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FOREX Trading > IP Lesson 4 > Flashcards

IP Lesson 4 Flashcards

1
Q

What is the single factor that causes price movement?

A

Orders placed by the whole population of traders

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2
Q

Is price movement precisely correlated with economic conditions?

A

No.

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3
Q

What will cause price to bounce up off a particular level?

A

Masses of BUY orders placed at that level.

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4
Q

What causes a currency ( if regarded as a product ) to rise in price?

A

When demand is higher than can easily be supplied.

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5
Q

What is the basic objective of technical analysis?

A

To identify where other traders are likely to have clustered their orders.

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6
Q

How is technical analysis used to identify where other traders are likely to have placed / clustered their orders?

A

By the study of historical price action.

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7
Q

What is the net effect of millions of other traders using technical analysis to place trades?

A

The trades create a self-fulfilling prophecy.

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8
Q

What would happen if a majority of traders believed that the colour of the president’s tie guaranteed market direction?

A

The orders they placed as a result would actually move the market in that direction.

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9
Q

What gives a trading method it’s viability with respect to the total trading population?

A

The degree of agreement with the method.

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10
Q

BIG IDEA : Explain the effect of the psychology of the trading population as related to price movement.

A

The beliefs that traders at large maintain tend to result in self-fulfilling prophesies with regard to price action, the more widespread the use of a method of prediction, the greater validation it tends to receive as a result of the market following these opinions.

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11
Q

What is the essence of technical trading?

A

To use historical patterns of price action to identify where other traders will place their orders en masse.

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12
Q

What is the definition of a market making higher highs, and higher lows?

A

Up trending.

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13
Q

What is the condition of a market making lower highs and lower lows?

A

Down trend.

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14
Q

The condition for which most strategies are designed is :

A

Trending markets.

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15
Q

When price bounces up and down around a given level, like a band, what condition does this describe?

A

Ranging.

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16
Q

Which IP strategy is the fundamental strategy for capturing profit in a ranging market?

A

IP Reversals.

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17
Q

In a market with price moving up and down indecisively, with no overall movement, what condition does this describe?

A

Choppy.

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18
Q

What qualities does a choppy market tend to test / develop in a trader?

A

Discipline and confidence.

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19
Q

What is the key element in deciding how you respond to market opportunities and risks?

A

The identification of over-all price direction.

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20
Q

In any given market condition, what basic behaviours define it’s phases.

A

Runs and Pullbacks.

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21
Q

While the most common trading advice is “trade with the trend” what is the actual proportion of time trending vs. indecision and pullbacks in a Trending market?

A

About 50%

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22
Q

True or False, when trading with the trend, in a trending market will still be wrong half the time?

A

True.

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23
Q

When do the highest probability set ups occur in trending markets?

A

When a strong trend is established, and then price pulls back.

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24
Q

In a trending market, what are the best times to buy?

A

On the pullbacks.

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25
Q

In a trending market, what are the best times to sell?

A

On the runs.

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26
Q

What is the key factor in harnessing the power of a trending market?

A

Identifying when price is running or pulling back.

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27
Q

What does a swing high represent?

A

A peak in price.

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28
Q

What does a swing low represent?

A

A trough in price.

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29
Q

Why is the term “swing” used with regard to price action?

A

To differentiate a given price move from daily, historical, and other highs / lows.

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30
Q

BIG IDEA : The most basic principles of technical analysis are :

A

Support and resistance; which are price levels which have some historical significance that causes price to react to the same level. Such levels then provide valuable information for trading decisions.

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31
Q

What does support refer to?

A

Any level that which has proven to support price in the past.

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32
Q

What is the effect of a strong support level on price action?

A

It tends to act as a “floor”.

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33
Q

What does resistance refer to?

A

Any level which has proven to resist price highs in the past.

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34
Q

What is the effect of a strong resistance level on price action?

A

It tends to act as a ceiling.

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35
Q

How should support and resistance be represented during trading?

A

By drawing horizontal lines through these levels on my chart.

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36
Q

How are support and resistance most often identified?

A

By finding levels that price has bounced off in the past.

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37
Q

What tends to occur when price has bounced off a certain level numerous times in the past?

A

Traders will tend to buy around these levels.

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38
Q

What is the effect of clearly established support and resistance levels?

A

Traders use of those levels create self-fulfilling prophesies.

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39
Q

What numerical characteristic tends to produce support and resistance in terms of price?

A

Round numbers.

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40
Q

If a resistance line is broken, what will price often do as a result?

A

It will often pullback and test the line.

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41
Q

What is the effect of price pulling back and testing a line of resistance?

A

The line then acts as support.

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42
Q

What happens when price has pulled back and tested a line of resistance after breaking through that resistance, and transformed into a line of support?

A

The line supports price rallying up further.

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43
Q

What is it the name for price breaking through resistance, testing the line for support and bouncing up / rallying?

A

Break and test.

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44
Q

What is the value of “break and test” price action?

A

It is a high probability entry point!

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45
Q

Regarding trend lines, where are the lines drawn during an uptrend?

A

UNDER the swing LOWS.

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46
Q

What is the function of trend lines in an uptrend?

A

They act as support for the TREND.

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47
Q

What is the function of trend lines which support an uptrend effectively?

A

They signal high probability entries for the next RUN UP.

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48
Q

In a downtrend, the trend line is drawn at what level?

A

OVER the swing highs.

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49
Q

Downtrend lines generally are associated with what effect on price?

A

They act as a resistance level for the trend.

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50
Q

What is the value of Downtrend lines?

A

Often signal high probability entries for the next RUNDOWN.

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51
Q

What can happen if a resistance trend line is broken?

A

It could become support.

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52
Q

What can happen if a support trend line is broken?

A

It could become resistance.

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53
Q

How long can prices react to a trend line?

A

From hours to years.

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54
Q

When drawing lines on your chart, what is the most important thing to understand / remember?

A

That they are the product of my own personal opinion / perception.

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55
Q

When drawing lines on your chart, what is the main risk arising from the influence of your own opinions?

A

That my opinions might not clearly reflect what the market is actually reacting to.

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56
Q

What is your main goal when drawing lines on your chart?

A

That my lines accurately reflect the market’s perception more than my own opinion.

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57
Q

Which price point MUST you draw your lines through to create accurate representation of the market sentiment?

A

Open and close prices.

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58
Q

Why are the open and close prices more important than the daily highs and lows?

A

Because the market chose the open and closing prices over the highs and lows.

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59
Q

How many touches through a line are required for the line to be valid?

A

3 or more.

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60
Q

BIG IDEA : What are you trying to accurately chart with your trend lines?

A

What others will react to.

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61
Q

What are indicators ultimately descriptions of?

A

Mathematical relationships.

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62
Q

What do the mathematical relationships of indicators describe about the chart?

A

Various aspects, including trends, volatility, and momentum.

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63
Q

What can indicators help you to do?

A

confirm price patterns and trade entry signals.

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64
Q

Why does the use of indicators require discretion?

A

Because they can contradict each other, and do not contain any more information than the chart itself.

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65
Q

Do indicators reflect changes in the market before or after those changes occur?

A

Only after the change has been calculated and displayed by the indicator.

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66
Q

What is the best source of advanced knowledge and insight about the market as compared with indicators?

A

My skill and experience in trading.

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67
Q

How many indicators do professional traders usually use?

A

2-3.

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68
Q

How much complexity is required of the best performing strategies?

A

Minimal. They are extremely simple.

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69
Q

Why do the majority of traders not use their simple strategies consistently?

A

They spend more time trying to improve the strategy than their psychology and mindset.

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70
Q

What is considered to be the most powerful indicator in the IP arsenal?

A

MACD

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71
Q

What do moving averages represent about price?

A

Average price over a given period.

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72
Q

What is the value of Moving averages as a trading indicator?

A

It is useful for identifying trend direction.

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73
Q

Moving averages provide useful information for identifying trend direction, within an average range. What is the value of this average range of price in trading?

A

It provides a level of dynamic support and resistance.

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74
Q

Which moving average indicator is best suited to a fast moving market?

A

Exponential moving averages.

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75
Q

Why are exponential moving averages more suited to fast moving markets?

A

They are more adaptable in fast moving markets.

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76
Q

How do Exponential moving averages adapt efficiently to fast moving markets?

A

They weigh recent prices more heavily than older ones.

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77
Q

The industry standard blue EMA line represents what?

A

20 EMA

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78
Q

The industry standard Red EMA line represents what?

A

50 EMA

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79
Q

The industry standard Green EMA line represents what?

A

200 EMA

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80
Q

Example : When using 50 EMA, and the price is above the Red line, what is indicated?

A

That the market is Bullish.

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81
Q

Example : When using 50 EMA, and the price is below the Red line, what is indicated?

A

The market is Bearish.

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82
Q

In addition to the information about dynamic support and resistance, and over all market direction, what is the value of EMA’s?

A

Professional traders commonly place orders around the 20,50, and 200 EMA.

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83
Q

Why is it valuable to know that professional traders commonly use the 20,50, and 200 EMA to place orders?

A

Because it results in regular bounces from these levels.

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84
Q

Where is the MACD indicator found?

A

Below the chart.

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85
Q

What type of indicator is MACD in a technical sense?

A

It is a momentum oscillator.

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86
Q

What does the EMA generally indicate with regard to a trend?

A

Indicates if momentum is high or low.

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87
Q

How does MACD calculate / find if momentum is high or low?

A

It subtracts long period EMA from short period EMA.

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88
Q

What common error can be made by beginners with regard to MACD?

A

Attempting to develop entry signals.

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89
Q

What is the correct use of MACD?

A

Identifying convergences and divergences in price.

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90
Q

What is indicated when the price action is mirrored by the MACD line?

A

Convergence.

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91
Q

What is indicated when price action is NOT mirrored by the MACD line?

A

Divergence.

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92
Q

What does convergence, as communicated by MACD, indicate?

A

Market Momentum is in accord with the prevailing trend.

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93
Q

When Market Momentum is in accord with the prevailing trend, what can be reasonably expected?

A

A continuation of the trend.

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94
Q

What does divergence as communicated by MACD, indicate?

A

That Market Momentum is not in accord with the prevailing trend.

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95
Q

When Market Momentum is not in accord with the prevailing trend, what can reasonably be expected?

A

An immanent reversal.

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96
Q

What does RSI stand for?

A

Relative Strength Index.

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97
Q

What is RSI technically?

A

A momentum occilator.

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98
Q

What does RSI measure?

A

The speed and change of price movements.

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99
Q

What is the range through which RSI occillates?

A

between 1-100

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100
Q

Where is RSI generally found on it’s 1-100 scale?

A

Between 30-70.

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101
Q

What is indicated when RSI is below 30?

A

The market is OVERSOLD, undervalued.

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102
Q

What is indicated when RSI is above 70?

A

The market is OVERBOUGHT, and thus overvalued.

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103
Q

What can be reasonably expected of Oversold markets?

A

They are due to move up.

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104
Q

What can reasonably be expected of Overbought markets?

A

They are due to move down.

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105
Q

What can RSI be used to identify?

A

Divergences in price.

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106
Q

What does the Stochastic Oscillator measure / represent?

A

It identifies overbought / oversold market conditions.

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107
Q

How does the Stochastic Oscillator identify overbought / oversold market conditions?

A

By comparing closing price to total price range over a given period of time.

108
Q

Why should RSI and Stochastic Oscillators be used in conjunction?

A

Haha! Trick question! They should not!

109
Q

Why should RSI and Stochastic Oscillators not be used in conjunction?

A

Because they provide similar information. Reduce clutter.

110
Q

What is the basic function of the choppiness index?

A

To standardize the definition.

111
Q

Over what timeframe is choppiness measured by the choppiness index?

A

A 4 day period.

112
Q

What does the height of the line of the choppiness indicate?

A

The choppiness!

113
Q

At what level is choppiness considered too high to trade?

A

60 is too high for trading.

114
Q

What does Average True Range indicate?

A

The breathing cycle of the market.

115
Q

What is ATR used to gauge?

A

Good times to enter or wait.

116
Q

The metaphor of an object being thrown into the air, then slowed and reversed by gravity can be applied to what market behaviour?

A

The market’s breathing cycle.

117
Q

What phase of the market’s “breathing” would you use ATR with the intent to capture?

A

When the Market is losing steam.

118
Q

Why would you use ATR to ascertain when the market is losing steam?

A

Because it is the best time to enter the market for the next run.

119
Q

Why is it important to only enter the market when it is slowing down?

A

Because this is the best opportunity to catch a low-risk, high reward entry.

120
Q

When should you enter an accelerating market?

A

Never.

121
Q

You observe that candles are getting progressively smaller relative to one another. What does this indicate?

A

The market is slowing.

122
Q

You observe that the candles are getting progressively smaller relative to one another. What does this say about the current trading opportunities?

A

It’s the best time to enter a trade.

123
Q

You notice that an uptrend is losing steam, so you choose to enter what kind of trade?

A

Short.

124
Q

You notice that a downtrend is losing steam. What kind of trade will you enter?

A

Long.

125
Q

When gauging candle sizes, what are they measured against?

A

Relative to one another.

126
Q

You observe that the candles are getting progressively bigger in size. What does this indicate about market conditions?

A

The market is accelerating.

127
Q

You notice that the candles are getting larger relative to one another, how does this affect your decision to enter trades?

A

I choose to wait out the run, and enter when it slows.

128
Q

ATR is useful to beginners for what reason?

A

To learn to identify relative candle size.

129
Q

What do Bollinger bands measure?

A

They measure volatility.

130
Q

How do Bollinger bands represent market volatility with their graphic?

A

With bands above and below a moving average.

131
Q

You notice your Bollinger bands widening. What does this indicate?

A

Volatility increasing.

132
Q

You notice your Bollinger bands narrowing. What does this indicate?

A

Volatility decreasing.

133
Q

Which two methods primarily use Bollinger bands as an indicator?

A

The bounce and the Squeeze.

134
Q

When ENTERING a bounce, how would you use Bollinger bands?

A

Enter at the Bollinger band itself.

135
Q

You have entered a Bounce at the Bollinger band, where will you trade the movement to?

A

Back to the middle.

136
Q

When using the Bollinger bands, and observing that they have squeezed together, what is indicated?

A

A breakout is immanent.

137
Q

What does Parabolic SAR indicate about market behaviour?

A

Price and time related to a given trend ( This needs clarification. )

138
Q

What does Parabolic SAR depict on your chart?

A

Parabolic SAR produces dots trailing behind price over time.

139
Q

What is the value of the dots produced by Parabolic SAR?

A

They form an excellent level for trailing stops.

140
Q

When Parabolic SAR dot appear below price, what is the trend?

A

An uptrend.

141
Q

When Parabolic SAR dots appear above price, what is the trend?

A

Downtrend.

142
Q

What can fibonacci ratios indicate about the market activity in the IP method?

A

To indicate potential reversal levels.

143
Q

What naturally occurring numerical ratio tends to also identify critical points that cause price to reverse?

A

Fibonacci ratios / retracement levels.

144
Q

After a run, what do fibonacci ratios often suggest about the movement of price?

A

How far it will pull back.

145
Q

What is the most common degree of pullback after a run?

A

61.8%

146
Q

What does Volume refer to?

A

The number of contracts traded by the entire market in a given period.

147
Q

What is the value of determining volume for a given trading period?

A

It determines the significance of a market move.

148
Q

Upon what indicator does the perceived strength of a movement depend?

A

The volume of trading during that period.

149
Q

What does the magnitude of the volume say about a particular move?

A

The higher the volume, the more significant.

150
Q

Where is the Forex central exchange located?

A

Everywhere and nowhere…..

151
Q

Why is it impossible to keep track of true Forex volume?

A

No central exchange.

152
Q

Does Forex volume follow any discernible patterns?

A

Yes, it peaks at the same time daily.

153
Q

What is the value of knowing the time of day with the highest volume?

A

It allows the effective estimation of relative volume.

154
Q

During which times daily does Forex volume generally rise?

A

Between 7am and 2pm GMT

155
Q

What typically occurs during the 7AM to 2PM GMT high volume period?

A

The big move of the day.

156
Q

What is the major move of the market day called?

A

The power move.

157
Q

Is it possible to identify the daily power move in advance?

A

Yes, and with an impressive strike rate.

158
Q

What is required in order to identify the daily power move?

A

Correct analysis.

159
Q

What are price patterns?

A

Distinctive formations created by price movement.

160
Q

What do price patterns reflect / communicate?

A

interaction between buyers and sellers.

161
Q

What forms and guides price patterns?

A

The laws of mass human behaviour.

162
Q

What is the value of price patterns to the professional trader?

A

Often leads to a predictable market move.

163
Q

In general, what characteristic of a pattern indicates it’s significance?

A

The length of time it takes to form.

164
Q

In general, a price pattern that takes longer to form is…

A

More significant.

165
Q

What are the two types of price patterns?

A

Continuation and Reversal.

166
Q

As compared with candlestick patterns, what type of trends are indicated by price patterns?

A

They signal long term trends.

167
Q

What is a continuation pattern?

A

When an established trend pauses, and then resumes it’s original direction.

168
Q

What is the significance of a continuation pattern?

A

Can provide excellent entry point to capture the next run on the trend.

169
Q

Common continuation patterns include which 3?

A

Triangles, Rectangles, and Flags.

170
Q

In a continuation triangle, what is it formed by?

A

two trend lines that meet at a point.

171
Q

In a continuation triangle, what is the criteria for a valid triangle?

A

each trend line touches price at least twice.

172
Q

A symmetrical triangle in a down trend indicates what?

A

Bearish outlook.

173
Q

A symmetrical triangle in an uptrend indicates what?

A

Bullish outlook.

174
Q

What is indicated by an ascending triangle?

A

It is Bullish!

175
Q

How does an ascending triangle appear on your chart?

A

Flat upper trend line, and rising lower trend line.

176
Q

What is indicated by a descending triangle?

A

A bearish outlook.

177
Q

How does a descending triangle appear on your chart?

A

As a flat lower trend line, and falling upper trend line.

178
Q

When a pair of horizontal trend lines, which both touch price at least twice appear, what is this called?

A

A rectangle.

179
Q

What is represented by rectangle formation on your chart?

A

Indecision in the market causing a period of consolidation.

180
Q

What kind of market conditions are communicated by rectangles?

A

Ranging market conditions.

181
Q

Can range bound markets provide profitable opportunities?

A

Yes! And they require the right strategies to do so.

182
Q

Which indicators flourish in ranging markets?

A

Those that signal reversals.

183
Q

When a sloping triangle against the dominant trend appears, it could be what kind of formation?

A

A flag.

184
Q

What do flags represent?

A

A pullback.

185
Q

When do flags most commonly appear?

A

After a sharp run in price.

186
Q

When in the course of a trend will reversal patterns occur?

A

BEFORE a major change in the direction of the trend.

187
Q

How are Reversal patterns often used with regard to open positions?

A

To close existing positions.

188
Q

How are reversal patterns used with regard to placing new trades?

A

To enter trades in the opposite direction.

189
Q

What market condition must be present to allow a reversal pattern to develop?

A

There must be an existing trend.

190
Q

Which of the reversal patterns is noted for it’s power in Forex trading?

A

Head and shoulders.

191
Q

Describe the basic shape of head and shoulders patterns.

A

3 price peaks, highest in the middle.

192
Q

In regard to the head and shoulders pattern, what does the shorter 3rd peak represent / communicate?

A

It indicates a weakness in the trend.

193
Q

What is indicated when a head and shoulders pattern appears inverted, following a down trend?

A

A reversal of the down trend.

194
Q

What is a head and shoulders pattern which appears as a mirror image of the regular pattern called?

A

Inverse head and shoulders.

195
Q

Which is the most common reversal pattern in technical analysis?

A

Double tops or bottoms.

196
Q

When, in relation to price, do double tops or bottoms appear?

A

When price reacts to the same level twice.

197
Q

What is indicated by double tops & bottoms?

A

A strong level of support or resistance.

198
Q

With regard to the various forms of technical analysis, which is considered the most reliable form?

A

Candlestick patterns.

199
Q

Under what two market circumstances do candlestick patterns show very predictable movements?

A

After sharp runs or strong support.

200
Q

Which candlestick pattern occurs when a pair trades significantly higher than it’s opening and close?

A

High test.

201
Q

High test candlestick patterns are found in up or down trends?

A

Both.

202
Q

In a high test pattern, the pair trades high as compared with it’s open and close; where would the open and close be found relative to one another?

A

Almost at the same level.

203
Q

What does a high test candlestick pattern communicate about the market’s activity?

A

The high was tested before being rejected by sellers.

204
Q

Observing a high test candle after a powerful movement up, what is indicated?

A

A good reversal signal.

205
Q

What is indicated if a high test candle is formed on a strong resistance level?

A

A good reversal signal.

206
Q

BIG IDEA : What is technical analysis in general terms?

A

The study of price movements, and what causes them.

207
Q

How high does the wick of a high test candle need to be relative to the rest of the entire candle formation?

A

2x as long.

208
Q

Low test candles occur in up or down trends?

A

Both.

209
Q

When in terms of price action do low test candles occur?

A

When a pair trades significantly lower than it’s open / close.

210
Q

At what level relative to the opening price does a low test candle close?

A

Almost at the same level.

211
Q

Why, in terms of market activity, do low test candles form?

A

Because the low was tested before being rejected by buyers.

212
Q

What is indicated if a low test forms after a powerful movement down?

A

A good reversal is indicated.

213
Q

What is indicated if a low test candle forms on a strong support level?

A

A good reversal signal is indicated.

214
Q

What is the length of the low test wick relative to the rest of the entire candle formation?

A

At least 2x longer.

215
Q

When is a doji formed, in terms of price action?

A

When open and close price is virtually the same.

216
Q

What is represented by the formation of a doji?

A

Equilibrium between buyers and sellers.

217
Q

What do doji’s tend to indicate?

A

The end of a run or pullback.

218
Q

What is the normal size for a doji?

A

relatively small.

219
Q

In evaluating a doji formation, what is the pip difference between open and close?

A

a few pips, smaller is better.

220
Q

What kind of formation is created by two or more candlesticks with equal highs?

A

Tweezer tops.

221
Q

What do tweezer tops indicate?

A

That buyers were not able to push price up any longer.

222
Q

Regarding tweezer tops, what might be inferred by the fact that buyers are not able to push price up any longer?

A

That the buyers may be weakening.

223
Q

What characteristic of tweezer tops indicates the power of the formation?

A

The greater the height of the wicks.

224
Q

What should the size of the two tweezer top candles be relative to one another?

A

about the same size and shape.

225
Q

How high should the tweezer tops be relative to the size of the entire candle formation?

A

At least the same size as the rest of the entire formation.

226
Q

What is indicated by tweezer top formations?

A

They are bearish!

227
Q

In what kind of trends are tweezer tops found?

A

up and downtrends.

228
Q

How do tweezer bottoms appear on your chart?

A

As two or more candlesticks with equal lows.

229
Q

What do tweezer bottoms indicate about price action?

A

That sellers were not able to push price down any longer.

230
Q

What can be inferred by tweezer bottom formations, given that they indicate sellers were not able to push price down any longer?

A

That sellers may be weakening.

231
Q

What aspect of a tweezer bottom formation indicates it’s power?

A

When the wick is significantly lower than the body.

232
Q

What size should tweezer bottom candles be relative to one another?

A

About the same size and shape.

233
Q

How long / low should the tweezer bottoms be, relative to the rest of the entire candle formation?

A

At least the same size as the rest of the formation.

234
Q

What is communicated by the formation of tweezer bottoms?

A

They are BULLISH.

235
Q

Are tweezer bottoms found in up trends or down trends?

A

Both!

236
Q

When a small candle of either colour is followed by a large green candle that has a body at least 2x larger than the small candle, what is this pattern?

A

A Bullish engulfing pattern.

237
Q

What is communicated by the presence of a Bullish engulfing pattern?

A

That buyers are taking control.

238
Q

What is to be expected as the result of buyers taking control, in the formation of a Bullish engulfing pattern?

A

They are sending price up with a powerful movement.

239
Q

What do Bullish engulfing patterns indicate about downtrends?

A

That they have run out of steam.

240
Q

How large is the Bullish engulfing candle, relative to the previous candle?

A

At least 2x larger than the entire previous formation.

241
Q

What kind of pattern is formed when a small candle of either colour is followed by a red candle which is twice as large as the entire small one?

A

A bearish engulfing pattern.

242
Q

What does a bearish engulfing pattern indicate about uptrends?

A

That the up movement has run out of steam.

243
Q

What does a bearish engulfing pattern communicate about market activity?

A

That sellers are taking control.

244
Q

What can be expected when sellers take control of the market, as indicated by bearish engulfing patterns?

A

They are sending price down with a powerful movement.

245
Q

How large is a bearish engulfing candle relative to the smaller preceding candle?

A

the body is at least 2x larger than the entire smaller formation.

246
Q

What type of formation occurs when a candlestick formation is completely within the preceding candle?

A

An inside bar.

247
Q

Regarding inside bar formations, what kind of low does it have relative to the preceding candle?

A

It has a higher low.

248
Q

Regarding inside bar formations, what kind of high does it have, relative to the preceding candle?

A

A lower high.

249
Q

What is signalled by an inside bar formation?

A

A run is losing momentum.

250
Q

What is the value or significance of inside bar formations?

A

It’s a great low risk entry.

251
Q

What is the significance of an inside bar formation, after a run up?

A

It’s bearish.

252
Q

What is the significance of an inside bar formation after a run down?

A

It’s bullish.

253
Q

What is the relative size of the inside bar candle to it’s preceding candle?

A

It’s half the size.

254
Q

Once signals are understood, what can you do to increase the probability of your hit rating?

A

Combine multiple signals.

255
Q

What happens when all of the MA, trend line, and candlestick traders are all trading at the same time?

A

The chance of a move is much greater.

256
Q

What is the key to technical analysis mastery?

A

The ability to identify what other traders are thinking.

257
Q

What is a common term for the combination of signals?

A

Confluence.

258
Q

If the market is not choppy, what will the market typically be doing?

A

Running or pulling back.

259
Q

What kind of pattern does volume form over the course of a week?

A

A 5 peak sine wave.

260
Q

What in very basic terms, is the daily approach to swing trading?

A

Enter when the market is quiet, and wait for the daily power move.

261
Q

What is the value of using / identifying price patterns?

A

To determine long term continuations or reversals.

262
Q

Which form of technical analysis is best suited to short term runs and pullbacks?

A

Candlestick patterns.

263
Q

What is most critical to learn in order to be able to foresee the next few trading days with impressive accuracy?

A

Learning candlestick patterns.

264
Q

What metric tends to indicate how powerful a candlestick pattern is?

A

The length of the timeframe.

265
Q

On which timeframe are candlestick patterns are not very significant?

A

On the minute or hour basis.

FOREX Trading (8 decks)

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