Understanding Price Action by Chris Capre

[darthfrancis]

Hola Darth,

14+ years now. Although many of the models I use to trade price action, I learned in my early time/first years.

Now its just a matter of refining the little details. Sometimes a small adjustment leads to a big result in edge, especially over time.

A key turning point was realizing a long time ago, how price action patterns, like pin bars, inside bars, and engulfing bars, are more often than not, giving a sub-optimal entry.

But I still train in the core models every week/day. It’s amazing how getting down those key models helps one to see more, and go way beyond patterns (which leaves you reactive, not responsive).

As for the Neo 101010101101010, ‘There is no spoon’

Kind Regards,
Chris Capre

lol, **** what pill do I take?! Kudos for sticking with the 14 years. im sure you’ve seen many fade by the wayside.

'best

Darth

[2ndSkiesForex]

Trading Humor: Hump Day Edition (On Leverage)

Kind Regards,
Chris Capre

[MerryTrader]

The AUDUSD has just shot up with the minimal of retracements, I’ve not had time to trade, I wouldn’t have gone in, my minimum would be 38.2, but it shows to me that these trades are worth pursuing, just what I’m thinking, would love some comments.

[MerryTrader]

@2ndSkiesForex

Trading Humor: Hump Day Edition (On Leverage)

Kind Regards,
Chris Capre

No no, that’s beverage

[2ndSkiesForex]

The AUDUSD has just shot up with the minimal of retracements, I’ve not had time to trade, I wouldn’t have gone in, my minimum would be 38.2, but it shows to me that these trades are worth pursuing, just what I’m thinking, would love some comments.

Do you have a chart so we can see what you are seeing?

Thanks in advance.

[frxbee]

Thanks for the reply Chris. Much appreciated. Apologies for the delayed reply (I am down with flue).

Hello Mr Frxbee,

Some good questions. I do not know which specific chart you are referring to, so cannot comment on that per se.

But, it should be noted any ‘[B]why[/B]’ behind taking an entry never has to do with an individual candle/price action pattern by itself. My style of price action is different than most others who teach PA.

Most promote price action patterns as the primary reason they enter a trade. Examples could like the ones you mentioned ‘pin bar, inside bar, outside bar, etc’.

I take a different approach, by understanding the price action context first, before anything else.

We do this by gleaning the underlying ‘order flow’ behind the market using our [B]core models[/B]. I mention some of these ‘models’ in the very beginning, such as ‘[B]impulsive[/B]’ or ‘[B]corrective[/B]’ moves. By gleaning these, we understand the following key points;

[B]1) strength and weakness of buyers and sellers
2) buying and selling pressure
3) momentum in the market
4) who’s in control of the market and who is not
5) what is the most likely next direction[/B]

This is a very different approach then those who spend most of their time talking about price action patterns first (pin bar, inside bar, outside bar, etc).

[B]In Summary[/B]
To answer your question of ‘[I]why/what candle formation I used to take the trade[/I]’, then answer is, it most likely had nothing to do with a candle/price action pattern by itself.

Do we use patterns - yes? But one has to understand using those patterns as your primary reason for entry, is that they are most often ‘s[B]ub-optimal entries[/B]’. The key is to know when they are sub-optimal, and when they are not.

Just blindly trading the patterns by themselves is not really understanding price action, and what it means to trade price action.

Using our models, once I have identified the 5 things listed above, then I look for opportunities to trade with strength as much as possible.

I do trade counter-trend, but only if I spot weakness in the trend, or a ‘[B]transition[/B]’ in the dominant price action.

Hopefully this answers your questions.

My apologies if it seemed like a bigger meal than anticipated. I want to give you a different perspective than the vanilla-freshman way of looking at price action - which after a short period of time, you’ll likely find highly inefficient by itself to give you profitable results. If it was, every bank would save them hundreds of thousands of dollars, and just train their traders to use those simple patterns.

Looking forward to your response.

Kind Regards,
Chris Capre

[2ndSkiesForex]

Thanks for the reply Chris. Much appreciated. Apologies for the delayed reply (I am down with flue).

hola frxbee,

sorry to hear you have the flu - never fun being ill, and always makes me appreciate what it is to be healthy.

speedy recovery amigo

[GRIX_FX]

Hello and good morning traders!
Hope ya all had a great weekend Scanning through the markets this morning and the EU has come to my rudder.
After an impressive uprun last week, the pair corrected with weekend gap back to the dynamic S/R. Would like to see an impulse to the upside, however this surely looks like an excellent buy opportunity ahead:

Keeping tabs.

Have a great day ya all!

[MerryTrader]

@2ndSkiesForex

Do you have a chart so we can see what you are seeing?

Thanks in advance.

I’ve got a couple of things out of the way so I can spend more time studying, but also I thought I’d leave it for a few days to see how it was unfolding and I think it makes a better example now.

We still don’t know if it will move ahead upwards, but for the time being I’m going to look at that as an unknown rather than try and figure out if it’s reversing or going forwards, and overthinking.

But the key thing is that I’m sure it’s the shallower retraces that are more likely to give the best trades.

[GRIX_FX]

GM Traders.
Midweek already with lots of intraday sideways moves for the past two days.
Focusing on the USDCAD, which has been pushing up in the last couple of days from a prolonged bearish trend. Interestingly enough, we had a pinbar on the daily chart yesterday. Price was rejected from the EMA 20 as well as round 1.1000 region.

If this is sustained, we may have a sell off as a continuation to the previous bearish trend.

Buena surte amigos!

[kashix]

@GRIX

First, I have no intention of adding confusion to your trade idea. I just want to point out a few things I noticed.

Last Weekly candle was a bullish pinbar, which rejected off a 2010 level. I’m long CAD/CHF so I want U/CAD to go down as well. BOC Press Conference right now, so we’ll see if it creates some volatility.

[kashix]

Downtrending since 2012 and reached this level noted by the horizontal line. We have an engulfing candle upwards.

Next picture shows the breach of the 20 EMA on the Daily chart. I guess I’m guessing that this is the beginning of an uptrend. I longed the retracement. What do you think?

After seeing the candle in blue, I decided to enter. Here’s my SL/TP.

[2ndSkiesForex]

@kashix

@GRIX

First, I have no intention of adding confusion to your trade idea. I just want to point out a few things I noticed.

Last Weekly candle was a bullish pinbar, which rejected off a 2010 level. I’m long CAD/CHF so I want U/CAD to go down as well. BOC Press Conference right now, so we’ll see if it creates some volatility.

Hola Kashix,

I’m guessing grix has no issues with you presenting your ideas. We are happy to see different trade ideas as long as they follow the general rules of the thread.

Your trade idea definitely has merit to it. It’s quite possible both of you can make money on this, as your time horizon is longer than Grix’s.

I don’t trade CAD, but will be following this trade so good hunting.

Kind Regards,
Chris Capre

[2ndSkiesForex]

Hola Traders,

European indices as a whole have been regaining some ground being heavily oversold the last few days.

Looking at the 5 minute chart below on the German Dax, we can see a lot of the elements to a pre-breakout squeeze and 20 ema carry leading into the intraday resistance of 9284 at B.

After a small shakeout, the index found buyers just below the level who held the bids and then attempted to take out the level again.

If the sellers were truly in control, they would not have allowed a third attempt at the level so quickly © followed by a fourth (D).

Notice the consistent buying pressure leading into the final breakout and clearing of 9300.

For now, I’ll watch for corrective pullbacks into 9300 and 9284 to potentially get long. A 1hr close below 9284 and 9260 will likely lead to further unwinding towards 9230 and 9190.

Kind Regards,
Chris Capre

[2ndSkiesForex]

@kashix

Downtrending since 2012 and reached this level noted by the horizontal line. We have an engulfing candle upwards.

Next picture shows the breach of the 20 EMA on the Daily chart. I guess I’m guessing that this is the beginning of an uptrend. I longed the retracement. What do you think?

After seeing the candle in blue, I decided to enter. Here’s my SL/TP.

Hello Kashix,

Just curious, if you have a live trade, how come its not showing up on the chart with the lines showing entry and exit?

Just noticed that, so was wondering.

But its certainly possible there may be a bounce to follow. Either that, or the last 4 candles are a corrective move after an impulsive one, and more selling will resume.

Time will tell.

Kind Regards,
Chris Capre

[kashix]

Hi Chris,

Yes, it’s live. I removed the lines for the weekly chart because it would have been too messy. On the last picture, you see the second yellow circle is where I longed. That gray line is my entry. The teal line at TP1 is actually my only target placed for now (because of FIFO, it’s a hassle to do multiple TP’s). My stop is slightly below where the picture cut off. I figure it’s at least still 1:1 and I’ll see how price breaks down. If I don’t like it, I can manually exit at any point with a profit or loss.

[2ndSkiesForex]

Hi Chris,

Yes, it’s live. I removed the lines for the weekly chart because it would have been too messy. On the last picture, you see the second yellow circle is where I longed. That gray line is my entry. The teal line at TP1 is actually my only target (because of FIFO, it’s a hassle to do multiple TP’s). My stop is slightly below where the picture cut off. I figure it’s at least still 1:1 and I’ll see how price breaks down. If I don’t like it, I can manually exit at any point with a profit or loss.

Ahh ok - roger that. Thanks for clarifying.

BTW - what platform is that as I don’t recognize it?

[tonyro44]

My 2 cents, yes the FIFO is hard to trade multiple trades on the same pair because if you put in place, a T/P order it will be the same for all your trades on that pair.

Hi Chris,

Yes, it’s live. I removed the lines for the weekly chart because it would have been too messy. On the last picture, you see the second yellow circle is where I longed. That gray line is my entry. The teal line at TP1 is actually my only target placed for now (because of FIFO, it’s a hassle to do multiple TP’s). My stop is slightly below where the picture cut off. I figure it’s at least still 1:1 and I’ll see how price breaks down. If I don’t like it, I can manually exit at any point with a profit or loss.

[kashix]

@Chris - The platform is Marketscope.

@Tony - Yes, it’s really a pain. Instead of putting a TP/SL, you’d have to make a complex OCO order using limit orders of varying amounts to close your position. What I do is, I watch price action and manually close half at certain levels.

[kashix]

Hahaha Chris…

You use Marketscope. I see it in your videos. If you go to your Trading Station, then to Options > Skins, there are a few you can choose from. I’m using Midnight.