The dream of every trader is to be able to buy at the lows and sell at the highs. Knowing where the market ends a downside is certainly a unique advantage that would lead to consistent successes and profits.
History teaches us that with each new low there are always 2 possible reactions… the continuation of the downtrend or the rebound. The same goes for the opposite on the highs.
How to determine the existence of a Minimum to buy on?
There is no single and reliable solution but there are some tricks and readings that allow you to increase the chances of success on the part of the trader.
In this article (and in the video) I will explain the important points to keep in mind before buying on the lows or selling on the highs.
Trading Room for spread trading
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Avoid false breakouts in online trading
Bear Trap and Bull Trap
Whenever we are faced with a minimum that we consider of great importance there could also be a trap. As we all know, the continuation figure of a bearish trend brings us back to thinking about the formation of consecutive lows and a possible breakout of a previous low (previous day or previous week) could confirm in the trader’s mind that the bearish trend is still very strong. .
This figure causes most traders to sell at the breakout of a bearish trend. Many voices, on the other hand, in such situations there is a decisive reversal, such as to create a turnaround.
Always remember that a bearish trend ends when there are no more operators available to sell … and not when a news or an important minimum is presented.
We-Trading has developed an oscillator called Demand & Supply that tries to determine the bullish or bearish excesses where you can reverse.
Intraday trading indicator Collection
The aim is therefore to understand if the new breakout of a maximum can lead to a continuation of the trend or to a bearish movement.
In the video above I described his reading with practical examples. There are also other videos on the same youtube intraday trading playlist.
The use of the Demand & Supply oscillator made it easy to identify possible false breakouts of highs (or lows) keeping the trader on alert. Many pitfalls can be avoided and at the same time we can position ourselves to seek a profit.
As with any self-respecting trade it is always necessary to identify a stop loss and a take profit and in this case it is also simple. In fact, in the event of a new maximum with a spike on the oscillator, we will evaluate a SELL with a stop on the Maximum and take profit equal to twice the risk (risk reward of 1: 2). Same upward calculation on bearish spikes on the oscillator.
In summary, the rules are:
- looking for a spike on the price
- search for the same spike on the oscillator
- price on a new high (or new low)
- set stop loss and take profit
- monitor the trade and set BreakEven when the position goes towards profit.