Price Action on Daily & 4H Charts- No More Indicators, News or Smaller Time Frames

Trading Systems
103

The Forex Market is one of the most attractive Financial Markets that has the potential to provide traders with a real source of Long-Term Wealth. Turning this dream into a reality is the goal of all Retail Traders and with the vast range of trading techniques that are available to us, it is only a matter of time before this goal is realized. Nevertheless, before this can take place, we will first have to make a very important decision. Will I dedicate my life to being a Day Trader or a Swing Trader?

At first, this decision might appear to be a very easy one to make. After all, the time and dedication that goes into finding the right technique and practicing it several times appears to be the most difficult hurdle to overcome. However, I believe that the decision to trade the markets daily or on a weekly basis will determine your choice of methodologies and ultimately your rate of returns and profitability.

Day Trading is the most widely used approach to trading this challenging market. It involves targeting the daily price movements of exchange rates on the smaller time frames using various Statistical Indicators and Price Action strategies. Since some of the most liquid Currency Pairs can move by up to 100 Pips within a few hours, traders can be very successful if they can capture most of these each day. Despite this potential for large, there are a few drawbacks that can adversely affect profitability.

Many of these daily movements can be quite erratic. A rally in the EURO USD by 30 Pips might appear to be the direction to trade for the day. However, within a few minutes, this can be erased by a sharp reversal as the market reacts to a tremendous improvement in the US Non-Farm Payroll numbers. In addition, the short time in between trades can make it difficult for us to recover from losses before moving on to the next trade.

Because of the cumulative impact of these disadvantages, this has been my experience…


Hopefully it is/will be different for other Day Traders…

Swing Trading is an alternative form that many traders have opted for to address many of the challenges they faced as Day Traders. The patterns and price movements on the larger time frames are a lot more stable and predictable. Gains per trade can be much larger and traders have more time in between opportunities to remain objective following losses. As good as this approach may be, Swing Traders do have to face a few difficulties as well.

The holding period for these traders is longer than that of Day Traders. Many of the profitable trends on the larger time frames require up to 7 days or more to reach their targets. Although a week can fly by in the blink of an eye in most aspects of our lives, it can seem like an eternity for those accustomed to Day Trading. There is also the issue of not having many trades to choose from each week. Since these movements do not take place as often as with Day Trading, a much greater level of patience is demanded until they finally appear.

These issues are just a handful of those that go into a retail trader’s decision matrix. Time Zone differences, work schedule and family commitments are also important “real world” factors that have to be seriously considered as well. Once these challenges are resolved, however, we will have moved one step closer to becoming successful traders that are financially independent - forever.

DAY TRADING


SWING TRADING


[B]Duane

DRFXTRADING[/B]

104

Yes Duane, we will waive the first 50k meaning you would only be responsible for and owe FXCM the value of the total negative balance above 50k. For example, if you had a negative balance of 51k, then we would waive 50k, and you would be responsible for and owe 1k.

If you have any questions about re-opening your account, please feel free to reach out to me in the Broker Aid Station.

105

Hi guys,

Reads really interesting indeed but could you share the set-up for this method please?
Thanks.
regards,
Vincenzo.

106

Hey man,

The only info. that I can give here for free is at the beginning of the thread which talks about the general aspects of the Methodology.

Everything else that details Entry, Exit, Setups, Stop Losses, Analysis, Targets etc. are available elsewhere-at a cost.

Regards

[B]Duane
DRFXTRADING[/B]

107

…Yet another example of how Consolidation Breakouts with Large Candles lead to False Breakouts…another trap of the market…

EURO USD looked set to break higher with this Large Candle…


…but I expected it to at least pause before either moving sideways or reversing sharply…


This is because these Large Candles, as attractive as they are, hardly lead to successful breakouts.

Figuring this out and identifying the types of Candles that actually lead to profitable breaks was what I had to do…


I cant tell how much money was lost and time spent in spotting the right signals to trade- made a big difference in results.

Although this has taken place on the Daily Chart, these Large Candles are seen across all time frames as well. Its not so much the size in terms of Pips but relative to the other Candles on the time frame being traded. So whether you are a Day or Swing Trader, they will appear from time to time.

Once you can make this distinction, it becomes much easier to avoid these traps.

Duane
DRFXTRADING

108

Hey all,

Range Trading opportunity on the NZD CAD.

Its now at the Resistance boundary and could be headed back down with a break of the 4H Chart Trend Line.

The key is the type of signal that we get to start the move. Both the Candlestick Setup and the Breakout Signal that starts the move have to be strong - otherwise, gonna be risky.


The Setup and the Signal may appear within the next 12 hours and could offer 150 Pips.

Duane

109

Following up on the previous analysis, we`re now seeing the pair showing signs of starting a reversal.

Strong Bearish Signal given at Resistance, but not enough to start the move.

We gonna need either an ABC or Bear Crown/head and shoulders pattern to get going.

[B]Duane
DRFXSWINGTRADING[/B]

110

Hey all, been awhile, back with you.

These Videos will now show you examples of a more aggressive Swing Trading approach based on my current Methodology. They will show how you can take advantage of profitable movements in the market each week that can provide an average of 150 Pips per trade. As long as you know which trading rule to apply to the trading opportunity presented, you will be able to profit from these trades on a consistent basis every month.

There are now 5 Swing Trading Strategies that I use which will be showcased here which you can easily apply to your trading.

[B]

  1. Trading Within Consolidation using Support and Resistance

  2. Trading Within Consolidation using Daily Chart Signals

  3. Trading Within Consolidation using 4 Hour Chart Signals

  4. Trading Strong Trends/Consolidation Breakouts

  5. Trading Slow Trends/Consolidation Breakouts

[/B]

As Swing Traders using Price Action/Candlestick Signals, a big challenge when Trading within Consolidations is figuring out which time frame to use for entry or if we should simply enter at the S/R areas. There are several Technical Factors that determine which strategy to use but one of them has to do with the size of the Consolidation. For small ones such as in the Video below, volatility at the S&R areas is minimal, making it easier for us to enter there without waiting on the Candlestick Signals. For larger Consolidations, however, Daily and 4 Hour Chart Signals have to be used given the increased volatility/spikes at these areas.

There are some Trends and Consolidation Breakouts that are very fast and are characterized by Strong, Large Candles while others have Small, Slow Candles. These require 2 Types of Trading Strategies to ensure we aren’t affected by unexpected pullbacks that lead to losses.

These Trades will also be shown in the Dukascopy Trader Contest to show how they perform under a competitive environment. By targeting an average of 150 Pips per trade twice a week, it is possible to generate 1200 Pips each month - very large turnover that can provide strong Short Term and Long-Term Gains.

Any questions and comments, fire away.

102 PIPS GBP CAD - TRADING WITHIN CONSOLIDATION USING SUPPORT AND RESISTANCE



Regards

[B]Duane

DRFXSWINGTRADING[/B]

111

[B]OBEYING THE HOLDING PERIOD RULES FOR TRADES[/B]

There is nothing more frustrating than seeing a strong floating profit turn into a loss in a matter of minutes. This can be avoided by establishing and obeying a rule for how long you hold your trades before deciding to close them. Sticking to this rule will help to minimize the losses due to holding out for more Pips than the market is going to give us.

This recent trade on the GBP CAD which had to be closed at the end of my Holding Period for this type of trade shows how crucial this rule is to trading success.

Once you obey this rule, consistent gains will be a regular part of your trading.

[B]
Duane

DRFXSWINGTRADING[/B]

112

After forming the Pennant Setup on its Daily Chart as predicted several weeks ago, the CHF JPY pair could provide us with a trade in the next couple of days.

We will either see it head back inside of the Pennant and take us to Resistance or U-Turn at Support to continue the Bearish Breakout.

If it gives a Bull Candle to start the reversal, it would be an ABC Signal, which as you know leads to Sharp Movements and is a common signal seen when it comes to False Breakouts. If it continues bearish however, it would have to give us a strong Bear Candle that breaks the Counter Trend Line just below Support. Many times when a Consolidation is being broken, we will see the pair breakout initially, then pullback to test the broken S/R before U-Turning.

(Apologies for the fuzziness - the video is actually clearer than this thumbnail)

Once we get a signal in either direction, we are likely to be able to capture at least 150 Pips as long as the setup we see on the Daily & 4H Charts meet our entry rules.

So by Wednesday the latest we should see a signal to get things going.

Get ready to trade it!

[B]Duane

DRFXTRADING[/B]

113

[B]GBP USD - BEARISH BREAKOUT FROM PENNANT OR BULLISH REVERSAL?[/B]

Hey guys,

We have a scenario now on the GBP USD where the Support of its Pennant on the Daily Chart is now taking place. Based on the theory of Consolidations, it could either continue Bearish or reverse to take us back inside of the Pennant.

There are certain technical factors and signals that tell us which of these 2 scenarios will take place and once you know what these are, you`ll be able to trade them profitably every time. This helps to avoids situations such as:

1- Jumping into the market at the first sign of a break of the Pennant only to see the market reverse sharply back inside.

2 - Start trading when we see the market showing signs of heading back inside of the Pennant only to see it U-Turn sharply to continue the breakout.

Both cause losses on a regular basis for traders, but they can be minimized once we know what those factors are that predict which situation will be the correct one.

[B]Duane

DRFXTRADING[/B]

115

Hey everyone,

EURO USD looks to have broken the Support of the large Pennant on its Daily Chart at 1,0815…


From here, it will either continue lower in favour of the USD or reverse to head back inside the Pennant.


(Video is much clearer than this thumbnail- not sure whats up with Babypips…lol)

Ultimate direction is going to depend on the signal we get on the Daily Chart - either way, it will be very profitable as breakouts from Consolidations and False Breakout Reversals are usually fast, providing large Pips in a short time.

Duane
DRFXSWINGTRADING

116

How´s it going all?

NZD CAD is the focus today.

Daily Chart looks to be shaping up to be a Large Range Consolidation, with the Support already formed, leaving the Resistance to be completed. This would be done once current downtrend takes us to the Support to complete the 2nd Resistance point…


With some 255 Pips on offer until hits Support, a strong signal to get things going would offer a short trading opportunity.

This could be done on the 4H Chart, once we get a good signal on the Daily Chart…


As you can see, there was an intitial breakout followed by a pull back to test the Support. Having now U-Turned, it could continue bearish until that Support boundary of the Range is hit.

Breaking and Testing of Consolidation is a common way for these boundaries to be broken…


The next step is to fill out the Trading Plan that you have to trade these types of setups such as this one…


Assuming that all guidelines are met for Entry, Stop Loss and Targeted Pips, trade can be taken…

The key thing now is to wait for the right type of Signal from the Daily Chart.

[B]Duane

DRFXSWINGTRADING[/B]

117

DO YOU GET NERVOUS WHEN TRADING?

If so, my advice is to ensure you have a Trading Plan Trade Sheet.

I used to be nervous too especially trading smaller time frames. These move very quickly and the minute you enter a trade, there is a possibility to lose very quickly - not a nice feeling. You get a lot of unnecessary tension and nerves. This is one of the many reasons I and others switched to the larger time frames and Swing Trading.

Nevertheless, whatever time frame you use…get a Trade Sheet that has rules and checklists to justify each trade. I found that whenever I traded without this, I would be unsure if I had taken everything into account before clicking that button. This uncertainty creates anxiety and fear.

If you have a Trade Sheet that you know will provide you with a good trade 80-90% of the time, you will be more confident. It gives you a visual confirmation that you are making the right decision and that everything has been accounted for.

This is an example of some of the Trade Sheets that I use…


These guide me through all steps involved in the trade - from analysis to closing of the trading platform as well as while the trade is in motion.

If you use something like this during Demo Account phase and the results are good, then just use it on the Live Account and the nerves will fade away and be replaced by celebration of trading wins.

Good luck


Duane
DRFXSWINGTRADING

118

[B]DETERMINING YOUR PIP TARGET PER TRADE[/B]

Take a Top - Down Approach.

  1. Determine how much Money you need to make from Trading to make it worth it. (ex. $1000 Monthly)

  2. Determine how much you are going to invest in a Real Account. ($1000)

  3. 1 and 2 will give you your expected Rate of Return per month - 100%

  4. Determine if you can/want to trade every day or a few days during the month - Day vs Swing Trading

  5. After choosing, determine how many times per month on average yu will trade. (ex. 10 times)

6 . This then gives you the average dollar amount per trade you need to get to that $1000 per month - $100

7 . Then use this $100 along with the risk per trade (ex. 5%) to determine the Risk/Reward Ratio per trade you need.

  - If you risk 5% per trade ($50) then you need a strategy that gives you a 2 to 1 Reward Ratio ($100/$50) on average

Naturally, as your account balance increases/decreases, the dollar amount of the gain per trade will change.

This approach takes the uncertainty out of how many Pips to get per trade since you now know the bigger picture. The challenge is then to determine which trading strategy can get you this consistently.

[B]Duane
DRFXSWINGTRADING
[/B]

119

Recent trades on the CHF JPY and the EURO JPY highilght the accuracy of the Holding Period rules in specifying when to exit trades in anticipation of market reversals.

Both were closed when their respective Holding Periods had ended, despite not reaching their initial targets…



It is very tempting for us to hold on to our trades in hopes that our targets are hit, but sometimes do this can lead us to be surprised by reversals that take away the profits we already have. Some of these reversals can be small, 30, 40, 70 Pips…

However, other reversals can be…



This is why holding period rules are important part of my Methodology…


Once you have them, very important to stick to them…ALL THE TIME.

Duane
DRFXSWINGTRADING

120

Higher Time Frames make you understand the larger picture of what is happening on the LTFs.

Take the recent spike in the CHF JPY on Thursday.

It may have seemed like a simple trend change with breaks of Downtrend Lines taking place on the 30 Minute Chart…


…but examining the Daily Chart, you can see a Large Consolidation being formed …


…which is based on certain patterns of candles that generally lead to these Consolidations…


This means that the rally was always gonna to take place to form Support and most persons who saw this would have stopped selling in anticipation of this rally…


Duane
DRFXSWINGTRADING

121

GBP CAD False Breakout Reversal Daily Chart

The graph below shows one of the examples of False Breakouts that take place across the Forex.


As you can see from the Daily Chart of the GBP CAD below, the setup was almost exactly the same as the one above.


(FXCM Used for Chart Signals based on New York Close of Daily Candle)

Trade was made, led to 140 Pips, using 4H Chart…


(Dukascopy, where I have my Live Account, used for Trade Execution)

Exit took place before reversal now starting


Maiin Factors

  • False Breakouts
  • Daily Candle Signals
  • Entry using 4 H Chart

Duane
DRFXSWINGTRADING

122

GBP USD - TRADE UPDATE DEC. 22, 2015

Overall looking Bearish given the Consolidation breakouts on the Daily Chart


However, 4H Signal given is too weak to trade now…


This means we gonna have to wait for another 4H or Daily Signal that is stronger to justify entry

Duane
DRFXSWINGTRADING

123

Thread continued here

http://forums.babypips.com/show-me-the-money-swing-trading-/77786-aggressive-swing-trading.html#post739593