TDP-Academy Trading SetupGuide Version 1.1. March 2017 Author: Boris Nikolajew & Wiktor Majorkiewicz INDEX 1. Foreword 2. Charts 3. Timeframes 4. Indicators 5. Drawings 6. Chartpatterns 7. Analyzing the Chart 8. Enter a Trade / Position 9. Tradingjournal 10. Risk Parameter 11. Trend 12. Trade setups/entries 1. Foreword This manual has been written by the TDP-Academy, a Team of experienced Traders. It should help the Members of the TDP-Academy to improve the success rate of theirs own Trading, should help to understand the language and setups given to our Members day by day. The Manual is short, to the point and not concluding as we are working to improve our own rate every day.
RISK DISCLAIMER Be aware, trading and investing like we do, is highly risky. You can lose your money. This kind of trading doesn't suit everybody so be careful when opening a trade and always place a reasonable STOP LOSS based on your own Money Management. Losses can exceed your equity. TDP-Academy nor any of the representatives are liable for any Losses. This course and all content is for educational purposes only and it s never an invitation to trade, buy, hold or sell any instrument. If you trade, buy, hold or sell any instrument noted in that letter be aware you can lose money. Prezentowane treści są materiałami edukacyjnymi i nie stanowią rekomendacji w rozumieniu przepisów Rozporządzenia Ministra Finansów z dnia 19 października 2005 r. w sprawie informacji stanowiących rekomendacje dotyczące instrumentów finansowych, lub ich emitentów (Dz.U. z 2005 r. Nr 206, poz. 1715).
2. Charts 2.1. Barchart This chart is made up of a series of vertical lines that represent each data point. This vertical line represents the high and low for the trading period, along with the closing price. The close and open are represented on the vertical line by a horizontal dash. The opening price on a bar chart is illustrated by the dash that is located on the left side of the vertical bar. Conversely, the close is represented by the dash on the right. Generally, if the left dash (open) is lower than the right dash (close) then the bar will be shaded black, representing an up period for the stock, which means it has gained value. A bar that is colored red signals that the stock has gone down in value over that period. When this is the case, the dash on the right (close) is lower than the dash on the left (open). TDPAcademy Trading SetupGuide Example and description of a Bar: 2.2. Candlestickchart The candlestick charting techniques we use today originated in the style of technical charting used by the Japanese for over 100 years before the West developed the bar and other analysis systems and charting tools. In the 1700s, a Japanese man named Homma, a trader in the futures market, discovered that, although there was a link between price and the supply and demand of rice, the markets were strongly influenced by the emotions of traders. He understood that when emotions played into the equation, a vast difference between the value and the price of rice occurred. This difference between the value and the price is as applicable to stocks and all other financial markets today as it was to rice in Japan centuries ago. The principles established by Homma are the basis for the candlestick chart analysis, which is used to measure market emotions surrounding a stock, commodity, bond or any other product we r trading and analysing today. This charting technique has become very popular among traders. Candlestick charting is a very complex and sometimes difficult system to understand. Here we get things started by looking at what a candlestick pattern is and what it can tell you about a stock.
When first looking at a candlestick chart, the student of the more common bar charts may be confused; however, just like a bar chart, the daily candlestick line contains the market's open, high, low and close of a specific day or any other given time period. Now this is where the system takes on a whole new look: the candlestick has a wide part, which is called the "real body". This real body represents the range between the open and close of that day's trading. When the real body is filled in or black (or any other color), it means the close was lower than the open. If the real body is empty, it means the opposite: the close was higher than the open. Just above and below the real body are the "shadows". Chartists have always thought of these as the wicks of the candle, and it is the shadows that show the high and low prices of that day's trading. If the upper shadow on the filled-in body is short, it indicates that the open that day was closer to the high of the day. A short upper shadow on a white or unfilled body dictates that the close was near the high. The relationship between the day's open, high, low and close determines the look of the daily candlestick. Real bodies can be either long or short and either black or white. Shadows can also be either long or short. TDPAcademy Trading SetupGuide Example and description of two Candles, a bearish and a bullish one: 2.3. Linechart A style of chart that is created by connecting a series of data points together with a line. This is the most basic type of chart used in finance and it is generally created by connecting a series of past prices together with a line. a line chart can give the reader a fairly good idea of where the price of an asset has traveled over a given time frame. Since the closing prices are often seen as the most important ones to keep track of, it is not difficult to see why line charts have become so popular. Example of a Linechart:
3. Timeframes we are using 3.1. Intradaychart Intraday is another way of saying "within the day." Intraday price movements are particularly important to short-term traders looking to make many trades over the course of a single trading session. TDPAcademy Trading SetupGuide The term intraday is occasionally used to describe securities that trade on the markets during regular business hours, such as stocks, bonds, commodities, metals or any other instrument we r trading. This term is often used to refer to the new highs and lows of a security. For example, "a new intraday high" means a security reached a new high relative to all other prices during a trading session. In some cases, an intraday high can be equal to the closing price. 3.2.Daily The term Daily is occasionally used to describe securities that trade on the markets during regular business day, such as stocks, bonds, commodities, metals or any other instrument we r trading. This term is often used to refer to the new highs and lows of a security. For example, "a new daily high" means a security reached a new high relative to all other prices during a previous session. 3.3. Weekly The term Weekly is occasionally used to describe securities that trade on the markets during regular business week, such as stocks, bonds, commodities, metals or any other instrument we r trading. This term is often used to refer to the new highs and lows of a security. For example, "a new weekly high" means a security reached a new high relative to all other prices during a previous week.
4. Indicators we are using TDPAcademy Trading SetupGuide 4.1 RSI Relative Strength Index is an indicatior which can be very useful to spot overbought or oversold areas in financial instrument quote. Basically when RSI is moving near upper band this means we are in overbought zone, if near lower band - oversold zone. Traders can use it to ensure that buy or sell level is reasonable. TDPAcademy Trading SetupGuide 4.2 Stochastic Stochastic Oscillator is working pretty same as RSI. Traders use it for check if financial instrument could revert soon because of overbought or oversold momentum. Generally there is need to monitor upper and lower indicator band.
TDPAcademy Trading SetupGuide 4.3 MACD Moving Average Convergence Divergence oscillator is one of the most ferquently used indicator. It is builded from histogram and moving averages. Correctly interpret can show possible price reversal. Popular trading technique is to spot bearish or bullish MACD divergence with chart.
Generally this means that power of demand (bearish divergence) is weaker. And the opposite, when supply power run out (bullish divergence) there is strong possibility that reversal is coming.
TDPAcademy Trading SetupGuide
4.4 Moving Averages TDPAcademy Trading SetupGuide Moving Average is simple indicator which can be useful to recognize entry of position. Most puplar peroids for MA are 20, 30, 50, 100 and 200. Peroid means 50-day (daily chart) or 30- hours (one hour chart). If trader spot that chart crossed MA from down to up it usually means that can be good buy opportunity. If chart crossed MA from up to down that might be sell occasion. Important is to know that trading with MA can bring the best results in trends (buying in up-trend, selling in down-trend).
TDPAcademy Trading SetupGuide 11. Trend Recognize the trend is very important for traders. There are three types of trend - up trend, down trend and horizontal trend. Correctly spotted trend can pay a lot of money as trader is going with the market, not against. Trend is builded from impulses and corrections. In up trend there are bigger impulses than corrections and the same in down trend. Horizontal trend is when the price is moving in consolidation, there is no clear up or down direction. The easiest way to spot which trend is already functioning is to check if there are higher lows with higher highs (bullish trend) or lower lows with lower highs (bearish trend). Other most used method is to draw the trend lines. In up trend there is need to draw the line from the lowest low to next higher low, in down trend - from the highest high to next lower high.
11.1 Up trend TDPAcademy Trading SetupGuide
11.2 Down trend TDPAcademy Trading SetupGuide
11.3 Horizontal trend TDPAcademy Trading SetupGuide
TDPAcademy Trading SetupGuide 12. Trade setups/entries 12.1 Supply and demand zones Trader need to have a plan and know which points are to be fullfiled when decides to open position. The most successful strategies are simple. Price of financial instrument depends from flow of the money, so entries based on supply and demand zones could bring very good results. Upper supply zone was created by first top (bears activated), what means that second price test at this level will be good short opportunity - chart shows us that there was located bigger money flow. Also if we can get confirmation with indicator like RSI, MACD or Stochastic which has bearish divergence (or bullish if we would like to go long) this means it is good occasion. Short entry at the first top level would bring us successful trade. Second chance to sell will be when the support becomes resistance.
TDPAcademy Trading SetupGuide The opposite situation and chance to go long is when price are close to previous bottom. This means we are in the support zone. There is worth to wait for price action and indicators for confirmation that actual level are interesting for demand (bulls) which will pushing quotations higher.
TDPAcademy Trading SetupGuide 12.2 HHLC and LLHC formation Another very accurate trade entry technique is to locate higher high lower close (HHLC) or lower low higher close (LLHC) formation.
TDPAcademy Trading SetupGuide 12.3 Trendline entries One of the most popular and simple strategy is to open trades when price is touching trendline. There is need to buy in up trend and sell in down trend.
TDPAcademy Trading SetupGuide
TDPAcademy Trading SetupGuide 12.4 Fibonacci Retracement Another trade method important to know is Fibonacci Retracement. This is one of the most used technique to recognize the end of correction. There is need to spot impulse (up or down trend) and measure by fibo tool. Price mostly reacting at 50% and 61.8% levels.
TDPAcademy Trading SetupGuide Ofcourse there are plenty of techniques and strategies, but this mentioned here are absolutelty must know. Power is in simplicity - combination of described methods with discipline and patience can bring decent, profitable results in longer run.
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