Price action trading - Trade like the pros! | Page 2 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Questions for real pros: How to trade with reference points only? 126 replies

Retail Trade Gains vs Pros 6 replies

Signal Provider/Trading Signals MT4 pros cons? 2 replies

Pros and Cons of Point & Figure Trading 10 replies

Retail Sales? Trade Balance? What it means? Newbies ask here. Pros answer here. 9 replies

Attachments: Price action trading - Trade like the pros!
Exit Attachments

Price action trading - Trade like the pros!

  • #21
  • Edited 3:59am Oct 3, 2016 3:44am | Edited 3:59am
Quoting Kubiasty
Hey WDays, What is the signal to put the trigger on Support / Ressistance area ?
When you are aware of your surroundings and know what to expect, entering is easy.

You have two ways you can go about it. Either you are aggressive and buy at support/sell at resistance, or you play it safe and wait for a bounce+retrace back.

There are a few things to note, however. Price will rotate between three cycles: range - expansion - consolidation. I like to think of the first phase as the "accumulation" phase; during the accumulation phase, buyers or sellers will set up their positions and they'll do it slowly, without causing much noise. Once they're all set, there is a sudden volatility injection in the market and price moves from A to B. Once it reaches its point of destination, it will proceed to go sideways and consolidate, perhaps retrace a little before that.

In terms of timing, we need to wait for the market to settle down. Entering while the market is in an accumulation process is simple and can be done by using a fib (could enter at the middle of the range), we could use a smaller timeframe area of supply or demand or we could wait for a fakeout and enter in the other direction.

I will elaborate further as we come accross these examples in the upcoming trade week.

I hope my crappy Paint diagram is clear enough.
Attached Image (click to enlarge)
Click to Enlarge Name: diagram.png Size: 14 KB
  • #22
  • Oct 3, 2016 3:48am Oct 3, 2016 3:48am
Notice, during the accumulation phase, price action will be very choppy, volatile, going in all directions.
We don't care about that. We have built a trade idea on the higher timeframes, we are confident that this market will be going up (down) today. We are bullish (bearish) and the ongoing jitter does not interest us. We hold our position with a tight stop (that is not too tight and risks getting hit) and we wait for the expansion of the range. Then we get paid.
  • #23
  • Oct 3, 2016 3:55am Oct 3, 2016 3:55am
Another component to a successful trade is to be aware of the time of day we are planning to position ourselves. Please, do not take any trades between 10 pm GMT and 4am GMT on european or american markets, as you will end up stuck in a consolidating market. The Asian session is when our major currency pairs will consolidate.

Keeping in mind what we just saw in the previous post, market moves from range (accumulation) to range expansion to consolidation. This goes for all timeframes and periods. It is crucial to keep in mind the importance of timing. It is advisable to trade during the early London session, a couple of hours before the NY session and a few other sensitive times (6 am, 10 am, 12 am, 2:30-3:00 pm, 5 and 6 pm, 8 pm all GMT). Those are times of the day where you can expect to see a rise in volatility.
  • #24
  • Oct 3, 2016 4:18am Oct 3, 2016 4:18am
more explanation please..
I Will Never Give Up
  • #25
  • Oct 3, 2016 4:58am Oct 3, 2016 4:58am
Let's take usdcad, a setup from august 12th. Breaking up the trading day by time. All times are GMT+1 (CET), since that's what my broker uses.

Midnight is when the new trade day starts on our platforms. Up until Frankfurt Open, I call that the Asian Session. During that time, price is steady - it just declined during the previous day, it retraced and is now consolidating in peace. We're cautious, so we don't rush in before we figure it out.

We know we should expect a second bearish day, price will be going down. We have to short. Inside the highlighted box, we're going to look for a logical entry point. I suggest doing that after Frankfurt has already opened.
Attached Image (click to enlarge)
Click to Enlarge Name: USDCADM15.png Size: 45 KB
  • #26
  • Oct 3, 2016 5:02am Oct 3, 2016 5:02am
One way to get a precise entry is using the fibonacci retracement tool.
Attached Image (click to enlarge)
Click to Enlarge Name: entry.png Size: 47 KB
  • #27
  • Oct 3, 2016 5:09am Oct 3, 2016 5:09am
With a rather tight 15 pip stop above the top of the asian range.... This position yields almost a 4:1 reward to risk ratio with an entry from the 61.8% retracement.
Attached Image (click to enlarge)
Click to Enlarge Name: USDCADM15.png Size: 43 KB
  • #28
  • Oct 3, 2016 5:26am Oct 3, 2016 5:26am
This method requires a bit of discretion because it's not your ordinary "When green crosses red up - buy, when green crosses red down - sell" type of deal.

However, when we want to learn how to trade properly and more importantly consistently, we must be prepared and know what to expect once volatility kicks in. Entering is the easiest part, yet it bugs so many of the new traders. 90% of the work should be done outside of trading hours. We should focus on marking up our charts in a way that it is clear to us what exactly is going on in the market. That way, our confidence will grow to the point where entries no longer bug us.

Over time, we will eventually be able to spot things before they happen and capitalize by taking the most adequate course of action during trading hours.
  • #29
  • Oct 3, 2016 5:32am Oct 3, 2016 5:32am
Speaking of time sensitivity, some trading days are in fact better than others!
For instance, mondays are usually choppier and slow moving. Tuesday, Wednesday and Thursday are much better in terms of trend activity. Usually the weekly candle will develop during those three days. Fridays are 50/50... Sometimes you can see good activity, sometimes they're choppy.

This does not go to say that ALL mondays are bad or that all tuesdays are great. There are just bigger chances for those things to happen on their respective days.
  • #30
  • Oct 3, 2016 5:48am Oct 3, 2016 5:48am
And here's why that happens:

How does price action develop?

And this goes for any candle on any timeframe.

The first 20% are usually moving against the intended direction (they move counter-trend), they set a high or a low. That goes on for a reason; when momentum is weakening, it needs new fuel to move forward. This means the market will look for liquidity and attack areas of supply or demand. Once they grab hold of liquidity, they will return back to the open and start going from there. Every time the range is expanded significantly, there will be some time spent in consolidation (sort of validating the freshly conquered territory). the last 20% are reserved for a retracement and consolidation.

I've tried to depict it with a diagram again...
Attached Image
  • #31
  • Oct 3, 2016 5:51am Oct 3, 2016 5:51am
All in hindsight. Live examples would explain it better.
  • #32
  • Edited 6:17am Oct 3, 2016 6:05am | Edited 6:17am
Quoting WDays
Let's take usdcad, a setup from august 12th. Breaking up the trading day by time. All times are GMT+1 (CET), since that's what my broker uses. Midnight is when the new trade day starts on our platforms. Up until Frankfurt Open, I call that the Asian Session. During that time, price is steady - it just declined during the previous day, it retraced and is now consolidating in peace. We're cautious, so we don't rush in before we figure it out. We know we should expect a second bearish day, price will be going down. We have to short. Inside the highlighted...
Thankyou Wdays for sharing this to help others
you told"We know we should expect a second bearish day, price will be going down"
how did we know we will have another bearish day? was not it possible it did go more up first in second day(i mean price goes first up until your SL and then down)?
  • #33
  • Oct 3, 2016 7:23am Oct 3, 2016 7:23am
Quoting WDays
{quote} Which is why I am trying to structure this thread more as a written guide rather than giving away my own interpretation. ICT's stuff is gold, would be a shame if it all went to waste. I don't feel guilty when it comes to what I've done by opening this thread, because he used to encourage people who learned from him to "give back to the public" and since I have no intention of going commercial with this stuff, my conscious is clean
Of course Sir. You are 100% right. This stuff is gold and each one of us take what suits us better. I liked your approach adn will follow with interest. Good job.
  • #34
  • Oct 3, 2016 8:29am Oct 3, 2016 8:29am
its called wyckoff

Attached Image (click to enlarge)
Click to Enlarge Name: WyckoffLogic-FEAUTERED.jpg Size: 171 KB


I had thread about wyckoff formation only:

http://www.forexfactory.com/showthread.php?t=601278
  • #35
  • Oct 3, 2016 8:59am Oct 3, 2016 8:59am
Quoting Anusragger
All in hindsight. Live examples would explain it better.
Here's a live example on EU for you

Can we all agree that EU is bullish right now? The rally started from 1.1130, on wednesday, September 21st. The rally was exhausted 5 days later, on the 26th @ 1.1280, which in turn started a move down. The pair found new demand @ 1.1160 roughly and jumped back to 1.1250 last friday.

The rally to 1.1250 was followed by an ongoing consolidation today. Within that consolidation, we look to take action.
Attached Image (click to enlarge)
Click to Enlarge Name: EURUSDM15.png Size: 28 KB
  • #36
  • Oct 3, 2016 9:03am Oct 3, 2016 9:03am
Perfect. I took this one also. but just one entry at 1.12388. target hit.
  • #37
  • Oct 3, 2016 9:05am Oct 3, 2016 9:05am
Quoting guilherme
Perfect. I took this one also. but just one entry at 1.12388. target hit.
Good job

Today was a lousy day to give a live example on, but I hope we can find better ones in the upcoming days...
  • #38
  • Oct 3, 2016 9:12am Oct 3, 2016 9:12am
I shorted euro, going against the overall trend. It's a risky trade, it could have well shot up. What gave me the confidence to act?

Well first of all, the move up was capped, like I said by 1.1250. Which meant that in order for it to fight through that level, it needed some of that liquidity, resting below.
This morning started with a tiny drop and formed a double bottom @ 1.12204. Keep an eye out for double bottoms like that! It's not your ordinary formation, which confirms a strong support level. A level as clear as that usually means there is liquidity resting right below. Retail orders.

My analysis is further backed by what someone else mentioned earlier, the so called "Liquidity void" (which is kinda coined by ICT I think, so I'm reluctant to call it that).
Naturally, the expected development was a down day.

And look at USDx I was expecting it to hit the 95.68-72 area, it even overshot.
Attached Image (click to enlarge)
Click to Enlarge Name: USDXM15.png Size: 38 KB
  • #39
  • Oct 3, 2016 9:28am Oct 3, 2016 9:28am
Quoting Kubiasty
its called wyckoff {image} I had thread about wyckoff formation only: http://www.forexfactory.com/showthread.php?t=601278
Thank you, I didn't realize it had a name But yeah, that's generally it.
We look at our charts and try to figure out what market has done, so that we understand what is currently doing and finally so we can know what to expect.

Today's example was probably a little too perfect in that it illustrates what I was going on about earlier. Work inside the consolidation, with a directional bias in mind. Try to sell in the upper portion of the range or buy in the lower portion. This allows for tighter stops. I have to admit, today was rather annoying, sitting through an entire day of ranging, but all is well that ends well.
  • #40
  • Oct 3, 2016 9:40am Oct 3, 2016 9:40am
Quoting arya.aryaee
{quote} Thankyou Wdays for sharing this to help others you told"We know we should expect a second bearish day, price will be going down" how did we know we will have another bearish day? was not it possible it did go more up first in second day(i mean price goes first up until your SL and then down)?
Simply by building a directional bias before sitting down to trade We do most of our work outside of trading hours, remember?

Regarding stops, trading is like a game. We have to think like retail traders and like market makers at the same time. Retailers are taught to place stops at the last swing low or high. What's more, people who want to buy or sell a breakout will place buy stops and sell stops above or below known highs/lows. What do you think is going to be the first thing market makers do?

Stops are meant to protect our capital, not serve as target practice. With a directional bias in mind and well placed entry, you can afford to have a 10 pip stop without a care in the world.
1 trader viewing now