![]() ![]() Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Hypothetical or Simulated performance results have certain limitations, unlike an actual performance record, simulated results do not represent actual trading. Past performance does not guarantee future results. Decisions to buy, sell, hold or trade in securities, commodities and other investments involve risk and are best made based on the advice of qualified financial professionals. All content is to be considered hypothetical, selected after the fact, in order to demonstrate our Services and should not be construed as financial advice. This site & the products & services LuxAlgo offers are for informational & educational purposes only. Trading is risky & most day traders lose money. ![]() The amplitude of the cyclical variations within a broadening wedge increases over time, thus potentially highlighting volatility clusters in higher time-frames. A broadening falling wedge follows the same scenario structure but with sellers instead of buyers. This scenario eventually repeats itself with increased volume, causing impulses and retracements of higher magnitude reinforcing a positive feedback loop until the price is judged overbought even by initial buyers. This allows the creation of a new impulse, with only a divergence left. These participants can be composed of initial buyers, accumulating positions, or late traders seeing the potential to buy at a better price. However, before the decline reaches the previously established low, certain market participants buy again. Contrarian traders judge the price to be trading above its intrinsic value, selling and thus creating a decline in prices. Momentum traders follow the initial impulse further pushing prices up. The cause of an ascending broadening wedge is a surge from an initial buying impulse, driving the price higher. Causes Of Broadening Wedgesīulkowski offers a description of the causes of broadening wedges in the market in terms of the market participant's behavior. Certain analysts close trades caused by partial rises/declines when the price reaches the support/resistance of the wedge, opening a new position in the case of a breakout while using the metric rule for setting their take profit. Selling directly after a partial decline would allow for higher profits. For a broadening descending wedge the measure rule would place our take profit at the highest high inside the formation. Selling directly after a partial rise would allow for higher profits. It shows the enormous momentum within less time at the support line.For a broadening ascending wedge the measure rule would place our take profit at the lowest low inside the formation. A big candlestick means a candle with more than 70% body to wick ratio. The breakout of trendline should always happen with a big bearish candlestick. There is a simple and effective method to filter false breakouts of the trendline. Many false breakouts can happen, but you should always show patience. In this way, you will filter the good patterns from the crowd. While analyzing the market, you should try to read the market structure. This will cause a bearish trend reversal. After 3 to 5 attempts, buyers will fail to keep the bullish momentum, and many sellers will enter the market. ![]() On each wave’s formation, the wave size increases, showing that buyers require more effort to push the price in the bullish direction. But the number of sellers is increasing with time. And sellers are weak, and they cannot compete with the buyers. On each higher high, the price will break a resistance level. When price makes higher highs and higher lows, it shows the break of key levels. ![]()
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