My price-action strategy

[fxfxfx]

Hi Diesel,

 

Thx for you great contribution ! This makes me really happy when I see when users are helping other users - This makes this really a wonderful place.

 

I see no "Thanks"-button (Obviously I thanked too many times yesterday/today) but again: THANK YOU :)

 

fxfxfx

 

Here is a secret share just for my indo friends in this thread!

 

I have just had professionally coded my own Custom Indicator that may be a help to those who already understand how to plot swings and breaks of them. I have never shared this before but wanted to save it for a special moment...

 

Below is an image of recent EURUSD. In the picture, the indicator is programed to follow fairly large swings however that can be customized whatever way you like. You can also customize how many pips it must break the swing by.

 

http://i177.photobucket.com/albums/w201/jtimpsonstamps/jt.gif

 

and here it is. Enjoy!

 

http://www.mediafire.com/?xh6quaxcxs91xmt

 

this is for your personal use and not to be resold. Thanks for respecting my wishes on this.

[nnn123]

Hi 3fx,

 

Here is my homework.

 

The large blue rectangle is the current move down swing.

 

I lack something as this analysis does not give me much in a way to trade on the current downswing based on what I have plotted on this chart.

So 3fx, can you please help. Thanks.

 

http://clip2net.com/s/Zmxb

[crips]

Here is my homework and I wanted to tell you that now I can see that chart way better. I have even spoted some entry possibilities.

http://img17.imageshack.us/img17/1160/eu4hpachartwithfibs.gif

 

Uploaded with ImageShack.us

 

Regards

 

Crips

[alright]

Hi alright,

 

Very very good !

I see that you exactly analyzed the market AND you could also remember what I said how I trade :)

 

Just food for thought: What if you entered at the 50%-Retracement of the PIN-BAR (not the swing - the bar itself) and put your SL slightly above the high of the pin-bar.

How would the R/R then be ?

 

;)

 

Cheers

 

and thanks for not just following the thread but also actively PARTICIPATING with posts and screenshots.

Thank you for sharing your knowledge, my friend. I'm really enjoying all this.

So you mean to not enter at the pinbar close but wait for the price to retrace back to its 50%? Of course the r/r is much better but would we not miss the trade if the price didn't retrace?

On a side note, I've just updated my pic as I see, on what we can call a well established trend by now, what could be one more potential entry on another confluence and a doji bar, good for over 100 pips already. Am I speaking sh*t??

 

http://img862.imageshack.us/img862/8458/201106100920.png

[fxfxfx]

Hi alright,

 

Let me explain me how I see the market situation:

 

Market was in a clear sideways-market -> This means: Lots of orders are now accumulated -> this means: The longer the sideways-market - the more powerful will be the breakout move.

In addition to this we have a change of trend. What does this mean ? Due to the fact the a NEW TREND hast now established, chances are low that the market suddenly change the trend again ;)

 

To summarize:

When I am in the middle of a strong trend or a sideways-market, my potential exit-point would be the last swing high or swing low (It depends on the market-situation).

When I am in the beginning of a NEW TREND - I expect that the market makes a bigger move and therefore I let the market breathe a little bit more. Also my expected target would be higher.

 

Regarding the 50% entry - Let me explain this to you:

 

You can either enter at 50% - then you have a little bit of risk that the market will not re-visit this level -> What can happen: Nothing -> Worst case you missed the move - but it is not a loss !

You can also do this:

Split your order in 2 parts ;)

1st Order with 1% Risk at the 50%-Level and target 2x your risk

2nd Order with 1% Risk at the Low of the pin-bar (In this case) and target 2x your risk or a S/R line in the near of it (Please note: The main trend goes to our favour)

 

So what can happen ?

 

* Price retraces to the 50% Level and does not retrace to the low and hit our stop-loss -> We lost 1% while risking 1% -> We close the 2nd pending order which was not triggered as the marked proofed to us that our analysis was wrong.

* Price triggers our normal entry-level AND our 50% entry-level and then suddenly retrace and hit our stop-loss -> Lost 1% +1% = 2% while risking 2%

* Price triggers our normal entry-level AND our 50% entry-level and hit the tp of the trade with the 50%-entry and then suddenly retrace and hit the SL of the normal entry -> Gained 2% and lost 1% while risking 2% -> Still made 1% Profit

* Price triggers our normal entry-level but NOT our 50% entry-level -> Gained 2% - Lost 0% -> Total Gain 2% while risking 1%

* Price triggers our normal entry-level AND our 50% entry-level and hit the tp of the trade with the 50%-entry and also the TP of the trade with the normal entry -> Gained 2% PLUS 2% -> We made our 4% Profit while risking 2%:) - So potential Risk/Reward is 1:2 as I stated before and also we have the option that we can move the SL of the trade with the normal entry to breakeven and play forward to the next S/R without any risk and already a locked gain.

 

In this case I wouldn't have taken the 50% option as it happend at the beginning of the new trend.

Hope this helps.

 

As far as I can see (at least at my chart) We would already be in profit and out of the trade if we had taken the PIN-Bar with the normal-entry ;) -> Assuming that we do not babysit the trade and trail the Stop-Loss ...

 

Hope this was useful...

 

Cheers

fxfxfx

 

Thank you for sharing your knowledge, my friend. I'm really enjoying all this.

So you mean to not enter at the pinbar close but wait for the price to retrace back to its 50%? Of course the r/r is much better but would we not miss the trade if the price didn't retrace?

On a side note, I've just updated my pic as I see, on what we can call a well established trend by now, what could be one more potential entry on another confluence and a doji bar, good for over 100 pips already. Am I speaking sh*t??

 

http://img862.imageshack.us/img862/8458/201106100920.png

Edited June 10, 2011 by fxfxfx

[fxfxfx]

Hi alright,

 

Regarding your question of the re-entry: In this case you must make a deeper analysis as this is NOT a pin-bar it is more kind of doji (As you already recognized it correctly). Move down to a 1-hour chart and look how the move was formed -> Was it a normal move up and a normal move down OR a STRONG MOVE to S/R and then hardly BOUNCED back ?

 

If it was a normal move up and down -> Forget it...

If you see that 1 hourly candle moved to the S/R very STRONG (like a + and - pole of a magnet) and was STRONGLY rejected (like the + and + pole of a magnet) then the re-entry would be OK.

A strong UP-move (candle with very small wicks and a BIG BODY) and a strong DOWN-move (candle with very small wicks and a BIG BODY) form also together (when both are seen as one) a PIN-BAR (Hope this was not too complicated)...

 

Cheers

 

fxfxfx

 

Thank you for sharing your knowledge, my friend. I'm really enjoying all this.

So you mean to not enter at the pinbar close but wait for the price to retrace back to its 50%? Of course the r/r is much better but would we not miss the trade if the price didn't retrace?

On a side note, I've just updated my pic as I see, on what we can call a well established trend by now, what could be one more potential entry on another confluence and a doji bar, good for over 100 pips already. Am I speaking sh*t??

 

http://img862.imageshack.us/img862/8458/201106100920.png

[alright]

What can I say? Just :-O

Thanks

[alright]

Hi alright,

 

Regarding your question of the re-entry: In this case you must make a deeper analysis as this is NOT a pin-bar it is more kind of doji (As you already recognized it correctly). Move down to a 1-hour chart and look how the move was formed -> Was it a normal move up and a normal move down OR a STRONG MOVE to S/R and then hardly BOUNCED back ?

 

If it was a normal move up and down -> Forget it...

If you see that 1 hourly candle moved to the S/R very STRONG (like a + and - pole of a magnet) and was STRONGLY rejected (like the + and + pole of a magnet) then the re-entry would be OK.

A strong UP-move (candle with very small wicks and a BIG BODY) and a strong DOWN-move (candle with very small wicks and a BIG BODY) form also together (when both are seen as one) a PIN-BAR (Hope this was not too complicated)...

 

Cheers

 

fxfxfx

It appears to me it was the second case occurring on 1H TF. Long UP bar with little wicks and long DOWN bar with little wicks, which, although it wasn't as long as the preceeding bar, did close in its lower half. Both formed a tweezers or railroad pattern, and this in Candlestick language should be a reversal formation. So that would make a legitimate entry. Do you confirm?

 

http://img832.imageshack.us/img832/9949/201106101424.png

Edited June 10, 2011 by alright

[fxfxfx]

Yep,

 

That is what I meant ;)

 

Enty: Below the low of the blue candle - StopLoss Above the S/R Fib Confluence

Target:

2 Options:

1) 2x the risk

2) Wait how price re-acts at the last swing-low

 

Cheers

 

fxfxfx

 

Cheers

fxfxfx

 

It appears to me it was the second case occurring on 1H TF. Long UP bar with little wicks and long DOWN bar with little wicks, which, although it wasn't as long as the preceeding bar, did close in its lower half. Both formed a tweezers or railroad pattern, and this in Candlestick language should be a reversal formation. So that would make a legitimate entry. Do you confirm?

 

http://img832.imageshack.us/img832/9949/201106101424.png

[fxfxfx]

What can I say? Just :-O

Thanks

 

Confused or impressed ?

May you need additional info regarding my thoughts ?

Edited June 10, 2011 by fxfxfx

[alright]

Confused or impressed ?

May you need additional info regarding my thoughts ?

Definitely impressed! If I think of all the time I've wasted until not long ago while looking for the magic indi...

What you say makes a lot of sense to me. Thanks once again. :)

[fxfxfx]

Hi nnn123,

 

Thx for your contribution :)

 

Please look at the chart and then you will see the importance of the color of the swings and to trade in this direction and not the other way ;)

Price reached the highest high (1.0556) - now lets analyze the move down ;)

 

Price reacted nicely at the 1.0492-Level - but lost strength and was not able to make a higher high -> OK ?

Then price closed below the TREND-CHANGE-LINE (1.0486) -> TREND CHANGE !!! -> Change Direction is now SHORT !

 

Then price broke (as expected-because Trend is DOWN) the 1.0431-Level - Found its support at 1.0378 and then PULLBACK and BOUNCE of a specific level -> Where? -> WHAMM -> from the 1.0431-LEVEL which is your PA-Confluence-Level -> And now the price has also the right direction ;) -> Price got rejected from this level hardly and WHOOM -> continued its way down :)

 

So you see the importance of determining the direction of the trend ;) And also trade in the direction of the trend !

This is the A&O - because we (both) looked at the same chart - but only a little parameter (Direction of the trend and in which direction to trade) makes the difference -> From your side the price broke all levels, From my side price re-acted as expected to these levels ;)

 

Hope this clarifies it or at least has helped you to see the market as I see.

 

Anyway: Excellent work !

 

Cheers

 

fxfxfx

 

http://clip2net.com/clip/m0/1307689932-clip-48kb.png?nocache=1

 

Hi 3fx,

 

Here is my homework.

 

The large blue rectangle is the current move down swing.

 

I lack something as this analysis does not give me much in a way to trade on the current downswing based on what I have plotted on this chart.

So 3fx, can you please help. Thanks.

 

http://clip2net.com/s/Zmxb

Edited June 10, 2011 by fxfxfx

[fxfxfx]

Hi grooter,

 

great work.

 

The good news for you: The longer a market stays sideways - the more powerful would be the breakout :)

 

Cheers

 

fxfxfx

 

And mine. Can not wait for GY to break out from this range to see what will happen :-)

 

http://img151.imageshack.us/img151/1434/swinghilofibconfluenceg.gif

 

Uploaded with ImageShack.us

[fxfxfx]

Hi izogrey,

 

Well done :)

 

Next chapters will be about candlestick-patterns ;) You will see: You will see then the "big picture" :)

 

Cheers

 

fxfxfx

 

I use M1 chart, with 200 SMA typical price on it ( and the channel formed by 200SMA high+200SMA low ). When the price makes a move which intersects the channel, I put a fibo on it and I enter only at pivots on 38.2 . I discovered that this level measures the force of a move. I enter when a pivot is formed at 38.2 and when the Oscar oscillator ( kind of smoothed Sto ) takes off from OB/OS region. I add on subsequent moves in the same direction, when a new pivot appears on a new 38.2 level. I exit at predefined levels from Joe Ross books ... or when my SL is hit ... :-). I control the big picture with M15 and H1 ( where are also the predefined levels ). I should be always very aware when it's a range in order to not evaporate the profit.

 

Pros:

- I am already in when a big move develops;

- SL is small due to M1 chart.

 

Cons:

- very energy consuming - I mean very !!

- I'm not always aware about the range situations;

- if I cannot trade ( because of a job, for example :-) ) the system statistics are altered, with result on the daily profit.

 

The general result is some kind of oscillations at about breakeven, with jumps on green when a big move develops ( because of addings ).

But this kind of system is good for learning, not for a long run trading. At least I cannot resist in a long run with this.

 

This is the reason why I follow this thread: because it's more human than on M1. :-)

 

My homework on UC:

http://img30.imageshack.us/img30/7126/ucfibocluster.gif

 

 

Cheers

[fxfxfx]

Hi crips - price already reacted nicely (as expected) to your level ;)

 

Just a side-comment -> Do you draw the swings with a zig-zag or manually ?

 

Cheers

 

fxfxfx

 

Here is my homework and I wanted to tell you that now I can see that chart way better. I have even spoted some entry possibilities.

http://img17.imageshack.us/img17/1160/eu4hpachartwithfibs.gif

 

Uploaded with ImageShack.us

 

Regards

 

Crips

[fxfxfx]

Hi alright,

 

Thx for your kind words.

 

I only can tell you: Once finished with all the excercises you will see the market the same way as I see it - trust me.

 

This is also the reason why I make these "Training"-Lessons, because when you only read an e-book you will NEVER get these information or feeling -> You must DO it !

 

Folks that is really SO important to do the homework (I am sure there are many users following this thread who are trying to get the system by only watching) -> You must DO it.

I compare it this way:

You can watch 100 times how to make a do-it-yourself couch (or whatever) but never tried to make it on your own... You will DEFINITIVELY FAIL !

 

Therefore great thanks and contributions to the users who are actively doing their excercises and shares them all with the community !

 

Cheers

 

fxfxfx

 

Definitely impressed! If I think of all the time I've wasted until not long ago while looking for the magic indi...

What you say makes a lot of sense to me. Thanks once again. :)

[alright]

I wish you had started this thread long time ago, mate. It's really changing my vision of the market. All stuff that I'm supposed to know, or at least to have read or heard of, but in time got buried by heaps of useless indicators, and systems, and holy grails, looking like the easy way to conquer the market while it made the marquet conquer me. Now, the worst thing is to wait for your next lessons (and I'm sure I can speak on behalf of the contributors here), all of us impatient and eager to know more and more like young pupils in a primary school classroom.=D>

[fxfxfx]

Outlook of how we should trade in the Future

 

Hi folks,

 

I will post here as an Outlook how a trade can come out and what I am speaking all about.

 

See below my chart from yesterday (fib-confluence) - I switched to the hourly chart.

The blue boxes represented my S/R and Fibonacci-Cluster Confluence.

As long as price is in no-mans-land it is not interesting for me -> When price comes to my "power-area" you have to be prepared. Watch now for price-action.

We finally got prompted -> A pin-bar has formed (blue vertical box).

What also already happened was a "change in trend" (white dotted lines are BULLISH Trendlines, white solid lines are BEARISH Trendlines).

I know the price-movement will be big (Because of the TREND-CHANGE) so I would not get for a fixed 1:2 or 1:4 Ratio nor the next swing low and I also would not take the 50% Entry-Option.

Best to use is to trail the stop-loss.

What happened ? Price shoot down -> Entry: below the Low of the pin-bar, Stop-Loss: Above the High of the pin-bar

Price went as expected to the last swing low. At this point a fake-breakout happened (A Fake-Breakout is an Inside-Bar followed by a bar where the high or low went outside the boundaries of the outside-bar, but was rejected from the market so that price CLOSED inside the boundaries of the outside-bar - So to say: A market-trick).

What to do ?

Place a new sell order.

Entry: Low of the fake-breakout-bar

Stop-Loss: High of the fake-breakout-bar

Immediately put the SL from the PIN-Bar-trade to the SL of the breakout-bar and lock 41 PIPS of profit (This is for sure - even when price goes against us).

The Fake-breakout got triggered and price found its way down and at today's market close the price is at 1.4333 and also an inside-bar has formed. What to do ? Move BOTH stop-losses (the SL from the PIN-BAR and the SL from the Fake-Breakout) to the high of the outside-bar (1.4375).

 

Status as of now:

PIN-BAR:

Risk: 20 PIPS

Profit Locked: 153

Locked Risk/Reward: 1:7.65

 

Fake-Breakout:

Risk: 39 PIPS

Profit Locked: 73

Locked Risk/Reward: 1:1.8

 

http://img31.imageshack.us/img31/9417/eurusd60minconfluence.gif' alt='eurusd60minconfluence.gif'>

 

Uploaded with ImageShack.us[/img]

 

As I said: I am NOT a full-time trader (maybe soon) as I must have a day-job and accumulate the earnings until I have grabbed so much money until I can survive for ages and therefore was NOT able to catch the trade.

 

But we trade exactly this way on the 4-hourly (at least I do it as this timeframe suits my lifestyle).

 

Cheers

 

fxfxfx

Edited June 10, 2011 by fxfxfx

[nnn123]

Hi 3fx,

 

This has really made a lot of sense. Thank you so much for this.

 

I look forward to your further lessons.

 

Hi nnn123,

 

Thx for your contribution :)

 

Please look at the chart and then you will see the importance of the color of the swings and to trade in this direction and not the other way ;)

Price reached the highest high (1.0556) - now lets analyze the move down ;)

 

Price reacted nicely at the 1.0492-Level - but lost strength and was not able to make a higher high -> OK ?

Then price closed below the TREND-CHANGE-LINE (1.0486) -> TREND CHANGE !!! -> Change Direction is now SHORT !

 

Then price broke (as expected-because Trend is DOWN) the 1.0431-Level - Found its support at 1.0378 and then PULLBACK and BOUNCE of a specific level -> Where? -> WHAMM -> from the 1.0431-LEVEL which is your PA-Confluence-Level -> And now the price has also the right direction ;) -> Price got rejected from this level hardly and WHOOM -> continued its way down :)

 

So you see the importance of determining the direction of the trend ;) And also trade in the direction of the trend !

This is the A&O - because we (both) looked at the same chart - but only a little parameter (Direction of the trend and in which direction to trade) makes the difference -> From your side the price broke all levels, From my side price re-acted as expected to these levels ;)

 

Hope this clarifies it or at least has helped you to see the market as I see.

 

Anyway: Excellent work !

 

Cheers

 

fxfxfx

 

http://clip2net.com/clip/m0/1307689932-clip-48kb.png?nocache=1

[alright]

Hi folks,

 

I will post here as an Outlook how a trade can come out and what I am speaking all about....

 

fxfxfx

My 1H chart looks a bit different as the strongest confluence is above that pinbar while on the one you show the distance between the 2 lines is 15 pips. Probably I should still consider the pinbar as a reversal and a good entry as it almost reached that blue confluence and also one more reason would be the doji before it. Is that right?

Also, is the breakout entry the one I marked?

One last thing: leaving a profitable trade like that in the hands of an after weekend market would not be too risky in case of a big gap like it sometimes happens, so the stop orders could be jumped?

 

http://img823.imageshack.us/img823/4971/201106110021001.png

[r326196]

EU

 

My EU line.

 

1 > 4hrly downtrend

2 > daily uptrend

 

From my pic, is price level 1.43485 a good location to go long since 4hrly and daily is in different trend? my first tp is the pink line @1.4448

would you be able to do a complete picture as per now using EU as an example ( for 4hrly and daily ) into a single post so we can compare

 

http://img594.imageshack.us/img594/5599/70198238.jpg

[fxfxfx]

Hi alright,

 

you are right: Your lines look different than mine - I made the lines on the 4-hour chart and then switched to the 1-hourly ;) This is the reason.

But this is of no importance.

Drawing these lines is more than an art than an exact science. But this does not mean that you made the lines wrong -> You just would have OTHER entry-setups.

But what I basically wanted to say to you all:

When there is no setup or you are not 100% sure about your setup -> Skip the trade ;) -> The next will surely follow.

 

Regarding the PIN-Bar: The PIN-Bar with the comment in your chart shows the wrong direction. PIN-Bars are always traded in the opposite direction of the long wick (nose). When the nose is showing down, the trade-direction must be up -> So I would not have taken this PIN-BAR as the trend is down. But only a few bars later an other setup occured (Fake breakout) -> I would have taken this one ;) .... So: Do not force a setup -> The next setup will surely follow.

 

My 1H chart looks a bit different as the strongest confluence is above that pinbar while on the one you show the distance between the 2 lines is 15 pips. Probably I should still consider the pinbar as a reversal and a good entry as it almost reached that blue confluence and also one more reason would be the doji before it. Is that right?

Also, is the breakout entry the one I marked?

One last thing: leaving a profitable trade like that in the hands of an after weekend market would not be too risky in case of a big gap like it sometimes happens, so the stop orders could be jumped?

 

http://img823.imageshack.us/img823/4971/201106110021001.png

[alright]

Hi alright,

 

Regarding the PIN-Bar: The PIN-Bar with the comment in your chart shows the wrong direction. PIN-Bars are always traded in the opposite direction of the long wick (nose). When the nose is showing down, the trade-direction must be up -> So I would not have taken this PIN-BAR as the trend is down. But only a few bars later an other setup occured (Fake breakout) -> I would have taken this one

Ok fxfxfx, Im definitely missing something then.

From post #143

"Price went as expected to the last swing low. At this point a fake-breakout happened (A Fake-Breakout is an Inside-Bar followed by a bar where the high or low went outside the boundaries of the outside-bar, but was rejected from the market so that price CLOSED inside the boundaries of the outside-bar - So to say: A market-trick).

What to do ?

Place a new sell order.

Entry: Low of the fake-breakout-bar

Stop-Loss: High of the fake-breakout-bar"

I can see the inside bar and after that a doji which had its low outside the boundaries of the outside bar, and closed back inside them, making a counter trend pinbar but I thought you were meaning to enter at the low of that bar.

Where is exactly the fake-breakout bar and the entry and stop you're speaking about then?

As for my charts, the lines were taken on the 4H timeframe too but surely the broker's server time makes a difference on that TF. In my case it's FxPro.

[fxfxfx]

Hi alright,

 

[alright]

Hi alright,

...

 

Look at the white circled area:

1st Orange Candle is the outside-bar

2nd blue Candle is the inside-bar

3rd orange Candle is the fake-breakout-bar -> High went above the high of the outside-bar, but closed inside the ouside-bar.

 

Cheers

fxfxfx

Ok, got the idea now. You meant a false breakout on the upside. Everything makes sense now. Thanks for clarifying. :)