Latest revision as of 12:11, 21 November 2023

Technical Trading Strategies typically form the initial basis for trading decisions by retail traders when they enter the Forex market for the first time. Understanding Technical Trading Strategies is a good place to learn how to enter and exit trades. In this WIki, we will explore many different Technical Trading Strategies and how you might go about employing them within The Basic Cycle of all markets.

NOTE: No one technical strategy is going to work all of the time in all the various market structures and environments. For example, Breakout strategies will tend to work in trending environments but get chopped up in uncertain or sideways markets. This means that understanding where you are in the context of The Basic Cycle and the overall trend will benefit you greatly when executing a technical strategy in live market situations.

NOTE: All technical strategies will benefit from understanding the big picture Fundamental Trend and the prevailing Sentiment that is driving market prices in the current trading session. A good idea is to use technical trading strategies as a "Timing tool" to find smart places to enter trades in the direction of the Sentiment that is currently driving prices.

WARNING: As with any trading strategy, you need to take the time to vigorously test each strategy in a simulated market situation before putting any of your money to work in the markets. Not doing the necessary backtesting may result in financial losses. All strategies in this Wiki or on Volatility.red are for information purposes only and are not in any way intended as financial advice.

This Wiki is a part of our Essential Forex Trading Guide. Be sure to check that out HERE.

Basic Technical Trading Strategies

Many retail traders gravitate towards Technical Trading Strategies because they are visually simple to understand and execute in live market situations. In this Wiki, we are going to take a look at some very basic technical trading strategies that you can experiment with and see if any of them are a good fit for your trading plan such as:

You can access the main Wiki on Basic Technical Trading Strategies HERE.

Every Market has a Strategy

Every Market has a Strategy! What we will do in this Wiki is break down when the best time to trade the Basic Technical Trading Strategies found in the Basic Technical Trading Strategies Wiki are and how you can apply these timing concepts to your trading including:

[Every_Market_has_a_Strategy#When_to_Trade_Technical_Strategies | [When to Trade Technical Strategies]]
Trading Strategies and the Stages of the Basic Cycle
Strategies and the Basic Cycle

You can access the main Wiki for Every Market has a Strategy HERE.

Intermediate Technical Trading Strategies

Building on the Basic Technical Trading Strategies Wiki, in the following Wiki we will take a look at a few more Intermediate Technical Trading Strategies including:

You can access the main Wiki for Intermediate Technical Trading Strategies HERE.

Chart Patterns

Utilizing Chart Patterns is a very old and time-tested practice in virtually all financial markets. We are not going to reinvent the wheel in this Wiki but we will introduce you to some of the most common forms of Chart Patterns that have stood the test of time and are worth you taking the time to learn and understand.

In the following Wiki on Chart Patterns we will explore:

You can access the main Wiki for Chart Patterns HERE.

Related Wikis

Readers of Technical Trading Strategies also viewed:

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-Content in progress.....
+[[Technical Trading Strategies]] typically form the initial basis for [[Pre-Trade_Considerations | trading decisions]] by [[Institutional_and_Retail_Traders#What_is_a_Retail_Trader? | retail traders]] when they enter the [[Forex]] market for the first [[Forex Market Hours | time]]. Understanding [[Technical Trading Strategies]] is a good place to learn how to [[Developing_your_Trading_Process | enter and exit trades]]. In this WIki, we will explore many different [[Technical Trading Strategies]] and how you might go about employing them within [[The Basic Cycle]] of all markets.
+'''NOTE:''' No one [[Technical Analysis | technical]] strategy is going to work all of the time in all the various [[Price_Action_Analysis | market structures]] and environments. For example, [[Breakouts_and_Breakdowns | Breakout strategies]] will tend to work in [[Trends | trending]] environments but get chopped up in uncertain or [[Breakouts_and_Breakdowns#The_Sideways_Time_Correction | sideways markets]]. This means that understanding where you are in the context of [[The Basic Cycle]] and the overall [[Trends | trend]] will benefit you greatly when executing a [[Technical Analysis | technical]] strategy in live market situations.
-NOTE: No one technical strategy is going to work all of the time in all the various [[Price_Action_Analysis | market structures]] and environments. For example, [[Breakouts_and_Breakdowns | Breakout strategies]] will tend to work in [[Trends | trending]] environments but get chopped up in uncertain or [[Breakouts_and_Breakdowns#The_Sideways_Time_Correction | sideways markets]]. This means that understanding where you are in the context of [[The Basic Cycle]] and the overall [[Trends | trend]] will benefit you greatly when executing a technical strategy in live market situations.
+'''NOTE:''' All technical strategies will benefit from understanding the big picture [[Fundamental_Analysis | Fundamental Trend]] and the [[Sentiment_Analysis | prevailing Sentiment]] that is driving [[Price_Action_Analysis | market prices]] in the current [[Forex_Trading_Sessions | trading session]]. A good idea is to use technical trading strategies as a ''"Timing tool"'' to find smart places to [[Pre-Trade Considerations | enter trades]] in the direction of the [[Sentiment_Analysis | Sentiment]] that is currently driving [[Price_Action_Analysis | prices]].
+'''WARNING:''' As with any trading strategy, you need to take the [[Forex Market Hours | time]] to vigorously test each strategy in a simulated market situation before putting any of your money to work in the markets. Not doing the necessary [[Tick Data for Backtesting and Algo Trading | backtesting]] may result in financial losses. All strategies in this Wiki or on Volatility.red are for information purposes only and are not in any way intended as financial advice.
-NOTE: All technical strategies will benefit from understanding the big picture [[Fundamental_Analysis | Fundamental Trend]] and the [[Sentiment_Analysis | prevailing Sentiment]] that is driving [[Price_Action_Analysis | market prices]] in the current [[Forex_Trading_Sessions | trading session]]. A good idea is to use technical trading strategies as a ''"Timing tool"'' to find smart places to enter trades in the direction of the [[Sentiment_Analysis | Sentiment]] that is currently driving [[Price_Action_Analysis | prices]].
 This Wiki is a part of our [[Essential Forex Trading Guide]]. Be sure to check that out [[Essential_Forex_Trading_Guide | HERE]].
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-='''Simple Technical Trading Strategies'''=
+='''[[Basic Technical Trading Strategies]]'''=
-The 3-5 Candle Drop
-	The 3-5 candle drop is a strategy that attempts takes advantage of a market in an uptrend that has experienced a 3-5 candlestick drop or retracement.  The main objective of a trader is to find a safe spot to get into an advancing market.  The retracement should be no more than 60% of the prior advance to remain a viable and safe buy setup.
-Criteria of the 3-5 Candle Drop (see figure 1.1):
-•	The stock or market should have 3 or more consecutive lower highs (each of the last 3 candles should have lower highs, we are not talking about pivots here) or 3 or more red candles.  Having both lower highs and red candlesticks will make the setup more potent as this shows that the market has blown off a good amount of steam but the fact that it is less than a 60% retracement shows the strength is still on the buy side.
-•	3 or more consecutive lower lows.  Make sure that the down candles are controlled and not aggressive.
-•	A reversal candlestick on or after the third candlestick lower.
-•	There must be a nice tradable price void, free of consolidation areas, for the stock to move up easily through after the entry buy has been taken.
-•	There must be some sort of support or demand to the left that the market is attempting to bounce higher from in the form of a congestion area, prior pivot, 40-60% retracement, a rising moving average or any other areas that can be considered a place of interest where demand for the market is present.
-•	The market should be in an uptrend for this strategy to have good accuracy.  If not there should be at least one higher low pivot that has held above the prior pivot low.  This will at least show that the market is attempting to transition to a possible uptrend.
-='''Intermediate Technical Trading Strategies'''=
-=='''The Trend Trade'''==
-This strategy works best when combined with [[Fundamental and Sentiment Trading Strategies]].
-The trend trade attempts to capture a trade in the direction of the overall market trend.  This is a trade that should be in line with the current sentiment driving the particular currency and tends to be a day trade because it uses pivots and pivots change every trading day.
-Trade Setup:
-* In an uptrend wait for the market to pull back.
-* Apply the [[Technical_Analysis#Fibonacci | Fibonacci]] retracement tool from the extreme low to the extreme high.
-* Apply trader pivot points.
-What we are looking for is a confluence of one of the [[Technical_Analysis#Fibonacci | Fibonacci]] retracement levels to match with one of the pivot points in the buying zone.
-There should be less than 10 pips between the Fib level and the pivot point.  The fewer amounts of pips between the 2 levels the better the setup.
-The pros are that you can use a small stop loss and have good pinpoint accuracy with the entry.  The cons are that price may not pullback for you to get a trigger.  Sometimes a confluence will be hard to find.
-The same trade management would apply to this trade as pretty much all other trades.  We would look to target just before the prior extreme high and place the stop in an area that the market should not hit if you are correct in your analysis.
+Many retail traders gravitate towards [[Technical Trading Strategies]] because they are visually simple to understand and execute in live market situations. In this Wiki, we are going to take a look at some very basic technical trading strategies that you can experiment with and see if any of them are a good fit for your trading plan such as:
-The trade works in the exact same manner in reverse for a short trade.
+* [[Basic_Technical_Trading_Strategies#The_3-5_Candle_Drop_and_Pop | The 3-5 Candle Drop and Pop]]
+* [[Basic_Technical_Trading_Strategies#The_Breakout_and_Breakdown | The Breakout and Breakdown]]
+* [[Basic_Technical_Trading_Strategies#Bullish_and_Bearish_Momentum_Stall | Bullish and Bearish Momentum Stall]]
+* [[Basic_Technical_Trading_Strategies#Matched_Move_Higher_and_Lower | Matched Move Higher and Lower]]
+* [[Basic_Technical_Trading_Strategies#Climactic_Buy_and_Sell | Climactic Buy and Sell]]
+* [[Basic_Technical_Trading_Strategies#The_3-5_Candle_Drop_and_Pop_Moving_Average_Plays | The 3-5 Candle Drop and Pop Moving Average Plays]]
+* [[Basic_Technical_Trading_Strategies#Moving_Average_Buy_and_Sell_Zones | Moving Average Buy and Sell Zones]]
+* [[Basic_Technical_Trading_Strategies#Major_Support_Buy_and_Major_Resistance_Sell_Zones | Major Support Buy and Major Resistance Sell Zones]]
-=='''The Profile Trade'''==
+You can access the main Wiki on [[Basic Technical Trading Strategies]] [[Basic Technical Trading Strategies | HERE.]]
-This strategy works best when combined with [[Fundamental and Sentiment Trading Strategies]].
-The profile trade strategy involves buying or shorting the break of the most recent [[Technical_Analysis#Fractals | fractal]].  We talked earlier about how you can take advantage of the market profile changing as a way to get you back into the fundamental trend after it has had a period of price action going against the overall big picture.
+='''[[Every Market has a Strategy]]'''=
-Trade Setup:
+Every Market has a Strategy! What we will do in this Wiki is break down when the best time to trade the [[Basic Technical Trading Strategies]] found in the [[Basic Technical Trading Strategies]] Wiki are and how you can apply these timing concepts to your trading including:
-* Identify the most recent [[Technical_Analysis#Fractals | fractal]] swing high and wait for the price to break that high by one pip then enter a long position.  This applies to fundamentally strong pairs.
+* [Every_Market_has_a_Strategy#When_to_Trade_Technical_Strategies | [When to Trade Technical Strategies]]
-* Identify the most recent [[Technical_Analysis#Fractals | fractal]] swing low and wait for price to break that low by one pip then go short if the fundamentals are pointing down.
+* [[Every_Market_has_a_Strategy#Trading_Strategies_and_the_Stages_of_the_Basic_Cycle | Trading Strategies and the Stages of the Basic Cycle]]
-* The stop loss placement goes on the other side of the opposite most recent [[Technical_Analysis#Fractals | fractal]] swing.
+* [[Every_Market_has_a_Strategy#Strategies_and_the_Basic_Cycle | Strategies and the Basic Cycle]]
-One of the best way to use this strategy is with the overnight trades.  For example, if there was a strong news release and the London traders moved a currency up through the London session then look to get in on a break of a [[Technical_Analysis#Fractals | fractal]] swing high during the US session.  The break of the high during the US session gives us confirmation that the US traders are going to buy the pair up as well.
+You can access the main Wiki for [[Every Market has a Strategy]] [[Every Market has a Strategy | HERE]].
-This strategy is best on a 5 minute chart for intra-day trading but can be on any time frame.
-The 4 hour time frame is a nice time frame to get an idea of how price is behaving in relation to the big picture.  Sometimes a break of the 4 hour [[Technical_Analysis#Fractals | fractal]] back in the direction of the fundamentals can signal to us that the market is done moving price in the opposite direction and ready to start trading the pair back in line with the big picture.
+='''[[Intermediate Technical Trading Strategies]]'''=
+Building on the [[Basic Technical Trading Strategies]] Wiki, in the following Wiki we will take a look at a few more [[Intermediate Technical Trading Strategies]] including:
-=='''5 Minute Candlestick Trade'''==
+* [[Intermediate_Technical_Trading_Strategies#The_Trend_Trade | The Trend Trade]]
+* [[Intermediate_Technical_Trading_Strategies#The_Profile_Trade | The Profile Trade]]
+* [[Intermediate_Technical_Trading_Strategies#5_Minute_Candlestick_Trade | 5 Minute Candlestick Trade]]
-Another strategy that you can use is one that has a high probability of success and is also extremely simple.  The caveat is that it can only be used when there is an extreme deviation or surprise that the markets absolutely did not see coming.
-The easiest way to see whether or not this has occurred is to research each risk event and find out what the market is expecting so that if the opposite happens you know that it will cause a large sustained reaction.  The key word here is sustained because lots of minor deviations cause reactions but these are typically quickly retraced and within a few hours things are all back to normal and it’s as if nothing happened at all with the exception of a spike on the charts.  Lots of new and retail traders get sucked into those moves and end up buying at the top or selling at the bottom only to watch the market move against them dramatically.
+You can access the main Wiki for [[Intermediate Technical Trading Strategies]] [[Intermediate Technical Trading Strategies | HERE]].
-An example of a time that we can apply this trade is when a central bank announces a rate adjustment when the market was expecting no change.  In these circumstances it’s hard to see a trade ever losing but these instances are also rare.
-Another example is if something really unexpected happens completely out of the blue.  For example, if a central bank member was giving a speech and then said something totally unexpected and out of character this would also get the market moving in a sustained manner.
+='''[[Chart Patterns]]'''=
-This trade setup should not be used on small data points that have a deviation from the expected figure because it is better to trade those on pullbacks.
+Utilizing [[Chart Patterns]] is a very old and time-tested practice in virtually all financial markets. We are not going to reinvent the wheel in this Wiki but we will introduce you to some of the most common forms of [[Chart Patterns]] that have stood the test of [[Forex Market Hours | time]] and are worth you taking the [[Forex Market Hours | time]] to learn and understand.
-We also need the sentiment at the time in the right order to get any kind of tradeable move such as positive sentiment that is suddenly and instantly changed to negative from whatever the news was.  As long as the event was extremely unexpected and has a direct impact on the markets expectations for the central bank’s monetary policy then you are probably good to consider this type of trade setup.
+In the following Wiki on [[Chart Patterns]] we will explore:
-The method for taking advantage of this is rather simple.  You make sure that you enter the market right before or at the close of the first 5 minute [[Technical_Analysis#Japanese_Candlesticks | candle]] after this surprise event has taken place.  Stops can be placed either the halfway point of the [[Technical_Analysis#Japanese_Candlesticks | candle]] or just above or below the 5 minute [[Technical_Analysis#Japanese_Candlesticks | candle]] away from your entry.  This will be something that you perfect over time with practice with this type of trade.
+* [[Chart_Patterns#The_2_Pattern_Categories | The 2 Pattern Categories]]
+* [[Chart_Patterns#Rectangles | Rectangles]]
+* [[Chart_Patterns#Flags | Flags]]
+* [[Chart_Patterns#Triangles | Triangles]]
+* [[Chart_Patterns#Double_Tops | Double Tops]] and [[Chart_Patterns#Double_Bottoms | Double Bottoms]]
+* [[Chart_Patterns#Head_and_Shoulders | Head and Shoulders]]
+* And so much more...
-Targets should be based on normal things such as old highs or lows and [[Technical_Analysis#Average_Daily_Range | average daily range]] of the pair.  You can also hold for longer if there is a solid fundamental reason supporting the move and the market has a clear expectation of where the price of the pair could get to in the long run.
+You can access the main Wiki for [[Chart Patterns]] [[Chart_Patterns | HERE]].
-The main point is that you should be getting in within 5 minutes of the initial event to ensure that you make some pips from it.  This requires you watching and listening to the news feeds intensely but when you get a few trades like this each month it will be worth it.
+=Related Wikis=
-='''Advanced Technical Trading Strategies'''=
+Readers of '''Technical Trading Strategies''' also viewed:
-Content in progress...
+* [[Pre-Trade Considerations]]
+* [[Forex Market Hours]]
+* [[Speculating]]
+* [[Having an Edge in your Trading]]
+* [[Essential Forex Trading Guide]]