Price Action That Matters

[wm247]

Hi Aaron

I watched your videos on pin bars. V well presented & well explained. I have a question with regards to “Why Pin Bars Form” that I’d like to raise now than to stock it up, if you don’t mind. In case the question had been asked & answered before, pl point me to the post(s). Thk you.

We know that a pin bar (or for that matter other reversal signals such as engulfing bars, 2-bar reversal… etc) is NOT a guaranty for a successful reversal trade. It may fail occasionally.

My question is the converse: is price reversal [B]always [/B]preceded by pin bar(s) or engulfing bars or 2-bar reversal signal(s)? If not, what other reversal signal(s) are there to look for so that we don’t miss an impending reversal?

Henry

Hi Henry,

it may not be so related to your original question, but I also asked that similar question in his other thread for Beginners, as I suspect about another PA signal: Morning Star and Evening Star. His answer is here:
Morning Star & Evening Star

[Henry9986]

Thx mate. Yup, it’s remotely related.

So, I’d modify my question to Aaron: [B]is price reversal always preceded by pin bar(s) or engulfing bars or 2-bar reversal signal(s) [I]or 3-bar reversal signal (meaning morning star / evening star)[/I]…? If not, what other reversal signal(s) are there to look for so that we don’t miss an impending reversal?[/B] :21:

Henry

Hi Henry,

it may not be so related to your original question, but I also asked that similar question in his other thread for Beginners, as I suspect about another PA signal: Morning Star and Evening Star. His answer is here:
Morning Star & Evening Star

[Henry9986]

Hi wm

I’d like to take the notion in your post further here: “If we combine a valid 2 BR or a valid MS/ES, we will come up with a valid PB.” I think it’s more appropriate to talk abt it here than in the Beginners thread.

What you raised is part of a larger question that has been in my mind for sometime regarding candlestick patterns. Looking for pin bars alone, say, on H1 charts may probably miss out valid pin bars that shd have been there.

A valid pin bar on H1 chart shows up on M30 chart as 2 BR. But the converse is not always true. A 2 BR, say, at 9.30am & 10.00am on M30 chart does not show up as pin bar on H1 chart, as a 2 BR at 10.00am & 10.30am does.

What say you?

Henry

P/S: by the way I had a question on message board in your Profile page.

[krugman25]

i have only just come across this thread and havent even started reading it properly yet but from a quick scan i just want to say congrats aaron on starting this, after chatting with you on skype over the last year or so i think your own thread is long over due!!!, i will be following with massive interest and hopefully contributing a bit if you’ll have me lol

Thanks for checking this out. You are more than welcome being here! You and I go way back. Are you looking to get back into harmonics? As you can see I stuck with some VSA principles and as always trading price action. Now that you are settled in are you going to get back into trading more seriously again? I hope to see you around a lot more!

[krugman25]

Thx mate. Yup, it’s remotely related.

So, I’d modify my question to Aaron: [B]is price reversal always preceded by pin bar(s) or engulfing bars or 2-bar reversal signal(s) [I]or 3-bar reversal signal (meaning morning star / evening star)[/I]…? If not, what other reversal signal(s) are there to look for so that we don’t miss an impending reversal?[/B] :21:

Henry

There are different ways to find reversals. The ones you mentioned are false break candles, so you have a failed breakout attempt. Because you had an initial breakout that failed, it gives you a high chance of reversal which is why the candles you mentioned are the best to trade and most commonly traded. There are non false break patterns such as the inside bar. Sometimes price reaches a resistance or support line and instead of having a false break, the supply/demand steadily shifts. That may look like inside bars on the daily candles, and then you will eventually have the sudden reverse as price breaks out of the inside bars. There are also patterns that can signal to reversals or breakouts. For right now I don’t have a lot of information on individual candlestick patterns, but I do have a list of the ones I trade and approved for this forum on post #2 of this thread. You can find a lot of good information about those patterns through an online search. The best way to get start though are with the false break reversal candlestick patterns such as the pin bar and engulfing bar.

[Henry9986]

hmmm… false break patterns & non-false break patterns… seeing more light now. Thx Aaron.

There are different ways to find reversals. The ones you mentioned are false break candles, so you have a failed breakout attempt. Because you had an initial breakout that failed, it gives you a high chance of reversal which is why the candles you mentioned are the best to trade and most commonly traded. There are non false break patterns such as the inside bar. Sometimes price reaches a resistance or support line and instead of having a false break, the supply/demand steadily shifts. That may look like inside bars on the daily candles, and then you will eventually have the sudden reverse as price breaks out of the inside bars. There are also patterns that can signal to reversals or breakouts. For right now I don’t have a lot of information on individual candlestick patterns, but I do have a list of the ones I trade and approved for this forum on post #2 of this thread. You can find a lot of good information about those patterns through an online search. The best way to get start though are with the false break reversal candlestick patterns such as the pin bar and engulfing bar.

[wm247]

Hi wm

I’d like to take the notion in your post further here: “If we combine a valid 2 BR or a valid MS/ES, we will come up with a valid PB.” I think it’s more appropriate to talk abt it here than in the Beginners thread.

What you raised is part of a larger question that has been in my mind for sometime regarding candlestick patterns. Looking for pin bars alone, say, on H1 charts may probably miss out valid pin bars that shd have been there.

A valid pin bar on H1 chart shows up on M30 chart as 2 BR. But the converse is not always true. A 2 BR, say, at 9.30am & 10.00am on M30 chart does not show up as pin bar on H1 chart, as a 2 BR at 10.00am & 10.30am does.

What say you?

Henry

P/S: by the way I had a question on message board in your Profile page.

Hi Henry,

Krugman has answered your question here, and I think I had left the answer from your previous question on message board in your Profile page.

[Wookie1985]

Thanks for checking this out. You are more than welcome being here! You and I go way back. Are you looking to get back into harmonics? As you can see I stuck with some VSA principles and as always trading price action. Now that you are settled in are you going to get back into trading more seriously again? I hope to see you around a lot more!

Yeh I can see alot of the methods you used to talk to me about in here. It looks like a fantastic thread mate and I cant believe how quickly its grown!!! As ive said to you before I think your an incredibly talented trader and this thread can only help others including myself. I will be getting back into serious trading during the next couple of months and yes I will be focusing on harmonics and price action. I wont post any of the harmonic stuff here unless specifically asked to by you. But the PA stuff I will be more then happy to contribute to and have ur thoughts on. If im being honest im glad I got some of your wealth of knowledge one on one before you started this thread. All the best mate and good to see you doing so well

[Henry9986]

Thx mate. Didn’t see it earlier. Still not v familiar with how this forum works.

By the way, did u manage to find OCO EA for MT4?

Hi Henry,

Krugman has answered your question here, and I think I had left the answer from your previous question on message board in your Profile page.

[wm247]

Thx mate. Didn’t see it earlier. Still not v familiar with how this forum works.

By the way, did u manage to find OCO EA for MT4?

Unfortunately, not.

[Jason_Rogers]

@wm247

I check FXCM website, and they offer Trading Station and MT4.

Hi Will,

I’ve answered your questions below, but if you have any further questions about FXCM, feel free to ask me in the Broker Aid Station

@wm247

How do you make it NY Close chart? It’s basic, I know, but I just want to play it safe.

FXCM’s Trading Station platform always displays charts with a New York Close. You can change the time zone by going to “System > Options > General > Time zone”, but regardless of the time zone you choose, you will still have five daily candles per week that begin and end at 5 PM New York time.

By default our MT4 platform displays daily candles with at midnight GMT close, but you can convert our MT4 charts to New York Close by using the free New York Close app on FXCMapps.com

@wm247

How you add tick volume? It’s not listed in the indicator list, so I’m confused.

You can add tick volume to the Marketscope charts by right-clicking on the chart and selecting “Show Tick Volume”.

@wm247

The Demo only seems valid for 1 month. Any possible way to extend it besides making a new Demo account?

FXCM demo accounts expire after 30 days of inactivity, but if you keep trading your demo, it will not expire.

@wm247

Also, they only give me $50,000 virtual money at the beginning with no options to adjust it. Do you know how to adjust this amount of virtual money? $50,000 at the beginning sounds unrealistic, and I don’t like to groom bad habit with virtual money.

If you want an FXCM demo with a customized balance, you can get one by registering for the demo directly on FXCM’s MT4 platform (go to “File > Open an Account” from the platform). That will allow you to specify your starting balance and your MT4 demo login will also work on Trading Station.

Jason

[Xtromist]

Hey guys. Haven’t posted in this thread for awhile. Thought I’d share a potential setup for this/next week on AUDCAD daily. Pair is in a consistent bearish channel. I had taken profit off a 2BR (8H charts) at the previous swing high and am looking for shorts at the highlighted area.

[Henry9986]

Thx again Aaron. Just to be sure I don’t misunderstand any important points, on post #2 why did you specifically & separately mention hammer besides pin bar? I thought both hammer & shooting star are pin bars but with wick at diff end & at diff locations. And when you mentioned hammer, why did you leave out shooting star? Sorry if am too inquisitive :8:

There are different ways to find reversals. The ones you mentioned are false break candles, so you have a failed breakout attempt. Because you had an initial breakout that failed, it gives you a high chance of reversal which is why the candles you mentioned are the best to trade and most commonly traded. There are non false break patterns such as the inside bar. Sometimes price reaches a resistance or support line and instead of having a false break, the supply/demand steadily shifts. That may look like inside bars on the daily candles, and then you will eventually have the sudden reverse as price breaks out of the inside bars. There are also patterns that can signal to reversals or breakouts. For right now I don’t have a lot of information on individual candlestick patterns, but I do have a list of the ones I trade and approved for this forum on post #2 of this thread. You can find a lot of good information about those patterns through an online search. The best way to get start though are with the false break reversal candlestick patterns such as the pin bar and engulfing bar.

[Henry9986]

Good morning Aaron

I recall you mentioned that you don’t set a fixed TP but let your trade run when you see that the [B]trend / momentum is v strong[/B]. Could you please explain the factors you take into consideration to judge whether the trend / momentum is strong or weak?

Thank you.

Henry

[Papagoy]

• good level (horizontal line + fibonacci)
• trend continuation

• not enough room to grow

[Mr_B_A_Barracus]

Hi Aaron

I am currently moving my stop loss to break even after about 50 pips profit on the dailys if I am given any warning signs. For instance I was long on the NZDCAD which made 50pips but has been struggling at a first trouble area, then on the 4hr a large bearish engulfing bar formed at this very point so I moved my stop loss to break even. I have just been stopped out. Do you think I’m being too tight with my stop loss on the dailys? Or is 50pips reasonable? I think I may have jumped ship at the right time as I am also short on the AUDUSD where correlation is strong between the two currency pairs. Strangely enough there was an engulfing bar which formed on them both at the same time, I am inclined to believe that the bearish behaviour on the Aussie will win out but I’m still a little concerned I’m over managing my trades…

Thanks

BA

[krugman25]

Hey everyone, I am officially back home. I don’t do any more traveling for a couple weeks which means I will be back here more frequently. My boss gave me the rest of the week off starting tomorrow, so I will go back through all of the posts since I was gone and answer anything I missed. Thanks to everyone for holding to fort down while I was gone.

I don’t have time to posts charts and analysis, but I hope someone from the community will have a chance to do it, there have been some great trades this week so far and some setups forming right now. I had .7500 marked as a key level on the NZDCHF, overnight we saw price climb above the level and collapse back down with a large bearish engulfing bar. Also 1.3550 is a key level on the EURUSD and we have a potential for a pin bar on the 8 hour. I won’t be taking these trades because I am in a couple other trades right now. I will post those trades later on today or tomorrow.

[steve1972]

Hi, I’ve just took a short on the NZD/USD.
The overall market looks quit bearish at the moment if you look at the weekly chart.
Ive set a pending order to trigger at 0.8210 just below resistance.

No T/P set yet I’ll wait to see if the trade triggers first.
Steve.

[krugman25]

Thx again Aaron. Just to be sure I don’t misunderstand any important points, on post #2 why did you specifically & separately mention hammer besides pin bar? I thought both hammer & shooting star are pin bars but with wick at diff end & at diff locations. And when you mentioned hammer, why did you leave out shooting star? Sorry if am too inquisitive :8:

Henry,
The reason they were mentioned separately is due to their requirements. The pin bar requires the wick to be 3 times larger than the body, and I have seen some have a requirement of 4 times larger than the body. The hammer/shooting star has a requirement of 2 times larger than the body. Both are good setups to play but I do believe the pinbar is the better candlestick formation of the two. Traders often pass up trades because they don’t have a perfectly formed pin bar, but they may have a perfectly formed hammer or shooting star, and may be just as high probability of a setup.

[Henry9986]

Argh…! More light now. Thx Aaron.

Henry,
The reason they were mentioned separately is due to their requirements. The pin bar requires the wick to be 3 times larger than the body, and I have seen some have a requirement of 4 times larger than the body. The hammer/shooting star has a requirement of 2 times larger than the body. Both are good setups to play but I do believe the pinbar is the better candlestick formation of the two. Traders often pass up trades because they don’t have a perfectly formed pin bar, but they may have a perfectly formed hammer or shooting star, and may be just as high probability of a setup.