5 Factors To Consider Before Taking A Trade

fair factors before taking a treat so i remember when i first started trading it was about seven years ago i was at work in a sales job and doing really well as a matter of fact and i remember one of my friends came into work his name was tom now i'm not sure if i'm supposed to mention that but that was his name we won't mention any surnames here and he came in and he said have you heard about this trading thing i was like no well actually i did say yeah to be honest with you you know when you just want to be involved i was like yeah i've heard about it but haven't really dabbled in it then he came to me sat down shared some charts and i think at the time he was sharing with me binary options and i'm sure a lot of you have heard about binary options absolutely hilarious piece of whatever now jumped into binary options and i remember you could buy or put and sell whatever it was and when you're on the demo accounts back then binary was the way to go any trade you took you was winning nine out of ten of them but the minute you put money into the markets that's that's when things went bad so anyway i was interested but i realized coming from a gambling background that that wasn't the kind of thing that i wanted to be involved in you know speculating with the marks going up or down risking 50 pounds to make what was it 50 or 150 whatever the odds were so then i left it alone for a little while continued to just get on with my work do my sales make my money and then somebody else came into work and they said to me oh i've just gone to this seminar and they've taught me how to trade blah blah blah and i was like okay so what's the plans now and he was like well i've paid three thousand pounds to join the seminar and if i can prove over i think was three months or six months that i can trade consistently then i would be able to get a trading account so i was like okay fine people were willing to invest that far back so i got a bit more inquisitive and i continued just to study look at what i could find back then the internet wasn't as exposed as it is now with the with the amount of information that's there but i managed to find a book um called naked forex by water peters and this was the book that really changed my trading forever started to study it understanding different key levels different candle patterns and just different names of the currency pairs and the structures etc and i dabbled with with it a little while you know downloading mt4 seeing what it's about blah blah blah but at those times when you're trading the candles just look like literally trying to find a needle in a haystack so i was on an ad-hoc basis dabbling between trading not going live yet just demo trading and binary and then it was this moment that i went to a friend's house and i walked into his office and he was sitting there and he was downloading all these documents or all this data onto a spreadsheet i said to him what are you doing now this was a good friend of mine back then so you know when you have good friends and they're doing something that you have an interest in you kind of feel more inclined to be you know more inquisitive so i was and when i sat with him asking what he was doing he said oh i'm trading i was like i'm a trader as well you know i'm a trader so um we sat down he was talking about what he was talking about i was talking about what i learned from the naked forex book and um yeah it just began it just started to build from there and about four years ago was when i really transitioned my training from learning dabbling to really taking it seriously and at the time we were trading the one minute time frame but super hyper scalping i mean like in and out of the markets within minutes and we had some eas that we were using as well i'll put some up on the screen take a look at the the email so you can see for yourselves i still have the indicators and funny enough i think what we should do youtube is we should pop these indicators on an mt4 platform and we should try them out maybe put a hundred thousand pound in an account and try it out together i think that would be fun but maybe down the line but we got into it and everything else now from there you know the rest is history i continue to learn and adapt to my own moving on to higher time frames day trading intraday trading scouting swing trading you name it now what's the more of the story here well the thing is there was so much learning that i did throughout my transition as a trader learning binary scalping intraday swing trading and there's such vast amount of knowledge out there on the internet that it can become super overwhelming now they say in life knowledge is power but i say in forex too much knowledge is poison so the topic of today's lesson is five things for you to consider before taking a trade so what we're going to do today is share an example of a trade that i took on pound jpy and i'm going to break that down to you but before we do i'm going to go through five steps that you can use in order to help you become more consistent and profitable with your trading having a clear plan and direction about why you want to take the trade how are you going to take the trade and how you're going to enter and manage the trade whatever else so we're going to construct a plan now the first thing we're going to talk about today which i think is one of the most important factors when it comes to trading is identifying the structure of the market now what do i mean by that well in forex or in trading period there are only three structures that you're going to be working with you're going to be working with an uptrend or a downtrend a range in market or you're going to be deciding whether you need to trade within a range or not now terms of ranges they're very messy so we'll discuss that and we'll share some examples on the charts in a second but the third point should i say is are you able to identify the direction of the trend within a few seconds let's head over to the charts and take a look at what we're seeing here so we're going to take a look at our first example here this is on eur usd on the 30 minute time frame now one of the criterias when constructing a plan and looking for identifiable trades or should we say approaching trades making a plan is trying to figure out the direction of the market now it sounds simple is it simple well you know that really depends and it's down to the trader here but what we're looking for the market to do is clearly identify a bias now we know when the market is moving to the upside we make higher highs and higher lows the markets break previous structural highs they make new highs they make higher lows above the previous structure highs and continue on so on and so forth now the point here is this if you come to the markets the first thing you should be doing is identifying the direction if the structure of this market is clearly moving to the upside then your first thoughts should be this today on tuesday on wednesday on thursday the market structure is bullish today i am taking buyers only that is it guys there is nothing more to it when formulating a plan i'll say it again you identify the structure and the directional bias and you stick to it no matter what because the minute you start to deviate and you start to look for wic rejections and exhaustion trades and resistance trades and supply and demand trades and whatever else trades you've got out there that's when you start to involve emotions it's easier to lose a trade when you've planned the trade than it is to take a trade you think is a good trade and is not a good trade you have to listen to that again this is a first example a clear uptrend when the market is moving down an example here on euro new zealand dollar for our time frame so for use out for for you guys out there who are making excuses oh i don't trade the 30 minute time frame i'm only trading the 4h time frame well here you go 4 h time frame 30 minute time frame euro new zealand dollar a different pair the market is clearly trending down when you come to the markets in the morning and you see the structures creating lower lows and lower highs your plan should be to sell only period remove any other thought process that you may have any other hurdles obstacles anything that you may be facing in that brain of yours and just focus on sales because if the market is down you're more likely to win your trades or have a higher probability of winning your trades working with this downtrend and selling only because if you buy it guess what you're going to say later on oh guess what the market was down and i knew i shouldn't have bought it but i did because it looked like a buyer but now i look at it again it's a cell you don't want that remove it the final example of the first step that we need to be focusing on in formulating a plan or constructing the plan is identifying ranges if you cannot look at the charts from a 10 year old's perspective and identify immediately a trend that's either up or down then guess what identify it as a range with no directional bias and stay out don't fight the markets don't be the brains behind the first person you can enter a trade and say well it's making low highs and lower lows if it's not breaking structural highs and it's not breaking structural lows guess what get out the markets so that's the first part of your plan identify the directional bias if it's up you're buying if it's down you're selling and if it's moving sideways you're doing nothing pretty simple put it in a notepad remember this point so for the second point is marking your key levels you want to make sure that you're marking your major level your intermediate levels and then your target levels so we're going to look at an example right now on new zealand jpy on the 30 minute time frame first part of the planning was identifying the structure of the market this is clearly making higher highs and higher lows so what are we doing with this example well we're buying this structure or we're buying when we get an opportunity now in terms of key levels what's your major key level well if you're buying in an uptrend your major key levels are always going to be your higher lows why well in an uptrend as we saw recently if the market is making higher highs and higher lows then after a higher low we expect a higher high only until the major higher low is broken are we anticipating or potentially waiting for the trend to change here so as long as the market is respecting this structure it is not being broken then we are still looking for buys the only time we're not is when the market breaks the structure so when the market comes back to our major key level which is this one here we then have to wait for evidence in confirmation of the market showing or giving us a sign to take a trade what do we have here well we have price created multiple wic rejections indicate in bullish sentiment we also have wick rejections here indicating bullish sentiment now we need an intermediate level our intermediate level is always going to be a level in the market where prices created some sort of resistance when i say resistance i don't mean resistance less so in the market i just mean resistance period where you see multiple wick rejections why is this important well we'll get on to that in a minute the final level that you need to be looking for is your target level why well everybody needs a target if you take a trade blindly and you don't have any direction of what reward ratio you're using when you're going to take your profits how you're going to manage your trades this will help you okay so you have your major level your intermediate level which we're going to talk about in a minute and then your major then your target level so now the market's come back to a key level we see the wic rejections here we're going to take the trade this is an example so don't start putting messages underneath this video black oh rocks you made replay mode i'm not interested just take some of the principles and concepts that i'm illustrating here so that you can use it in your own trading with projections at a key level structure is up we have evidence and confirmation now we're taking the trade of the break of the structure with a buy stop order why is the intermediate level important because we need to see if we can get to break even by one to one okay by time the market moves 10 pips we need to make sure we can get our trade to break even remove the risk and let the trade play out now do we have a one-to-one back to this intermediate level absolutely we're good to take the trade the trend is up are we good to buy it absolutely the next point will come after which should have probably come before but let's focus on this now and then we have the wick rejections targets we're going from one to three as part of my strategy are we going to be able to hit our targets before we find some sort of resistance at this major key level target level 1 000 what do we do we take the trade and then we see what happens okay this is what we call bob is your uncle we plan the trade we identified the structure we see how the market is moving and there you go okay what did we do we identified the structure step one we marked our key levels step two as you can clearly see here with this example this is how you want to do it major key level intermediate level make sure you can get to break even and manage that trade and finally target levels as you can clearly see here so we've discussed two points already identify the structure bias of the market second mark your key levels now third identify the phases of the market now these are in my opinion the holy grail rules of forex trading now if you're not familiar with it then you're going to get familiar with it now but there's a few rules we must stick to as traders we know how an uptrend moves higher highs and higher lows we know how a downtrend moves low lows lower highs we know how a range moves sideways but when should we buy and when should we sell well here we have the examples of when we should do that first example is a downtrend we never want to sell the market when the market is in a push phase why well even though the market is moving down and we may get signs of wick rejections and engulfing candles and strong momentum to the downside we always run into or may face the issue of price pulling back so if we enter in a push phase what could happen is when we plan to sell the market no matter what evidence or what confirmation you get there is a very high chance that the market will pull back so how do you eliminate this well when you identify the market has made a lower high and already has broken the previous low and extended itself beyond the previous structural low that's a sign to stay out wait for the market to breathe as i want to call it wait for it to exhaust and then look to take the trade once the market has exhausted from the push phase that's when you can start looking for trades why well after a push phase we have an exhaustion phase and after the exhaustion phase we then in theory have a continued push phase that's the same with a bias structure if the market is trending up we know we're looking for buyers but we don't want to buy in a push phase because there is a very high chance that the market when trying to buy will eventually do what exhaust now remember with our key levels as long as the market trades above the previous higher low we're still good for buyers and you don't want to be in a position with those excuses that we hear out there oh the market makers took me out oh it was a stop loss hunt oh that was my broker get out of here i'm teaching you the rules of trading right now these are all you need to know if the market's in a push phase wait for the exhaustion i couldn't care less and you shouldn't care less respectfully saying if the market exhausts and you think it's exhaustion as long as as long as it looks like the exhaustion and you take the trade and it loses then guess what it was a banging trade but if you're taking a trade and a push phase then you're a doughnut now when do we want to buy and when do we want to sell well we've just said it here to be honest with you but if the trend is down we're looking for sales and we only want to sell once the market has exhausted or pulled back because based on past history and always remember this without history there's no future if the market has pulled back created a structure or yeah create structure in the market what can we expect well we can suspect the market will then eventually create a new lower high and if we're taking our trade in an exhaustion phase we can suspect a continuation as part of the downtrend same applies to buyers here if the market is in an uptrend we know we're looking for buys as part of an uptrend what comes after a pullback higher low well obviously a continuation not guaranteed but more often than not and if we're trading based on structure the market trading above the levels trading as an uptrend then we could suspect the market will eventually push the upside to make a continuation of that uptrend so very simple concept here but very a lot of traders should i say overlook this these are the rules to trade in it really there's nothing more to it and if you can accept this concept and believe this is going to make a huge difference to your trading in 2021 final point here when the markets are ranging guess what just stay out of the market don't be an absolute george you only want to trade when the market is pushing up or down is in the exhaustion phase has retested key levels shown signs of weak rejections giving you evidence of momentum when the market's doing nothing you do nothing get a book go on youtube go for a run just don't trade not every day is a trade-in day so that's tip number three identify your market structure identify your key levels and identify the phases of the market because these three tips alone is enough to make a huge difference but let's move on to tip number four tip number four identify your patterns there is nothing worse than a trader trying to trade absolutely everything listen to what i'm telling you if you want to be a successful consistent trader you only need two or three patterns to be honest you only need one trading is about being patient waiting for the trades to come to you the more you know as we mentioned in the beginning the harder it is going to be for you to execute because you're going to continually have doubts but what you need to do as part of formulating your plan is making sure you know which patterns you are going to trade now these patterns here are not new you all know them i'm not trying to teach you anything that is going to change your life here but i'm trying to illustrate a point once you've identified the uh the direction you've performed your key levels of drawing in your key levels you understand the phases of the market that's your foundation you're ready to trade now all you're doing is waiting for those free things to line up and then once your pattern develops looking to take a trade now these are some of the patterns that i trade which i love as you can clearly see here there's no butterflies or bumblebees on this on this chart there's no order blocks or supply and demand there's no abcdefg on here or one two three four five it's simple in a downtrend if the market creates a double top i'm taking it why because a price a level is created if a level is being respected as part of a downtrend there's a strong sign the market could go down as a double bottom in an uptrend if the market creates a level and a level is respected there's a very high chance the market can go up now does this mean it's going to win no but if i'm 30 40 50 right i'm making money baby so if i see this pattern as part of an uptrend i'm taking it break and retest again downtrend if the market's making lower lows lower highs and after the push phase makes an exhaustion phase and they get evidence of a re-test at a key level guess what taking a cell why because after a push phase we have an exhaustion in a downtrend an exhaustion if it creates a lower high will then eventually create what a new lower low same for an uptrend triple bottoms triple tops amazing patterns usually i like to take these when the market is coming from a downtrend then this pattern here illustrates price failure to break structure indicating a potential reversal i'm not taking a double pot bottom as part of a downtrend i will only take a triple bottom as part of a downtrend down trend reversal into a buy buys market because then i have three confluences a level created price making the lower high failing to make the lower low failing the double top making the triple bottom three confluences by same with triple tops now these patterns might not be for you as i said some of you are into some of these really fruity patterns and some of you into some of these simple patterns but for me i am a simple pattern person trader and um you need to identify one two or three patterns you're going to work with i promise you you may not be taking as much trades as you are now but i can promise you one thing you will become more consistent with your results and the outcome of your trades you will allow the numbers to play out and trust me things will change so structure key levels phases in the market and patterns okay so there's four there and for the final one it's an accumulation of the free so let's take a look at my pound jpy trade that i took yesterday and let's focus on the five points that we just discussed so the first thing we want to do here when planning this trade is identify the direction of the market now granted looking at gj is not the clearest of trends here but with experience you'll start to identify how to identify trends on higher time frames and then be able to understand what is happening on a lower time frame now as an intraday trader from a 4-h perspective not really too fast about this trend here what i'm really focused on is what's happening here so when we go down to the audi time frame you'll see this more clearly what do you see a beautiful uptrend higher highs and higher lows but then you might ask yourself well then rox why do you have the key level from the 4h here um at the highs and the lows well remember what i said we have three levels you have your major level which is this clearly this is a very important level in the market then you have your target levels and then you have your intermediate level so in a minute we'll go over the intermediate level the fourth process yesterday let's go to the hourly and focus on this from an hourly perspective and let's find our notes i'm looking at the direction the trend was up making higher highs and higher lows so we put a little tick there we have a key level that we need to be careful of the 4h key level as you can see when price came to this level it failed to break above it for a long period of time so i'm looking for a higher high high low formation here i'm looking for price to respect levels in the market where it's holding where there's multiple wick rejections just like this key level here and then what i'm anticipating the market to do is make a new higher high so the direction is up my key levels are in and around here and what i'm expecting the market to do is eventually make a new higher high now if the market is in a push phase i expect it to do what pull back respect structure then make the higher high but if the market exhausts and doesn't continue and then eventually starts to break structure levels in the market closing below those levels what can i start to anticipate based on this criteria well the direction is potentially changing my key levels are being violated and the phase of the market is now changing to a push phase but in an opposite direction because structures are being broken now the plan was and if you want to see the live recording of this plan i'll pop a link down below and you can go check out my facebook of the live recording but the plan was from the live session to wait for a 4-h candle close only until this 4-h candle closed would i be looking for cells the minute that 4-h candle closed this is what i did i went down to my 5-minute time frame so this may seem confusing but don't get confused previous uptrend higher time frame key level 4h time frame structure of the market holding at my key levels looking for a continuation higher higher turns of patterns probably not looking for any patterns here waiting for a clean break and retest but then we have a structural change price started to break the structure on the 4h time frame taking out the trendline slash what i like to call brick wall destroying and crushing through key levels in the market and then we have a new form structure that is forming lower lows and lower highs now when we're looking at the structure we want to look for patterns as part of our trading opportunities so when we're looking for these patterns i'm taking my major key levels in the market as you can see here let's remove these and these once the market makes a lower high and lower low as part of this downtrend i'm then looking for price to pull back so this usually would be in and around this level here but remember what we mentioned in the beginning of this video as long as price trades below the key level we're good to go for sales so we don't really call this a break we'll just adjust it as price develops so price comes back to this key level some of you might be saying well rox if you're looking for your patents to take the trade then is this not an opportunity to sell well no not really i'm looking for a bearish candle i'm looking for indecision or i'm looking to trade this as part of a self-stop entry so i'm waiting for two free wic rejections if they develop i'll take the trade and if they don't i don't take the trade nothing developed here and i think at the time if i'm being brutally honest with you i wasn't looking for a pattern by time i got to the charts what i identified was the breakout on the break back in that's another pattern for you price then done what continued the push phase as part of this overall downtrend created what i just mentioned which was multiple wick rejections indecisions wick rejections whatever else and now we start to form what a continued downtrend so at this stage how did i take the trade well i'm identifying here the is creating a downtrend structure the bias is sell the key levels are being respected higher timeframe key levels are being respected and violated changing the direction of the market the phase in the market has been in the strong push phase double top pattern pulling back creating multiple wick rejections and my pattern now is a lower high trade as part of a downtrend anticipating new lower low what i did at this stage is i waited for price to push back into around 50 of my stop-loss range giving the market the opportunity to push up and if it did no trade but once it's pushed up and then set my cell stop so if the market does continue down i get triggered in with momentum as part of the structure as part of my pattern with respect to my key levels and look what happened i was triggered into the trade breakeven was set at one to two which i never got which was around here somewhere as you can clearly see we sat in this trade for a little while we had a pullback and then towards the end as you can see here the market continues to rally down now as you will continue to see the trend line or the brick walls i like to call it as being respected new lower lows and lower highs are being formed previous structures are being violated key levels are being respected double top patterns are forming there are so many opportunities for you to trade what's the final point bring it all together it will take practice but i tell you over time you for sure will be able to master your charts in a very similar way and find a lot more consistency with your trade-in so just to conclude this why is it important to plan your trades and use this five-step process to make sure that you are being the best or doing the best that you can to find the highest probable set ups and to start trading more consistently and profitably well making a plan and trading these five steps will stop you from trading off the whim when you make a plan you have a clear direction you know what it is you're looking for whether you lose a trade or not guess what you're going to be satisfied with the result it's going to stop your failure in this business like everybody else is doing you'll be able to focus on or have laser focus on what it is you are expecting from the markets and to be honest with you one of the biggest things that i've seen if you use this five-step process and you really focus on your approach to the market you're going to remove all emotions you will it's just natural because to be honest with you when you know what to expect whether it be win or lose you know that you're using a strategy that's proven it's part of your plan you have data to back it up and you're executing according to that plan that approach there's nothing to be worried about you remove fear you feel more confident you're able to just execute and compose yourself in the life markets and to be honest with you if you know how to do this approach and you practice it on a daily basis because it won't happen overnight but if you continue to practice it guess what it will stop you making bad decisions and bad decisions is the reason why traders fail one of the biggest reasons so my advice to you is this watch this video over again take some notes make sure that you practice this because it's not gonna as i said happen overnight go and back test 25 trades a hundred trades and make sure that there is a story behind every trade you take if you take a trade just because it's a key level there's a pinbar engulfing candle it's not the right reason to be taking a trade make sure you know why you're taking it you know like people are able to talk about football players their names their surnames their age their date of birth like it blows my mind i mean good on you to be honest with you but how they do it with football how they do it with basketball how they do it with nfl whatever you want to call it you should be able to do it with your trade-in this is your business this is your future take it seriously so that's that's the video today as always say guys just uh support the channel for me 2021 i'm going to be bringing some amazing content going to be more consistent going to make sure i deliver you the highest quality content that's out there and if you're new to my channel welcome if you are subscribe turn on your notifications so you know when i'm coming back next and uh hit that like button until next time continue to trust the process

Channel: RockzFX Academy

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Keywords: 5 Factors To Consider Before Taking A Trade, factors, to, consider, before, taking, trade, rockzfx, rockz, rocks, rocksfx, forex, trading, forex strategy, trading strategy

Id: rZec4FgFzTg

Length: 34min 47sec (2087 seconds)

Published: Wed Jan 06 2021