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How to Use Episodes to Trade a Volatile Forex Market
We are in difficult times trying to stay healthy and for those trading, trying to navigate volatile markets. I can only hope and pray for the former while I can help with the latter by passing on some insights designed to trade on the “right” side of the market. What I mean by this is to look at the forex market as trading in episodes. By identifying the current episode you will be buying when the market flow is buying or selling when the market flow is selling. The danger, especially in a volatile market is to get stuck trading the bias of an old episode when a new one has begun.
This is not a new concept for me as it is a key building block in my AT Ladder Strategy. If you look at a daily chart for this past week it looks like a straight line down from a Monday high at 1.1237 to a Friday low at 1.0638. However, those trading know the price action has not been straight down. It has been a series of up and down episodes, Take this past Friday as an example: EURUSD opened in the Far East around its low at 1.0655 => it then rallied more than 1.5% to 1.0832=> and then fell to a new low at 1.0639 => before rallying at the close to around 1.07 Within this price action were a series of up and down episodes (depending on the time frame you trade) offering opportunities to trade as long as you were in sync with the current episode.
The following is from a chapter in the AT Ladder Strategy. It will give you an idea why episodes are important. How to identify an episode and use it to trade is fully explained in the strategy course, which you can get access to.
What is an episode?
The forex market trades in episodes on all time frames. The longer the time frame, the longer the episode is likely to be and vice versa. Identifying the current episode is a major step in getting on the strong side of the market to trade.
What I mean by an episode is a period on a chart where a currency is trading in an uptrend (i.e. up ladder), downtrend (i.e down ladder) or in a consolidation or congestion range. This is a critical concept to understand for if you are trading an old episode when a new episode has begun then you will find yourself on the wrong side of the market.
It is important to identify when a new episode begins and when it ends. It is also important to be aware of the broader trend as countertrend moves (e.g. retracements) tend to end more abruptly than moves with the overall trend. The hardest thing as a trader is to reverse gears when one episode ends and another begins.
So what I can do in the current environment is to help those trading by providing key insights, such as those expressed in this article and a program that you will find invaluable.
In this regard, we are including the AT Ladder Strategy at no extra charge for subscribing to the Amazing Trader. You should find yourself trading with the current episode and a program that will open countless opportunities to trade
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