For me , there is a resistance straight upward the current price. I won’t enter until I confirm it did break and close above the resistance.
Hey eternal, the setup is at a nice daily S/R, I hope it works out for you. I do want to say, entering 1 star trade because they probably won’t get hit is a bad reason to take a trade. Bad trades entries get triggered almost as much as good trade entire, the difference is the good trades have a better chance of not being stopped out and actually reaching the profit target. A traders success isn’t in a single trade, but in his average of all trades taken. If you make it a habit to take low quality setups you deem as 1 star quality, it will affect your overall RR and win rate average. The daily charts are more forgiving, so you can sometimes get away with this on the daily but if you ever want to learn how to master the lower TF, it’s a must to be filtering out the poor quality trades.
I’m not saying don’t ever take 1 or 2 star trades, but I personally would take one only if the RR was huge and the reward could justify the risk of the trade. But I never take 1 star trades and rarely two.
And good morning in Iowa, Krugman! Rise and shine early, I presume?
Oh well, a great man once said, “Early to bed and early to rise makes a man healthy, wealthy and wise.”
Although to be honest, I like to slightly alter it this way, “Early to bed and early to rise makes a man healthy and wise. Wealthy I cannot guarantee. Or at least until I learn about Forex.” 
I agree on that but entering on the close above resistance will give a RR of > 1 entering above the break of the pin bar the RR won’t be worth it
So you think a close above the S/R is enough as confirmation ?
So here are the results from my AUDUSD trade yesterday I posted live yesterday.
I closed the trade with a 1 : 3.5 RR. I know people get weird about proof a trade was taking, so if that is you I left my brokers trade history markers on the screen which are the little green arrows that also display pips made. I do want to make sure everyone why I post these which not to prove my method works or that price action works but rather for the great value in chart analysis. I don’t care if the chart I am analyzing is a trade I personally took or not, but I know people like it so I will periodically do it. If you look at my live trades and don’t learn something valuable about price action, then it isn’t correctly serving it’s purpose.
Haha, liking the quotes. I am more of a late to bed early to rise kind of guy. I woke up at 5am this morning and couldn’t get back to bed. I think after a few more posts I am going to crawl back into bed for a little longer though.
Live Trade
Hey everyone, I wanted to post another live trade I entered into last night. I had made a post yesterday to be watching at this level for bullish PA.
I gave a good analysis on this yesterday so I won’t get into all the reasons why I think it was a good trade. I was watching the S/R line and waiting for 2 more pieces of the puzzle to come together which was a good high quality price action candle, and a pickup in volume to confirm the market was behind the move. I got an “OK” quality hammer and an “OK” pickup in volume. After analyzing the setup I was able to give it around a 3 star quality. I ended up entering at a retracement of the candle which gave me a 10 pip stop. Shortly after entering price shot up and away a comfortable distance from my entry so I have now moved my SL to BE.
There are two risks to this trade that I have been staying aware of. One is that price picked up on higher volume, but the volume hasn’t been spectacular. The second thing is that we very close to a major resistance level and could see that affecting up movement. The trade was up to a 1:5 RR at one point. I am shooting for a 1:9 RR. I don’t like holding trades into the weekends. In this trade if my TP isn’t hit by the end of the day, I will manually close my trade for the weekend.
Great setup!
I was wondering how I could have missed this one but I checked my chart and it happened at 4am my time. Guilt is gone.
I guess this was for me. Yeah, you are right the approach didn’t sound very professional. I am still learning and I can feel I have had a dramatic change in overall attitude but I can still improve a lot. I think I am in the breakeven to small profit range now and I need to finetune everything to increase my results.
I exited this one as it’s forming a huge pinbar against my trade on the 4hr. I hope this isn’t just fear but rather a smart loss cut.
Haha, sorry for directing that to the wrong person. It may be in your trading basket to take such trades, but I just want to make sure you aren’t taking poor quality trades because they have less chance of getting triggered. It sounded like in the post you were hinting that while the trade was low quality, if it broke the candle it would become better quality. If it is poor quality before you got triggered, it will still be poor quality afterwards.
I am glad you are getting better and improving. It happens slowly but each and every day you will get just a little better at trading and the psychology involved. I look forward to hearing about great results from you in the future.
In this video I discuss the three steps I take to identify a price action setup, the requirements for a pin bar and the retracement entry technique.
In this video I explain How to identify a flag pattern and trade management techniques for this pattern.
Interesting video, Krugman. I can see that you really are taking whatever means possible to increase RRR, even going as far as taking retrace entry to enhance it. 
Lots of retail traders would have been [U]really close to have a heart attack[/U] to see the price hover dangerously near to the wrong side of the pinbar (and got their SL triggered) before falling explosively downward. It really was a skin on our teeth situation, but then we’re finally dancing in the moonlight.
And yes, how did you manage the stoploss for this particular trade and that pinbar?
It’s funny, I was actually looking through a folder on my computer where I store my trades I take and videos I make for the trades, and I found a couple videos I had completely forgot I had made. When I watched that video, it took my back to that trade. I believe I set my stop loss a few pips above the pin bar high. The few hours leading up to NFP price had climbed all the way to within 1 or 2 pips of my SL. As soon as NFP hit, price dropped like a rock. I had a certain level of anxiety with that trade but for the most part stayed cool. Another time on a EURJPY short trade price moved down 150 pips, pulled all the way back to within 1 pip of my stop loss, and then exploded back down for 300+ pips. It’s natural to get anxious over those situations, but I have a sticky note on my computer screen that says “Don’t sabotage your trades!!!”. I was notorious for getting emotional and closing trades early, in which price usually moved back in my favor short after, leaving me with missed profit making opportunities. I have trained myself to not let my trade anxiety affect my trading plan. That’s why I tell traders to wait for a while before they decide to let themselves interact with their trades and get out of a trade going south because it’s too easy to start sabotaging your trades based on emotions.
So basically, a PA Flag pattern tells us to find an entry from a retrace and helpfully lets us ride a big trend till the end. It’s like finding an entry from the swing low of 1-2-3 pattern. Nice interpretation.
One thing I don’t really get from the video is that you put something like a monthly line high above as your Take Profit target. How do you draw that? Is that coming from the Monthly chart?
This part is an important one, Krugman. If even a Master like you feels that way, imagine how lots of newbies will feel when the price seems to go entirely to the wrong direction! We have talked a lot about PA and live trades this first 2 weeks(!), in both beginner and advanced thread. I think now it’s a good time to begin discussing the mental-psychological aspect of trading in more depth, Krugman.
Patterns are just like candles, A single pin bar tells us that in the time period of 1 candle there was a break upwards or downwards, and price was pull right back in signaling an overall rejection of those prices. When a pattern forms it’s just like a candle, but on a larger time scale. A flag show a quick price movement that generally goes parabolic before it peaks. The flag shows the market cashing in on the move, the equal upper and lower trends on the channel show the market bulls unwillingness to let price break below the trend line(they may believe there is more bullish action to come). Hundreds of price pullbacks happen every day in Forex, if you were to take them all you wouldn’t be a trader very long. Well defined PA patterns are similar to well defined PA candlesticks. The difference is that in a pattern the formation or shape of all of the candles are what matter, and in the candlesticks it is the individual candle definition that matters.
These profit targets are suggestions but statically they are the length that traders target. The only reason anything can be “predicted” in the market is because people are predictable. Traders often use things like the lengths of the flagpole to shoot for regarding profit, and because the majority of the markets use these standards, they are often reached. And in a pattern, your pattern is your signal, so you simple enter at pattern confirmation and shoot for your patterns profit target.
Thanks very much for this video. It leaves me with questions. When you decide to enter a trade on a retracement like in here, what do you do if it doesn’t retrace at all ? Do you still have a plan to enter the trade at the break of the signal or do you move on to the next setup ? Also, do you always enter on retracement ? If not, what is the criteria then ?
Yves
Great video, great tutorial!
I seldom watch tutorial videos, but I like yours.
Questions:
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Why use H8 chart?
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After found the 50% with Fib, you changed the trend line for a moment (so that it passed through the 50% point of the pin bar).
I didn’t understand well why you did it. Could you please explain?
Thanks.