Take a look chart above, it’s MT4 indicator called “Velocity Waves”. This indicator is ZigZag based and they will helps you to understand what is going on at market.
Each wave comes with basic info such as: h-size, v-average volume, s-speed in pips/hour.
Example below is the same pair EUR/USD on daily chart (1x zoom out). Zoom out will help you to get more clear picture of market for sure.
Now you probably ask yourself how to trade with it. If you analyse our previous chart you will notice that price has reach top (resistance gray area on chart below). That indicate possible trend reversal. Which was happen in next two waves (sell trend). So after we understand that price is reach top we can find best entry for sell.
How to trade with Velocity Waves
Ok, now we expect sell trend. Once when we understand that sell trend is on the way we need to wait for trend corrections to enter sell positions (check 1 and 2 spots). If you check 1 and 2 spots you will see great trend corrections beautiful to enter with sell positions.
This looks like easy when you review chart history right. But what is going on with current trend.
Live Trading with Velocity Waves Indicator
I just open two sell position at market on my live account, take a look at live trading chart below:
So how I made decision to open two sell positions:
Ok, if you check example 1. you will see two waves reach top at the same price, after some time three waves (example 2) reach the same top and it’s below example 1. So there is a lot of chance that price is going down. If price go against me, my loss will be very small since I open positions at the waves top (resistance). I didn’t set stop and profit levels yet. But it’s the easiest part of trading.
Please leave comments below if you have any kind of questions.