Illustrates a trading strategy or a trading plan.
This image illustrates a trading strategy or a trading plan. It shows when a trader should buy, when to sell, or when not to trade.
Essentially, this strategy suggests making decisions based on market trends or behaviors. Each step is described below:
1. Identifying the Trend (WHAT'S THE TREND?): First, understand the current trend or behavior of the market. It can be of three types:
*BULLISH:** When the market price is consistently going up or is likely to go up.
*SIDEWAYS:** When the market price is fluctuating within a certain range, meaning it is not rising too high or falling too low.
*BEARISH:** When the market price is consistently going down or is likely to go down.
2. Actions According to the Trend:
*If it is BULLISH:**
Then check *"PRICE AT SUPPORT?"** that is, is the price at the support level? The support level is a price level where the price of a stock or currency tends to increase again after falling, because there are more buyers than sellers at that point.
If the answer is *"YES"** (yes), meaning the price is at the support level, then "BUY".
If the answer is *"NO"** (no), meaning the price is not at the support level, then "DON'T TRADE".
*If it is SIDEWAYS:**
Then *"WAIT FOR BREAKOUT"** that is, wait until the price breaks out of that specific range. A breakout means that the price moves significantly above or below the support or resistance level.
*If it is BEARISH:**
Then check *"PRICE AT RESISTANCE?"** that is, is the price at the resistance level? The resistance level is a price level where the price of a stock or currency tends to decrease again after rising, because there are more sellers than buyers at that point.
If the answer is *"YES"** (yes), meaning the price is at the resistance level, then "SELL".
If the answer is *"NO"** (no), meaning the price is not at the resistance level, then "DON'T TRADE".
In summary, this trading strategy is:
* If the market is bullish, buy at the support level.
* If the market is bearish, sell at the resistance level.
* When the market is not moving in a specific direction and is within a range (sideways), wait without trading for the trend to become clear or for a breakout.
This is a simplified trading strategy, and real trading depends on many more complex factors and analyses. It can only serve as a guideline