Elements and process for a strong trading strategy

[tradinglounge]

Find a strong trend, wait for consolidation /contraction, trade the breakout of strong resistance on increasing volume, apply stop under volume.

A strong trend
indicates that there is strong underlying demand for an asset, such as a stock, currency, or commodity. This can be a good sign for traders who are looking to enter the market and take advantage of the trend.

Consolidation
refers to a period of time where an asset's price is range-bound, or moving within a relatively narrow price range. This can be caused by a lack of supply or demand for the asset, or by traders taking a wait-and-see approach. During consolidation, the asset's price may form higher lows or lower highs, indicating a lack of supply or demand, respectively. Lower volume during consolidation can also be a sign of a lack of supply or demand.

A breakout
is a price move that occurs when the asset's price breaks through a level of resistance or support. This can be a sign of increased demand or supply, and is often accompanied by higher volume. When entering a trade on a breakout, it is important to place a stop loss order at a reasonable level to manage risk.

Volume
is an important factor to consider when trading, as it can provide information about the level of supply and demand for an asset. Higher volume can indicate increased interest in the asset, while lower volume may suggest a lack of interest. It is important to carefully manage risk when trading, and to have a clear understanding of your risk tolerance and risk management strategies.

Risk management
is an important aspect of trading, as it helps traders to minimize losses and protect their capital. There are several strategies and techniques that traders can use to manage risk, including:
Setting stop-loss orders: A stop-loss order is an order that is placed with a broker to sell a security when it reaches a certain price. This helps to limit potential losses by selling the security before it falls further in value.
Using risk-reward ratios: A risk-reward ratio is a measure of the potential reward of a trade compared to the potential risk. By focusing on trades with a high risk-reward ratio, traders can potentially maximize their profits while minimizing their risks.
Using risk management tools: There are various tools and software that traders can use to help manage risk, such as risk calculators and position sizing tools. These tools can help traders to determine the appropriate level of risk to take on for a given trade and to manage their overall risk exposure.

Keeping a trading journal: Keeping a detailed record of all trades, including the reasoning behind each trade, can help traders to learn from their mistakes and improve their risk management strategies over time.

[MongiIG]

On 18/12/2022 at 05:36, tradinglounge said:

Find a strong trend, wait for consolidation /contraction, trade the breakout of strong resistance on increasing volume, apply stop under volume.

Hi @tradinglounge

Thanks for sharing great content.

 

All the best - MongiIG