Whenever Happy Pip goes swimming at the beach or the pool, she always wears her pink rubber ducky floaters. Whenever she trades retracements, she uses stop loss points. Pink rubber ducky floaters are lifesavers. Stop loss points are capital savers. As we said before, reversals can happen at any time. Retracements can turn into reversals without warning. This makes using trailing stops…
Properly distinguishing between retracements and reversals can reduce the number of losing trades and even set you up with some winning trades. Classifying a price movement as a retracement or a reversal is very important. It’s up there with paying taxes. *cough* There are several key differences in distinguishing a temporary price change retracement from a long-term trend…
Imagine this scenario. Price starts to rise. Keeps rising. Then it starts falling. And falling some more. And falling some more. And then it starts going back up! Have you ever been in this situation before? It looks as though price action may be rallying and a buy trade is in order. WRONG! You’ve been…
What is a range-bound market? A range-bound market is one in which price bounces between a specific high price and a low price. The high price acts as a major resistance level in which price can’t seem to break through. Likewise, the low price acts as a major support level in which price can’t seem to…
What is a trending market? A trending market is one in which price is generally moving in one direction. Sure, the price may go against the trend every now and then, but looking at the longer time frames would show that those were just retracements. Trends are usually noted by “higher highs” and “higher lows” in an uptrend and “lower…
When two people go to war, the foolish man always rushes blindly into battle without a plan, much like a starving man at his favorite buffet spot. The wise man, on the other hand, will always get a situation report first to know the surrounding conditions that could affect how the battle plays out. Like…