3 lessons to boost your trading skills

Study, practice, and beat your competitors!
This guide is based on our own research. Traders who tested it improved their tournament results and were able to take 1st-3rd place for the first time ever.
We won’t guarantee that you’ll 100% become a tournament winner. But we are sure that the lessons will help you better understand analytical tools and more appropriately apply them in your trading.

The course consists of 3
parts dedicated to 3
technical indicators:

What are they for?

Indicators don’t forecast the future, but they are handy in understanding the market. The MA shows the general direction of a price, whether it is going up or down. It’s useful when you plan to conclude a trade and want to ensure that your forecast is correct.

What will you learn?

Note!

Let’s get started!

Lesson 1

The EMA: your rapid trend indicator

The EMA (Exponential Moving Average) is a basic trend indicator. On the chart, it looks like a curve. The EMA is very sensitive to recent price changes and has a shorter delay in contrast to SMA (Simple Moving Average). You can follow its direction to make price forecasts.

The EMA is always smoother than the current price.

Settings

The EMA has several features. Leave them all on default, excluding the period. The longer it is, the stronger the price signals. The shorter it is, the more quickly the EMA reacts to price changes.

We recommended using 12, 26, 50, and 200. You could also try the Fibonacci numbers: 5, 8, 13, 21, 34, and 55: they are handy for short-term trading.

What can the EMA help you with?

Indication of trends

When the price goes up, and the EMA follows, you can trade up. When the price goes down, and the EMA follows, you can trade down. Always ensure your forecast is correct. Change the scale of the chart and look at the bigger picture. If the general trend is up and the local one is up, an “up” forecast is less risky.

Depicting a support/resistance level

During an uptrend, the EMA is below the current price (it’s “supporting” it, preventing it from falling further). When the trend is downward, the EMA is above the price curve (providing “resistance,” so the price doesn't go further up).

Identifying a possible reversal

A reversal is a change in price direction. When the EMA goes down, the price curve crosses it going upwards, and an uptrend may follow. When the price crosses the EMA going downwards, a downtrend may follow. Reversal periods are risky for concluding trades. Wait for a moment when a new trend appears and then trade up or down.

Homework

Explore the capabilities of the EMA by combining it with another indicator. Let’s try a simple trading strategy for the EMA + SMA indicators.

1 Open the trading platform.

Find a trending market — pay attention to currency pairs.

2 Set 2 MAs: EMA 7 and SMA 14.

Choose different colors so that you don't mix them up.

3 Identify a trend, steady movement up or down, with the help of the MAs.

  • When both MAs are below the current price and going up, there’s an uptrend.
  • When both MAs are above the current price and going down, there’s a downtrend.

4 Validate your forecast (trend, up or down) by changing the scale.

5 Keep your eye on the indicators:

During an uptrend

The current price crosses the EMA 7 going up, and the EMA 7 follows and crosses the SMA 14 going up. When the SMA 14 starts rising, conclude a trade up.

During a downtrend

The current price crosses the EMA 7 going down, and the EMA 7 follows and crosses the SMA 14 going down. When the SMA 14 starts falling, conclude a trade down.

6 Repeat the exercise by trading multiple assets in different time frames.

Improve your results!

Lesson 2

Bollinger Bands: explore the power of volatility

You are already familiar with the EMA trend indicator. Let’s learn about another one — the Bollinger Bands (BB). The BB reflect volatility, which is how significantly a price deviates from its average value. The chart shows 3 lines: a middle one (the Moving Average) and its deviations. The space between the lines is colored so that you can perceive it as 2 bands.

During a downtrend

The current price crosses the EMA 7 going down, and the EMA 7 follows and crosses the SMA 14 going down. When the SMA 14 starts falling, conclude a trade down.

Settings

There are 4 parameters for the BB: the type of MA (the middle line), the period, the deviation, and the field. Start practicing using it with the default settings: SMA, 20, 2, and “close”, respectively.

What BB can tell you about?

1 The absence/existence of a trend

The bands are close to the middle line when the price is not changing significantly. The bands push away from each other as soon as the price starts snowballing. When the bands are close to the middle line, it means that there’s no trend, or it’s just at the very beginning.

2 The trend direction

The middle line of the BB is a Moving Average that indicates the price direction. When it is going up, and the MA is rising, you can trade up. You can trade down when the price starts falling, and the middle line is going down.

3 A possible reversal

When the price is about to change direction, it’s risky to make trades because of the uncertainty of the situation. Knowing reversal signals will help you avoid that. BB indicates a possible reversal when the price crosses its bands:

Always ensure your forecast is correct. Change the scale of the chart and look at the bigger picture. If the general trend is up and the local one is up, an “up” forecast is less risky.

The price is about to go up when it crosses the lower band going downwards.

Note!

The BB always need validation, for example, by applying the SMA with shorter and longer periods.

Although the BB are based on the MA, the indicator has a delay.

Homework

Let’s explore the BB capabilities by applying the indicator as a part of a trading strategy.

1 Open the trading platform.

Find a trending market (start with currency pairs).

2 Set 3 indicators: EMA 7, SMA 14, and the BB with default settings.

3 Identify a trend using BB signals:

  • the current price is moving up/down;
  • the bands are widening significantly;
  • the middle line is following the price direction.

4 Now, keep your eye on the indicators.

Trade up

The price rises, then the EMA 7 follows, then the SMA 14 and the middle line SMA 20 too.

Trade down

The price falls, then the EMA 7 follows, then the SMA 14 and the middle line too.

5 Repeat the exercise by trading multiple assets in different time frames.

Improve your results!

Lesson 3

Stochastic: an accurate tool for
trading on a flat market

Stochastic is a flat market indicator. It measures price momentum, whether it is changing quickly or not. The indicator reflects changes in price by how strong the fluctuations are. Unlike the MA and BB trend indicators, the Stochastic doesn’t have a delay.

Settings

A flat is the absence of a trend. There are 2 types: tight and wide flats. If it’s a tight flat, the price is not fluctuating significantly. If it’s a wide one, the changes are noticeable. However, it is still not a trend (steady movement up or down).

Note!

It’s risky to trade when the flat is tight. If one appears on the chart, you should take a break. When the flat is wide, you can trade, but using the Stochastic indicator.
The Stochastic chart is below the price chart. It consists of 2 lines: the slow and fast Stochastic. There are also blue lines on the chart: the upper one is the overbought level, and the lower one is the oversold level. The levels are usually measured from 0 to 100. When the price is in the overbought zone, it’s reached its peak on a flat market — now it can reverse and go down. If the price is in the oversold zone, it is likely to start growing.

Settings

There are 3 options for Stochastic: the period and the overbought and an oversold level. The default settings are 14, 80, and 20, respectively.

What can Stochastic help you with?

1 Identifying flats

When there’s a tight flat on the market, Stochastic fluctuates between the oversold and overbought levels, hardly crossing them. When there’s a wide one, the indicator may cross those levels, but only for a short time period. During a strong trend, Stochastic can stay in the overbought or the oversold zone for a long time.

2 Identifying reversals on a flat market

On a flat market, when the fast and the slow Stochastic cross and move into the overbought zone, it means that the price will soon stop rising. When Stochastic moves into the oversold zone, it means that the price will soon stop falling.

3 Identifying the trend direction

When Stochastic moves into the oversold zone and stays there for some time, pay attention to the price chart. Wait for a downtrend to begin and trade down. When the situation is the opposite, wait for an uptrend to start and trade up.

Note!

Stochastic shouldn’t be applied alone, just like any other indicator. You can see the situation on the market more clearly by combining indicators of different types.

Homework

Let’s test another simple and effective trading strategy — Stochastic + BB.

1 Open the trading platform.

2 Choose the Stochastic and Bollinger Bands indicators with the default settings.

3 Find a trending market using the BB indicator (start with currency pairs).

4 Identify an upcoming trend using Stochastic:

  • The fast and slow Stochastic cross and move into the overbought/oversold zone;
  • Stochastic crosses the overbought/oversold zone and stays there for some time. Then it moves in the opposite direction: down/up;
  • The current price starts moving down/up.

5 Validate the Stochastic signals with the help of the BB:

  • The middle line is going down/up;
  • The bands are widening.

6 Repeat the exercise by trading multiple assets in different time frames.

7 When Stochastic is getting close to the oversold/overbought zone and the Bollinger Bands tighten, stop trading.

8 Repeat the exercise by trading multiple assets in different time frames.

Improve your results!

18+ General Risk Notification:
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