How to Stay One Step Ahead of the Market
Hey Guys!
As traders, we always want the sense of being one step ahead of the market. In other words, what's happening with current price should not be of consequence to your trading. It's just another bit of information that's
added into your analysis of what will happen next. Now the polar opposite of this situation is chasing the market. Where a trader is reacting to what price is doing currently. After years of trading, one thing I can state with confidence, is that if you're chasing the market and reacting to current price, you won't make it in trading in the long-term. I mean, you may get lucky from time to time, but ultimately you're luck will run out. So the question becomes how does a trader stay one step ahead of the market? At the basic level, if a trader can stop focusing on price "direction", and instead begin focusing how price travels from point A to B, they have a shot at being one step ahead of the market. Let me explain.
As you guys know, on the Eur/Jpy pair during the month of February 2022, I was consistently taking short trades as price pulled back to the 132.80 levels. Now this is even if price at the moment of entry was moving up. ( I wasn't focusing on price direction) Instead, I was focusing on "how" price moved from point A(on the chart) to point B.(on the chart) Initially, there was 1 minute strong long strength sparking the explosive move up however, there was even stronger 1h strong short strength confirmed on the lower time frames in the beginning of the 1st range. At this point I was already viewing this pair to be short biased,(I was one step ahead of the market) and even if price continued up, as long as there was no confirmation of further long strength I will continue entering short positions. I was able to confidently take multiple short entries because "how" price was moving from point A to point B was not indicative of a long market. Or like I always say, " The lower time frame's price action wasn't complimenting the higher time frames move up." Then finally, there was further 5 minute confirmation of strong short strength and price began its descent. However, if a trader at this point was basing their trades on "current price direction", they're likely to take long positions on this pullback for a possible next move up. A devasting outcome as you can see.
So if you always find yourself on the wrong side of the market, firstly, stop putting value onto current price direction. It is just a result of previous price action. Begin asking yourself, "What is the context of the current price direction".
Or even better, learn how to read price to know how price traveled from point A to point B and begin staying one step ahead market. For if you a can do this, perhaps you will have a shot at staying in this game for the long haul.
I'm sure you guys have questions! Don't hesitate to ask! I'll gladly help!
Have a great day guys!
Ken
As traders, we always want the sense of being one step ahead of the market. In other words, what's happening with current price should not be of consequence to your trading. It's just another bit of information that's
added into your analysis of what will happen next. Now the polar opposite of this situation is chasing the market. Where a trader is reacting to what price is doing currently. After years of trading, one thing I can state with confidence, is that if you're chasing the market and reacting to current price, you won't make it in trading in the long-term. I mean, you may get lucky from time to time, but ultimately you're luck will run out. So the question becomes how does a trader stay one step ahead of the market? At the basic level, if a trader can stop focusing on price "direction", and instead begin focusing how price travels from point A to B, they have a shot at being one step ahead of the market. Let me explain.
As you guys know, on the Eur/Jpy pair during the month of February 2022, I was consistently taking short trades as price pulled back to the 132.80 levels. Now this is even if price at the moment of entry was moving up. ( I wasn't focusing on price direction) Instead, I was focusing on "how" price moved from point A(on the chart) to point B.(on the chart) Initially, there was 1 minute strong long strength sparking the explosive move up however, there was even stronger 1h strong short strength confirmed on the lower time frames in the beginning of the 1st range. At this point I was already viewing this pair to be short biased,(I was one step ahead of the market) and even if price continued up, as long as there was no confirmation of further long strength I will continue entering short positions. I was able to confidently take multiple short entries because "how" price was moving from point A to point B was not indicative of a long market. Or like I always say, " The lower time frame's price action wasn't complimenting the higher time frames move up." Then finally, there was further 5 minute confirmation of strong short strength and price began its descent. However, if a trader at this point was basing their trades on "current price direction", they're likely to take long positions on this pullback for a possible next move up. A devasting outcome as you can see.
So if you always find yourself on the wrong side of the market, firstly, stop putting value onto current price direction. It is just a result of previous price action. Begin asking yourself, "What is the context of the current price direction".
Or even better, learn how to read price to know how price traveled from point A to point B and begin staying one step ahead market. For if you a can do this, perhaps you will have a shot at staying in this game for the long haul.
I'm sure you guys have questions! Don't hesitate to ask! I'll gladly help!
Have a great day guys!
Ken
Forex Trader/Forex Trading Education/Weekly Forex Forecasts and Midweek Forex Analysis