We analyze the types of advisers in simple words Part 4

Here, on the contrary, we see good impulses and good pullbacks. But, in this case, you have to trade on higher timeframes, which means that the maximum pulse length can reach, for example, 500-600 p, and the minimum pullback – 160-200 p.

If we increase the price step, then we will need to somehow pay for it with our deposit. Suppose we set a price step of 80 p (I will not take into account the spread for simplicity).

Consequently, at a movement of 500 p, we will open 500/80 = 6 deals and plus 1 at the very beginning. In general, when waiting for the drawdown after the 7th transaction, we will need $ 11.1 * 160 (remember the cut-off from the penultimate order) = $ 1776

From the point of view of risk reduction, our choice is low-volatility movements, ideally a “flat” type (as in the 2nd figure, slightly higher).

Those. when the price first goes one way a small number of points and then goes the other way, also a small number of points. But it is only desirable that this is not on the higher timeframes.

In this case, we “kill” not even 2, but a whole herd (group ..? Herd ..?) Of hares.

1) We do not need a large deposit in order to “stay out” recoilless movements because of their short duration.

2) We further reduce the risk of a negative scenario (ie the absence of a “rollback” at the right time)

3) We bring a bit of stability to profit (a little lower I will describe where to look for it) and, with the right approach, we can enjoy profit every morning (oops … Spoiler)

4) You can play a little with the price step (for extreme people and connoisseurs, of course), slightly reducing it, so that in the future you can earn a little more.

Attention! It is strictly forbidden to play with the initial lot size! Thus, you simply reduce the number of “steps” by 1 and thereby increase the probability of margin call.

Good, so: long movements are bad. Rare kickbacks are bad. Short movements are good. Frequent rollbacks are good.

The attentive reader, probably, intuitively felt that we are talking, in simple words, about 2 scenarios:

1) Low volatility flat (when the flat is “narrow” compared to the rest of the price pattern)

2) Low-volatility V-shaped U-turn (when the price makes the letter “V” either from top to bottom or from bottom to top, and so that the turn is small)

Well, let’s deal with volatility in more detail.

What do these scenarios have in common? The question is rhetorical. Of course, the word “low volatility.” Where do we look for something “low volatility”? The question is incorrect =) Because the question is not “where?”, But “when?”

A brief excursion into pricing will tell us that there are only 2 reasons for low price volatility:

  • extremely large volumes of buyers and sellers;
  • extremely small volumes of buyers and sellers.

In the first case, there are so many people selling the tool that in order to push the price by at least a couple of points, you need to buy a lot of * goods *, but there is simply no need for such a large purchase. As an example, the S & P500 index.

In the second case, the price goes a little bit because some NORMALLY POPULAR instrument trades extremely few people. Those. it’s not about any Zimbabwean dollar that trades 3.5 people all over the world – on the contrary when buying, the price can skyrocket or fall, because there is generally no one there and no one supports liquidity. But we are interested in precisely liquid instruments, which for some reason (hehe) for some reason are not currently being traded by a large number of people. It is this option that will interest us with us.

There are only 2 reasons for low price volatility:

  • extremely large volumes of buyers and sellers;
  • extremely small volumes of buyers and sellers;

And all because in order to determine the instrument suitable for the first option, we need information about volumes that are not available on Forex, because the market is decentralized. Then I wanted to write where and how to search for information on such tools, but I just don’t see the point of why bother so if there is a much easier option.

In the second option, we just need to know the ACTIVITY PHASES of any instrument we love. And put your adviser to work exactly when this activity is low (small movements, small pullbacks, small but stable profits).

So, in simple words, we are just interested in when a LIQUID instrument trades FEW (compared to average), people. Again, in simple words, few people trade when most merchants sleep (literally).

For the “martingale” adviser, we are interested in the time when the LIQUID instrument trades FEW (compared to the average), people.

Other currency pairs can be valued in the same way:

  • USD / JPY will calm down during the Pacific session (it will not be in the European one, because there is a strong influence on the dollar due to correlation with EUR / USD),
  • AUD / USD will trail off to Asian, etc.

….etc.

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