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Can these 5 steps make you more profitable in Trading Well, In this video, I’m not only going to show you some of the most useful trading techniques, but I’m also going to execute it in live market, so you can actually see how it will look when you will trade with real money. Also, checkout other strategies videos in the strategies tested hundred time series, where we tested different strategies 100 times to find their win rates, because some of the data mentioned in this video is based on that series, and don’t forget to subscribe to the Trading Rush channel, after all you don’t want to use a strategy that doesn’t even work.

If you have been trading for a while, you have probably realized that not all trading charts are worth trading. There are times when you should take more trades, because the market is perfect for booking big profits. But then there are times when you should completely avoid trading, because if you do, you might end up with multiple losing trades in a row.

Instead of immediately looking for new trades, the first thing you should do is analyse if the market is worth trading or not.

So when I started recording this video, the forex pairs were not really that good for taking trades. As you can see, on the Euro USD pair the 200 period moving average was looking flat, and the price was crossing it multiple times in a short amount of time.

If you have watched my previous videos, you know I use and recommend using a 200 period exponential moving average to find the long term trend, because it’s the easiest way to find the trend, and if we take trade in the direction of the long term trend, we can achieve greater reward to risk ratios, in other words, we can make more money.

So, on these forex pairs, I’m looking for a chart, where price is staying above the 200 period moving average for a while, and where the moving average is not looking flat. Furthermore, the price action should look cleaner. For example, look at these two charts. Here, the first chart looks much cleaner than the second chart. On the first chart, the price is staying above the moving average, and is not looking flat. This kind of chart is perfect for beginner traders, as the price action is easier to read, and your stoploss won’t get taken out because of a choppy price movement.

Just like the Euro USD pair, the GBP USD and GBP JPY were also looking choppy. Even though they were below the moving average, the price action was not cleaner like the price action we saw in the example.

Many people lose money by taking too many losing trades in a bad market. If your charts look similar to these, you should probably avoid trading at that time.

When I started recording this video, most of the forex charts were looking like this. So instead of taking trades in these choppy conditions, I closed the charting platform and came back later when the price action was smoother.

Few hours later, the price action on the NZD USD pair was much cleaner. The price was above the moving average. Furthermore, the 200 period moving average was not looking flat.

Once you filter the bad charts, and find a good forex pair, it’s time for the step 2, where we will use the multi-time frame analysis to find more information about the chart. By more information I mean the points of interests where price has a higher probability of reacting. Sometimes, when you trade on a smaller timeframe, you might end up taking long trades, at a strong resistance level that is clearly visible on the daily time frame. This lack of information can make you lose money.

In this example, I’m on the 5 minutes timeframe. So to find the important levels that many people can easily see, I will switch to the daily timeframe. Here, I will draw the strong support and resistance levels that I can see. Since we are using the 5 minutes timeframe to enter trades, switching to the daily is not really necessary according to some people. But I like to do it to make sure I don’t end up taking short trade on a smaller timeframe at a strong daily support.

If you don’t know how to draw strong support and resistance areas, check out the support and resistance level video on the Trading Rush channel, it has some good examples that you will find helpful.

As you can see, the price couldn’t cross the resistance level, and also reacted to the support level. Since we are trading on a 5 min timeframe which is much smaller than this, we can say that there is enough room for us to take long and short trades on the 5 min timeframe. Right now, we are not on a strong support or resistance level.

Once we have identified the areas on the daily timeframe, switch to the 4 hours timeframe, and look for other clearly visible areas. As you can see, the price is currently near a support level.

If we switch to the 30 min timeframe, we can clearly see that the price reacted to that support level.

Now if we switch to our entry timeframe which is 5 minutes, we will have more information than before. First we only knew that the price was in an uptrend. But now, we also know that the price is near a support level.

Now in the third step, we will use an entry signal indicator. I’m using the MACD indicator in this example. MACD strategy was one of the best trading strategies, that we have tested in the strategies tested 100 times series. If you want to learn more about it, check out the MACD video on this channel.

As you can see, the MACD has not given an entry signal yet. But we can tell that it is going to, because the momentum is slowing down. I have also made a second MACD video, where I explained how to use the Histogram to our advantage. Check that video as well.

Since patience is the key, I waited for the MACD to give an entry signal which was around 20 minutes later. As you can tell by looking at the histogram value, the MACD has given a crossover. It is a small crossover, so it can be difficult to see on some mobile screens. The entry according to the MACD strategy, is at the closing price of the crossover candle, or at the opening price of the next candle. If you use a different entry signal indicator at this step, take entry according to your entry strategy. Now remember, in the third step, we are not executing the trade yet, because there is one more thing you have to calculate.

In the fourth step, you have to calculate the position size by looking at your stoploss strategy. A lot of new traders make the mistake of setting a bad stoploss. Your stoploss has to be far enough from the entry so the price have enough room to wiggle around before going in your favor. And you have to decide where you want to set your stoploss before taking the trade. That’s because to get a consistent loss amount, you have to calculate your position size using your stoploss distance.

I have explained more about this in my ATR indicator video, and in the part 7 of small account challenge series. Check them out if you want to learn more.

According to the MACD strategy, the stoploss goes just below the swing low, which also happens to be below the support area in this case.

In the step 5, it’s time to set the profit target. In this example I’m going to use a fixed profit target, which will be 1.5 times greater than my risk. To get a 1.5 to 1 reward to risk ratio, I can simply multiply my stoploss by 1.5 to get my profit target.

Once you have calculated all of these values, you can enter the trade. It might look like it takes a lot of time to calculate the stoploss, position size, and profit target before executing the trade, but it only takes few seconds once you get a hang of it. Furthermore, even if you are trading on a smaller timeframe like 5 minutes, you will have enough time to calculate everything properly.

Once you have taken the trade with a stoploss and profit target, you can simply close your trading platform if you are not looking for new trades. Once you have taken a trade, there is not really a point in staring at your chart. The price is either going to touch your stoploss, or your profit target.

In this case, the live trade I took using the MACD strategy was profitable. Furthermore, it went exactly how we predicted, and even reacted to the resistance area we drew using the daily timeframe. With only 5 simple steps, we were able to execute a profitable trade.

That’s all. Now you know a little bit more about trading. Liked the video if you liked it. Subscribe and ring that notification bell for more trading videos, and check out other videos on the Trading Rush Channel to find some of the best trading strategies that actually work. And thanks to all the Patrons for supporting the Trading Rush channel on Patreon. Thanks a lot.

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If you find yourself in a position, where you enter a trade, but it immediately goes in the opposite direction, before finally going in your favor? Well, then this video will make you better at trading. Lets look at a theory. Lets say, you saw some strong support and resistance areas and you are waiting for the price to break those levels. You put your money in a position when the price gives a break out. The price is breaking out of a resistance level, but instead of moving further in your direction, it turns around as soon as you enter the trade and hits your stoploss.

To understand why price goes against you after a breakout, we will first have to understand what actually happens inside a range breakout. Since price ranges after a trend, let’s assume that some traders took long positions in an uptrend. After a while, the price gave a pullback near a support level after touching a resistance area, but then struggled to make a higher high. After getting buying and selling pressure at the support and resistance levels, the price simply moves sideways. Any beginner trader can tell, that this is a range market, and price will make a big move after it breaks these support and resistance levels.

But here’s the thing. Some traders who bought when the price was trending, or traders who bought at this pullback, will still have an open position. In a range market, price can either break up, or break down. In this example, since price hasn’t given any signs of reversal, traders who are holding a long position, will set a stoploss just below the breakout support.

Then there are second kind of traders. These traders are willing to sell at a resistance level, hence the selling pressure that is stopping the price to go higher. The traders who are selling at this resistance level, will most likely set their stoplosses, just above the resistance level.

Now here’s a big problem. In these kinds of scenarios, the stoploss of a retail trader becomes obvious and vulnerable. In a breakout, the people who are selling at resistance, are setting their stoploss just above the resistance. And the people who are buying at the support, are setting their stoploss just below the support level.

Now lets say, there is bill. Bill, is the big banks. Bill is the one who trades in very large quantities. Bill the big banks, sees the breakout opportunity. He sees that there are many stoploss orders waiting to be triggered. Now remember, big banks actually trade in very high quantities than the retail traders. So when an institutional trader enters with a very big position, the price makes a big move, especially on smaller timeframes.

In this scenario, when the price comes near the support. Bill the big banks, creates a selling pressure that leads to a small downward move. But since there were a lot of retail traders waiting for a breakout, 2 things happen. Number 1, the people who had their stoploss orders just below the support level are taken out. Since a stoploss order in a long position, is a sell order, more selling pressure is created at a breakout.

Number 2, the people who wanted to sell at the breakout, finally sell, and create even more selling pressure. These traders will set their stoploss just above the breakout level. The selling pressure leads to a big red candle.

Now, what do you think will happen, if the big banks creates a buying pressure as soon as the breakout happens? When this happens, the traders who entered after the breakout candle, are taken out because they had a stoploss, just above the breakout level. Since stoploss order of a short position is a buy order, a new buying pressure is created. And if the top resistance is crossed, even more buying pressure is created as the traders, who had a stoploss above the resistance, are taken out, and new orders are created at the new high. The retail traders who had open orders below the support levels, basically got played.

Beginner traders who get to experience this part of the market, sometimes complain that their broker can see their open orders, and is trading against them. No, that’s not really the case. Your orders are simply too predictable.

So how can you avoid this from happening? Well, the easiest and effective way of trading a breakout, without getting played, is to wait for the price to react in your favor.

There is a chance that price will reverse after a breakout, but we cannot know that as a retail trader. If a breakout is going to work, In a downward breakout, the level that is broken will now act as a resistance level. So, it is better to take the short position, when the price comes back to this resistance area, and struggles to go higher. Then you can look for an entry signal, like a engulfing candlestick pattern.

Now some traders will say, why not just put stoploss orders far away from the obvious support and resistance levels? Well, if you do that, you will not get a decent reward to risk ratio.

What about trend breakouts? If a down trend that was respecting the trend line resistance, suddenly breaks out, will the price reverse? No, unless the down trend was a weak pullback of an uptrend, or if it is at a strong support level, a simple trend line breakout will have a low chance of reversing the price direction completely. You see, when the price breaks the trend line support or resistance, it doesn’t always has to mean that price will take a 180 degree turn. It can simply mean that the trend is getting weaker, and can go side ways.

Now imagine a second scenario. What do you think will happen, when price breaks out of an all time high resistance level, and makes a new high for the first time in its history? It will be on the news. Many people who have never traded in their entire life, will take long positions in that asset. But what if price doesn’t go further up? What do you think will happen then? Well, first of all. The people who took trades only looking at the news, will panic. When the price comes back below the previously broken resistance level, many will cut their losses. This will create a huge selling pressure. and since this is a panic sell, you can capture a good profit when the price makes a big move down.

A lot of beginner traders are told to trade the trend breakouts, without completely explaining what kinds of breakouts are better. The trend breakouts that have a higher chance of working, are probably the pullback trend breakouts. In a strong uptrend, if the price gives a small pullback, you can trade the break out of that pullback. This way, you will take trade in the direction of the long term trend, which will increase your chances of making a profit.

Now lets imagine another scenario. This time, when the range is formed after an uptrend, there is no Bill the big banks, or any bank to take trades against you.

Let’s say, someone draws the support and resistance levels, at the tails and body of the candles.

When they take positions at the breakout, the price goes in the opposite direction again. But this time, it’s because the beginner trader is too much focused on their favorite timeframe. You have to understand that not everyone is looking at the exact chart as you are. The support and resistance you draw using tails and bodies of the candles, won’t always work, because they will look very different on different timeframes.

If you are waiting for a breakout to happen, make sure the support and resistance you are looking at, can be easily identified on other timeframes. Furthermore, when the breakout happens, make sure it is visible on different timeframes as well. Because sometimes, a successful breakout on one timeframe, can mean something else on other timeframes. This can lead to a lack of high volume and interest near the breakout area.

After understanding these kinds of scenarios, you will be able to tell when a possible trap is set, and with patience and good money management, you will probably make money with the breakouts.

That’s all. Now you know a little more about breakouts in trading. Like the video if you liked it. Subscribe for more trading videos, and check out other videos on the Trading Rush channel, where we tested many different trading strategies 100 times to find their real win rates. Thank you very much for watching.