Pure Price Action For Dummies

Beginner Questions Candlesticks, Chart Patterns, and Price Action
858

Hello again to all.

Having spoken to Nikita, I have decided to add my favorite candlestick patterns, or rather the three that I try to use. I look for these in the daily chart only, and they known as HH-HL, Pinbar and Engulfing. Each is valid in either direction pending the price action in which they are found. Eg, LL-LH is the reverse of HH-HL.

The first chart is a daily showing all three. The following three charts are in 4 hr suggesting the validity of the daily patterns, one chart for each pattern. I hope this makes sense. I hope also that the charts present in the order I uploaded them.

Actual trade parameters must be up to the reader as I have not traded these samples. They are so easy to see in hindsight!!

859

See the first image, you shouldnā€™t sell after the pinbar, itā€™s a poor trade, the bullish candle before it is a strong bullish reaction to the preceding down move, so you trade is high risk, since the target at best is the last low, but your next trade is fine, itā€™s bullish reaction to the down move, reasonably tight stop, and up she goes off the double bottom.

860

OK purplepatch, I take your point re my suggested trade number 2. Please show us a couple of pics as you would see and trade a pinbar?

861

@nikita: wow! I really like you! I mean u generously offer some of ur time simplifying fx to newbies like us. honestly im almost done with babypips school but ikm stil lost and I was so depress that im willing to pay someone to teach me in personā€¦ but thanks rto you it seems to make more sense now. of cors school hir is also a big plus. I hope u wont get tired in sharing ur knowledgeā€¦ a big thanks!

862

Thank you bebehto.

Hope the thread helps in learning how to read charts.

We are all learning. Me included. I am currently learning something called Dejavu so I can scalp Min 15 TF in between.

The trick is to be able to draw your S & R lines accurately. The entry with bias than becomes easy.

Zoom in and out of your chart to place a best fit line. Than watch the candlesticks come into play.

Dont guess.

Finally the babypips school is a great resource but you cant learn how to race a horse by reading about it over the weeks.

It has to be paired with actual riding. Even if its just simulated horse called a demo account. Some serious screen time. Otherwise it wont work.

863

OFFICIAL - Somewhere Over the Rainbow 2011 - Israel ā€œIZā€ Kamakawiwoā€™ole - YouTube

One of the greatest songs of all time.

Have a great weekend.

864

Canā€™t argue with that - we (Mrs Templar and I) first heard it on the 50 First Dates soundtrack, confess we love the film and the song!

Have a great weekend yourself.

ST

865

ā€“ thanks so much! been a great helpā€¦ ā€œlikeā€ (im using my gtab now and babypips app doesnā€™t have that feature yetā€¦ hehe!)

866

1023Ɨ705

I hope I am not cramming too much into this one but I am too lazy to draw another chart using microsoft Paint.

Its the only one I got on my laptop and its lousy as hell.

So this is a drawing explaining waves and how we trade price action with waves.

As we all know price moves in waves and there are many ways to trade waves.

Waves are just prices bouncing from one level to the other. Like everything in forex, when we say price moves in waves, the rules are more of a sort of guidelines as far as price is concerned. Its up to us to trade patterns or waves that would give us the most chances of having profitable trades.

So if we pay attention to the drawing above, the area with the red horizontal lines mark prices falling on a higher TF. So our bias is for a sell.

The ones in the blue is the place where its upwards. The tail at the bottom of our price chart is probably where you would find a pin bar on higher TFs.

This is the basis of our most profitable trading method, the BPC or Breakout Pullback Continuation pattern.

The areas marked with the crude green x is where we would ideally take big risk trades.

The area marked with the blue Iā€™s are areas where most of newbies will either sell or buy and get burned. This is where the candlestick charts, especially on H4 or D TF chart will give us a false impression that price is about to move explosively either downwards or upwards. So we will enter in these areas, with higher risk because of greed and than watch price go against us.

This happens again and again and again. These are the areas that play psychological games with a trader. Those who did the bad call of ā€œpredictingā€ or ā€œguessingā€ or even ā€œthinkingā€ that the price will fall in this areas will usually hold until the price reverses to the area where profitable traders think of entering the trade. Which is the areas marked with the green X. This again is because of psychological reasons. We look at the same charts, especially on H TF and it will show us candles that look like its going to hit a home run from that area. So we in a panic cut our trades. Those who dont care at all or are very new will try to enter a contra trade now, only to see themselves getting burned again. This time they will block out the fact that prices are reversing and hold on to the loosing trade until prices make a new low or high.

Every newbie and those who cannot make money from the market are only doing one mistake and that is the above. Its not a habit that is easy to break.

The brown line in between just shows price action on a smaller TF and how it would look on a slightly higher TF. The purple crosses just show how we can capitalize on LH or HL on a chart, but never against bias. NEVER AGAINST BIAS.

Those who are predicting a reversal, make sure you have a break out from a major resistance or support area like and a retesting of that level as I have shown in the bottom of the picture. Do not attempt to simply buy or sell at every pull back or candle with a wick. Only do that when its broke upwards and retests the line again or there were pullbacks from that area previously. This only applies when D TF is in a range. Otherwise stick to BPC!

Finally an example of the BPC on H1 EA

1023Ɨ382

If you have picked the right levels on Higher TF, you will see candles doing the classic entry patterns on or nearby those areas without fail, each and everytime.

This is how we filter out the noise and decide where are the areas we should pay attention to and where are the areas we should ignore.

Hope it helps.

867

Hi Nikitafx really helpful comments and explanation.

868
  • Thanks for this postā€¦ i know im getting thereā€¦ :33:
869

Any advice for tomorrow trade, Market make new high GU but it is going down now, as per rule stick with long bias tomorrow when London open.

871

im so relieved that Iā€™m done reading this threadā€¦ a huge thanks nikita and to all who contributedā€¦ I still have a ptob on plotting s&r but Iā€™m not going to ask how can this be done properly coz I believe itā€™s been all laid out here. Iā€™m just going to read through them again. I just want to say thank you a lot for this thread again. it gives hope to small trader like meā€¦ xoxo

872

Take ur time. U can see good BPC patterns on EU yesterday and today. Total 200 pips worth of entries on one pair.

873

Apologies if I am missing something obvious or have just not had enough coffee, yet, this morning - but what does BPC stand for? I promise I have read the thread so apologies if it is my memory failingā€¦!

ST

874

LOL, You are excused ST. I know you have been following since the very early beginning.

BPC was a term that was thought to me by Yaniu Mervin. It was the name that described what I was doing, where support is broken, retested as resistance and than continues.

So the short form was Break out, Pull back, and Continuation. BPC.

We had that pattern play out so beautifully since yesterday Asian. And the movements were very precise.

Only thing that prevented me from loading 15 or 20% risk was D TF bias that was not that clear for me.

875

Hi Nikitafx I have a question regarding the TP, suppose I place TP at 40 pip and SL at 20 pip, and the pair did nice move towards my TP and there is a probability that pair will break out, in this type of situation what will be the best to do.

  1. Take the profit and out from the Market
  2. Take SL to the Entry and wait for the break out
  3. Take SL to Entry and place the trailing stop 1 pip move.
  4. Put trailing stop 10 pip above/down to entry and get 10 pip move.

Thank you in advance.

876

If we know market is going to break out we would hold for higher pips.

I read some time back on how not holding or letting trades run are also a contributing factor to margin calls.

So if we know its going to be a Break Out and we have entered at a good level, than we should try to hold.

The best entries are the ones that are very early and the SL can be moved to BE without price coming and hitting it again.

But we wont get that often.

Watching D TF or even H4 will tell us which are the trades that we can hold for more and which are the ones that we have to take quick profits.

877

Thanks for the advice, as per today at GU pair I entered very good time at 8:00 am when London open and took 69 pip and out as my TP hit,probability was high to break that resistance Around 1.5580. I can hold more 20 pip but I donā€™t want to be greedy. Any advice will be appreciated

878

Take what we are comfortable with.

Use your chart as a guide. Usually a clear chart will ensure that previous highs of a wave will be tested. That is the gist of a system like Deja Vu. Same goes for PA.

But If you are happy with 50 or 60 and dont want to risk it, than bank it.

1 pip in your account is one pip more than what is out there.