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.
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.
This is a huge problem with a lot of beginning forex traders. It’s best to ditch the higher TF charts and trade only the chart in front of you. When you attempt “top-down” analysis, it only leads to uncertainty and confusion.
Again, trade only the chart you intend to enter with. Don’t worry about top-down. It will only confuse you.
Please, by all means, disregard the news. It means absolutely nothing and has no bearing on the direction of the market. It will affect volitility, so it’s best to stay out during High-vol reports (NFP, FMOC, etc.).
Another myth. Context and probability over confluence. For example, you could have 20 indicators pointing toward a bullish bias yet have price take a surprise nosedive. It happens all the time. It’s better to find out where you are in the market cycle and adjust your entry to fit the current price action.
One of the worst things you can do is trade off the news. You’re better off flipping a coin. Pundits on TV and writers on Market Pulse constantly use the phrase “in spite of.” For example, “The Euro fell in spite of the ECB’s positive economic outlook.” Or " The USD rose sharply in spite of inflationary pressures predicted by the Fed." And on it goes. Trying to predict market direction with news events is about as effective as using a tarot card reader to predict who you’re going to marry.
How are they “more precise?” When a 5min bar hits a certain price it isn’t a “fake price.” This idea that somehow the price action on a dailychart is different and “more valid” than on a 1 minute chart is completely false.
It doesn’t matter about the price itself, it’s what’s happening around that price that matters. Five consectutive bull bars closing on their highs on the 5min chart means exactly the same as when it happens on the daily chart. It means you probably want to get long!
If you really hold your ground on not paying attention to the news, then what business do you have with whether the news causes high volatility or not. If you have to disregard the news new, then disregard it.
Don’t come in here to confuse anyone.
I’m not here to argue with anyone on what’s best to do, as the best way to learn is via experience.
You can keep countering others advice while feeling so intelligent. My advice to you is check what you think before putting out here as a fact.
Ya I think you trade charts naked however I believe understanding the price action is just important. Know the psychology behind it. You don’t have to be a fundamental expert but this can go well with just price action. It sounds like your strategy is scalping which that would work well.
Personally I swing trade and use top down analysis. I like to know approximately where the overall money is going and find trades within my parameters. I use price action, fundamentals, and 2 indicators. It’s very simple.
Indicators are wonderful but trading just indicators or just price action w/o knowing the psychology behind it is disastrous.
But what do you think will happen to a trader who doesn’t know when a major new is to be released, hence doesn’t know when to stay away from the market?
There’s a difference between trading the news and paying attention to the news.
As a technical analyst, you use it to know when to stay off the market, while a fundamental analyst, you use it to trade the market.
I completely disagree. The chart you present here could be any timeframe, and you would trade it the same, no matter what. It doesn’t matter if it were a daily, 1hr, or 1 minute chart. You would trade it exactly the same.
For example, if you were to enter long right now, your stop would be just below the solid black line. If you were going short, your stop would be just above the highest price reached on the chart. You would simply adjust your position size depending on the timeframe. If this were a daily chart, your SL would be 100’s of pips away. Whereas, if this were a 1minute chart, your SL would be just a few pips away.
It doesn’t matter the timeframe-- the price action tells us the same thing: The chances of the price continuing upward remain highly probable.
I agree. Keep trading on demo if you are getting more enjoyment than you would trading real $$. Also, I never meant to say that my way is the only way. My appologies for offendng you in the slightest. It all comesdown to doing what works for you.
