On example daily chart of EurAud (on this article)- what do you see related to the quarters theory? support and resistance? trading edge?
I see 100 pip round whole numbers (black lines) divided into four equal parts of 25 pips apiece (red and yellow lines)-
If you did trade with 100 pip stop losses- this would be a great way to trade either position, swing or daily charts- from whole round numbers to next whole round number.
Those would be 100 pip stop losses vs 100 pip targets or 1:1 Risk Reward setups- you would need to have a win rate of 60% or more to make a profit with this type of trading, or you could set a 100 pip stop loss and let trade run for either a couple, few or many more days and have a higher Risk Reward setup.
The quarters theory started with 1000 pip areas, like example from 1.6000 to 1.7000 would be 1000 pips, break this down into four equal parts or as follows:
1.6000- major round number-
1.6250- minor number-250 pip area
1.6500- minor half number- 250 pip area
1.6750- minor number- 250 pip area
1.7000- major round number
This can be done on any charts from monthly down to 1 minute and should be done for knowing possible entries, exits and risk reward (lot sizes)- on every trade you make. I use the quarters theory for scalping, it will give you a trading edge and control your trades within a certain structure of the market.
I see 100 pip round whole numbers (black lines) divided into four equal parts of 25 pips apiece (red and yellow lines)-
If you did trade with 100 pip stop losses- this would be a great way to trade either position, swing or daily charts- from whole round numbers to next whole round number.
Those would be 100 pip stop losses vs 100 pip targets or 1:1 Risk Reward setups- you would need to have a win rate of 60% or more to make a profit with this type of trading, or you could set a 100 pip stop loss and let trade run for either a couple, few or many more days and have a higher Risk Reward setup.
The quarters theory started with 1000 pip areas, like example from 1.6000 to 1.7000 would be 1000 pips, break this down into four equal parts or as follows:
1.6000- major round number-
1.6250- minor number-250 pip area
1.6500- minor half number- 250 pip area
1.6750- minor number- 250 pip area
1.7000- major round number
This can be done on any charts from monthly down to 1 minute and should be done for knowing possible entries, exits and risk reward (lot sizes)- on every trade you make. I use the quarters theory for scalping, it will give you a trading edge and control your trades within a certain structure of the market.
