Saturday, 20 December 2014

2 Spots in the Market Create High Probability Setups

Below is a excerpt from one of the topics inside AIMS Forum where we share with our fellow AIMSters (AIMS Members) ideas and concept that can change their trading dramatically for good.


Continued from Inside the forum
.... Point No. 5.

When the market stops moving stop trading.

Understand the differences between Volatility, Momentum and Density of the market. 


The AIMS Stress Free Trading - The Setup  Strategy is designed for Faster Moving Markets. The faster time frames have the potential for bigger gains within shorter time periods but there is a problem. That problem is the presence of enough trading volume to keep the chart moving nicely creating waves up and down. It is your job to establish if the markets are volatile or not.

If the average Range (difference between high and low for that period of time) is less than your average winner it might be a good idea to wait until markets starts moving.

It would not be appropriate to say that we "need" volatile markets for M5/M1 strategy to succeed. I should rather say, "In order to take advantage of fast moving markets i.e. moderately and highly volatile markets, we drop to lower time frames such as M5 or M1 or the M5/M1 combination, in doing so we are able to trade some best looking charts.

When the Markets are DENSE (Market Density is a term coined by AIMS Stress Free Trading. The concept is explained inside AIMS Forum.) and Volatile, when there are more ticks per candle the better is the picture, the better and more reliable is Elliott Wave count. We would need at least 20 ticks per candle for a chart to be worth trading. But 100 ticks per candle is a very healthy chart. In order to make sure you get this right we suggest that we trade during times of expected higher market activity. Those times obviously are:


High Probability Spot Number One:

Session Open Times is the highest probability spots in the market where there is higher probability of the market making a dash in some direction.  Markets usually have greater activity during open times. Such as London Open, New York Open, (New York Banks usually open an hour before Equity Open) Asian Open is another Session time and more appropriate for yen, aussie and kiwi based combinations.

High Probability Spot Number Two: 

2. Just After News. Yes, thats right, a few seconds or a minute after major news are released. You can check these news very easily using a free website. www.ForexFactory.com is the worlds largest forex related website and very reliable. They have the news rated as red, amber and yellow. We are interested in the Red News. As data hits the market so does the orders and it creates an environment called high volatility period. The more the activity the higher the chances of price moving in direction or the other. We have a special, very simple but effective technique for trading the news. Premium members of AIMS Stress Free Trading can access it any time they like.