Trade Against The Trend…And Your Trading Account Becomes A Black Hole

Hello and welcome to another edition of the bulls vs the bears. Today I have another poignant message for you. Trade against the trend and your trading account becomes a black hole. This is not a joke. This serious. You absolutely do not want to turn into a gambler and hope against hope that somehow you fan make a profit going anti-clockwise. Your trading account will absolutely feel like your skull if you try that.

Look why do you want to trade against the trend when the trend is showing you the money? You will be absolutely nuts trying to go against the grain. I know it’s human nature to explore the unknown sometimes. But this is not Russian Roullete. This is Forex Trading. And forex trading is a business. And the best way to profit as a trader is to go with the trend. If you are a rookie trader listening in on this post, read my lips”DO NOT GO AGAINST THE TREND!” Just take the path of least resistance. As the popular saying goes,”The trend is your friend.” So don’t act as if the trend is your enemy

So we are going to take a look at a few examples of how you can make money trading the trend and how you could bleed money trading against the trend.

First up is

An Obvious Bearish Trend using GBPUSD pair

Let’s take close look at the bearish trend around 25th August on the left side of the trend, It’s pretty obvious that the bearish trend is the winner here. It’s basically screaming trade me. Look at the bearish trade signal at the top of the trend. I mean how can you go against the trend?

Let me let you in on a little secret. When traders trade trends, they move in the same direction. I can hear hear somebody asking “Why is that so?” Well it’s the least course of resistance. You follow the path that is most travelled. The last thing you want to do is go against the grain and blow up your account.

When a market trends it makes a titanic move in the direction of the market. But then it pulls back to its most recent average price(Look up We are moving Averages Parts I and II). With that in mind, you trade from value since trends tend to resume at the point of value. You then look for price action opportunities that are backed by a confluence of trend and the average price behind them.

Now let’s take a look at an illustration of the dangers of trading against the trend using the same GBPUSD

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Take a close look at all the countertrades against both trends on the screen. There is absolutely no way you are going to make any money going against the grain Take a look at all those failed countertrend inside bar setups. It’s like trying to get in the way of a moving train when you try to trade against a stromg trend.

Don’t get so caught up in trying to trade against a strong trend that you put your account in harm’s way. You will definitely blow a huge crater in your trading account if you try to get in the way of a strong trend.

Now let’s take a close look at a clear trend using the USDCAD pair.

Here we see a nice strong uptrend glued to the channel on our right under the month of October. Not only do we see strong a trend direction, but we also see a value area that we can enter to a trade as far as price is concerned. This value area runs parallel with the strength of the uptrend.

See the numerous price action buying opportunies that the pin bars and inside bars present on this uptrend. It is pretty obvious the uptrend is the least course of resistance. Why would you want to against that? So looking for buy signals on this trend is the obvious choice, not trading bears on the downside.

Committing Suicide Trading Countertrend

However you’d be committing suicide if you so much as consider looking for a counter-trend signal on this chart. You see the the two long-tailed pin bars bearish pin bars? Even these two would have incurred for you a huge loss. The least you’d gain from these two is breakeven, at best. So when you see a strong trend, don’t fight it. Embrace it.

Next up is an

Obvious Downtrend Featuring the USDJPY pair

Take a look athe downtrend between 20th November and 4th December 2020. It’s pretty obvious isn’t it? You’d be crazy to go against that. So in this situation you’d be looking fo price action sell signals retraces back to the resistance level so you can trade parallel to the downtrend. Notice the pin bar signals forming following retraces within this falling market. This setup triggered this huge downward surge

Countertrend Pin Bars

Now take a look at the same chart and zoom in on the countertrend pin bars. You can see they have failed miserably. Anybody in his right mind will not even dare trading such lost causes. It makes no sense chasing bad money with good money. Try pursuing them and the only return you’d get is a huge hole in your trading account.

That’s s a wrap for “Trade Against The Trend…And Your Trading Account Becomes A Black Hole.” I hope you now understand that trading against the trend can be dangerous to your trading account, not to mention your health. When you trade on both sides of the trend you give back all your hard-earned profits like you are giving away confetti.

So What should be your New Year’s Resolution? Follow the dominant trend and avoid the countertrend like the plague. Your trading account will be the happier for that if you follow the direction of the trend.

Til next time take care.

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Three Perfect Tips You Can Use To Profit From Trading Inside Bars

Hello and welcome to another edition of the bulls vs the bears. Last time I showed you A Complete Breakdown of the Inside Bar and How to Trade it. Today we are going to learn about three perfect tips you can use to profit from trading inside bars. I’m sure you guys really enjoyed the breakdown on inside bars last time. Trading Inside Bars can be fun if you know understand how they function of course. Unfortunately too many traders do not under understand how inside bars work ,and consequently they end up bleeding money to the point where they pull out their hair in frustration. It doesn’t have to always be that way when you are trading the inside bar.

Let me let you in on a little secret. There is a very subtle side to to the inside bar. Knowing these subtle differences could be the difference between forex prosperity and forex poverty. I’m not saying that every inside bar trade is a guaranteed winner. But once you figure the nuances of trading the inside bar you put yourself in great posiion to make humongous profits. I’m not saying every trade is a sure bet. So long as you put yourself in the best position to make profits

So without further ado, let’s jump into the three perfect tips you can use to trade the Inside Bar.

First up is

Trade Inside Bars On Daily Chart Frame ONLY

When I first started trading I heard so much about the daily time frame. I was like “What’s the fuss about the Daily time frame? The one hour and four hour time frames is where it’s at.” Unfortunately for me I was losing so much money on the 1 hour and 4 hour time time frames it was ridiculous. So I said to myself” Let me try the daily time frame and see how it goes.” I’ve never looked back since. The daily chart frame is the only chart frame I trade on these days,

You see the daily chart frame is the strongest time frame you of all the time frames for inside bars. Let me show you a few reasons why I say so.

1.An inside bar on the daily time frame alerts you of possible time frames and that you need to be ready for a potential break out. An inside bar takes up more significance on a daily chart frame than on a lower frame, It cuts out all the sideways and choppy movements that you get on the 4 hour and 1 hour time frames. Rather you have one inside bar pattern or inside day pattern.

2. There are two many faulty inside bars on the lower time frames. Consequently they trigger false breaks you do not want to jump, especially if you are a rookie trader. Even worse they are of no value to you as a trader, which will cost you barrels of cash, not to mention peace of mind.

In alerting you of possible consolidation on the lower frames, the daily time frame saves you valuable cash and utter misery.

Avoid Multiple Inside Bars on Lower Time Frames

You have a huge cluster of inside bars on the lower time frames. Consequently you endp falling victim to the dreaded false break. This makes it doubly hard to trade inside bars on time frames because they are insignificant and they costing you valuable profits and time. You’d be better off spending all that time focusing on the daily time frame. Now let’s look at an illustrations of differences in trading inside bars on the 1 hour and daily chart frames

This is what the the 1 hr time frame looks like. Now who will want trade such a choppy mess? For starters it’s tough making any meaningful analysis of this mess. Not to mention the fact that you have so many failed inside bars staring you in the face. There is no way you can trade all of them. Come to think of it, trade them and see whether your trading account will not blow up in your face. Now let’s take a look at a daily chart

As you can see the price action on the daily is clean. You don’t have to scratch your head making trading decisions over choppy price action. You should be able to make your decisions and reign in your profits with ease with such a smooth pattern staring you in the face.

Last but not least is

Trade Inside Bars Bars With Daily Chart Trend

Not only should you trade inside bars on the daily chart. But you should trade daily inside bars with the daily chart trend. It’s the right thing to do. However, if you are harboring any crazy intentions of trading against the trend. DON’T EVEN TRY! You will blow a huge hole in your trading account if you do. I’m not saying it can’t be done. But unless you’ve ve been trading for ten years or more, You’d be better of trading inside bars with the daily chart trend. You should ONLY trade against the trend using key chart levels.

Inside bars are best traded as continuation patterns on the daily chart. Think of inside bars as breakout moves which provide great risk reward potential for getting on board trend markets after a brief period of consolidation. Let’s take a look at inside bars in daily trend using USDJPY.

Ladies and gentlemen here is a layout of inside bars in a daily trend. Take a close look at inside bars in bow\bearish and bullish trends. Inside bars work great in trending markets because they are continuation patterns. You don’t need to stress out analysing these patterns. The data is screaming “TRADE ME” at you. And when it does yell at you, you only need to oblige.

And last but not least:

Don’t Strangle Your Trade With a Tight Stop Loss

There is this this school of thought going around sayingyou place your stop loss just below or above the mother bar, high or low of an inside bar.”Well I’ve got some bad news for you. It doesn’t always work that way. Sometimes you ran the risk of strangling your trade with such a tight stop loss. You place your stop losses in places where they stand the best chance of not being whacked by sharp fluctuations in price.

I can hear somebody asking”Well, where is the best place to place a stop loss?” Well make sure your stop loss is further away from any key levels. This might mean you reducing your position size to accommodate a wider stop loss distance. Let’s take a look at an illustration using the EURUSD.

As you can see the theme of continuation is written all over this chart be it downtrend or uptrend. The breakout plays create risk reward opportunities if you play your cards right. Once the trend resumes after a brief pause your trade will be riding like a socket and racking up profits as well.

That’s s wrap for “Three Perfect Tips You Can Use To Profit From Trading Inside Bars”

Til next time take care.

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A Complete Breakdown of Inside Bar and How To Trade It

Hello and welcome to another edition of the bulls vs the bears. A while back I did a post on Trading The Inside Bar With Gusto. Today I am going to do a complete breakdown of the inside bar and how to trade it. Being the nice guy I thought to myself”Hmmm..How about doing breaking the inside bar down for those who are still struggling trying to trade the the insidd bar?” So basically we will be doing an introductory lesson on trading Inside Bar signals in terms of what it is, its anatomy, and how to trade the signals.

For those of you who are fairly new to the inside bar it’s fairly straight forward. It just shows a pause among among the major players as they try to contemplate their next move. Even more important the inside bar clues you in as to the next move of the major players. Think of the inside bar as another tool in your mastery of your trading strategy. And when you do master the inside bar it will most certainly help you prosper as a forex trader.

I guess the question burning on everybody’s mind is

What Is An Inside Bar?

Well an inside bar is a a pattern consisting of two components called the mother bar and the inside bar respectively. Of course the first bar in the pattern is the mother bar followed by the inside bar. It reminds me of a hen protecting its chicks . Now let’s see what the inside bar looks like in real life.

Ladies and gentlemen this is what the inside bar pattern looks like. Now as you can see the inside bars form in the middle of the mother bars or close to either the high or low of the trend . This pattern takes shape in both the bullish and the bearish trends. It doesnt really matter how these bars look so long as they are within high to low distance of the mother bar.

Now that we have gotten the definition out of the way let’s look at

Four Variations of The Inside Bar.

The first variation we are going to look at is

Double Inside Bar

The double inside bar consists of two bars within the mother bar. Sometimes you can sopt as many as thr33 to four inside bars within the same inside bar layout. when you see this many bars that tells you that the players are struggling to decide what their next move will be. The good news is these bars appear before the powerful trend moves take place. so just hang tight and wait for those moves to unbfold. Then you make your entry.

Next up is

Coiling Inside Bars

Coiling inside bars take shape when two or more inside bars are coiled up within one another. Picture a bicycle spring and how tight it looks. That’s what coiling inside springs look like. They coil up very tight like a spring. When this pattern develops it suggests the market is suffering from contraction. After a while the market will uncoil and burst into a powerful trend surge. Keep your eyes open for these surges as they present great profit opportunities

Next up is

Fakey Inside Bar Pattern

The fakey pattern is what you call an inside bar false break. It’s a false breakout from in inside bar pattern in that an doing a sharp reversal and going back the opposite directions. Rookie traders are the biggest,,casualties in this charade as they are tricked into believing a huge move is about to break. Of course they end up making the wronf move which will end in tears for a lot of them. Then again these false breaks drop valuable clues as to the next move of the markets

Last but not least is

Inside Bar/Pin Bar Combo

The Inside bar – pin bar combo is pretty much self explanatory. It’s a combination of an inside bar and a pin bar. Here you have an inside bar with pin bar showcasing its classic tail/shadow. Now as some of you may well know, the pin bar’s tail/shadow is tells us which direction the market is turning to next. Thus the inside bar doesnt just take a break. It comes with confluence as well. In others it’s equipped with other price factors. This makes it a very humongous price signal.

That’s it with the variations of the inside Bar. The next burning question on everybody’s mind is

How Do I trade Inside Bar Patterns?

You can trade Inside Bar Patterns two ways -either as a continuation signal or as a reversal signal. Now you an trade these patterns as continuation signals in the daily chart or as a reversal signal at key support and resistance levels. The best way to get the most out of inside bars on continuation levels is trading them on the daily charts. Someone is probably wondering”Why the daily charts?” Well, it’s fairly easier. Unlike the the other time frames you get less noise. Everything is crystal clear on the daily chart. Let’s take a look at a few examples shall we?


Trading Inside Bars as Continuation Patterns

Insider bar 2 education

As I said The most profitable way of trading an Inside bar is within a trending market or continuation move.

It’s much easier to trade and the trend is so clear that the odds can only be in your favour and nothing else. Often times the inside bar results into a breakout or continuation pattern depending on the current trend at the time. And when that pattern unfolds, it can only mean one thing – PROFITS!

Last but not least is:

Trading Inside Bars As Reversal Patterns

Insider bar 3 candlestick

The graphic above is a classic example of a solid inside bar reversal. An inside bar forms at the level of resistance, suggesting a period of indecision among the major players. Obviously they are scared of moving any higher. However, see the bears take over in explosive fashion as they head downwards on the back of a price breakdown past the inside bar’s mother bar low. With that being said, it’s time to ring in the profits.

That’s s wrap for “A Complete Breakdown of Inside Bar and How To Trade It.” Hopefully you ar inspired and rearing to apply your knowledge you have gained about trading the inside bar. Next week we will learn how not to trade the inside bar.

Til next time take care.

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Trading Breakouts Can Be Fun.But..They Can Also Ruin Your Trades

Hello and welcome to another edition of the bulls vs the bears. Today my message to you is this:Breakouts can be fun, But they can also ruin your trades. By that I mean trading breakouts can cause you to lose your trades. IF you are rookie trader, trade breakouts at your own peril. It is very tempting to get sucked in to trading on new lows(downtrend) and trading on new highs(uptrend) . Noq I’m not saying do not trade breakouts. Breakouts do possess great profit potential. Except that if you follow the herd, you will get gulped up by the market.

Sure it’s okay to trade with momentum. You may say to yourself”This trend is very hot. Let’s jump on the bandwagon here. Newsflash! Breakouts can force you into a whiplash it will make your head spin. Instead just wait for the market to pull back to the support/resistance area where you get more price signals lined up. There are some trades that make say”Hmmm..This trade has a million dollars written all over it. Then you jump in as if you just won the lottery only for the market to do a 360 on you. You are then looking like a deer caught in the headlights wondering”What happened here?” Well the market is unforgiven towwards rookies. So you need to contemplate carefully before you jump in.

So today I’m going to show you some real life examples of trades that can suck you in only for the market to whiplash into the opposite direction. You could lose your entire account on such trades. Sure it’s hard to ascertain where such mouse traps spring from spring from. But at least you can learn from the carnage these traps create and not repeat these mistakes again.

First Pic Please

This is a classic example of a failed breakout/false break at the key level via the GBPUSD pair. Just see how the bears break through the key support during the downtrend only for price to do a 360 and make an upward push. of course those overcome by greed are left standing there holding the bag with their tails between their legs.

Pic No 2

This is another example of a failed breakout attempt by the bears inside the channel vis the EURUSD pair. Basically price takes a plunge and recovers as illustrated by trendlines connecting September 1st and 21st highs and September 8 and September 25th lows. The bears anticipated slalom breakout fizzled out with the doji at the tip of the channel

This is the type of breakout that easily sucks in rookie traders who like to follow the herd. Once they get stumped, the pros turn in and whiplash price in the opposite direction. That of course will leave a black hole in your trading account every time.

Pic No 3

Here we see a clear false break above a key resistance level in the GBPUSD pair. Initially the bulls mount a strong push only to be repelled by the bears. Of course this causes price to create a sharp reversal. This strips so many amateur traders out there-especially those to looking to cash in early.

So now that we have ascertained how risky trading breakouts can be, The burning question on everybody’s mind is

What’s The Alternative To Trading Breakouts?

Well rumor has it that the best alternative to trading breakouts is retracements or pullbacks. This is where price temporarily drags back after a sustained trend period. It usually occurs at key levels and it is at this juncture where you find multiple opportunities for price entries.

Let’s take a look at a few examples

Pic 1


Here we see a classic example of a pull back in action visavis the GBPUSD pair with the help of moving averages. Notice the way the 13 day EMA line(Red Line) crosses the 21 day EMA(Green Line). This suggests a pull back, and,even more important, it suggests a price signal. Also it’s happening on the daily chart frame where you have a much higher higher chance of making making a solid profit. Plus, you don’t have to worry about false breakouts in this setup. It’s as clear as day.

Let’s look at another pullback example


Here we see another example of a pullback but this time in the downtrend. See the way the Red EMA crossed the green EMA. This signals another pullback, which of course means a signal to make your entry. Once Red EMA croses Green EMA it means the pullback has ended and that the downtrend has resumed. Pullbacks make for very valuable high probability setups. You’d do well to make that part of your trading plan.

Now let’s look at a pullback situation where the trend has confluence


Here we get confirmation that the downward trend has begun. Not only that but you have multiple signals along the key level . This phenomenon is popularly known as the power of confluence. The downward trend is confirmed by the moving average crossover and the sloping trend line. Initially price suffers a humiliating rejection at the 1.5750 level. In this setup just put on your hunter’s hat and wait for the bearish pin par to appear. This then confirms that the bears shift is over. You then make your entry when price dips just below the tips of the pin bar. This should bring you decent profits with little or no risk.

You see the power of confluence in this chart? With these multiple factors your odds of winning a trade increase by a hundred fold. By using a combination of a solid trend, support and resistance , and price action bars, You cut down risk and increase the probability of achieving huge profits.

If you want to know how moving averages work, look up We are Moving Averages Part I and Part II

That’s s wrap for “Trading Breakouts Can Be Fun. But..They Can Also Ruin Your Trades.” Breakouts can lead you into a ditch especially if you follow the herd blindly. Now I’m not saying you shouldn’t trade breakouts. I’d be the last person to ruin your fun. But you do need to tread with care when trading breakouts. Failure to do the right checks and you risk being eating alive by these breakouts.

Sure it’s only natural that you want to put in a trade because you strongly believe that the market is moving in the direction you want to trade in. However, you need a trading plan that allows you to take advantage of these breakouts instead of you being swallowed by these breakouts.

Til next time take care.

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How To Let Forex Trades Run Their Course

Hello and welcome to another edition of the bulls vs the bears. Today we are going to learn how to let forex trades run their course. We are going to learn how to let the market do the heavy lifting for you instead of you manually exiting the markets and hurting your chances of making a decent profit.

Do you know why forex traders struggle  to make a profit? No, it’s not lack of knowledge nor trading skill, semi-empty trading accounts, terrible risk management, not negative mindset, It is rather them  shooting themselves in the foot. You see when you exit your account before your stop loss or take  profit hits, you are hurting your chances of  making a  solid profit. Instead of exiting the market prematurely how about letting the market hit your stop loss and your take profits?It will make a life a whole lot stress-free for you.

So  all we are going to do is to learn how to avoid shooting yourself in the foot  when trading on the market.

First of:

Never Close Your Trades Manually

One way of not trading like a deer caught in the headlights is NEVER close your trades manually. If you exit prematurely from the trade you are basically telling the whole. You see forex trading is all about winning to maximize  lost trades. Sure you are going to lose some trades, But it doesn’t mean that you have to jump out with your tail caught between your legs.

Let me give you a nice illustration. Let’s say you enter a trade on a demo account with the market chopping sideways for a week stuck in limbo. Next the market makes a  sharp turn stopping you out for a humongous loss. The difference here is that with a demo account you can afford to to take a loss that might  turn into a huge win. Next week this same trade comes your way  and hits your profit target by the end of the week. So instead of taking a humongous loss you take a  huge win simply by lying in wait like a sharp shooter.

I can hear somebody saying”What’s your point?” Well my point is let the market do the heavy lifting for you instead of you exiting your trade as if your pants are on fire. You cant control time in the forex trade. It has its own schedule. You just have to wait in line while it prepares to launch. I know you want to make your profits right away, but the forex market  plays to its own drummer.  You might have to sit tight for three weeks when trading live. That’s how trades set themselves up sometimes. Are you willing to wait that long? That’s for you to find out.

Just remember this. If a trade doesn’t smash your stop loss, then  your trade has more room to breath and you have the opportunity to rack up the profits.  It may take a breather(consolidate) for two weeks and then take off running again and hand you more profits.

Let’s look at a few examples of  letting the market work for you as against emotionally exiting trades

Cutting winners

This is a classic illustration of exiting a trade prematurely and leaving money on the table.  A trader takes of running  at the site of a diminishing  pin bar(as indicated by the small red arrow). However, see the huge upward trend that ensues after the emotional exit. That’s too much money to leave on the table. If this trading account were human, I can only imagine the insults it would be firing the trader’s way. It pays to just let the trade play out.

Next example please

How to Use Set and Forget Trading Strategies

Here we have an illustration of the popular set and forget strategy.  This strategy cures the habit of running with your tail between your legs the moment your brain screams “TROUBLE!” Based on your trading plan you make your entry set your sop loss and profit targets and take a walk outside the house. With this strategy, you can afford to  breath in fresh outside. By the time you get home , your profits should be waiting for you in your trading account.

However,  are three exceptions to this rule

  • When there is a sudden price reversal. This should be a clear sign to you to run for the  hills
  • The price chart keeps changing – Don’t forget that price charts are not static and so thing change.  Pay attention to what the charts are telling you
  • When your price signal  misfires when the market reverses or closes below or above the price pattern.

Finally we get to look at situations where it’s best to run for the hills.

First example please

Right in front of us is an  4 hour chart. Here we have a reversal situation after price attacked the previous key level numerous times. Unfortunately the support line refuses to yield and when that happens, now will be a good time to head for the exit.

That’s a wrap for “How To Let Forex Trades Run Their Course.” Do your trades a huge favour by not jumping off the bus too soon.   Letting the trades run their course increases your chnces of racking up  decent profits.

No one is saying you wont experience losses – they will come. But  dont take volountary losses by  making premature exits. One way of solving this habit is to review your isk per trade so that you are not emotionally frazzled when price hits your stop loss. You need to decide how much you can afford to part with. And you if you are not sure about your stop loss placement look up How To Place A Stop Loss To A Tee. And if you are stuck on how to place a profit look up A Few Rules on How To Take Profits From Forex Trades

Til next time take care.

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