Reversals of the market happen all the time on the D TF.
So assuming that we had religiously followed the communist system and we bought on the following day intraday H1 and H4 candles on the lowest low and sold at the highest high and we coupled that with a reasonable risk to reward ratio and money management, than you can see that for every 4 or 5 consecutive trades, you might have one looser.
If calculated, you are about 70 to 80% profitable on your entries, which coupled with a 1:2 RRR, you will be seeing exponential growth. If you had followed candle patterns, the RRR on this method can easily be 1:3 or higher.
Forex is about averages and statistics, no one can trade without loosing a position every now and than. Most loose nearly half of their positions, but still make money, because they understand money management and RRR. Its about giving yourself the statistical advantage.
With that being said, there are valid reversal signals on D TF that shows up on candlestick patterns and also correlation.
On a day like today, I would be very cautious buying tomorrow. Unless ofcause the LL on H4 or H1 gives me a very very valid signal with a very very minimal SL and correlation, especially USDCHF shows a sell signal.
If it does not satisfy any one of what I had outlined above, I go about doing some other thing, watch a movie, troll some blogs or post something on babypips. But whatever I do, I dont take a trade.
Remember, PA traders only take entries that they know for a fact is going to be profitable. Atleast they see it being a high probably trade. PA cannot be profitable if we have the itch to take positions daily.
This thread is to teach people on how price moves, the waves, the correlation, the support and resistance areas and how to use candlesticks to trade. Most importantly, it teaches traders how to look at the concept of price bias and in my personal opinion, the most valuable lesson in this thread is about keeping trading very very simple and uncomplicated.
Hence I drum this in every opportunity I get, you dont see what its going to do than dont enter a trade.
Being profitable is not about chasing the market or chasing price daily. Its about staying out of the market most of the time.
So demo this method until you get the idea of how and when to use PA.
To simplify that if today is a buy tomorrow is a buy without understanding the nuances of the entry points and requirement is like me saying earlier in this trade to just a draw a line at the D TF candle close/open and enter a trade when price crosses that line on H1 TF in the direction of bias. It was an example to show newbies a simple fact, and it works in theory, but its not applicable in real live account situations.
I hope it clears things for you.
