Yes, the first 3 swings in a trend form the 1-2-3 pattern, so I tread the break of swing 2 as the official start of the trend.
This is going to look crap now but I wanted to inform about todayās activity.
Sorry but I couldnāt resist and I took the USDCHF 1day Pinbar. Reasons are, the pattern looks exactly like in my plan (see graph) Area changed from support to resistance and price formed 2 convincing rejections. I decided to ignore what was in the far west thinking that I am trading based on a pattern that started beginning of september until now and I saw it lasting a day or two so considering what happened since mid july seemed fair enough. Still, as I knew that there could be potential trouble so the setup wasnāt high quality, I decided to set SL lower than the upper wick and to move to BE once price had moved 20 pips in my favor and to close before TP if price looked like it reached a support. I finally closed on a 50 pips profit (30 pips above original TP).
Yves
Congrats on making profit. Some people do allow themselves to enter trades even if the pin is sitting on support as in this trade. It does increase the risk of the trade but as you saw with this, if price does break the level it can be a very explosive move.
The only thing I may have done differently is move my SL to just above the S/R line below the pin bar, and let it run to full profit. With such an aggressive selloff, I think it may still reach that area. Keep and eye on it over the next couple days to see if I am right in that assumption.
Another one I took on the GBPCHF 4hr Pinbar (Itās Swissy day today !) This one is still active.
Pretty much the same reasons as the previous one but not that for obvious reasons, I only entered it because I wasnāt in the USDCHF anymore. The pattern I have in my plan has formed with a nice pinbar preceded by a not so pinbar candle but definitely showing rejection of a support that used to serve as strong resistance. To me, this setup is a lot better than the USD but price has been moving very slowly recently so I decided to set an SL higher than wicks but below support on the left to limit my loss. I have set 2 TPs but that was before I read about Aaronās live trade and I must say, I will seriously consider what you wrote about multiple TPs. At the end of the day, you have to believe in what you are doing so set a TP where you think price will go and thatās it.
Yves
Well, if you happened to discuss a live trade and it end up being a loss, that would by no mean change the view I have on your trading skills ! This is simply the reality of trading. (funny how trading in the zone has changed the way I see everything eventhough I havenāt even finished reading it yet 
Is this pin bar valid for trade?
hi,
this is my 1st post not only in this forum but also in babypips. Im learning price action. However on this eurchf 4h chart i think this pin is good for trade but not sure yet. plz need experts comments.
Thanks to Aaron for this nice and helpful thread.
Hi Mamun, you picked up the best thread for your first post !
I would say yes, it is a pinbar as the body looks to be 3x the size of the wick. It would be better with a slighly smaller body and without the upper wick. For example, the one that formed on the GBPCHF 4hr is better (if only considering the pinbar itself) for the rest, I am not the best to analyse the setup.
Yves
I am looking at this pair. Hope it close with a nice BEEB
Pros:
- BEEB forming and engulfing several candles
- Big Bearish bar showing rejection of Resistance
Cons:
- Risk/Reward may not that good
Rating : 3/5
Same here ! Hope it goes down a bit more. It would eliminate 1st trouble area which is very close from here.
Ok Krugman, I hve many doubts about this topic, as I am interested in having from time to time big RR trades, to compensate some previous losses. So here we go:_ ā¦
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So [B]first[/B] you donāt recommend trading with mutiple levels ? In which case you use them ? In that case, how do you determine how much position to close for each level.
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[B]Second[/B], I read you on another post of yours, that sometimes on big and very defined trends with little to no resistance you donāt set TP levels and just let it rideā¦Could you be more specific on how you manage that.
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[B]third[/B], I understand you can pyramid your positions when you see new PA happening, is that correct ? and how much you add to your position ?
Did you post this one yesterday ? I totally missed it 
Hey gmatav, I am happy to talk about money management as it really a topic we havenāt hit on yet here. Most people agree to methods and techniques without asking why another way may be better, so I am very glad you asked.
1. Multiple TP levels - Like many things I talk about regarding trading, the TP issue becomes a math issue. There are different ways to look at the math but maybe the easiest way is like this; Once you hit your first TP and take money off the table, imagine that your second leg of the trade is a brand new trade. The risk reward of your new trade is this; your risk is from Entry to TP1(assuming you moved to BE) and your reward is TP1 to TP2. In my picture, in the first example, the RR for your second TP leg is terrible. Regardless of the RR for the first leg of the trade, your second leg now has a 4:1 RR. The second example is much better because the second leg of the trade at least provides a 1:1. Most people wouldnāt take a trade that has 4 risks for 1 reward, but they will happily do it in a multiple TP method. I believe people do it though because they lose perspective on the RR once mutiple TP levels are introduced.
With that foundation laid I can now answer your question, I will use multiple TP levels when I know the levels are far enough apart to provide a satisfactory RR for each leg of the trade. Multiple TP levels are more attractive to me in range trades, as there may not be enough momentum to blast through resistance levels. If I am on the fence about the strength of the trade, the multiple TP method can be a good balance between making a little more profit and the extra risk involved. If the trend is strong I usually would rather take the extra risk, hold my entire position and plan on price breaking through the first resistance. If the second resistance is far away, I may be able to carry the whole trade and double my RR or better. I honestly donāt have a cookie cutter method, I just play it by ear and use the price method that I think best fits the trade. I hope to teach pyramiding out of, holding flat and pyramiding into trading methods so my readers can also decide what way is best for them. I do plan on coming up with a loose set of rules to help make it more rule based and a little easier to decide which method to use for a given trade setup.
2. No TP levels(letting the trade run) - If price has broken through say a 1-3 year high or low so price is in an area it hasnāt been in for a very long time, I will let sometimes let the trade run and as it makes higher highs and higher lows I will move my SL to these logical support levels. If I zoom out and there is some really major and obvious S/R a few years back I will mark it, but sometimes those are hundreds of pips away from your entry. There is no reason to get out of a winning trade unless you are about ready to hit some major resistance zone. Sometimes patterns will form such as flags or inside bars, this is usually the market taking profit and taking a breather before potentially moving higher. If price is pausing during a strong trend, I can then move my SL nearby and wait for price to either breakout for more profit or hit my SL and get me out of the trade.
The other time I wonāt set a TP level is if price is in a very strong trend, and the momentum seems strong enough to break through the next major S/R level. Many traders will TP, and within minutes price will explode through their TP level, meaning they could have achieved much more profit if they would have stay in the position for a little bit longer to see how price was going to respond to the level. If price is moving aggressively to a resistance level, there is less of a chance of it reversing or getting hung up. In these cases the reward for holding the trade may be bigger than the added risk.
In the two scenarios I describe above are the most logical times to no set a TP level.
Every trade we take has a certain amount of risk and reward. We as traders enter trades where the risk is minimized, and the potential reward is big enough to justify whatever risk exists. This same principle every trader uses to enter a trade, is the same principle I use to decide how I want to manage a trade. Like in the above example if I think there is a little bit of added risk riding momentum through a resistance level, but the reward could be huge, that helps me justify the decision to stay in the trade. All of this is done to try and maximize the profit making potential of each trade when it is statistically in your favor. As simple as some may want to make PA trading sound, trading does require a bit of personal judgement and can be somewhat objective. Beginning traders will find it easier to make PA trading as rule based as possible, just to get the core principles of it down. But I believe to become a better trader and become what everyone wants to be which is an expert, it requires learning some of these things that require a traders own discretion.
You donāt let a trade run unless you can monitor it at least occasionally, because getting out of the trade will be up to the traders discretion. If you canāt give time to the trade, just set a TP and forget it.
3. Pyramiding - You are correct, I only pyramid into a trade on new price action, just like if I were entering a new trade. In times passed I have added 0.25% risked for each addition to my trade. If I start my trade with 10 lots and pyramid into it twice, it may be up to 15 lots by the time I close it. This is the technique that Jesse Livermore used to turn a few hundred dollars into millions in a short amount of time. The concept is essentially trying to compound your winning trades.
I know there is a lot to process here. If I were to give advice to a beginner I would say, stick to 1 TP, set your stop loss and TP level and donāt touch your trade until one of them is hit. This makes it simple and mechanical. If you feel you are beginning to understand what trades you could have made more on using a different technique, then you are probably ready to try out different techniques. Also a trader struggling to be profitable with the core teachings of price action, will just speed up his demise as a trader by trying to implement these techniques into his trading. A trader must first be able to see consistent profits to make good use of these other techniques.
Note: Math for calculating RR for 3 TP levels
((TP1 - entry) / (entry - SL)) * percentPositionClosedForFirstLeg) + ((TP2 - Entry) / (entry - SL)) * percentPositionClosedForSecondLeg) + ((TP3 - Entry) / (entry - SL)) * percentPositionClosedForThirdLeg)
*This will give you the position weighted risk over the position weighted reward for your trade.
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I was actually going to ask you about this
however when you move your SL to BE you are actually risk free since your capital is protected no ? unless you account for the money you could have won if you took all the profit form TP1 but wonāt if you SL at BE is hit
Also when you say % position closed do you mean of the original lot size or of your potential full TP ?
Thanks
Good catch, what I am showing above is treating each trade individually, I believe the right calculation is [I]((TP1 - entry) / (entry - SL)) * percentPositionClosedForFirstLeg) + ((TP2 - Entry) / (entry - SL)) * percentPositionClosedForSecondLeg) + ((TP3 - Entry) / (entry - SL)) * percentPositionClosedForThirdLeg)[/I]
I tested that calc on a 2 TP model using 1:1 for first TP and another 1:1 for a second TP, and got a RR of 1:1.5 which is the right answer. Because once you remove half of your position from the trade, you can only achieve half of the next reward compared to your initial risk.
% closed is of your total entry. If you entered in with 10 lots and you close 7, then you want to use .7 as your multiplier, as that is the % of your position that is locked in at that RR level.
Iām about ready to pack up for the night, but I know my night time is most of your mornings so I wanted to leave you something to wake up to.
There is not price action yet but it is an area I will be watching over the next couple hours to see if anything forms. The next major resistance here is 1.0000(one of those magical VBRNs). We could see a good lower TF price action signal false break through my marked support level. The trend has been strongly bullish so any chance to ride this trend into the next key resistance is something I am looking for. If the charts provide a setup of 1:3 or better it would be a candidate for using a single TP level. In cases where you are riding into a major resistance, the statistics are stacked against price quickly breaking through the level. Itās best to take your profit when you can and then let the market shake out at that key level to see if it wants to go higher or reverse.
The volume up on the price increase shows the bulls swooping in and carrying price higher. Price has began falling back on low volume which is common after these quick explosive moves. Generally in a strong trend or momentum what you are looking for is price to pull back to one of these minor S/R levels and watch for a PA signal to form, and with increased volume for confirmation.
Hey traders. Spring from the islands, making my introduction here. Not exactly in the first few pages of the thread, but still in the early stages of the thread. Iām not exactly a Christian, a dad, husband, entrepreneur, trader, Air Traffic Controller and Engineer. Iām also guardian of 4 dogs and a few cats. The exact number is not confirmed as the colony grows and decreases as they move outā¦ā¦
Iām not exactly new to trading, having first been introduced to trading in 2008. In 2009, 2 margin calls back to back signaled the end of my then trading career. Signed up for the J16 group from FF some time later and now Iām a lifetime member. Have been using the concepts gained there both on and off. However, I try to learn from other sources of PA as I grow as a trader. The psychology is the hardest part. I tell you that. I still keep a demo for trying, tweaking, and learning new strategies.
Career wise, Iām presently an air traffic controller, having worked as a Senior Custody Transfer and Measurement Engineer for a natural gas company with stakes in LPG and LNG processing, marketing and export. Iāve also spent some time as a Field Specialist with an international oilfield services company.
Trading wise, Iāve tried it all. EMA crosses, EAās, special coded indicators, etc. Iāve even been on the supply and demand bandwagon that passed through and is now being marketed like crazy. The search for the Holy Grail took years. However, when it dawned, consistent profits no matter how small whilst being stress free was what mattered most. What I can say, working demo accounts is easy, but when real money is on the table, the emotions get nasty. I donāt trade lower time frames, as there are better things to do than stick around and watch a monitor continuously. My goal is to trade for a living, not live to trade? How can I have the free time to do as I please if it is spent monitoring charts? Of course the odd chart at night before bed or sometime can never do much harm. :27:
Glad to see PA is making a comeback, as something Iāve realized is that markets evolve, and Iāve seen systems fail under different market conditions, more specifically systems I paid for. However, correctly applied PA never seems to fail. Why traders neglect it, beats me. Even happier, to see Kruger teaching it so simply and beautiful. Of course, my methodology isnāt 100% the same as Kruger defined, but for the sake of the thread, and tweaking, Iāll make sure it does. However, be advised, I post in other parts of BP as well, tse can attest to that. Great if you know where. But out of respect for OP, Iāll keep mum. However, it has been confirmed that PAās reliability can be confirmed with volume.
In short, Iāll be along with the rest of the community. Subscribed.
hi krugman, whats your settings for volume indicator?
Itās just standard tick volume.
Welcome to the community! You wonāt regret subscribing here. Thank you for being honest and open here about yourself. It has been like that here since day one and because of it we have a really friendly and helpful bunch of people here. Here I try to give the forum some stretching room, so donāt feel you have to do everything I am talking about or try and trade exactly how I do. I have a general set of guidelines that give people room to make price action their own while all keeping us on the same page when it comes to the principles behind how PA works.
Iām not sure what you consider low timeframes, but we can go as low as 30 minutes here. While I trade these low timeframes I donāt find myself watching the charts that much, usually 2-3 times a day for a couple minutes. I check the charts when the markets are most active, if there is nothing I move on with my day and check a few hours later. I may be able to convince you trading the low TFs doesnāt mean quitting your day job, but well see. I think I am still convincing others of that to.
We are glad to have you here and your experience will be greatly appreciated.
under indicators volume? any fixed minimum? any levels required to add?