Scanning the Markets Effectively

A question we often get asked by new traders starting out on their trading journey is "How do I find trades?". Often beginner traders can spend hours and hours looking through charts without really coming away with anything worth watching. They get bogged down looking through charts in many different timeframes where they see some timeframes up trending and others down trending. It all just becomes a bit too confusing and they end up wasting hours of their time aimlessly searching the markets with little to show for. The good news it, there is a better way! We will take you through an effective approach you can start using to scan the markets for trading opportunities today!

We are trend following traders here at Trade with Precision so the approach we are running through today works well for those traders who look to trade with strong trending markets. So firstly it's important to have a list of all the products you trade so you can start scanning through that list. It could be that you only trade FX so you would just have a list of the FX pairs you trade, alternatively you may also trade commodities so you would add those to your list as well. When we start scanning through our list we are firstly looking at the daily charts to see how price has been trading and to determine if it's worth looking at other timeframes for trading opportunities.

What we want to see is smooth trending conditions with clear momentum on our daily charts. If we get this then we will note that chart down on a notepad and that will help form our watch list for the day. If our strategies haven't setup on the daily chart, we would then look to drill down to lower timeframes to find those setups. If we come across a daily chart that is in no clear trend then we simply move on to the next chart and don't even bother looking down through the timeframes. This keeps us away from messy, unpredictable charts.  Below I have provided an example of the type of daily chart we would immediately pass on.and then type of daily chart we would look at in further detail.

Take a look at the charts above and decide which chart you would rather trade off? EURCAD or Coffee? Well we would rather trade off a chart like Coffee than EURCAD. It should be immediately clear that on the EURCAD chart there's no clear momentum however as soon as we take a look at the coffee chart we can see clear selling pressure. That's the sort of chart we want to put down on our watch list and stalk closely for trades.

So as you work your way down the list of products you can trade, don't waste time on those daily charts without clear direction like EURCAD and rather focus your time on the ones with clear direction. This will cut down your scanning time and make sure you're focused on only the best charts out there worth trading.

Lessons: 

• Create a list of all the products you trade. 
• Each day scan through that list looking at the daily chart timeframes. 
• If the daily chart is trending with clear momentum then note it down. 
• Take a look through that chart's other timeframes looking for trading opportunities. 
• If there's no clear direction on the daily chart then put that product aside for the day. 

Happy Trading!

Regards,
The TWP Team