On the first page (I think) Nikita does say to watch out for reversal signals on the daily and if there is a reversal signal sit out and wait for the reversal to be confirmed. I dont do the personally I like to trade the reversal but you are better off to wait for confirmation.
A question. If we go by the rule, if yesterday was a buy then today is a buy and vice versa then how important is reading the candlesticks on the D TF. For example, the GU on wednesday formed a nice bearish candle only on Thursday for it to reverse without any real indication even though the correlation with the other pairs was pretty much spot on. What happens in this situation. Is it just a case of you win some you lose some?
It much easier said than done at first. All part of discipline and only you can do something about it. I will say it gets easier to do after time. Especially after you turn loses into profits then it get easier to be able to sit out as you feel like you are not missing anything
Honestly I see what you are referring to and there was really nothing you can do there. It is not a perfect system just a good one and works the majority of the time. Days like that is where sound money and trade management come strongly into play.
I thought as much, thanks for confirming. You canāt get it right all the time (unfortunately)
I wanted to reply to this since last night but did not get the chance to.
Very good questions. I am going to try to keep the answers as short as possible so that you do not have a situation where you are overloaded with information.
- You cannot find good trades and feel that the charts do not make sense to you or you feel that something is not right because correlation is out of whack or any number of reasons, than do not enter. Let it go. Close your real and start up your demo if you must. But do not enter.
If you read two or three pages before this one, you will find an article on what I do before taking a trade. My trade idea, or trade plan is formed way before the market makes its move. The reason is so that I can firstly look at the charts on multiple TF and figure out what I see. I will than decide if its a buy, a sell, or unknown.
Unknowns charts gets moved to the extreme corner of my charts on MT4. The clearest charts gets moved to the other corner. I will than proceed to look at the pairs individually and as a basket for correlation. If I see a correlation and I see that market will continue to move in the same direction as yesterday, I will than proceed to mark previous Support or Resistance Areas to mark where I think I would enter a buy or a sell.
I than sit back and watch. Hourly. Always wait for the candle you are observing to close first before you make your trade call. Sometimes a hammer might end up as a strong bull candle on the last minute or so. Wait for it to finish.
Why all this extra work? Because if you just mark some S&R areas and you dont know what the other related pairs show or are even doing, than you are going to have more loosing trades than what is necessary. Secondly, setting your mind up for a game plan will prevent you from making silly mistakes. Trying to take a trade when we do not even know if there is a reasonable chance of it going to be a buy or a sell will cause us to make amatuer mistakes. Worst still, fundamental mistakes. All because we became emotional. I have had times when I had accidentally entered 10 times the lot size than what I should, just because I was too excited.
- Candles behave in the same manner on all TFs. You just need to spend one good day, 12 hours, looking at an enlarged chart of Min5 or Min15 to understand what I mean by candle opening, body forming and finally it closing. This really helps because no matter what the TF is, candles form and behave the same way.
But than, you also had gone one step ahead and rightly pointed out that candle patterns are only valid when they are at S & R areas,
I hope that everyone can spot immediate S & R areas on our charts. Once these lines are marked, we now need to know if its going to be a buy or a sell. This is where looking into H4, D, W and MTF really helps.
I remember telling friends on this thread that I see GU and EU flying back up earlier in the week. The reason I said so was because I saw the monthly chart on GU and it showed a clear pattern where prices were going to fly back up. It showed a classic pullback pattern.
But than, that is a D TF candle. The SL makes it impossible to trade this TF.
So jump into Weekly and Daily. We will see both of it being bull for the week before. So that tells me that most probably its going to be a buy.
The idea is if its a sell, than its going to be a sell again.
Now, why dont we take that idea way past the D TF?
How if we only sold when all of last weeks candle, say, from H4 to Monthly TF was bearaish?
Will it go down? It will fly like mad. So bias for H1 and H4 can be in seen in DTF. DTFs direction can be seen in Weekly or Monthly.
The reason why we can tell to an extent on where this is going to end up somewhere this month or week is purely by reading higher TFs.
So when say Weekly or even Monthly is at its S&R area, than be prepared to either avoid the entry all together or wait for the reversal or breakout to be
complete and a pullback to occur.
Another important method that we can use is looking at the H4 candle. If its a strong bull and prices on the current candle are showing a bear, than I will look at where the H1 candle broke out of the chart earlier and is now pulling back to the breakout point so that we now can enter on a confirmed trade with very minimal SL.
The same thing when you feel that you are not sure where it prices are going to go, than its best to look at H4 for a quick reference. H4 candles or price will always tend to climb to the extreme ends before deciding on a reversal. That would be the S&R area.
So I hope you get the general idea. All TF is important.
Formation must not only happen in H1. The higher the TF, the better the chance for us to catch a decent move.
Finally, regarding reentry, you should wait for a drop in H4 to be complete and a new candle starts in H1 to find a re entry. This is especially true when the candle reverses and touches your entry point or a previous S & R area that price just broke from upwards or down. The previous Support or Resistance area is where we would be hunting for our re entry.
Sometimes this happens on an H4 chart. Sometimes on H1. But a BPC is a clear indication that prices are going to fly in the direction of bias.
I hope the reply has not made you confused.
We do look at D TF to decide on which way price is going to go.
But, we are also suppose to watch out if D TF is going to hit resistance if we are buying or support if we are selling.
I did mention somewhere on Wednesday or Tuesday, when we were all shorting GU, that something gives me the feeling that GU and EU is going to fly back up.
The reason I said so is because Weekly and Monthly TF on both these pairs, especially Monthly on GU and Weekly on EU showed very strong buy.
When the higher TF of a particular pair is showing a contra signal to what is being shown in the lower TF, we should realise that it will eventually shoot back up.
The only real question was, where do we buy, especially since Monthly and Weekly TF cannot be traded without the aid of smaller TFs.
So it was not totally unexpected.
As far as money management is concerned, I turned down the amount of capital I was risking purely because Correlation was out of whack last week.
When GU and EU shoots up, Aussie and Kiwi either stay at the same spot, or slowly slide downwards.
To me, these are clear signs that something is not right.
Further more, even if we did follow bias without looking too much into the candle patterns on Weekly and Monthly, where is the hammer/pullback or atleast a double top candle on H4, H1, Min30 or even Min15 that day to give you a clear signal that the big boys have come to the party and its time to ride the wave?
I do not see where you could have got an entry for GU on that chart.
On the other hand, 4 hours into that drop, there was a clear reversal signal, with price giving us 3 hours to decide and jump into the accumulation of big money, sometimes giving us a chance to buy with a SL as low as 20 pips, before it decided to fly back up north by 150 pips.
So I dont see why would you short GU on many levels.
No proper candle patterns on Smaller TF indicating a short.
No clear correlation.
If we still did go in for a short, the Risk should be turned to a bare minimum.
What we blindly thought was going to be an easy short was actually a BPC on H4 and D TF.
The system works, its just us who are not looking at the picture as we are intended to do, sometimes.
And those days happen when we cannot see all that we should see in order to take a bigger risk trade, cut down, or stay out all together.
Dont rush and look for trades daily.
Thanks Nikita,
I noticed correlation was out of whack also so I was tentative with my trades. I also need to look at the shorter TFās to give me more of an idea of moves within moves. Something Iāll be looking at next week. One other thing. Iām based in the UK and I base my day start at midnight UK time. Is that right or should i be looking at a different time to give me a better readin of bias?
Thanks again.
Thanks Nikita.
That is going to take some time to sink in / digest. Iāll come back again and again to look the reply.
There is nothing wrong with chasing price action but it has to be scalped the problem is knowing when to exit because the money will not say when its time is finish.
The problem with chasing price is your stop loss gets bigger and your potential profits get smaller. If your going to chase price (please dont) your best chance is if you missed the entry say on the 4hr or 1hr, Drop to the 5-15 min time frames and look for an entry. I dont recommend doing it at all but I will not say I have not done it successfully. But lower risk and really just wait for the next one. Its just not worth the risk at any risk level.
A bit off topic but could someone re-run past me the rules on MM. Iāve got a Ā£3k demo account and my reading of it is I should take Ā£300 of that and risk 10% of that meaning an overall risk on bankroll of 1%. My question is what lot sizes should I be using. Should it be 1 mini lot and once 60 pips is achieved then up the lot size to 2?
Sorry if itās been covered but Iām not to sure and without a good grasp on it I feel as though Iām gambling.
Lets say you had a 10 pip stop loss. This would mean You would enter 3 mini lots. 100 pip stop loss 3 micro lots
One gap, one weekend and I dont see whats going to happen.
Continuity of price action broken.
Guys would it be better if i stop forex for likeā¦ maybe two weeks?
Im having an examination next week and Iām not sure whether I can put all my heart into analyzing the market. My only concern is that I may not know whats happening when i come back after two weeks
AUD/USD breaking the support of 1.03. Anyone say any price signal to short this? The potential win looks lucrative as the resistance is far belowā¦
A good time to see what a break will do for you. Sometimes coming back with a fresh set of eyes can do wonders.
I see it but Iād wait for confirmation and see if it retests the 103. Just my opinion as Iām a noob also 
Canāt help but agree. Just has to be patience to see if it retest with a price signalā¦
Tx
I did catch an entry off the one hour. Didnt get to much out of it I risk 20 pips made 50 so not to bad. I trailed my stop to tight and got taken out early. You are looking at it correctly. If you missed the boat wait for the next one. A retest of 1.03 will probably be your next shot to get in. Dont expect to get to much though as 1.02 has been a very strong level in the past and I would reasonably expect it to hold. Especially if the Aussies cut interest rates. which is to be expect since they had a trade deficit which came as a surprise. I dont trade news but just something to keep in mind if they do make the cut the 1.02 level is the most logical price to do so.