TRADING STRATEGY


FX


In the first example, price returns to the ‘liquidity high’ of the previous day after making


a lower


Figure 5- GBPUSD Daily Market Structure - Trading Liquidity on Pullback Summary


low,


fil l ing the inefficient price run from the previous day.


In the subsequent examples, price returns to pronounced levels


of order flow and


transacted liquidity after making higher highs .


Again, on higher timeframes, we can see this idea of confirmator y volume injected to suppor t the moves. Note how price rebalances


through the


inefficient runs from the previous day to the last level of liquidity.


We have seen that daily and weekly


market structure


behaviours have nuances within and between each other, and these can be exploited intraday using an understanding of price delivery mechanics and higher- timeframe confirmatory volume


mapping


patterns, a


possibly relationship


between trader and investor sentiment.


Lessons learned from market structure nuances can be applied to intraday swings. Note how price rebalances to the last volume of liquidity after making new intraday highs and lows.


Note that, as discretionary traders with a quant mindset, how we trade is ultimately more important than the strateg y, which can only remain a proof of concept. We need to understand the nuances of price by specialising in certain behaviours, and


practice


diligently. A football coach with the best strategy needs players with best first touch; that touch can be deployed in numerous strategies, and may be the sole advantage with inferior strategies, but needs to be strongly developed.


Graham Harrison Independent trader


Author of “Dynamic Web Programming”


FX TRADER MAGAZINE October - December 2017 51


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70