One of the most widely overlooked areas of trading is market structure. Developing a keen understanding
of market structure and its dynamics can help day traders to gain an unbelievable advantage. Developing a
feel and understanding for market dynamics is key to profitably taking advantage of short-term
fluctuations. In foreign exchange trading this is especially critical as the primary influence of intraday
price action is order flow. Given the fact that most individual traders are not privy to sell-side bank order
flow, day traders looking to profit from short-term fluctuations need to learn how to identify and
anticipate price zones where large order flows should be triggered. This technique is very efficient for
intraday traders as it allows them to get on the same side as the market maker.
When trading intraday, it is impossible to look for bounces off every support or resistance level and
expect to be profitable. The key to successful intraday trading requires more selectivity and only entering
at those levels where a reaction is more likely. Trading off psychologically important levels such as the
double zeros or round numbers is one good way of identifying such opportunities. Double zeros represent
numbers where the last two digits are zeros. Examples of double zeros would be 118.00 in USDJPY or
1.1100 in the EURUSD. After noticing how many times a currency pair would bounce off double zero
support or resistance levels intraday despite the underlying trend, we have observed that these bounces
are usually much larger and more relevant that rallies off other price levels. This type of reaction is
perfect for intraday FX traders because it gives them the opportunity to make 30 to 50 pips while risking
only 15–20 pips.
2016-10-25_122655.jpg
of market structure and its dynamics can help day traders to gain an unbelievable advantage. Developing a
feel and understanding for market dynamics is key to profitably taking advantage of short-term
fluctuations. In foreign exchange trading this is especially critical as the primary influence of intraday
price action is order flow. Given the fact that most individual traders are not privy to sell-side bank order
flow, day traders looking to profit from short-term fluctuations need to learn how to identify and
anticipate price zones where large order flows should be triggered. This technique is very efficient for
intraday traders as it allows them to get on the same side as the market maker.
When trading intraday, it is impossible to look for bounces off every support or resistance level and
expect to be profitable. The key to successful intraday trading requires more selectivity and only entering
at those levels where a reaction is more likely. Trading off psychologically important levels such as the
double zeros or round numbers is one good way of identifying such opportunities. Double zeros represent
numbers where the last two digits are zeros. Examples of double zeros would be 118.00 in USDJPY or
1.1100 in the EURUSD. After noticing how many times a currency pair would bounce off double zero
support or resistance levels intraday despite the underlying trend, we have observed that these bounces
are usually much larger and more relevant that rallies off other price levels. This type of reaction is
perfect for intraday FX traders because it gives them the opportunity to make 30 to 50 pips while risking
only 15–20 pips.
2016-10-25_122655.jpg
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