Hi Johnathon,
Firstly, I’d like to say thanks for creating such a brilliant thread and website. I’ve been following it for a while and have been trading using your system with real money since October 2012. So far I’m up 15% using the money management techniques you wrote about in one of your articles; you’re a big reason why I have been able to profit so far.
I’m writing on this thread because I want to ask you about three price action patterns which I don’t trade at the moment (I only trade pin bars and engulfing bars currently). As of yet, I haven’t got the confidence to trade 2 bar reversals, inside bars or engulfing bars which break S/R lines. Would you be able to help?
2 BAR REVERSALS:
From what I can tell, 2 bar reversals seem to me like pin bars except they’re spread over 2 candles rather than one. Here’s an example of one I spotted on the NZD/USD last week on the daily chart:
Am I right to think that this is a 2 bar reversal? Can I trade them like I would a pin bar i.e. it would have to close within the previous candle etc.?
INSIDE BAR:
The other pattern I want to trade is the inside bar. From what I can tell this pattern doesn’t have to be at significant S/R; it almost creates it’s own S/R. Do you agree with this or would you look to trade it at S/R? Here’s an example of one I spotted on the EUR/GBP daily chart this week:
How would you trade an inside bar? It seems to me like it would be a good idea to set an order at the break of the ‘master candle’.
BREAKOUTS:
The final pattern I wanted to ask about is one that I have seen from time to time. I’ve noticed that when a trend is temporarily capped by resistance, it is often broken by an engulfing bar before the trend continues. Do you trade these patterns? Here’s an example from the GBP/USD daily chart:
I for one have been an avid fan of trading “price action”. I also enjoy people who are willing to teach others how they trade and what works for them. One of the biggest issues I believe many people will find here is the following.
How to actually get an accurate entry.
Knowing when to get out of a position.
If they should scalp or swing trade a position.
I for one have seen many people posting so many charts, with colors, and lines. Yet, no where can they actually prove that they are following the system which they are teaching. Posting charts with all of these circles and lines, is basically trading “IN THEORY”. Which of course doesn’t translate into profit taking most of the times. I invite you to look at the following stats.
Please notice how the winning positions usually last less then 5 mins, and the losing ones last at least 1 hour. The last position which was closed for profit, was down as much as 43 pips. 2 pips away from a margin call. Poor money management due to emotional trading is what allowed his/her loss to have been that high. Yet, he survived it. The only thing I would like for people to understand is focusing on the entry! Not the trend! Most of us lose money in the short and long term because we become bias to our position. This market actually is ran on the 1m chart. You can make just as much money against the trend as you can with it. Only because we never know when the trend will actually reverse. Food for thought to everyone. Focus more on the lower tf and you will be able to make many more profitable trades.
I posted it and asked about its lower wick. I did not take it though because to me the lower wick was kinda a bit long. I would like to ask your opinion about it if for you it was a bit long for your criteria as well. thanks!
It’s an open secret that there are (near) infinite ways of going about making money from the markets ( on all the available timeframes ).
This method (which happens to be a SWING trading method on HIGHER timeframes) suited Johnathon, and he teaches it to those who feel it can suit them as well. It is NOT the only way, but works for him & many others, myself included.
With regards to entries/exits/scalp-or-swing:
How to actually get an accurate entry: posted over and over again: at the break of a setup (no. of pips is up to the trader’s discretion)
Knowing when to get out of a position: S/Rs are key to this method, and exits are based on next relevant S/Rs (on the timeframe one has taken the trade)
If they should scalp or swing trade a position: this particular method is a swing trading method
if you read the first 50-100 pages you will come across the EB’s, Pins and two bars. I also been told I can give links if they are not advertising and are used for educational purposes. With this in mind I will give you one link only to the two bar reversal which will exppain it and how it works. I wont give links to the other info as sure you can find it: The 2 Bar Reversal
We do not trade IB’s as trigger signals. Simple reason for this is there are far better price action set-ups to trade. We are all about trading when we have a strong edge in out favour. inside bars are indecisions candles and are showing the marker is uncertain. We don’t want this but rather obvious set-ups where there is a clear and obvious bias. The reason these become popular with both traders especially with new traders is because they form all the time and they give traders the chance to trade all the time. If you really want to trade then you can read about the strategy here: How to Trade Price Action with Inside Bars I do not recommend it though.
Yes I do trade breakouts but not as you are showing. I trade them with price action with a few different methods. One involves spotting the breakout and using the 1hr as trigger and the others involve key price action signals to get into the breakout.
I am stoked this has worked out great for you, but for me this is a very poor setup.
It is formed at a high and not a low. it is formed within a range and also in a tight consolidation box. The engulfing bar is not large or commanding and is stuck within the housing candle showing price could not break the high.
This was a touch better than a flip of the coin for me and the reason the slight edge was in your Favourite was because of strong recent trend. Because this BUEB could not close above the housing candle it would have held as resistance against your trade.
Obviously just my opinion but for me I would have needed it to be at the low and also bottom of support which would also be the low of recent range and the BUEB would have to be larger, more commanding and not stuck within previous candles.
As it is it worked out great for you so well done!
With a little know how and the right indicator you can change the MT4 charts to any time frame you wish. Also the new MT5 has some new time frames such as the 2hr/4hr and 12hr.
Johnathon, You are looking at the wrong bullish candle m8. Actually I based the trade not only on bullish engulf but also on that daily pin shying from support at 0.8571 . So its like 2 signals
I played this BUEB on GBP JPY daily from Friday and I lost it. I still don’t know if it was bad luck or bad play. I think I traded into a level of resistance but I’m not sure if it was an important one. These levels of resistance/support seem to be everywhere.
[QUOTE=str8;461301]I played this BUEB on GBP JPY daily from Friday and I lost it. I still don’t know if it was bad luck or bad play. I think I traded into a level of resistance but I’m not sure if it was an important one. These levels of resistance/support seem to be everywhere.
Let me present my opinion. I think the BUEB was quite ok (I didnt trade it, IDK why, just looked and didnt like it). There was a resistance just around the BUEB high… AND the shape of next day candle should advise you to go out of this setup, because the BUEB was kind of big one, I would expect bigger move up.
Hi All,
Im looking at this trade. I wonder if you can give me your thoughts.
Its AUDJPY 4H
My opinion is the pair is ranging. It is at the bottom of the range, produced a big PB,at relevant SR, BRN is 32pips away but hasnt proved too much problems in the past.
I know the pair isnt trending but I think its a good setup.
Any thoughts?
Studying signals from the past, I’ve seen most of good signals start even from the first day to move in the right direction. I made a buy stop order at 10 pips above the BUEB. If the trade wouldn’t have been open I would have cancelled my pending order after the first day. I also think the BUEB was ok but the candle from the first day invalidated it.
