YOU will NEVER make MONEY trend trading if you do not understand this...
Published: 2019-01-13
Status:
Available
|
Analyzed
Published: 2019-01-13
Status:
Available
|
Analyzed
Predictions from this Video
Incorrect: 0
Prediction
Topic
Status
The speaker analyzed the Euro/Dollar daily chart for 2018 to determine the percentage of time the market spent trending versus consolidating.
"I've taken a look at 2018 on the euro dollar daily chart. I've mapped out every bit of data when it comes to when the markets trending versus when the markets consolidating."
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In 2018 on the Euro/Dollar daily chart, there were 77 trending bars and 390 consolidating bars in the analyzed sections.
"consolidating markets are the red boxes and on the green boxes the ones are a little bit harder to see those are trending markets and what you can see above these is the amount of bars in each of these right the amount of bars trending in this first section here is 77 bars trend and the amount of bars consolidating in this red box here is 390"
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For the Euro/Dollar daily chart in 2018, there were 1078 bars in consolidation and 452 bars in trend.
"the consolidating bars came up to 1078 bars in consolidation for the euro dollar daily chart in 2018 the trending bars were 452"
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The analysis of the Euro/Dollar daily chart for 2018 showed that the market consolidated approximately 70% of the time.
"there is 1078 consolidating bars that means that the market actually did consolidate right at seventy percent of the top"
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New traders often expect to win over 50% of their trades, which is unrealistic given that markets only trend about 30% of the time.
"the statistical fact that the market only trends 30% of the time so what happens is newer traders jump in the market expecting to win over 50% of the trades"
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To profit from trend continuation trades when winning less than 50% of the time, a favorable risk-reward ratio is crucial.
"if we can't win at 50% or above then how do we make money with trained continuation well this comes down to the risk reward ratio on these specific trades"
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A great trend continuation strategy might achieve a win rate of approximately 40%.
"in trend continuation roughly about 40% of the time with a great trend continuation strategy"
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A scenario is presented where winning 40% of trades with a 3:1 risk-reward ratio, risking $100 per trade, results in a $12,000 gain over 100 trades.
"if you win forty percent of the time and let's say you're risking 100 dollars per trade at a three to one risk reward"
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In a trend continuation trading scenario with a 40% win rate and 3:1 risk-reward, the losses over 100 trades would be $6,000.
"if you have $12,000 gain with this three to one risk reward winning 40% of time you're trained to do Asian trading what is your losses well your losses are $6,000"
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The mathematical demonstration shows a 60% profit ($6,000) over 100 trades using a trend continuation strategy with a 40% win rate and 3:1 risk-reward.
"so you make $6,000 or 60% in a hundred Trey's using that math those statistics"
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The market trends approximately 30% of the time and consolidates approximately 70% of the time.
"when the market is trending it's only gonna do so for around 30% of the time when the markets consolidating it's gonna do so for around 70% time"
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Traders should adapt their trading plan to their personality; if one cannot accept a 40% win rate, a mix of consolidation and trend continuation strategies might be more suitable.
"personally for me this is something most traders don't do either you have to make your trading plan adapt to your own personality if you're not someone that can deal with winning only 40 percent of the time and you want to win more then you're gonna need to probably trade some type of mix between a consolidation and trend continuation strategy"
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Trend continuation traders must understand that they will likely lose more trades than they win, but profitability can still be achieved with a high risk-to-reward ratio.
"if you were deciding to be a trend continuation trader you need to go into that with the mindset and the understanding that the market does not always Trent that you will probably more than likely lose more trades than you win but if you do so with a high winning without excuse me with a high risk to reward ratio you can still make money over time"
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A profitable trend continuation strategy should not be expected to win above 40% of the time and requires a risk-reward ratio greater than 1:1.
"creating a trend continuation strategy and keeping in mind that this strategy is probably not going to win above 40 percent the time also understanding that in order for this strategy to be profitable you need to have more than a one to one risk reward"
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Moving averages and market structure (highs and lows) can be used to identify trends for trading strategies.
"you can use moving averages and actual structure... using structure to read trend would look a little something like this we would be looking at the market looking at the highs and the lows of the market"
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A specific rule for trend continuation trading is suggested: only trade when the 20-period moving average is above the 50-period moving average.
"the only time I trade triggered anyway ssin is when the 20 period is above the 50 period moving average"
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A potential strategy involves using the 4-hour chart to confirm the 20-period moving average is above the 50-period moving average as a condition for trend continuation trades.
"what you can do is you can say well now I know that the only time I'm looking for trend continuation trades is when the 20 is above the 50 let's say and the way I'm going to look for those trades is by looking for a you could even do this this is this is kind of advanced I probably should not be sharing this on youtube I want to do it anyway just because I like giving you guys some of the best material possible you can actually go here and and say I want to see the four-hour chart the 20 above the 50"
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An advanced trading approach suggests combining a higher timeframe trend condition (20 MA > 50 MA on 4-hour chart) with a simpler pattern like double bottoms on a lower timeframe (1-hour chart).
"I'm going to drop down to a smaller time frame I'm going to trade let's go really really simple double bottoms on a one-hour chart"
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A potential entry condition for a trend continuation trade involves the Relative Strength Index (RSI) going oversold and then forming a double bottom.
"I need a market I'm gonna go ahead and put in my personal settings for an RSI and I'm gonna say okay what I need it says C is a market that goes oversold and then creates a double bottom"
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An example is given of a trade setup where the market becomes oversold, then forms a double bottom, indicating a potential entry for a trend continuation trade with more than a 1:1 risk-reward.
"here in this case we have a market and we know we're in our trend continuation rolls are here we pull back as we pull back when do we go oversold or right in here that does not create a double bottom anywhere but we're after we go over so we do get a double bottom right here right this is a double bottom so our entry would be here stop-loss below there shrink attenuation trade we'd have more than one to one risk reward"
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The speaker shares two examples of a potentially effective trading strategy but emphasizes they have not tested it extensively and plan to do so.
"this is two examples of really nice trading opportunities this strategy may be awesome I have no idea I have never tested it after this video I'm not gonna I'm probably gonna go test this for myself at least on a couple of different pairs"
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Traders should follow the process of creating and testing their own strategies, including the one discussed in the video, if they aim to be trend continuation traders.
"you need to do the same exact thing you're welcome for the free strategy that I just created here on YouTube but that's the entire process that you need to be going through if you plan to be a trained continuation trader"
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Successful trend continuation trading involves defining conditions and entry reasons, understanding win rates might be around 40-50%, and aiming for a higher than 1:1 risk-reward.
"you make up your conditions and your entry reasons you understand that trend continuation trading comes with a little bit of maybe a 40 maybe a 50 if you're if you have an incredible strategy of 50% winning percentage and a higher than one to one risk reward"
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The success of any trading strategy, including trend continuation, hinges on creation, rigorous testing, and demo trading, without skipping these crucial steps.
"you must create the strategy test the strategy demo trade the strategy don't skip any of that or your chances of success are much much lower"
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The speaker's own trend continuation strategies, including stop-loss and target techniques, may be included in a future 'EAP' program if further testing proves successful.
"if you want to know my own trend continuation strategies this strategy in much more detail with stop-loss and target taking techniques and everything else maybe in the EAP coming soon if I continue to test this it actually works out"
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The EAP program is offered as a way to significantly reduce the learning curve for traders who want to develop their own strategies.
"if you would like to cut down the learning curve of actually doing all of this yourself creating the entire strategy yourself what you need to do is go ahead and click the link in the description labeled EAP that program helped many many traders hundreds of traders on their journey to profitable trading"
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A mentee named Matt achieved his fourth consecutive profitable month in forex trading, highlighting the potential for success through dedicated effort and the program's strategies.
"one of my trading mentees who has become a forex trading badass is Matt who's I think his youtube comment name is Zin artist or something it's something a little bit weird but it's it's awesome that he's become an incredible trader he actually messaged me I think he left a youtube comment talking about having his fourth profitable month in a row"
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