4 tricks to increase profits in the market

Raul Lopez - professional traderHe believes that the price itself can give us all the information we need to identify the future direction. Raúl López is also the founder of StraigthForex, which aims to provide market education and help traders improve their trading skills. Raoul Lopez also has a big experience in other areas of trading: money management, risk management and trading psychology.

Trick 1: Effective Trend Detection

Most experts say that the main task of a trader is to identify the main trend and trade exclusively in its direction. This is true, but it can be said that this idea is not formulated quite accurately. The fact is that the market is in a trend phase no more than 30 % of time. Does this mean that we should trade the market for 30 % times and the rest of the time be waiting for that period to occur?

Or is there some other way to objectively and efficiently identify the trend and trade according to our strategy, taking into account the market conditions. That is, if the market is in a trend phase, then we trade in the direction of the trend, but if the market is in a "sideways phase," then we should trade accordingly.

– LP1 - Low of the previous session.
– HP1 - High of the previous session
– LP2 - Low of the session two days before the previous session
– HP2 - Maximum of the session two days ago (High of the session before the previous session).
– PP - Pivot point. (LP1+HP1+CP)/3 (where CP - closing price of the previous sessions).

We use the following rules to determine the trend:

- when the market trades above a pivot point, we can talk about a potential uptrend with sideways implications.
- when the market trades above HP1, we can talk about a strong uptrend.
- when the market trades above HP1 and HP2, we can talk about a very strong uptrend.
- when the market trades under a pivot point, we can talk about a potential downtrend with sideways implication.
- When the market is trading under LP1, we can talk about a strong downtrend.
- When the market is trading under LP1 and LP2, we can talk about a very strong downtrend.
- When the market trades around the pivot point, crossing it up and down, and pulling away from the HP/LP, it is safe to speak of a sideways trend.

Let's look at the graphs

On this 15-minute EUR/USD chart, we analyze the previous session (Friday, January 5) to determine our levels. The market is trading below the PP, but above LP1. From this we conclude that it is now a sideways phase with downward implication. In this situation, we can analyze the possibility of opening a long position (at the bottom of the range) or a short position (at the top of the range). If the market breaks through the level of LP1, in this case, only short positions should be opened.

Trick 2. Indicator signals

Once you have identified the trend, use indicatorsto get buy and sell signals.

Suppose if the market is trading between PP and HP1, ie, perhaps we have an uptrend in the sideways phase. One of the simplest strategies is to using an oscillator to determine buy and sell signals (overbought and oversold zones or divergence signals).

Trick 3. Price behavior

The price behavior analysis approach assumes that the price chart itself gives you all the information you need about the price movement. All necessary information can be obtained by analyzing the price curve. The best way to analyze price behavior is through candlestick patterns. Using the approach of analyzing the price behavior allows you to filter out the wrong signals. Using candlestick signals gives us the next opportunity to open positions: HammerWhen the indicator is in the oversold area, bearish absorption when the indicator is in the overbought area, and another hammer together with a divergence.

Adding price behavior signals to your strategy will increase the accuracy of your signals.

Trick 4. Consistency is the key to success

If you are serious about trading, then consistent behavior should be your first goal. You shouldn't hope to make a profit on "chance", you shouldn't risk all of your deposits and trade large amounts on the news, because it can end sadly. We should trade only when our system gives a signal for a trade, only when we are sure that the probability of success is high.

If you want to become a consistent trader, you must:

- Develop a trading system that fits your inner self, risk tolerance and behavioral style.
- Apply the rules of capital management, transactions and risk management.
- Work on discipline. Even if you have perfect trading systembut you don't follow its rules exactly, then you lose.

You can never know everything. The market is always teaching us new lessons.