Forex Trade Strategies : Market Structures

     

From Suri Duddella article, first I read about the Market Structures concept.  Then I read more about market structures work from Dr. Ron Lockhart article . There are many articles available where you can learn about it .This concept is very powerful structuring concept , but it also very simple to predict. We traders always try to follow some pattern, momentum, oscillator or some Zen-type signals from different forex guru. But traders cannot able  cue all signals because of market structures .Prices start with a wave and it ends at some point and then there is a down-wave, and it ends some time and then begins another up-wave. You can predict this wave easily by understanding market structures. Market Structure Low (MSL) and Market Structure High (MSH) formation is continuous and is repetitive at every wave begin and at every wave end. Market Structures form in all markets, in all time-frames and in all instruments . This market structure pattern sometimes fail and again re-fail, then form again and re-form. This is a concept pattern. Different indicators like Average directional index , support/resistance levels, are helpful to understand market structure . This indicator triggers to confirm the theory and it always works . Different pattern like 3LPB pattern helps you understand forex market structures.

 Market Structure Low (MSL)

.Market Structure low is explained with three candle pattern such as- A new low formation, lower low formation, higher low of close formation . Market structure low is based on close values . This structure not depend on lows or highs (Please always remember this when trading market structures).  Market structure low based on long triggered price range . When prices close above the highest close value price. Stop loss is being place below the low of the MSL to protect the trade.

Average directional Index (ADX) সম্পর্কে জানতে ভিসিট করুনঃ ADX

Market Structure High (MSH)

When market structure high pattern form then market shows  major tops. They form near key resistance  areas or key moving average areas.  There are three ways to find patterns. One is to find a series of past market structure highs and build a trend line for resistance. Another way is to find a critical resistance area and trade a short position. Final way is to trade msh is to  know a fractal wave form and build a larger wave structure using the distances between them.

Trade and Stop loss

 Trade is taken when price closes below the low of the third candle .Stop loss should be placed abouve the MSH  pattern's high.  There are two ways to target MSH shorts. One is to trade until another MSL forms near a key significant level. Trailing stop should be placed in the previous bar's high  candle.

 Trading Market Structure High

The picture shows a simple Market Structure High formation. In this chart, market structure high signal is formed at potential top at 780 level. Short trade opportunity should be taken when price shows below the low of the third candle.

First, Enter a “short” trade below the third candle at 778, then place stop loss above the MSH high at 780.2 . Target is dynamically changed and trade until the prices form either another MSL or if the price closes above the previous bar's high after  some profit.

Trading Market Structure Low

Same way,  MSL trades should be taken.  These picture shows an  MSL formation after a long downtrend around 10700 level. This MSL is confirmed when the price closed about the high of the third candle . Enter a “long” trade above the high of MSL at 10850, then , at the price 10650 stop order should be placed.