Welcome to episode 164 of 10,000 trade show where we are mastering trading and creating excellence through the deliberate practice and analysis at 10,000 trades.
In this episode, we’re taking a look at market inefficiency. An inefficient move is when price moves very fast in one direction. Once we see an inefficient move form, we are looking for price to reverse and fill that inefficiency. So, let’s go on the chart and see how to identify this, how to take the trade, where place our stop loss and most importantly where to exit the trade with the profit.
Here, we’re looking at an Inefficient market move trade setup. This is GBPJPY five-minute chart. An inefficient market move is when price moves very quickly and usually the move is a result of a comment that comes out from news wires or rumors going around on the market and it creates market sentiment which drives the price up really fast. In cases like these, the price does not tend to stay up very long, usually it retraces back all the way before it starts in the new direction that it wants to go in or continue on in the previous direction. Basically, what we’re looking to do is to identify this type of a rapid rise or drop in the price and we are trying to trade it in the opposite direction. So, it’s very important that we wait for price to give us an entry first. We need to make sure that price hits a resistance point.
In this case, we have the 20 level here and then we also have the pivot point R1 level and we see that after a long period of time, price is still not able to break the resistance to the upside. It’s not able to hold so, it’s not able to go higher and instead we see that the price just closes below this R1 level and we get a solid candle close here (that’s a red solid bearish candle close). Once we start to see that the price is holding below the resistance level, we can enter the trade short. In this case, our stop would go above the high and we’re looking for this move to get retraced, our exit can be entered right at the same time, we can enter our take profit target which will be at the base of this move. The point where the price of release is the point we are looking for it to come back to so, we enter the trade short, our take profit target can go just above where the price released from. And we set our target and wait for the price to come back. If we see that the price hasn’t quite hit our target but it starts to go sideways, it’s best to exit that trade then.
Just to recap, an inefficient market move is when price moves in one direction very quickly and usually it’s the result of a rumor or a comment that came out on the news-feed. In this case, we saw that there were some comments around brexit. As a result of that the GBP jumped up and created the sentiment for price to move up. But, the problem here is that price moves up really quickly creating an inefficient move, it’s like a vacuum in the market and then price will come down to fill that vacuum and then continue on wherever it wants to go to.
In this case, first we are looking for an inefficient move then we want to make sure that the price fails to break above the high. So, we have to make sure price is making lower high and it fails to break above the high.
If price breaks with the high then there is no setup or the setup has failed and we cannot be in that trade, it’s best to exit the trade. But, once we see that the price is not able to break the resistance and we get a nice solid candle close, we can enter the trade short and we stay with the trade till it comes to the base of the move, where the price released from to the upside and we can just enter our take profit target right when we enter the trade. In this case, from entry to exit here we got 33 pips in the move so our profit is 33 pips or $330.00 if trading one standard lot.
If you’d like to learn more profitable forex trading strategies like this one, I invite you to visit my course at http://tradingwithvenus.com/forexcourse
I will show you how to read the candlesticks and different chart patterns. We’ll do a deep dive into technical analysis and I will show you how to read the charts properly, what trade setups you’re looking for and how do we trade these setups properly.
I will also show you what are the important fundamental news that you need to pay attention to and how the different fundamental factors drive market price.
I will also share with you the trading strategies that I personally use that I have found to be the most profitable. We’ll also talk about trade management and how to manage your account and manage your risk so that you become a profitable trade.
I will also show you tons of examples that you can go and check out so, that you are able to see these trades setup in the live markets as well. As a bonus, you will get access to my pivot point indicator. If you have watched any of my videos, you know I really love trading the pivot points so you will receive that as a special bonus. The price of the course is $497. To sign-up for it please “Trading with Venus” http://tradingwithvenus.com/forexcourse.
Thank you so much for joining me for this video, I hope you enjoyed this trade setup. If you like this episode, please feel free to subscribe to the YouTube channel http://youtube.com/c/Tradingwithvenus1 as well as share it with your friends who may find this beneficial. I’ll be back with another great trade setup next time.