This image illustrates a trading strategy or plan. It shows when the trader should buy, when to sell, and when not to trade.
This strategy essentially involves making decisions based on market trends or movements. Each step is outlined below:
1. Determining the trend (What is the trend?): First, you need to understand the current trend or market movement. It can be of three types:
*Bullish:** When the market price consistently moves upward or has the potential to move upward.
*Sideways trend:** When the market price fluctuates within a certain range, meaning it neither rises nor falls significantly.
*Bearish:** When the market price consistently decreases or is likely to decrease.
2. Direction-based action:
*If it is bullish:**
After that, you need to see *"Is the price at the support level?"** That is, is the price at the support level? The support level is a price level where the price of the stock or currency has a chance to rise again after falling, due to a greater number of buyers compared to sellers.
If the answer is *"Yes"**, that is, the price is at the support level, then "Buy".
If the answer is *"No"**, that is, the price is not at the support level, then "Do not trade".
*If it is sideways:**
So *"wait for the breakout"** means waiting until the price exceeds a defined range (breakout). A breakout is when the price breaks through a support or resistance level and moves significantly upward or downward.
*If it is bearish:**
After that, you need to see *"Is the price at the resistance level?"**, that is, is the price at the resistance level? The resistance level is a price level at which the price of the stock or currency is likely to drop again after rising, due to a greater number of sellers compared to buyers.
If the answer is *"Yes"**, that is, the price is at the resistance level, then "Sell".
If the answer is *"No"**, that is, the price is not at the resistance level, then "Do not 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 range-bound (sideways) without moving in any particular direction, wait until the direction becomes clear or a breakout occurs without making any trades.
This is a simplified trading strategy, while real trading relies on more complex factors and analyses. It can only be considered as a guideline.