Down approach to the future / Commodity and Forex Trading

Down approach to the future / Commodity and Forex Trading

There is an old saying about not "not seeing the wood from the forest. When it comes to deciding whether to buy or sell futures or commodity exchange agreement, this may actually be something good in the beginning. On the level where trees , the lower time frame, such as the daily price chart, you will witness the market (futures, commodity and Forex) trending up, down and sideways. In fact, it can often appear quite "noisy" to the untrained eye. Deciding whether to buy or sell based solely on what you see on the lower time frame can be quite challenging. However, approaching the problem from a 'higher' terms may be helpful in aligning the overall picture the market in question. This will be staring in "forest" first before focusing on "trees".

Often you can get away with just one will over what timeframe you trade from. For example, if often allow your trades to continue overnite for one or more days, then it is likely that you use the "daily" price chart to make the final entry decisions. Therefore, a higher time frame would be "a weekly price chart, where each price bar represents one trading all week (5 days). If you are a day trader, one who usually does not leave the position overnite, and you use the 5 minute chart for your last timing decisions, for 10 min, 30 min, 1 hour and daily charts are more time-frames view of your preferred time frame for timing trades. For the rest of this article, we will assume that is normally used on a daily chart to make your future, Commodity or Forex trading decisions. So, the next higher time frame (not wood) will be on the weekly chart.

Start by removing your weekly price chart of the market you want to analyze. What do you want to look for is whether the overall weekly trend is up or down. In essence, a bull trend is one that forms the larger swing bottoms and higher tops swing, and Bear trend forms a smaller swing swing bottoms and lower tops. There are exceptions to this general rule. However, indepth discussion on trends is beyond the scope of this article. I invite you to visit my archive of articles and lessons on ProfitMax Trading, Inc web site for more information on this topic and others.

If your test reveals that the weekly chart is bullish, then you will want to focus on the lookout for opportunities to buy out your daily futures, forex or commodity price lists. When looking to buy off the daily chart, come as close to breaching bottoms will provide you with the lowest risk and highest profit potential trades. If you've solved the weekly trend is bearish, then you are looking for shorting (selling) options, sell the rally peaks. If the weekly trend is narrow sideways, find another market for trading unless you want to trade channel swings (I hope you're aware of the channel breakouts - be prepared). Wide sideway trends weekly charts will recommend you to simply trade in the direction of the current weekly direction. If the weekly trend is currently moving up, buying out the daily pattern of those retracement (sinking) pivot bottoms will provide you with better trades.

Whenever you plan a trade, look at the bigger picture. I want to get a good idea of ​​which way the market wants to go. If you look at any larger time frame chart, such as weekly or monthly price chart, you will see that when the market is bullish as the daily chart is bullish for a very, very long time. Dynamics is a very powerful attribute in the future, commodity and currency markets and the trend of higher time frames will often tell you that it is the momentum of the daily pattern (lower time frame that will be based on your final buy / sell trading decision.)

Be aware that even weekly and monthly trends can change at any time. Yes, you can go to the next level, monthly schedules, and note which way it moves to get an idea of ​​likely weekly direction. But be careful not to lose your perspective. Although the trends take a long time to change, one day it will. At that point, you will need to be prepared.

Using this 'downward approach' for trading futures, commodities and forex, we get the "big picture" first. You are looking at the "forest" before getting down and looking closer to the "trees". Once you have done this and have a good idea what the long term picture looks like the prices, then you can focus on your technique timing of your "fine-tune" the timing trading decisions. Like many successful traders know, time is everything! As a market analyst and trader, my preference for the time based on market cycles and their cumulative affects, what causes market tops and bottoms.

Always remember that it's "law of probability" that you want on your side of every trade. You want the odds in your favor. You do not want to risk too much or too exposed. Want to buy low and sell high. All this depends on you see "big picture" as they have just discussed, and methods of precision of time to get the best price for the lowest risk exposure.




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