Forex Price Action

Forex_School_Online · January 6, 2012, 6:23am

[B][U]Thread Guide Continued…[/U][/B]

[B]

Other factors to consider when looking for & selecting A+ and High Probability Trades[/B]

–> Trades with the trend have higher probability
–> PA formed after a deeper pullback / retrace is preferred
–> When it comes to how many pairs to watch: the more the merrier
–> No system in the world is 100% correct; don’t stress over individual trades
–> It’s all about WAITING, and then POUNCING on A+ trades
–> Treat each timeframe independent from the other
–> Watch out not to trade into key levels
–> Watch out not to trade into traffic
–> Avoid indecisive setups
–> Never trade the last H4/intra-day candle of the week
–> If you are unsure, hesitating or not entirely convinced about a setup, your gut is telling you avoid it
–> Better to be out of a trade and wishing you were in it
–> How do you define ‘big’ PA?
–> How do you define ‘big’ PA? #2 ( BIG is OBVIOUS )
–> We have to be careful not to CHASE TRADES
–> Avoid taking RETRACE ENTRIES
–> The 1-2-3 pattern can be used to identify swing/trend reversals
–> The 1-2-3 pattern can be used to identify swing/trend reversals #2
–> The S/R level comes first, then the PA signal ( which should SCREAM at you to take it due to its obviousness )
–> The area comes first, then the signal
–> The best trades will always be found with the trend, but on occasions you will get great opportunities to enter against the trend
–> 80% win rate does not equate to a sequence of 8 wins every 10 trades
–> What to do when the Daily is not presenting us with any major pullback opportunities
–> Price story analysis to determine whether or not to take a trade
–> We are only concerned with the most recent swing/momentum
–> It is a myth that you need R:R of 1:1 or 1:2 to take a trade
–> Low win rate + higher R:R, OR, High win rate + Lower R:R
–> Find an obvious trend, wait for rotation into value, find a PA confirmation to enter the trade
–> There are better and more optimum times to trade than others
–> Manage a trade setup FULLY on the timeframe you spotted it on
–> Look at each chart and their separate trends individually
–> On questions regarding: Traffic, Pinbars, Relevant S/R Levels and Trend (swing/momentum)
–> We can enter D1 Friday PA on Monday but careful to let market spreads settle down before setting entries
–> Swing highs and lows are places where we look to find PA
–> The key to counter-trend signals is HUGE PA
–> Look to stack as many factors in your favour when looking for A+ trades
–> Regarding strict rules: You have to draw a line somewhere, and once you have drawn it you have to strictly stick to it

[B]

Price Action and news/fundamentals[/B]

> Ref #1
> Ref #2
> Ref #3
> Ref #4
> Ref #5
> Ref #6
> Non Farm Pay Roll & Price Action

Forex_School_Online · January 6, 2012, 6:27am

[B][U]Thread Guide Continued…[/U][/B]

[B][U]4. Basic Trade and Money Management

[/U][/B]> The fine line between giving a trade room to breath and understanding where it might struggle
> Remember Risk/Reward is only half the equation
> We set PENDING orders in order to enter into trades when price is moving in the direction we want
> Where do we set Take Profit (TPs)?
> All reveal PA is confirmed when price breaks it (in the direction of the trade)
> Stick to the same chart (TIMEFRAME) you took the trade from
> Keep it simple & manage your trade from ONE timeframe (the one you spotted it on)
> Bearish setups - entry is below the low : Bullish setups - entry is above the high
> AlertFx.com - Forex Alerts for Free
> Round Numbers can act as psychological S/R levels
> Work out your risk first, then split a trade as many ways as you want
> Keep it simple: see a trade and manage on the same timeframe
> PRE-TRADE MANAGEMENT PLAN
> How to work out RISK and TRADE LOTS before each trade ( POSITION SIZING )
> Article: Start Thinking in Money, Not Pips
> Round Numbers can act as psychological S/R levels
> Work out your risk first, then split a trade f or management
> Keep it simple: see a trade and manage on the same timeframe
> How to work out RISK and TRADE LOTS before each trade ( POSITION SIZING )
> Article: Start Thinking in Money, Not Pips
> Placing multiple orders and targets
> Position Sizing Calculator
> Leverage explanation + links for further reading
> Live trade management call (insightful)
> What to do when we can not find a recent S/R to base trades off of
> More on position sizing and using a trade manager to move SL’s to BE
> Caution on taking Fibonacci or random retrace entries
> Take entry at the break of the setup!
> Getting burnt for not taking entry at the break of the setup
> Example of profitable trade management
> Work out how much you are prepared to lose BEFORE entering a trade
> Brief TRADE ENTRY process breakdown
> Using buffers for entry and stoploss
> We are ONLY concerned with the timeframe in which we have spotted the setup
> A buffered stop is a well-placed stop
> Let the market tell you where to place your stop
> Trades shouldn’t be entered before the break of the signal
> Define your risk in $ BEFORE entry!! > Article: Forex Money Management that Actually Works
> Article: The Myth of Risk:Reward
> Brief on creating trade plan + Journalling
> More on trade entry buffers
> Article: Are You Over Managing & Micro Managing Your Forex Trades Into Losers?
> Live trade enry management example
> More on R:R and Win Rate
> Example of fixed $ risk per trade
> An personal insight into trade management and targets
> Live trade entry and FTA example
> You don’t need a pull-back when price is at an extreme high or low
> Overview of Trade Management concepts using live trade as basis
> Trade entry is via pending order set after the setup candle has closed
> 3 words: PRE-TRADE PLAN and HERE
> We are swing trades looking to get on the correct side of the next swing
> Trading less but making more money
> Don’t be afraid of breakeven trades!

Forex_School_Online · January 7, 2012, 5:18am

Thread Guide Continued…

5. Broker and Charting Info

# Providers of 5-DAY New-York Close Charts

–> MT4: Pepperstone, GoMarkets, AxiTrader, HotForex, TradingView.com, FXDD, FXpro, Traders Way, FXCM TS2
–> MT5: RoboForex, GoMarkets, InstaForex, LiteForex
–> Indices/Futures: AxiTrader, GoMarkets, HotForex, InstaForex

Note: You can have a different broker where you place your trades. The above recommendations are purely for CHARTING platform.

# Tips on posting up clear charts

–> Tip #1: MT4 Save Picture + Paint.NET
–> Tip #2: JING Screen Capture
–> Tip #3: THREAD RULE: Remove ALL indicators ( MAs, Oscillators, etc ) and Trendlines from your chart!!

6. Daily Routine, Pairs Watchlist, Trading Plans & Journalling

# Daily Routine

–> Very quick to scan through charts when the levels have been marked in advance
–> Simply flick through charts to see whether any PA has formed at your levels
–> Times of the day one can check charts (corresponding to market sessions)
–> Looking for PA at other timeframes from Daily levels
–> Breakdown of daily approach
–> Video :: Daily Routine (+ other goodies)

# Pairs Watchlist

–> Most avoid EURCHF as it is heavily manipulated by the Swiss National Bank (SNB)
–> I watch all majors, all crosses, indices, oil & metals & a few exotics
–> Any instrument with HIGH LIQUIDITY is game for trading (e.g corn, soya, wheat futures)
–> I watch about 35 pairs and the major Indices
–> PA works the same with Indices as with Forex pairs
–> Best intra-day setups are during London / NY overlap (lots of liquidity)
–> Bigger markets and pairs are easier to trade (more stable)

# Trading Plans & Journals

–> Article :: Why You Need a Trading Journal - Example Included
–> Insightful post on Trade Journalling
–> A member’s excellent trading plan #1
–> A member’s excellent trading plan #2
–> A member’s excellent trading plan #3
–> A member’s excellent trading plan #4
–> A member’s excellent trading journal #1
–> A member’s excellent trading journal #2
–> We are all individuals with different trading plans that contain slightly different rules depending on what suits our personalities

7. Glossary

PA = Price Action
KHL = key horizontal level
SR = support and resistance
BE = break even (Place stop at entry price)
TP = take profit
FSA = first support area
FRA= first resistance area
BEEB = bearish engulfing bar
BUEB = bullish engulfing bar
2BR = 2 Bar Reversal
PB = pin bar
FTA = first trouble area
IB = inside bar
RN = round number, e.g 1.2400 for AUDNZD
BRN = big round number, e.g 1.6000 for GBPUSD
VBRN = very big round number, e.g 1.0000 for USDCAD
CT = counter trend
SL = stop loss
RR = Risk Reward
Fib = Fibonacci
SL = Stop Loss
H4 = four hour chart
H1 = one hour chart
D1 = daily chart
TF = time frame

bhops · January 8, 2012, 5:53am

Hi Johnathon,

I do like the PA signals you are advocating. I first found PA trading over here on Babypips but for one reason or another threads on pure PA trading just seemed to die out.

Here is a nice BUEB I am looking at on the NZD/CAD Daily. It has happened at a nice level but I really like to trade pullbacks and this hasn’t quite pulled back enough for me. I will keep an eye on it though.

I’ll chuck a few more up as I see them.

Forex_School_Online · January 8, 2012, 6:59am

Here is a live pin bar trade played on the daily chart of the GBPUSD. The daily time frame is by far my favorite time frame. Price action can be traded and applied on any time frame, however I would highly suggest traders start with the daily time frame and once profitable then begin working their way down from there and not the other way around. So often traders start from the 5 minute time frame and work up to the daily time frame and this is often why they don’t find much success. Once you are profitable you can start moving down time frames and as long as you remain profitable and keep moving down to as low as you like. The key is making profits and the daily time frame is a great time frame to do that on.

Safe trading,

Johnathon Fox

bhops · January 8, 2012, 4:21pm

Here’s one for discussion. I will be looking for some Price Action in the highlighted zone on the EUR/CAD. This pair is strongly Bearish and I’m hoping for a nice pullback to the area highlighted before seeing some nice Price Action to get short.

Forex_School_Online · January 8, 2012, 9:53pm

Heads up on very solid level traders should watch for potential Price Action setups.

Chart is 4hr EURUSD.

Of late the trend has been down in a strong way so trading with this momentum and looking for shorts is definitely preferred to longs!!

Forex_School_Online · January 9, 2012, 3:44am

Two areas to look out for:

bhops · January 9, 2012, 3:47am

Price on many of the Euro pairs does look to be starting to rotate back. I shall keep my eyes peeled.

Forex_School_Online · January 9, 2012, 5:50am

Aussie 12 Hr Pin. With the recent up move and at support.

Will be interesting to see how this plays out if it breaks higher as their is a little resistance close by over head.

bhops · January 9, 2012, 10:50pm

Did you end up taking this trade?

Forex_School_Online · January 9, 2012, 11:26pm

Yes I was entered long when it broke higher.

I will recap when I take profit or get taken out at BE.

Forex_School_Online · January 10, 2012, 8:55am

Hey all just to recap this live trade I posted in here. Price has now shot higher and I have taken 50% profit and moved remainder to break even. This trade is a great example of how powerful Price Action trading can be when played from the right areas and manage corrcetly.

Safe trading to all,

Johnathon Fox

mojo6911 · January 11, 2012, 8:36pm

Good thread. Thanks.

Forex_School_Online · January 11, 2012, 10:57pm

Your very much welcome. As I get more time I will post more and more,

Johnathon

MrGone666 · January 12, 2012, 5:51pm

Well, i do price action mixed with fundamentals.

Regards.

Forex_School_Online · January 13, 2012, 7:07am

Really nice pin formed on the EURUSD 4hr timeframe. Apsolute A+ setup.

With the trend, at a pullback to 50% level of last swing and then nice pin bar reversal.

Very nice!

bhops · January 13, 2012, 11:01pm

Hey Johnathon a really nice example of Price Action at work and with a minimum of indicators! I love clean charts.

The Euro pairs had some nice pullbacks last night and I played a similar set-up to the one you’ve posted but on the EUR/NZD.

Trading with the dominant trend price eventually pulled back to a relevant swing zone that I have highlighted on the Daily.

I scrolled down to the 4 hour charts (which is about as low as I personally like to go) and a Bearish Engulfing bar was able to trigger me into the trade. One Price Action signal like this per week can make you a rich man!

Looking forward to swapping more PA ideas with you as we go along.

Forex_School_Online · January 14, 2012, 7:47am

Great trading!

The above setup I posted in the EURUSD did fall a lot lower into recent support as well!

Nice trading,

Johnathon

ambo · January 16, 2012, 8:44pm

Hi Johnathon

Nice looking setup just 3 things trend, support and resistance level and setup bar, that looks like a real user friendly way to trade. Simple is often best so many people over complicate things, this is a simple set up with good edge but i suppose the trader has to have the patience to wait for these to come up?