Understanding Price Action by Chris Capre

ApexPredator · May 17, 2013, 8:28am

Hope it works out for you mate.

You raised an important point there, which is that if you are already in a position, and another signal comes up, do you:

A) Do nothing, since you are already in a trade.
B) Add to your existing position and adjust the stop or
C) Just adjust the stop, and dont add to the positon…

Would be interesting to see how you guys approach this.

I prefer to go for B.

Happy trading.
Apex.

bull4ace · May 17, 2013, 10:33am

Hello Apex,

Add on positions on AUDCAD got stopped out. All my 3 trades this week ended negative eating up 3% of my balance. The original position will be held for as long as no trend reversal in sight.

The other set ups that I saw this week went the way I read it but were leaving w/out a trace of me lol.

Anyway, w/ regards to your question. I have the same approach as you do. I am aiming to produce a leg composed of stacked trades for my long term goal. This is the very purpose of my second position.

Cheers.

bull4ace · May 18, 2013, 10:19am

2ndSkiesForex:

Hello BF,

Sorry for the well overdue response. Hope your not mad at me.

A pullback is generally defined as a corrective move against the trend. So if we are in a down trend, then this would be a move that actually goes upward, but slightly and not impulsively. Usually they stop around the 20ema on the higher TFs, sometimes are shy, sometimes just past it, and often go for several bars (4-15), but we have to have a loose definition for this.

The general things to note about pullbacks is they are a) against the dominant trend, and b) generally corrective, and c) they often go to key levels.

Key levels are areas where there was a lot of order flow and price action at those levels. The heavy amount of price action - possibly a strong rejection/reaction, or several rejections there, or holding there, all indicate the buyers/sellers are placing a lot of orders there, because they feel its a serious level to defend or attack. Orders tend to congregate around key levels, and so we need to identify them as they become areas of defense for our trade, or areas to attack when they are weak, or areas for us to enter.
A lot can be said about key levels, so definitely check out the article above.

Does this answer your question regarding what a pullback is?

Kind Regards,
Chris Capre

Hello Chris,

The best summary about key levels. As I’ve said, I read a lot of times your articles about key levels but your description here provides me w/ additional key infos on how to look at key support and resistances and how to approach them.

Your choice of words here pushed the switch on the light bulb in my head.

Kudos to this.

2ndSkiesForex · May 18, 2013, 10:52am

Hello B4A,

I am glad you liked the article as I wanted to write something about key levels for some time, and put some gusto in this one about how I approach key support and resistance levels.

But always glad to turn a light switch on.

Kind Regards,
Chris Capre

bobmaninc · May 18, 2013, 7:00pm

V
Very good question. For me I do all of the above. It depends on my risk exposure. I will not add on to a position unless the position I am adding is only risking margin already gained from the last position. Meaning say I am in a trade and its up 50 pips. I have already banked some and moved the stop to BE and price pulls back say 20 pips into a S/R level and gives a good signal to enter in the direction of my trade. 50pips - the 20pip pullback= 30 pips is all I can risk. Now this could go deeper into position sizing and all for risk but I am sure you get the point.

If I would assume any additional risk then I will just adjust the stop and wait for price to go further into profit (since you have a good chance of this fact).

If there would not be good breathing room for my trade already in profit or adjusting the stop still would not get me to BE then I do nothing.

ApexPredator · May 19, 2013, 2:42am

"bobmaninc":

V
Very good question. For me I do all of the above. It depends on my risk exposure. I will not add on to a position unless the position I am adding is only risking margin already gained from the last position. Meaning say I am in a trade and its up 50 pips. I have already banked some and moved the stop to BE and price pulls back say 20 pips into a S/R level and gives a good signal to enter in the direction of my trade. 50pips - the 20pip pullback= 30 pips is all I can risk. Now this could go deeper into position sizing and all for risk but I am sure you get the point.

If I would assume any additional risk then I will just adjust the stop and wait for price to go further into profit (since you have a good chance of this fact).

If there would not be good breathing room for my trade already in profit or adjusting the stop still would not get me to BE then I do nothing.

Hi Bob, thanks for the reply. Thats similar to what I do, adjust the stop to BE and then add some positions.

I also agree that the breathing room has to be there, or you risk getting stopped out.

Thanks again.
Apex.

ApexPredator · May 19, 2013, 2:45am

Hi bull, thanks for the reply, hope the week ahead brings you success.

And yes, building that alpha by adding positions is a very nice feeling indeed!

ApexPredator · May 19, 2013, 8:40am

Hey guys, a few days ago I said I was going to forward test a 1 minute strategy… Well my strategy appears to work, and it seems as though institutions are using a similar method because the markets are responding at the same levels consistently, this means that the system isnt really one I can use on a 1 minute since I always get slipped on my order as I lose out to the big guns in the market (on smaller TF’s entry is everything!) which is a shame because we are talking 10’s of risk multiples a day here…

Therefore, I think 5 minute is the smallest a retail trader can go. Also, the 5 minute gives you more thinking time compared to the 1 minute - you’ll need a robot to trade the 1 minute effectively.

Going to do some more forward testing on the 5 minute this week, and hopefully it will work out well.

I just thought some people were wondering how my 1 minute testing was going.

Thanks for reading!
Adiós!
Apex.

BRAZILIANFOREX · May 19, 2013, 8:48pm

2ndSkiesForex:

Hello BF,

Sorry for the well overdue response. Hope your not mad at me.

A pullback is generally defined as a corrective move against the trend. So if we are in a down trend, then this would be a move that actually goes upward, but slightly and not impulsively. Usually they stop around the 20ema on the higher TFs, sometimes are shy, sometimes just past it, and often go for several bars (4-15), but we have to have a loose definition for this.

The general things to note about pullbacks is they are a) against the dominant trend, and b) generally corrective, and c) they often go to key levels.

Key levels are areas where there was a lot of order flow and price action at those levels. The heavy amount of price action - possibly a strong rejection/reaction, or several rejections there, or holding there, all indicate the buyers/sellers are placing a lot of orders there, because they feel its a serious level to defend or attack. Orders tend to congregate around key levels, and so we need to identify them as they become areas of defense for our trade, or areas to attack when they are weak, or areas for us to enter.

A lot can be said about key levels, so definitely check out the article above.

Does this answer your question regarding what a pullback is?

Kind Regards,
Chris Capre

Hello Chris! Good night!

I just read your article on the fundamental levels and undoubtedly now much easier to trade pullbacks and knowing what it is and how to make it a trend.

Every time I read your articles more, but I’m getting a taste for trading in forex and I’m more motivated and see how it is possible to lead a life trading when we have someone to instruct us to take the right path and follow the exact direction.

As I like to deal only in favor of the trend was very important for me to clarify these concepts of what is a pullback and breakout, and what were fundamental levels. Now I understand, summarizing on fundamental levels, they need to have at least two subcultures to be used as support or resistance levels. Basically that’s what I understood.

I get very motivated when I read your articles and they help me a lot to improve my trading.

Again thank you for your cooperation!

GRIX_FX · May 20, 2013, 1:29am

ApexPredator:

Hey guys, a few days ago I said I was going to forward test a 1 minute strategy… Well my strategy appears to work, and it seems as though institutions are using a similar method because the markets are responding at the same levels consistently, this means that the system isnt really one I can use on a 1 minute since I always get slipped on my order as I lose out to the big guns in the market (on smaller TF’s entry is everything!) which is a shame because we are talking 10’s of risk multiples a day here…

Therefore, I think 5 minute is the smallest a retail trader can go. Also, the 5 minute gives you more thinking time compared to the 1 minute - you’ll need a robot to trade the 1 minute effectively.

Going to do some more forward testing on the 5 minute this week, and hopefully it will work out well.

I just thought some people were wondering how my 1 minute testing was going.

Thanks for reading!
Adiós!
Apex.

Hello Apex,

Good to hear that the M1 strategy is working for you. Be sure to let me know when you get to H4, I can join you on that…sorry am a H4 trader only;).

danyrexy · May 20, 2013, 2:02am

After two good baggings on USD/CAD and Gold last week, I can look forward to a fundamentally quiet week ahead but still the market trends are on and chances are gonna be there to trade. Price Action just rocks!

ApexPredator · May 20, 2013, 2:25am

Its French, German and swiss bank holidays today… Certainly going to have an impact until the US session.

Also, Evans from the FOMC is going to speak which may spark something late on.

Trade safe bros!!

Apex.

bull4ace · May 20, 2013, 4:25am

bobmaninc:

V
Very good question. For me I do all of the above. It depends on my risk exposure. I will not add on to a position unless the position I am adding is only risking margin already gained from the last position. Meaning say I am in a trade and its up 50 pips. I have already banked some and moved the stop to BE and price pulls back say 20 pips into a S/R level and gives a good signal to enter in the direction of my trade. 50pips - the 20pip pullback= 30 pips is all I can risk. Now this could go deeper into position sizing and all for risk but I am sure you get the point.

If I would assume any additional risk then I will just adjust the stop and wait for price to go further into profit (since you have a good chance of this fact).

If there would not be good breathing room for my trade already in profit or adjusting the stop still would not get me to BE then I do nothing.

Hello Bob,

I couldn’t have said it any better. This is also my kind of trade management.

Cheers.

bull4ace · May 20, 2013, 4:27am

ApexPredator:

Hey guys, a few days ago I said I was going to forward test a 1 minute strategy… Well my strategy appears to work, and it seems as though institutions are using a similar method because the markets are responding at the same levels consistently, this means that the system isnt really one I can use on a 1 minute since I always get slipped on my order as I lose out to the big guns in the market (on smaller TF’s entry is everything!) which is a shame because we are talking 10’s of risk multiples a day here…

Therefore, I think 5 minute is the smallest a retail trader can go. Also, the 5 minute gives you more thinking time compared to the 1 minute - you’ll need a robot to trade the 1 minute effectively.

Going to do some more forward testing on the 5 minute this week, and hopefully it will work out well.

I just thought some people were wondering how my 1 minute testing was going.

Thanks for reading!
Adiós!
Apex.

You’re going great on what you’ve been doing mate. Keep it up!

perryfx · May 20, 2013, 9:17am

Apex,

Hope all is well with you. No new trades for me at the moment. Closed my AU short and still holding my GU short from the last week. How about you ?

perryfx · May 20, 2013, 9:19am

Looks like we have a spammer here to give signals to the PA traders.

Your tricks won’t work specially on this thread. Good luck and I suppose Babypips will take action.

2ndSkiesForex · May 20, 2013, 9:52am

Did he get banned/removed already? Couldn’t find the post, but if you remove the link from your ‘quote’, then nobody will go to his site.

Kind Regards,
Chris Capre

2ndSkiesForex · May 20, 2013, 9:54am

BRAZILIANFOREX:

Hello Chris! Good night!

I just read your article on the fundamental levels and undoubtedly now much easier to trade pullbacks and knowing what it is and how to make it a trend.

Every time I read your articles more, but I’m getting a taste for trading in forex and I’m more motivated and see how it is possible to lead a life trading when we have someone to instruct us to take the right path and follow the exact direction.

As I like to deal only in favor of the trend was very important for me to clarify these concepts of what is a pullback and breakout, and what were fundamental levels. Now I understand, summarizing on fundamental levels, they need to have at least two subcultures to be used as support or resistance levels. Basically that’s what I understood.

I get very motivated when I read your articles and they help me a lot to improve my trading.

Again thank you for your cooperation!

Hello BF,

I am glad the follow up helped and you are getting more motivated, understanding and confident in your trading as that is my goal with this thread and work.

Kind Regards,
Chris Capre

ApexPredator · May 20, 2013, 10:35am

Hi Perry!
Had a few trades whilst forward testing the new 5 minute system.

I got hit for a few breakevens before snagging 6+RR in total across all pairs in the morning session… The important thing is Im not getting slipped on my entry as I was on the 1 minute!

But yeah, on my live account, no trades today mate. Im sure that FOMC event is going to make a nice move so watch out for PA or step away from the train!

Trade safe mate.

Apex.

ApexPredator · May 20, 2013, 10:46am

Hi bull, thanks a lot!

It was certainly very fun following the 1 minute chart for a few days, and people make it seem as though absolutely everything on the 1 minute is pure noise… But if your trading with the momentum moves, the 1 minute timeframe can be very prosperous indeed!

Not for retail traders though!

Thanks for the support, ill let the forum know how the 5 minute goes!

Thanks again!
Apex.