{"id":393910,"date":"2020-08-21T11:41:57","date_gmt":"2020-08-21T09:41:57","guid":{"rendered":"https:\/\/ftmo.com\/?p=393910"},"modified":"2024-03-15T12:59:43","modified_gmt":"2024-03-15T11:59:43","slug":"trading-preparation-routine","status":"publish","type":"post","link":"https:\/\/ftmo.com\/en\/trading-preparation-routine\/","title":{"rendered":"Trading preparation routine – How to do TOP-DOWN Forex Analysis"},"content":{"rendered":"
It is often said that being well prepared for the trading day is a battle half won. This cannot be far from the truth.\u00a0 You simply cannot jump to an empty chart, start trading right away and thinking you can profit. You need to have a plan. A trading plan. In this article, we’ll look at how to draw a simple trading plan directly on the chart and how you can implement it right away to start trading.<\/em><\/p>\n All traders are different, you will hardly find two traders with the same strategy and view on the markets. Knowing that, we know we cannot satisfy everyone’s opinion but it’s ok.<\/span><\/p>\n In this article, we are going to break down the chart of GBPUSD which is a heavily traded pair and we’ll use a simple price action with horizontal and diagonal support and resistance and also a volume profile to easily spot areas of heavy distribution and path of least resistance.<\/span><\/p>\n All of our steps are going to be explained in depth so no worries, we are sure they are really easy to follow.<\/span><\/p>\n Because the preparation is best done when markets are calm, weekends are best suited for the job.<\/span><\/p>\n <\/a><\/p>\n Since the majority of traders specialize in intra-day and intra-week trading, we are not going to a higher timeframe than weekly. Of course, monthly, quarterly or yearly charts can uncover some macro directional details but if executing your trades on the hourly timeframe, probably won’t be important to you.<\/span><\/p>\n When looking at the weekly chart, we should always ask ourselves questions such as:<\/span><\/p>\n <\/p>\n As you can see in the above chart, the weekly timeframe functions as our broad navigation.<\/span><\/p>\n Before drawing any lines to the chart, we should just take a look at the price movement alone. After this observation, we can notice GBPUSD broke out from a 2-month long trading range at the end of July.<\/span><\/p>\n The price was ranging during the past two weeks, and this signals that some bigger move might be coming soon.<\/span><\/p>\n After this, we can draw support and resistance lines using price action and volume profile. If you don’t know how to use a volume profile in your trading, you can read our<\/span> article<\/span><\/a> about this topic.<\/span><\/p>\n When marking out your weekly chart, there is no reason to go thousands of pips above and below the market price, as there is a very little chance the price is going to reach there during the following week.<\/span><\/p>\n <\/p>\n As you can notice, we used purple colour to mark out our weekly levels.<\/span><\/p>\n We simply marked out support and resistance levels from right to left and used HVNs from volume profile for correlation.<\/span><\/p>\n Because we are looking at Forex where the volume is calculated by the executed bid\/ask movement, we put more emphasis on the price action rather than volume.<\/span><\/p>\n If you trade Indices or Commodities, doing things another way around might be better for those assets.<\/span><\/p>\n Looking at a daily chart gives us a more detailed look at the actions of previous days.<\/span><\/p>\n We are going to examine the past trading week and ask questions such as:<\/span><\/p>\n Responding to these questions, we can mark out our chart with lines.<\/span><\/p>\n <\/p>\n As you see, we marked out daily levels with the blue line, once again we marked out the most recent levels where the price bounced from.<\/span><\/p>\n We also boxed out the recent trading range with shaded grey colour, for reference we also shaded the areas from the past with a similar price behaviour, as you can notice from the past examples. Every time GBPUSD was in a very tight range like this one, we had a big expansion shortly after.<\/span><\/p>\nTrading preparation routine – How to stay ahead of the game<\/h2>\n
Weekly Chart<\/h2>\n
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Daily Chart<\/h2>\n
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