Understanding FGD and FRD Setups in Trading
Chapter 1: Introduction to FGD and FRD
What is FGD (First Green Day)?
The First Green Day (FGD) refers to a day when an asset experiences its first positive close after
a series of red (negative) days. It often signals a potential reversal or the beginning of a bullish
trend, especially when accompanied by volume spikes or news catalysts.
What is FRD (First Red Day)?
The First Red Day (FRD) is the first day of a negative close after a consistent uptrend or series of
green days. It can indicate the beginning of a bearish reversal or pullback, particularly after
parabolic moves or overextended rallies.
Chapter 2: Technical Criteria for Identifying FGD and FRD
Key Elements of FGD:
1. Multiple Prior Red Days: At least 2-3 consecutive red days leading up to the FGD.
2. Support Area: The price finds support at a key level such as a previous low, moving
average, or trendline.
3. Volume Spike: A significant increase in volume often confirms a reversal attempt.
4. Engulfing or Pin Bar Candlestick: A bullish candlestick that engulfs the previous day's
body, or a pin bar with a long wick.
5. Gap-Up or Strong Open: Often opens higher than the previous day’s close.
Key Elements of FRD:
1. Multiple Prior Green Days: Typically 3 or more green days prior to the FRD.
2. Resistance Area: Price reaches a known resistance or psychological level.
3. Volume Climax or Fade: A large volume spike (blow-off top) or decreasing volume
during the rally.
4. Bearish Candlestick: A reversal bar like a shooting star, doji, or bearish engulfing
pattern.
5. Gap-Down or Weak Open: Opens lower or fails to hold the opening price.
Chapter 3: Next-Day Technical Factors to Analyze After
FGD
If FGD Has Printed:
1. Pre-Market Action: Watch for gap-ups and volume. A strong open may lead to
continuation.
2. Resistance Levels: Identify nearby resistance from previous support turns or intraday
highs.
3. Volume Confirmation: Continuation depends on sustained or increasing volume.
4. Opening Range Breakout: Look for a break above the morning high.
5. Trend Confirmation: Use moving averages (like 9 EMA or 20 EMA) for directional
support.
6. News Catalyst: Presence of a news catalyst can support further momentum.
Chapter 4: Next-Day Technical Factors to Analyze After
FRD
If FRD Has Printed:
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2.
3.
4.
Gap-Down Watch: Check for a lower open or selloff in pre-market.
Support Levels Below: Identify support zones where price may bounce.
Volume Decline: Weak volume may signal a continued slow fade.
Morning Push Failures: If price tries to reclaim highs but fails, this can confirm short
bias.
5. Intraday Lower Highs: A key signal that trend is reversing.
6. Parabolic Structure Breakdown: If prior move was parabolic, expect sharper
corrections.
Chapter 5: Risk Management and Psychology
1. Avoid Chasing: Wait for confirmation instead of entering at extremes.
2. Size Accordingly: FGD and FRD can reverse fast, use small position sizing.
3. Stop Placement: Place stops beyond key levels — under the FGD low or over the FRD
high.
4. Trade Plan: Have an entry, exit, and reason for the trade.
5. Avoid Bias: Stay objective — not every FGD continues and not every FRD dumps.
Chapter 6: Common Mistakes
1.
2.
3.
4.
Ignoring Volume: Volume is often the key driver for these setups.
Trading Against the Trend Prematurely: Let the setup confirm first.
Misidentifying the Setup: Confirm trend context before labeling it as FGD or FRD.
Holding Too Long: These setups are often short-lived unless supported by strong
catalysts.
Chapter 7: Practice and Review
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Backtest 100+ examples of FGD and FRD.
Note the outcome of the next day.
Build a playbook with screenshots, notes, and patterns.
Focus on timing, especially market open and session volume.
Conclusion
FGD and FRD setups are powerful tools in a trader’s playbook, especially when used with
proper technical analysis and discipline. Recognizing the context, key signals, and next-day
behavior can lead to high-probability trades if approached systematically.