My price-action strategy

Hi folks,

 

Due to the demand/requests of some traders that are struggling around, I decided to share how I trade on a regular basis.

Here is the thread I am referring to:

http://indo-investasi.com/showthread.php/6052-How-are-you-making-money

 

As I am not a professional e-book writer which sells e-books on an every-day-basis nor I am a professional teacher - I decided to make this thread this way.

 

I will update THIS post on a regular basis and will add chapters when we finished one.

I also update the chapters on a regular basis.

 

I will do this on this way because I saw on many forum very good threads, but they have 1000s of pages and you will get LOST.

Example: J16-Thread on FF, nobrainertrades on FF,...

So - Always use this post as a reference and have a look at this post in a regular basis.

 

As I do not want to bore any super-skilled trader I will state here in 1 sentence how my system works:

 

I trade PIN-BARS, Inside-Bars, Fake-Breakouts and 2-Bar PIN-Bar candlestick-pattern when they occur at a support/resistance-line in the direction of the trend. If there are additional price-action-confluences like Trendline, Fibonacci-Retracement, Fibonacci-Cluster -> The setup becomes more valid.

 

1.) What will move the market ?

http://indo-investasi.com/showthread.php/13455-My-price-action-strategy?p=156626&viewfull=1#post156626

 

2.) How does the market move ?

http://indo-investasi.com/showthread.php/13455-My-price-action-strategy?p=156638&viewfull=1#post156638

2.1) EXCERCISES

http://indo-investasi.com/showthread.php/13455-My-price-action-strategy?p=156864&viewfull=1#post156864

http://indo-investasi.com/showthread.php/13455-My-price-action-strategy?p=156869&viewfull=1#post156869

3) Support/Resistance with Fibonacci-confluence

http://indo-investasi.com/showthread.php/13455-My-price-action-strategy?p=157305&viewfull=1#post157305

 

Cheers

 

fxfxfx

Edited June 9, 2011 by fxfxfx

What drives the market ?

 

The market is driven by: PSYCHOLOGY of the masses !

Uff ? Now maybe you expected something more spectacular ;-) ?

 

Yes - folks! Your price-chart is nothing more and nothing less than the reflection of the psychology of the masses !

 

When the majority of the masses thinks that price goes up (positive news events, positive rumours, special price-formations..) price WILL go up.

When the majority of the masses thinks that price goes down (negative news events, negative rumours, special price-formations..) price WILL go down.

 

This is a FACT !

 

And I mean with the majority not the amount of people - I mean the amount of people multiplied with their capital (We small "hobby"-traders only have small impact to price).

 

This also means:

When thousands of BIG BUY-orders are sitting at a specific price-level, price WILL go UP !

When thousands of BIG SELL-orders are sitting at a specific price-level, price WILL go DOWN !

 

But this also means: There must be a something in "common" what makes these people think that price will go up or down.

Do you really think that this could be an indicator or an EA ?

Did you know that there exists THOUSANDS of indicators with literally and endless amount of parameters.

CCI (1), CCI(99), MA(5), MA(99988), MACD(444), MACD(39488),.... ?

 

Do you get the idea behind my question ?

They could never have one common thing that they (all these indicators in summary) say: BUY now ! This is impossible as even ONE indicator could have an endless amount of parameters !

 

Why do you think that your brokers offers you so many indicators ;-)

 

What is the feed for every indicator ?

You got it: PRICE !

Why do you trade only the reflection of price (this is what an indicator is) ?

 

Do not get me wrong - I will not say that indicators or EAs does not work ... But i do not know anybody PERSONALLY who makes CONSISTENT money over a LONG TIME-PERIOD !

Most (if not all) EAs or indicators are curve-fitted. This means that they work for a certain period of time but when market-condition changes -> They start to fail (Is there an A-HA effect and/or did you also know this situation probably?) !

 

I also must say that so many people are seeking for the holy-grail: Wake up, people: This holy grail does not exist, because if it exists we ALL would have a problem ! Our financial system will collapse ! There MUST be a certain amount of risk ;-)

Only if you accept this and trade in a logical way with common-sense you will succeed !

You also must accept that you MUST take trading serious ! Treat it like a business (because in fact it is a business).

Also accept that this trading-method probably will NOT work for you (I am not an ego and say that this strategy is the best and that this will work for you - as I can NOT guarantee this).

Even when 2 people are doing the EXACT same business it will happen that 1 will succeed and 1 will fail !

 

This strategy is in fact not "my" strategy - This concept exists for a VERY long time and is nothing new to most traders.

 

You probably would say: But when I do not need any indicator - Why are there so many ?

I will clarify this for you:

Long time ago the japanese people traded rice successfully only with price-action. At a certain point of time the PCs became so cheap that everybody was able to buy one -> And then: Why only trade with this BOOORING price-action-stuff when we have computers which can do soo much more than a human brain. These days were the start of the indicators. Why did the people use it ? Because it is "unsexy" to not use them !

 

Listen: Rice was traded at times where Expert-Advisor and Indicators were unknown words ;-) successfully for AGES - and still people trade it successfully !

 

Although Trendlines, Fibonacci and S/R - lines are basically also indicators ;-) I personally do not count them as indicators....

Edited June 5, 2011 by fxfxfx

How does the market move ?

 

How does the market move ?

 

The market moves in 3 directions:

 

1.) BULLISH (price makes Higher Highs and Higher Lows)

 

2) BEARISH (price makes Lower Highs and Lower Lows)

 

3) SIDEWAYS (price makes equal Highs and equal Lows)

 

Will update these 3 directions with pictures....

 

1) BULLISH:

Price makes Higher Highs and Higher Lows:

An impulsive swing is followed by a retracement-move which DO NOT retrace (close) below the start of the last impulsive move

The majority is very confident that Price will go UP.

http://img810.imageshack.us/img810/7933/uptrend.gif

 

2) BEARISH:

Price makes Lower Highs and Lower Lows:

An impulsive swing is followed by a retracement-move which DO NOT retrace (close) above the start of the last impulsive move.

The majority is very confident that Price will go DOWN.

http://img853.imageshack.us/img853/5593/downtrend.gif

 

3) SIDEWAYS:

Price makes Equal Highs and Equal Lows:

Price makes a swing upwards/downwards followed by a swing in the opposite direction which close (or high/low) is near the beginning of the first initial move and then again retraces to the other side of the "channel". -> Will update this with a picture

The majority is unsure of how price will move and therefore trade from one side of the channel to the other side of the channel (little bit self-fulfilling *g*) until there comes clarity (news-event or price moves sharply outside the channel and also closes outside the channel).

http://img842.imageshack.us/img842/3800/sideways.gif

Edited June 5, 2011 by fxfxfx

Hi fxfxfx. Funny I'm the first one posting here as I only happened to see the other thread half an hour ago, while I see many posters already interested in your theory over there. I totally agree with your idea of trading PA since I too, as many of us here, come from a long path of disappointing trades based on indicators and systems (never EA's though - at least I take this merit LOL) which always lead me nowhere. I only started to study PA seriously not long ago, mainly based on Sam Seiden's teaching, which have started to show some good results although still on demo. I'm keen on knowing more of your strategy and hope to see more very soon. Thanks for taking the time and passion to share your successful hints, and I have to say I like the idea of questions and answers like at school. Looking forward to your next posts. :) Edited June 5, 2011 by alright

Hi alright,

 

Sam Seiden is one of the very few good mentors/teachers which you can find at the web.

 

Maybe also take a look at Nial Fuller (Never bought his course, but he has the most stuff on his website for free).

 

Search this forum for "Nial Fuller" and I am sure you will find his website.

 

Also a very good site (and also a free one) is forex4noobs.

 

Cheers

 

fxfxfx

Ji fxfxfx. Funny I'm the first one posting here as I only happened to see the other thread half an hour ago, while I see many posters already interested in your theory over there. I totally agree with your idea of trading PA since I too, as many of us here, come from a long path of disappointing trades based on indicators and systems (never EA's though - at least I take this merit LOL) which always lead me nowhere. I only started to study PA seriously not long ago, mainly based on Sam Seiden's teaching, which have started to show some good results although still on demo. I'm keen on knowing more of your strategy and hope to see more very soon. Thanks for taking the time and passion to share your successful hints, and I have to say I like the idea of questions and answers like at school. Looking forward to your next posts. :)

Edited June 5, 2011 by fxfxfx

Just a side note

 

Hi folks,

 

I want to give here a short side-note which has nothing to do with the trading-style:

 

How can I identify if a Website which is selling a Forex-product is good or not ?

 

1) They all look the same !

They have nearly everything in 1 page (no sections, forum, videos, free stuff, FAQ,...) packed and you have to scroll hours until you come to the end of the page (full of garbage comments of testimonials)

No joke guys: Look at the products that you have bought and compare their websites ;)

 

2) They all cost(s) about 70-90 USD !

 

3) They do NOT provide any free info (except a short report which says nothing)

 

4) They all have photos of guys with a Ferrari or some other kind of expensive car or house,....

 

Of course this does NOT apply to ALL sites, but chances are high that when the elements above applies to a site that the product itself is **** :-(

 

Hope this helps,

 

Cheers

 

fxfxfx

4) They all have photos of guys with a Ferrari or some other kind of expensive car or house,....

You're forgetting the guy trading with a laptop under a palm tree from some exotic beach...:))

alright,

 

You are right ;-)

 

Missed this one - Often he has a glass of some exotic drink...

 

Probably this is the reason why the guy is seeing so many indicators (with so much alcohol inside) ;)

 

Will go to bed now because in austria it is already after midnight and I am tired now.

 

Read my posts and think about it.

 

After my lessons you will probably be able to see the market like Neo in "The Matrix" - and not like the guy on the beach with the exotic drink inside his blood ;)

 

You're forgetting the guy trading with a laptop under a palm tree from some exotic beach...:))

Hi Fxfxfx,

 

Thanks so much for sharing your Price Action methodology. I have been deeply studying the excellent YTC Price Action course (available here on indo) and believe your methods will compliment YTC nicely. I have subscribed to this thread and will certainly be following and participating... when I think long and hard, Price Action is about the only thing that makes sense and you can really trust. Why trade "shadows"(indicators) when you can directly trade the reality of what is actually happening ?

 

Cheers!

 

Diesel10

Hi Diesel 10,

 

Yes, YTC is also good as I basically like his teachings about simple retracements and complex retracements and also his definition when the trend has changed.

You will find for sure the one or other thing which you probably know of YTC ;)

 

Just food for thought: Do not be surprised as the trading-system itself is NOT the big secret how to succeed in the trading-market ;)

 

OK - but now I really go to bed.

 

More will come tomorrow...

 

Cheers @all

 

fxfxfx

 

Hi Fxfxfx,

 

Thanks so much for sharing your Price Action methodology. I have been deeply studying the excellent YTC Price Action course (available here on indo) and believe your methods will compliment YTC nicely. I have subscribed to this thread and will certainly be following and participating... when I think long and hard, Price Action is about the only thing that makes sense and you can really trust. Why trade "shadows"(indicators) when you can directly trade the reality of what is actually happening ?

 

Cheers!

 

Diesel10

Price moves when there is an imbalance in Supply & Demand. If they are matched price will remain where it is, all being the same. Find on your chart where this imbalance occurs and you will be ahead of most people.

Hi shabz,

 

You are totally right ;)

It is all about supply and demand.

 

Supply and demand is only the reflection of the psychology of the masses -> When the majority thinks that price will rise (and can rise) for a product/share/,... -> price will go higher - regardless if there is a need for it or not -> Even when it is overbought or oversold !

 

But the tricky part is not to find the level where price will go up or down (because price nearly does this every time).

The tricky part is: where do I jump in (this is the simple part by spotting these levels), what do I accept as my maximal loss and where do I get out of the trade...

 

I can nearly buy at any price and have no stoploss and have enough margin and I can hope that price will eventually go to my direction (at some time) - And then the next question: Where do I get out of the trade ?

 

Cheers

 

fxfxfx

 

Price moves when there is an imbalance in Supply & Demand. If they are matched price will remain where it is, all being the same. Find on your chart where this imbalance occurs and you will be ahead of most people.

fxfxfx,

 

thanks for sharing you thoughts...

 

yeah price action rules....

 

PH

You're forgetting the guy trading with a laptop under a palm tree from some exotic beach...:))

 

http://learntotradethemarket.com/wp-content/uploads/NialBeachTrader-onBeach72dpi8in2-215x270.png

 

The first picture on Nial Fuller's website. It gets really hazy trying to sort the good guys vs bad guys. I guess they both use the same sort of advertisement.

Great thread, keep continue.

 

Cheers.

fxfxfx,

I discovered your postings today and you sound like a teacher, oh no .... you sound like a good teacher.

 

Since some of us have read hundreds of threads at FF or other forums where about 100 "teachers" catch the attention of people but most strategies fail and are a big waste of time,

would you feel offended when asked (by me) to show us your qualifications ?

 

Qualifications ?

What is that ?

 

Easy:

Since when is your trading profitable ?

How profitable is it ? ( risk % per trade, risk-reward, average win rate and such things )

Do you trade a real money account or Demo ?

Regardless which, it is so easy to use myfxbook or other services which don´t show your name and your broker name, account-number.

I would like to see your results.

That talks louder than thousands of words.

 

I am not here to offend you, but I read similar "teaching threads" many times and you certainly know how to put the words, very promising and appealing,

but please first show me ( us ) the cold facts about your own trading success.

 

Thank you.

Hi,

 

Yes - but the small difference is that Nial do not uses perfect Model-Photos - He uses a cartoon of himself ;-)

He is really funny this guy :-)

 

Cheers

 

fxfxfx

 

http://learntotradethemarket.com/wp-content/uploads/NialBeachTrader-onBeach72dpi8in2-215x270.png

 

The first picture on Nial Fuller's website. It gets really hazy trying to sort the good guys vs bad guys. I guess they both use the same sort of advertisement.

In my opinion the only qualification that matters in Forex is experience and plenty of it:-). The one thing that I have learnt in this business is that you can never stop learning.

 

fxfxfx, refreshing thread, thanks.

 

All the best,

Dave

I have some question.

 

I'm a scalper , mean I realise my P/L every day, most in minutes sometimes but rarely in hours.

 

I make a gain around 0.6% average per day, by an average of 12 trades per day.

 

so my question is, how long is the average time of the trades and how many trades per month you do and how long you hold on your trades.

 

my problem is not only the psycho to wait longer for realise the P/L also my broker "dukas" has a big swap rate, over the night I have to pay 3 pips for euro.

 

so I ask for the account and technical basis to trade this style:

 

Broker?

 

account size to make a living, will say need $1000/ month

 

Time consume, how often has to check trade setups

 

Time consume ,how often has to check , babysit, the trade

 

thanks in advice

 

cheers

Hi fxeasy5,

 

I understand your point as I must say that I also asked these kind of question(s) to my mentor.

But maybe I will dis-appoint you (As I also was dis-appointed when I asked this my "mentor").

 

I will not share my results at mt4stats or myfxbook or so for a very reasonable reason (at least for me - But I am maybe a little paranoid ... But this is the exact same reason as my mentor did not provided these stats to me...)

 

So I do not want to dis-appoint here anybody - You will not get any stats here in this public forum.

 

I am not sure if I should disclose my success-rate because this ususally leads that people think that they must achieve the same .... - but let's say it is little bit above 50%....

Risk % per trade is no prob: 2% per Trade

Potential Risk/Reward is mostly 1:4

 

You have these options.

 

1) Simply ignore my thread (And i would not be angry to you if you would do this, as I understand your point)

2) Learn from my thread and my system does not work for you (At least you would have learned a lot of basics)

3) Learn from my thread and my system works for you (At least you should be profitable)

4) The demand will decrease/stop -> I just simply stop posting and the thread can be closed.

 

But 1 thing is for sure: This thread will NOT be a waste of bandwidth -> I will try to bring things forward as fast as possible.

 

I leave the decision to everyone to choose it for their own if they want to continue my thread...

 

I trade real money for a little bit less than 1 year and demo for 2 years.

I firstly started trading profitably for about 1.5 years ago

 

Cheers

fxfxfx

 

 

fxfxfx,

I discovered your postings today and you sound like a teacher, oh no .... you sound like a good teacher.

 

Since some of us have read hundreds of threads at FF or other forums where about 100 "teachers" catch the attention of people but most strategies fail and are a big waste of time,

would you feel offended when asked (by me) to show us your qualifications ?

 

Qualifications ?

What is that ?

 

Easy:

Since when is your trading profitable ?

How profitable is it ? ( risk % per trade, risk-reward, average win rate and such things )

Do you trade a real money account or Demo ?

Regardless which, it is so easy to use myfxbook or other services which don´t show your name and your broker name, account-number.

I would like to see your results.

That talks louder than thousands of words.

 

I am not here to offend you, but I read similar "teaching threads" many times and you certainly know how to put the words, very promising and appealing,

but please first show me ( us ) the cold facts about your own trading success.

 

Thank you.

Edited June 6, 2011 by fxfxfx

Hi harry007,

 

I ususally trade 4 hourly upwards as it suits to my lifestyle (I am not a retired trader at the moment and also have a day-job).

4 hourly trades are usually opened 1-2 days, but sometimes also only a few hours -> But we also target a few hundred pips ... so when we target 200-300 PIPS and you deduct your 3*2 pips there should be enough PIPS left.

 

Account-size to make a living you will approx. need 7000 - 10000 to make this 1000/month -> But this can not be said here in general as you make sometimes more and sometimes less -> I will show some techniques how to fatten the account(s) - But do not consider to quit your day-job until you have at least so much money in your bank-account that you can survive for a few years !

 

Time-consuming: When you babysit the trades you need every 4 hour a few minutes -> If you do not have the possibility then you have to apply a set-and-forget strategy where you do not need to babysit the trade and let it just run...

 

Broker: I do not want to discuss this in this public forum as I have my very own special reasons to avoid it (Call me a paranoid)...

 

So - Maybe this not the right strategy for you as it can reaally be hard (mentally) when you are a scalper to change to a swing-trader - I know this by myself -> It was a hard process !

 

Hope this helps...

 

Cheers

 

fxfxfx

 

I have some question.

 

I'm a scalper , mean I realise my P/L every day, most in minutes sometimes but rarely in hours.

 

I make a gain around 0.6% average per day, by an average of 12 trades per day.

 

so my question is, how long is the average time of the trades and how many trades per month you do and how long you hold on your trades.

 

my problem is not only the psycho to wait longer for realise the P/L also my broker "dukas" has a big swap rate, over the night I have to pay 3 pips for euro.

 

so I ask for the account and technical basis to trade this style:

 

Broker?

 

account size to make a living, will say need $1000/ month

 

Time consume, how often has to check trade setups

 

Time consume ,how often has to check , babysit, the trade

 

thanks in advice

 

cheers

Hi harry007,

 

I ususally trade 4 hourly upwards as it suits to my lifestyle (I am not a retired trader at the moment and also have a day-job).

4 hourly trades are usually opened 1-2 days, but sometimes also only a few hours -> But we also target a few hundred pips ... so when we target 200-300 PIPS and you deduct your 3*2 pips there should be enough PIPS left.

 

Account-size to make a living you will approx. need 7000 - 10000 to make this 1000/month -> But this can not be said here in general as you make sometimes more and sometimes less -> I will show some techniques how to fatten the account(s) - But do not consider to quit your day-job until you have at least so much money in your bank-account that you can survive for a few years !

 

Time-consuming: When you babysit the trades you need every 4 hour a few minutes -> If you do not have the possibility then you have to apply a set-and-forget strategy where you do not need to babysit the trade and let it just run...

 

Broker: I do not want to discuss this in this public forum as I have my very own special reasons to avoid it (Call me a paranoid)...

 

So - Maybe this not the right strategy for you as it can reaally be hard (mentally) when you are a scalper to change to a swing-trader - I know this by myself -> It was a hard process !

 

Hope this helps...

 

Cheers

 

fxfxfx

 

thanks for your quick and comprehensive answer,

 

I will follow you thread and I will used a other real account to try to become a feeling for swing trades, first by smaller pipvalue

 

Thanks again for your Time, I know we make a lot of more work for you

so I really appreciate your work for us

cheers

Hi Harry,

 

Please only trade this strategy on a live-account when you tried it out on demo and get a "feel" for it.

But it will take a little bit until I explained everything.

 

Cheers

 

fxfxfx

 

thanks for your quick and comprehensive answer,

 

I will follow you thread and I will used a other real account to try to become a feeling for swing trades, first by smaller pipvalue

 

Thanks again for your Time, I know we make a lot of more work for you

so I really appreciate your work for us

cheers

But the tricky part is not to find the level where price will go up or down (because price nearly does this every time).

The tricky part is: where do I jump in (this is the simple part by spotting these levels), what do I accept as my maximal loss and where do I get out of the trade...

 

I can nearly buy at any price and have no stoploss and have enough margin and I can hope that price will eventually go to my direction (at some time) - And then the next question: Where do I get out of the trade ?

 

Cheers

 

fxfxfx

 

If you know where the supply & demand levels are, then all you need to know is the dominant trend, preferably confirmed also by a higher timeframe.

 

If you take the break of the demand level, then your stop level is the other side of the supply level (this is where you are wrong) and your first TP, should be the distance between the supply & demand levels and then projected forward from the breakout point. Fib Tool can plot this automatically on the chart.

 

At this point I would take partial profits & breakeven plus a couple of pips on the rest.

This fits in with the classic ABCD pattern. Any further moves can be controlled by a trailing stoploss.

 

I think trading without a stoploss, leaves you with an undefined risk, and while you may be right eventually will lead to bigger risk taking & bad habits. Especially if your take profit is smaller than your risk, you will have one bad trade that will wipe out the profit of many good hard earned trades. I would stand aside from a trade that does not carry at least a 1:1 RR, 1.5 & higher is better of course.

Hi shabz,

 

Thx for you post - of course you are right.

But I also explained how I trade in my 1st post in this tread and I do not think that users know how to trade this strategy as some of them are not that skilled like you...

They need simply a helping hand who shows them what to do step-by-step (At least at the beginning) - And as I said: There exists more than 1 successful system - This what I want to describe here worked for me.

And I also think that the system itself is not the big secret - There are other factors which makes trading it successful.

 

Cheers

 

fxfxfx

 

If you know where the supply & demand levels are, then all you need to know is the dominant trend, preferably confirmed also by a higher timeframe.

 

If you take the break of the demand level, then your stop level is the other side of the supply level (this is where you are wrong) and your first TP, should be the distance between the supply & demand levels and then projected forward from the breakout point. Fib Tool can plot this automatically on the chart.

 

At this point I would take partial profits & breakeven plus a couple of pips on the rest.

This fits in with the classic ABCD pattern. Any further moves can be controlled by a trailing stoploss.

 

I think trading without a stoploss, leaves you with an undefined risk, and while you may be right eventually will lead to bigger risk taking & bad habits. Especially if your take profit is smaller than your risk, you will have one bad trade that will wipe out the profit of many good hard earned trades. I would stand aside from a trade that does not carry at least a 1:1 RR, 1.5 & higher is better of course.