ElectroFX Pure Price Action Trading - page 7
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This is becoming more clearer now.
Good to hear, it only gets clearer and clearer as you know what to look for.
What I have outlined in detail is evidence based swing trading where you use those swings also to help with your expectations and your stop loss.. which give you your risk:reward pre-trade.
I have then just introduced breakout trading which as you can see can be traded on it's native timeframe...but breakout trades on a higher timeframe can actually be traded as swing trades in the same fashion but on a smaller timeframe
This means that the same rules and concept can be rinsed and repeated on all trades that you take and you do not have to learn a whole bunch of different trades separately. You basically learn one concept and with it comes several solid types of trade.
I did not cherry pick the chart I used, I just opened one up and took a snap of quite recent history.... but why don't you find me an H4 chart that looks messy to you and I will use that to pick apart some more trades for the next posts of this thread.
OK, I don't know if you consider this messy & I'm not sure how far you zoom in or out when you look at a chart but lets use EUR/USD from 10/18 thru 11/15
Thanks again for all your help.
Trade 1 in the examples so far was EUR/USD 10/31 ... so right in the middle of what you just asked... we should probably try something different.
OK, I don't know if you consider this messy & I'm not sure how far you zoom in or out when you look at a chart but lets use EUR/USD from 10/18 thru 11/15 Thanks again for all your help.
OK how about EUR/USD 8-20-2012 to 9-17-2012
OK, first let's establish the structure of the market leading up to your chosen times.
In this screenshot I have marked out your dates with the Green Box and mapped out the overall wave activity (swing1) of this timeframe (H4) using the Green lines again. The next level down (Swing2) is quite small and will mess up the chart but you can visually see the smaller swings that are going on. I will mark them in this next screenshot.
Here is the first safe evidence based trade I see in your Green box.
This is a range breakout, you can see that on the swing2 level there are several lower highs and higher lows compressing in to a triangle or range. Some people draw this in as triangles but I generally keep everything horizontal these days. I have drawn the range in using the smaller Green box.
Once price breaks out of the our range we have proof that things are changing, by waiting for the indecision and pullback on a lower timeframe (but still visible here on the H4) we have an entry price and stop loss established. On a breakout I always just go 1:1 with the risk:reward because we are trading ITS momentum and it is not a swing trade so I can't target previous recent highs/lows. (once you develop the ability to see all this using multiple timeframes you can take these H4 breakouts on M30 or M15 and have much better risk:reward but that comes later as it is more complicated/advanced)
If you were to just trade the breakout of the range or triangle you would need to use an arbitrary number for stop loss and take profit. Waiting for the evidence of it breaking out and pulling back to the other side of it gives you an idea of current momentum with entry point and stop loss so that you can plot the take profit.
Next trade in this chosen period of time tomorrow..
Moving on to the next trade possibility of your chosen time period.
In this next trade the area of Demand was created by the previous breakout trade. This is the box I have drawn in. Price then came back to it on a Swing2 scale and reacted a first time with no significant entry patterns that held good risk:reward. Price then cam a little deeper in to the box/zone and gave a nice little pinbar that was then immediately broken north for your entry trigger.
This was not a big enough pullback to be considered a Swing 1 trade yet and must be treated as a Swing2 trade which means that the recent high just created is the most conservative and safe Take Profit. Considering that you are following a trend of higher highs and higher lows you could intelligently expect a higher high, that is why the target I mentioned is the conservative one. It does allow for a 1:1 risk:reward or higher and the trade is a go.
You can see that this is above 1:1 risk:reward but that first push up didn't quite hit your Take Profit. It was then followed by that little red IB which the break of South would have allowed for the 1:1 and could have been used as a manual exit. As a complete set and forget trade though this one just went to profit anyway so either way worked fine.
Next Trade tomorrow...
so looking at EUR/USD today and not last years charts, where is the next trade/setup/opportunity?
so looking at EUR/USD today and not last years charts, where is the next trade/setup/opportunity?
Hi Phil,
As you can probably assess from the thread so far; I like to react based on the evidence that presents itself and be open to a set-up either way, that way you do not get married to any ideas of one direction. Until the Location, Structure, Entry Trigger and good Risk:Reward presents itself there is no trade for me.
Right now we have reached a solid Daily area of Support at this 1.3000-1.3035 zone ... this would be a great area for a weekly scale turn but there is not quite enough proof yet that it is holding at that scale, it's just an ideal location for that possibility. As I zoom in a bit, we may be getting close so it is on my radar.,, at the same time if this Daily Support breaks then I will be looking for for more selling opportunities to set up on the smaller wave scales until the next potential turning point which is the 1.2915-1.2875 zone.
*note*
I would like this thread to be about understanding the concepts first and foremost and I don't mind who chooses the chart. I will be saving my Daily Outlooks / Next Trade Expectations for my live room though.
Thanks electrofx for all you doing this for all of us.
I'm learning a lot and have made some winning trades the past few days using your method.
Looking forward to what is to come.
Thanks electrofx for all you doing this for all of us.
I'm learning a lot and have made some winning trades the past few days using your method.
Looking forward to what is to come.Great news Mark
The funniest thing about Trading to me is how complicated many people make it.
Once you understand that every swing does not start in a random location, and it does not end in a random location, the chaos that some talk about disappears.
Unfortunately, learning to read the charts is less than half the battle. Trading Psychology is the big kicker, confidence, belief, accepting loss as part of winning (there is no 'only wins' way of doing this), not interfering, second guessing, frustration, anger.
This is why I always stress to everyone I teach that they must learn how to trade from a technical standpoint and master it for sure, but then they must put the time in and study it extensively in chart history, use MT4 strategy tester with F12 to progress the chart 1 candle at a time. It's painstaking but you can virtual paper trade a year in a few weeks in a realistic environment. This action will help YOU build confidence in the system instead of just believing what someone else told you/showed you.... A huge part of the Psychological part... If you believe in what you are doing because you have proved it to yourself then you will accept losses and laugh about them. You will not hesitate and you will not interfere, you will just react to the evidence that you see.