1. Trading environment of the market

Determining the market trading environment is one of the most important factors before making a trade.

Simply put, this means assessing whether an asset's price is currently trending or moving sideways within a trading range. To be able to use the right type of indicator and the right tool, you need to correctly identify the current environment.

In a trending market, asset prices move in a particular direction over a long period of time. In these cases, you should use moving averages, Fibonacci and trendlines in your strategy.

In a sideways market, asset prices often bounce off strong support and resistance levels. A trading strategy that combines Pivot points, Bollinger Bands, or oscillators may work better in this case.

Note that a bunch of these technical indicators can apply to both trending and ranging markets depending on how you apply them, so it's really important that you know the type of environment I'm trading.

2. Momentum

Momentum is often associated with physics, which is the product (multiplication) of an object's mass and velocity. In trading, momentum represents the rate at which an asset's price changes over a certain period of time.

This can be determined using complex mathematical formulas in the form of technical indicators like RSI, MACD or simply price action.

Example: A steeper and larger rally than the previous four hours means bullish momentum is getting stronger.

Looking at momentum can help you predict the upcoming direction of price action and how fast or slow the move might be. It can also help you gauge whether a reversal or break is likely at certain pivot points, as well as the speed of a potential correction in a trend. Strong momentum will often lead to breakouts instead of reversals.

3. Inflection point

They often refer to support and resistance levels that can guide you in setting entry and exit rules for your trading strategy.

Pivot points can include Fibonacci levels, Pivot points, focus areas based on historical price action or psychological numbers, dynamic support/resistance levels based on indicators techniques or a combination of these levels.

4. Volume

Another important factor is volume, trading volume represents how much interest the market has in a particular asset. Changes in volume can help determine the best time to enter a trade and when to exit.

Volume is usually displayed as a line or bar below the main price chart. The more actively traded the asset, the higher the volume will be.

Volume typically declines during periods of sideways price while volume increases are often accompanied by breakouts or trend maintenance. Observing trading volume can also give you an idea of the market environment.

5. Time

Finally, there is the time factor. The timing here is not forecasting but looking at specific periods in which price often has special moves before it. For example, the opening of the money market usually moves in the same direction as the closing price six.

By knowing these special time periods, you can time your entries well, get a better grip on buying or selling, and avoid being fooled by rallies that are unlikely to sustain.