There is a substantial risk of loss associated with trading Derivatives . Losses can and will occur. My methods will not ensure profits

Friday, March 23, 2012

First Trouble Area



FTA ( First Trouble Area) is the first area that price is likely to stop and revers.It is the nearest price level where one can expect some opposing order flow.

We need some space for our trade to move and take our position to profit. Better to ensure that there is some space between our entry and the  first point of interest that can give our trade some  trouble. Price may not always reverse at FTA. Price often will just stall for a bit before carrying on. It depends on how strong the level it is heading into.Strength of the trend and the price action trigger also matters.If we really think about it, the FTA is also a RR ratio.

FTA could be a recent swing High/Low, a round number, a, price flip zone. or a consolidation border. It is best to try to define these areas from situation to situation rather then one such thing.

Pay attention to FTA so that we can be more logical in our trade planning and management.

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10 comments:

  1. AnonymousJanuary 23, 2014 at 7:35 PM

    Hi Sir,


    Could you please tel me approximately how much space is required to take a trade???

    I was observing, for few trades you are not trading if the space is 10 points and few places you are taking the trade.



    Thanks,
    Mahesh

    ReplyDelete
  2. SMART TraderJanuary 23, 2014 at 7:53 PM

    Mahesh

    Such rules cannot be made.
    Your decision should depend on the strength of the move and strength of the FTA
    For example a weak FTA against a strong trend will always break.You need not worry about space at all in such cases

    ST

    ReplyDelete
  3. AnonymousJanuary 23, 2014 at 8:10 PM

    Hi Sir,

    Thnaks for your reply...


    Do we need to consider the volume while trading...with DPs.

    And also tel me what other things we need to consider..along with our chart?

    Thanks,
    Mahesh

    ReplyDelete
  4. SMART TraderJanuary 23, 2014 at 8:41 PM

    Mahesh

    There are so many things to consider.
    I have explained a lot in my 140 posts written over the last two years.
    I was working quietly on this the previous three years. This is something that evolved over a long period of time and still evolving.

    This cannot be explained or condensed in a comment reply.It may take one or two years hard work to achieve it.
    If you are not willing to go through all this, do not waste your time here.

    ST

    ReplyDelete
  5. AnonymousJanuary 23, 2014 at 9:25 PM

    Hi Sir,

    Thanks for your suggestion.



    Thanks,Mahesh

    ReplyDelete
  6. Sanjoy Kumar RoyFebruary 21, 2015 at 10:30 AM

    Dear Niranjan,

    FTA and LOL seem similar or am I missing the point?

    Thanks.

    ReplyDelete
    Replies
    1. SMART TraderFebruary 21, 2015 at 10:40 AM

      FTA is the first barrier for price after a trade entry. This can be a single level
      LOL is two trouble areas clustered one after another. This need not be the first one

      ST

      Delete
    2. Sanjoy Kumar RoyFebruary 21, 2015 at 1:13 PM

      so can FTA be considered a sub-set of LOL?

      Delete
    3. SMART TraderFebruary 21, 2015 at 1:51 PM

      No. They are different concepts. LOLs are trouble area clusters but may not be FTA
      Term FTA does not refer to the first layer of a LOL
      http://niftynirvana.blogspot.in/2012/03/trouble-areas_14.html
      http://niftynirvana.blogspot.in/2012/03/layer-over-layer.html

      ST

      Delete
    4. Sanjoy Kumar RoyFebruary 21, 2015 at 9:25 PM

      Ok. Thanks.

      Delete

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