Thanks for the step by step walkthrough, really useful. It really shows how your mind was working.
I’ve been waiting for the price to break above the PIN high on the daily, but now my IC Markets demo has frozen I’m just gonna go to bed : )
1 – Strong preceding trend. All bearish candles from the resistance to the support level. Starts off with smaller bearish candles near the resistance. As it gets to the middle between the support and resistance levels, the bearish candles increase in size. And toward the end, near the support level, you see a long wick testing that level, then a smaller bearish candle after that. Almost perfect. Shows the bears are losing control and a change in control to the bulls may occur.
2-- Right above the number 2 is the first bullish candle of the bearish preceding, right at our support level. This is arguably an inverted pinbar or a doji depending on how loosely you define those formations. Most importantly it’s a sign of indecision. Exactly what we’re looking for.
I place my entry above the high of that first bullish candle and a stop below the low. Roughly a 30-35 pip stop.
For my target, I set it just before the next resistance level. However, there is a psychological level in the way of that. So I have set a price alert to let me know when(if) price is at that level so I can see how price is reacting to that level live.
3 – Price heads down and shoots right back up (this formed a nice pin bar on the daily chart). As it shoots back up it triggers my entry.
…
Canadian and US news are to be released tomorrow morning (EST)–one of which is considered to have high impact. I’m most likely going to either close it out before the news for likely a small profit or a small loss, or I will tighten my stop and monitor it live to see how price is reacting to it. I have not decided yet.[/QUOTE]
Good call. My entry/stop is more risky. If you’re taking it on the daily then you might run into an issue with the RR being relatively poor depending on where you put your stop. The issue is that it’s a pretty large pin bar and ideally you would want to place a stop at the low–but that would offer a RR that would not justify taking this trade. However if you do take it and place a tight stop, price may revisit/retest that support again and potentially hit your stop. This is a similar situation to Nick’s most recent video here. But good night :).
I would get into the habit of placing your targets based on price action rather than that RR indicator you have. Placing targets based on that RR indicator is very arbitrary. Instead, look for minor S/R levels and psychological levels as price is most likely to react to those levels.
what is your edge ? you risk 72p with the hope of making 122p. you need to be right a lot of times to make a profit trading this way and from what I read some of the best traders in the world are only right about 60% of the time.
I didn’t realise this thread would get popular. I will check in more often from now on.
Guys, trades like this are nowhere near valid… The upper wick on USD/CAD is way too long. The upper wick of the daily candle cuts right through the 1.1015 resistance area. The fact that buyers could push up so far suggests that they are way too strong to be countered.
I don’t have an edge, I’m just trying this out at the moment as I am new to Price Action.
The traditional 1:3 risk to reward ratio was I believe a stock trading tool set up years ago, and people have jumped on the bandwagon without question it. I agree reward needs to be greater than risk, but Ideally I would usually aim for 1:2 or higher.
Though in practice I find when you tighten your stop loss you just get stopped out before the trade turns and hits your target anyway.
