How to use the Moon Phase indicator. Find out the secrets behind the Moon Phases, for trading better

Do you know which are the Moon Phases? Watch our latest video, where we explain which is the best Moon Phase for trading

Moon Phase for trading – a tried and true way to trade

Hello, this is Diary of a Trader, and I want to go over a new kind, well, it’s not new, but it’s probably new for a lot of you. A form of analysis that is probably not as common as others. This is a part of what’s known as financial astrology. And, don’t let the name throw you off. Financial astrology is actually, it’s mathematical psychology based on the science of astronomy. And so, how we analyze markets based on the behavior that people exhibit, we also base a lot of our trades on market sentiment. So, it’s not really any different than trading based off of where the mood of a market is. And Moon Phases is what we’re going to go over today. And, before you laugh, Moon Phases are a very real tried and true way to trade. They are very effective and they are… You should not use them on their own, though, you should use them to complement other forms of analysis.

So, for example, let’s take a look at the Euro/Dollar. And, let’s just clear everything off our charts, and let’s go take a look at this. Let’s scroll out, and here’s the Euro/Dollar, and here are our Moon Phases. So, New Moons are at the top, New Moons mean that there is, no moon out, it’s dark out. If we were to select Format, and we select Full moon off and New Moon off, we’re just left with these bars. However, we want to keep these on, so the Full Moon is down below and the New Moon is up top. So, Full Moons mean that it’s bright outside, you can see a big bright moon, New Moons mean that the sky is dark, there’s no moon. And depending on the instrument, you’re going to notice some type of pattern. And for the Euro/Dollar what we see is that during a New Moon phase, you can usually find that you’re at a market top of some sort. And so, during a New Moon, you have a high probability of being able to short that market if you’re in a bear trap. If we’re in a bull trend, then what that tells us is that on Full Moon, we have a high probability of the trades moving up for those two weeks, okay?

So let’s see how this plays out. Let’s look at each one of these, individually. So let’s get rid of the New Moons and let’s just look at the Full Moons. Just the Full Moon phases. So, here’s a Full Moon. If we would have bought at the beginning of the Full Moon that would have been a winning trade. And again, on the Euro/Dollar pair, it seems that Full Moons are near or at a type of a market bottom, or at least you can find a market bottom somewhere within that Moon Phase, and so, the idea is to take a long position during a Full Moon. So, here we have a Full Moon that would have been profitable. Let’s just kind of look at how profitable these would have been. So if we would have taken a long right at the open, okay? And closed it at the close. That would have been 160 pips on that trade. And then, let’s see if we traded at the open of a Full Moon and sold at the close. That would have been 315 Pips. We’ll do this Full Moon, and if we sold at the close, 354 pips. Now, we’re getting into a thing where we’re not going to see an increase all the time. We would have been down 46.6 pips. And then, look at here, at the close, up 282 pips. And over here, if we were to buy at the open, and sell at the close, we would have been up a total 19.6 pips. Now, you can see that in a strong uptrend with the Euro/Dollar, Full Moons yield really great results for finding a bottom and then selling at the end of that phase. We can see this repeats itself over, and over, and over again and if it seems kind of silly and obnoxious that you can do this, that’s okay, that is perfectly normal. And then because we can see the inverse of this behavior too. Oftentimes, when we know that there’s a change of trend coming, it is in response to the inverse Moon and we see a dramatic trade-off of that area, usually right on it. And, so let’s take off the Full Moons and let’s go to the New Moons.

Now, we can tell that during a very strong bull move that we really do not want to try and short during a New Moon. We could consider taking profit during a New Moon, during a strong uptrend, or we would consider just sitting and staying flat, not adding until we get back in. But notice what happens when we take a look here at this activity. A good sign that we were going to be entering into a new trend change, was when we finally had a New Moon that had a significant drive down followed by a kind of a muted move up, and then we have another significant drive down. So if we look at these swings, these are more pronounced so if we would have bought at the open, or sorry, if we would have shorted at the open, and then covered at the close, that would have been 187 pip move. If we would have done that most recently here, and then sold at the close, that would have been a 303 pip move. So you can see that when you’re entering into a bear trend when you see two dramatic drops off of the New Moon phases, that’s a pretty good idea that you are entering in a new bear trend and that we probably do not want to entertain going long, yet. Now, the question is, well what happens when it doesn’t move that way? Well, let’s look at the different market. Let’s go ahead and look at the British Pound and the US Dollar. Because it’s important to notice that not every instrument is going to show you that the… Not every chart is going to have the same response to these levels, okay? You know, the Pound/Dollar seems to respond to the Full Moon and the New Moon just like the Euro does. But, you have to look at the past price activity of each instrument, to determine for yourself whether or not this is true. The Footsie 100, the British stock exchange, it responds to the inverse. It likes New Moons for market lows where it can go long, so it operates on the inverse, but the Bitcoin-Dollar pair, sorry, not the Bitcoin-Dollar pair, the Pound/Dollar pair trades like this.

Let’s actually take a look at the Dollar Index and see how that operates. They’re about the same. And let’s look at Bitcoin. How does Bitcoin trade these areas? It seems to also like the Full Moon, to the New Moon, Full Moons being bullish and the New Moons being bearish. but notice a lot of those are tests for the dollar. Let’s take a look at the Euro/Pound Forex pair and let’s see if that’s any different. Not really, no. So, we could say that in Forex, at least in Forex and cryptocurrencies, it seems to be a fairly consistent process that you have a bias for a market being bearish for a New Moon phase and bullish for a Full Moon phase. But again, we want to use other forms of analysis. So, let’s go back to the euro. And, The Moon Phases itself is not enough to dictate a trade, so we need to do other things. So, one thing that we can use is oscillators, or other forms of an oscillator, like other types of oscillators, like the RSI, or I like the Composite Index. If we look at where these levels go, let’s see, we have a, look like a market bottom starting at a Full Moon, where is our Composite Index? Is it below these two averages? Sure. This is a good buying opportunity. Let’s kind of keep fast forwarding and see if others show up. Actually, there was one back here too. Other good shorting opportunities, if we get into these accelerated conditions near a market high, a short-term market high. But we’re looking more for bullish buy entries based on our charts. You can see, as we’re moving along here, that we do see a nice… We can see some nice correlative moves, based on where a New Moon and a Full Moon is going to start. And then, if our conditions are met, where we can go in the direction of that Moon Phases, then we have a higher probability of catching some really nice profit in the process. And most recently, this is probably a good example. Here, we were in an accelerated zone, an elevated zone here, that was giving out a sell signal, we had a double top on our Composite Index. That was really telling us that we had a high chance of having down prices because we can include the New Moon, and the behavior of the New Moon is to have lower prices during that Moon Phases. Hope you found this video helpful and please watch our other videos.