Selective Forex Trading:

Chapter 10. More about Extreme Levels in the Market

There are 12 levels in total related to the extreme levels (ELs) of a larger time compression. These involve the weekly, which then expands to larger time compressions and contracts to the smallest time compression known. The four levels that are considered to be the basis comprise:

• The two outer extreme levels that surround the smaller time compression trading ranges.

• The two inner wall areas that form within the two outer extreme levels.

The outer extreme levels are referred to as the top extreme and the bottom extreme levels. The inside levels are illustrated in Figure 10.1 as two inner walls, indicating a measured trading range with anywhere from 60 pips to 150 pips, depending on the currency combination.

As mentioned, extreme levels are considered the outer levels of a trading range; beyond these ELs are standard off-market levels or rates that commonly offer a reversal point within a +/− 10-pip area either above or below the off-market rate. The distance within the inner walls is where traders are most likely to lose trades while using a traditional methodology, and this is known as the "dogfight" section of the daily market. Traders trading in this area feel that they must trade every day and scalp or be a day trader, and as a result, they often begin to see trades that are not present. These mirage-type traders lose money and become part of the 80 to 90 percent of historical traders who fail.

If you can learn how to trade in ...