Intraday Trading Techniques – Part 2
As explained in previous lesson, determining the daily / 4h chart direction will give you a more clear view on intraday actions.
Let me repeat once again :
It has been said many times: “The trend is your friend.”b The question is, how does one find the trend? It often comes down to using various indicators to help determine which way a market has been moving, and thus where it might go next. One of the most popular to use to help determine this information is the moving average.
When the price of the market stays below the moving average, then the pair is said to be in a downtrend.
When it is above the moving average, it is said to be in an uptrend. Both are movements that can potentially be capitalized on, but the trader needs to be aware of how the different trends should impact their trades.
The best recommendation from most experienced traders is that a trade should be placed in line with the prevailing trend.
There is no heroism in placing a trade that goes hard against the trend. This is actually a recipe for disaster in most scenarios, and it is a good way to lose money.
Don’t Get Faked Out
Try not to get too caught up in whether the price is just above or just below the moving average. Sometimes, using the moving averages alone is too simplistic.
There is one way to have a high probability of any given trade :
Always wait for the confirmation – in the case of Moving Averages it is most of the time two consecutive closings of bars ( above or below the MA’s)
Most of the traders will tell you to use additional Indicators in confirming the move, but I am always for a Simple solutions :
If you start combining too many different indicators, you are going to end up frustrated and missing trades
You will start to hang on your opinion , trying to find an indicator that supports it – The Disaster
You better arrange your Stop Loss in line with Profit Target and Risk/Reward Ratio and never commit too much of your current margin to just one trade.
That way, you have an upper hand and as long as your Probability in any given trade is above 50% , you can’t miss it.
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