Finding hidden opportunities

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After you have determined the market direction in the beginner strategy, in step 2, you start looking for trading opportunities.

You are instructed to place a line on the last candle and only consider any price action that happens to the right of this line and ignore everything before that line, as the chart to the right shows:

Vertical line market up

However, just looking at anything after this line is not strictly correct. There may be a trading opportunity as soon as you switch to the 5 minute chart, based on what happened to the left of the vertical line. In other words, you may not have to wait for an opposing fractal to form or break. This may have happened already and so you would immediately have an opportunity to enter a pending order.

In this lesson, we will teach you how to spot those opportunities.

First of all, go to the 30 minute chart and determine the market direction by finding the last broken fractal.

Now place a vertical line on the candle that breaks that fractal.

Break of the last fractal on a 30 minute chart

number_1 Last broken fractal
number_2 Price breaks the fractal
number_3 Line placed on the break of the fractal

Now switch to the 5 minute chart. The vertical line that you drew on the 30 minute chart will also show up on the 5 minute chart – you may have to scroll to the left to find it. You will now look at what happened on this chart, starting from the point in time marked with the vertical line you just drew, until the current point in time.

Use the following instructions depending on the direction you have determined on the 30 minute chart.

Market direction is up

Look for the last broken down fractal on the 5 minute chart. If it is to the left of the vertical line that you drew on the 30 minute chart, there is no trading opportunity and you must wait for a new down fractal to form and break in line with step 2 of the beginner strategy.

If the last broken down fractal is to the right of the vertical line, there may be a trading opportunity.

To find out if there is a trading opportunity, take a look at the one up fractal that came right before the last broken down fractal and all the up fractals that came after the last broken down fractal.

If any one of these up fractals have been broken after the last broken down fractal has been broken, there is no trading opportunity and you go back to step 2 of the beginner strategy.

The following chart demonstrates what this looks like:

Market direction up 5 minute chart no opportunity

number_1 Last broken fractal
number_2 Up fractal before the last broken down fractal that is not broken
number_3 Up fractals after the last broken down fractal that have not been broken
number_4 Break of the last up fractal which means that you have missed this trade.

If none of these up fractals have been broken, there is a trading opportunity. Take a look at the example below:

Market direction up 5 minute chart immediate opportunity

number_1 Last broken fractal
number_2 Up fractal before the last broken down fractal that is not broken
number_3 Up fractals after the last broken down fractal that have not been broken meaning that you can go ahead and enter the pending order.

After you have found a trading opportunity, you can go ahead and enter the pending order using the high price below the most recent up fractal for your entry, the tip of the most recent down fractal for your stop loss and the next pivot point up from your entry as your profit target.

Now you have entered this pending order in a different way than in the beginner strategy. But you can manage it in the same way as in step 4 of the beginner strategy:

Lesson
Before your order turns into a trade, you need to monitor it. Adjust the entry point and the stop loss. If the market direction changes, cancel.
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Market direction is down

Look for the last broken up fractal on the 5 minute chart. If it is to the left of the vertical line that you drew on the 30 minute chart, there is no trading opportunity and you must wait for a new up fractal to form and break in line with step 2 of the beginner strategy.

If the last broken up fractal is to the right of the vertical line, there might be a trading opportunity.

To find out if there is a trading opportunity, take a look at the down fractal that came right before the last broken up fractal and any down fractals that came after thatl.

If any one of these down fractals have been broken after the last broken up fractal has been broken, there is no trading opportunity and you go back to step 2 of the beginner strategy.

The following chart shows what this will look like:

Market direction down 5 minute no opportunity

number_1 Last broken up fractal.
number_2 Down fractal just before the last broken up fractal that has not been broken.
number_3 Down fractals after the last broken up fractal that has not been broken.
number_4 Break of a down pointing fractal indicating that you have missed the trade.

If none of these down fractals have been broken, there is a trading opportunity. Take a look at the example below:

Market direction down 5 minute chart immediate opportunity

number_1 Last broken up fractal.
number_2 Down fractal just before the last broken up fractal that has not been broken.
number_3 Down fractals after the last broken up fractal that has not been broken meaning that you can go ahead and enter the pending order.

After you have found a trading opportunity, you can go ahead an enter the pending order using the low price below the most recent down fractal for your entry, the tip of the most recent up fractal for your stop loss and the next pivot point down from your entry as your profit target.

Now you have entered this pending order in a different way than in the beginner strategy. But you can manage it in the same way as in step 4 of the beginner strategy:

Lesson
Before your order turns into a trade, you need to monitor it. Adjust the entry point and the stop loss. If the market direction changes, cancel.
You haven't attempted the quiz yet.
165

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  • I did. Its good to have more spots to get action smile
  • Im looking on the chart "when market direction is up" and im wondering, when the the up fractal has been broken, it says we dont have trading opportunity. But cant we make it like in begginer strategy http://en.tradimo.com/learn/forex-trading/beginner-strategy/pending-order-entry/ and use last broken down fractal as SL and last up fractal as pending order point? Or if we want to make it, we have to do it exactly like in begginer strategy?
  • Hey Sepurta,

    Really, you shouldn't.

    The fact is that you will build on the rules of the beginner strategy and you will start to add discretion, but you should really only add discretion into your trading when taking off you profit targets - not when you enter. The idea is that you wait for a pull back in the market and then yo wait for the price to go further with greater force. If the price has already broken the up fractal, then you have missed that trade.

    So in this instance you should wait for another trade set up
  • I do not understand what the difference between this strategy and the regular Beginner strategy is. We are looking at the same things to happen in both, right? Where is the hidden opportunity here?

    Sorry for asking, but seems like I'm missing something here...
  • I think you're trying a bit too hard to put up certain strategy levels. I mean the switching to the 5 min Chart and then putting the vertical on the last candle was suspicious to me right from the start and I didn't do it. If I had opened the software say 45 min ago I would have put the line earlier and still made the same kind of decisions, just earlier.
    Sorry to put it like that but "hidden opportinities" is another way to say we fooled you in the first lesson.
  • Sorry, you talked about using fractals break on the left side but your explanation is about fractals break on the right side of the line. Do you mean that if there is already an opposite fractals break on the left side on 5m chart you can enter a trade already?
  • jackdaw211

    Yes, I was confused at first as well about that. You should start looking at the left of the line as well and if there are broken fractals there you should enter your trade
  • I have a big question biggrin. If the trade is missed , that means the target for profit should be lower then the pivot points? Some pivot points are at 20+ pips distance, and as it states that the trading opportunity was missed it means that we are targeting a smaller profit?
    How much should the average target profit be?
  • Hi miha209
    In the first example the trade is missed as there is not a sequence of unbroken up fractals. This means that there is no hidden opportunity so you resort to the Beginner strategy as normal and wait for a new fractal to form after the vertical line on the 5m chart..
    In the 2nd example where there is a sequence of unbroken up fractals this gives you an opportunity to place a pending buy stop order without having to wait for fractals to form .
    With regards to Pivot points and profit targets these are the same whichever way you enter the market. Use the same rule of placing profit at the first pivot point after entry providing the gap is more than 5 pips.
    Hope this helps biggrin
    Regards
  • Thank you for your response smile
  • Hello, please, after I close a position I must wait for a new break fractal to get the opportunity (meaning go to step 2)? Or I can open a new pending order supposing that I already have a broken fractal giving me oportunity before the closed position, according the hidden oportunity lesson?
  • Hi Rodorush
    After the position closes you need to check the market direction on the 30m chart. Then look for a new fractal in the opposite direction to break before placing your pending order. I realise this can take time but you need to find the correct entry point on the 5m chart under Beginnerr strategy guidelines
    regards
  • now i learn why i have hit the stop loss in one of my trades i miss the trade and enter the pending horder order nice to learn wink
  • Hi,

    I read this article for the 3rd time and still dont know if I understand well. First I read: "There may be a trading opportunity as soon as you switch to the 5 minute chart, based on what happened to the left of the vertical line", does this "left" refers to the space from left of vertical line drew on last candle on 5min chart and that drew on broken candle on 30min chart?. I also get impression that this article shows us how to find trading opportunity when we woke up or after playing sport when we dont have access to the PC for 2-3 hours? Is it the whole story about finding up fractal (when market is up) that has not be broken, so we still have a chance to enter it, because pending order is executed when up fractal is broken?
  • Hi brendza,

    The vertical line is the line you drew on the 30 minute chart.
    So this addition to the strategy says you can also take fractals left from that line into account where we usually are not able to do that.

    Regards,
    Timothy
  • Hi Timothy,

    Thank you for your answer. I will keep this lesson as a reminder to learn again after I gain more experience. Regarding to first chart in this lesson (break of last fractal on 30 min.chart), shouldn't we use first down fractal in lower left corner of the chart (formed at about 7.00, 15 Nov 2012), as it breaks last candle?
  • Yes but in this case it does not change the market direction.
    But i will change this screenshot to avoid confusion!
    Thank you for noticing.
  • Good Day to All,In the mt4 Platform there is no fractral,how to put it to the graph? pls help..
  • Hi Osman bin Husin,

    You can put the fractals in by doing the following in your MT4:

    Insert>Indicators>Bill Williams>Fractals.

    Remember that you can also zoom in if you wish them more pronounced on your charts.

    Regards
    Emma

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