1Profit Pioneers Besics to Advanced Trading Book. 1

Contents
The Stock Market Gateway...........................................................................................3
Stock Market Basics......................................................................................................5
Stock Market Indexes.................................................................................................10
Selection Of Online Stock Broker...............................................................................14
Trading checklist.........................................................................................................15
Terminology................................................................................................................17
Trading Psychology ………………………………………………………………………………………………..28
Formation of Stock Charts..........................................................................................39
Channel Based Trading .............................................................................................105
Trendline Baased Trading.........................................................................................117
Elliott Wave Pattern Strategies.................................................................................190
Divergence Cheat Sheet............................................................................................259
Volume Based Trading .............................................................................................300
Swing Based Trading.................................................................................................310
PROFIT PIONEERS Page 2

When trading and investing in the stock market, you are looking to buy
the shares of a company at a low price and make a profit by selling
them at a higher price.
While trading stocks on an exchange, you have to be registered; you

can easily buy and sell shares through TMS id of licensed broker who
will charge you a fee. The vast majority of share trading in today's
world is carried out through online trading platforms.
In this in-depth guide, we go through all of the stock market basics and
how you can get started trading in stocks.
The Stock Market Gateways
If a company is looking to raise capital, it can offer its shares to the

public and list on a stock exchange. This is known as an IPO or initial
public offering.
At the start, the company will choose the price point that the shares
are listed at. Once the shares have been floated on the stock exchange,

the price is open to the public and can move higher and lower
depending on supply and demand.
While a company can issue more shares, there is always a limited

supply, which allows you to know the number of shares in circulation.
When buying shares in a company, you are becoming a part-owner of

that company and gain any rights that come with those shares, for
example, voting and dividend rights.

Stock Market Basics

The share market, or stock market, is a dynamic marketplace where
individuals and institutions buy and sell ownership stakes, known as
shares, in publicly-traded companies. These shares represent a claim on
the assets and earnings of the company. Investing in the share market
provides individuals with the opportunity to participate in the growth
and success of businesses across various industries.
When you own stock in a company, you own a slice of that company
equal to the number of shares you own. For example, if you own 10
shares of (KBSH) and there are 100 shares in total, you own 10% of
Kutheli Bhukhari Small hydropower Company.
This part-ownership gives you voting rights and any potential dividend
payments.
It is important to note that when buying and selling your shares, you
are not buying or selling them directly from the company. You will
normally make your trades through a registered broker, and you will be
buying or selling your shares to another stock investor.

What Determines Share Prices
The prices of stock of ABC company can move higher for several
different reasons, but in the end, it all comes down to supply and
demand. If more people want to buy the shares, then the price will rise.
If more people are trying to sell, then the price will fall.
Supply and Demand
Some of the most common reasons supply and demand are affected
include;
● Company Earnings: The financial welfare of a company plays a
huge role in the share price. Not only how much money the
company is making but also how much money they could make in
the future is factored into a stock's price.
● State of the Economy: Whether the economy is booming or
trending lower will have a large role in how well stock prices are
going. When we are in strong bull markets, it can be easy to find

strong winning stocks. When things turn around and the economy
takes a dive, finding stocks that remain positive becomes much
harder.
● Interest rates: When interest rates move lowers, Big investors,
mutual fund can bring big amount of money from the different
institution like bank, finance. When big amount of money comes
into the market there is high chances to Rise the market.
Ultimatly , there is an opposite relation between the interest rate
and stock market.
● Technical Analysis: Many investors are using technical analysis
and chart patterns for both finding and managing their stock
trades. Technical analysis doesn’t means only the reading chart,it
makes to sense of mass psychology, market sentiment and
human behaviours.
Buyers Fighting Sellers
Everything is taken into account, the price of a companies stock comes

down to the laws of supply and demand.

There are millions of transactions from both buyers and sellers taking
place in the market every day. The price of a company's stock will move
higher if more buyers are willing to pay higher and higher prices.
However, on the flip side, when the sellers move in and overwhelm the
buyers, we can see price sell-off quickly and aggressively lower.
Understanding the Stock Market
It has been proven repeatedly that over long periods of time, the stock
market can generate substantial returns that are hard to beat.

As we discuss in more depth below, not only can you make money from
buying low and selling for a profit, but as a shareholder, you can also
make money from dividends.
When many investors think of the stock market, they either think of
trading or what it would be like to find the next Facebook or Google
before it takes off. However, to make solid profits over long periods of
time, you do not need to take such large risks looking for the next big
player.
Investing in companies that have proven long-term track records of

profits can give you long-term capital gains while giving you an income
every year from the company dividend.
Stock Market Indexes
Whilst there are many thousands of stocks on many different stock

exchanges worldwide, there are also what are known as stock market
indexes.

Stock market indexes show you the price of a basket of stocks for
certain indices. For example, when people talk about the Hydropower,
they are talking about the stock market index and when they are talk
about the Upper which represents the company that trade under
Hydropower index of NEPSE.
well know market indexes In NEPSE are:

What is a Dividend?
Whilst making profits through capital gain is a popular way to make

money in the stock market, profiting from dividends can also be very
lucrative.
A dividend is a payment to shareholders from the companies profit.

This is normally made once or twice a year, depending on the company.
Some large companies also pay out quarterly dividends.
Normally only the biggest and most profitable companies will pay out
dividends, and they will publicly declare the amount that each dividend
is going to be.
To be eligible for a dividend payment, you must be a fully paid stock

owner by the ex-dividend date.
Whilst profitable companies will regularly pay out their normal

dividend when making profits; they can also pay out special dividends.

How to Invest in Stocks for Beginners with Little Money
There are two common ways traders and investors take part in the
stock market.
Whilst at first glance they seem very similar, they have very different
pros and cons.
Buying and Owning Shares
The most common form of share investing is buying the shares

outright. This means you own a slice of that company and all the rights
that come with those shares, including potential dividends.
This type of trading normally involves no margin. That means if you buy
Rs 100K worth of stock, then you will need to front up the whole Rs.
100k at the time of settlement.
With this type of investing, you are looking to buy as cheap as possible
and profit as the price rises.

Selection of licensed stock Broker
The type of stockbroker you choose to use will largely be dependent on

the style of trading or investing you want to do.
If you want to trade the different stocks in a NEPSE choose the best
broker with highest rating and don’t forget to get a information about
the timing of payout, provision of Non-cash collateral and How broker
Response to the client etc.
There are total 75 licensed broker in Nepal as per Feb 2024.
Some of licensed broker in Nepal are:

TRADING CHECKLIST
TRADING ROUTINE
1) Is this trade formed on my time frame? Yes /No

2) Is this trade formed in one of my Stocks / Forex pairs?
TRADING STRATEGY
1) Does this trade meet my trade setup rules?

Example: is the 50 EMA above
2) 200 for a long trade?
3) Is there a valid trade entries.For example a candlestick

pattern entry?
4) Is there any golden crossover in MACD Indicator?
MONEY MANAGEMENT
1) Am I risking the correct amount of my account?
2) Stop loss method correct?
3) Profit target method is correct?

4) Is the minimum risk reward achieved?

Terminology

If you want to become a profitable trader in the stock market, you must
know the terminology that traders and brokers commonly use.
This post goes through the most common stock market terminology
you will need to know to start trading stocks.
The Most Common Stock Market Terminology
Buy
To buy shares in a company.
Sell
To sell your shares that you own are making a profit or to try and
minimize a loss.
Bid
The price you are willing to pay for a certain stock.
Ask
The ask price is the price people are looking to sell their stocks for.

Spread
The spread is the difference between the bid and ask price and what
you will be paying to your broker to make your trade.
Stock Symbol
The stock symbol represents the shortened symbol for the larger stock
name.
Annual Report
Each publicly listed company will prepare an annual report for the
market. This is a wide-ranging report showing cash holding, account
management, and the company's overall financials.
Bull
A bull is someone who is expecting prices to move higher. A bullish

market is a market moving higher.

Bear
A bear is someone expecting the market to move lower. A bearish

market is a market that is moving lower.

Blue Chip Stocks
Blue-chip stocks are the largest and most significant companies listed
on the stock exchanges. These companies normally make the largest
profits and pay the biggest dividends. They are also normally the
leaders of their industries. For instances there are various stock in
NEPSE like UNL,HDL,RBCL,NTC , Which have very big potential to pay
biggest dividends.
Limit Order

When placing a buy limit order, you are placing an order below where
the price currently is and then looking for the price to bounce higher
once you have been entered.
Market Order
A market order is a type of order that will enter you into a trade or exit
you from your position as quickly as possible at the best available price
on offer.
Volatility

Volatility is the amount prices are moving higher and lower. A highly
volatile market is a market that sees large and fast swings higher and
lower.
Averaging Down
Averaging down is a common strategy in the stock market where you

continually buy more of a stock as the price moves lower. This makes
your overall average entry price lower.
Capitalization
Capitalization is how much all of the company's shares are worth

overall.
Float
Float is the number of shares overall that can be publicly traded In daily
basis.
IPO
When a private company gets listed on the stock exchange and

becomes a public company, it has an initial public offering or IPO.
Secondary Offering

When a company is looking to raise more money from the public, it can
have a secondary offering.
Day Trading
Day trading refers to a certain style of trading where a trader is looking

to enter and exit their trades before the market closes each day. A day
trader is not holding their trades past the markets open.
Broker
When looking to trade the stock market, you will need to use a
registered stockbroker who will buy and sell the stocks for you.
Portfolio
If you start to build up a few investments, it becomes known as a

portfolio.
Index
An index is a benchmark normally designed to show you a certain

sector or part of the economy. An example of a stock index is the Dow
Jones formed with the 30 largest public companies listed on the US
stock exchange. There are many stock indexes around the world, and

there are indexes that show different parts of the economy. You can
also trade on stock indexes.
Margin
When using margin, you borrow money to make larger investments.
Dividend
Companies that make large and regular profits will certain amount in
terms of cash or Share which is pay out by this particular stock to their
stockholders.

Execution
Execution refers to entering or exiting the market. For example, exiting

your order to buy a certain stock.
Sector
A sector is a certain part of the economy or a group of related stocks
For examples. If you are engaged in a Nepal stock exchange you can see
these sector under the NEPSE .
Volume

How many shares get traded or a given time period is referred to as vol
When volume is large, then more shares are being trades compared to
lower volume periods.
Yield
Yield is the measurement of what return you are receiving on your

investment. This typically refers to the amount of dividend your stock is
paying you each year and what percentage of profit you are collecting
each year.
Lastly on Stock Market Terminology
Whilst this list goes through the most commonly used terms that you
will run into in your stock trading, it is not exhaustive, and there are
other terms you will come across.
These include less commonly used terms such as 'dead cat bounce' and
'golden cross.'
This list, however, is a good starting point and will ensure you have the
basics terms you need to start buying and selling in the stock mar

FUNDAMENTAL ANALYSIS FOR NEPSE

D

Trading Psychology

Trading psychology is one of the most commonly overlooked and
underrated aspects of successful trading .
Whilst every trader needs a great trading strategy that will make them
winning trades, if you are making the same mistakes over and over
again, then you will continue to lose money.
If you risk too much, over-trade, revenge trade to get back your losses
or make other psychological mistakes like not cutting your losses small
when you should, then it does not matter how good your strategy is,
you will lose money.
In this post we go through exactly why trading psychology is so

important and how you can start using the best trading mindset.
What is Trading Psychology?

Trading psychology is a broad term that takes into account everything
that involves your emotions when trading.
When traders refer to trading psychology they are normally referring to

the mistakes and mental errors that they continually repeat that cost
them money.
These errors normally fall into two categories; errors from being greedy
and errors from being fearful.
As we discuss below; if you don't understand and work on these errors,

then you will find it extremely hard to be a successful trader.
Why Nepal Stock Exchange is so complicated?
In Nepal, just knowing technical stuff isn't enough for the stock market.
You've got to understand politics, Investor feelings, and what the
government is up to with shares market. It's like a puzzle where you
need to know who's in charge because their ideas followed by the
market moves.
Some folks think Communist parties don't like the stock market much.
They prefer putting money into things that make production rather than
just buying shares. On the other hand, Democratic parties are more into
letting capitalism do its thing, including the stock market.
But here's the twist: even within parties, certain people can make a big
difference. Take Bishnu Poudel, for example. He's from the Communist
party but was known for making the stock market bull. And then there's
Dr. Ram Saran, who didn't let politics get in the way of being good for
the stock market.
How to chased with politics
Understanding how politics affects the share market can be tricky, but
it's important for investors to keep an eye on it. If there's a new
government on the pipeline , knowing some basic things like which party
will be in charge, who the next prime minister and finance minister will
be, and whether the finance minister has a background in finance can
help predict how the markets might react.

If you notice that whenever there's a change in government, the market
always react either by red candle or green candle. if upcoming
government is not good, it might be a good idea to use a strategy called

stop-loss. This means selling your stocks when they reach a certain low
point to prevent big losses, then buying them back when the prices
drop. But if the new finance minister is someone trusted and
experienced, you might not need to worry so much. In that case, you
could stick with your investments without waiting for the market to go
up and down
Why Does Trading Psychology Matter?
The psychological mistakes that traders make are common amongst

almost all traders and they can hold you back from being successful.
The reason these errors are so common is because when trading we are
all dealing with either making or losing money. This brings on feelings
of greed and fear. When we are being greedy we can have a tendency
to make the same mistakes over and over again that will hurt our
results. These mistakes are not taking profit when we should, making
far too many trades than we should or risking a lot more than we
should.

We do these things because we kick into greed mode thinking we are
going to make a lot of money.
When we move into fear mode another set of mistakes creep in. These
errors are normally holding onto losses for far too long instead of
quickly cutting them short or not entering the next good trade we have
found because the last trade just lost. We start doing these things
because we are fearful of losing money.
These psychological errors will continue to hold you back and stop you
making money no matter how great your trading strategy is.
How to Get the Best Trading Mindset
Whilst many traders will try to pretend that they don't have any trading
emotions, this is actually the wrong way to get the optimum trading
mindset.
All traders deal with emotions that making and losing money throw up.

If you don't have any emotion around making and losing money whilst
you are trading, then you simply are not yet risking enough money.
To get the best trading mindset you need to first acknowledge all of the
feelings that come with both winning and losing.
Once you begin to understand these feelings and the full range of
emotions you experience when you are trading you can begin to deal
with them.
When you start to understand how you feel when you lose you can deal
with it. Instead of pretending you feel nothing, you can actually work on
it and learn to overcome it to become a much better trader.
You should know as a trader
There are many, many different psychology tips that you could use in
your trading, but I have turned the list below into a short set of dot
points that you can remember and that will help you the most.
● Don't risk too much on any one trade.
● Don't chase your losses with revenge trades.

● Don't over-trade and make too many trades.
● Don't let the last trade stop you making your next trade.
● Always cut your losses short at your stop loss point.
● Always take profit at your designated profit target level. Don't get
greedy and hold for more.
Mass sentiment: You should always keep your eyes on the external
factors like Monetary Policy and its review, Interest rate, news that
floats on media about share market , market influencer, condition of
liquidity, real estate business and its condition, unlocking period of
promoter share etc. Because those factors directly and indirectly can
affect the market, so always do try to go with authentic sentiment not
with rumers or Boom Boom kinds of stuff.
Trading Psychology Books
There are many trading psychology books you can read to improve your
trading.
Whilst a lot of them are good reads, a lot of them are also incredibly
boring.

The following three books are not boring and they will help you in your
trading immensely.
Trading In The Zone by Mark Douglas
This is one of the most famous and popular trading books by the late
Mark Douglas.
The great thing about this book is that it breaks down what can be an
incredibly complicated subject and makes it easy to understand.
Douglas goes through all the mental habits and mistakes that are
constantly costing you money in your trading.

The Disciplined Trader by Mark Douglas
This is another book by Mark Douglas and is now also known as another
one of his classics.
This book looks closely at why traders tend to make the same mistakes
over and over again.

You get taken through a step-by-step walkthrough and will begin to
understand why it is you have been making the mistakes you have
been.
Trading Psychology 2.0 : Brett N. Steenbarger
This is an extremely comprehensive trading psychology book by Brett

Steenbarger.
This is not a book you are going to finish in one sitting and it can often
take some time to go over things a few times to fully understand their
meaning.
This book includes full academic research and you will come away after
having read it with a lot of practical tips you can start using in your own
trading.
Trading Mindset Quotes
Need help with some trading psychology quotes? Here a few of the
best.

Learn to take losses. The most important thing in making money is
not letting your losses get out of hand.
● Marty Schwartz
If you cannot control your emotions, you can’t control your money.
● Warren Buffet
Do more of what works and less of what doesn’t.
● Steve Clark
Risk comes from not knowing what you are doing.
● Warren Buffet

Formation Of Stock Charts

Learning how to trade the stock market successfully can come with a
lot of challenges. There are many different strategies and stock market
terms to learn, and you will need to create an edge over the market.
Something that can help you create an edge over the market is reading
and accurately analyzing stock charts.
In this post, we go through everything you need to know about stock

charts and how you can start reading them to find high-probability
trades.
What Exactly is a Stock Chart?
A stock chart shows you a visual representation of what price has done
over a certain period of time. For example, you could be looking at a 15
minute stock chart that shows what the price is doing every 15
minutes, or you could be looking at a longer-term chart such as the
weekly chart.
Stock charts are used to quickly get an idea of what price has done in
history and what it could do in the future.

Many technical analysis and price action traders will use these sorts of
charts to find patterns and trends to help them find their trades. As we
discuss below, you can find many high-probability price patterns on
your stock charts that can help you make trades.
The example chart below is the daily chart of UNL showing you the
different price movements, higher and lower.

Choosing the Best Stock Chart
There are different charts that you can use in your stock trading that
will show you different information. They each have their pros and
cons.
Line Chart
This is the simplest of all the stock market charts. This chart also has
the least amount of information and is just one long line moving
higher and lower.
As price moves higher or lower, the line chart will be updated and
form a line.
This type of chart is good for quickly spotting potential trends and also
marking support and resistance.

Bar Charts
The bar chart and candlestick chart are similar.
The bar chart shows you more information than a line chart as it also
shows you the open, close, high, and low that price made for each
session.
The example below is a bar chart of Non-life Insurence . The le tip or

wing shows where the price opened. The bar high and low show how
far the pric
Having a candlestick body is so handy because you can quickly and

easily see if the price has moved higher or lower.
In the chart below, the red candles are bearish candles where the price
has moved lower. The green candles are bullish candles where the
price has moved higher.

How to Read Stock Charts
A er choosing the type of chart you will use, you will then want to start
analyzing these charts to find and manage trades.
Some of the most popular strategies for reading stock charts include;
Look for the Obvious Trend

Trading with the obvious trend can o en reward you with long-running
winning trades that can be minimal risk.
Obvious trends will tend to run for long periods. Whilst every trend
has pullbacks where price makes a move against the trend until the
trend fails, it can offer high probability trades.
In the example chart below price is on a trend higher. Price makes

regular moves and swings lower against the trend, but the trend
overall continues moving higher.
Using Support and Resistance

Support and resistance are some of the most common forms of trading
across all different markets and time frames.
When using support and resistance in your trading, you can either look
for the support or resistance to bounce or for a breakout.
In the example below, price moves into an important area of support.

This could be a high probability area to look for long trades before the
price rejects the support level and then moves back higher.
Adding Important Indicators

Stock traders will o en use indicators in their chart analysis to get an
idea of what price could potentially do in the future.
One of the most popular indicators in the stock market is the moving
average and, in particular, the longer-term 200 period simple moving
average.
The 200 period moving average can give you a quick indication of the
overall price trend, and it can also be used as dynamic support and
resistance.
In the example chart below, we can see that price continually stays
below the 200 period moving average. We can also see that each time
price moves higher to test this moving average, it rejects it as
resistance and moves lower.

Following the Volume Information
Volume in the stock market is the amount of shares that are being
traded.
Volume can be a key indicator in the stock market, and you can use it
to find potential trades. You can also use it to confirm a potential trade
idea you had.
When the price is moving higher with increased volume, it is normally

seen as a good sign that the stock is strong and healthy. The opposite
is also true when the price starts falling, and the volume is increasing.
This can mean the stock is gaining momentum lower.

If the volume starts to become less and less a er a large move higher or
lower, it could be a sign that a potential reversal in the opposite
direction could be on the cards.
Platforms That Offer the Best Stock Trading Charts and Tools
To correctly analyze stock charts and their price action, you will need a
platform that has all of the tools for you to use.
When choosing your stock chart platform, you will also need to
consider the type of trading you are going to be doing and the type of
broker you want.
If you are looking to trade stocks exchange like Nepse ,Sensex then
trading view offers the best charts with all the inbuilt tools you need
for free.

Supply and Demand in Stock market

Supply and demand-based trading in Forex isn’t different with any other
real world trade.

Whilst many trading websites will try and make this subject overly
complicated, the truth is that it is not.
The trick however when it comes to using supply and demand levels
when trading is being able to quickly and easily spot these levels to find
and then manage your trades.
In this post we go through exactly what supply and demand is and how
you can use it in your trading.
What is Supply and Demand?
Supply and demand are simply how much something is wanted and
how much there is to offer.
Supply is the amount on offer for a certain product, asset or in the case
of trading
Forex, a currency.
Demand is the amount that is wanted for a certain asset, product or

currency.

For a simple real word example think of the price of petrol / gas. When
there is a lot of gas around and there is a large amount of supply, then
the price will fall and be cheaper.
However, on the flip side, if the demand increases and there is less
supply available, then people will start to pay higher prices.
Supply and demand can be seen on everything from house prices

through to the amount you pay for your food.
What is Supply and Demand in Trading?
If there is a large amount of demand for a certain stock, then it will rise.
however, the demand falls away and there becomes an imbalance
where there is too much supply, then just like in the real world the
price will start to fall.
The easiest way to think about this is what happens when price starts
rising rapidly in a rising market. As price begins to surge higher more
and more traders are trying to enter (an increase in demand). Because

there is not enough supply to keep up with this rising demand the price
rises higher.
There are many ways to spot supply and demand levels on your Forex
charts. Common ways are trendlines , support and resistance and even
using dynamic support and resistance with moving averages.
However, the easiest ways for you to spot supply and demand levels on
your charts is with major support and resistance levels. These levels
where price continually bounces from show a consistent level where
price is finding an oversupply and a level where demand grows.

How to Identify Supply and Demand in the stock Market?
Price is in a constant tug of war between the buyers and sellers. This
tug of war is to figure out the supply and demand levels and ultimately
who is in control of the next move.
As the example chart shows below, as price moves lower there is an

oversupply and a lack of demand. This sends prices lower. Price moves
into a demand level (support) where the market dynamics shift. At this
level that amount of demand picks up and because demand is now
higher, the supply starts to get lower. This sends prices back higher.
As price moves back higher traders start to cash out of their profitable
trades. Because traders are leaving their positions and selling out, all of
a sudden there is more supply around. What happens when there is
more supply and not as much demand? Price starts to fall back lower
again.

Supply Demand Price Action Trading
Whilst there are many complicated ways you can start to use supply
and demand levels in your trading, the easiest and often the best is
with a clean price action chart.
What does a clean price action chart mean? No indicators or any other
distractions.
Just raw price action.
See the example chart below. First you notice that price is in a trend
higher. You then want to find long trades inline with the current trend.
As this example chart shows, you get two potential trading signals to
make a long entry.
Price first pulls back into a clear demand (support) area where you
could enter long. Price then makes a second pulback into the same
demand zone before making another large move higher.

Finding Supply and Demand Trading Signals
Once you have learned how to spot obvious supply and demand zones
on your charts, you can then start using them to find both high
probability trades and also manage your trades.
You can use these levels to make very high reward trades and also to
set your stop loss and profit targets.
You can also use these same levels on all time frames.
Simple Supply and Demand Trading Strategies
The next two examples of supply and demand trades are setups you will
see and be able to use in your trading over and over again. They form
on all time frames and repeat themselves time and again.
In the first example you identify a clear demand level. Price has clearly
found demand at this level multiple times. If you are very aggressive
you could just enter a long trade right from this level.

If you are more conservative you could look to increase the odds of
your trade by using a bullish Japanese candlesticks to confirm your
trade. In this example price forms a bullish engulfing bar at the demand
level to confirm a long trade higher.

In the second example you notice that price is starting to make a move
and trend lower. You also notice price break through a clear support
level. When price moves back into this supply level you could start
looking for short trades. Short trades here would be at an obvious
supply level and in line with the trend lower.
Just like the first example you could also use a candlestick pattern to
confirm the bearish move lower. In this example price forms a Shooting
star pattern to signal a move back lower.

Lastly
Being able to accurately identify and use supply and demand levels can
take some time and practice.
It is not as easy as downloading and using an indicator that tells you

what to do and what direction to trade.
However, there are many benefits to supply and demand trading once
you have mastered it. You can use it to find trades on all time frames
and it will also help you with your stops and profit targets.
Make sure you test out any new strategies on free demo chart. before
you ever risk any real money so you know that they work for you and
you are completely comfortable with them.

Using simple and repeatable price action triggers that form time and
again in the markets can be a great way to find entries into the market.
These triggers will often get you in at the best time and just as the
market is about to reverse, giving you the optimum entry price.
Why Entry Signals are too Important?

Buying and selling a currency pair in order for you to gain profit from the
differences between the entry and exit price is your main objective in
Forex trading.
Buying low and selling high is universal. Some traders spend more time
thinking profoundly on entry points, whilst others believe that success
sometimes relies on how a trader exits their trades.
Knowing the value of a currency pair that will appreciate in the future
isn’t enough unless you have a clear conception of when the appreciation
will occur.

CANDLESTICKS
Remember the saying; “Give a man a fish, and you feed him for a day.
Teach a man to fish, and you feed him for a lifetime”.
Just like in trading, you don’t need to get the signals, but learn how to
find them and teach yourself how to actually get profits for a lifetime.
Without the mastery of trade timing and good trigger points you will
never make any profits. That’s why a trader uses charts in their daily
trading.
You can use charts to determine everything that is happening in the Forex
market. One of the most useful and common types of charts is the
candlestick chart.
How Can Candlestick Charts Help You?

It is a type of financial chart that is more visually appealing than the
common bar chart, thus making price action easier to interpret and
analyze.
It can also help an investor make wiser buy and sell decisions because
of its recognizable patterns.

PIN BAR REVERSAL
Patterns play a very crucial role in trading, so here’s to a breakdown of

the most helpful patterns for your daily trading needs.
Pin Bar Reversal = Pin Bars

Pin Bars are one of the most powerful price action patterns in Forex
trading as they are easy to recognize which means both professionals
and retail traders use them.

HOW TO FIND
What is a Pin Bar?

The pin bar (also known as Pinocchio Bar) formation is a reversal setup.
It is a one candle / bar formation that has an obvious large tail or
shadow either up or down.
A pin bar is a single candlestick setup that clues price action into
potential reversals in the market.
It also has an elongated wick that sticks out.
There is also a Fake Pin Bar that is different than the normal pin bars.
Because of the price action, you can now determine the difference
between the two. If a long wick sticks out from recent prices then it’s a pin
bar, if the long wick does not stick out then it’s not a genuine pin bar, but
rather a ‘FAKE PIN BAR’.
How to Spot the Pin Bar?

Bearish pin bars form after several bullish candles and have a nose that
is higher than the top of the previous candle.
The nose must be at least 75% of the candle size and the candle body must
be less than 16%. (Vice Versa for a Bullish Pin Bar).

ENTRIES
Pin Bar Entries

The best way to trade any market is to trade in line with the trend.
In a trending market, a pin bar entry signal can offer a better risk reward
with lower risk.

RISK LEVELS
If the pin bar shows a rejection to lower prices, it’s a bullish pin bar since
the rejection shows the bulls or buyers are pushing price higher.
Aggressive - High Potential Reward and Risk: 50% Retrace This entry
involves taking a 50% retrace of the pin bar or other reversal candles
wick.
For this entry you would be setting a trade entry and waiting for price to
move higher or lower 50% in the opposite direction of where you actually
want price to go for your trade.
You do this to get a much tighter stop loss and potentially higher reward
pay off.
Medium Reward / Risk Entry: Entry on Close

This entry on reversal trade signals involves entering as soon as price has
closed. When the reversal candle such as the pin bar has closed and it
meets your criteria, you simply enter the trade.
Lower Reward / Risk: Entry on Confirmation / Break Higher or Lower

EXAMPLES
With this entry type you are creating a trade entry and waiting for price
to break higher or lower, above or below the pin bars high or low.
Price is then breaking in the direction that you are looking for price to
move.
This is lower risk, but can create bigger stops that will give you lower
reward.
Each entry has it payoffs for potential risk and reward.

ENGULFING BAR
Engulfing Bar
Engulfing Bar= EB’s, also known as Outside Bars = OB’s are one of the most
widely used strategies in Forex trading and stock market. EB’s can
generate very accurate and reliable signals if identified and understood
correctly.
What is the Engulfing Bar?

There are two types of engulfing bars:
(1) Bullish Engulfing Bar.
(2) Bearish Engulfing Bar.

EX
HO WA M
T OP LFEI N
SD
Bullish Engulfing Bar (BUEB)

The bullish candle fully engulfs the previous candle. It can even engulf
more than one candle, but to be a valid bullish engulfing bar, it must
engulf at least one of the previous candles.
Bearish Engulfing Bar (BEEB)

The bearish candle fully engulfs the previous candle.
Both Bullish and Bearish Engulfing Bars have a “lower low” and “higher
high” like the preceding candle.
How to Spot Engulfing Bars?

Looking for the engulfing bar is pretty simple. The candle should
completely cover the previous candles range, taking out the previous
high and low.

IENXSAI D
MEP B
LEASR
Inside Bar = IB
One of the most familiar candlestick patterns is the inside bar. It forms
when price trades within the high and low ranges of a previous day.
You can call an inside bar a ‘breakout play’.
The best IB’s are made in trending markets with the direction of the
trend.
What is an Inside Bar?

The inside bar is formed when the second bar or candlestick is engulfed
within the previous bar or candlestick high and low.
It is a two-bar price action trading strategy in which the inside bar is

smaller and within high to low range of the prior bar. It can be at the top,
middle or bottom of the bar.
How to Spot the Inside Bar?

You can see what it looks like in-line with a trending market below. As you
can see below it is a down-trending market so the inside bar pattern
would be called the inside bar sell signal.

TRENDS
Here’s another example; this time it’s an inside bar pattern with a
trending market.
In this example, the market was trending higher so the inside bar would
be referred to as the inside bar buy signal.
Inside Bar Entry

ENTRIES
Inside bars can be traded both as reversals and market trend

continuations.
The most commonly used entry with the inside bar is to place a buy stop
or sell stop at the high or low of the mother bar. This way your entry
order is filled when price breaks out above or below the mother bar to
confirm you move and to miss as many false inside bar moves as possible.
How to Use These Reversals Price Action Triggers?
Support and Resistance

In technical analysis, support and resistance levels are the most
important concepts to determine long and short trading opportunities.
Support is a price level where we can see concentration of demand , price

will often turn around and be ‘supported’.
Resistance zones are the opposite to support zones and are levels in the
market where price is finding more sellers and less demand; in other
words, price is finding resistance.
Resistance zones can be great spots to target bearish reversal trades or to
use with your exits.
If you can recognize the zones of support or resistance on your charts, it

will provide both valuable entry and exit points.

TREND LINES
Trend lines
There are 3 different types of markets. These are the uptrend (higher
highs and lows), downtrend (lower highs and lows), and sideways trends
(ranging).
Uptrend trendlines (valleys) are drawn along the bottom of identifiable

support areas. And in a downtrend, lines (peaks) are drawn along the top
of identifiable resistance areas.
You should not try and make the line fit the market.
So how can you draw them? It's easy! Locate a minimum three major
points that align higher or lower.
What are Some of the Stop Loss Strategies Used?

STOP LOSS
Market volatility is never-ending. As a trader, the hardest part is to

mitigate against losses.
NOTE: Set your own stop losses depending on your individual

preferences.
Below are some of the most popular and commonly used stop loss
strategies.
Pin Bar Stop Loss Strategy

You can place a stop loss behind the tail of the pin bar whether it’s
bearish or bullish.
As a result, when price hits your stop loss, the pin bar setup will turn out
to be invalid.
Remember that the market is just notifying you that your pin bar setup
was not strong enough, don’t ever think that it’s a bad thing when price
hits the stop loss.
Inside Bar Stop Loss Strategy
The inside bar stop-loss strategy gives you two options on where you can
place a stop-loss.
It can either be behind the inside bars high or low or even behind the
mother bars high or low.

STRATEGY
If you want a lower risk inside bar stop loss strategy, then it’s behind the
mother bars high or low. Just like the pin bar stop loss strategy, the inside
bar setup becomes invalid once hit.
Confluence Stop Loss Strategy

Traders often use this kind of setup.
With this strategy you will use support and resistance levels, previous
highs and lows, moving averages, trend lines, and channels to find an
appropriate stop level.
The good thing about confluence stops is that they are often used at
obvious price levels in the market.
Note: If price repeatedly takes out your stops by just a few points, add
more confluence levels or add a little padding to place your stops outside
the stop hunting zone.
Volatility Stop Loss Strategy

Professional traders often use this strategy because it has the ability to adapt
to changing market conditions.

If the volatility is high, you can use a larger stop loss for greater swings and
you can shorten when the market calms down.
In times of high volatility, you should widen your targets to counter the
reduced effect on reward: risk ratio.
If the volatility is low then you should set closer targets because price won’t
travel as far.
Final Thoughts
Use price action patterns for entry according to your own risk tolerance and
how aggressive you are as a trader.
Always remember to use a stop loss and always test new strategies on a
good demo trading platform first .

Breakout Trading Strategies

Breakout trading can offer you the opportunity to find and make very
high reward trades that can be highly profitable.
Some of the most explosive and also profitable trades are breakout
trades. The reason for this is because just before price breaks out of an
area it is often tightly contained. When price eventually does breakout
it can often then explode in a large move.
In this lesson we go through exactly what breakout trading is and how

you can make high probability breakout trades.
What is Breakout Trading?
When you are making a breakout trade you are looking for price to
'break' through a key level in the market.
The two most common levels traders will look for breakout trades are
through support and resistance levels and through trendlines.
As a breakout trader you are looking to enter a trade when price breaks
a key level and make a profit as price continues on with the break.

See the example breakout trade below. Price at first is contained and
rejects the resistance level. The breakout trade comes when price
breaks through the resistance level. This allows for long trades to be
placed and profits to be made as price moves higher.
What are the Advantages of Breakout Trading?
Breakout trading can be done on all time frames and on nearly every
market.

The best markets to make breakout trades are where there is a lot of
market movement and volatility. This will give you a better chance of
seeing price explode through a key market level.
When breakout trading you have uncapped profit potential. This means
that unlike a strategy such as range trading where you are trading back
into a support or resistance level, you are trading out of a support and
resistance level. This allows you to make a trade that could run into a
very large winning trade.
Whilst there are a lot of advantages to breakout trading, there are also
some very real risks.
The example below shows exactly what happens when a breakout trade
quickly turns into a fake out. This happens when price attempts to
breakout of a key level, but quickly snaps back and stops all of the
breakout traders out.

Basics of Finding a Breakout Trade
The most important thing to breakout trading and what new breakout
traders often struggle is first finding a major level.
You need to be able to first identify that the potential breakout level
has been respected as a support or resistance level on multiple
occasions.
This goes the same for trendlines.
See the example below. Before breaking out higher price had respected
the obvious resistance level twice. This sets up a clear breakout trade
when price moves up higher and looks to re-test the same level on a
third occasion.

Simple Breakout Trades
Some of the best breakout trades are also the simplest.
Once you have found an obvious level that price has been contained
within such as a key support or resistance level, then you can start
looking for your breakout setups.
Intraday Breakout Trading Strategy
One of the most popular trading strategies is finding and making
intraday breakout trades.
Intraday breakout trades can be both explosive and highly profitable.
The main thing you want to keep in mind when looking for intraday
breakout trades is that you want to trade with the momentum on your
side.
For Example: see the chart example below. Once you notice price has
rejected an obvious support level on multiple occasions, then you can
start looking for breakout trades lower.

The first chance to make a short breakout trade is when price makes a
clean breakout.
If you missed this first trade you could take the second chance entry
when price retests the old breakout area and it holds as a role reversal
and new resistance level.

Example Breakout Trading Strategy
The same strategy used to find intraday breakouts can be used to trade
breakouts on higher time frames.
These higher time frames can be as long term as you like, for example;
daily, weekly or even the monthly time frame.
In the example below, price breaks and importantly closes out of the
key support level. This is the first chance to take a short breakout trade.
After selling off lower price then makes a move back higher and retests
the same old support level that price previously broke out of. This is a
high probability level to look for new short trades as these levels will
often hold as role reversal levels just like this level held as a new
resistance level.

Lastly
Breakout trading can be fast paced, exciting and it can also offer you
very high reward winning trades.
With that said, it can also come with a lot of risks if you have not
practiced your chosen breakout strategy and mastered it.
There is a very real risk of making breakout trades that quickly turn into
'fakeouts' with you quickly being stopped out.

If you want to add breakout trading into your trading toolbox, then the
best thing you can do is get a set of free demo trading charts and test
out different breakout trading strategies to see what suits you the best.

Important Chart Patterns And Their Formation

Chart patterns are incredibly popular in many different markets
because they allow you to not only find profitable trades, but also
manage them.
Whilst there are many charting patterns you can use, some of the most
popular repeat over and over again. They form on all time frames and
you can use them in many different markets from Forex to stocks.
In this post we go through exactly what chart patterns are and how you
can start using them in your own trading.
What are Chart Patterns?
Chart patterns are different to candlestick patterns.
Whilst many traders will be using Japanese candlesticks to find their

trading patterns, there is a difference between a chart pattern and a
candlestick pattern.

A candlestick pattern is normally a one or two candlestick pattern only.
For example, a candlestick pattern may be an inside bar or a dragon fly
doji.
Chart patterns are not formed with just one or two candlesticks and are
created over longer periods of time. They will normally show you a
bigger reversal that is being formed or a larger trend that is being
shaped.
Just because they are formed with more sessions and candlesticks does
not mean that you have to use them for longer forms of trading only.
There are many patterns you can use for short term trading and
patterns that can also be used to make intraday or scalp trades.
How to Use Chart Patterns
You can use chart patterns in different ways in your trading, but the
most popular is to find and then make high probability trade entries.

Chart patterns repeat time and time again. The reason they continue to
form and continue to repeat is because each pattern is price showing
you what traders are doing through the price action.
Given similar sorts of circumstances traders will tend to behave in the

same ways over and over again. Think about how traders get greedy
when looking to make money or fearful when they start losing it. These
emotions don't change.
This is the same reason why the same patterns continue to form over
and over again. Traders do the same things over and over again in the
markets which creates the same patterns.
You can use this knowledge to your advantage by finding and then
trading these patterns to make profitable trades.
Trading Classic Chart Patterns

There are endless amounts of chart patterns you can learn to use in
your own trading. Just like the endless amount of indicators you can
find and use, you don't need to know them all to be profitable.

Often the best way is to find one or two classic chart patterns and then
mastering them so you know them back to the front. This is far better
than finding and trading 20 x different patterns, but being very average
at them all.
Head and Shoulders
The head and shoulders is quite possibly the most popular of all the
chart patterns.
Once you know how to identify it you will start to see it on all your
charts and time frames and you will see how profitable it can be. When
done correctly this pattern can be incredibly reliable.
The head and shoulders pattern are formed with three peaks and a
neckline. The first peak is shoulder one or the 'left shoulder'. The
second peak is the head and the third peak is the right shoulder.

Double Top and Double Bottom
This is a very easy pattern to identify, but a very reliable reversal

pattern.
This pattern is formed with two peaks and a neckline. For example; with
a double top we need to see price form two peaks rejecting the same
resistance level.
For a double bottom we need to see price forming two swing lows
rejecting the same support level.
Entry is normally taken when price breaks higher or lower through the
neckline.

Day Trading Chart Patterns
Charting patterns are not just for the higher time frames and you can
use them for both day trading and intraday trading.
The most commonly used pattern that is used by everyone from the big
banks right down to the smallest retail trader is support and resistance.
When using support and resistance you are either looking to buy / sell
the bounce, or buy / sell the breakout.
When buying or selling the bounce you are looking for the support or
resistance level to hold and for price to make a reversal.
When buying or selling the breakout you are looking for a key support
or resistance area to break.

Intraday Chart Patterns
Another very popular pattern that can be used on all time frames and in
many different markets is role reversal trading.
With role reversal trading you are using support and resistance levels,
but you are looking for these levels to change their roles.
See the example chart below. At first price finds this level as a support
level. Price then breaks lower. When price makes a new move back
higher you are watching to see if the old support level will hold as a role
reversal and new resistance level. If it does you can look for short
trades.
You can use these role reversals as old support / new resistance and
vice versa, old resistance and new support levels.

Lastly
We have only gone through a few of the popular chart patterns in this
post. There are many you can learn and use in your trading.
Keep in mind you don't need to know them all and finding one or two
that you like the best and then mastering them will often be the best
way.
Make sure you test out these patterns and any other new strategies on
free demo / virtual trading charts first before you ever risk any real
money in the live market.

Channel Based Trading

Channel trading can be a great way to find support and resistance areas
and potential breakout trades.
When channel trading, we are trading a channel as it forms and

bounces or breaks through the previous channels levels.
In this post, we discuss exactly what channel trading is and the best
strategies to use it.
What is Channel Trading?
When trading a channel, you use parallel lines connecting the swing
highs and swing lows of a market's support and resistance.
The most common method to mark a channel is by using trendlines.
The swing highs that are marked by the trendline are known as the
channel's resistance levels. The swing lows that are connected to create
the channel become the support level.
As discussed below, these levels can then be used to find bounce’

trades and breakouts.

Trading the price channel is a very popular method of technical analysis
because you can use it on all time frames and in many markets,
including stocks and Forex.
You can use a channel to find support and resistance as the price
continues to move higher or lower, and you can use it to find potential
breakout trades.

Channel Trading Strategies
Whilst there are other strategies that are used with channels such as
the break and retest and the horizontal strategy, four popular
strategies are;
● Ascending Channel Trading Strategy
● Descending Channel Strategy
● Channel Breakout Strategy
● False Breakout Channel Strategy

Ascending Channel Trading
An ascending channel is where the price is moving higher.
With this channel, price is making higher highs and higher lows.

The easiest way to take advantage of this type of channel is by first
identifying the trend higher and the channel.
Once you have done this, you can begin to look for both long and short
trades depending on how aggressive you are.
The higher probability trades are always with the trend. This means
looking to take long trades from the support of the channel when the
price moves into the low.

Aggressive traders may look to trade against the trend when the price
moves into the resistance of the channel and for the price to move back
lower.
Descending Channel Trading
A descending channel is when the price is moving lower.
With this type of channel, price is making a series of lower highs and
lower lows that you will be able to connect with your trendlines.
The two ways you could look to trade the descending channel depend
on how aggressive you are.

If you are a trend trader looking to put the odds in your favor, you may
look to go short when the price moves higher and back into the
resistance of the channel. This would then be trading in line with the
trend lower.
If you are more aggressive, you may consider looking to trade against
the trend and look for long bullish trades when the price moves into the
channel's support level.
Channel Breakout Strategy
This is a very popular channel trading strategy.
With this strategy, you are looking for the channel to break and take
advantage of the possible explosive momentum.
As the example shows below, the price holds the ascending breakout
before finally making a strong breakout higher.
Importantly price also made a strong close above the upper trendline
area.

When the price moved back lower, you will also note that this old
channel level held as a new support level.
One other thing to note is that the longer the channel holds, the
stronger the breakout will be when it occurs.

False Breakout Channel Trading
Channel levels will regularly false break.
You will o en see price pop above or below the channel support or
resistance before snapping back in the opposite direction right back
into the channel.
This gives you an opportunity if you are a false break trader.
As the example shows below, the price was in a channel moving lower.
The price tested the resistance of the channel before popping out just
higher. It then snapped back lower, forming a bearish engulfing bar to
signal a potential false break and lower prices.
Just like in this example, you can use your Japanese candlesticks when
looking for potential channel trade entries.

Channel tool in Trading view
To start channel trading in your set up is very straightforward.
Simply follow these steps;
● Open your app.
● Select insert’ > tools > parallal channel.

● Select the first high or low you would like to mark your trendline
with your computer mouse. Drag the trendline until you are
happy with how it is positioned on your chart.
● Repeat this last step to create the second part of the channel.

Trendline Based Trading

Trendlines are one of the most widely used technical analysis tools in
every stock exchange like Nepse, sensex and forex as well to help find
support and resistance.
If you understand and can draw your trendlines correctly, then they
can be an incredibly accurate technical analysis weapon.
There are some key rules to marking your trendlines correctly and a
lot of traders struggle at times with forcing the markets and placing
their trendlines in the wrong areas.
What Are Trendlines Really Used in Stock exchange?
When marking a trendline you are trying to highlight a support or

resistance level and a possible area to find great trades.
You are looking at where price may stop and respect the trendline as a
support or resistance.
Before explaining how you can use your trendlines, we need to know
the three types of markets;
1. Uptrend (usually noted with higher lows and higher highs)

2. Downtrend (usually noted with lower highs and lower lows)
3. Sideways ranging markets with no clear trend
You can use trendlines to find support and resistance in each of these
three markets.
For example; if price is in an up-trend you will quite o en see a

trendline form with price creating a series of higher lows that match as
a support level.
How to Correctly Draw Trendlines
In most of the major lessons you will find discussing trendlines and
how to mark them, people discuss using only two swing points.
There is a pretty large flaw in this way of marking trendlines. If you use
only two swing points, then you could find a trendline anywhere on
the chart at any time. This does not make it a reliable support or
resistance level and somewhere you should look to find trades, it just
makes it two random points connecting.

If you flip to your own chart now you will see what I mean. I have
added an example below; see how we could make any number of
trendlines?

To have a confirmed trendline and a support or resistance we could
look to find trades at, we need a minimum of three swing points to
line up.
This shows that price has continually respected a level and is not just a
random point.
The easiest way for you to mark your trendlines in all three market
types is to find the recent swing highs and lows.
Using your charts trendline tools, see if these highs and lows match.

Price is Not Always Perfect
Price will not always create perfect trendlines.
To find the best trendline trading opportunities don’t be tricked by the

candle wicks and false breaks that the markets create.
Just like a normal horizontal support and resistance level, the market
will false break a trend line.
Also keep in mind when marking your trendlines that they are not
perfect exact lines. Trendlines are zones of support and resistance and
zones where you are going to look for trades.
Match Your Trendlines with Other Price Action Clues
Whilst trendlines are a great technical analysis tool, you should be

using them with other price action analysis to create even better trade
setups.
You can increase your chances of making winning trades by lining up

trendlines with horizontal support and resistance areas to find sweet
spots.

You can also use other technical trading indicators like the Moving
Average.
Trendline Trading Opportunities
There are three major trading opportunities that you can keep an eye
out for when using a trendline in your trading;
Trendline Reversal Trading
This is the most popular trendline trading strategy and involves

marking your trendline and then looking for the market to reverse
when it is touched.
Price action traders will increase their odds of making winning trades
by using other strategies such as Japanese candlesticks to confirm that
price is looking to indeed reverse.
Below is an example of price forming a bullish pin bar reversal when it

hits the trendline;

Channel Trading
Trendline channel trading is very similar to range trading, but price is

normally making a move either higher or lower.
In this move higher or lower you have both a trendline for support and
resistance that you can use to trade the ‘channel’.
When channel trading you could trade both long and short for as long
as the channel holds.
See the example below on how to trade channels with trendlines;

Trendline Breakouts
There are two major ways you can look to play a trendline breakout.
The first is the most aggressive and involves watching and waiting for
the trendline to break. When you see price has broken and closed

outside the trendline support or resistance you enter a breakout
trade.
The other method and less aggressive trendline breakout strategy is to

watch for a breakout and when you see a break occurring look for
price to make a new test of the old trendline support or resistance
area.
With this strategy you are looking to see if the trendline support or
resistance that has been broken holds as a new support / resistance
for you to enter a trade. See example below;

Lastly on Trendlines
It is very easy to mark trendlines where they shouldn’t belong.

Be careful you don’t begin marking trendlines on every single chart just
for the sake of marking a trendline. Only mark them when they are
obvious and don’t over analyze them.
Make sure you find three clear points of reference and to increase
your odds use other strategies like Japanese candlesticks and your
favorite indicators.

Moving Average: How to Use in Stock and Forex
Markets
Technical Indicators are a fundamental part of technical analysis. .
These indicators are the best way for you to forecast financial market
direction based on its historic price, volume, and even future contracts.
As a trader, you probably want the most effective and common
indicator that you can use on your trading basis.
One of the best indicators out there is called the “Moving Average”.
What is a Moving Average?
Moving Averages are used widely by traders on their price action charts
because they can track and identify trends by smoothing the markets
fluctuations.

A moving average is a technical indicator that helps you smooth out
price action and it can also identify the predominant trend in a market.
They can also be used to provide dynamic support and resistance levels
as the markets moves higher or lower.
A moving average is simply showing the average price over a certain

period of time.
As the price changes, its moving average either increases or decreases.
The common application of moving averages is to identify the trend

direction.
It may also be calculated for any sequential data sets, opening and
closing prices, high and low price, trading volume, or any other
indicators.
There are two commonly used moving averages:
(1) Simple Moving Average (SMA)
(2) Exponential Moving Average (EMA)
PROFIT PIONERS Page 130

Simple Moving Average (SMA): This indicator cant be conduct on
platforms like Nepse alfa , Chukul, etc.

As the name implies, it is the simplest form of moving average.
It is very easy to understand and is calculated by adding prices over a

given number of periods, then dividing the sum by the number of
periods.
For example; a 10-day SMA would add together the closing prices for
the last 10 days and then divide the total number by 10; a simple
arithmetic mean. Each time a new period occurs, the moving average
moves forward dropping its first data point and adding the newest one.
Here is another example of a 6-day SMA:
Last Closing Prices for Apple [
43.41, 43.52, 43.21, 43.77, 43.58, 43.63 = 261.12
To calculate SMA, divide the total of closing prices by the number of

periods

6-day SMA= 261.12/6 = 43.52
Exponential Moving Average (EMA)

Exponential Moving Average is the 2nd most widely used technical
indicator.
It gives greater weight to more recent prices and are calculated by

applying a percentage of today’s closing price to the recent(yesterday)
moving average.
The difference between the SMA and EMA is that SMAs look at all data
equally while EMAs will factor recent market moves higher in weight.
EMAs also react faster to recent price changes than SMAs.
An EMA has to start somewhere, so an SMA is used as the previous

periods EMA in its first calculation. After that, calculate the weighting
multiplier. Lastly, calculate the EMA for each day between the initial
EMA value and today.
Formula for a 10-day EMA:
Initial SMA: 10-period sum/10
Multiplier: (2 / (Time Periods + 1)) = (2 / (10 + 1)) = 0.1818 (18.18%)

EMA: {Close — EMA (Previous Day)} x Multiplier + EMA (Previous Day)
What Markets is a Moving Average Used in?
Forex Markets are extraordinarily liquid because of the vast number of

participants. Stocks can also be liquid, but will be less liquid once you
have moved away from the blue chips.
Moving Averages allows you to look at the data smoothly rather than
focusing on daily price fluctuations from all financial markets. The time
frame plays a significant role on how effective your moving average will
be.
This moving average length can be applied to any of your chart time
frames depending on your time horizon. Additionally, the time frame or
length that you chose for the “look back period” can also play a big role
on how effective it is.

EMAs may work better than the SMA’s in stock or financial markets
because of the weight given to recent prices, whilst there are other
times that SMAs may work better.
What are the Most Popular Moving Average Combinations?

200-Day Moving Average
The 200-Day Moving Average is one of the most popular technical

indicators used by traders.

This indicator can be found on the charts of investment banks, hedge
funds, and market makers. It is considered as a key indicator for
determining the overall long-term trend.
Investors use it to analyze price trends. As the name implies, it is a

security’s average closing price over the last 200 days.
You can get the 200 moving average by taking the securities closing
price over the last 200 days.
[(Day 1 + Day 2 + Day 3 + Day 4 + Day 5 + …. + Day 198 + Day 199 + Day
200) / 200]
= 200-day moving average

50 Day Moving Average
Just like the 200-Day moving average, the 50-Day moving average is one
of the most popular technical indicators that investors use for
predicting and tracking price trends.
50-Day moving averages are widely used because they work so well. It is
calculated with a security’s average closing price over the last 50 days.
[(Day 1 + Day 2 + Day 3 + Day 4 + Day 5 + … + Day 48 + Day 49 + Day 50)

/ 50]

=50-day moving average
200 EMA Multi-Timeframe
200 EMA is a very popular forex indicator because it can tell you what
the trend is before entering a trade.
There are things you need to know about the 200 EMA. It is used to
separate bull territory from bear territory. To help you start you need to
know that;
● Seeing price below your 200 EMA is often seen as downtrend.
● Seeing price above your 200 EMA is often seen as uptrend.
● The best way to enter it is to use price action by the help of price
acton charts as it tells you where to place a stop order and use
previous swings to take profit.
Possible example of how it works:

● Place a 200 EMA on your daily chart and determine if it’s an
uptrend or a downtrend.
● After that, switch at 4 hour chart. You need to see where the 200
EMA is relative to the price action or if it is the same trend as your

daily chart.
● If yes, switch to 1 hour chart and check to see if it is the same
trend as your daily and at 4 hour charts.
● You could then potentially execute your trade entries on 1 hour
chart when the trend on 1 hour chart is the same as your 4 hour
and daily charts.

Moving Average Crossover
Known as the most basic type of signal, crossovers are the most favored
among traders as they remove all emotions.
They are used to identify shifts in momentum and can be used to

determine entry and exit strategy. A moving average crossover occurs
when the traces of two moving averages cross. Crossovers shows trends
but does not predict future direction.
In general, this indicator combination uses two or more moving

averages, a slow-moving average and a faster moving average.
Additionally, the faster moving average is a short-term moving average.

Short-term moving averages are more reactive to daily price changes
because they only considers a short period of time.
How to Use the Moving Average in Your

Trading?
The main function of Moving Average is to identify trends and reversals,

find support and resistance, and measure an asset’s momentum.
Moving Averages help to define the trend and recognize changes in the
trend. Many traders, however, make some fatal mistakes when it comes
using moving averages.
Trend Analysis
Moving Averages do not predict new trends because of its lagging

indicator nature, but they can track and confirm trends once they been
established.

The moving average crossover as discussed above is also a great tool for
searching for potential newer trends taking place.
Support & Resistance
MA’s can also be used to determine dynamic support and resistance.
It is easy to notice that the falling asset of a price will stop and reverse
its direction like the same level as an average. Stocks will often reverse
either up or down at price levels that are close in proximity to popular
MA’s as these levels are acting as confirmation levels.
Recap
Moving Averages are a valuable analytical tool. Before it can become

effective, you must first understand its functions, when and where to
use it and practice with it through a demo account

Bollinger Bands
Bollinger Bands were created by John Bollinger in the 1980s and are
one of the most popular and widely used technical analysis indicators in

the markets today. Not only can Bollinger Bands be used in a large
number of markets from Forex,
Cryptocurrencies and stocks exchange like Nepse ,Sensex etc they can
also be used on all time frames.
Bollinger Bands are most often used as a trend following indicator as

well as gauging if a market is overbought or oversold.
In this post we go through how you can set them up on your charts and
three easy strategies you can use to trade with them.
Bollinger Bands Settings
Bollinger Bands are created by three ‘bands’; the upper, middle and
lower band.
The common standard setting is to have the middle band set to a 20
period Simple moving average.

The upper band is created by taking the middle band and adding twice
the standard deviation.
The lower band is created by taking the middle band minus twice the
standard deviation.

Standard Bollinger Band Settings
Middle band: Created with 20 period simple moving average.
Upper band: Created from middle band plus two standard deviations.
Lower band: Created from middle band minus two standard deviations.
Three Bollinger Bands Strategies
Overbought and Oversold Bollinger Bands Strategy
One of the most common Bollinger Band strategies is using them to

gauge if a market is overbought or oversold.
A lot of traders will use these bands and look for price to revert back
the middle band or to the mean.
When using a mean reversion strategy, we are assuming that if price

deviates or moves too far away from the mean it will eventually have to
come back.
This is often looked at as price moving back from an overbought or

oversold market into more true value.

As the chart shows below; price tags the upper band before rotating
back lower. It also moves lower before tagging the lower band and
moving back higher. Each time it ‘tags’ the upper and lower bands it
reverts back to the mean middle band.
When combining these ‘tags’ of the band with other technical analysis
such as support and resistance trendlines they can provide solid trade
entry points.

This strategy can work well in ranging and sideways conditions.
However, if price goes on a long trending run, then we can see long
periods where price does not move back to the mean and middle band.
This is where using Bollinger Bands in trending markets can be used.
Trend Trading with Bollinger Bands
In strong trending markets where the move has a lot of momentum

price will spend a lot of time away from the mean.
If you are trying to trade looking for price to reverse back into the mean
and middle band in these market conditions it can lead to endless stop-
outs.
Bollinger Bands react to price as it is being created in live time. They will
constrict and expand as price moves depending on what the price
action is doing.

Using other technical analysis and indicators with Bollinger Bands can
help you more clearly identify the trend and also confirm potential
trades.
One strategy is to use another moving average such as the 50 EMA.
When all the bands are clearly under the 50 EMA you could look for
short trades. The opposite would be true if price was trending higher
and all the bands were above the 50 EMA.
See the example below of the clear trend lower with all the bands
below the 50
EMA.

Scalping With Bollinger Bands
Because Bollinger Bands can be used on many markets and on all time
frames, they can make a great tool for scalping.
They can also be a good indicator to find scalp trades because if done
right they will help you find fast moving markets where there could be
potential for high reward trades.
There are a lot of potential strategies you could test in your own
trading, but one scalping strategy is to combine Bollinger Bands with
another moving average such as the 50 EMA.
Often when a market is moving in a strong trend above or below the 50
EMA price can make sharp moves. When price is making these sharp
move, it will often not revert to the mean and middle band for some
time.
An example of this is on the chart below; price is below the 50 EMA in a

down trend.
A potential entry could be when price closes below the lower band.

The trade could have the profit taken when price eventually does revert
to the mean and price closes back above the middle band.

To add confirmation to this strategy you could use both the 200 and 50
EMA’s looking for the golden cross .
An example of this could be if looking to go long; the 50 EMA crosses

above the 200
EMA indicating an uptrend.
The Bollinger Bands are above both EMA’s.
When price closes above the upper band entry is taken. When price
closes back below the middle band the trade is closed.
Using Bollinger Indicator trading view
Using Bollinger Bands inside trading view charts is very easy.
First make sure you have the correct and best charts to use Bollinger
Bands.
Once you have your charts open click “Insert” > “Indicators” >
“Bollinger Bands”.
A box will open on your charts with the standard settings.

You can change these settings as well as the colors you would like the
bands to show on your chart.
Lastly
Whilst Bollinger bands can be excellent for gauging the strength of the
market, the trend and if a market is overbought or oversold, they
should not be used alone.

Other technical analysis and indicators will help you confirm your trade
entries such as support and resistance, trendlines, moving averages and
the MACD.
When making trades with Bollinger Bands you always want to take into
account the overall market conditions. Using ‘tags’ of the upper and
lower bands for entries may work well in ranging markets, but during
strong trends it could see you take a lot of losses.
Lastly, always test new indicators, analysis techniques and strategies on
a demo trading account to make sure you are profitable with them
before ever risking real money.

MACD – Moving Average
Convergence Divergence Trading Guide
Oscillating indicators are to show securities when they are overbought

or oversold allowing a trader to enter at the best possible price.
There are different types of Momentum oscillator a trader can use, and
the MACD is one of the most popular. In this guide we are going to
concentrate on the MACD and how to combine with other strategies to
enhance a trading strategy.

Not including the moving average, the MACD is the Most popular
trading indicator. .
What is MACD?
The Moving Average Convergence Divergence (MACD) is a technical
indicator used to identify new trends or momentum and show the
connection between the price of two moving averages.
Whilst there are different types of indicators you can use in your
trading including lagging leading and confirmation, the MACD uses the
difference between short-term price and long-term price action trends
to anticipate future movements.
MACD fluctuates above and below zero lines, highlighting both

momentum and trend direction as the moving averages converge and
diverge.
The MACD has three major components that are used to give signals;
○ MACD line – is a result of taking a longer-term EMA and

subtracting it from a short term EMA

○ Signal line – EMA of the MACD line described into 1
component
● Histogram – measures the distance between MACD and its signal
line. The difference between the two oscillates around Zero Line.

How to Use the Moving Average Convergence Divergence (MACD) in
Your Platform for Trading?

the MACD chart, there are three numbers for its settings;
● Faster-moving average – the number of periods that are used to

calculate
● Slower-moving average – the number of periods that are used
● Difference between the faster and slower moving average – the
number of bars that are used to calculate

Examples;
The most commonly used MACD parameters are “12, 26, 9”, here’s
how to interpret it.
Faster-moving average:
● 12 represents the previous 12 days
Slower-moving average:
● 26 represents the previous 26 days
Difference between the faster and slower moving average:
● 9 represents the previous 9 days moving average or the variation
between the fast and slow (plotted by vertical lines called
histogram – red lines in the chart above)
● Calculation
MACD Line:
(12-day EMA – 26day EMA)

Signal Line:
9-day EMA of MACD Line
MACD Histogram:
MACD line – Signal line
Your MACD line is the 12-day exponential moving average (EMA) less
the 26-day exponential moving average (EMA). You can use closing
price for this moving average. The 9-day EMA acts as a signal line and
identifies turns because it is plotted with the indicator.
For the histogram, it represents the difference between MACD and its
9-day EMA
(Signal Line). If the MACD line is above its Signal Line then its positive
and if the
MACD line is below its Signal Line, then it is negative.
Remember
The typical settings used as MACD parameters are “12, 26, 9”. You can
substitute other values depending on your preference and goals.

How to Trade Using MACD
MACD has two moving averages with different speeds. In other words,
one will be quicker to react to price swing movement than the other
one.
If a new trend occurs, the fast line will start to cross the slower line. For
this reason, the fast line will diverge or move away from the slower
line, often indicating a new trend.

You can see in the image above that when the lines cross, the
histogram temporarily disappears because the difference between the
lines at that time is 0.
Terminology
The Convergence and Divergence of two moving averages are what

MACD implies.
If moving averages move towards each other, it means that a

Convergence is occurring. On the other hand, a divergence occurs when
the moving averages move away from each other.
There are three different methods to interpret Moving Average

Convergence
Divergence (MACD).
Cross over
Signal-line Crossovers
A “signal-line crossover” is a 9-day EMA of the MACD line.

It trails average line and helps determine the turns in the MACD. It
shows bullish crossover when the MACD crosses above the signal line,
and a bearish crossover if it turns below the signal line.
As shown above, the chart clearly shows how a buy entered after the
bullish crossover can be profitable. This strategy can also be used to
manage or close a short entry.

On the other hand, you can use bearish crossovers for short
entries or manage/close a long entry.
Center-line Crossover
When the MACD line moves above the zero line to turn positive, then a
bullish center-line crossover occurs. This occurs when the 12-day EMA
moves above the 26-day EMA.

If the MACD line moves below the zero line to turn negative, then it is a
bearish center-line. This occurs when the 12-day EMA moves below the
26-day EMA.
Divergence
If the security price diverges from the MACD, it is a signal of a potential

new trend.
This shows a point where the MACD does not follow price action and
deviates. When the price action makes a new low, but the MACD does
not confirm with a new low, then it is a “positive divergence” or “bullish
divergence”.
When the price of a security makes a new low, but the MACD does not
confirm with a new high, then it is a “negative divergence” or “bearish
divergence”.

“Bullish Divergence” or “Positive Divergence” forms when a lower low
was recorded by a security and a higher high is created on the MACD.
A “Bearish Divergence” or “Negative Divergence” takes place when the

security records a higher high and a lower low on the MACD.
What is the Most Popular MACD

Combination?

Moving average convergence divergence +relative vigor index (RVI)
The use of Relative Vigor Index is to measure the strength of a trend by
comparing the closing price of a security to its price range and
smoothing the results with EMA.
In fact, the basic point of combining these tools is to match

crossovers. To put it differently, if one of the indicators has a cross, you
wait for a cross in the same direction as the other one. If it occurs, you
buy or sell the equity and hold your position until the MACD gives you a
signal to close the position. See image below;

Moving Average Convergence Divergence + Money Flow Index (MFI)
The Money flow index – MFI is a type of oscillator that uses both
price and volume on measuring buy and sell pressure. It generates
less buy and sell signals compared to other oscillators, for the reason
that the money flow index requires both price movements and surge to
make extreme readings.
This strategy is a combination of the MACD with overbought/oversold

stocks or
Forex signals produced by money flow index.

If the MFI gives you a signal of a bearish cross over the MACD lines,
there is a potential short trade. This strategy is the same way in the
opposite direction for long trades.
The chart above is 1 day chart of Nepal stock exchange (NEPSE). The
Red circle is the moment when the MFI is signaling that NEPSE is in

oversold zone. In between 1,2 days, the MACD has a bullish signal and
is now open for a potential long position at the green circle highlighted
on the MACD.
You hold your position until the MACD lines cross in a bearish direction
as shown in the highlighted red circle on the MACD.
Moving Average Convergence Divergence + Triple Exponential Moving

Average (TEMA)
The use of Triple Exponential Moving Average – TEMA is to filter out

volatility from conventional moving averages.
It is made up of a single exponential moving average, a double

exponential moving average, and a triple exponential moving average.
It can generate a trade signal when the fast line crosses the MACD and
the price of a security breaks through the TEMA. You will exit positions
whenever you receive contrary signals from both indicators.

The image below is the 10-minute chart of Twitter. In its first
highlighted green circle you can clearly see that you have the moment
when the prices switch above the 50-period TEMA. The MACD confirms
a bullish TEMA signal on the second highlighted circle. This is when you
open your long position.
As shown above, the price increases and you get your first closing signal
from the MACD in about 5 hours. The price of twitter breaks the 50-
period TEMA in a bearish direction after 20 minutes and you close your
position. As can be seen, it generated a profit of 75 cents per share.

Moving Average Convergence Divergence + Triple Exponential Average
(TRIX)
The use of a Triple Exponential Average – TRIX is to be a momentum

indicator. It is an oscillator used to identify oversold and overbought
markets.
This strategy offers two options for exiting the market.
● If the MACD makes a cross in the opposite direction, exit the

market.
This gives you the tighter and more secure exit strategy. You exit the
market right after the trigger line breaks.
● If the MACD makes a cross that is followed by the TRIX breaking
the zero line, exit the market.
This strategy is riskier because if there is a significant change in trend,

you are in your position until the zero line of the TRIX is broken. It could
take a while for that to happen.

The image above shows the 1day chart of SHPC. As shown above, the
first green circle is a long signal that comes from the MACD. The second
On the other hand, the and red circles show sell signals from indicator.
In our platform Simply, when blue line cross the red from above,you
should go for buy position. and when red line cross the blue from
above take a sell position.

Moving Average Convergence Divergence + Awesome Oscillator (AO)
The use of this indicator is to measure market momentum. The

Awesome Oscillator calculates the difference of the 34 and 5-period
Simple Moving Averages.
You will enter and exit the market only when you receive a signal from
the MACD, confirmed by the awesome oscillator.
Below is the 1 day chart of . The two highlighted green circles are
signals that indicate to open a long position. The Awesome Oscillator
gives you a contrary signal after going long.

Recap
The best thing about the MACD indicator is that it brings together
momentum and trends into one indicator.
As has been noted, you can calculate it by using the difference between
two moving averages.

For this reason, the MACD values are dependent on the price action of
the underlying security and knowledge of other strategies like technical
analysis will improve its effectiveness.

Fibonacci Retracement Trading Strategies
The Fibonacci sequence (simply called Fibonacci) is the term used when
referring to a mathematical sequence of numbers

According to the rule of the sequence, all subsequent numbers will be
the sum of the two numbers that preceded it (the sum of the two
previous numbers).
Fibonacci has become a powerful tool in Forex and other CFD trading.
Fibonacci levels are used in trading financial assets such as Forex,

cryptocurrencies, stocks, futures, commodities and more.
The Fibonacci levels, with the help of its retracements, targets, and
extensions, are one of the best tools to use in technical analysis.
The strong support and resistance levels (swing points) on the Fibonacci
are exact and easy to find. In general, Fibonacci offers clearly defined
entry and exit points.
As we go through in this post, the Fibonacci tool can be used to help

you both find high probability trades and also where you can take profit
from the market.

What is Fibonacci Retracement Trading?
Fibonacci retracements are famous among technical traders. This tool is

based on the Fibonacci sequence invented by mathematician Leonardo
Fibonacci in the 13th century.

The most important thing in the sequence is the mathematical
relationships between the numbers, expressed as ratios.
In Forex and other technical analysis trading a Fibonacci retracement is
obtained by taking two extreme points (usually a swing high and a
swing low) on a currency, stock, or commodity chart and dividing the
vertical distance by the crucial Fibonacci ratios.
The key Fibonacci ratios used in the division are 23.6%, 38.2%, 50%,
61.8%, and 100%.
After identifying these levels, you can draw horizontal lines and uses
them to identify possible support and resistance levels. This makes it
easier to identify possible entry and exit points on a chart.
Fibonacci retracements allow traders to take a more calculated entry

and exit in the market.
Have a look at the example below. Price is in a move higher before it

makes a retracement back into the 50% 'Fibo' level for a possible long
trade entry.

How to Use the Fibonacci Retracement Tool in Trading view
To use the Fibonacci retracement indicator in your Trading view charts,
fallow these steps;
● Open the Trading view trading platform like chukul,nepse alfa

● Click on technical chart.
● Select the Gann and Fibonacci tools.

● Select Fibonacci Retracement and go to your chart. The chart
allows you to customize your Fibonacci levels on the trading view.
● Once on your chart click and hold with your mouse to plot your
Fibonacci levels.
● NOTE: The Fibonacci levels and descriptions can be added and
customized to what you need.
What are the Fibonacci Retracement Settings?

The Fibonacci retracement levels or settings are horizontal lines on a
chart that indicate the positions that support and resistance are most
likely to take place.
The settings are based on Fibonacci numbers. Each level of the settings
is associated with a percentage, and the percentage indicates how
much the price has retraced from the previous move.
The Fibonacci retracement levels most commonly used in trading are

23.6%, 38.2%, 61.8%, and 78.6%.
Unofficially, a lot of traders also use 50% as a Fibonacci ratio.
The Fibonacci retracement settings are crucial because they can be

drawn between two significant price points, like a low and a high. This
helps you know the entry and exit points in a trade.
How to Use Fibonacci Extensions
Fibonacci extensions are tools that traders use to establish profit

targets or how far the price of an asset might move after a retracement
or pullback has ended.

The extension levels are also likely areas where the price of an asset
might reverse.
In Forex and other financial markets, the Fibonacci extension levels help
traders to provide price levels of support and resistance.
However, they are mostly used to calculate how far the price of an
underlying asset can travel after a retracement is done. This means that
Fibonacci retracement levels are used to know when to enter a trend,
while the Fibonacci extension levels are used to identify the end of that
trend.
The number 1.618 is a key number in the Fibonacci sequence as it is

called the Golden Ratio. This number forms the basis of the most
important Fibonacci extension level, which is the 161.8% level.
In an uptrend, traders always attempt to enter the bounce point, and

they measure the retracement to find out how far the trend will go
before reaching its peak, which is the 161.8% level.
Meanwhile, in a downtrend, the traders will attempt to enter the

market at a correction point and then measure the last retracement.

This allows a trader to find out how far the trend could go before
reaching the bottom, the 161.8% level.
Traders looking for reversals might also use the 161.8% extension level
to enter a counter-trend trade.
However, this technique is most suited to advanced traders with years
of experience under their belt.
There is no special formula for Fibonacci extensions. When the indicator

is inserted into a chart, the trader selects three points.
After choosing the three points, the traders draw lines at the
percentages of that move. The first point indicates the start of a move,
the second point shows the end of the move, while the third point is
the end of the retracement against the move.
Simple Fibonacci Retracement Strategy
Fibonacci retracements are usually used as a trend trading strategy.

In this case, traders take note of a retracement taking place within a
trend and use Fibonacci levels to try to make low-risk entries in the
direction of the trend.
Traders that use the Fibonacci retracement strategy expect that the
price of an asset has a high chance of bouncing from the Fibonacci
levels back in the direction of the earlier set trend.
See the example below. Price is in a trend higher and so trend traders
are looking for long trades.
Using the Fibonacci tools, they see that price has moved back lower
into the 50% retracement point.
This offers potential long trading opportunities to get a long position
with the trend.

Elliott Wave Patterns Strategies

The Elliott wave theory is based on the theory that the price of a certain
asset tends to move with similar patterns.
Ralph Nelson Elliott created the theory a er observing that price tends
to move in repetitive patterns and waves. He would then use these
patterns to predict the future of where prices could move.
In this post, we go through exactly what Elliott wave trading is and how
you can use it in your own trading.
Elliott Wave Principle
The Elliott wave principle believes that trending markets will normally
move in five waves and then against the trend with three waves.
The five movements with the trend are referred to as motive waves,
and the moves against the trend are called corrective waves.

You can use these waves on many different markets and time frames to
find key areas in the market and find high probability trade entries.
Elliott Wave Trading System
The Elliott wave trading system has set rules that must be met.
These include;
● The second wave does not retrace 100% of the first wave.
Normally this retracement will not move past the 61.8% Fibonacci
level.
● The fourth wave does not retrace past100% of the third wave.
● The third wave has to move beyond the high or low of the first
wave.

Elliott Wave Patterns
The two main patterns that the Elliott wave follows are the motive
phase and the corrective phase.
Motive Waves
When using Elliott wave in your trading, you are looking for a five-way
motive phase.
The chart above shows that when the price makes this motive phase, it
has three waves higher, with two short pullbacks lower.

These short pullbacks are crucial for the trend to gain momentum, but
the rules must be met for the motive phase to be accurate.
Corrective Waves
The corrective phase moves into action with three moves. Instead of
being numbers, these moves are referred to as A, B and C moves.

The tricky thing about the corrective phase is that it can be tough to
know if the market is going through a corrective phase until it has
played out and the price has made its movements.

How to Use Elliott Wave Patterns
Because the Elliott wave theory is that price moves in certain patterns,
you can combine them with many other strategies and indiactors.
The basic principle of the Elliott wave is that over any set time frame,
the price will tend to trend in the same ways.
You can use these movements and patterns to find high probability
trades and look for a trend to make its next move.
As we go through below, you can look to make and manage your trades
using these Elliott wave movements.
Elliott Wave Oscillators
Whilst you will have to manually plot and mark your Elliott wave
movements, you can also use an Elliott wave oscillator.
The Elliott wave oscillator uses the difference between the faster
moving 5-period moving average and the slower moving 35-period
moving average.

A er applying the Oscillator to your chart, you can use it to find trends
and market movements.
When the price is trending higher, then the oscillator will show as
green. This is because the faster moving 5 period moving average has
been stronger than the slow-moving 35 period moving average.
When the price turns bearish, the oscillator will flip lower because the 5
moving average is moving lower compared to 35 moving average.
See the example of this oscillator below.

Practical Elliott Wave Trading Strategies
While you can use many different strategies to find and manage your
trades with Elliott wave, the simplest is to follow the patterns.
Step #1: Look For the First Three Moves

The first step to this Elliott wave trading strategy is to wait until the
price has formed the first three legs of the motive phase.
A er we notice these legs have successfully been formed in line with the
rules, we are looking for a new trade with the trend.
Step #2: Look for Potential Long Entries Aer Move Four
As price is making the fourth wave of the Elliott wave, we are looking
for a new entry. In the example below, we can see that we start to look
for long trades as the price is making its fourth wave lower.
As the price moves into the 50% Fibonacci level we could start to look
for long trades.
You could also fine-tune your entry with other confirmation, such as
bullish candlestick patterns.
Step #3: Take Profit Aer Wave Five
As the price moves above the high of wave three, we could look to take
our profit.

Because the Elliott wave will be invalidated if the price moves below
the high of wave one, we could look to put our stop loss below this
level.
Using an Elliott Wave Indicator
Marking the Elliott wave moves on your charts can be a time-

consuming process.

This is a very easy-to-use indicator that will then let you see exactly
where these waves are.
Note that this indicator does not mark the Elliott waves for you. It is
designed so you can quickly market the number and letters of each
phase.

How to Trade the ABCD Pattern
As the prices of securities fluctuate, past price data is recorded and
can be observed on what we call price charts.
If you have ever had any interest in the financial markets, you have no
doubt seen a price chart before.

Occasionally, the data recorded onto these price charts form patterns.
A pattern is simply a recognizable configuration of price movement.
These distinctive formations form the basis of what we call technical
analysis.
Technical analysts interpret these patterns in an attempt to predict

future price movements. The basis of this belief is largely founded in
human psychology and herd behavior.
This post will analyze a specific chart pattern known as the ABCD
pattern. We examine how to use this pattern, its variations, and a
couple of useful indicators that you can use when trading this pattern
on the markets.
What is the ABCD Pattern?
Of all the various price patterns that exist, the ABCD pattern is among
the easiest to identify. As you might have deduced from the name, the
pattern consists of four separate parts: A, B, C, and D.
The patterns indicate when the price of a security is about to change

and begin trending in the opposite direction. For example, if a stock

has been trending upward, the ABCD pattern can help you predict
when this trend will reverse and begin moving downward.
The ABCD pattern can indicate either bullish or bearish reversals

depending on the configuration of the pattern. You can see an
example of an ABCD pattern below.

How to Use the ABCD Pattern
If you can predict when a trend reversal will occur, you can use that
information to your advantage by entering either long or short
positions before the reversal. Let’s examine some possible entry and
exit points using the ABCD pattern.
Assume that you believe a reversal is imminent on a stock that has

been trending upward. You correctly identify a bearish ABCD pattern
and are seeking an entry point to open a short position.
In a bearish ABCD pattern, you would be looking for the price to rise
initially from (A) to a new high of the day (B). A er the price reaches (B),
you would be waiting for a dip back down to support (C). The support
(C) should be higher than the initial point (A). Once support has been
established at (C), you are almost ready to enter a short position. The
price should begin to rise from its support at (C) up to a new high. This
new high is (D). Once the price reaches (D), this is the optimal point to
enter a short position.
If the pattern holds, the trend should reverse at (D), and your short
position should become possible.

Once you have located an entry position, you should begin to consider
when to exit the trade.
As a general rule, your exit target should be twice as much as your risk.
Therefore, if you enter a RS.100 position and have a stop loss order
should be at rs.90, your take-profit order should be at Rs.120, double
the amount you stand to lose.
When attempting to trade a bullish reversal on a stock that has been

trending downward, you would oppositely approach the trade. You
can see an example of a bullish reversal pattern in the section below.
XABCD Pattern
The XABCD patterns are similar trend reversals to the original ABCD
pattern. There are numerous XABCD patterns, but the four most
popular patterns are:
1. Gartley.
2. Butterfly.
3. Crab.
4. Bat.

These patterns can either be bearish or bullish, depending on their
configuration. They are made up of five-point chart patterns and can
be more difficult to locate because they consist of various
measurements and ratios. Thankfully, there are some online tools
available to help you identify these patterns more easily.
Bullish ABCD Pattern
Ironically, the bullish ABCD pattern begins with a sharp move

downwards.
Intense selling pressure leads to a sharp decrease in the security price

(A),which the price rises back up as more and more people begin to
buy . dip (B), this rise selling volume will again increase, sending the
security price back down to a support level lower than (A); we can call
this support level (C). this last fall in price, the trend should reverse,
and the security price should begin its uptrend (D).

Bearish ABCD Pattern
As with the bullish ABCD pattern, the bearish pattern begins with a
sharp move to the upside. The pattern is essentially the opposite of
the bullish pattern, rising where the bull pattern falls and falling where
the bull pattern rises. At (D), the uptrend should reverse and begin to
turn into a downtrend.
ABCD Pattern Indicator
For those of you who are trading using the different platform, custom
ABCD pattern indicators built into the platform can help you identify
these patterns more easily. You can find a link to download the ABCD
pattern indicator below.

Lastly
A common saying among members of the financial community is that

past performance is not indicative of future results.

Active traders would be well advised to commit this phrase to memory.
Whilst chart patterns certainly provide traders with a statistical
advantage, they in no way guarantee a Successful trade.
Price movements regularly deviate from potential trading patterns, and

the security price may behave differently than the pattern may suggest.
Traders should always remember to effectively manage their risk with
stop-loss orders and proper capital allocation.

How to Use the Average True Range

The average true range is an indicator that highlights market volatility.
It does this by showing you how much a Forex pair or asset has moved
on average over a set time period.
You can use the average true range (ATR) in multiple scenarios in your
trading including helping you find appropriate profit targets and where
to set your stop loss to suit the market conditions.
What is the Average True Range
The average true range was created by J.Welles Wilder to measure

volatility.
As price makes larger or smaller moves higher or lower the ATR

becomes bigger or smaller indicating the asset volatility.
The ATR is shown in pip amounts for Forex or dollar amounts for other
markets. For example; a reading of 0.50 would mean 50 pips in the
Forex market.
The standard setting for the ATR range is 14 and can be used on any
time frame you choose.

As each new time frame closes the ATR is calculated. For example; on a
daily chart the ATR is calculated at the close of the next daily time
period.
These 14 time readings are then added together to show you a

continuous line that will give you a quick indication of overall asset
volatility.
The average true range cannot be compared from one market to
another . If an asset has a higher price, then it will have a larger ATR
compared to a market or stock with a smaller price.
How to Calculate the ATR
To calculate the ATR range over a certain time period, the 'true range' is
first calculated.
The true range is calculated by finding the greatest value of;
1. Current high minus the current low.
2. Current high minus the previous close.
3. Current low minus the previous close.

After the true range is found over 14 periods, it is averaged to find the
‘average true range’.
If you are using the standard 14 day time period you can then use this
information to calculate the ATR on a monthly, weekly, daily or intraday
time frame.
How to find the Average True Range on MT4 and MT5
Open the different site and app.
Click; “Insert” >> “Indicators” >> “Average True Range”.
A box will then open with the standard settings that you can change to
suit your needs. These include the color that the ATR will show in and
the time period that the true range will average over.

How to use the ATR
Whilst the ATR is not an indicator you're going to use to find new trade
signals . it is an indicator that you can use to find better profit targets
and stop loss areas.
The ATR will highlight the different market conditions and help you
identify when they are changing allowing you to set larger stops or look
for bigger profits.

Using the Average True Range for Profit Targets
A lot of traders are using a form of Risk reward with their stop loss and
profit targets. For example; risking 1 and looking for 2 reward.
The ATR can be used to help you identify potential profit targets and
also work out if a trade entry is suitable.
If you find a potential trade that has a very large ATR, then you know
price is more likely to make a large move. If you get your trade call
correct you can use this information to set a larger target.
You can also use the ATR to spot trades that you should stay clear of
because they have a small ATR and do not have a high chance of
meeting your risk reward criteria.
Using the Average True Range for Stop Loss
The average true range is commonly used for setting a stop loss and
also trailing a stop loss.

One strategy for using the ATR to set your stop loss is using a multiple
of the average true range. For example; you may set your stop 2 x the
ATR away from the current price.
You could also use this strategy for trailing your stop. If price moved in
your favor and you were looking to lock in profits you could use a
multiple of the ATR to trail your stop higher or lower behind the current
price.
Conclusion
Whilst the ATR is not an indicator that will help you find trades or spot
the market trend like a moving average, it can help you identify the
recent volatility or lack thereof.
You can then use this information to your advantage by either passing
on trades, or when a suitable trade is found, setting appropriate stops
and targets.
The ATR is best used with your other tools and trading strategies
including your price action trading systems.

Using the average true range this way you can identify the volatility and
then read the charts to find high quality trade entries.

Mean Reversion Trading Strategies
Have you ever noticed that even in the strongest of trends price will
always make rotations? This is known as mean reversion or price
reverting back to the mean.
In this trading guide we look at exactly what mean reversion trading is

and how you can use it to find high probability trades.

What is Mean Reversion Trading?
When mean reversion trading you are making trades on the assumption
that price will revert to the ‘mean’.
Price never moves higher or lower in a straight line.
Even in the very strongest of trends either higher or lower price will
make rotations. For example; in a strong trend higher price will still
make rotations lower before then continuing with the trend higher.
In the example below price is in a strong trend higher. Attached to the
chart is a 200 period moving average . Even as price continually moves
higher it is still rotating back lower before then making the next leg
higher.

Mean Reversion Trading vs Momentum Trading
As a momentum trader you are looking for price to continue in the

same direction. For example; if price is in a trend higher you are looking
to make a long trade and for price to continue with the trend.
There are many different strategies you may use to momentum trade,
but you are looking for price to continue with the current momentum.
When mean reversion trading you are looking for price to revert back to
the mean. This means that if price has made an extended leg higher you
would be looking for a rotation back lower and a pullback into value.
Mean Reversion Trading in the Forex Market
One of the most popular markets to use mean reversion strategies is in
forex market. This is because Forex pairs can often make very large
moves that will see regular rotations back towards the mean.
The chart example below shows price continually moving back lower
and into the mean level of the moving average even after some
incredibly powerful moves higher.
Mean reversion trading will often be higher risk because you will be
making trades against the current momentum.
You will often be looking to pick a market top or bottom and you will
also be looking for price to reverse its current direction.
The Best Mean Reversion Indicator
One of the simplest and easiest indicators to use for mean reversion
trading is the exponential moving average.
When you combine two moving averages and look for the ‘cross’ you
can begin to look for very simple and high probability mean reversion
trading setups.

Keep in mind when using the moving average cross you are not looking
to trade with the momentum, but instead are looking for a rotation
back into the mean. This strategy is discussed more below.
Basic Mean Reversion Strategy
Whilst a lot of traders use moving average crossovers to find trend and
momentum trades, they can also be used to find mean reversion
trades.
The easiest way to do this is to use the 200 and 50 period moving
average.
As the chart shows below; when the 50 period moving average crosses
below the 200 period moving average we are looking to take long
trades.
When the 50 period moving average crosses back above the 200 period
moving average we are looking to take profit.

This strategy can be added to further by making sure you don’t trade
directly into key market support or resistance levels and that you avoid
markets that are very choppy or sideways.
The best markets are the markets making strong moves either higher or
lower and that are not stuck in ranges.
Short-Term Intraday Mean Reversion Strategy
This is a higher risk mean reversion trading strategy that comes with
higher potential rewards.
With this short-term Intraday strategy , you are using small time frames
like the 5 minute and 15 minute time frame.
The key is finding markets or Forex pairs that have made a strong trend
or move higher or lower.
Once you have found a market that has made this large move you are
looking to use a simple Japanese reversal candlestick patterns such as
the hammer candlestick pattern to time your entry and make quick
profits as price reverts to the mean.

As the example shows below; price made a large move lower before
forming the Hammer candlestick. Price then moves back higher and
rotates back into the mean.
Note how this hammer is formed at a support level. You can increase
the odds of your trades with this trading strategy by making your trades
at key market levels.

What is Heikin Ashi and How You Use it
Bar charts, candlestick charts, and line charts are the three most
commonly used charts in the markets for trading.

But, did you know there are other less popular techniques like the
Heikin Ashi which has proven to be one of the best strategies to use to
gain a deeper view of the market.
In this post we look at exactly what the Heikin Ashi is and how you can
use it.
What is Heikin Ashi?
Heikin-Ashi, also called Heiken-Ashi, is translated as an "average bar" in

Japanese.
The Heikin Ashi strategy is a useful tool used in identifying market

trends and predicting the future prices of assets.
The Heikin Ashi can be used alone or in conjunction with candlestick

charts.
These charts can be very useful as they make it easier to read

candlestick charts and analyze market trends.
Traders use the Heikin Ashi to get information such as when to stay in a
trend trade or if it's time to get out because the trend has reversed.

Traders make money when markets are trending. This makes predicting
a markets trend correctly super important.
Heikin Ashi vs Candlestick
The Heikin Ashi has a few differences with the traditional candlestick
chart.

The candles on traditional candelstics usually change from green to red
(up or down), making it difficult for some traders to interpret.
However, the candles on a Heikin Ashi chart display more consecutive

colored candles, making it easy for traders to identify past price
movements and current trends.

With Heikin Ashi, charts usually stay green in an uptrend and red in a
downtrend.
This isn't the case with the traditional candlestick charts where colors
are different even if the price is moving strongly in one direction, but
price just moves slightly lower for one session.
Another major difference between Heikin Ashi and traditional

candlesticks is how the prices are displayed. When using the Heikin Ashi
chart, the candles begin from the middle of the candlestick.
This is different from the traditional candlestick chart where it starts

from the level where the previous candlestick closed.
Heikin Ashi Calculation
Heikin Ashi shares some features with the normal candlestick charts.
The open-high-low-close (OHLC) candles of regular candlesticks are also

present in Heikin Ashi techniques. However, Heikin Ashi uses an altered
formula of close-open-high-low (COHL), which is;
Close = ¼ (Open + Close + Low + Close)
(The average price of the current bar)

Open = ½ (Open of Previous Bar + Close of Previous Bar)
(The midpoint of the previous bar)
High = Max [High, Open, Close]
Low = Min [Low, Open, Close]
How to Use Heikin Ashi to Identify Trends and Trend Strength
Because Heikin Ashi candlesticks are calculated using averages, the

candlesticks have smaller shadows or wicks compared to the regular
candlesticks. However, similar to the regular candlesticks, the smaller
or shorter the shadow or wick in
Heikin Ashi, the stronger the trend.
Heiken Ashi is designed to show you the direction of a trend with the
help of its color-coded candles. A green candle indicates that the trend
is up, while a red candle is a sign that the trend is down.
Green candles without upper shadows show a strong uptrend while
red candles without lower shadows indicate a strong downtrend.

A Heikin Ashi chart shows you the strength of the trend using the
shadows or wicks and the amount of red or green candles that form in
a row.
The major thing to keep an eye on when using a Heikin Ashi chart to
determine the trend strength is wickless or shadowless candlesticks.
The candlesticks that don't have a wick or shadow on one end are
referred to as "shaved candles." Depending on the end that lacks the
shadow, there is a name for each type of a shaved candlestick.
Heikin Ashi Trading Strategy
The Heiken Ashi is an excellent trading strategy for reading the price
action of assets and predicting future prices.
Whilst it is similar to the traditional candlestick charts, it differs in

certain ways. Heikin Ashi helps eliminate unnecessary information to
allow you to better identify market trends.
Below is an example of a simple strategy you could use to trade with

the Heikin Ashi.
In the first chart example you find a trade to get long. This is using
normal candlesticks and you enter with the trend higher when you find
a bullish hammer pattern.

After you have entered you begin to monitor the Heikin Ashi charts for
the trend and for your trade management. The chart below is the same
pair and time frame, but instead of normal candlesticks it is the Heikin
Ashi chart.
Heikin Ashi
This is a free indicator from trading view. The Heikin Ashi comes with
chart settings that allow you to choose how the chart should be
displayed.
The charts support both colors and line graphs. You will get to set the
time frame you wish to view along with being able to use it on any
market or Forex pair.
The best way to understand this Heikin Ashi indicator is to take a hands
on approach and play around with it.

Harmonic Pattern Trading Strategies

Forex trading has evolved massively over the past few decades with the
creation of trading tools designed to make it easier for virtually anyone
to trade currencies. Chart pattern recognition has become an essential
aspect of Forex trading because it can quickly help you find profitable
trades.
There are many chart patterns that you can use for technical analysis,
and some of the most popular are harmonic patterns.
Harmonic patterns use Fibonacci numbers to define precise turning

points. Whilst most of the other common trading methods focus on
analyzing the current price action of a currency pair, harmonic trading
attempts to predict future movements.
This more complex nature makes it harder for some traders to

understand. However, in this post we break harmonic patterns down so
you can understand them and use them in your own trading.
What are Harmonic Patterns?

Harmonic patterns were first introduced into the trading scene in 1932
by Harold
McKinley Gartley.
Harmonic patterns are a type of advanced trading pattern that take

place naturally in financial charts.
These patterns follow geometric price action and Fibonacci levels.
Harmonic patterns can be defined as trend reversal patterns based on

retracement levels, geometric structures and Fibonacci extensions.
These patterns offer a way for you to establish where the key market
turning points will occur. They also provide you with levels that may act
as new potential reversal zones, allowing you to enter reversal trades.
When you have correctly identified a high probability harmonic pattern
you will be able to enter your trade in a highly profitable reversal zone
with little risk.

How do Harmonic Patterns Work?
Harmonic patterns work by combining patterns and mathematics. This

trading method is precise and based on the assumption that patterns
repeat themselves.
The primary theory behind harmonic patterns is centered on price/time

movements, which complies with the Fibonacci ratio relationships.

The Fibonacci ratio analysis works exceptionally well in the forex and
stock market and you can use it on any timeframe chart. The main idea
of Fibonacci is using the key ratios (0.618 or 1.618) to identify the main
turning points, retracements, and extensions on a chart. These can also
help you identify the Swing high and swing low points.
The projection and retracement levels that are derived using the high
and low swing points will give you key price levels that you can place
both your stops and targets.
Harmonic patterns can indicator potential price movements and key

reversal or turning points. This can give you a major advantage because
these patterns can give you very accurate entry, stop loss and target
levels.
Types of Harmonic Patterns
There are many types of harmonic patterns that include;

Gartley Pattern
This is a simple harmonic pattern that was developed by Harold

McKinley Gartley. The Gartley Pattern, also known as the 222 pattern is
a harmonic pattern usually preceded by a significant low or high. The
Gartley pattern is usually formed when there is a correction of the
overall trend. The bearish Gartley Pattern is W-shaped, while the bullish
Gartley looks like M.

Butterfly Pattern
The Butterfly pattern was first created by Bryce Gilmore and it is similar
to the
Gartley pattern. The bullish butterfly indicates that traders should buy
an asset. The bearish butterfly indicated a new potential sell trade.
Butterfly patterns are important because they help you identify the end
of the current move.
Crab pattern
The crab pattern was created by Scott Carney. This particular pattern is
considered one of the most precise harmonic patterns. The crab pattern
provides reversals in very close proximity to what the Fibonacci
numbers show. This pattern is similar to the Butterfly pattern, but
differs in its measurement.
Bat Pattern
Scott Carney also invented the Bat Pattern in the early 2000s. This
pattern is similar to the Gartley pattern because it is a continuation and
retracement pattern that is usually formed when a trend temporarily
reverses its direction, but stays on its original course.
Shark pattern
This is one of the newer harmonic patterns and was founded in 2011.
This pattern gets its name because of its steep outside lines and shallow
dip in the middle that when formed on a chart resemble a dorsal fin.
Cypher pattern
The Cypher pattern uses Fibonacci ratios lesser than one. When this
pattern is formed it creates a steeper visual appearance compared to
the other harmonic patterns. This pattern has five touch points and four
waves or legs between them. The touch points on this pattern are
reversal levels.
Harmonic Patterns Scanner
There are many different harmonic pattern scanners available that you
can use and that will automatically find all the harmonic patterns,
however the easiest to use is by Trading View for the international

trader and some of few app such as Chukul , Nepse Alfa , Nepali Paisa
For Nepal.
Whilst TradingView charts don't have as many features as Meta trader

charts and are not as advanced, if you want to use harmonic patterns,
then they offer the best and easiest solution that is also free.
To use the harmonic pattern scanner with TradingView all you have to
do is open their charts, select indicators, search for 'harmonic patterns'
and add it to your chart. All of the different patterns will now start to be
scanned for and added as they are formed.

Momentum Trading Strategies
PROFT PIONEERS Page 247

The goal of momentum trading is to find markets and time frames that
are making strong moves and use that to your advantage to capture
profits.
That can be done with a number of different strategies to find the

highest probability setups.
In this post we look at exactly what momentum trading is and how you
can use it to find high probability trades.
What is Momentum Trading?
When momentum trading you are looking to find markets that have
already made a clearly defined move either higher or lower.
For a momentum trade to buy or go long you would be looking to first
identify when price has made a strong push higher.

You would then be looking to make a profit by using this momentum in
your favor by buying within the momentum and selling as price rises
higher.
See the chart example below; price is making a strong move higher. In
this example we could have looked to buy with the strong momentum
and make a profit as prices continue to rise.

The best momentum strategies involve finding the markets and time
frames where there is a clear short-term trend in place.
Whilst there is always the risk that the trend will bend and reverse,
looking to trade with the trend and momentum will often add
confluence to your trading setup.
How to Trade Momentum in the any StockMarket
One of the best markets to momentum trade is the Forex market and
stock market. The reason for this is because it is a 24 hour market and
can make some large moves on the back of explosive volatility.
Volatility offers a lot of trading opportunities and the potential to find

momentum trades.
Another large bonus is that you can be in and out of your positions
quickly with very low costs.
When momentum trading in the Forex market you have an abundance

of Forex pairs to trade from. Because you want to find the strongest
moving markets and time frames you don’t want to be stuck watching
just one pair or one time frame.
The Forex market and other stock market allows you to scan and
monitor many different pairs and many different time frames from the
monthly to the one minute charts.
When using momentum trading strategies in the markets remember

moves can be explosive. You need to practice strict money
management controls. Use tight stop loss levels and always make sure
you have worked out how much you are prepared to lose before
entering each trade.
Short-Term Momentum Trading
Many traders will use momentum trading to find short-term intraday

trades .
This involves looking for trades on smaller time frames such as the five
minute or
15minute time frames.

The reason this can be an incredibly popular way to find momentum
trades is because you can enter and exit trades quickly and have your
trades closed before you log off your computer.
If trading higher time frames such as the 4 hour or daily charts you will
often be holding trades for days on end and then also be faced with
costs such as rollover.
Trading the smaller time frames such as the 15 minute charts will also
present you with far more trading opportunities over many different
markets because the trends are changing far quicker.
Momentum Breakout Strategy
Two of the simplest ways to find momentum trading setups are to look
for momentum Breakout trades or use an indicator.
Momentum breakouts occur when price has already formed a strong

move either higher or lower. Price will then consolidate and often move
into a box formation. When this box breaks out the momentum trader
will look to trade in the direction of the momentum and the breakout.
An example chart below shows how this works. Price moved higher
before pausing and moving into a box. It then broke out higher and
continued on with the momentum.

What is the Best Momentum Indicator?
One of the most popular indicators to find momentum trades is the

moving average.
The reason the moving average is so popular is because it can show you
when a trend is forming and also when strong momentum is building.
This can be done when using two moving averages together.

Below is a chart that has the 50 EMA (exponential moving average) and
200 EMA attached to it. As the 50 EMA crosses below the 200 EMA we
can see price moves into a downtrend.
As
the EMA’s begin to widen we can see that the trend and momentum
get stronger and it becomes a potential market to start looking for
momentum trades.

Momentum Trading Setups Examples
Most traders want to get into the market at the best price. This is no
different with momentum trading.
A common strategy used to do this is to wait and watch for price to

pullback into a supply or demand zone within the momentum.
The first step to doing this is identifying when price is making a strong
momentum move. The chart example below highlights this with a
strong move lower.
After this, we are looking for a pullback higher so we can find a

potential entry. As the example shows below price pulls back into the
recent resistance level. This could be a possible entry level to go short
with the momentum lower.

Lastly
Momentum trading can be highly profitable when done correctly. Many

traders will use the strategies discussed in this post and add their other
favorite tools and techniques to find high probability entry points.
These include strategies such as using Japanese Candlesticks, using

price action clues to confirm breakouts or their other favorite
indicators.
Very lastly, always test any new strategies, systems or indicators on free
demo / vitual charts to make sure you are successful with them before
ever risking real money.

Divergence Cheat Sheet
One of the basic tenets of technical analysis is that momentum

precedes price. However, prices never move in a smooth line, and
momentum will be out of sync with the price.

In technical analysis, when there is a mismatch between momentum
and the actual price, it’s referred to as a divergence. Traders can exploit
these price discrepancies for profit.
Divergences are concepts that allow investors to spot trend reversal

signals in bullish and bearish markets.
This trading guide takes an in-depth look at what divergence is, the
different types of divergences, and how to trade divergence in the most
efficient way.
What is Divergence?
In trading, divergence happens when the price of an asset and the

indicator you’re looking at are moving in opposite directions. In other
words, when the price of an asset is out of sync with the corresponding
indicator’s readings, a divergence signal occurs.
In normal market conditions, the price action of an asset and the

technical indicator moves in the same direction. In other words, when
the price prints a new high, the technical indicator should print a new
high as well.

Similarly, when the price prints a new low, the technical indicator
should print a new low. However, when this type of convergence gets
out of sync, we get a divergence.
For example, we have a divergence signal if the price moves up, but the
indicator moves down or vice-versa.

As you have noticed, divergence is not a technical indicator per se, but
it’s a trading concept. There is no mathematical formula to calculate
divergence, but they are visual tools on the price chart.
The main purpose of divergences is to signal momentum building up

into a trend and give early reversal signals when there is a slowdown in
the momentum readings.
Divergence doesn’t say when the reversal will happen, but it’s an early
warning sign that the price might actually reverse soon.
The opposite of divergence is convergence.
Convergence happens when the price of an asset and the indicator

you’re looking at is moving in sync in the same direction. For example,
if the price of an asset is making a new higher low, the indicator should
follow the price and print a corresponding higher low.
How Does Divergence Work?
To really dig deeper into the market, traders need to understand the
foundation of how price in any market moves.

At the core, asset prices move in a series of higher highs and higher low
when we’re developing an uptrend. Conversely, when we're developing
a downtrend, asset prices move in a series of lower lows and lower
highs.
The concept of successful trading is to buy low and sell high. In other
words, you have to buy when the price is making a new low and sell
when the price makes a new high.
The concept of divergence can help traders distinguish when it’s a good
idea to buy at a new low and sell at a new high. This is done by studying
the divergence signals – the mismatch between the price and the
technical indicator.
The only limitation of divergence is that it doesn’t provide timely trade

signals. The divergence signal can persist longer without price changing
direction.
Broadly speaking, there are two types of divergence signals:
● Regular divergence is also known as the classic divergence.
● Hidden divergence.

The divergence cheat sheet table below outlines the different types of
divergence and the signals they generate.
Regular Divergence
Regular divergences can be further classified into regular bullish

divergence and regular bearish divergence:
Regular bullish divergence happens when we have a disagreement

between prices that are falling (making lower lows) and a technical
indicator that is rising (making higher lows).

Regular bearish divergence happens when we have a disagreement
between prices that are rising (making higher highs) and a technical
indicator that is falling (making lower highs).
The regular bullish divergence is an early sign that the prevailing

downtrend will change direction and turn to the upside. In this regard,
the regular bullish divergence is a buy signal.
Conversely, the regular bearish divergence is an early sign that the

prevailing uptrend is about to change direction and turn to the
downside. In this regard, the regular bearish divergence is a sell signal.
The image below outlines side-by-side the difference between the

regular bullish divergence and regular bearish divergence.

The ideal place where a regular bullish divergence can develop is at the
end of a downtrend. This type of divergence then naturally leads to an
uptrend.
Conversely, the ideal place where a regular bearish divergence can

develop is at the end of an uptrend. This type of divergence then
naturally leads to a downtrend.

Hidden Bullish Divergence
The hidden divergence doesn’t differ that much from the regular
divergence. For a hidden divergence to happen, we need to see a
mismatch between the price and the technical indicator similar to
regular divergence.
However, while regular divergence signals a possible trend reversal, the

hidden divergence signals the possibility of trend continuation. Hidden
divergences tend to develop within an existing trend.
Usually, hidden divergences indicate that the prevailing trend is still

strong enough to resume itself.
Just like the regular divergence, we can distinguish two different types
of hidden divergence:
1. Hidden bullish divergence.
2. Hidden bearish divergence.
Hidden bullish divergence happens when the price is making a higher

low, while at the same time, the indicator is making a corresponding
lower low.

The hidden bullish divergence is an early sign that the prevailing
uptrend is ready to resume.
Usually, the hidden bullish divergence signal develops a er prices have

pulled back, and now the bulls are ready to control the market again. In
this regard, the hidden bullish divergence is a buy signal.
The image below outlines side-by-side the difference between the

hidden bullish divergence and hidden bearish divergence.
Usually, the hidden bullish divergence can be observed in uptrends.

Hidden Bearish Divergence
Hidden bearish divergence happens when the price is making a lower

high, while at the same time, the indicator is making a corresponding
higher high.
The hidden bearish divergence is an early sign that the prevailing

downtrend is ready to resume. Usually, the hidden bearish divergence
signal develops a er prices have pulled back, and now the bears are
ready to control the market again.
In this regard, the hidden bearish divergence is a sell signal.
Usually, the hidden bearish divergence can be observed in downtrends.
Finding hidden divergences is more difficult because they don’t occur as

o en as the regular divergence. However, hidden divergences can tell
traders in advance when the prevailing trend is ready to resume.
In a nutshell, the hidden divergence occurs simultaneously with short-

term retracements in the price. In other words, the hidden divergence
signals the potential end of PULL BACK.
● Hidden bearish divergence – the end of a pullback in a

downtrend.

● Hidden bullish divergence – the end of a pullback in an uptrend.
Divergence Indicator
Before recognizing regular divergence and hidden divergence and the

possible trend reversal or trend continuation signals, traders need to
pick a technical indicator.
Usually, momentum oscillators like the RSI, Stochastic, MACD, etc., are
o en used by retail traders to spot those instances where the price of an
asset and the indicator fails to converge.
The same way the price of an asset moves up and down, establishing
peaks and valleys, technical indicators converge or diverge from the
price making equivalent peaks and valleys.
Some technical indicators can be applied directly on the price chart or

in a separate window, usually below. Traders can use any oscillator to
identify divergence.
The MACD, stochastic, and RSI indicators work best to identify regular
divergence.

In contrast, the money flow index (MFI) is a better alternative to
identify hidden divergence. This is true because the money flow index is
a trend following indicator.
One of the most popular technical indicators to spot regular divergence

and hidden divergence is the Relative Strength Index (RSI) indicator.
Divergence RSI
The Relative strength index (RSI) is a leading technical indicator which

means it can precede the price movements. This means that the RSI
divergence is a leading indicator of price action.
An image of the RSI indicator is presented below.
With the RSI indicator, traders can identify both regular divergences
and hidden divergences.

However, the RSI divergences can’t be used as a timing tool. In this
case, candlestick chart patterns can act as a great confirmation signal
for the resumption of the prevailing trend (in the case of RSI hidden
divergence) or the trend reversal (in the case of RSI regular divergence).
Traders can look for long positions if they spot regular RSI bullish
divergence or hidden RSI bullish divergence. Conversely, traders can
look for sell positions if they can identify regular RSI bearish divergence
or hidden RSI bearish divergence.
Bullish Divergence RSI
The chart below outlines the regular bullish RSI divergence.

In this example, traders can see that the price is making a new lower
low compared to the previous swing low point on the price chart. At
the same time, the RSI indicator prints a higher low relative to the
previous low printed on the RSI oscillator.
A er forming the lower low on the price chart, the prevailing trend
reversed from bearish to bullish.
The RSI indicator can also help traders spot bullish hidden divergences.
The example below shows price trading in an uptrend. Comparing the
swing lows in the price with the swing lows printed on the RSI
oscillator, hidden bullish divergence is developing on the price chart.

A er forming the higher low on the price chart, the prevailing trend
resumes and moves to new highs.
It’s crucial to understand that the bullish hidden divergence can

develop in any place within the uptrend as long as all the technical
conditions are satisfied.
Bearish Divergence RSI
The price makes higher highs in a regular bearish RSI divergence, but
the RSI oscillator prints lower highs.

In the example below, traders can see that the price is making a new
higher high compared to the previous swing high point on the price
chart.
At the same time, the RSI indicator prints a lower high relative to the
previous high printed on the RSI oscillator. Following the RSI bearish
divergence, the price started reversing quickly, and a new trend
emerged.
The RSI indicator can also help traders spot bearish hidden divergences.

The example below shows price trading in a downtrend. Comparing the
swing highs in the price with the swing highs printed on the RSI
oscillator, a hidden bearish divergence is developing on the price chart.
Following the hidden bearish divergence, the prevailing bearish trend

continued to the downside.
Lastly
In summary, traders need to know that regular divergence signals a

trend reversal, while at the same time, the hidden divergence signals a
trend continuation.
Trend following traders are better off focusing on identifying hidden

divergence as this will help them ride the overall market trend. Because
the hidden divergence is a trend continuation signal, out of the two
types of divergence, the hidden divergence carries a higher rate of
success.
Last but not least, trading divergence works across all time frames;
however, the higher the time frame is, the more reliable the divergence
signal tends to be.

Multiple Time Frame Trading Analysis

Multiple time frame trading involves using more than one time frame
to analyze and then carry out your trades.
The reason that using multiple time frames is so popular when using
technical analysis and price action trading is that it gives you a clearer
overall picture of what price is doing. It also helps you drill down to a
smaller time frame to make a better entry with a smaller stop loss.
This post goes through exactly what multiple time frame trading is and
how you can start using it in your own trading.
What is Multiple Time Frame Trading?
When multiple time frame trading, you are using more than one time
frame to analyze an asset's price. For example, if trading the Spl stock
on a Nepse, you may be looking at the daily chart, the 4 hour chart,
and also the 30 minute chart.
You would use multiple time frames to analyze a trade because it can
give you an excellent idea of what price is doing overall. Each time
frame has its own trends and movements.

The higher the time frame, the stronger the price action and signals
area. However, also the slower price is moving. The shorter the time
frame, the more noise and false moves you will encounter.
If you can combine multiple time frames, then you can start to gain a
very clear picture of exactly what the price action is doing.
Multiple Time Frame Trading Methodology
The methodology behind using multiple time frames is that you can
start to build a clearer picture of the price action and technical analysis
story.
For example, you may find that the higher time frames, such as the
daily chart, are trending higher, so you begin looking for long trades.
Whilst you could stay on the daily time frame to make your trade, your
entry will not be ideal, and your stop loss will be wide.
You could use the information you have from the daily chart and start
to move lower through the time frames. You could use a smaller time
frame such as the 30minute chart to find the ideal long trade entry

that gives you a tight stop loss and a much bigger potential risk to
reward ratio.
Multiple Time Frame Confluence
The main reason that so many traders use multiple time frames in
their trading is because it gives their trades a level of confluence.
When trading with one time frame only, that is all the information you
have. When using multiple time frames, you start to build a really clear
picture of the overall price action story.
In the example below, we can see that the daily chart price is in a
trend higher. We can also see that price has pulled back lower into an
important support level.

The second chart below shows the same pair; however, this is the 1
hour time frame. We could use this smaller time frame to look for a
better entry signal to go long that would give us a tighter stop loss. In
this example, the price has formed a bullish at the daily support level
in line with the daily chart trend.

Trading 3 Time Frames
Most traders when analyzing their trades over multiple time frames
will use three time frames.
The reason for this is because you normally want a higher time frame,
such as the daily or weekly time frame that shows you the overall price
action picture. You then want an intraday time frame such as the 4
hour or 1 hour time frame that shows you what has been happening on
the intraday charts. And lastly, you want a smaller time frame that will
help you find the best trade entries. These time frames are normally
smaller time frames like the 30 minute and 15 minute time frames.

The higher time frame, such as the daily chart, will show you a clear
picture if the price is in a trend or ranging and will have fewer false
signals. As you start to move to lower time frames, there will be more
noise on your charts and many more false signals.
If you can combine the higher time frames with the lower time frames,
you can start to get a really good idea of where the market is looking to
head next. You can also start to make tight entries.
Multi Time Frame Indicators
One of the letdowns of most trading platforms is that they do not

allow for indicators to be easily used across multiple platforms. For
example, if you want to see what a moving average is doing on the 1
hour chart, then you have to move to the 1 hour chart.
When multiple time frame trading, it can be convenient to see what is

going on with other time frames without moving to them. For example,
if analyzing a Forex pair on the daily chart, it can be convenient to know
what a certain moving average is doing on the 1 hour chart without
moving off the daily chart.

Whilst it is not built directly into their charts,
Strategy for Multiple Time Frame Trading
One of the best strategies when multiple time frame trading is to trade
with the higher time frame momentum and use the smaller time
frames to pinpoint your entries.
As an example, there are three charts of the same Forex pair below,
the daily, 4 hour, and 30 minute chart.
In the first daily chart, we can see the price starting to break higher
with the trend and through an important resistance level.

On the second chart that is the 4 hour time frame, we can see that
price has confirmed this breakout with two large bullish candles. This
lets us know that we should be looking for long trades with this new
momentum.

On the smaller 30 minute chart, we are now looking for our trade
entry. This smaller time frame gives us a better entry with a smaller
stop loss and a bigger potential risk to reward level.
When price pulls back into a clear support level, we can make a long
entry and profit from the next move higher that is in line with the
higher time frames trends.

Day Trading Strategies for Stock And forex
markets
As a day trader, price action volatility and the average daily range are critical to
your success or failure.

Investors are holding their position for far longer periods of time and
are often looking at making sure the fundamentals of their trade are
aligned.
In this post we look at day trading strategies you can use in the Forex
and stock markets to get in out of trades quickly.
Day Trading for Beginners

Day trading is the buying and selling of a security within the Forex or
stock markets designated hours.
Positions are closed before the market closes to secure your profits.
Day traders may also enter and exit multiple trades during a day trading
session.
Day traders use high amounts of leverage using Trading strategies to

capitalize on small price movements in highly liquid stocks or
currencies.
This means that even small movements in price can lead to big wins
(and losses)
Stocks, currencies / Forex, options, and futures are the most commonly
day traded financial instruments.

What are the Benefits of Being a Day Trader?
This is a question often asked by traders looking at different systems.
Will it benefit me? In what way?
Day trading can be a home-based business.
Day trading does not require any major infrastructure. There are no
bosses or workers.
There are no special skills required and there are no tests that need to
be passed.
You do however need a strategy and a solid level of knowledge if you

want to be successful.
A major reason a lot of traders look at day trading is because the

market can fall overnight. A lot of the risks of making large losses can
be avoided if you are not holding your trades overnight or when away
from your trading charts.
In day trading, you close your trade before the markets close to avoid a
lot of the headaches.
Another major benefit is the amount of trading opportunities you get.
Because you are day trading you will be trading on smaller time frames.
This will give you more trades and more chances to make potential
profitable trades.

Forex Day Trading Strategies
Scalping Day Trading Strategy
Scalping the markets involves looking for very quick profits from small
moves in the price action.
As a scalper volatility is your friend. The more volatile the markets are,
the more price is moving and the more trades you can find to
potentially make more profits.
When using scalping strategies you are trading in a similar way to other
day trading strategies. You are looking to get in and out before the
market closes or before you finish your trading session.
There are many different strategies you can use to ‘scalp’ the markets,
but below we go through one in detail.
Example Scalping Day Trading Strategy
The best time frames to scalp the markets are the one minute to the 15
minute charts.
With this strategy you are looking for price action that has formed a
clearly defined range.
As the chart example shows below; price has formed clear support and
resistance areas and has been bouncing between both of these levels.
When price makes a new test of one of these levels we are then looking
for a Japanese candlesticks entry signal.
In this example below; price forms a bearish pin bar and an inside bar at
the resistance. Both of these could be used as potential candlestick
entry signals to enter short.

Breakout Day Trading Strategy
Day trading breakouts is a riskier trading strategy that also comes with
the potential for higher rewards.
When looking to make breakout trades on the smaller time frames like
the one minute to 15 minute charts you run the risk that you will enter
a lot of false breaks.
The flip side to this is that when you do find a trade that breaks out in
your direction the breakout can be explosive and offer large rewards.
When looking for day trading breakout trades you could be using a
number of different strategies.
These include looking for trendlines, support or resistance levels or
even moving averages to break.
Example of Intraday Breakout Trading Strategy
Below is an example of a breakout trade.
Price had repeatedly held at the support level bouncing back higher
each time price tried to move lower.
Finally price broke below this level signalling a potential short trade.
Once the breakout was confirmed price rapidly moved lower as is often
the case with confirmed breakout trades.

Day
Trading Stocks
Moving Average Day Trading Strategy
Using moving averages is particularly popular when day trading the

stock and indices markets.
Often moving averages will be used to define a trends strength or to

find dynamic support or resistance.
Moving averages can also assist in finding high quality day trades.

To find trades using moving averages traders will often use what is
termed the Golden cross strategy .
This is where one moving average crosses above or below another

moving average.
Example Moving Average Day Trading Strategy

Using the golden cross we can find when the market is moving into a
strong trending period. We can also see when the two moving averages
become separated to gauge the strength of the trend.
The example chart below has a 50 EMA (exponential moving average)

and 200 EMA plotted on its chart.
The 50 EMA reacts a lot faster than the 200 EMA and stays a lot closer
to the current price action.
When we see the golden cross and widening of the two moving
avereges we can see the trend lower is strong and can begin looking for
short trades in line with the trend.
Trades can then be found in conjunction with these moving averages.

For example; we can use candlesticks, support and resistance or a
number of other entry signals.

Trend Day Trading Strategy
One of the most popular day trading strategies for all markets is trend
trading.
The reason for this is because when making trades in line with the
current trend the potential rewards can be large as the trend continues
in the trades favor.
Two common strategies to finding trends are the moving average as
just discussed and plotting trendlines.

Using trendlines involves finding a series of swing points that match up
either in a trend higher or lower.
Example Day Trading Trends
As the chart example shows below; price is making a solid trend higher.
As price moves higher it is also rotating lower before once again moving
back in line with the trend higher.
These moves higher all line up to form a trendline.
This trendline could be plotted and used to find high quality long trades.
As with the other strategies, you can find entries using Japanese
candlesticks, supply and demand or your other favorite indicators.

Lastly
As a day trader the market conditions you are trading in are crucial.
If you are trying to use a trend trading strategy when price is stuck in a
tight range, then you will continually get stopped out.
It is important that you tailor each of your strategies to how the

markets are currently moving.
It is also important you test any new strategies on Demo crarts with
virtual money .so you know they work, before you ever risk any real
money.

Volume Based Trading

All markets such as Nepse, Forex, crypto, and stocks need trading
volume to move higher or lower.
Being able to read and analyze volume in your trading accurately can
help you find high probability trades.
This post looks at exactly what volume is and how you can use it in your
trading with different strategies.
What is Volume When Trading?
At its simplest, volume is the amount that has been traded for a certain
market over a certain time frame.
Volume can be handy when looking to find and manage your trades
because knowing when the volume is spiking or backing off can help
you analyze what the market is doing.
Volume information can help you find new potential moves, Volume ,
and even when to look for a potential fakeout .
Markets like stocks have a centralized system that can help you
accurately read the different volume levels.

Markets such as Nepse ,forex , however, are now centralized. The
volume information you get will be slightly different for each broker.
This is because each broker is using different liquidity providers to fill
their orders.
With that said, you can still get a pretty good idea of volume and in
particular, volume spikes when using a few main indicators.
List of Volume Indicators
There are a range of different indicators that will help you analyze
volume levels, but four of the most popular volume indicators include;

#1: VWAP
#2: On Balance Volume
#3: Chaikin Money Flow (CMF)
#4: Volume Price Trend Indicator (VPT);
On Balance Volume
The on balance volume indicator is designed to show you when a

certain market has been seeing an increase in volume, but the price
action has not been moving that much.
The on balance volume indicator, which is o en referred to as the OBV,

can give you a clue of what the larger market players are doing and if
they are increasing their positions.
When larger market players like institutions start to move into a

position, they aim not to see a huge move in price, making their trade
less profitable.
This indicator can show you when large amounts of volume are taking
place, but the price is not following.

Chaikin Money Flow (CMF)
The Chaikin money flow indicator is one of the more popular indicators
for volume analysis. This indicator was created by Marc Chaikin and is
used to measure the flow of volume over a certain time period.
With this indicator, you can start to see the buying and selling pressure
for any given time frame you have set.
Volume Price Trend Indicator (VPT)

The VPT or volume price trend indicator is a technical analysis tool that
can help you determine the strength of a move in price.
This indicator can give you an idea of the supply and demand levels.
The volume price trend indicator will move higher or lower to give you
a positive or negative value. It does this by multiplying the volume
levels with the change in price for a certain time period.
Volume Trading Strategy
One of the most common trading strategies is looking for price to

breakout through a key level such as an important support or
resistance level.
Volume information can help you find these breakouts and also add
confirmation.
Higher Volume with Breakout
In the example below price is trying to breakout higher and through a

resistance level.

When analyzing the volume, we are looking to see that the volume
increases and ticks higher before and during the breakout.
On the flip side, if we saw the price was breaking out with a small
amount of volume, we should be cautious and potentially look for the
breakout to turn into a false breakout.

Volume Spike in a Trend
As price trends through the day or session, you should keep an eye out
for the volume levels.
In a strong trend, we will continually see a spike in the volume as the

trend gains strength. This can be for both higher and lower trends.
In the example below price is in a trend Higher. When looking at the

volume levels, we can see that prices continually spikes as the trend
continues higher.

Volume Trading Strategy for Intraday
A lot of volume indicators are used on the daily charts. However, some
indicators can be great at showing you if the volume is spiking or
decreasing on an intraday basis.
Best Volume Indicator for Intraday
The on balance volume indicator was created in the 1960s by Joseph

Granville.
This indicator tallies the higher and lower volume levels to help you
accurately look for breakout or fakeouts.
You can use this indicator to try and get a better idea of what the
bigger market players are doing during each session.
These indicators add an oscillator that moves higher and lower to your
chart. It is natively installed in MetaTrader charts, and you just have to
select it from the indicators section.
The idea behind this indicator is that price will normally follow the
volume information.

The on balance volume is mainly used to find when large spikes in the
volume occur, but the price is not making the same large movements.
This can give you a clue to where the price could head next. The bigger
players in the market will normally try to move in when volume levels
are minimal to get the best prices. If you notice that volume is
increased, then a new move could be about to occur.

Swing Based Trading
There is one rule the market always follows. No matter how strong a
trend higher or lower is, price will always have swings.

For example; if price is in a strong trend higher, price will still make
swings back lower before continuing on with the trend.
As a swing trader you can take advantage of these swings by making

entries at the best areas and profiting from the next swing in the
market.
In this post we go through exactly what swing trading is and how you
can use it to find profitable trades.
What is Swing Trading?
When swing trading you are looking to profit from the next swing
higher or lower in the market.
Whilst a lot of swing traders will be using higher time frames such as
the 4 hour time frame and above, you don't have to be using higher
time frames to be a swing trader.

Swing trading is trading the 'swings' and you can do this on any time
frame.

The other misconception is that swing trading can only be done in
trending markets.
Whilst a trending market is a lot more favorable to swing trading, you

can still use a range to swing trade from the range highs and lows.
As a swing trader your goal is to find profitable trader and ride the next
swing or wave in the market.
See the example chart below. Price is in a clear uptrend. You don't want
to enter at the top of the trend so you wait for price to make a swing
lower where you can then enter a long trade.
You can then profit as price swings back higher inline with the strong
trend.

What are the Advantages of Swing Trading?
Swing trading is definitely not for everyone.
Unlike Scalping or breakout trading you will have to have more patience
and you will not have as many trading opportunities.

Swing trading however can offer you the ability to find very high
probability trade setups.
It can also offer you the chance to enter large reward trades.
These trades will often be with the trend. Because the trend can at
times continue running for long periods of time you can be making
swing trades that run in your favor for long periods giving you very
large risk reward winning trades.
Swing trading can also be carried out on many different time frames
and as long as the market or Forex pairs is liquid, then it is suitable for
swing trading.
Swing Trading Basics
Swing trading is one of the most simple and basic forms of trading.
At its simplest you are looking to make a trade from one swing point
and ride the wave higher or lower for a profit.

For an example see the chart below. Price is in a trend lower. As a swing
trader you are looking for price to make a swing high within this trend
to give you a chance to make a short trade.
When price makes a swing high you can enter this short trade and start
riding the wave back lower.

Swing Trading Simplified
The two most common questions with swing trading are;
#1: How to identify a trend?
#2: How to identify a swing point?
Whilst there are many different methods and strategies to do both of

these things, the simplest is using a moving average crossover.
Using a moving average crossover such as the 50 EMA and 200 EMA
crossover will show you when a trend has begun and also how strong
the trend is.
You can also use the 200 EMA (exponential moving average) as a
dynamic support or resistance level to find swing highs and swing lows.
The chart below is an example of how you might do this.
First the shorter period 50 EMA crosses above the longer term 200
period EMA showing us there is a new trend higher.
The EMA's also begin to widen showing us that the trend higher is
getting stronger.
Using the 200 EMA we can then look for the times that price pulls back
lower to test the longer term moving average and makes a swing low to
get long inline with this trend higher.

Profitable Swing Trading Strategies
The other simple swing trading strategy that involves no indicators and
uses only raw price action is looking for swing highs or lows at key
support and resistance levels.
This is an extremely popular strategy because of how often this pattern

continues to repeat itself time and time again.
The chart below shows how this pattern works.
First you see that price is in a trend lower and has found a support
level. You then see price breakout lower and through this level.
When price makes a swing higher you are looking to see if this old
support level will act as a new role reversal and swing high resistance
level. This is the level you will look for potential short trades.

How to Master Swing Trading
Swing trading is not suited to all traders and it is definitely not going to
be mastered in a weekend of back testing.
This strategy will take a lot more work than using indicators or a
strategy that is more automated.
With that said, if you want to trade higher time frames, find high
probability trades and make trades that have the chance to be very
high reward, then swing trading is for you.


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Contents

The Stock Market Gateway...........................................................................................3

Stock Market Basics......................................................................................................5

Stock Market Indexes.................................................................................................10

Selection Of Online Stock Broker...............................................................................14

Trading Psychology ………………………………………………………………………………………………..28

Formation of Stock Charts..........................................................................................39

Channel Based Trading .............................................................................................105

Trendline Baased Trading.........................................................................................117

Elliott Wave Pattern Strategies.................................................................................190

Divergence Cheat Sheet............................................................................................259

Volume Based Trading .............................................................................................300

Swing Based Trading.................................................................................................310

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While trading stocks on an exchange, you have to be registered; you

The Stock Market Gateways

If a company is looking to raise capital, it can offer its shares to the

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While a company can issue more shares, there is always a limited

When buying shares in a company, you are becoming a part-owner of

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individuals and institutions buy and sell ownership stakes, known as

shares, in publicly-traded companies. These shares represent a claim on

provides individuals with the opportunity to participate in the growth

and success of businesses across various industries.

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Supply and Demand

● Company Earnings: The financial welfare of a company plays a

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Buyers Fighting Sellers

Everything is taken into account, the price of a companies stock comes

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Understanding the Stock Market

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Investing in companies that have proven long-term track records of

Stock Market Indexes

Whilst there are many thousands of stocks on many different stock

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well know market indexes In NEPSE are:

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Whilst making profits through capital gain is a popular way to make

A dividend is a payment to shareholders from the companies profit.

To be eligible for a dividend payment, you must be a fully paid stock

Whilst profitable companies will regularly pay out their normal

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Buying and Owning Shares

The most common form of share investing is buying the shares

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The type of stockbroker you choose to use will largely be dependent on

There are total 75 licensed broker in Nepal as per Feb 2024.

Some of licensed broker in Nepal are:

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1) Is this trade formed on my time frame? Yes /No

1) Does this trade meet my trade setup rules?

3) Is there a valid trade entries.For example a candlestick

1) Am I risking the correct amount of my account?

2) Stop loss method correct?

3) Profit target method is correct?

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The Most Common Stock Market Terminology

To buy shares in a company.

The price you are willing to pay for a certain stock.