JÄWÄ's Price Action Trading Method

Trading Systems Free Forex Trading Systems
1

Hello, and welcome… to Jurassic Park :smiley: but in all seriousness this is my 4 hour price action strategy, i make a very comfortable living off of it so please check it out and feel free to comment on it or ask questions so we can all continue to learn and become better traders :slight_smile:

The first link I included is a quick template of the actual strategy, and the second file is an in depth explanation worth reading

Now, here are some picture explanations and examples of trades made:


Looking at this chart we can see an obvious Pin Bar forming on the 4 hour chart, noticing that it is also above the center line of the Bollinger Band we can see it is in a prime selling zone and therefore a pretty good probability trade, but wait! there is still one more filter we have to use, the 1 hour chart.


These four 1 hour candles are all the candles that are contained within that one 4 hour pin bar, by looking at these 4 candles we can see how the price was moving within that pin bar, the reason we use the hour as a filter is to see if the price is truly heading in the direction we want it, or if this is just a temporary pause in the trend. Notice how all 4 candles completely reject the top bollinger band, the buyers tried and failed four times to bring the price up, also notice how they broke through the EMA’s, that is a great confirmation.


and look! the price moved after the pin bar

in case the files aren’t working

Official Forex Strategy

Currency Pair: GBP/JPY, AUD/JPY, EUR/JPY, GBP/NZD, EUR/NZD
(Any pair that has high volatility and daily pip ranges)

Explanation: When you choose which charts you are going to trade there are a number of things you must look for when considering a chart

1 High Volatility: the more volatile the market the more entry and exit points there will be as price reaches its extremes much faster, another great thing about high volatility is that the market will normally be trending, and when it isn’t the ranges are big enough to trade off of profitably.

1 Confluence: look for charts that trade with confluence to one another to maximize how many entry signals appear a week

1 Number of Charts: make sure you only keep a manageable amount of charts, otherwise every time you go to your computer to look for signals you’ll be trapped their sifting through dozens of high risk/low reward charts for no reason, just like a trading method, you want to get to know each and every chart before you even consider moving on to another one (I myself only trade 5 charts), this will allow you to get a feel for the way that market moves, how wide your stops can be, and how far each price move will go on average

Time Frame: 4 Hour

Explanation: Because this method of trading uses the pure Price to determine signals, it can be used on any time frame, that being said you should pick a time frame that suits how often you want to trade, I myself enjoy being able to only have to be at my computer every 4 hours and by using the 4 hour charts I never miss a single candle. Some considerations before picking your time frame are:

1 Profit Goals: obviously you wont make 80 pips a trade on the 5 minute charts, the lower the time frame the smaller the moves, and the smaller the take profits will have to be,

1 Quantity vs. Quality: The smaller the time frame the more trades you will have to make to achieve a certain amount of pips gained, this causes increases in spread and swap costs, that being said however there is much more money to be gained by trading smaller time frames (if you trade 24/7), every candle on the 4 hour chart has a few or more 15 minute chart moves on it that all could have been profited from where as on the higher time frame it is translated to a slow price move.

1 Amount of time spent on Forex: Although the lower time frames contain more money to be made you must realize the unrealizable of being at your computer every 1, 5, 15 minutes, or even every hour of every day, whereas if you trade the 4 hour or daily charts you will never miss a candle (provided you dont mind waking up once at a godforsaken hour in the middle of the night to check the market for five minutes)

The lowest I would ever go from using 4 hour charts with 1 hour charts as confirmation, would be using 1 hour charts with 15 minutes as confirmation.

Indicators: Bollinger Bands, EMA (5), EMA (10), 1 Hour Chart

Explanation: I have tried literally EVERY SINGLE indicator (extensively might I add…) on MT4 as well as numerous custom indicators, IN MY OPINION indicators are dumb :stuck_out_tongue: all indicators are lagging indicators by nature, meaning they can only tell you what has already happened, where as by using just price action you can see where the price will go before it goes there, that being said I use these indicators for the following reasons:

1 Bollinger Bands: This is used to determine price extremes and buying and selling zones, you don’t want to be trading an evening star at the bottom of a move now do you? This helps filter the direction you want to be trading in an obvious and simple way

1 EMA’s: I use these as dynamic supports, if you plot them on your charts you will see that price often bounces off of the EMA’s, and this is a very useful piece of information to use, to be able to see the buyers and sellers fighting back and forth with clarity

1 1 Hour Chart: Being able to see inside every candle within the 4 hour candle you are about to enter into a trade because of is an amazing filter, to see the price moving, see why the 4 hour candle has formed in the way it has, is extremely awesome

BUY:

Entry: Place buy order on pin bar (or reverse pin bar) or morning star that forms on the 4 hour chart (on or below the center line of the Bollinger Bands) and is confirmed by price movement on the 1 hour

SELL:

Entry: Place sell order on pin bar (or reverse pin bar) or evening star that forms on the 4 hour chart (on or above the center line of the Bollinger Bands) and is confirmed by price movement on the 1 hour

EXIT: take half profit at 50 pips, and let the rest run till next opposing signal

STOP: place stop 40 pips away, at first take profit move stop to breakeven, trail stop manually by 50 pips after that

Explanation: These are just some hard numbers to use, it should be different for every chart as every chart moves differently, but these are some good safe guidelines to go by for entering and exiting.

2


this is a perfect example of a trade filtered out by looking at the 1 hour, look at this pin bar at the tip of this movement, it looks like it might be a reversal right? well lets look at the one hour


as we can see from these 4 one hour candles that make up the 4 hour pin bar, price is bouncing off the dynamic support and cant seem to break through, it tries but fails four times, so im going to just ignore this signal.

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and look! the trend continued :smiley: had we have sold there we would be very, very sad right now…

3

Hi thanks for sharing. What is the periods for your bands and ema?

Thanks.

4

The EMA’s are 5 (blue) and 10 (yellow), and the bollinger bands have standard settings period:20, deviation: 2)

5

I just started to learn Price Action and I have to say I really like they way you describe your method on this thread. May I know how often this set-up occurs in a week please? Really cool method and very simple!

6

I don’t see the pinbar here. Can you circle it please?

7


i circled it :3

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these were a few of the trades i made in the past couple weeks on the GBP/JPY 4 hour chart, i only included the signals that were filtered and confirmed

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here are a couple pictures that might help, i trade pin bars and reverse pin bars :slight_smile: the key obviously isnt so much looking for the signals as much as it is looking at where they are located in a move

Although most people might say a pin bar or a reverse pin bar needs to have the long end of the wick be at least 50% of the candle, the body no more than 25%, and the nose no more then 25%, by definition a pin bar is simply the visual representation of the indecision in the market, so for instance if you see a bullish trend in place and then you see one candle has a longer than normal wick, investigate! see why its acting that way by zooming into the one hour and even further if you want, see what happened in that candle, if you see for instance the bears had gained power and pulled the bears back down through a support line, perfect buying opportunity :smiley: even though it might be a sloppy pin bar you have to remember what makes the pin bar itself a pin bar, the indecision in the market :3

Also a side note on trading evening and morning stars, too be valid all they need to be a good signal is:

  1. A current trend in place
  2. A candle signifying indecision or possible trend change (doji’s, pin bars, hammers etc.)
  3. Confirmation of the change in trend (ie. if the first candle in the pattern is bullish, then the next candle would have to be an indecision candle, and then the last candle would have to be a bearish candle)
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here is another example, in the middle of a large upward move a possible reversal occurs, so we zoom into the 1 hour to see whats going on

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as we can see it takes practice to read the market and determine whats going on, normally i like to prioritize like this

  1. Price action on the 1 hour: if we see a confluent price action signal on the 1 hour that is recent that is a great indicator to either get in or out of a trade

2.Bouncing off S/R’s: if the market is trying and failing to break through supports that is a good signal as well

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9

it obviously depends on the market and which charts you are using, but typically i get ATLEAST 5-6 signals a day, and between 2-300 pips a day

10

What pairs do you trade on this strategy? Or put another way… What pairs give the best results with it?
I heared Nail Fuller once saying that you do not get pin bars on some pairs as good as others.

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i put the pairs i trade in the attached file :3

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Is anyone else getting errors when trying to open the docs?

13

It works fine. Try using OpenOffice to open it.

@SithJawa: Thanks for sharing this man, and nice profile pic, reminds me of NeoPets. :stuck_out_tongue:

Do you really get 5 pin-bars a day on the 5 currencies that you trade with? I read somewhere that pin-bars occur only once a week or so.

14

aha its rainbow dash from my little pony: friendship is magic :stuck_out_tongue:

and if you look on your charts you can see for yourself, typically there are more than 5 signals a week on every chart, and if not it could be because im already in a trade, some weeks there will only be one or two trades per chart because they’ll be large moves and we will be in trades already, but yes there are a lot of opportunities on the 4 hours :smiley: even though there is potentially 4 times as much money to be made from trading the 1 hour charts, with the 4 hour charts you can be present at every candle, meaning you never miss an entry, so even if i only got 5 signals a week, with the average 80 pip move and 90% accuracy rate of this system, ill take my 320 pips :smiley:

15

Hi SithJawa,

On a pin bar reversal entry do you enter on the close of the pin bar? or the low/high of the pin bar? or 50% of the bar?

for the SL do you generally use a fixed SL or use the extreme of the pin?

with regards to Post #7, you show a trade that states “102 pips potential”, however why is that considered a bearish pin bar? if anything i would have thought that to be a bullish pin bar (finished closing as bullish?), but then the next candle is a bearish engulfing bar…

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I enter at the close of the pin bar, although waiting for it to break past the high/low would be a possible alternative, this could help filter out bad trades HOWEVER you would miss out on a lot of pips which would reduce your RR, I don’t think filtering out the occasional false breakout would be worth it in the long run

And I generally use a fixed stop loss so my RR stays intact, not too mention by looking at charts you can see price doesn’t always respect previous high lows to the number, many times the previous high low will be broken through as a test and had we have place out stop there we’d miss a good trade

And you should take a look at babypips section in price action, I think they call that a hanging man, but I call it a reverse pin bar :slight_smile: it shows the exact same thing as a pin bar, indecision in the market, however it goes about it in a different way, with pin bars you want to see them bouncing off of supports, but with reverse pin bars you want to see the opposite! You want to see them testing that new price over and over, so when you see a reverse pin bar at the too of a move you see that the bears were able to stop the bulls in their tracks with great force, and although they couldn’t completely win the candle they contested it for sure, a great sign of a reversal :slight_smile:

17

Hi!

Regards,
A Fellow Bronie

I like Twilight Sparkle thou.

But yeah, keep going on ur PA studies. You seem to be getting something about the BBands.

18

As Jangez asked, what is your exact entry point after a pin bar?. Can you post photos with the exact horizontal lines of actual entry points.

Also you mentioned hard numbers for SL and TP do you have more specific numbers for each of the 4 currencies?

What is your number of losses and max losses? Thanks

19

Hi SithJawa,

Thanks for sharing, I’m a huge fan of PA and candlestick patterns so this is right up my street.

How long have you traded this method? Have you ever considered using S/R for TP levels as it may prove to be more profitable? I’ve just never understood how it’s possible to use a fixed target on all trades without looking at the candles in context.

Thanks, Ben.

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@ Relativity: woot Bronies :smiley: and yeah i know there are a lot of studies on Bollinger Bands that are extremely interesting, for instance using multiple BBands with different deviations or periods as take profits, or to show strength of movements, tis interesting

@Kimonz:

that is obviously just a colored horizontal line not an actual entry level as its the weekend but you get the picture, i enter exactly at the close of the candle, at the most a minute before (especially if i have multiple entries on the way), the line isnt exactly at the close first of all because of human reaction to the close of the candle cant be exact and the spread of course which for that trade which i took was about 5 pips, so i put my entry level there :3

And yeah to be safe i keep my sl at 40 pips normally, obviously if there is a strong S/R level right beforehand i will place my sl there, because if it were to break through that line it would be an obvious reversal sign, as far as the individual pairs go the NZD pairs love long wicked candles, they are very volatile so 40 pips is just safe, and with the yen pairs you could safely go down to 35, as i said in my explanation (i think i said atleast) the 40 pips stop loss is just a safe hard number to use, ideally, you should always place stops at previous highs/lows, because placing a stop above them would be dumb because if it were to break through that SR level chances are the move is cancelled so why waste more pips then you need too, there are of course a few kinks with that

  1. what if the previous high low (even of the previous candle) is more than 50 pips away? do you place an outrageous stop? of course not! place it above the previous high/low by a safe distance (5 or 10 pips), and have it be around 40 pips because that is just a safe number that seems to work very well, if it is an absurdly large candle that would place your stop too far away just put it at the safe 40 pips, you really just have to get the feel for each chart i think :3

  2. what if the previous high/low is 10 pips away, do we place a 10 pip sl? nope! that would be absolutely unsafe :expressionless: try to keep it near 40 (in my opinion)

and my W/L rate is about 10:1 (90%), its very accurate, my max losses in a row has so far been 3 in a row, i had three trades on different currencies going and they all decided to spite me :[…

@Benjamin: i have tested and backtested and refined this method for around three months of tedious 6-7 hours a day labor (im serious, there were days i didnt see the light of day… [also i dont have a dayjob]), after trying tons of moving average and MACD strategies i have found this to be the most profitable (and the most simple) strategy to use

and that is an amazing question, one of which i have no definite answer too, i think it really depends on the persons trading style, i use S/R to get an idea of where price is going to go, but again at the end of the day this is a business, this is my job, i need to make sure i make a profit, so i take some profits out as soon as possible so that if it were to randomly reverse do o whatever reason, i could still make money at the end of the day, by taking half profit at 40 lets say with a 40 pip half take profit (with a 90% success rate), you automatically assure yourself a great paycheck at the end of the month :smiley: another thing is with the charts im using, i find there are three sizes of moves consistently:

  1. small moves: 40-70 pips
  2. big moves: 80-150
  3. WHAAAAA!?!?!?: 150+
    (yep, 71-79 pip moves dont exist [kidding… but for some reason there does seem to be very few in this range for some reason :O])

and i find they happen consistently with equal chance, i take my half profit out at 40 so that during the small moves i still make a profit instead of falling short with a tp at an S/R level 80 pips away, and then i still have half of my profits left to run to the next signal to maximize profits, i secure a win early with my half tp, and then let it run, its a very safe yet highly profitable way of trading, its just what i like to do to be safe :slight_smile: