Converting to price action trading

Good choice. I don’t even use moving averages anymore.

Not to scare you or anything, but I’ve been trading for over 10 years now and am still picking stuff up. The funniest thing is I always do better keeping things simple. I am a long-time student of Al Brooks. I would start there.

Absolutely. Having just the candlesticks will give you enough information without all the clutter. For example, check out this chart I traded earlier:

I caught a small portion of this little downtrend on the 5-min E/U for a scalp profit earlier in the Asian session today. I highlighted it for you.

Do you need moving averages, stochastics, or fractal indicators to know that this is a strong move downward? Of course not! Your first clue is the three consecutive strong bear bars forming the reversal, followed by a lower high, followed by another lower high. At this point, you have to get short and take at least a small profit-- and that’s what I did.

The next time you look at a chart, say to yourself, “What is the probability of this going higher/lower?” If you answer “highly likely,” then jump in!

For example, What about this chart?

The probability is high that this will go at least a little higher, so I would jump in long here. My stop is down where the red line is. The problem with most traders taking this trade is with the wide stop. But even though the risk is high, the probability that you will make at least a scalp profit is even higher.

You could argue that the second to last bar shown has a prominent tail at the top, so you would be justified in maybe taking a stronger BO. The point is you don’t need indicators to see a high-probability trade. You just need the candlesticks and the ability to recognize the different breakouts and patterns they create.

The great benefit of price action only is that you can see the patterns, breakouts, ranges, channels, and levels without cluttering your charts. For example, I used to get so aggravated when price wouldn’t react to the moving averages the way it was supposed to. Now, I simply remove these lagging indicators so I get a better picture of what is happening. All you have to do is take a step back, look at the bigger picture and trade in the same direction. Pretty easy.

The downside is the time it takes to learn to recognize breakouts, tight channels, wide channels, ranges, reversals, and all the assorted patterns necessary to get a read on the current market. It took me a long time, but then again, I’m sure I’m not as smart as you. :slightly_smiling_face:

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wow thanks for the insights and examples. |

Based in the chart it is the break and retest where the price breaks the previous highs and retest it right but do you use trendlines as well?

I’ve tried this strategy before by analysing on the 1H TF and entry on the 5m and but also got stopped out before going my the way I wanted.

Here’s the case I saw the price in the 1H TF is at the support level and I went into the 5m and saw a big fat bullish engulfing candle stick on the leftside with many small red candles, but after I enter it went down again. how do I fix this or should I wait the 5m TF to break of structure before entry?

Keep in mind that the most common thing that price will do in the next few bars is continue doing what it was doing in the last few.

Also that you do not have to buy/sell live, you can set an entry order above/below where price is now - if it reaches an entry level, this confirms your analysis and the order will be triggered: if price doesn’t get there, you have lost nothing: then you can re-assess.

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It’s OK, to use just price action. But you first need to know that using just price action is not a holy grail either.

I’m not an expert yet, just started learning. But my “2 cents” goes thus.

You have to familiarise yourself with at least 2 of these; candlestick patterns, chart patterns, harmonic chart patterns, trend lines, support and resistance levels, pivot levels, fib retracement and extention levels, psychology levels.

Then, of course don’t disregard the news. Because after all wonderful analysed chart and certain win can turn to a loss in a second if a news event is released that turns the trade bias of the majority against your trade bias.

Whichever of the above technical analysis tools you decide to use, you must always ensure a confluence happens, and make sure you check the news to be on a safe side, before you enter any trade.

To know more about price action, you can visit the section on price action in the “school of pipsology.”

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Imo, all you need is support and resistance. No indicator whatsoever. What i’ve been taught is when the price enters a support or resistance zone, wait for rejection then place your trade. Sell at resistance and buy at support. Is price breaking a zone? Wait for a retest, if not, wait for the price to enter your next zone and try again.

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This is the right idea, congrats :smiley:
I’d recommend to use higher timeframes since your only indicator will be price action itself and we all know in most case the higher timeframe are more precise.
another crucial tip is to leave your emotions apart and only focus on logical decision.
it could also be an advantage for you if you only trade pairs which haven’t any high impact news that day (for example avoiding GBP/USD when there are high impact economic reports in UK and USA)

you can check babypip’s calendar and filter only high impact news or you could download apps like “Tradays” where you see all the upcoming events.

i don’t know if this is helpful but i’m a naked trader and only rely on PA. I got interviewed a few months ago by babypips where I go in detail about trading naked. its not up to date anymore but it may could give you some infos :slight_smile: i’ll attach the link of the interview/post belowe.

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I agree. Without effective use, price action nor indicators will be of any service.

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Price action is definitely the way to go, IMO. Keep it simple and look for trends (higher highs & higher lows, or lower highs & lower lows), and use important levels as well as orders to enter.

Here’s a good, live example of a trade I’m looking at on EURUSD:


1H chart, current uptrend with a pullback to that SR level. I have a buy stop order placed just above the previous bar and my SL below the next SR level down to help protect from stop hunts.

This is a good setup in my eyes, but despite that I could still be wrong. PA is not as reliable on the 1H charts as it is on 4H and up. But that’s why you use SL’s, to keep your losses manageable and to protect your capital.

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noted thanks ando

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thanks for the example I’ll study it

Dude why do you wanna walk the plank its suicide at lease have a 200 SMA and then go raw
I feel you about price action bcuz the way the market moves nowadays indicators can’t keep up
and major support and resistance are being blowed away. good luck bro!

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Kudos to you for taking the leap and ditching the indicator training wheels.

Indicators are useful for interpreting price when the trader doesn’t speak the language of price action, however the trader that is fluent in price action will find that having an interpreter to be inefficient and mostly ineffective.

It is definitely possible to trade without indicators, provided that you know what you are looking for.

My advice is to get proficient with market structure beyond the simple higher lows/higher highs define an uptrend and lower highs/lower lows defining a downtrend.

Look beyond the candles and the patterns and look at the intent. Price action needs the context of placement, time, and who benefits from the success or failure of a pattern.

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I highly recommend the work of Adam H Grimes. Check out his book “The art and science of technical analysis”. It’s a masterpiece. Certainly one of the best books out there on technical analysis (price action). It’s not for beginners tho, but if you have some experience it’s perfect

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I agree with you. Adam H Grimes is a great writer and trader His book “The art and science of technical analysis” is very good. It shows how to use charts and patterns to make money in the markets. It is not easy to read, but it is worth it. If you want to learn more from him, you can also check his blog and his free trading course. He has a lot of useful tips and insights.

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thank you for your response and support.

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so recently i came up with a strategy I just need help on senior traders to correct me if I’m wrong at some point.

Break & Retest Strategy:
Trading Style Day Trade / Intra-Trade
Analysis: Draw Recent Highs & Recent Lows, Draw Trendlines / Trend Channel as shown below.


Entry Trigger: at the 15M-TF if it breaks and retest the previous highs or lows as shown below.

As for my stoploss: it will be at the previous lows/highs
As for takeprofit: it will me x2 my stoploss which is 2:1 RiskRaito.

What do you guys think if there is any additional things that I need please advise.

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I use price action to spot the general direction and strength of the market, and I use indicators and oscillators to fine-tune my entries and exits, and to identify potential divergences and signals. I also use fundamental analysis to understand the macroeconomic factors that affect the market. I think this approach gives me a more balanced and comprehensive view of the market, and helps me to trade with more confidence and consistency.

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I trade futures anymore as commissions and fees are generally cheaper than spreads with US brokers. That said, yeah I use some discretionary rules (guidelines) that will fly without indicators, but since the volume also helps take some of the guesswork out, I do use some volume vs price indicators along with the structures like you and others are showing on your charts.
I don’t have any kind of R:R target though unless I’m scalping a slow time of the day, otherwise I just watch the risk and get out when things change.

I think your strategy makes sense. The chart you show in specific seems to me to be a typical continuation pattern, and I would expect it the breakout to be in the downside. I would therefore be careful if the breakout happens on the upside, pay close attention to the retrace and the candles to follow. Also, the two green candles on the uptick, with a gap between them, often indicate just this; a continuation in the direction of the previous trend, bearish in this case. I believe Adam Grimes also mentioned this in one of his posts.