One of the first surprises for newbies is that experienced Forex traders that actually make a living at it almost always don’t use esoteric mathematics, AI, neural nets, etc. They’ve been doing it long enough to recognize support-resistance and combine it with price-action.
For example, one system that is often used is [I][B]Inside Bars[/B][/I]. Inside bars (those with a lower high and a higher low than previous bar) are quite often an indication that neither buyers or sellers are winning and there is pent up demand. If the next bar breaks the low/high of the engulfing bar a breakout often follows.
Rather than try and guess how far the breakout will move I think it’s more prudent to close a % of the trade and let the rest run. You might close 25% of the trade when 15-20 pips are made and then another 50% when another 15-20 pips are won, continuing the process until the market reverses.
I have had strategies that appeared to be losers in backtests become winners when backing out of winning trades gradually rather than waiting for a TP and losing everything when the market moves against you after approaching the TP.
I code EAs (to use - not for sale) and am in the process of coding this strategy.
I think that’s about the stage I’m at now…lol. Although I’m not using IB’s, I am using a combination of other candlestick formations, timeframes and S&R.
However, I did create, and am using, an EA to manage the order for me once I pull the trigger manually because I’m not always at my computer when things happen. I have it move my stop to breakeven when it get’s to x pips in profit, and will close a portion of the order at another x pips in profit level (user definable). Then I basically set as big a take profit…usually at the next S or R level accordingly…as indicated, and let the order run. If I get back to the computer before it hits either breakeven or take profit, then I can assess whether to let it continue, or close it completely. For now I only have it close out a portion once.
I’m finding that it’s having a very positive effect overall.
Congratulations for the thread, I started to study forex in some months, I let out the indicators already… and started to study price action… and of corse, my vision was very expanded and now I understand much better the actions by price.
Then I started about some weeks to study VSA (volume spread analysis), that i my think is another level than price action, because now I’m starting to understand the meaning of the movements and leting out the “blindness” about the price movements.
For me, trade with indicators is the 1st level, trade with price action is the 2nd one and VSA is the 3rd one.
I wish all newbies could get past the indicator(s) lure. The indicators are such a trap. Every now and then I look at someone touting a new indicator and have to remind myself that the indicator is reflecting history, not predicting the future. When I first started with Forex I was enamoured with the ADX. I bought Welles’ book from back in the 70’s and read everything I could get on the ADX, convinced that I could develop an EA to follow the ADX signals for guaranteed winning trades. It was a round-about way of seeing how the ADX indicator follows price-action; it doesn’t predict it. Likewise, most other indicators that look promising, can be found to mirror the market after-the-fact, not before-the-fact.
I also am quick to ask newbies if they had an EA which would earn thousands of pips/dollars with regularity would they sell it for $97 ? It’s a rhetorical question that everybody should answer before spending money on EAs.
Just make it plain simple. Understand the 6 basic candlestick patterns and where the price goes. In my opinion this is the trend that most of us looking for. Most indicators are lagging, only the price tell us the real-time movements of the market.
I traded with inside bar system for a while when first started trading. It was very straightforward and when used with a stochastics to help verify the signal it gave me better odds for choosing good trades. as you said taking off 30-50% as you get certain number of pips is good for the long run because sometimes it’ll just come right down to stop you out and you end up negative or be. kiss is the way to go
Sorry to ask, but I’m new here. Can someone explain more about VSA (volume spread analysis)? Never heard of that term before. Anyway I strongly agree that price action is the best way to trade…
Thank you for sharing this. I’m new to trading but always wondered what the Pros do…
I understand this is similar to bullish/bearish Harami candlestick patterns only with less emphasis on the real body of the candle? Does it mean that in the case a bullish candle is followed by an inside bearish candle you just wait for the next candle to break out south? What timeframe do you use and how often do you get signals, I’m curious?
Thank you!
i agree with you guys…PA at its finest is the way to go…
but its nothing wrong with using indicators for your extra confirmation…especially rsi divergence on key levels in combination with PA is a wonderful tool…
