Pure Price Action For Dummies

Beginner Questions Candlesticks, Chart Patterns, and Price Action
2535

I have never received any formal trading or have i paid for a trading course, so i would not know what they teach there.

But i know most professional forex coaches ( i emphasize them as forex coaches, and not traders ) out there teach systems trading.

Systems trading involves a different way of trading, where a trader is to enter trades based on an entry that is being shown by the chosen system. It is usually a combination of indicators, sometimes coupled with certain market opening hours etc etc. As we are all aware, indicators are statistics, in their pure form.

We mechanically enter as trades form. The profitability or winning edge is based on the long term statistical edge a particular system gives.

The problem with this sort of method is that the market changes. The market is the same, but it changes. The changes will reflect on the statistical viability of the system, which directly impacts profitability.

It always pays to learn how the market moves and develop a sense and intuition to trade those moves in itself, raw, without processing price movements with second or third levels of statistics.

The impact on our profitability shows in real time, and adjustments to current market sentiments can be tailored accordingly within one or two loosing trades.

This luxury is not afforded in a systems trading.

2536

I hope some are on the euro aussie trade.

Good luck. Monkey see monkey do is back from european opening today.

2537

you mean short, I guess:) In, and hoping price won’t find my stop.

2538

Yikes! Im on the other side kores.

2539

:smiley: I feel I’ll never outstrip my newbieness. I have a free trade now, with stop about 3093.
I felt that EN and EA can be the odd pair amongst E-s that won’t continou to go long.

2540

Might never know, price might just go south further.

As long as we can afford a BE move, than your entry is a good one.

2541

Why it pays to watch a new candle form. And how do we trade it, using the communist system

EU W TF

Last week was a bull candle. Last month was a bull candle ( we are looking at monthly candle because its a new month, so it pays to know what was the overall sentiments and where is price at, in relation. )

So we anticipate a push further up.

Why the green line there? Its on top of the previous candles opening price / closing price of the candle two weeks ago. Most often, the peaks ( regardless whether its the extreme end of a candle wick, or the closing of a candle without a wick, is a peak of a price wave in the smaller TFs. )

EU D TF

Mark is at the same price level, where we can see a nice historical price action wave on the left of the day chart.

This is important. W need to know that the level that we have picked on the higher TF actually did have a support and resistance there, and this can be seen if it correlates with the smaller TF.

EU H1

The same horizontal line on the same price level but looked at from the H1 chart.

The true support and resistance levels that matter is filtered out from all the irrelevant noise, down to a few pips, as shown clearly in this chart.

We can now even take positions on the 15 minute or 5 minute chart for the matter, and be pretty assured that our SL is not going to be hit. This is how smaller TF charts should be read. Never read them without the price bias guide of higher TF. It would be a guessing game than.

I can guarantee you one or two trades per week per pair with this method.

Clear your mind of all the unnecessary clutter when you are looking at a chart, and trade only what you see.

Forget about SMA, EMA, ADX, RSI, Ichimoku, Pivots, Volume, BB bands, period settings and everything else!

Trade ONLY WHAT YOU SEE.

The naked chart will tell you all you need to know. Everything that you need to know, including news and fundamental effects are already built into the japanese candle stick chart.

We only need to figure out how to read the multi time frame charts. The hardest part for us to grab is correlating the multiple time frames.

Nothing else is needed.

Wait patiently like a sniper. Dont waste your equity like a machine gunner.

2542

EURO AUSSIE

I highlighted possibility of EA going further up and i would be watching 1.28000 closely.

This has what has transpired.

MTF

WTF

DTF

H4 TF

H1 TF

Unless your entry is clear, dont enter.

Plan your trades before hand. If price plays out on how your trade plan was, than its game on.

If it does not hit your levels, dont worry, we will catch the next train, cause there are plenty more.

Keep your SL in mind always.

Do not enter if price does not come to your levels, because it might end up as a false move, burning a hole in your balance.

PRICE DOES NOT MOVE RANDOMLY!

2543

Hi Nikita, these posts really clear things up alot.

So to summarise, we will find where the price close two weeks ago and use it as S&R level.
Then we’ll drop down to lower TF to verify if it is a valid S&R.
If it is, we will wait for the price to reach that level and buy/sell towards the same direction.
Am i getting it right?

Btw, in both of your Weekly charts, i do see an opening gap for last which i do not see in mine.
Wondering anyone has that gap as well?

2544

Btw Nikita, meant to say glad you are back. You are a natural teacher.

2545

no no no.

The first point of yours is wrong. We cannot just take price closing levels two weeks ago as our arbitrary support or resistance levels.

The chart has to support it. It just happens todays examples are as such. Often, the support and resistance could be the lowest low or close to that of a classic pullback candle.

It could be the peaks of where price had done a sharp reversal last year.

  1. You see a price gap on my chart because i have been experimenting with a few types of trading platforms and this particular one i just downloaded last week, hence a gap in my downloaded price history.

A gap is just that, a gap. Gaps happen when there is no data for that particular period for your platform to form candles with.

This not only happens when you download a new platform. Those using mt4 would often see a gap on monday morning. This is because the market had started earlier than when your broker had switched their platforms on. The markets start at say 6 am and your broker only switches on his feeds at 7 am monday morning, than whatever movement that has happened on that one hour will appear as a gap on your charts.

We can also see gaps often On minute one charts, especially during news hour. This is because our platforms refreshes itself every x number of times every second etc. The gap signifies that price had moved way beyond what our platform could update itself with in that small gap in between.

Sometimes, if you are using a broadband, you might loose connection or your connection might stall for a minute or so, and this period will show up as a gap.

Contrary to popular believes, the popular myth use to be that if there is a gap, especially on monday morning, than price will definitely close the gap.

This is a MYTH. Do not trade price gaps. They have nothing to do with the markets, only our platforms, refresh rates and internet connection, or lack of it.

2546

Thank you for your kind words Hogarste.

I have yet to figure out how to give a like on posts using an ipad.

2547

I see. So basically we have to actively look back on the left of the charts for S&R levels right?
Am i right to say that since S&R often happens at the level where the previous trend stops / consolidates, so the price is likely to visit that level again before going back towards to same direction?

So sorry if i am asking so much newbie questions. :frowning:

2548

Hello Ryan,

first off Welcome back Nikita, I hope you are well after your move to Singapore?.

If you look closely at Nikita’s graphs, you will notice price has reached the levels as resistance which subsequently were broken and price has come back to re-test the level as support. You should be looking for similar levels wherever they are and mark those on your chart. The higher the timeframe they appear and if they also show up on smaller time frames the more significant they are.

When price comes back to re-visit these levels, you should be watchig price action to trade. Often price will ‘bounce’ at the significant levels or price may simply smash through them. You have to watch price as it approaches the levels to see if there are signs of either which may happen.

Hope this helps your understanding.

2549

Hello. Its very useful tread thanks a lot keep it going :slight_smile:

2550

Hello folks, I have had a break from trading a couple of weeks now reevaluating my trading an my mistakes. I said to myself to only trade this method, but i could’t. I was chasing trades. Today I made my frist trade after the break and my losses. Starting over and now I know better. This is a simple method I am starting to get, it is truly simple if you follow the rules :wink: I went long at Eur/Gbp today and I am happy, I know, I will loose again, but hopefully not as many times as before!

Good luck to everyone :slight_smile:

2551

Hi Nikita,

I have read this thread in full, but I think it’s time for a re-read on my part. Sorry if this is an old question that’s been beaten to death, but I think only a yes or no would help. The rule below is from page 1 of this thread:

  • easiest way to trade when direction is known is to enter when price crosses the opening of D TF candle. Hold for about 40 pips.

What this means is that if yesterday was a buy day, and therefore today is a buy day, and todays price opened at 1.5, and then fell below (likely during the Asian Session), we would look to enter our buy when price crosses the 1.5 (likely during London Open) and either target 40 pips, or take a little profit before and perhaps hold on for a little more.

I use a mixture of thought processes in my own trading, but I want to make sure that I understand this rule.

2552

Hello Ltrader, i am doing well, thank you.

Nice seeing you around here. Hope you been doing great too!.

Ryan, what Ltrader is trying to explain to you is the BPC concept.

We always wait for price to break a level, than comeback to touch it. Our entry to go long or short is triggered at that point in time, during the retest. This is where previously a support area becomes resistance and resistance becomes support.

2553

Yes you are spot on.

That is exactly what i meant!

BUT beware.

That was my away of trying to point out the concept of if yesterday was a buy than today is a buy to a fellow trader who could not understand what i was trying to say. I think it was Forexpastor, if i am not mistaken.

That method should only be applicable when you are starting out to learn how to trade this way and should only be used on a DEMO account!

The reason why? Because your SL would be very high in relation to your profit margin. Any trade that has below a risk to reward ratio of 1 to 1.5 the minimum will ensure that you are more than likely to loose money in this game.

So bewarned, do not enter a trade when price has moved away from our entry point. Wait for the next train. Damage if we are wrong, can be enormous.

Look at what GU has done today and you will understand why this should not be used on a real account.

2554

I was doing the same thing couple of month’s back. Blindly selling on the basis of previous day’s candle. But later on i’ve realised what i was doing wrong.

Yesterday was a buy candle in GU but today instead of going for a buy i sold it 1.5750 and TP at 1.5660.
Reason to sell was that i had a minor resistance level plotted at 1.5760-70. Though price did shoot up during London session, It formed LH’s later in NY which indicated that prices were going to fall.

Someone posted earlier, Go with the flow until a key level is hit. It’s very much true.

As Nikita say’s, It’s all in the waves. I’m still learning to read the structure properly. But hey, with the enough screen time, we can spot the moves. No big deal.