A Simple Day Trading Strategy For Trading Market Reversals

in this video trailers we’re going to look at a simple market reversal strategy powerful one this

stay tuned

hey guys welcome welcome to you all right so the video is sponsored by pepper stone if you want to check them out it’s a link to the description below cfd spread bets multi-regulated offer a lot of markets see trader platform mt4 and mt-5 uh and i particularly see trader platform actually working a little bit with that and it’s a good platform so and check it out open a demo account have a look around see if they’re the right broker uh for you okay so i want to talk about simple uh market reversal strategy so whether you’re trading

currencies commodities indices stocks whatever it may be

this is quite a nice tool to have in your toolbox

for when you’re getting these kind of multi legs lower

um now i’m going to talk it from a perspective

of an index or a stock with a specific opening and close time

but it will work for forex as well you just have to be aware

that the time of day has to be relative to the session so there’s a london session

u.s session asian session for example if you’re splitting up

your currency pair that’s what we’re looking at we’re talking about the open but we’ll cover that in a moment so really what we’re looking for is to get along on a move lower but we’re gonna dive in all right because if we dive into a trade too soon we’re gonna get hammered and hammered and how many times have you dived into a trade way too early market’s gone further than you expected finally reversed and you’ve been caught out so we’ve got a few rules before that we look at before we get into the trade the first thing is that we always look for a three leg move so first leg driving lower second leg driving lower

third leg now this is a daily chart let’s just use a daily chart this is what we’re looking for you know like a week or so maybe a week of consolidation under the first leg and then a final move low what we don’t want to be doing is starting to look for a market reversals on the first leg or second leg with a little caveat

then a very very strong market let’s say this market’s been pushing or pushing up and it’s just starting to pull this down a little bit then maybe the second leg might be uh or a third leg might be kind of a little blip as opposed to a good drive but normally what we’re looking for is his first leg consolidation and by the way what counts as a leg is a consolidation or a pullback to the mean or something like that

second leg third leg drive lower now this is the zone

that we’re kind of interested in and what this does is it initially stops us diving in too soon

and also what helps is it helps you mentally because you go okay well i’m waiting for my third leg

before i even pull the trigger on before i consider pulling the trigger on this so third leg coming down now we want some decent moves here three solid days is nice and we want to be kind of in fresh territory where

you just feel everyone’s out there’s no one here buying any more

it’s done and we want a fresh low so this is the kind of a criteria fresh low good volume obviously trading fx is an approximation on volume if we trade an index we can see a good volume so you want a real kind of a good move now this is not necessarily an exhaustion type move but it’s good volume good flow to indicate that there’s a um if you think about a pile of people on the sidelines to sell

the more volume there is the more of those people are now have now executed what they need to do

especially when we’re in the third leg now it’s different and we’ll talk about volume

we talk about volume other videos and i’ll probably do another one soon so make sure you subscribe guys if you like this kind of stuff we’ll talk about the relationship with volume in the first leg it’s slightly different but the third leg we can look at it as possibly a reversal type

type pattern or signal for a potential reversal

so the best thing now that we can do well the best setup that i’ve found works

works the best for me and guys you know test this style stuff look for yourself have a look in the mark as you turn and try and see but it’s after you’ve had the third leg lower we look for an early day um or early in the day move lower so if you think about an index for example s p 500 nasdaq dax whatever it may be as the market opens we want to see that drive lower

early in the morning we don’t want to take any reversals that happen when you get the drive lower in the evening and it’s the same with currencies you know if we’ve got a us session we want to see that drive early in the us session we’ve got asian session that drive now up to you how you work it out over the three sessions um

but you really want an early drive so to speak so

early dry early in the day move lower kind of indicating a bit of urgency a bit of selling at the open bit of driving and then the morning low holds so what we’re kind of looking for if i can jot this down briefly here guys

is we are looking for this type of move pulls up and then we find some support above

below so the morning drive goes lower we push up

that doesn’t get re-tested after the morning but more importantly we find support above the low what we don’t want is for it to find support at the low you know that’s no good that’s almost a bare flag but there’s some weakness we want to see the low come in early morning low drive off that low and then find some support higher

preferably him up above the midpoint even better if it’s above the open something like that so you’ve now got a nice overall package to get into the trade you’ve got three legs lower you’ve got the early morning drive you’ve got good volume you’ve seen some evidence of buying or at least a back off in selling and some support holding which indicate there’s some buyers there

and it gives you a good risk order ratio because now of course you’re going to put your stop

under that morning low and you’re going to ride it and you look for a close that highs on the day and if you get a close at house on days on that day maybe you’re going to push it up and your first target is probably going to be that prior

support level there and if you’re looking for a full reversal you’re probably going to look for a break of this trend line here and then you can start to add and get aggressive maybe looking for a revisit to highs that’s a nice powerful strategy guys um the importance is that you’ve got to get that early morning move if it’s in the afternoon don’t touch it regardless of how good this looks

and then of course intraday stop under that low another thing is if you’re holding overnight look for a swing trade on this this is the beauty of this trade your stop is like an intraday stop but the target’s multiple days risk order ratio is very high on this one the thing is it doesn’t close decently high you don’t see the evidence of reversal on the day you take the trade consider cutting it consider trimming it now slightly different maybe from forex market because obviously you’ve got 24 5 you can admit to get your risk overnight but if you’re trading a stock for example or something where you

you give up the risk because the markets close you might want to consider trimming some off anyway guys whatever you’re trading do check out our pepper stoners i’ll link to them in the description below have a look at their account have a look at their website or maybe open a demo account see if they’re right for you um and make sure you’re subscribed for more videos take care keep the rest managed guys bye-bye

you

Leave a Reply

Your email address will not be published. Required fields are marked *