Range Brakeout Trend - But how do you know when to trade?

[MissPIPa]

Its a old question that’s been dogging me for years.

Most people can tell you what each of these are and show historical examples but the big problem us newbies have is how do you trade them when we don’t know what’s going to happen in the future?

When people post strategy’s one common thing we see a lot is “it works well in trending markets but s/l gets hit during ranges”

I also have read a lot of times in the past how trading ranges can be more profitable.

If we look at EUR/USD for example (I would include a pic if I knew how to) it was in a range for most of 2015 and 2016, At the start of 2017 we got a nice up trend.
The 2017 uptrend first price broke the low of the range 1.04621 and then shot up and broke the range high 1.17137 in July

Is there someone that can actually explain how do you approach this, And if you are going to say “with good MM” then please give examples of what this would be as in most cases when someone says this they don’t actually explain it or give examples of how it would of panned out.

Thanks in advance

[anon81929759]

first of all

@MissPIPa

(I would include a pic if I knew how to)

1. you hit REPLY
2. on top of the left writing field you have some icons, Look at the 7th icon from the left, it has a line with an up arrow, if you hover over it it says UPLOAD
3. if you click on it, you can select a file to upload from your computer, so if you took a screenshot and saved it as a jpeg you could upload that photo here

Next
yes i would be happy to give you a 1 on 1 explanation, free of charge.
but, you know what the problem is…

Babypips has a rule
we can’t exchange emails
we can’t exchange skype names
we basically can’t arrange to meet up in anyway off this site
i can’t even give you my mobile number
i can’t even put my email address up in a way like soandsoATwhatever.com

so… in reality,
unless we put up pictures and explain it like that
there really is no other way
if you try, you get flagged and kicked off the site[quote=“MissPIPa, post:1, topic:123994”]
“it works well in trending markets but s/l gets hit during ranges”
[/quote]

now… where are you putting your S/L to begin with
because if they are getting hit it means you haven’t work it out correctly
its either being put too close to the entry
or
you are putting it as far away as you can but you don’t have enough money to put it further away
which means, you should reduce your lot size so you can put it further away

but then again
if you are using the strategy that says, your stop loss is like 5 pips away and your Take Profit is like 30 pips
well then
i don’t want to mess with your strategy

if a market is RANGING
you need to establish the Highs and the Lows
and your stop needs to be outside of these parameters
if you put it inside of the high and low OF COURSE IT’S GOING TO GET TAKEN OUT.[quote=“MissPIPa, post:1, topic:123994”]
but the big problem us newbies have is how do you trade them when we don’t know what’s going to happen in the future?
[/quote]

it’s not just Newbies
NOBODY KNOWS WHAT’S GOING TO HAPPEN IN THE FUTURE
so… stop trying to work it out hehe
you roll with the market , you don’t try to predict it
the market itself is dynamic and adaptive to what traders are doing

the market makers do not rock up to work and say, you know what… for the next 6 months we are doing this precisely
price will go to here, then here, then here
NO, THAT’S NOT HOW IT WORKS
so trying to predict where it will be next is for the most part pointless
which is why you’re struggling with it hehe

it’s like being married (i’ve been married for 15 years now)

first 3 years i was trying to figure out why my wife was doing weird stuff.
THE ANSWER IS… i couldn’t figure it out because she herself didn’t know why she was doing it

THE ANSWER IS… She’s a woman, That’s what she does
and
THE ANSWER IS… IT’S A FINANCIAL MARKET, that’s what it does
Stop trying to predict it
Just roll with it[quote=“MissPIPa, post:1, topic:123994”]
Most people can tell you what each of these are and show historical examples
[/quote]

of course they can
because they can download historical data
i have decades of it
and we can sit down over a cup of coffee and figure it out

but does that mean that when the same thing happens again that the market will do the same thing… NO IT DOESN’T
so people can say what they want

going into historical data is just a guide, i’ts not definitive of what will happen in the future.[quote=“MissPIPa, post:1, topic:123994”]
When people post strategy’s one common thing we see a lot is “it works well in trending markets but s/l gets hit during ranges”
[/quote]

Another common thing also is…
Most people don’t have a clue about strategy
Most people lose all their money
listening to them is pointless unless you are planning to learn from their mistakes

you need to work out what works for you and for your style of trading[quote=“MissPIPa, post:1, topic:123994”]
I also have read a lot of times in the past how trading ranges can be more profitable.
[/quote]

that’s true they can
but then again, some traders are better at BREAKOUT TRADING , others like predictable RANGES but the downside is , after every ranging period a breakout will occur, and you gotta watch out for it [quote=“MissPIPa, post:1, topic:123994”]
And if you are going to say “with good MM” then please give examples of what this would be
[/quote]

well. you need to MANAGE YOUR MONEY
meaning

Look at how much balance you have in your account
Look at how much you are prepared to risk
from that , Derive a lot size

you said no one has explained it

OK, LETS’ DO SOME MATH… OK

let’s say you have $1,000 ACCOUNT BALANCE
Lets say you agree to risk no more than 1% of your capital
so… THIS MEANS YOU ARE RISKING MAX… $10 do we agree ?

now here is where people trip up

so… you’ll go and put a trade down and you’ll do this

EUR USD Lot size = 0.1 Lots ($1 per pip) and you’ll think this is ok hehe
but, you’ll be broke before you know it

YOU SHOULD BE DOING THIS

Amount to risk Max $10

now… Where are you going to put your stop loss (Because that is the risk)
so let me give a contrast between 2 Stop Losses

let’s say in 1 trade you plan to put your stop loss at 10 pips
and the Take profit, put it wherever you want, it doesn’t contribute to this example of risk.

so Stop Loss = 10 pips
so here is the calculation

Max Risk = $10
$10 divided by 10 pip Stop loss = Amount of $ per pip to risk max)
Amount of $ per pip to risk max = $1 per pip DO WE AGREE

now…
convert that to pips

so… $1 per pip = 0.1 Lots
(now assuming you do not move your stop loss) you will be fine
you will not lose more than $10 = 1%

but
let’s say you now get into a routine
and you put another trade down and this time THE STOP LOSS IS 50 PIPS
well hehe
if you try that with 0.1 lots, You’ll lose $50
and your account will blow up 5 x times faster

so TO BE SAFE here is the calculation for the lot size to use

Risk $10 (1%)
Stop Loss = 50 pips

so… $10 divided by 50 Pip Stop Loss = $0.20 20 cents per pip
so in LOT SIZES that means 0.02 Lots

see the difference

this trade you are trading 0.02 Lots
the first trade you were trading 0.1 Lots

in both trades you do not lose More than $10 (1%)
that called RISK MANAGEMENT , also MONEY MANAGEMENT
that’s how you calculate on a per trade basis what your lot size should be

now, i have used $1,000 and 1% as easy to calculate figures

but realistically, you should not start trading with less than $3,000
and around 2% should be your max risk
but really as a beginner get it below 1%

start with something like 0.1% and see how you go

so on a $3,000 account
0.1% risk would be $3 risk per trade

now with a min lot size of 0.01 lots (10 cents per pip)
this will allow you to run a stop loss of no more than 30 pips

now if you need like 90 pips max then use a risk factor or 0.3%

do you understand or not
if you like
i have a spreadsheet that i have already made
and i can flick you a copy if you like, so you don’t have to calculate this stuff on the fly
or
you can feel free to make a spreadsheet for yourself

if you are unclear on the formulae
let me know, i’m happy to explain it

but my point was…

people take gut feeling stabs as to what lot size they are trading
and also
THEY CHANGE THEIR STOP LOSS POSITION DURING A TRADE

DON’T EVER DO THAT
if you lost, Accept your mistake
because moving the stop loss on the fly sways the calculation in a big way and you’ll wonder how you lost all your money.

you have to calculate everything
have a plan
STICK TO THE PLAN

got any other questions ?

[MissPIPa]

Here we go, Thanks Martin.

I’m going to have to wait till the kids go to bed then I can read with some peace and quiet so I understand what you are saying.

No doubt there is going to be a lot of follow up questions but for just now can I just ask this one and I’ve actually been wondering this for a while?

If we look at the picture there is a range, What I would call a uptrend and then a breakout.
Are you saying you would take every signal that your strategy/system gives regardless of the phase the market is in and then let profits ride during the trend/breakout and hope they out weigh any loses caused when the market refused to trend?

[peterma]

Many people figure that it is impossible to predict the market, it’s a mantra often repeated.

On your chart, right where the white line starts on it’s merry way up, imagine that you are at that point.

There are a series of lower lows, and a new low, another mantra is to trade what you see, not what you think.

Then think this, the world’s most powerful office has just been vacated and there is a new kid on the block, the market is very aware that the new kid dislikes what he calls an over-valued USD.

Trends on a chart are by definition hindsight, application of market context (fancy name for fundamentals) can contribute in the art of prediction.

“Our companies can’t compete with them now because our currency is too strong. And it’s killing us.”

Mr Trump was speaking to WSJ on Monday Jan16 2017 - around the time of the beginning of the white line, he was referring to China.

I commented around that time that Mr Trump is known in the market as an achiever, he often gets what he wants

[MissPIPa]

Thanks for that, I asked on another post about fundamental reasons for trends that just backs up my theory.

[peterma]

Then perhaps having read Mr Trumps comments, taken on board that he chose the WSJ and not say Fox News, maybe now time for technical.

One of the most recognized patterns in a down trend (as it was then) is a Double Bottom, that occurred a few weeks after the new president took office.

Perhaps have a look back then whether there is anything on the TA side that could help, maybe a buy on the second drop etc…

[MissPIPa]

Wasn’t it a inverted head and shoulders?

[TradeViper]

Martin, I don’t know who you are, but BIGGLY up’s for this post. I and others have been trying to reach new folks with this very same common sense solution, and for some reason they prefer Snake Oil.

I would like to add, if you “system” indicates you need 100 pip stops, AND you cannot lower your position size to accommodate your maximum loss of 1-2%, this means you cannot trade that system, it is very simple.

In the institutional world, long term positions are often hedged against a short period of volatility by using Options, but this is generally not affordable to a smaller size retail trader. So the retail trader must use a different type of risk model. The bottom line is that your account size determines your Risk Model. If you do not have a Risk Model in place, you should not be trading.

The Ever Risk Averse VIPER

New traders get enamored with

[TradeViper]

Well, look at the Loonie on Friday, what caused the Breakout/Breakdown?

The Ever Instructive VIPER

[anon81929759]

Martin, I don’t know who you are,

I’m Martin
LOL
i don’t know how else to answer you on this.

thanks for the comment though

yeah, it’s common sense
a lot of people lack it though
what are you gonna do

[tommor]

I’m not a break-out trader but for those who are, surely you don’t just enter when the trade breaks out of the range? Surely you entered long at the bottom of the range and if price proceeded to break out through the upper range boundary, you just ride with it?

[anon81929759]

Here we go, Thanks Martin.

You’re welcome

No doubt there is going to be a lot of follow up questions but for just now can I just ask this one and I’ve actually been wondering this for a while?

Feel free to follow up

If we look at the picture there is a range,

yep, got it, there is indeed a range

What I would call a uptrend and then a breakout.

Ok… fair enough, let’s call it that.[quote=“MissPIPa, post:3, topic:123994”]
Are you saying you would take every signal that your strategy/system gives regardless of the phase the market is in and then let profits ride during the trend/breakout and hope they out weigh any loses caused when the market refused to trend?
[/quote]

Where did you get this from ?

1. when i trade i don’t HOPE for anything
   that’s stupid,
   the market is not going to give you what you hope for hehe

2. Should Phases be considered
   YES. MOST DEFINITELY

My strategy INCLUDES THE PHASE.
i actually have a step in my flow chart that says "do you know the phase of the market"
and i’m not allowed to proceed past that step until i get the phase of the market correct.

in a later step, i have to PROVE TO MYSELF with facts that i got the phase of the market correct

so. yes i do certainly consider the phase of the market.

if i had to guess what you were referring to , i think it would have something to do with me saying
if you hold a trade it will eventually break even
or something like that

Mate, if that’s the case
WHAT I MEANT WAS THIS

People put down trades and then trades go against them
and then they do the worst thing they can do, and that is
They close their trades manually out of fear

what i was trying to say was something that i actually tested a long time ago.
and that was
IF YOU ARE ON THE WRONG SIDE OF A TRADE
ASSUMING YOU HAVE THE BUDGET TO DO THIS
if you hold it, MOST TIMES the trades comes back to even out (at the very least) so you don’t have to cop a loss.
you can break even given enough time

but What exactly were you referring to ?

[MissPIPa]

You must know the phase, Great that’s what I always thought.

But here is the problem us newbies have, We don’t have that skill where we do know the phase until the phase has just about finished. And few people actually share a method on how to do it.

If you or anyone else could explain using the chart above at what point you said to yourself “This is a range” and “the range is just about finished here comes a up trend” and give a explanation to what made you come to this conclusion then you would be one of the first to explain to us and we would promote you to a god like status.

[3Bar]

Hi MissPIPa,

don’t let anyone fool you. No one knows what tomorrow brings. The only thing I know when trading is that the market is “right now” in a range or a trend. Tomorrow it may be in a different phase.

For me, knowing the phase plays no part in my trading strategy. I look for a particular signal regardless of whether it happens in a range or trend. Next I measure targets based on the current market speed. (ATR is a good gauge of market speed), then I determine the likelihood of the trade reaching the target without encountering significant support/resistance or trend channel hi/lo’s. Then, if my signal is good and the target has a clear path, then I put on the trade. Determining whether the market is a good phase or not never comes into my decision making processes.

There will inevitably be drawdowns regardless of whether you know the market phase or not. The key is knowing your likely drawdown in any given timeframe. Once you know your probabilities of winning and you are comfortable with your potential worst case drawdown, then you trust the plan and put on the trade.

[TradeViper]

I’m sorry, but Balderdash, a range establishes at the first high and low, you generally get 3 to 4 high probability trades with at least 2 being complete retraces, meaning highly profitable trades, just remember the last one will be a loss as the range breaks up or down. You are just are not focusing. and stay out of the mean.

The Ever Vigilant VIPER

[anon81929759]

@MissPIPa

then you would be one of the first to explain to us and we would promote you to a god like status.

HEHE… God like status huh
how can i possibly resist

ok, i understand
and the problem that occurs in this industry is a lot of people dont’ actually know,
but when the move is over it’s easy to identify

it’s sort of like a car crash
when you see a car crash vs 2 cars parked side by side, it’s easy to say THAT’S THE CRASH and THOSE CARS ARE PARKED
but before the crash, can you always identify if two cars will crash
it’s a little harder isn’t it.

@MissPIPa

We don’t have that skill where we do know the phase until the phase has just about finished. And few people actually share a method on how to do it.

Have a look at this chart
i have purposely edited your bits out
THE BLUE SQUARES AND RECTANGLES ARE RANGES (aka, when the market IS RANGING… IS SIDEWAYS… IS ACCUMULATING

also, i’m not a fan of providing links to the sites of you tube channels because i don’t like to sound like those scammers that say
hey i know this guy and until i met him i was losing etc etc
here is his link

but IN YOUR CASE, i think it would be beneficial
His Name is Martin Cole
he’s a good bloke, i’ve spoken to him a few times. he’s fair and he’s not a scammer
Just like Jim Dandy who teaches MQL4, Jim is also a good guy

Martin Cole can explain Ranges and breakouts to you really simply
here is one link

here is another useful one

you don’t need to buy anything or sign up or anything like that
but I STRONGLY SUGGEST you watch a few of his videos, specifically the ones that talk about PHASES OF THE MARKET, Profit Release, Accumulation Phase

now… regardless of what you call them , EACH PHASE HAS A PURPOSE AND PERFORMS A FUNCTION TO THE MARKET MAKERS
There are Pro’s and Con’s to trading both

and… You don’t have the skill because no one’s explained it to you
Martin cole will explain it to you… TRUST ME

Now i will also say this, in extension to the explanation of Martin Cole
Looking at a SIDEWAYS MARKET is one thing
but WHAT TIMEFRAME are you looking at vs what is your trading style

example. : if you are a scalper, there is no point to you knowing what the Monthly chart is doing
Your better bet would to look at M1 M15 M30
and probably pay more attention to the phase on the M30 , but use the M1 as Entry indicator

now. if you are a serious trader, and you trade let’s say a H4 chart, it would be highly beneficial to see what Phase the Market is in on the higher timeframes
because the higher timeframes are the TRUE PHASE of the market

short Term Time Frames, don’t mean diddly squat when it comes to phases because they can change in a heartbeat.
you want to try and find a middle ground
i would suggest probably watching the Phase on a 1 Hour, 4 Hour or Daily chart to get a feel for it.

go with that for now
watch martin cole and download his videos for reference

do you really need to purchase Market Makers Method
well. with all respect to Martin cole
Truth is… No you don’t
you can do all this without him if you can’t afford to purchase it

his software simply shows you where the phases are and a few other things.
then again, to be fair to Martin cole
if a beginner feels that his software may benefit them, go for it

but i can assure you of this, whichever way you go.
Martin Cole is an honest bloke
he will teach you how to trade
you can email him and have a chat if you like, he’s a nice guy

but even if you buy it, you won’t be scammed, that’s for certain
Worst case scenario will be that you buy his software thingy and you find it’s not really helping you.

so… Your choice
but i say
go to his you tube videos
download and watch them and learn from them
then, In MT-4 use the INSERT, SHAPES… RECTANGLE thing
and INSERT TEXT thing to simulate your own software so you remmeber the phases

now THE QUICK EXPLANATION IS THIS
When you draw a rectangle like i have in this picture

do it like i did at the one at the end
so… here is what i did

1. After the rally up, it made a high
2. i then waited for the low
3. NOW KNOWING THAT AFTER A PROFIT RELEASE there is almost always an Accumulation phase, i took the high and the low and the first stage of the phase
   THIS IS HOW YOU IDENTIFY THE BEGINNING OF THE ACCUMULATION PHASE or RANGING

so when you said this…

@MissPIPa

we do know the phase until the phase has just about finished.

it means you cannot identify the beginning

AS A GENERAL RULE
when there is a massive rally up or down
THERE WILL BE A RANGE THAT WILL FOLLOW… simple

and when you said this

@MissPIPa

explain using the chart above at what point you said to yourself “This is a range” and “the range is just about finished here comes a up trend”

i would say this…
i can pick the beginning of a RANGE

THE END HOWEVER IS A BIT MORE TRICKY
but as a general rule
DO THIS

get the initial HIGH AND LOW, now
draw your box
and stretch it over like i have done with that last box
then identify THE MIDDDLE OF THE BOX, i like to put a YELLOW HORIZONTAL LINE there

Next… if the price is currently on the upper side of the mid point LOGICALLY it means price is rising
but YOU DON’T KNOW BECAUSE IT’S RANGING
and if you are swing trading, you can make money on the up and down moves of the range because it’s predictable

THE DANGER IS… WHEN THE RANGE ENDS

now, You’ll know that it has ended because IT WILL BREAK EITHER THE LOW POINT OF THE BOX OR THE HIGH POINT

UNTIL IT DOES THAT… IT IS STILL RANGING

so… now… have i earned my GOD LIKE STATUS… or what ? hehe

now in saying that
this also happens at times
you draw your box and you have your high and low
but then a new high or low is created

IN THIS CASE YOU REDRAW THE BOX, it’s still ranging, but it just has a bigger range

now RULE OF THUMB

MEASURE THE DISTANCE IN PIPS FROM TOP TO BOTTOM OF THE BOX
if there is a high box, meaning something like 60 pips from top to bottom,
WHEN IT BREAKS INTO A PROFIT RELEASE IT WILL POP HARD

if there is a range of 10 pips from top to bottom, it’s not going to go far when it pops
the dynamics behind this is
if the distance is higher, they are accumulating more money to finance the move they plan to do
and if it’s smaller they only plan to make a small move
THAT’S A GENERAL RULE OF THUMB, NOT WRITTEN IN BLOOD… ok

READ THIS AND GIVE ME YOUR THOUGHTS… OK
I’m here to help
this is an easy subject

also

YOU CANNOT SUCCESSFULLY PREDICT
here comes and a sideways market
and at this point it will rally up or day
and then sideways and then rally and then sideways and then rally

NO WAY IN THE WORLD
if you are trying to predict breakouts… GOOD LUCK,

no… what you want to do is this

IF YOU BELIEVE THE MARKET WILL RISE, You want to wait for the Ranging to come at at point that is below the mid line of the box, hence BUY LOW

me personally, looking at this, i believe it will retrace to go to around 1.1250
now assuming i’m correct

1. I DO NOT KNOW WHEN THE RANGE WILL FINISH,… NOR DO I CARE
2. you want to roll with the market
3. so , i would wait until the price is as high as i can get it above the mid line, then i would SELL and put a stop loss that is 10 pips to 20 pips above the top of the box

MEANING.
YOU HAVE MADE A DECISION
YOU HAVE POSITIONED YOURSELF

NOW… IF YOU ARE WRONG, it means to be proven wrong, YOUR STOP LOSS MUST BE HIT

now with this in place
the only things that can happen is

it keep ranging
or
you get into negative for a bit but it stays within the box and eventually MUST GO DOWN
or
it hits your stop loss (which you have no doubt calculated your lot size so you don’t go broke)
or
YOU ARE CORRECT AND IT GOES DOWN
in which case you wait for it to go down, then you set your stop loss below your entry and at the bottom of the box
hence YOU LOCK IN PROFITS, just in case it comes back up again

if it keeps going down, you keep trailing the stop loss manually
if it comes back up and hits your stop
GREAT… YOU MADE APROFIT and you start the range all over again

IS THAT DEFINITIVE ENOUGH FOR YOU… hehe
take care mate

[Luke_Ronchi]

A great reply! I found so many good points here to attack the rangy market! Thank you very much, mate.

[anon81929759]

You’re very welcome

i’ve been out for a while, but i thought i might be a nice guy to MISSPIPa and do a bit of Post on it, i’m not sure if i’ll start a new one or continue it here, but STAND BY for some more stuff on this.

a sideways market can be a good thing IF YOU KNOW HOW TO ATTACK IT
i’ve had times where where the market was doing this that were so obvious it wasn’t funny
and it was ranging for like a week or 2
EASY MONEY hehe

so… it can be a good thing
but then, it can leave you for dead as well, if you don’t know what you’re doing

My advice is
PICK A DIRECTION and work only that 1 direction
don’t trade up and down within the range

THE THING THAT NEWBIES MISS… IS THIS

The Purpose of an Accumulation phase is TO TAKE YOUR MONEY

Really understand this too

These Market makers have been DOING THEIR JOB FOR OVER 100 years
They are experts at ACCUMULATING MONEY from people

they create a predictable situation
the purpose is… SO PEOPLE JUMP IN

it’s like putting bait on a fish hook
for the fish it’s FREE FOOD

Be Very Very Cautious of Range Periods

Even the fish can take a bit of meat from the bait without getting hurt
but the more the fish takes and the more the fish gets greedy
it’s inevitable that the fish will get hooked

like i said the smart thing to do is
DURING THE PHASE set up a trade so that when the Range Ends, YOU ARE ALREADY IN PROFIT

Stand by for the lesson to come

[anon81929759]

Ok MissPIPa
THIS POST IS FOR YOU

I have my coffee in hand, i have my charts out, and YOU WANT THE TRUTH about Ranging… YOU CAN’T HANDLE THE TRUTH… hehe

But seriously though.
here we go
LET ME GIVE YOU SOME INSIGHT INTO HOW THIS WORKS

WARNING : THIS WILL BE LONG AND IT WILL HAVE A LOT OF SCREENSHOTS
YOU HAVE BEEN FOREWARNED
so… No whinging about how long it was… ok

here we go

BACKGROUND INFO : On my charts BLUE CANDLES = UP (Bullish) and **
** WHITE CANDLES = Down (Bearish)

i’m just going to pick random instruments ok
THE PURPOSE HERE IS SHOW YOU HOW TO IDENTIFY RANGES, that’s it

let’s start with AUD USD (Because it’s convenient right now)
Here is a M1 Chart (1 Minute)

NOW, MAKE A PREDICTION…
the average Newbie would say
PREDICTION IS… IT’S GOING UP
The Trend is UP
so… YOU WOULD BUY
it might look something like this

and the newbie would say something like this

“AS YOU CAN SEE, Price took a rally up as a result of [we don’t care] news data, it then took a rally down, making lower highs and lower lows”
THEN YOU COULD ARGUE THERE WAS RANGE IN BETWEEN

then
“it’s not finished the Range and is continuously making Higher Highs and Higher Lows and is therefore going up”

a very cheeky newbie might also argue
“those last few candles have broken the trend line and this is therefore a reversal”
HMMM
IS IT REALLY ??

ok, so, Literally 2 to 3 mins later
here’s the screenshot hehe

so much for staying under the trendline
and HAD SOMEONE HAVE BOUGHT HERE, they would not be Shitting themselves hehe

but the point here is this

IT LOOKS LIKE AN UPTREND… RIGHT

now. let’s look at the H1 (1 Hour)

WOW… all of a sudden it’s not an uptrend
Lets look at it side by side

HERE IS WHY YOU SHOULD HAVE MULTIPLE SCREENS WHEN YOU’RE A NEWBIE

side by side comparion
1 Minute vs 1 Hour

as you can see the 1 Hour is telling us that the price has recently taken a big leg up and now
AS I TOLD YOU BEFORE

LESSON : AFTER A BIG RALLY UP OR DOWN THERE WILL MOST LIKELY BE A PERIOD OF ACCUMULATION (A RANGE PERIOD)

and here it is for your viewing pleasure
I’ve even included a lavender box to show you how i identify it

this relates to your question
HOW DOES IT START

you draw the box and extend it out so that you allow for more candles to form
let’s zoom in a little

HOW DID I DRAW THE BOX

STEP 1. I identified where the Rally Up STOPPED (at the blue candle before the box)
because the next candles high IS LOWER

STEP 2. you let a few candles for , around 4 or 5 as a min

STEP 3. You find the highest point and the lowest point (as indicated by the little red arrows)
this is what i based the top and bottom of the box on

STEP 4. Draw the box and extend it to the right, MAKE SURE TO NOT INCLUDE THE BIG BLUE CANDLE IN IT

THAT’S HOW YOU IDENTIFY A RANGE

NOW… SO
we have seen the 1Minute chart and it has shown us its’ moving up
BUT THIS WAS WRONG

then we saw the 1 Hour, we now know that it’s ranging

BUT … HOLD ON A SECOND
BEFORE we go saying , let’s enter a trade to go LONG
or let’s play around in the accumulation period

LET’S LOOK AT A HIGHER TIMEFRAME

LET’S ANAYLYZE the Daily chart

LOL
ARE ALL THE NEWBIES CONFUSED YET HEHEHE

SO NOW. it’s going DOWN hehe

LESSON : HIGHER TIMEFRAMES ARE ALWAYS MORE RELIABLE THAN LOWER TIME FRAMES

SO NOW… we can see the following
and positively conclude the following

LESSON : IF YOU HAVE A THEORY ON SOMETHING… PROVE IT
If you can’t , it’s not valid.

so we can PROVE that

• The 1 Minute Chart was merely showing an increase in price on the short term (But it doesn’t really count for much)

• the 1 Hour was showing a Range but Even though it’s true to a point
  if you just looked at the 1 minute and 1 Hour
  YOU WOULD CONCLUDE

A) THE TREND IS UP
B) IT’S CURRENTLY IN A RANGE (Accumulation Period)

YOU WOULD BE WRONG AND YOU’D LOSE YOUR MONEY

you see

• THE TREND IS CURRENTLY DOWN
• THE PRICE IS CURRENT IN AN ACCUMULATION / RANGING PHASE

lets keep looking at the higher time frames

here is the Weekly

oh… look at that it seems to be going up
BUT HANG ON… HANG ON A SECOND
LET’S ZOOM OUT A LITTLE

HOLY FIRETRUCK (FireTruck is not a dirty word and not against the rules of the forum hehe)
now. tell me you wouldn’t be kicking yourself if you thought the trend was UP

Definitely Trend is down

so what have we learned

LESSON : LOOKING AT HIGHER TIMEFRAMES IS IMPORTANT

LESSON : ADJUST ZOOM TO SEE A BIGGER PICTURE

let’s keep going and look at Monthly

ok LET’S UNDERSTAND A FEW THINGS HERE OK

1. the beginning of the chart is 1 November 1994

2. The OVERALL VIEW OF THE CHART IS it is going UP
   HOWEVER… it’s currently in a Pullback

3. in saying that, IT IS CURRENTLY RANGING

if we zoom in a bit it looks like this

now. YOU MIGHT BE SAYING THIS

“but Martin, it’s going up”
because you look at it LIKE THIS… right ?

Well (i’m a Star Wars fan) and to quote Ben Kenobi
“Luke, you are going to find that many things IN FOREX will greatly depend on your POINT OF VIEW”

My point of view
the WAY I SEE IT IS LIKE THIS

IT’S RANGING

you see, IF YOU LOOK CAREFULLY

1. price came down
2. then the next candle was higher
3. then we gave a few candles to form
4. it showed us a HIGH
5. then it went down to show us a LOW
6. and we now have our range

SO… UNTIL IT BREAKS ABOVE THE BOX OR BELOW THE BOX

IT IS RANGING

the Uptrend within the box is irrelevant
beause THIS IS A RANGE
it’s purpose is to deceive you

NOW LET ME GIVE YOU ANOTHER POINT OF VIEW

LET’S ZOOM IN
and lets’ say that you said “Martin, but … that Drop down, why is that not a profit release, why can’t we view the chart like this”

MEANING…

why can’t you say there was a rally down
THEN THERE WAS A SLIGHT RANGE
THEN… it continued to rally down a bit more
and then it started ranging

ANSWER : YOU CAN
again, it depends on your point of view

My point of view is… WHAT’S THE DIFFERENCE BETWEEN THE HIGH AND LOW OF THE BOX
between
the 2 Boxes
or
Joining the 2 boxes to make 1 Box

OR… HERE’ ANOTHER EXAMPLE (Which is really convenient here) of how you move the box on the fly

LET’S SAY WE HAVE THIS…

NOW i want you to imagine the following

• THE BLACK AREA DOES NOT EXIST, it has not formed yet (you literally do not know what is going to happen)

• all you know so far is…
  there was a rally DOWN

• there is the (Purple Box) a Small Range

• and now there is another rally down

• AND NOW YOU HAVE ANOTHER RANGE PERIOD

so… YOU DRAW THIS LAVENDER BOX

NOTE: i got rid of the green trend line , we don’t need it for the explanation

ok, so now we draw the new box based on the highs and lows (Remember ignore the black part)

so THE RULE NOW IS
IF IT BREAKS THE TOP OF THE BOX OR THE BOTTOM…IT’S A BREAKOUT
hehe

CAN YOU SEE WHY IT IS SO BLOODY IMPORTANT TO IDENTIFY THESE THINGS CORRECTLY
Keep watching…

so now a few more cancles form (i’ll uncover them_

so now
THAT BIG BLUE BULLISH CANDLE HAS BROKEN THE TOP OF THE BOX

but… CAN YOU SEE HOW IT’S NOT REALLY A BREAKOUT
so… if i did this

can you see how pointless it is

CAN YOU SEE HOW THAT LONG BLUE CANDLE IS MERELY JUST A STEP UP IN THE RANGE TO MAKE YOU THINK THAT PRICE IS GOING TO BREAK OUT.

and now look again

IS THIS A BREAK OUT
ANSWER: NO IT’S NOT
because if you consider this picture

can you see how it makes more sense ?

NOW LET ME INTRODUCE YOU TO ANOTHER CONCEPT

SEE THE BOX I JUST PUT UP
well.
Let me put Black lines on the top and bottom
and let me PUT A YELLOW LINE AT EXACTLY THE MIDDLE POINT

so
The top line price is 0.8225
the bottom line price is 0.6735

now let’s find the middle point

0.8225 - 0.6735 = 1490 PIPS from top to bottom
now 1490 Divided by 2 (Gives us the half way point)
so… 745

so now 6735 + 745 = 7480
so we put our yellow MID LINE on 0.7480

LIKE THIS

Now, if you decide that you are buying, you buy in the ared BELOW THE MID LINE where it says BUY HERE
if you are selling… YOU GET THE IDEA

i find it also helps to divide the two sides into quarters
and to only buy in the lowest quarter and to only sell in the highest quarter

OK… TAKE A BREATH NOW

so the question now is… Which way would this go

WELL.
LOOK HERE’S THE THING
this is a Long Time Frame

WHAT CAN YOU DO THIS WITH THIS

• You can gauge overall trend / Direction or whether it’s ranging

• but trading on this chart and holding for months to years is costly but profitable

• IT DEPENDS ON YOUR BUDGET AND TRADING STYLE

you need to find a sweet spot of trading

1 Minute chart is too quick and useless for the most part UNLESS YOU ARE PLANNING A PRECISE ENTRY POINT
However, Never trade off the 1 Minute chart

now, the Monthly will be accurate and much less manipulated, i mean… HISTORY IS HISTORY you can’t BS this.
however on the 1 Minute chart, they can do what they want.

so let’s go down a few time frames

BUT NOW WE KNOW

THE TREND IS DOWN
AND ON THE LONG TERMS IT’S CURRENTLY RANGING

this tells us the following

1. that unless price breaks above the box or below the box ON THE MONTHLY
   IT MUST CONTINUE RANGING

so now… YOU KNOW THAT EVERY TIME FRAME BELOW THIS IS REALLY ACTUALLY RANGING

there you go
THAT’S PROOF
and that’s predictable… right
RIGHT

but HERE’S THE CATCH

the distance from top to bottom on the box is 1490 PIPS… right
so even though it’s ranging

CAN YOU AFFORD TO PLAY IN THIS RANGE
let’s say you are playing with 0.01 lots (10 Cents per pip)
that means TOP TO BOTTOM you must have $149 just to survive the range

but there is also risk management
so… in reality, let’s say you are risking 1% of your account

well that means that $149 (let’s call it $150 to make the math easy … ok) must make up no more than 1% of your account.

which means YOU SHOULD HAVE A BALANCE OF $ 15,000

BUT WAIT A SECOND
THAT ONLY GETS YOU IN THE RANGE

now… if it’s pops in your favour (let’s say you said it was going LONG and it shot up) GREAT… $$$ CHA CHING

but. if it popped down
WHAT WOULD YOU DO

you see, the 1% risk is defined by WHERE YOU PUT YOUR STOP LOSS
so if your stop loss is going to be put on the bottom of the box… THAT’S SILLY

you want to put it lower
say around somewhere here 0.5929 (the low yellow line, so that’s 2290 pips approx from top to bottom

ok so let’s redo the math

to survive 2290 pips and to make 2290 pips 1% of your account at a lot size of 0.01 lots
hehe

IT MEANS YOU ARE RISKING $229 (let’s call it $230)
and for $230 to 1% of your account
YOU WOULD NEED AN APPROX ACCOUNT BALANCE OF AROUND $ 23,000

so clearly BEGINNERS CANNOT AFFORD TO TRADE ON THE HIGH TIME FRAME

LESSON : BUT DEFINITELY USE THE HIGH TIME FRAME TO GET THE BIGGER PICTURE AND DO NOT FORGET WHERE THE TREND IS

let’s now go back down to a 30 minute chart

can you now understand how THIS IS RANGING

FACTS

• We know it’s ranging on the Higher Time Frames
• we know that this is REALLY just a lower point , but IT’S RAINGING ALSO ON THIS TIME FRAME

the thing to be aware of is, if on the higher time frame WITHIN THE RANGE it goes up above that yellow mid line.
ON THIS TIME FRAME that means… it will be going LONG
so you need to decide what time frame suits you

so let me point out the range here, the last 2

so I HOPE THAT IT’S CLEAR NOW how you identify when the market is sideways

as a side note
LESSON : find out what pairs CORRELATE with your instrument and find out how the others behave if your pair is going up and how they behave if your pair is going down
use these other CORRELATING PAIRS as indicators as to whether the jump up is BS or not

NOW. THE BIG QUESTION

WHICH WAY WILL IT GO… RIGHT ?
UP OR DOWN

LOOK AT THE CHART, Take a Second to do it and scroll down and i’ll give you the answer

THE ANSWER IS… NO ONE KNOWS (See, You can’t handle the truth ) hehe
but it’s true, YOU DO NOT KNOW
anyone who thinks they do and can predict it… is naive

BUT HERE IS WHAT WE DO KNOW… DEFINITIVELY

• it must go UP or DOWN (Duuh) but stay with me on this…

NOW DID YOU BOTHER TO NOTICE THIS

LET’S LOOK AT THAT CHART AGAIN

Do you notice that price comes back on itself
LET ME POINT IT OUT TO YOU VERY VERY CLEARLY

THIS WILL BE AN EYE OPENER FOR NEWBIES

hehe
THIS IS WHERE YOU SAY… OOOHHHHHHH MY GOD
Hehe
Right ?? Get it

ok, so the thing is this happens all the time
and

LESSON : IT WAS IN FRONT OF YOUR FACE THE WHOLE TIME,… YOU JUST DIDN’T SEE IT

So let’s walk through this box by Box, let’s start from box to the far left and call it BOX 1
and we will follow this format

YOU ENTER AT THE BOTTOM LEFT OF THE BOX
YOU EXIT THE TRADE AND THE BOTTOM RIGHT OF THE BOX

so… if you had decided to BUY at the bottom left of box 1, You’d be in profit
IF YOU DECIDED TO SELL, you would be losing

THE LESSON HERE IS THIS…
IF YOU HOLD IT IT WILL COME BACK (Most times) and You’ll get your money back, without having to lose it
so IF YOU HELD in box 1. Can you see how you would your money back and have $0 Loss

now. BOX 2

so box 1 ended with a down move, and you assume it’s going down
YOU’RE WRONG AGAIN, it goes up
if you hold it… YOU GET YOUR MONEY BACK

so box 2 ends in a down rally, so you assume that’s what is happening

BOX 3 - you sell, You are wrong, if you hold, you get your money back

BOX 4 - if you sell after the rally down, at the top of Box 4 (left) you are good
if you decided that the rally was over, if you held, you’d get your money back

BOX 5 same as box 4

BOX 6 - lets say you think to yourself… ok, Box 5 ended with a strong Buy side, i suppose it’ll continue hehe
AND THEN… it turns around on you.
if you hold it, you get your money back

BOX 7. THIS ONE IS INTERESTING
if you decided that box 6 ended in a sell position that would continue, you would SELL in box 7
and you’d ■■■■ yourself to find out that it just took a step up (you would probably be inclined to exit the trade)

but… if you were cheeky and you decided I’M GONNA BUY, you might ok for a whiile, but you think it’s gonna go further
FACT IS… BUY OR SELL. YOU WOULD STILL GET YOUR MONEY BACK IF YOU HELD IT

LESSON : CAN WE SEE HOW THIS WORKS… DOES THIS MAKE SENSE ?

BOX 8 - SAME THING… if you sold, you get a rude shock, but if you hold you’ll be ok

BOX 9 - same thing

BOX 10 - Same thing
BOX 11 - Same thing
Box 12 - Same thing

and if you look carefully in the range you can see 2 More instances where that happened again

WE ARE NEARLY AT THE END

do we understand this ?

OK BACK TO THE QUESTION

WHICH WAY WILL IT GO

FACTS

1. WE DON’T ACTUALY KNOW
2. We do know there are only 3 POSSIBILITIES AND NOTHING ELSE EXISTS

Possibility 1 - it Keep ranging forever
Possibility 2 - It Eventually Breaks to the High Side
Possibility 3 - It Eventually Breaks to the Low side

now putting aside Possibility 4, - WE HAVE A ZOMBIE APOCOLYPSE and Forex and the entire world ceases to exist .

Let’s look at Probability

scenario 4 - Astronomically UNLIKELY
Scenario 1 - ahhh yeah… NOT LIKELY but Possible, but seriously… FOREVER.
IF IT HAPPENED, the market’s would be too predictable, so IT’S NOT LIKELY

so through LOGICAL ELIMINATION
we only really have 2 Options, don’t we

this is where you say “No ■■■■ Martin” hehe

NOW GUYS, AS OBVIOUS AS IT SOUNDS
YOU NEED TO UNDERSTAND THE DEEPER SIDE BEHIND IT

DONT’ TRY TO FIGURE OUT WHICH SIDE IT WILL BREAK TO (you’ll blow a blood vessel in your brain)

INSTEAD - PREPARE FOR BOTH SCENARIO’S
AND
LOOK AT THE PROBABILITY OF BOTH SCENARIOS

so… will it go high or low

well here’s another thing to look at

AND THIS NOW COMES BACK TO SUPPORT AND RESISTANCE LINES

the arrows indicate certain points in time WHEN THE MARKET CONDUCTED TESTS

LESSON : THIS IS A MONEY MARKET, MEANING… the Market makes have to make money.
** so… if right now, there was a huge move up. DON’T YOU THINK THAT EVERYONE IS ASSUMING IT’LL CONTINUE**

now. if EVERYONE thinks it’s going up and EVERYONE BUYS
wouldn’t the Market Makers LOSE MONEY ?

so. QUESTION : how do the market makers make money
ANSWER 1. they decide what direction they want to go in (what’s more profitable for them)
2. they convince the majority to go the opposite way

you can only prepare for BOTH SCENARIO’S

so here are the 2 Scenario’s
I BELIEVE HERE, the Market will drop down

now let me show you something (To determine HOW FAR IT WILL DROP DOWN)

CAN YOU SEE WHERE I’M GOING WITH THIS ??

NOW it will most likely go from the current price to the bottom of the yellow box
BUT… DON’T GET GREEDY

and remember this
if you were at the Bottom Left and you open a SELL TRADE (you’d be kicking yourself right now… right ?)

well, HERE IS HOW YOU GET OUT OF FIRETRUCKING BS SITUATION.

1. HAVE PATIENCE
2. IF YOU DID YOUR RISK MANAGEMENT CORRECTLY AND MONEY MANAGEMENT YOU’LL BE OK
3. TELL YOUR EMOTIONS TO SHUT UP
4. HOLD THE TRADE

and you’ll very likely find it will come back to zero itself out.

NOW BACK TO THE POINT OF HOW LOW WILL IT GO
it will certainly go to the Green Half Way Line
and from there, YOU HOLD OFF and you wait to see, if it goes up or down
REMEMBER… YOU DON’T BUY ON THE HALF WAY LINE, OR SELL

you wait until its low to buy or high to sell
so here… YOU COULD PROBABLY OPEN A SELL POSITION

BUT ALSO REMEMBER
that it’s ranging… so
WAIT FOR THE RANGE TO BREAK OUT OF THAT PREVIOUS LAVENDER BOX on the low side,
but, you should have opened a sell position (in a previous picture in the lavender box above the mid line… right ?)

so when it breaks to the low side, YOU’LL BE IN PROFIT

now… WHAT IF IT DOESN’T DO THAT
WHAT IF IT BREAKS HIGH and you were in on a sell

OK
watch this…

let’s say

• the lavender box is showing the range
• the yellow box is showing how price we retrace on itself
• the top green line is the MID LINE in the Range
• the bottom green line is the MID LINE in the yellow box (your target, Take Profit in the sell trade)
• the top black line is where YOU WOULD OPEN A SELL TRADE
• the bottom black line is where you TAKE PROFIT on the sell trade

so… HERE ARE THE 2 SCENARIO’S YOU PLAN FOR

1. IF IT GOES DOWN AS PLANNED - YOU WIN
2. IF IT GOES UP AS PER THE RED LINE - you are now at a loss

BUT…
LESSON : BECAUSE YOU PLACED YOUR SELL UP HIGH, it’s very likely that the price will revisit the MID LINE of the range and YOU’LL GET YOUR MONEY BACK

so either way

IF YOU ARE PATIENT
IF YOU PLAN YOUR TRADES

YOU VERY LIKELY (But not certainly) WILL NOT LOSE MONEY
you might break even, but you don’t lose money

and if it goes the wrong way
LEARN FROM THE EXPERIENCE

now… THIS IS THE END OF THE LECTURE
This is where Everyone says “Thank Firetrucking Christ for that” LOL

now… ONE LAST THING

I BELIEVE THERE WAS A MENTION OF A MATTER OF “GOD LIKE STATUS” hehehe

YOU’RE WELCOME MATE
I hope this has opened your eyes and the eyes of all newbies on this forum
ok

let me know your thoughts

OH, and one last thing

see the yellow box

Just to show i’m not full of crap
I BE YOU DIDNT NOTICE THIS

LET’S GO BACK TO OUR MONTHLY TIME FRAME AGAIN… OK
JUST QUICKLY

NOW… WHAT DO YOU RECKON ?

Looking at it with MORE EDUCATED EYES than you did like 30 mins ago

can you see how the retracement is working
Look…

same thing

• Black line is the Mid Line
• Blue lines are diving the Yellow Box into Quarters (Essentially but and Sell Points)

WHAT I WANT YOU TO NOTICE IS THIS

1. From the point at the bottom of yellow box, Left Corner, IT SHOOTS UP
2. THEN IT RANGES
3. then it drop to AT LEAST THE HALF WAY MARK

Let’s look at it
Look at the very top of the range
FOLLOW IT TO THE DROP and you’ll notice

• it ALMOST TOUCHES THE HALF WAY LINE (The First Red Arrow)
  **LESSON : this is why you don’t set your Take Profit, RIGHT ON THE HALF WAY LINE, because you won’t **
  always get your money back that way, but had you set it a bit above, YOU’D BE COOL

AT THIS POINT IT’S IMPORTANT TO NOT THAT THIS BOTTOM POINT IS A TEST POINT
***REMEMBER IT ****
so then

• it shoots back up, making you think it’s going up (this would be the point (The 2nd Red Arrow) that if you opened a SELL, you would now break even again if it didn’t hit your Take Profit if you had it on the black line.

also notice how THIS POINT also concurs with a few of the previous lows in the range… see that ?

so

• then it takes another dive down

so now it has a low test point and high test point, and
IT’S ABOUT TO DECIDE WHICH DIRECTION TO GO IN

it goes down to the 3rd arrow and pretty much touches the line, close enough YOU WOULD HAVE TAKEN PROFIT HERE.

it then comes up again

now the bit with the arrows is what you could consider A RANGE

so WE HAVE COME TO THE HALF WAY MARK… Right… THAT’S A FACT

also, in this case, it chose to go to the 75% mark (Bottom Blue line)

NOW NOTICE HOW IT JUST HOVERS THERE hehe

and now when you do this

Notice how EVER SO CONVENIENTLY
it positions itself at the mid point (The Green Line) of the new range (the Lavender box)
hehe

THIS HAPPENS ALL THE TIME,
SO OFTEN IT’S NOT FUNNY

so does that now help you understand Ranges a bit better

TAKE CARE

[MissPIPa]

Once again its going to take a little bit of reading to understand it all but thank you Martin I do appreciate you helping.