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Why Chain is the important element in Price Action Trading?

January 22, 2022

Why Chain is the important element in Price Action Trading?

The Chain is a critical element of price of Price Action Trading. Chain integrates the imbalances and trendlines and gives the detailed picture of the demand and supply.

As described in a previous lesson a potential imbalance is valid once,
• An opposing imbalance is taken out
• A trendline is broken with one or more full OCHL candles

The idea behind drawing a trendline by connecting the last two valleys and peaks is to connect the latest two impulses (bullish or bearish). If we start seeing impulses in the opposite direction then the dynamics for that timeframe in particular will probably be changing and we should lean on a bigger timeframe before we start trading in the same direction where the last impulses happened. These concepts are the core of the realignment rules that will be explained in the next episode.

THE CHAIN:
There is a relationship between the trendline break connecting the last two impulses and when an imbalance is created. We will be referring to this relationship as the Chain from now on. This chain connects both core concepts and provide us with a very objective methodology to locate potential tradable imbalances on any price chart and timeframe.

How to trade using Runaway Gap Trading Strategy?

January 15, 2022

How to trade using Runaway Gap Trading Strategy?

Different parts of Runaway Gap Trading Strategy
The Runaway gap means a gap formation in the middle of a trend. Consider a stock is in uptrend already and in the middle of an uptrend, price gap ups. This kind of gap is called Runaway gap. This is a sign of trend continuation. This type of gaps will get filled soon of it is created.

There are three major parts which forms this pattern.
1. Prior uptrend – The market was on uptrend the previous day. Market is already trending
2. Gap up & drop – Price gaps up the next day and after 2-3 candles, price starts dropping towards previous day’s closing price, filling the gap created earlier in the day.
3. Reversal candlestick pattern near previous day’s closing price – Price continue to drop till the previous day’s closing price and Price forms Reversal candlestick pattern near previous day’s closing price. This is the signal for price reversal to the upside. Note, in this case, price may not close the gap fully.

How to create algo for Exponential Moving Average Crossover Trading strategy?

January 8, 2022

How to create algo for Exponential Moving Average Crossover Trading strategy?

In this episode , we are going to learn how to code Exponential Moving Average Crossover Trading strategy.
Let’s get into the set-up.

Condition:
This is a very simple strategy, we will be using Exponential Moving Average crossover to take buying or selling decisions.
Buy: When 2 period Exponential Moving Average crosses above 3 Period Exponential Moving Average
Sell: When 2 period Exponential Moving Average crosses below 3 Period Exponential Moving Average

We will Buy: When 2 period Exponential Moving Average crosses above 3 Period Exponential Moving Average
We will Sell: When 2 period Exponential Moving Average crosses below 3 Period Exponential Moving Average

AMIBroker AFL Data Feed – December 2021

December 31, 2021

AMIBroker is one of the most famous Algo-Trading Tools available in the market today, which uses AFL Scripting. We can use AMIBroker to create, back-test and deploy and strategy. This post is the placeholder for sharing AMIBroker AFL Data Feed for December 2021. Note: These files contain data feed up-to 1 minute. We are providing…
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When a potential imbalance is confirmed as a zone?

December 25, 2021

When a potential imbalance is confirmed as a zone?

There are TWO SCENARIOS:
1. A potential imbalance takes an opposing imbalances out (and/or)
2. A potential imbalance is created if price breaks a trendline with one or more full OCHL candles. This trendline must connect the latest 2 peaks/valleys or 3 or more consecutive CPs (Continuation Pattern)
Both scenarios can happen at the same time, which is why I am using the AND/OR Boolean statement in the rule above. As long as only one criteria is met the imbalance will be confirmed.

So, once you draw a zone based on rules, you need to confirm validity of the zone using the 2 rules mentioned.

What is contingency plan and why every trader should have one?

December 21, 2021

What is contingency plan and why every trader should have one?, How a trader should build their contingency plan?

• If you want to be a successful trader, you should have contingency plans in place. You should use a “what if” process every time there is an issue and update the contingency plan as and when you encounter new scenarios and build your contingency rule book. For example: all the financial firms decentralized operational teams and have multiple data centres and backups after 9/11 attack.
• Your goal as a trader is preparedness to handle any surprises markets throw at you. To do so, you need to develop a dependable way to handle virtually every situation that may occur. Having events and circumstances thought out in advance is the key to manage risk effectively and build your capital.

How to trade using Breakaway (or Breakout) Gap Trading Strategy?

December 18, 2021

How to trade using Breakaway (or Breakout) Gap Trading Strategy?

Different parts of Breakaway (or Breakout) Gap Trading Strategy
The breakaway gap means breaking the important support or resistance or significant trend line in the form of the gap. This generally appears after if there is significant price build up or price consolidation near the support or resistance zone on the previous day.

There are three major parts which forms this pattern.
1. Consolidation – The market consolidates on the previous day, forming tight candles throughout the last hour of the previous day. This consolidation happens near a major support or resistance area.
2. Gap up & Rally – Price gaps up the next day above the consolidation zone or above the resistance area and continue to rally from there. This event had flipped our resistance zone into support zone, so we can call it flip zone.
3. Pullback – After a brief rally, price starts dropping towards the flip zone (previous resistance, which has turned into support now)

How to create algo for Wilders Moving Average Crossover Trading strategy?

December 11, 2021

How to create algo for Wilders Moving Average Crossover Trading strategy?

In this episode , we are going to learn how to code Wilders Moving Average Crossover Trading strategy.
Let’s get into the set-up.

Condition:
This is simple strategy, we use wilders indicator and using Moving Average crossover of 2 wilders indicator to take buying or selling decisions.
Buy: When 7.5 period Wilders Moving Average crosses above 11 Period Wilders Moving Average
Sell: When 7.5 period Wilders Moving Average crosses below 11 Period Wilders Moving Average

Wilders is a very complicated strategy in itself and we won’t be getting into the details of this strategy. Since it is algo, we can use just 1 line of code to pull the Wilders data and it is enough for us. If you are interested in learning Wilders strategy, let us know in the comments section, we will cover it as part of “Trading Strategy” series if there is enough interest,

We will Buy: When 7.5 period Wilders Moving Average crosses above 11 Period Wilders Moving Average
We will Sell: When 7.5 period Wilders Moving Average crosses below 11 Period Wilders Moving Average

What is the difference between Process-Driven & Result-Driven traders?

December 7, 2021

What is the difference between Process-Driven & Result-Driven traders?

There are two types of traders inside everyone.
First type of trader is an Architect, who is disciplined and process-driven.
Second Type of trader is like a rash driver.

AMIBroker AFL Data Feed – November 2021

November 30, 2021

AMIBroker is one of the most famous Algo-Trading Tools available in the market today, which uses AFL Scripting. We can use AMIBroker to create, back-test and deploy and strategy. This post is the placeholder for sharing AMIBroker AFL Data Feed for November 2021. Note: These files contain data feed up-to 1 minute. We are providing…
Read more

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