Master Trading Principle — Did you sit down today to TRADE … or to see IF THERE ARE TRADES TO BE TAKEN THAT MAKE SENSE TO TRADE?
1. Confirm Trend Direction on LOWEST CHART that shows a Trend out of 1 – 5 – 15 Min Charts.
2. Does THAT TREND (if there is one) match the HIGHER CHART TREND?
If NOT — it is in a counter trend trade. Watch for “space” to trade into the CORRECTION that will likely occur when this LOWER chart “corrective trend” runs into the HIGHER CHART TREND CONTINUATION.
Example: 1 Hour trend is DOWN and price has “stalled” at 1.3875 to 1.3890 for a 15 pip “Range”
The 1 Min has been “ranging” between .3875 and .3890 and you are BUYING UP from .3880 right now … going AGAINST the 1 hour trend.
You see at .3880 you have 10 pips of “space” (room) between .3880 and .3890 (the top of the ranging movement) — BE AWARE YOU NEED AT LEAST 10 PIPS of “space” for a safe NZ Forex trading.
ALSO BE AWARE … the 1 hour trend could RESUME DOWN and you are “counter trend” trading with the range trading you are doing.
Be prepared to CUT THAT TRADE if price breaks the “floor” of your range by more than 5 or so pips.
3. Is price at a KEY NUMBER — 00 / 10 / 20 / 30 / 50 / 80 / 90 / 00? Take trades ONLY off those.
4. Is Price “Ranging” in the 5 / 15 / 1 Hr charts as it “waits” for “something” to move it? If so, consider ONLY taking trades that favor the HIGHER CHART TREND DIRECTION. If you take a “Range” trade that is COUNTER TREND against the higher chart be prepared to CUT IT if it resumes trend.
5. How many CANDLES have happened in the move you are going to trade? 1 to 3 MAX. More than that and the “move” may go into a short term reversal before resuming the trending direction, causing you unnecessary draw down or an actual trend reversal.
6. Is the GREEN TDI LINE (Traders Dynamic Index) Above the 50 line and above the RED and YELLOW — but BELOW the 68 line? BUY.
If BELOW the 50 line and BELOW the RED and YELLOW but ABOVE the 32 — SELL.
7. If the PRICE ACTION is going UP — but the TDI is BELOW the 50 — this is possibly a TAKE PROFIT CORRECTION — use caution.
Don’t BUY without strong confirmation the move will continue. If the PRICE ACTION is DOWN and the TDI is ABOVE the 50 — use caution. This is possibly a take profit correction from buying. Don’t SELL without confirmation of the move.
TDI OVER 68 = OVER BOUGHT TDI UNDER 32 = OVER SOLD on the 1 min up to 1 Hour charts. If the RED OR YELLOW is over 68 or under 32 Reversal is likely.
On the higher charts — 4 Hour / Day / Week / Month the “over 68” and “under 32” are NOT as fast to reverse and change direction.
WATCH THIS VIDEO by the actual Author of the Traders Dynamic Index indicator for full on training on all aspects of this indicator.
IF YOU DON’T HAVE AT LEAST 3 SIGNALS TO TRADE — YOU DON’T HAVE A TRADE
BUY: 1 to 3 Candles IN THE TREND DIRECTION / TDI Above 50 – Below 68 / Key Number
Green Over RED and YELLOW
SELL: 1 to 3 Candles in the trend direction / TDI UNDER 50 and ABOVE 32 / Key Number / Green UNDER RED and Yellow.
CAUTION: Price Action (candle direction) going UP and TDI UP but UNDER 50 or Price Action going DOWN and TDI going DOWN but OVER 50. Both may be just CORRECTION ACTION and could REVERSE ON YOUR TRADE.