Price Action

[touchofpips]

I read this on another forum.

In general, I favor Price Action Based Indicators and dislike averages since at times they dont reflect current market conditions. Kind of like the disclaimer, that past performance does not predict future performance. I do like some averages which are described below but price action is much more durable IMO.

Trade Setups:
- Inside Bars (H1H1_IB_Indicatoror DIBS_TriggerLines1.1): made famous by Peter Crowns on FF but used by many traders to buy into trends and reversals on market moves that breakout of a range. Still looking for an indi that display outside bars as well.
- 1-2-3 Setup (1-2-3 MTF v3.1): classic trade setup pattern based on higher highs and lower lows that allow you to get into a trend on a retracement in a natural way as opposed to averages which are lagging.
- Wave Trends (WATL): very similar to 1-2-3 but takes wedges and ranges into account.
- Opening Session Breakouts (ant-GUBreakout_V.0.4.1): defines the high and low of a specified period of time during the opening of the London and US (07:00 to 09:00) open, the idea is to set pending orders on the bottom and top and let the market decide where it wants to go. generally speaking your target is 30 pips with a 20 pip stop.

[mk3fx]

Here's something for the newer or struggling traders.
How many of you trade the sunday gap??
Tonight i picked up about 70 pips, and it's the same most weeks.
Those in the US have an advantage, as it happens 5pm, for those in the UK, it's 10 pm.
Pull up a 5 min chart at the open. You're looking for gaps at least 20-30 pips . Nature abhorrs a vacuum, and the gaps usually get filled within 1-3 hrs.
I play them half stakes, with a TP 5 pips below fri close. R/R is 1:1
i.e if you have a 30 pip gap s/l 25 pips(allowing for 5 pip margin on t/p)
Try it next week, although we are into december, with thin mkts.
I've attached the chart for eur/usd, and the gap has now filled.

Hope this helps.

I didn't know that!

So if the gap opens up like 30 pips from the friday close, it should return to it, usually? Not the other way

[yogibear]

[QUOTE=mk3fx;96691]I didn't know that!

So if the gap opens up like 30 pips from the friday close, it should return to it, usually? Not the other way[/QUOTE]

Have a look at the chart i've attached, the last four gaps on Eur/usd.

1 - gap over 40 pips, so its tradeable. Proftable trade, very little drawdown.

2 - gap over 50 pips, so its tradeable. Profitable trade, no drawdown

3 - gap less than 30 pips, so no trade.

4 - gap over 40 pips, so its tradeable. Losing trade, stoploss hit.

So overall you would have made about 50 pips.Some people might say thats not a lot, but pips are pips.
Also, remember this is only 1 pair. I watch about 6 pairs at the open. Also, you can watch Oanda, they open their charts early on a sunday, so you can get a good idea there are any gaps worth trading.

As always, don't take my word for it. Demo it yourself, to make sure you think it works before you trade.

Hope this helps.

[#01]

You know what... yogibear is right. I notice gaps but never trade them, but lookin at them in retrospect they produce major pippalage.

[EU_TRADER]

I got some examples of bullish and bearish candlestick candles.


BULLISH CANDLES



BEARISH CANDLES


KICKER CANDLES

[yogibear]

Pretty self explanatory. Box trade.
Closed half +40, stop b/e

[trade4life]

Pretty self explanatory. Box trade.
Closed half +40, stop b/e

What currency pair was that? I couldn't see it on your chart because it had something blocking it.

[trade4life]

all I see is you talking about what has happened but no opinion on how to use that in your trade idea (short or long) maybe you explain it more for our benefit, those new to this thread

Here's a link to explain more about price action trading to you:

http://www.learntotradethemarket.com...-trading-forex

[yogibear]

What currency pair was that? I couldn't see it on your chart because it had something blocking it.

Eur/chf - no idea why it cant be seen, nothing is blocking it on my screen

[yogibear]

Heres one of my current positions - usd/yen
Made some good pips on the trendline break.
Now in on simple pa.
stoploss now 10 pips below yesterdays low.

[Mike]

Great job Yogi.

At the risk of being booed out of the thread, I just wanted to share with you the latest set up on EURJPY, the one great indicator I still use along with Harmonics is the Containment Bands (and one or two others), but anyway, what was interesting is the pin bar that formed right at the edge of the band giving me two reasons to go short, which I didn't unfortunately.



That goes back to my feeling that some indicators out there may be sculpting price without us really knowing about it especially if we don't have them on the chart; all we see is the pattern. I even admit I was watching my MT4 EURJPY chart, saw an engulfing pattern, and by chance went back to TopGun and saw it coincided with the Containment Band getting hit with a pin bar on the 600tick chart. Price action is price action, of course, but in this case there was something that made the pin bar appear. Even then without a tick chart its unlikely anyone saw the price action that way anyway. Regardless it wasn't a great move, it was a better signal to get out if you had been long.

[yogibear]

At the risk of being booed out of the thread, I just wanted to share with you the latest set up on EURJPY, the one great indicator I still use along with Harmonics is the Containment Bands (and one or two others), but anyway, what was interesting is the pin bar that formed right at the edge of the band giving me two reasons to go short, which I didn't unfortunately.

Hey Mike, no probs about the indicators, i think people should use whatever they're comfortable with, At the moment i'm actually looking at a couple of indicators, ROC and Coppock. I'm seeing if they could work for longer term trades, they seem promising but its early days.
Regarding that eur/yen pin, of course in hindsight its a good trade, but i don't think i would have taken it - small sized pin and countertrend.

I'm watching what happens if price gets to 1.07.We've recently had the breakout of the trendline, personally i'd favour breakout and retest of 1.07to get long, but we shall see.

[Mike]

Great. I too wouldn't have taken it based on things being so "green" in TopGun - which in technical terms was basically EUR fairly strong and JPY being so weak vs other pairs. I remember when that occurred EURUSD was floundering around only last night did EURUSD finally break past the 1.32990 level I drew.

What's interesting is as always seeing a pair rise but expecting a reversal based on the very rare bearish bat on the daily for EURJPY. There may be a maximum of 10 of these patterns a year for any given pair on the daily time frame, and if this one holds true then it could spell a major reversal, but as we know price does what it wants and it could invalidate the pattern if it keeps rising, i.e. a bat is not a bat if mathematically the last leg moves out of the 0.886 range (based off the starting point of the first leg).



The tricky thing with the harmonics on higher time frames, although rare/accurate, finding the top or bottom of the last leg is often a waiting game and, until certain, if you jump the gun and trade a reversal that doesn't come for a few days, you might be out quite a few pips. So, as of this moment I too am expecting the trend to continue until the buyers run out and some major profit taking takes place (if at all). In the example above, the pattern formed 3 bars/days ago, and its still a bearish bat, but you can see how useless it is until the reversal is certain.

That's why I too revert to simple price action indications of a reversal on 4h or the daily, since it's just too painful to ignore a harmonic pattern to see it bear tremendous fruit, but its more painful to follow it too soon or worse yet it disappears, the trend keeps on going, and you are killed.

[Johnni]

the trend keeps on going, and you are killed.

Thanks for the words.

[yogibear]

That's why I too revert to simple price action indications of a reversal on 4h or the daily, since it's just too painful to ignore a harmonic pattern to see it bear tremendous fruit, but its more painful to follow it too soon or worse yet it disappears, the trend keeps on going, and you are killed.[/QUOTE]

Hey mike, good post. the problem i have with harmonics, is exactly as you say, they can be very subjective. I have the same problem with Elliot Wave, which is why i don't use them.
Having said that, a very good trader i admire, who started out with price action, now trades a lot utilising harmonics. She posts on twitter a lot, let me know if you're interested, and i'll give you her name, and you can check out her trades.

Heres a quick scalp i took today - US 30yr bonds Its been range trading for months. Closed most for +30 pips, stop at b/e..If you believe classic ta, and apply a time retrace to the upmove, its due to have a major correction. I favour shorts if we get the signal.
On reflection a better trade would have been simply to have an order waiting at the low/
In fact i'm finding more and more, trading candles on the daily has one major disadvantage - they lag so much! The price has usually moved 100+pips before the signal.

[yogibear]

Also took an aggresive entry on Palladium.
No pa as such, just a break and close above resistance.
small stakes on this one, with a tight stop.
Not looking good at the moment, we shall see.

[Mike]

Hey mike, good post. the problem i have with harmonics, is exactly as you say, they can be very subjective. I have the same problem with Elliot Wave, which is why i don't use them.
Having said that, a very good trader i admire, who started out with price action, now trades a lot utilising harmonics. She posts on twitter a lot, let me know if you're interested, and i'll give you her name, and you can check out her trades.

Heres a quick scalp i took today - US 30yr bonds Its been range trading for months. Closed most for +30 pips, stop at b/e..If you believe classic ta, and apply a time retrace to the upmove, its due to have a major correction. I favour shorts if we get the signal.
On reflection a better trade would have been simply to have an order waiting at the low/
In fact i'm finding more and more, trading candles on the daily has one major disadvantage - they lag so much! The price has usually moved 100+pips before the signal.

Sure send me over her twitter name or share it here, I'm sure she wouldn't mind the publicity (ha-ha since it's only you sniper and I).

I have a good chart for you:



The main lesson from this would be that the pretrading hour range, the top level was drawn and 4 1/2 hours later after price breaks out, we see the resistance level become support, but notice the second circle! Beautiful price action! Two lessons in one here.

[yogibear]

Yes that was a great signal mike, when i posted the other day about looking for the break of 1.07 and get long on the retest, i didn't dream you would have to drill down to the 30 min chart to see it, LOL.
Needless to say, i missed the trade.

[tab]

I saw a video of Steve Nisson once, I just looked and he must have made it private.





Here's a different vid. oddly the candlestickforum.com doesn't have much of a forum.

[sniper012]

Awww dude, Steve is my effin HERO!!! Taught me everything I know about candlesticks!!! Well...his book Beyond Candlesticks did.

I saw a video of Steve Nisson once, I just looked and he must have made it private.





Here's a different vid. oddly the candlestickforum.com doesn't have much of a forum.