Any professional Forex trader out there can tell you that finding the right entry point is only 50% of success. Apparently, nobody likes a drawdown after opening another trade. Today we are going to take a closer look at how professional traders from Masterforex-V Academy seek and find the right
How do professional traders find entry points? At Masterforex-V Academy, they have over 20 ways to do that. One of them is matching price signals with trading volume.
Tech Analysis Basics: Finding Market Entries the Masterforex-V Way
To start with, take a look at chart 1 showing us a sell USD/CHF trade:
One might think that selling was done based purely on the price itself. However, by using a custom script, we add the trading volume of the 6S futures (the Swiss Franc) to the price chart. This way, we can see something others cannot – the trading volume dynamics. In such an environment, the price movement gets a whole new meaning and logic as opposed to those dictated by pure technical analysis fundamentals. Thanks to being able to monitor the trading volume, we are able to spot the times at which big players are pressing the market. Those are the levels that will let you open secure trades without being afraid to get those trades wiped out by the price. OK, let’s take a closer look at the situation. Chart 1 indicates that the trading volume starts peaking during the American trading session. This is where big players start accumulating short positions at the expense of buyers who are ready to trade on the rebound from the low of the day. As the level is being tested, we can see signals 2 and 3. Increasing trading volume tells us that someone is actively attracting market demand close to the level.
Let’s ask a logical question: if the market maker is getting ready to sell and is actively building up trading volume, what’s going to happen to those buy trades? The answer to this question is hidden in the form of candlesticks 2 and 3. Both of them have long upper shadows and shot bodies amid increased trading volume. Our script clearly indicates that through the histogram of trading volume under the price. Those signals indicate that buyers’ orders have become some kind of fuel for big players who have been selling to those buyers. The market-maker strategy is old but still effective. This is who the smart money trades against the crowd during the downtrend.
VSA-Based Forex Entries
Now we should pay attention to an important thing. The VOLEхpertME expert advisor used in this case syncs the trading volume below with the color of the price candlesticks. This is a trivial thing, yet it makes everything more visual and intuitive while comparing bullish and bearish moves while powering up the very VSA method of market analysis.
The mentioned chart above indicates that candlestick 3 is followed by a strong bearish candlestick, with twice as big trading volume. This means bearish domination and confirms big sales going on from the level. At first this may seem something insignificant. However, such trivial things make up a big picture indicating the relations between the weaker side and the stronger side of the market.
Hidden forex games. Going bullish
In order to reveal complicated price manipulations, efficient tools are needed. In the skilled trader’s hands, the delta bid/ask indicator may turn into a powerful scanner tracking hidden purchases or sales made by the smart money.
Point 1 is a strong bullish candlestick with high volume but negative delta (the VOLEхpertME expert advisor has drawn a purple bar with a negative value under the price chart). This indicates the sellers locked up in losing trades. Later on, the sales seem to be trying to press the price. Look at the bearish candlestick with above-the-average trading volume and negative delta (point 2). Still, there has been no expected effect. Instead of going down, the price stands still and starts going down.
Why does a strong bearish signals (point 2) fail as the price starts going up? Why do sellers get trapped in point 1? If to consider 3 red candlesticks (point 3) with positive delta, everything gets clear. Trades can see a strong bearish movement and start selling while relying on standard technical indicators. On the other hand, big players (the smart money) start playing hidden bullish games against them. If the smart money decided to sell, we wouldn’t see signals 1 and 2 and the price move indicated by number 3 would come with a negative delta during the downtrend.
Defining oversold markets
VOLEхpertME can boast another important function, which is defining overbought and oversold markets, or rather letting the trader define those market areas since the EA only reads the data for the last 5 days and gives the trader the average volume (Average Day (A/D) in the top right corner of the chart). While comparing the current volume to the average one, we can see the market areas where the market is really overheated.
Let’s consider an example:
The chart below shows us that the price has been going down continuously over the last 3 days. The low of the downtrend seen on May 10 and 11 starts accumulating a strong volume cluster equal to 10338 lots, with 9749 lots above the daily average equal to 7378 lots. This is what makes us think that the market is overheated. To be more specific the market is seriously oversold, and profit taking around the low is underway.
More often than not, such strong signals indicate that the trend is likely to be followed by a flat market or even a reversal, which is exactly what happens in this case. The key thing to keep in mind is that we can anticipate this by seeing the wakeup call before the situation gets obvious for the crowd. Wiping out the crowd’s stop-loss orders and capturing their pending orders to turn them into losers is also important for this signal to be strong. However, this is out of scope today. We are going to take a closer look at it in another one.
Masterforex-V Academy Traders Warn:
Don’t ever follow trading volume blindly and trust isolated signals. Not every volume / VSA / delta signal is reliable. Instead focus on matching signals since they lead to better decisions.
Practicing the functionality of VOLEхpertME can also benefit you in the long run. The thing is, any FX trader out there should learn to build logical chains and combine isolated trading signals into a bigger picture to see what’s really going on in the market and what’s coming next. The trader’s biggest treasure is their brain. Still, mastering your volume reading skills will definitely take your trading to a whole new level.
You can get VOLEхpertME for free. On top of that, you can count on professional assistance from an expert trader, including the instruction on setting up the EA and using it properly. The EA does really work effectively.
Professional trading is all about in-depth complex analysis. If you want to learn how to do it, apply for Masterforex-V Academy. You can also auto-copy professional signals generated by VIP traders.
