What kind of indicator is this, may I ask?
Used for calculating lot size, RR etc.
See the instruction Here on how to use: Metatrader Position Size Indicator
Success. EURJPY. H12. Short.
Reason for trade: The trend is downtrend in long term and range in short term. Price is right now at a significant resistance level and I see this as a pullback towards the downtrend. It also has confluence with the 50% Fibonacci level. I foresee that there will be traffic at the 117.706 level and my mind tells me to leave the trade but I want to take it for just some pips and exit the trade at that level rather than allowing it to run. What made me take this position is because the pinbar is large and obvious. Very large indeed. My mind is positive and I have a high probability that this trade will work out. So, I just set a sell stop and will check to see whether the sell stop will trigger.
Trade management: I have a feeling that the traffic is very strong. Price has been lingering around the entry point for a long time. Even after 5 hours it is still lingering there. I was not happy when I then opened my mobile app this morning and realized that price had moved against me. In order not to feel bad about this fact, I had to tell myself that the markets are going the way that they interprete the price movement and I have to be patient. Also, that price doesnât go in a straight line but zigzag formation. I then analysed the chart and came to the conclusion that it was not yet to be called a losing trade but just something I didnât like. So, I had to wait a little. Price has gone against me by 62 pips today. 9/4/2020. I noticed that there was a chart pattern that is forming. It is a head and should chart pattern. Maybe this is the right shoulder forming, and if this is true, then price would form the shoulder and go down to hit my TP. I will be patient much longer rather than close it now. In retrospect, the stop loss might get hit. 10/4/2020. Pips still in negative territory. Sell pressure is high though and it might go my way. Patience. The bull bars though were big at the start of the retracement and begin to get smaller, showing that momentum for the bulls is waning. I think this is just a retracement or pullback. Until Monday. 13/4/2020. Right!
Trade Result Remarks: 10/4/2020. I noticed that I was slipping into the bad habit of not taking responsibility and blaming the platform. Have to stop that and take responsibility for my trades. 13/4/2020. At the start of the week, the trade is in my favor during the Asian session. Have nothing to do but to watch it. The trade finally went as expected. It got to the region I predicted it would and hit my TP. Made $10.19 from this trade.
It doesnât do position size for non-currency pairs like gold and natural gas.
Noob trader L has a dilemma. He doesnât know how to resolve the contradiction in the fact that the market gives random outcomes but yet he can have consistent results. This is contrary to what he expects in life. In his life, he has been a successful businessman who can control and manipulate the outcomes he desires and he gets consistent results. So, how can trader L resolve this apparent contradiction in the trading environment?
First, he has to change his way of thinking by telling himself that uncertainty is what controls the market and this is something he can never control. It is like throwing a dice. You will never know what will come up; or even throwing a coin.
Secondly, he needs to work towards making sure the odds are tilted towards his favor by having an edge. This involves taking on high probability trades. If he has an edge, the wins will take care of the loses.
Thirdly, he should not evaluate his trading based on few trading results to know if he has an edge. This should be done based on a large sample of trading. Maybe after taking 50-100 trades then he can calculate his expectancy to know if he has an edge and his trading will be profitable.
Success. USDCAD. H4.
Reason for Trade Entry: When I saw that price had touched a resistance level on H4, I noticed that a 2 bar reversal signal was at play. It was a downtrend and the area was a pullback that would continue the downtrend. I noticed that to get to the next support level, there would be traffic so I set my TP1, 1.37840 in that region hoping to take some money out when it gets to that level and let the trade to run towards the second TP which is a support level at 1.36554. The price action signal looks large but not too large but I believe it is significant. I have placed a pending order and waiting for it to be hit. I will also place a price alert so that I would be notified when the TP1 is breached and take away some money from the table. The momentum and pressure are on the side of the bears. So, I believe the bears are in control.
Trade management: 3 hours after sell stop order, the trade was triggered. Right now it is at -28 pips. Nothing significant happening though. At close of trading day, 10/4/2020, the trade was at -15 pips. 13/4/2020. Sluggish, low momentum trade at the start of the week, Asian session. Nothing to do but be patient. Trade still against me but just -3 pips. I noticed a bearish continuation pin bar during the earlier session on H4. Trade is slowly picking up Midday NY time. +9 pips. The bears in control and with momentum.
Trade Result Remarks: 14/4/2020. When I saw a bullish 2 bar reversal at the close of the candle, I decided to close this position. What I regret most about this trade is not taking partial profit when it was up by 60 pips. Have to start taking my money early. No possibility that either TP would be hit. Profit $5.36.
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Success. EURCAD. H4.
Reason for Trade Entry: I decided to analyze the setup when I saw a large pin bar on H4. The general trend was a downtrend and the pin bar was at a pullback in a key resistance area that was formerly support. I checked for traffic in the direction of the trade and noticed that there would be no significant traffic if I short this pair down. The signal was also large which made me bold. Therefore, I had to set my pending order, a sell stop. The RR was 3.9. The price is hovering around a gap in price that occurred on March 6th, 2020. Really donât understand how to trade gaps but this will be a learning experience. The bearish bars are closing near their lows to show they have some fairly good momentum on the downside compared to the bulls. At the end of the trading week 10/4/2020, the sell stop has not triggered. 13/4/2020. Sell stop triggered during Asian session.
Trade management: The sell stop was triggered at the start of the week, 13/4/2020, during the Asian session. A bearish continuation pin bar has formed at the earlier session, so this gives me confidence that the trade would still be in my favor although I am -20 pips down. Patience. NY session trade went my direction to +37 pips. Intend setting TP1 to 1.50437, take partial profit and then break even with TP2 at 1.48807.
Trade Result Remarks: I noticed that the bulls were gaining momentum and it looked like an uptrend was at stake. Decided to close it for whatever pips was to grab. I would have implemented partial take profits if I had known. Profit $7.61.
Example: Pin bar that failed due to traffic on the left.
In the chart below, you will see that the stop loss, SL, for the trade failed because price could not go below the barrier that was created by the traffic on the left which is denoted by an arrow (3). This is why it is important that you take not of traffic in the direction of your trade before making the trade.
The pin bar had everything it takes for the setup to be a high probability setup except for the traffic.
Like all noob traders, I act like the typical trader. I have a trading plan that is fitted to my strategy but in the rush of adrenaline when an opportunity presents itself, I might tend to tweak it while analyzing a setup to fit my assumptions. On the other hand I know that after placing a trade, the outcome is random but deep in my heart I am wishing and hoping that this trade goes my way to the extent that it makes me nervous. I want to check the details of the trade on my mt4 mobile app even before the close of the candle. What this means is that I am flexible in my rules and rigid in my expectations.
If I continue this way, I will not turn out to be a consistently profitable trader. Rather successful traders are rigid in their rules and flexible in their expectations. 
That was the aha! moment for me.
What does it mean to be rigid in oneâs rules? It means whenever you see a setup you should follow your trade plan to the letter. Follow every step as it is written down. If the rules say donât take low probability setups, follow it rather than over trade. It is better to be out of a trade and wishing you were in it than be in a trade and wishing you were out of it.
What does it mean to be flexible in oneâs expectations? That means whenever you are planning to put on a trade that you expect to be successful, plan for the fact that it could fail. Put losses into your trading plan. That way you would be a complete trader. To put losses in your plan involves having a risk management strategy in place and a trade exit strategy. Remember it is wise to cut your losses short and ride your winners. When you do this you will slowly graduate from a noob trader to a professional trader.
So, I repeat again. To be a consistently profitable trader be rigid in your rules and flexible in your expectations.
Another example of Pin Bar that did not work due to traffic on the left.
The pin bar in the CHFJPY H4 chart below had all it takes to be a high probability trade except for one thing - there was traffic on the left. Note how the traffic on the left came to serve as a barrier which did not allow price to go below it. The traffic did not qualify to be a support level but it was significant enough to cause price to reverse. Note these things please.
I have said several times that we need a probabilistic mindset in order to succeed in trading because trading is a probabilistic business. So, how can one do this? By imbibing the following truths about probabilistic trading. These truths were taken from the book ââTrading in the Zoneââ by Mark Douglas.
Truth 1: Anything can happen.
This is contrary to what any successful person in other businesses expect. If you have been successful in life, you believe that you have some degree of control over what happens to you. But in trading, the moment you put on a buy or sell trade, you have no say in the outcome. Anything can happen. Believing anything can happen makes a good trader take on only high probability trades so that he can tilt the odds in his favor. Despite that anything can still happen. But having an edge gives comfort.
Truth 2: You donât need to know what is going to happen next to make money.
I learned this truth the hard way when I started trading. I was looking for the holy grail. I jumped from one strategy to the other looking for strategies and tools that can predict the market. All in vain. Believing that I should not predict the market to succeed, I now concentrate on making sure I have an edge and trading without allowing my emotions to make me make errors. When I place a trade, I leave the terminal and only manage it at the close of the candle.
Truth 3: There is a random distribution between wins and losses for any given set of variables that defines an edge.
What this means is that if you have a strategy that has an edge and wins 60% of the time in the market, you would not see 6 consecutive wins and 4 consecutive losses straight away. The distribution of wins and losses is random. That is why you should not determine if you have an edge based on a small number of trades. Calculate it, your expectancy, based on a large number of trades.
Truth 4: An edge is simply nothing more than a higher probability of something happening over another.
An edge is not a certainty that the next trade is a winner. Remember, trading results are random. Itâs simply having the probabilities on your side. That is why casinos make money although people win all the time at casinos. Casinos know that if you take the probability over a large sample they will win in the long run. Think like a casino. Only take high probability trades coupled with good risk management and in the long run you will be successful at trading.
Truth 5: Every moment in the market is unique.
Newbies particular need to put this at heart. I have also emphasized this in earlier posts. Because your last four trades were losses doesnât mean the next trade will be a loser or because your last four trades were winners doesnât mean you will make money in the next trade. The variables surrounding every moment you put on a trade are different from every other trade. Knowing this takes away fear and greed while trading provided you have an edge and are using sound risk management techniques.
Successful trading to all.
Loss. GBPUSD. H4. Long
Reason for Trade Entry: Price is currently at a support level. This was previously a resistance level, therefore, a flip level and important. The PA signal is 2 bar reversal. Price is in an uptrend and this level is a pullback to the uptrend, so if I take it I am trading in the direction of the trend. There are more bull bars than bear bars in the uptrend with consecutive bull bars. Although there are big red bodies, this only is seen during the retracement move and the momentum is on the side of the bulls. So, I think since this is a key area where a pullback will occur, the market is ready to buy here at the swing low. There is next to no traffic in the direction I want to trade. The price action signal is large and obvious and the bull bar has gone above the high of the bear bar which is a good sign. Therefore, I intend placing a buy stop here pending when it gets triggered. I will place my first TP1 at 1.27442 and take partial profits when it gets there then put SL to breakeven and let it run. Possibilities though.
Trade management: 16/4/2020. A bearish pin bar has appeared. I am afraid this trade might turn out to be a loser. But because this is the Asian session, I decided to wait until the open of the London session to see what happens. Right now at a loss by -74 pips. At the close of the next session, a bullish pin bar replaced it. The bullish pin bar is also significant. Signs that the pullback to the uptrend is taking place evident. There was a breakout of the support. Never saw this coming. Stopped out. P/L -$24.36.
Trade Result Remarks: Lost this trade because of a breakout of the support. I didnât see it coming. One take from this trade is that I should take note of the momentum and strength of the short term trade. I should have realized that the bears had short term momentum on their side and that means they could do a breakout of the support level which they did. Learned this. Short term momentum very significant.
Loss. USDCHF. H6. Short.
Note before: I learned something from this trade. I learned that trading should not be done towards a key level but away from the key level. I decided to insert the analysis here for the perusal of those who would be learning from it and for future reference when doing journal review.
Reason for Trade Entry: Price is at swing high. The signal is a bearish pin bar. Yes, this level has been a flip in the past. Price is in a downtrend and the signal is at a swing high. If I take the trade, it will be in line with the trend. Positive. The bears seem to have control of the market right now. There are consecutive bear bars and the red bodies are bigger than the bull bodies although there are some big bull bodies but the bear bars are closing at their lows showing they have momentum behind them and they also have some pressure. Relatively, I think the momentum is on the side of the bears right now. Traffic around 0.95403. very far. The signal is large and obvious. With protruding tails. Will set TP1 to 0.95403 and take partial profits after that.
Trade management: 16/4/2020. The trade is going in the opposite direction after a bullish pin bar occurred but I see nothing of interest in that. I donât believe it will hit my stop loss. Have to be patient. On retrospect, I laugh at what I said.
Trade Result Remarks: In a moment of hindsight, I believe I should not have taken this trade. This goes against the strategy that says do not take a trade when the signal is not touching the key level and you should be moving away from the key level not towards it. Hmmph, have to always remember that. Move away from key level and not towards it. See image below for more details.
Hi @Emekadavid! I hope youâre trading a demo account while practicing. Please permit me to make a suggestion. Ignore candlestick patterns altogether and concentrate on reading the market structure.
What does that mean? Price moves to and from highs and lows. Some people call these supply and demand zones. You may call it whatever you want but just take note of this. Look to see whether price rejects certain levels and place your trades based on that; not on candlestick patterns.
Think of it like this - market structure works whether youâre using temporal charts, tick charts, range charts and even renko charts (which do not depict price accurately). If it helps, read price action from renko charts or line charts, which connect close prices.
If you understand market structure, you will also be able to place your stops correctly. The few examples that you show indicate that your stops are not correctly placed.
Hereâs a good video on how to determine the supply and demand zones.
Take a look also at the following YouTube channels for market structure based trading. I suggest that you ignore any information on trend lines or chart patterns.
Thanks @QuadPip, I appreciate your suggestion. In fact, I value it. The candlestick patterns I am trading are high probability setups. That means they have an edge in the market. Also, they take market structure into consideration like buy at lows and sell at highs. I only made a mistake yesterday by selling at a low rather than buying. But that is the reason for my starting this journal. To analyze myself and trading and use that to improve my skills in trading.
I will download the videos you suggested and see whether I can incorporate the ideas they teach with what I already have or whether making a complete switch of strategy will be better. It will take me like a week to decide and I will post my thoughts here after analyzing the methods in the videos. As I said before the candlestick patterns my trading is based on have market structure embedded.
I appreciate your help. Thanks for showing me a different direction. I will surely look in that direction and post feedback here.
What did you learn?
After every trade, whether profit or loss, I ask myself the question: what did you learn from this trade? Sometimes there is nothing new to learn but applying old knowledge and experience. That is why I enter every trade with a sense of curiosity and adventure. There has never been a dull moment. To add to that, every weekend I review the trades I have taken in order to make the learning experience fresh. Forex trading is a skill and all skills depend on experience and knowledge. That is why I am always looking out for price action channels on YouTube. Each YouTube content creator has an experience and knowledge behind the videos they create and I want to tap onto that experience so that I can be standing on the shoulder of giants in my trading journey. I want to see far, farther than my default senses can accommodate if I was only relying on my personal experience.
That is one of the reasons why I started this thread. I want other price action traders to come here, look at what I am doing and say: hey @Emekadavid, you are not doing this right or you have to work on this area. It gives me joy to have those experiences.
When I first started forex, I never believed I had to read all the books. When I opened an MT4 terminal for the first time, the first question I asked myself was: what are all the traders making the price to move up and down thinking of doing right now. I looked for the answer in the babypips course and the course sent me to technical analysis using indicators. Indicators didnât answer that question instead they made me more confused. Now, I have found something that is logical and intuitive.
So, what I want to say in this post is that any trader who wants to succeed in trading forex should take the business as a learning experience. Keep a trading journal. Always look out for what others are doing by reading and watching YouTube videos. Try to practice what you are learning instantly and possibly on a demo account.
Well, have a great learning experience trading.
Lessons learned from trade review for this week, April 1-17, 2020.
This is a review of my trades for the week to highlight the lessons I learned from the mistakes I noticed in my trading.
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Have to start taking my money off the table when the trade is heavily in my favor so it doesnât reverse and should learn the patience of allowing the rest to run for a risk free trade. This way I would be making more risk free trades and earning more money.
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Never trade towards a key level but away from a key level. This is very true. That is tantamount to saying buy at support and sell at resistance. Let you trades move away from the key areas.
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Take note of short term momentum when analyzing trades. I think short term momentum is more important than long term momentum. Just an observation because the strategy is based on short term trends and not the long term trend although it is a swing trading methodology.
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When a reversal signal to close a trade is also a signal to open another trade, close that trade and open another one in the opposite direction immediately. Donât miss out on opportunities like this. The graph below illustrates this well.
Sometimes candlestick patterns form at support and resistance. But that is not the end of the story. We need to consider other factors such as if it was a swing point, if the signal was obvious and large etc. The graphic below of AUDJPY, H4, well illustrates that fact.
Recently, a well meaning friend here suggested I should switch the strategy that I am using saying that candlestick patterns are not right. That got me rattled. I thought it would be nice to take his advice since I valued his opinion but then after thinking about it for two days and watching the videos he recommended, I began to believe that his advice was well meaning but misguided.
Why?
- Although I cannot claim to be a professional trader yet (I am getting there soon), the strategy I am using is recommended by several professionals in the trading arena - Steve Nison, Justice Bennett, Nial Fuller, Johnathon Fox etc. Just to name a few. So, it is not a strategy that has no history. By the way, candlestick patterns have been used successfully since the Japanese invented them in 1600s.
- The strategy I am using has been acclaimed by this professionals to be high probability. That means if I know what I am doing, my trades will have a high win rate.
- Most times when a trader is using a good strategy the success or lack of thereof depends on the trader and not the strategy. I have to work on my psychology and money management skills and not the strategy.
That is it. I have gone beyond the stage of looking for the holy grail. That quest is for noobs. I have confidence in what I am doing and working hard to make sure my emotions and money management skills are right.