Hi all
This thread is dedicated to all I have learnt from my 8+ year Forex trading journey.
As the thread title mentions this is focused around short term trading on the 5 minute chart. I trade the EURSD, EURJPY and the GBPUSD, my trading style has fixed rules but is somewhat discretionary in nature. It is based around price action pattern recognition in combination with support and resistance and momentum.
Price Action
For price action I am looking for individual bars (pin, engulfing, inside) in combination with the surrounding candles and support and resistance (there has to be a reason for the price action). Price is always trying to tell us a story, it is about understanding what it is telling us and reacting in real-time.
Support and Resistance
Trend-lines, multiple highs/lows (supply and demand areas), fib retracement levels (50-61.8%), big round numbers (1.3000, 1.3300 etc)
Momentum
This is where more of the discretion comes in and is very much about reading what is happening right now, momentum is about the strength of the candles, volatility of current price, is it consistent, is it reliable, is the market behind the movement or just one big player, is price slowing down, does it have the momentum to drive further. The ability to read momentum comes with time.
Here is an example of a recent trade I took on GBPUSD
You can see the short term trend is down based on the moving averages, however price has tested the 1.5620 area 4 times and has failed to break through, this shows the sellers are not willing to take price lower. Then a nice pin rejection bar forms off that area, open and close at the top of the candle with a big wick on it. Enter on the close of the candle with a 5 pip stop and looking for price to run back up to the previous highs for a 10 pip gain.
This thread is dedicated to all I have learnt from my 8+ year Forex trading journey.
As the thread title mentions this is focused around short term trading on the 5 minute chart. I trade the EURSD, EURJPY and the GBPUSD, my trading style has fixed rules but is somewhat discretionary in nature. It is based around price action pattern recognition in combination with support and resistance and momentum.
Price Action
For price action I am looking for individual bars (pin, engulfing, inside) in combination with the surrounding candles and support and resistance (there has to be a reason for the price action). Price is always trying to tell us a story, it is about understanding what it is telling us and reacting in real-time.
Support and Resistance
Trend-lines, multiple highs/lows (supply and demand areas), fib retracement levels (50-61.8%), big round numbers (1.3000, 1.3300 etc)
Momentum
This is where more of the discretion comes in and is very much about reading what is happening right now, momentum is about the strength of the candles, volatility of current price, is it consistent, is it reliable, is the market behind the movement or just one big player, is price slowing down, does it have the momentum to drive further. The ability to read momentum comes with time.
Here is an example of a recent trade I took on GBPUSD
You can see the short term trend is down based on the moving averages, however price has tested the 1.5620 area 4 times and has failed to break through, this shows the sellers are not willing to take price lower. Then a nice pin rejection bar forms off that area, open and close at the top of the candle with a big wick on it. Enter on the close of the candle with a 5 pip stop and looking for price to run back up to the previous highs for a 10 pip gain.
Attached Image