GBPUSD trade I took earlier.
Idea was invalidated but a good execution of rules.
There are 2 trades in this sequence I had identified but did not take. This is the only chart I look at on the 5 minute timeframe because it is so volatile anything above 15 minutes requires min of 1000 pips stop. If you can get a good signal and get in early this pair can pay out handsomely. Didnt take the trades because with this volatility I only want the best. Both signal had I taken them wold have resulted in 800 pips each (200 pip stops each).
SPX short. I chickened out halfway through and moved my target a bit closer so did not achieve a 1:2 RR.
Ive come to a very deep realization with my trading psychology. Ive read about it so many times and at an intellectual level I understood what was being said but the problem with us humans is that things never take root subconsciously until you learn the hard way.
This is how a trade typically went for me:
- ‘Good Grant’ sees something and enters a trade (usually late after the horse has bolted)
- Now I’m in the trade and ‘bad Grant’ takes control of my thinking.
- Find new levels, reasons to exit early, paranoid fear on every tick against me.
- Exit early.
- Make excuses and stories about what just happened.
- Repeat.
The day I started accumulating statistical data one my trades I realized that every individual trade is simply an entry on my spreadsheet and that is when everything changed for me. I realised a few things:
- Statistically you are going to lose at some point.
- The market is random. Don’t project your hopes onto the trade.
- The battle is within you. If you don’t follow your tried and tested method, then you are cheating yourself out of becoming an awesome trader.
- Be honest with yourself. If you bend rules or make excuses you are only wasting valuable learning opportunities and your education will be harder.
I know I am on the right path to becoming a good trader and this makes each trade easier to deal with.
Has anyone else had moments of clarity that made a difference?
Ye I struggled with it as well when trading binary options when taking longer term trades, however the short term trades were win it all or lose it all. But after starting to use a hand written journal losses effected me a bit less tbh. So I used my journal to set monthly, weekly and daily goals and I will not break my daily/weakly goals at all.So if not moving SL/TP is in this weeks goals, dont do it, no matter what imo…
I only traded binary for a month or 2 so ye i guess you have done forex for a while and if you trust your plan then monthly goals or longer are even better.
Not giving advice, more sharing how I look at it haha.
Thanks for your comments. Your opinion/advice is welcome here
Indeed … they don’t come much better-behaved than that. 
Yes such days are gems! By way of interest only and not in any way intended as a criticism of Price Action trading I would like to show another screenshot of the same pair and period where a combination of both price action and indicators can produce very effective synergy in confirming bounces and non-bounces and help in accurately timing entries. This is nothing more than an MA ribbon superimposed on the same S/R lines identified in your chart and helping in confirming what is actually happening and when to enter - and exit.
There is really no either/or between PA and Indicators - just a benefit from using the best of both 
P.S. I don’t actually trade this pair, but interesting that my same (stripped-down) method fits over it quite well. I hope you don’t mind me butting in on your thread here - I just thought this might be of interest…
Hi Manxx I really appreciate you taking the time to show me your method of looking at the chart. Im here to learn and welcome the input.
I started out learning with the MA cross system but I found that I was getting into a move quite late so I binned all indicators and started teaching myself PA. I however never thought of pairing MA’s so close together, what are your settings…this definitely looks interesting?
This is (in my opinion) the core reason why most people abandon indicators.
Indicators always “work”, the problem is that we misuse them by giving them an independent lfe of their own. The only thing that is truly important and real is the price itself. I do not personally go along with the claim that price is random. Price is driven by various rational forces of supply and demand and cannot be random. But since the market comprises many different participants all with differing objectives and time scales, the underlying longer term pressures of commerce and investment are distorted by minor interim ups and downs - and the lower the TF the greater the impact of these interim biases.
Therefore, whether one is applying indicators or PA, the objective is the same: to determine the underlying core movement of price by filtering out the noise and clutter of short-term abberations. To ignore this principle and give indicators a “life” of their own is destined to failure at some point because the nature of price movement in any currency pair changes from time to time according to the changes in the underlying pressures which are causing the moves. Indicators and PA have to be in synch with the price itself.
A good example of this is the future movement in EURGBP before and after Brexit. The forces affecting the Euro and Pound will start to differ, maybe even dramatically, as both the UK and the EU develop their own policies independent of each other…and trading methods will need to adapt to that. I.e. it is not the indicators or the PA “lines” that dictate price, it is entirely the other way around, and all lines need to be read in terms of the current price moves or lack of.
Here are some shots how one could combines these two areas of analysis. I am sure most platforms have a menu allowing you to toggle indicators on/off with one click. The first chart is a naked 1H for Sept so far, which allows one to clearly identify possible S/R levels without the indicators blinding them. The next chart has the indicators “toggled” back over it like a skin in a photographic program like Photoshop.
The same chart can then be reduced to a shorter TF whilst retaining the same S/R lines e.g. below to 5m and then traded according to the indicator skin superimposed over it:
In this example from this morning there was a buy signal with an identified PA target area. But the indicator “skin” showed the momentum was not sufficient and the crossover “warning” still gave an 8-10 pip profit. Not much, but as much as the market in this TF (5m) was prepared to offer at the time!
By way of follow-up to the above, it is interesting that a further signal was given to resume the move at the same exit level and indeed this time the target area was reached
The levels were from PA analysis and the entry/exit from simple indicator usage…
(Of course I missed it because I was busy writing these posts! 
)
… and it is another matter whether one has the patience to sit for so long watching a 5 min chart - but this is only an indicative example of a principle, nothing more)
So true Manxx.
With time (and the little experience I have so far) Ive come to realize this. I used to think of my tools as the definitive guide to future price movement which as you can imagine caused disbelief, anger, confusion etc. Im starting to see them differently now.
How did you determine that momentum was not sufficient?
Do you have rules for when your 2 MA’s cross?
In your 3rd zoomed in chart price fulfilled the following rules (if Im reading it correctly):
- broke and close above a previous swing high level
- Fast MA(red) is above slow MA (blue).
- Then you closed the trade because price broke and closed below your slow MA pair (blue).
I would have missed this whole opportunity because on the break I would have waited for a pullback to that line…which never happened.
I also see how the MA pairing would assist with an exit strategy.
I really appreciate the time you took to show me this Manxx. I think this method of looking at price behavior has potential.
Call me curious (which I am), but are those 6/6d1 and 12/12d1 moving averages on your charts, above, Manxx?
Nothing more complex than that the price had dropped below the red ribbon pair for 15-20mins. This was sufficient to suggest there was not enough additional buying to push it further towards the PA resistance where price had stalled on previous occasions. The close below the blue ribbon suggested there was a good chance that the move had fizzled out and would be wise to take a profit and wait for the next move. At that point there was no way of telling whether the price would continue down to the start line and even beyond or would bounce back. Is that not the whole point of indicators? - that they [I][U]indicate [/U][/I]something? They are not [U]rules[/U], there is only [U]interpretation [/U]of what signal these lines are [U]suggesting[/U].
And here we have it! 
Rules, rules, rules!
No there are no rules here at all. There are only indications/suggestions that a move may have started and in which direction and how far it might get. Let’s look at this in two ways:
- The indicator “rule”:
The purple dotted line is actually the daily Pivot. So let’s make a “Rule”: If price closes above the Pivot, buy. If it closes below the Pivot, sell!..Garbage!!! By the end of the day you’ll be crying over your losses and wasted time.
- Price interpretation:
The daily Pivot line is like a focus on the mid-point of the [I]previous [/I]day’s total action. Therefore if price starts to move [U][I]away [/I][/U]from that Pivot then it suggests that either price is continuing the previous day’s move or starting a retracement. Either way, there is a good chance that there will be some follow-through. But, if the price is moving [I][U]back towards[/U][/I] the Pivot line then it suggests that the [I]current [/I]day’s action is directionless relative to yesterday and stagnating and that we will end up with an inside day.
In the example, the 5m bar closed above the Pivot (just!) but also both ribbons were positive and in the right order which suggests there was currently additional buying strength relative to earlier periods.
These two factors, [I]combined with a bullish scenario on the higher TFs[/I], justified a trade entry.
Subsequently, it appeared that the move was stalling when it dropped below the red ribbon and that it might be wise to cash in.
Again, these are only examples. The 5m chart is not a very reliable one for such interpretation but the same principle of using indicators superimposed on one’s PA analysis is good for any TF. It’s function is purely to help identify entry more accurately (e.g. determining a bounce off a support instead of pre-emptive buying in front of a steam train going straight through it!) and indicating a suitable time to exit.
Another reason why “rules” are no good is because markets perform better at certain times. I.e. it is wise to trade only in active periods and ignore the others (if intraday trading). E.g. if candle lengths are all very small then it suggests there is not really much going on even if there are “signals” - afterall, MA’s will still continue up and down even while the price is starting to stagnate like towards the close of the day or week.
Another example - [U]why [/U]should markets bounce off certain levels just because it has bounced there before? Is there some magical property in these lines that stops people buying and selling forex in the big commercial world? I don’t think so! But then there are reasons. For example, if you are a Swedish importer/exporter buying goods priced in USD for sale on the domestic market, then you know what level of krona/dollar will allow you to buy and offer your products competitively and still make a profit. Every time it reaches that level you will buy dollars to trade goods. Similarly, if you are an investor in foreign currency Instruments you will look for a competitive currency exchange level to buy that currency and maximise your return and simultaneously reduce your exchange rate risk in the future (forward currency swaps will price out the advantage that you are looking for in investing in thoseforeign currency instruments). Huge funds and companies do not do all there transactions in one go, they will build positions over a period of time adding and reducing whenever the price is right. We do not know the sum total of all these price pressures, but our indicators/PA can certainly give us some idea.
So, in a nutshell, it is not just a case of rules like “when the red crosses the blue…”. It is more like “what do I think the price is doing/likely to do and when do my indicators/PA tell me that it might have started, when it might have stopped and when I might have been totally wrong!”
Oops, Once again I’m rambling…Sorry!
Hi “Curious” (I always do as I’m told!)
The blue ribbon is a 12/12(shift+1) SMA, yes.
But I didn’t really want to get into specifics here, because it is not my intention that anyone would simply go and plant them on their charts and then complain when it doesn’t “work” for them (I am certainly not suggesting that [I][U]you [/U][/I]would do that! - but you know what I am getting at…)
I didn’t want to hijack Grant’s thread here, but I just thought it might be relevant to suggest how one can superimpose selectively some form of indicators over a basic PA analysis that might help sharpen the definition of points of action (e.g. entry, exit, etc). The choice of indicator should reflect what one is actually looking for and one’s trading style- I am not injecting a trading method here.
Hi grantx,
I was thinking about this all last night and, well, I feel a bit guilty that maybe I have been a little “over-enthusiastic” about this approach to overlaying indicators. I certainly hope that you will continue to post your thoughts and charts in your own way regardless of my input here!
I certainly did not intend to try and influence you or suggest in any way that you should change your approach. That is entirely your own thing, of course. I just wanted to offer a possibility that maybe had not occured to you or others about this.
Carry on with your good work!
Dear Manxx. Please don’t stop! Your contribution to this post is absolute gold to me. To be honest, the lack of input from other traders was becoming a little disheartening to me so your effort has only been positive!
My whole reason for posting here on babypips is twofold. Others might learn something from my approach, but more importantly, I want to learn from other traders. I read over your comments last night a few times and something you said really stood out.
This is exactly the mistake I made when I initially binned all my indicators! I was seeing them as rules on my chart and hence could not figure why my trades were not working out. Your comments highlighted something really important to me. I have to change my expectations. Indicators are there to help me interpret what price is doing and are not meant to ‘be the rule’. Like when you pointed out that momentum was not sufficient because price was on an uptrend but had spent some time below its average!
I have been looking through some of my charts with DMA’s loaded on them and combined with price action I think that they have great potential. Im not going to change my entire way of trading (Ive been through the stages of jumping between strategies…Im over it. Im pretty settled with what I have) but there can be no harm in seeing how this method compliments my PA style.
This is how I do my charts: Load relevant levels off the day chart. Move to 8hr and 4 hr and fine tune those levels. I see where price currently is and determine whether price is trending or consolidating. When trending I look at swing points in order to find pullbacks and rallies. If price is consolidating I determine the range. Its pretty simple and doesnt take long at all. Ive always liked the idea of moving averages because they add another angle on whats being observed in the form of dynamic support and resistance, possible areas for exit or adding to trades etc.
I listen to a lot of the podcasts by top traders, read a lot of the books and try and get into the mindset of being a top trader. The thing is I cannot interact with these great traders. I dont have a mentor…I have 20 of them but none of them know that I exist. Interacting on this site gives me the opportunity to interact and get feedback and is why I appreciate the time you have taken to comment.
Please Manxx I am here to learn. You write and comment as much as you want!
Im going to be cautious with trades until after the rates decision. I see something on the EURJPY which kind of lines up with the way I think the chips are going to fall this week.
- No rate increase.
- Weak dollar.
- Strong Yen.
And here is a trade I missed last week by a few pips. Price was just shy of my entry:
