The Rule of 90 | TrendSpider Learning Center (2024)

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The Rule of 90 | TrendSpider Learning Center? ›

The Rule of 90 is a grim statistic that serves as a sobering reminder of the difficulty of trading. According to this rule, 90% of novice traders will experience significant losses within their first 90 days of trading, ultimately wiping out 90% of their initial capital.

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While it can be a lucrative venture for some, it is also known to be a high-risk activity. This is where the 90 rule in Forex comes into play. The 90 rule in Forex is a commonly cited statistic that states that 90% of Forex traders lose 90% of their money in the first 90 days.

Fair value gaps can become a magnet for the price before continuing in the same direction. On a chart, a fair value gap appears in a triple-candle pattern when there is a large candle whose previous candle's high and subsequent candle's low do not fully overlap the large candle.

For a FVG to develop, there must be a set of three candles characterized by heavy buying or selling in the same direction. When there is a large move in either direction, a gap will be formed between the first candle's wick and the wick of the last candle, as illustrated in the figures below.

There are a number of different strategies that can be used to trade FVGs. Some common strategies include: Buying the gap: This is the most common strategy for trading FVGs. The idea is to buy the market at the price level of the gap, and then sell it once the market retraces back to the gap.

Rule 1: Always Use a Trading Plan

You need a trading plan because it can assist you with making coherent trading decisions and define the boundaries of your optimal trade. A decent trading plan will assist you with avoiding making passionate decisions without giving it much thought.

Most new traders lose because they can't control the actions their emotions cause them to make. Another common mistake that traders make is a lack of risk management. Trading involves risk, and it's essential to have a plan in place for how you will manage that risk.

FVGs can be identified through technical analysis involving the analysis of candlestick patterns and price chart patterns. Traders can categorize FVGs into two types: Undervalued FVGs, where prices are lower than fair value, and Overrated FVGs, where prices are higher.

The FVG formation consists of three candles and there are bullish and bearish FVGs. In simplified terms, we can illustrate them as follows: A bullish Fair Value Gap is created when there is a gap between the high of the first candle and the low of the third candle.

The Fair Value Gap (FVG) is a widely utilized tool among price action traders to detect market inefficiencies or imbalances.

What is liquidity sweep in trading? ›

What Is a Liquidity Sweep? A liquidity sweep occurs when large orders are placed to consume available liquidity at a certain price level. Liquidity in this context is often found in the form of traders' stop-loss and stop-entry orders.

Faire value gap (FVG)

Beneficial concept in price action trading; it offers an area that provides price inefficiencies. They detect instances of inefficiencies, or imbalances, in the market. FVG's are like errors in the market; price mostly tends to back and fill the gap.

█ Institutional Fair Value Gap, also known as imbalance, inefficiencies, and Liquidity void, identifies the most significant FVG within the lookback period. This is often referred to as Institutional Fair Value Gap since only big players can cause these liquidity voids.

Fair Value Gaps are created within a three-candle sequence and are commonly visualized on the chart as a large candle whose neighboring candles' upper and lower wicks do not fully overlap the large candle.

How to identify order blocks in Forex? In the chart, an order block looks like one or several candlesticks of an engulfing pattern that breaks out the order block range. The price should break out the range, return within the range, and rebound, which will mark the beginning of a new trend.

Actually numbers are following: 70% -75% of people lose money in their first year of trading! Other 20–25 % lose money in next 5 years! And only 3–5% of all traders are profitable or not losing money.

The Rule. If, after trading outside the Value Area, we then trade back into the Value Area (VA) and the market closes inside the VA in one of the 30 minute brackets then there is an 80% chance that the market will trade back to the other side of the VA.

Intro: 5-3-1 trading strategy

The numbers five, three and one stand for: Five currency pairs to learn and trade. Three strategies to become an expert on and use with your trades. One time to trade, the same time every day.

In investing, the 80-20 rule generally holds that 20% of the holdings in a portfolio are responsible for 80% of the portfolio's growth. On the flip side, 20% of a portfolio's holdings could be responsible for 80% of its losses.