Price Action That Matters For Beginners

[B]Rules[/B]

The allowed topics of discussion here will be smaller and more concise than the other PA That Matters thread. These rules are here to ensure that the thread does not become a run away thread and lose it’s value as an education tool. The rules and guidelines laid out here will dictate both what is discussed and what chart setups are posted.

[B]Topics Discussed Here[/B]
[ol]
[li]Price Action Candles
[/li][li]Price Action Patterns
[/li][li]Finding Key Support/Resistance Areas
[/li][li]Managing Risk/Reward
[/li][li]Trade Management
[/li][li]Money Management Methods(Fixed $ and % Risk)
[/li][li]Trader Psychology
[/li][li]Market Psychology
[/li][li]
[/li][/ol]

[B]Things we DO use[/B]:

[B]Price Action Candles[/B](in no specific order):
*Pin Bar
*Engulfing Bar

[B]Price Action Patterns[/B](in no specific order):
*1-2-3 Reversal

[B]What Matters(S/R key areas)[/B] (in order of importance):
*Horizontal S/R
*Fibonacci (50% and up)

[B]Things we DON’T use[/B]:

[ol]
[li]News - we only keep our eye on major news events to track potential trade risks
[/li][li]Any S/R tools not listed here
[/li][li]Any price action candles and patterns not listed here
[/li][li]Pivot Points
[/li][li]Fibonacci levels below %50
[/li][li]Volume
[/li][li]
[/li][/ol]

[B]Other thread/method requirements[/B]

[B]Trade Requirements[/B]:
[ol]
[li]A valid price action signal must have formed, this provides the entry signal
[/li][li]These price action signals must have formed at key S/R level(s)
[/li][li]The trade must provide at minimum 1:1 RR, preferably 1:2 or higher
[/li][li]The signal must not have formed in a choppy or noisy area of price
[/li][li]At a minimum the candle must be the size of the previous candle, or fairly close
[/li][/ol]

[B]Chart Requirements[/B]:
[ol]
[li]Candlestick charts only
[/li][li]Must be New York close
[/li][li]Can only show thread approved PA candles, S/R tools.
[/li][li]
[/li][/ol]

[B]Trade Quality Measurement(The 5 star system)[/B]: As long as the trade requirements are met, the setup is now “tradable”. Not all trades that fall within the core requirements are of considered high quality though. I tend to filter out trades I deem as lower quality, and I may increase or decrease the amount of money I risk on a trade depending on its quality. It’s important to have a system of rating the quality of your trade. Here we will utilize a 5 star system. A 1 star trade merely falls into the core requirements but may have other poor qualities increasing the risk of the trade. A 5 star trade is one of highest quality, is a perfectly formed price action signal with great RR and very little resistance along the way. Although most trades will fall in the 1-3 star range. Remember that measuring the quality of a trade can be very subjective, so if you don’t agree with someones rating of a setup, you can respectfully ask them to expound on why they gave their setup a certain rating.

[B]Personal Trade Filters[/B]:
After I find a trade that meets my core requirements I then run it through my personal list of filters that are apart of my trading method. For you as a trader, your filters may include no counter trend trades, non approved PA signals, or avoiding NFP. You may also filter out trades that are too low in quality(I.E. 1-3 stars). There are many filters a person can use to make sure they are taking the highest quality trades with the best edge.

[B]Timeframes[/B]: H4 and up

[B]Approved Currency Pairs[/B]: Price action occurs on all financial instruments such as currency, precious metals, indices and stocks. I am not picky on what currencies I watch as they almost all produce good price action. I don’t try and get to know the currency or the news behind the currencies, I just want to be watching for price action signals at key PA levels. Finding price action generally takes less than a minute on any candlestick chart.

[B]Trade Posting Requirements[/B]: You are allowed and encouraged to post questions, join discussions, answer questions and post trade screenshots. When posting information about a trade you “must” have a chart showing the trade being discussed with stoploss, entry and take profit clearly labeled. You must also post your opinion of the quality of the trade using the 5 star rating method. This is for your benefit because it will help you begin viewing your trades as unique and of different quality. Others will also benefit from this because they can ask you why you are rating your trades a certain quality. This will help create healthy educational discussions about trade setups. You must also provide at a minimum, a simple list of pros and cons of the trade you are posting. Remember though, the more detailed your analysis is of the trade you are posting the better. Not only will writing the commentary help you learn, but thousands of others will also read your post and learn from it.