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Commodity markets like oil are better suited to Intraday and Medium-Term trading, as they're extremely volatile and not suitable for long-term trading. In contrast, Gold may be suited to long-term investing as it acts as a hedge against inflation.
In lesson 6, you will learn trading strategies for short- and medium-term trading in oil and gold, with real trade examples.
This trading style means buying and selling within a day, such as scalping or day trading. This allows traders to open a trade within minutes or seconds, with positions expected to be closed by the end of the day. The risk usually comes from the frequency of trades and price fluctuations.
Scalping is designed to take profit from small price movements, often holding a position for seconds to minutes. This trading style is considered Intraday trading, and the Smart Risk Concept trader designs it. It is a price-action-based strategy using higher timeframes (HTF) and lower timeframes (LTF) with just 2 steps.
The first thing you want to identify is the market structure. Where is the price moving from, and where will it continue to move?
In this case, we will use a gold chart example on a higher timeframe to illustrate a bullish case.
The liquidity grab usually taps resting orders to capture liquidity before reversing the trend. As you see on the chart, there is a bearish liquidity grab at the top and a bullish liquidity grab at the bottom.
The bullish liquidity grab is where the price sweeps below a recent swing low. It immediately shows a strong rejection to the upside and finally leads to a bullish break of structure.
In the next step, you need to mark out the order block that initiated both the liquidity grab and the break of structure. This becomes your higher time frame point of interest. Price tends to revisit this block, where it acts as a demand zone, and smart money steps back into the market.
Here’s how to identify an order block:
An order block is a price zone where large volumes are placed right before a major expansion. Because of this, the price often reacts or reverses when it returns to these areas.
In the bearish scenario, a bearish order block is the last up-close candle or a series of up-close candles formed right before a strong bearish move that causes a break of structure.
In a bullish scenario, a bullish order block is the last down-close candle or series of down-close candles formed by a strong bullish move that leads to a break of structure.
After marking the order block, the next step is simply to wait for the price to return to that zone.
Zoom in on the lower timeframe to see signs of reversals. These signs could include a market structure shift, a change of character, or other reversal signals such as Inverse Fair Value Gaps (IFVGs) or V-shaped chart reversal patterns.
For placing an entry using this model, you have two options:
The first option is to enter immediately after the inverse fair value gap (IFVG) forms. In this case, you open your position at the opening of the next candle, with a stop loss placed below the recent swing low.
The second option is to place a buy limit order at the highest point of the newly formed IFVG and wait for the price to retrace back into the zone and activate your position.
For your take-profit, you can target the nearest buy-side liquidity on the current time frame. Or, if you're aiming for a larger move, you can target a key level on the higher timeframe. This entry approach often provides a better risk-to-reward ratio, since it is slightly more conservative.
It is a strategy of buying and selling a position on the same trading day without holding it overnight. This strategy, represented by Trading Lap, is called the AMD strategy. The AMD represents the Accumulation, Manipulation, and Distribution (AMD) market cycle, which helps us track smart money behavior.
Accumulation occurs when the price is moving sideways, indicating that smart money is quietly building its position.
Manipulation occurs when the market suddenly moves to trick retail traders by hitting stop losses or triggering early entries.
The distribution indicates a strong trend, suggesting that smart money exists.
Using a 1H timeframe gives a clear signal to spot if the market is making higher highs and higher lows or lower highs and lower lows.
This strategy only trades from 10 am to 11.30 am EST timezone or 30 minutes after the market opens.
We are going to mark the time zone with a yellow line at 5-minute intervals. If the price moves out of this yellow line, we do not trade.
As we see, the market has moved in accumulation and then been manipulated. Next, we participate in the distribution. As we already know, the market is bullish, so we will prepare for an upside move.
A fair value gap is a large price jump that leaves a gap between the first and third candlesticks. In the area where the price is manipulated, there’s a gap between the caldestick and the rest of the device.
Now, wait until the price comes back to the fair value gap. This provides further confirmation of strong bullish momentum.
Once the price touches the area and pushes higher with a strong candlestick, this provides additional confirmation of the upside. Set a stop-loss below the recent swing low and set a profit at the previous swing high.
Medium-term trading involves holding positions for several days, weeks, or months, depending on market conditions, such as swing or trend-following.
A trend line, or trend-following strategy, is a way for traders to buy in an uptrend and sell in a downtrend by drawing a straight line. This line serves as a support or resistance zone for entering and managing risk.
The trendline trading strategy below is used by Tori Trades, who has successfully used it for over 8 years.
We use Ray to connect the trendline, which can be drawn from point A to point B on TradingView.
Source: Bitcoin, Monthly; TradingView
Start on the Bitcoin price chart at the monthly timeframe, as we want to collect as much data as possible. I start marking from the lowest point to the highest point, but note that you can never overlap when drawing the line.
As you can see from the chart, there are already three touchpoints, but there are still other points we can mark in this monthly timeframe. So, we will use a new Ray tool to connect the recent point to the next point.
As you can see from the chart, there are still more points left, and we are working toward the most recent point shown below.
Now, we have connected all the touchpoints below. We still need to continue the upward trend, as it will act as a key resistance level.
The monthly timeframe has been completed with the top-down analysis. Now, moving to the weekly timeframe.
On the weekly timeframe, we connect the line from the monthly timeframe, narrowing it down until all are connected. However, there aren’t enough points to connect clearly yet, so we're using a smaller timeframe than the daily one.
Source: Bitcoin, Daily; TradingView
Now, we connected the weekly trendline to the daily trendline. Make sure the trend line aligns with the data points and does not overlap them.
Source: Bitcoin, 4H; TradingView
On the 4H timeframe, we draw the resistance key level, and that will do it. As you can see, we can’t continue the line anymore. Let’s move to the next step.
Wait for the price to break the support level with strong bearish momentum.
Set the entry and take profit at the next support level and set the stop loss behind the recent swing high. This trade might take days or weeks to reach the level you targeted.
This swing trading strategy takes several days or weeks to generate profits. Some traders use breakout, pullback, or support/resistance to help them execute trades over a medium period of time. In this example, we will use support and resistance:
Source: Micro WTI Crude Oil Future, 4H; Trading View
Based on the Micro WTI Crude Oil Future price chart at the 4H timeframe, the price continues moving up. As we see, the price keeps moving higher highs and higher lows.
After the recent high, the price has been trading sideways in a resting zone.
Support and Resistance levels in this strategy will be only horizontal. It requires at least 3 touch points for confirmation. It allows cutting the candlestick's wick, but not the candlestick body, when drawing the level. We draw both liens at the 4H, as it’s more relevant on a higher timeframe than on a lower one.
Source: Micro WTI Crude Oil Future, 1H; Trading View
At the 1H timeframe, we will check the breakout confirmation. As we see, the price breaks out and then comes back for a retest, with a big green candlestick reversal. This shows that bullish momentum is increasing, suggesting potential for a long trade.
Source: Micro WTI Crude Oil Future, 1H; TradingView
Enter a trade right after the retest, then target profit at the previous high. Place a stop loss below the resistance level.
Intraday trading strategy involves buying and selling orders on the same day, such as scalping and day trading.
Day trading and scalping suit best when the market is highly volatile or when combined with news trading.
A medium-term trading strategy involves trend-following and swing trading and can be pursued over days, weeks, or months.
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