Oct 11, Vivek Deveshwar rated it it was amazing. Lot of trading books fill up many pages on psychology but skimp on actual details on choosing stocks, trade entry, exit etc. This book covers 3 different trading methodologies in full details yet explained in a simple way. Nov 08, D. Thrush rated it it was amazing. I found this book to be very helpful.
Kratter gets right to the point and reveals 3 strategies that you can try with examples and lots of explanation. Everything makes sense and he gives numerous links to more resources. Apr 02, Anthony T rated it it was amazing. A book pack full of gems This book is loaded with strategies and explained so clear that you will feel equipped to jump in and start your investing. I wish I had Matthew's books years ago but I'm so thankful for his knowledge and experience on the subject.
I will definitely continue to read more of his as he publishes them on the subject. Trading is risky Technical analysis is used for entry and exit into a trading position. Stock selection,entry and exit selection are keys to successful strategic trading. I will recommend this book for strategic investors. Feb 23, Kevin D. Cottrell rated it really liked it. Matthew Kratter. He has a way of making the complex understandable. I'm going back in for a second read. Oct 28, Victoria Wekamp rated it really liked it.
Oct 15, Jeanette Howard rated it really liked it. Great book! It was easy to understand and inspired me to go for it. Sep 17, David Anderson added it. Stupid, elementary and common sense. Apr 08, Fred Barr rated it liked it. Outdated Book was a good read provided general knowledge but it is a few years old I guess I am more of an investor than a day trader so it was informative but not practical to me.
Mar 18, Senthil Visagan rated it liked it. Good book for beginners. Not ground breaking techiniques, but some good advises. Can be used as a quick reference on two techniques he ecplains.
Nov 25, Mark rated it it was ok Shelves: non-fiction , investing. Another very basic primer primer on stock trading strategies. If we draw trend lines indiscriminately, we will find more whipsaws than trends. The crux is to draw consistent and relevant trend lines. With dozens of step-by-step examples, you will learn to read market swings and build them up to draw the trend lines that matter. It is best to keep your trading method simple for effective trading. For traders looking for simplicity, using only a period moving average to day trade is a great option.
Basically, any intermediate period is useful for day trading. A long period moving average lags too much and does not help day traders. A short 3-period moving average is almost like price itself and is mostly redundant. As for the choice of moving average type, we are using exponential. But a simple moving average will work fine too. The key is consis- tency and do not keep changing the period or type of your moving average.
A moving average can help to clarify the price action. These are some questions to help you clarify the context using a moving average. Are prices above or below the moving average now? How did prices get there?
Have prices been overlapping with the moving average? What is the slope of the moving average? Has the slope been changing often? The answers to these questions cannot be interpreted in isolation. We need to integrate them to form an analysis.
It shows the first 20 bars of the session. Price is now above the moving average. It got there after a bounce off the moving average. However, it has not exceeded the last swing high. The bars that overlapped mainly had long bottom tails. The slope of the moving average is positive but not overly steep. The slope of the moving average turned down momentarily at two instances.
Integration and analysis of trading context Prices were mostly above the moving average and bounced from the moving average. These signs show that the day has been bullish. However, the slope of the moving average is not steep and had turned negative at two instances.
So, despite the bullishness, the market is not in a strong trend. What are the implications of our analysis on our day trading? We should only take long trades until there are bearish signs. But due to the lack of a strong trend, we should aim for nearer targets. In a bull trend, buy when prices retrace to the period moving average.
In a bear trend, sell when prices pullback up to the period moving average. This chart shows the price action after our price context analysis.
As the context was bullish, we took the trade. However, as implied by our context analysis, we should not press for large gains. We can also usecandlestick patterns with the moving average to pinpoint entries. The moving average follows the price trend but lags behind it. Hence, a trailing stop based on a moving average locks in profit and at the same time gives enough room for whipsaw action. It is a valuable tool for traders learning price action.
When we look at a moving average, we have to look at price as well. Open a chart now and put on a period moving average. If you practice enough, a period moving average is possibly the only indicator you need. How to Enter the Market as a Price Action Trader Imagine that the market just formed a bullish two-bar reversal at a support area.
Your assessment of the market is bullish. You decide to enter the market. Market order b. Stop order c. Limit order d. Is there a difference? But most gloss over the technical aspect of exactly how to enter the market. Market Order A market order is executed immediately. But you do not know what price your order will be executed at. Its execution is guaranteed, but the price is not. You can only place a buy limit order below the market price.
Placing a limit order above the market price turns it into a market order. Similarly, you can only place a sell limit order above the market price. If the market lets you in at the limit price, your limit order will be filled. If the market does not hit your limit price, your order will not be executed.
The implication of a limit order is the opposite of a market order. While you know the price your order will be filled at if it does , you have no assurance that it will be filled.
Stop Order Once you understand the difference between a market order and a limit order, you will find it easy to learn what is a stop order. A stop order is a conditional market order. A buy stop order is placed at a price level above the market price. A sell stop order is placed below the market price. When the market hits that price level, the stop order becomes a market order to be executed immediately. Note that a stop order becomes a market order when triggered.
This means that the fill price is not guaranteed. Bearish inside bar. We expected the market to fall further after breaking below the inside bar. Placed a sell stop order a tick below the bearish inside bar 3. Sell stop order triggered as the market breaks down below the inside bar.
In this case, we are using a sell stop order to trade the break-out of an inside bar. We can also use stop orders for trading the break-out of any other price action formations. Stop orders offer the advantages of confirmation and efficient execution. Stop orders are only triggered on break-outs.
The break-out serves to confirm our market assessment. If the confirmation break- out does not occur, we will not enter the trade. Moreover, it is the most efficient way to trade break-outs.
If we waited for the break-out before entering a market order manually, we might suffer great slippage. However, with a stop order, the break-out automatically turns the stop order into a market order to be executed right away. Although we might still suffer slippage, using stop orders still beats manual entry of market orders.
When I trade price patterns, I prefer to use stop orders. This is because price patterns are break-out signals. Price patterns are hints that price would break-out and continue in a direction. Bullish patterns point up and bearish patterns point down. Unless, I expect that they will fail and want to fade them. Fade Trades - Limit Orders If you think that price will reverse its direction after a break-out, use limit orders. There are two typical scenarios.
You might want to fade break-outs of a price range. Or, you might want to fade a counter-trend move. The example below shows the first scenario. This trading session has moved nowhere since it began, forming a tight trading range. As we expected break-outs of this tight trading range to fail, we placed a sell limit order just above the session high. As price surged up, our limit order was triggered. Having our order filled just above the trading range, we had plenty of profit potential.
When trading a tight trading range, limit orders are ideal. If not, your profit potential might be severely handicapped. Entering the market with limit orders is an advanced technique. This is because, at its core, limit orders represent a bet against the most recent market movement.
At a micro level, using limit orders is reversal trading. And reversal trading is always tricky. But if you are able to use limit orders wisely, they offer a great timing advantage with little adverse movement. With a well-placed limit order, you need not suffer more than a couple of ticks of paper loss throughout your trade. But the overriding principle is to use what is consistent with your trading strategy.
If your trading strategy dictates a certain entry method, follow it unless there are reasons to tweak.
Entry methods, like any other parts of a trading strategy, can never be perfect. Do not seek the perfect entry method. Simply understand their implications and trade-offs. What are trapped traders? We want to find trapped traders because trapped traders lose money.
If we find them and take advantage of the order flow they create, we can take their money from them. There are two types of trapped traders. We can easily empathize with them because at some point in our trading, we were trapped traders as well. What do they have to do eventually? They must exit their positions as dictated by their stop-loss orders. Trapped out of Winning Positions The second type of trapped traders are trapped out of winning positions.
For instance, you are in a long position and prices dropped and hit your stop-loss order. What would you have done? Probably, you would chase after the market and try to get into the move. In fact, there are many trading patterns that rely on trapped traders. We have reviewed the follow trading strategies before. Here, we will point out the trapped traders in each trading setup. This will allow you to focus on the high quality trading setups with a healthy amount of trapped traders.
Hikkake Trading Strategy Hikkake is an inside bar failure trading strategy. It waits for a break- out of an inside bar to fail. Then, Hikkake traders enter as the breakout traders are getting out of their positions. This diagram shows the different perspectives of the trapped traders and the Hikkake traders.
Inside bars are narrow bars which means less trade risk. Traders love to lower their risk, and will not give up a low-risk inside bar break-out trading setup. What does this mean for the Hikkake trader? It means more trapped traders, and higher chance of success. So what is the first step to find high probability Hikkake setups? Find the best inside bar trading setups. Then wait for them to fail.
Two-legged Pullback in a Trend Another well-known price action trading strategy is the two-legged pullback in a trend. The diagram below shows the perspective of trapped traders. The two-legged pullback starts from the low of a down trend. This diagram shows only one group. You can try to figure out where the other group of trapped traders are and how they went into the trap. Hint: They went against the down trend.
Pin Bar Trading Strategy The pin bar really goes the distance to trap traders by poking up above a swing high or below a swing low. Not only that, its long tail confirms that a nice trap is present. This is because many traders enter or exit their trades at major swing highs and lows.
These traders, if trapped, will fuel our blast to profits. Trend Bar Failure Earlier, I shared a simple price action trading setup based on trapped traders with our newsletter subscribers. Its simplicity makes it one of the most versatile and effective price action pattern. Think like trapped traders but do not act like them. It is not that difficult because all traders, including you and me, were once trapped. It is a simple but powerful concept that works in all markets.
In this article, I will explain it with price action patterns in the forex futures markets. Does the following experience sound familiar? Stopped Out and Trapped Out 1. Accordingly, you placed a pattern stop just below the Pin Bar. Shortly after, the market fell and hit your stop-loss order. Almost immediately after you got stopped out, the market leapt up again. If you were nimble and alert, you might have re-entered the position. If not, you might have been left standing in the dust while the market blazed ahead without you.
A re- entry opportunity often offers a higher probability of success. Essentially, while our trading premise is the same, we delay our trade entry.
A re-entry trading strategy takes the following form: 1. Find a trading setup with any price pattern. Original setup 2. Do not take the original setup. Wait for the traders of the original setup to be stopped out. Enter as the market reverses and moves in the direction of the original setup.
As the traders of the original setup were stopped out, they would need to seek a re-entry. In other words, they were trapped out of their positions and had to re-enter. Their re-entries would help to push the market in our favour. You can replace it with any other price action pattern. Long Re-Entry Trading Setup 1. Look for a bullish Pin Bar 2.
The market must fall below the low of the Pin Bar but not too far below 4. Look for a bearish Pin Bar 2. The next bar must move below the low of the Pin Bar 3.
The market must rise above the high of the Pin Bar but not too far above 4. Look to buy when price breaks below any bearish bar Explanation of Trading Rules 1. Original setup do not take 2. Original setup triggered 3. Original setup stopped out 4. Get the indicator for free. It was a decent setup, but in our re-entry trading strategy, we do not take it. As the market rose above the Pin Bar, some traders initiated their long positions. Two bars later, price fell and hit stop-loss orders placed around the low of the Pin Bar a common pattern stop level.
The market recovered quickly and offered a re-entry chance with a second bullish Pin Bar. We bought as price broke above its high. After our entry, the market rose with a strong thrust. The Pin Bar was triggered and some traders went long. After overshooting the last trend high, price fell and hit stop- loss orders placed at the low of the Pin Bar.
As buying pressure emerged lower shadows , we bought as the market rose above a bullish Marubozu. The market meandered for a few hours before falling again, resulting in a loss.
This losing trade has a stark difference with the winning instance. It was a hint that the market bias was no longer bullish. Moreover, the market has hit a target projected from a triangle chart pattern orange lines. After the projected target was hit, some traders took their profits and closed their long positions.
It follows that when the market fell down, fewer traders were stopped out and trapped out. Hence, the re-entry approach was not ideal in this case. Generally, good re-entries occur soon after the original setup. But this method may cause more harm than good. The reason is that not every time it breaks these lines it is headed for a strong up or downtrend.
Wait for a pullback and go to enter the trade. It did retrace, however, the price did not continue to go in the direction of the trend. Place your stop loss below the bottom moving average line. Depending on what time frame you are in will vary on how large your stop is. Your take profit is when the price touches the period line. You can tweak these rules as you wish. But we found the best way to push your winners with this strategy is to wait until the price touches the period line.
Big Three Trading Strategy is fun to use and trade with. It is not very messy on your chart because there are only three little lines to look at. Our team believes this strategy uses the best three trading indicators that work well together. The moving averages are arguably the most popular forex indicators.
If you prefer to not have indicators on your chart, check out our price action pin bar strategy. I look forward to hearing what you guys think about this strategy.
Thanks for reading and we hope to see you back! Please leave a comment below if you have any questions about our big three strategies. Thanks, Traders! We specialize in teaching traders of all skill levels how to trade stocks, options, forex, cryptocurrencies, commodities, and more. Our mission is to address the lack of good information for market traders and to simplify trading education by giving readers a detailed plan with step-by-step rules to follow.
Big Three Strategy But we found the best way to push your winners with this strategy is to wait until the price touches the period line. I love this personally I've come across what I never expected, and as I read and do research, I discovered that this is the most powerful weapon to change my position. But I would like to know how to do the settings on my android since I may need to trade anywhere. Thanks so much. Thanks for the comment.
What platform are you using for mobile trading? If you use tradingview, you can add all these indicators on the chart. Currently meta trader does not provide mobile access for custom indicators. You can use tradingview on mobile, however which we do have this for. For sma 20 I change use bollinger band 20 and take profit if price touch midlle band because, if touch sma 80, only small profit. I test gbpjpy m5. Whats you take on these indicators?
Do you think they are the best trading indicators? If not, what indicators do you use? I have tested the three moving averages and they work quite well when rules are followed.
The indicator would be even more fun to use as it's a visual indicator that a novice and an experienced trader can easily use. Love the Big Three trading stradegy.. I also use stochastic oscillater to give me more insurance.. Im finding 3 hour chart with 5 minute candles to be best for me Keep up the great work..
Thank you so much.. Thank yyou for thhe auspicious writeup. It in facct wass a amujsement account it. Loook advanced tto more arded agreeable fro you!
However, hhow couuld we communicate? Thank you for your for the Big Three Strategy. This is enteresting chart that i think will work. Thanks again ,,. Please log in again. The login page will open in a new tab. After logging in you can close it and return to this page. I could go on an ongoing back in history about this but you get the point.
Below are some key details about the strategy you'll want to understand before we get started. This can be used for swing trading, day trading, and scalping. This strategy can be traded with any market, such as Stocks, Futures , and Forex.
It can be a great addition to your current trading plan.
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