Today, we talk about Structure. We think that Structure is one of the fundamental and essential concepts in the for retail traders.
Sometimes, you may see the price moving within the specific range. When the price reaches the upper level, the price reverses to the downside, while the price reaches the lower level, the price reverses to the upside. And this kind of price action occurs a few times.
This specific range often together with the high , which the BUY and SELL sides are "fighting" with each other. A flat range occurs when price trades sideways without any significant direction. Actually, we don't know which side will "win" finally. In other words, we don't guess the direction.
Once you find the Structure in the chart, you could easily to identify the critical resistance and for establishing the trading plan.
Establishing the trading plan:
There are two strategies to prepare the trading plan: (a) Trade within the range (2) Trade breakout when pullback.
(a) Trade within the range is the strategy that many traders tend to trade. Simply that when the price reaches the upper level, going to SELL, and when the price reaches the lower level, going to BUY. The stop loss reasonably is set outside the area.
(b) Trade breakout when pullback. We wait for the market to choose the direction and follow the trend. When the price breakout confirmed, open the trade once pullback. We wait for pullback as we make sure that the profit and loss ratio is reasonable and worth to open the trade.
Remember that good profit and loss ratio is one of the key components to be a success in the trading.
Enjoy the trading itself, and you will be much better at it!
Thank you. This is TraderPig.