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Where can I learn more about Price Action like those in James16 charts? 9 replies

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james16 Chart Thread

  • #40,021
  • Aug 6, 2009 12:41am Aug 6, 2009 12:41am
Thanks supremeChaos,

Hope this chart can clarify my question. I have been talking about the pinbar at 21 Sep 2008, which have been highlighted by James16 initially. If I entered at the lower end of the pinbar, I will face an immediate trouble zone, am I??

cheers,

kk007

Quoting supremeChaos
kk007,
if i may.... im trying to understand your line of thinking..

why the gain is 50 instead of 500 pips? wha is the value/price u based that from?
what is the price of "the top of the ppz"?

Sir james16, i believe, based the 500-pip gain from the 1.3830-70 ppz (Jul2007 mini range highs, Aug31'08 PB/spike low) &/or the weekly chart 150EMA (around 1.3927)


if u look & trade solely off of that weekly chart, u can see the immediate bar after the PB (from the 1.4900/5000) was a huge drop/down bar, indicating momentum of the downmove.
this...
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  • #40,022
  • Aug 6, 2009 12:44am Aug 6, 2009 12:44am
Quoting kk007
Hi James,

How do you know the pinbar will not be stopped by PPZ like this?

cheers,
kk
The thinking is . .You will probably be stopped and Price will reverse on you if you run in to a PPZ level like this.

So once Price breaks you protect yourself by moving to break even and/or take partial profits and limilt your risk once that PPZ is hit.

Now I know you may be a R:R guy and the PB size was 400+ pips which would have not even come close to being hit on this PB. So, you would adjust you position size to reflect your risk accordingly.

Or tighten your stop loss by placing it over the 1.4500 reducing your risk and waiting for a hard break.

The break gave up 120+ pips and Yes, the 50 pips you mention to the PPZ level would have been the time to move to break even.
(Charts to show the break)
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Indicators show the past. Price Action "Indicates" the future.
  • #40,023
  • Aug 6, 2009 12:53am Aug 6, 2009 12:53am
Jarroo,

Thanks a lot. You understand my question and answer completely! I was wondering if expert users here have a way to know a PPZ level can be easily broken or not. With what you suggested, there is no way to realize that.

cheers,

kk007


Quoting jarroo
The thinking is . .You will probably be stopped and Price will reverse on you if you run in to a PPZ level like this.

So once Price breaks you protect yourself by moving to break even and/or take partial profits and limilt your risk once that PPZ is hit.

Now I know you may be a R:R guy and the PB size was 400+ pips which would have not even come close to being hit on this PB. So, you would adjust you position size to reflect your risk accordingly.

Or tighten your stop loss by placing it over the 1.4500 reducing your risk and waiting...
  • #40,024
  • Aug 6, 2009 12:58am Aug 6, 2009 12:58am
jarroo answered very well kk.

i totally misunderstood your question.

jim

Quoting kk007
Jarroo,

Thanks a lot. You understand my question and answer completely! I was wondering if expert users here have a way to know a PPZ level can be easily broken or not. With what you suggested, there is no way to realize that.

cheers,

kk007
  • #40,025
  • Aug 6, 2009 1:01am Aug 6, 2009 1:01am
Cheers James.

Quoting james16
jarroo answered very well kk.

i totally misunderstood your question.

jim
  • #40,026
  • Aug 6, 2009 1:02am Aug 6, 2009 1:02am
Quoting kk007
Jarroo,

Thanks a lot. You understand my question and answer completely! I was wondering if expert users here have a way to know a PPZ level can be easily broken or not. With what you suggested, there is no way to realize that.

cheers,

kk007

Depending on the high quality of the setup, i.e. A++ setup, it can provide the necessary momentum strength to cut through alot of traffic and strong PPZ levels.

But the mindset you have to have is that "PPZ levels like this" will always stop and reverse on you. So you prorect your self and see if it runs through.

Sometimes it does and sometimes it does not. But when it does and then acts as the PPZ level that it is . . . . . . your looking real good as that PPZ is now your friend.
Indicators show the past. Price Action "Indicates" the future.
  • #40,027
  • Aug 6, 2009 1:03am Aug 6, 2009 1:03am
Quoting jarroo
The thinking is . .You will probably be stopped and Price will reverse on you if you run in to a PPZ level like this.

So once Price breaks you protect yourself by moving to break even and/or take partial profits and limilt your risk once that PPZ is hit.

Now I know you may be a R:R guy and the PB size was 400+ pips which would have not even come close to being hit on this PB. So, you would adjust you position size to reflect your risk accordingly.

Or tighten your stop loss by placing it over the 1.4500 reducing your risk and waiting...
Looking at the 4H jarroo, one then "should" have been stopped. cuz the Pb did break hard and bounced off that ppz albeit temporaily but enough to get one stopped if one had protected himself by moving the stop to BE at the ppz.

G.
I believe . . .
  • #40,028
  • Aug 6, 2009 1:08am Aug 6, 2009 1:08am
Quoting ghous
Looking at the 4H jarroo, one then "should" have been stopped. cuz the Pb did break hard and bounced off that ppz albeit temporaily but enough to get one stopped if one had protected himself by moving the stop to BE at the ppz.

G.
Yes that is correct ghous. It would have been a break even trade or a partial profit trade. It would not have been a loss for me, because I would have been waiting for the PPZ level to act as it did.

Or made the adjustment of the full risk PB and when from there.
Indicators show the past. Price Action "Indicates" the future.
  • #40,029
  • Aug 6, 2009 1:11am Aug 6, 2009 1:11am
I have traded pinbars for the fourth times and failed. My first two was failed trade (
http://www.forexfactory.com/showpost...ostcount=39538) and the third is a winning one.

My failure rate at the moment is 75% with a risk level higher than 1:1.

This time I have set my stop-loss to fib 61.8. The price open my short stop order and went all the way against me! Again, there is no mental interference or reaction issues for me in this case.

Trading PB is not as easy as it seems for me.

kk007
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  • #40,030
  • Aug 6, 2009 1:19am Aug 6, 2009 1:19am
Quoting kk007
I have traded pinbars for the fourth times and failed. My first two was failed trade (
http://www.forexfactory.com/showpost...ostcount=39538) and the third is a winning one.

My failure rate at the moment is 75% with a risk level higher than 1:1.

This time I have set my stop-loss to fib 61.8. The price open my short stop order and went all the way against me! Again, there is no mental interference or reaction issues for me in this case.

Trading PB is not as easy as it seems for me.

kk007
kk007, my friend, those PBs were not failures. They when right where they were suppose to go.

Secondly, get off the hourly. Stay with the Daily and Weekly time frames. That's where the best and biggest moves come from.
Indicators show the past. Price Action "Indicates" the future.
  • #40,031
  • Aug 6, 2009 1:22am Aug 6, 2009 1:22am
I have set an offset 3 pip below the pinbar, it was triggered and go for less than 1 pip profit, so no way to lock any profit.

If the same thing happen in D1/W1 in the similar porportion, I will make the same decision.

Quoting jarroo
Kk007, my friend, those PB were not failures. They when right where they were suppose to go.

Secondly, get off the hourly. Stay with the Daily and Weekly time frames. That's where the best and biggest move come from.
  • #40,032
  • Aug 6, 2009 1:26am Aug 6, 2009 1:26am
Quoting ghous
hey Ady,

What Josh was pointing out is what you call "hidden" bearish divergence.
Here's some info from the babypips school.
Divergence

G.
Quoting supremeChaos
ady27,
if i may....
Jduester was referring particularly to Hidden divergence ---connotes a trend continuation (in Jduester's chart, it's downward trend)
.......................................
Thanks Guys
I know the types of divergence....
From my point of view, hidden divergence are less reliable, if you check out the math behind it I think you'll see.
Do a back test to see if hidden points at the direction as regular. My results was: less often. much less. Less reliable.

Second is, for newbie's (like me), simple is better. I think for seniors also...
Regular divergence is like a mountain climber going up, at the start of the climb, he is strong and fresh (so his power gauge MACD is full).
On the second hill up the mountain he is less powerful (his power gauge ,MACD, looks down compared to previous power reading). and so on.
As price pushes up less power, hence MACD lower (in an up move). sign for reversals. Just confluence signs.
simple, logic.
  • #40,033
  • Aug 6, 2009 1:26am Aug 6, 2009 1:26am
Quoting kk007
I have set an offset 3 pip below the pinbar, it was triggered and go for less than 1 pip profit, so no way to lock any profit.
That's right. lol So you pass on taking that one.

It was sitting right on a S/R level, amoung other things (traffic) I'm surprise it gave up 4 pips.

We need space, swing Highs/Lows, off of a PPZ level, supporting confluences, etc.
Indicators show the past. Price Action "Indicates" the future.
  • #40,034
  • Aug 6, 2009 1:33am Aug 6, 2009 1:33am
Quoting jarroo
The thinking is . .You will probably be stopped and Price will reverse on you if you run in to a PPZ level like this.

Let me rephase this . .

Price will probably stop and/or reverse on you if you run into a PPZ level like this.
Indicators show the past. Price Action "Indicates" the future.
  • #40,035
  • Aug 6, 2009 1:34am Aug 6, 2009 1:34am
Thanks Jarroo,

Yes. Good points. I will remember all these you mentioned here. Let me keep improving myself. Perhaps, I should may place my sell stop 2 pip lower to make sure the PPZ broken (perhaps too risky to do this?)

cheers,
kk

Quoting jarroo
That's right. lol So you pass on taking that one.

It was sitting right on a S/R level, amoung other things (traffic) I'm surprise it gave up 4 pips.

We need space, swing Highs/Lows, off of a PPZ level, etc.
  • #40,036
  • Aug 6, 2009 1:37am Aug 6, 2009 1:37am
Quoting kk007
Thanks Jarroo,

Yes. Good points. I will remember all these you mentioned here. Let me keep improving myself. Perhaps, I should may place my sell stop 2 pip lower to make sure the PPZ broken (perhaps too risky to do this?)

cheers,
kk
You do know "This is Critical" from James16, correct?

James16:

THIS IS CRITICAL.

WE MUST LEARN TO:

Notice a strong s/r area just beyond our pa if it exists.
Know that if we trade into it we had better be prepared for a quick reversal that could give us a loss if we are not prepared.

if we know its there, we have several choices.

1. get out when it gets there for a small profit.
2. take a small partial profit and move the remainder to BE.
3. stay in with your total position hoping for a break and move your stop to BE.
4. Dont enter until the level has been broken."
Indicators show the past. Price Action "Indicates" the future.
  • #40,037
  • Aug 6, 2009 1:40am Aug 6, 2009 1:40am
Quoting kk007
I have traded pinbars for the fourth times and failed. My first two was failed trade (
http://www.forexfactory.com/showpost...ostcount=39538) and the third is a winning one.

My failure rate at the moment is 75% with a risk level higher than 1:1.

This time I have set my stop-loss to fib 61.8. The price open my short stop order and went all the way against me! Again, there is no mental interference or reaction issues for me in this case.

Trading PB is not as easy as it seems for me.

kk007
Just throwing this out there...I am not a J16 member but have thought time and time again about becoming one. I am familiar with many PA patterns and don't ussually trade them, but I do find them extremely interesting none the less. Saying that, I notice you are trying to trade a PB on the 1 hour. From a mere statistical standpoint, ~90% of swing highs or lows on that time frame are breached. Sometimes it takes price a while to come back and take out the price level in question, but those are the numbers. Often times there are stops waiting just on the other side of those swing points, your broker can see them in his order book and he is quite fond of them. So next time you see this setup, know that there is a 90% chance your stop will become your brokers take profit. One the other hand....What can YOU DO to take advantage of such percentages? With a little good old brain power, think about how you can reverse things and put the odds in your favor. Consider the longer term trend and where price is right now, then consider which sorry positions will be destroyed next.. Remember 90% over the long haul. If you choose to trade on the 1 hr as you are now, be darn careful to exit while you're still in the money.

Good trading to you all, keep up the good work here everyone!

Scotty B
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  • #40,038
  • Edited 2:03am Aug 6, 2009 1:42am | Edited 2:03am
Quoting kk007
My failure rate at the moment is 75% with a risk level higher than 1:1.

This time I have set my stop-loss to fib 61.8. The price open my short stop order and went all the way against me! Again, there is no mental interference or reaction issues for me in this case.

Trading PB is not as easy as it seems for me.
1. Almost everyone I have seen trades ten pips below the break, not 3. To make sure it breaks and all. 3 pips doesnt even make the spread on some pairs. You cant judge a break of a previous pin based on something that barely touches it - especially when the break is an integral part of the PA setup!

I used to try and trade on the exact pip that a bar broke and a setup was 'valid' - why waste ten pip profit?! It was a disaster.

Now, if I want a quick entry on the first break of the bar/validation of the setup, I wait for a Jaroo-style 'hard break'... and kill it if it goes against me, mbq-style.

Add equal parts Jim and Mike, you get the 'JimMi' system

2. You traded it right into a massive pivot level. You even have it drawn. There is more traffic than the Daytona 500. Price was always going to react to that.

3. Warning! Personal opinion!
61.8 bar stops suck, seriously. Pretty much all fib based single bar stops do.

Fib levels arent some *magic* number that the market automatically respects. Especially on the lower timeframes. The reason you see them respected on charts is because other traders think they should respect them. So things like big retraces of downward moves will likely retrace to a fib level before resuming trend. But in this case, no one else was looking at your fib. No one else was trading it. And as a result, there was no reaction.

If you look at it logically, how much money does it take to retrace a huge 3000pip downswing to the 38.2 level? Alot - its a big move.

How much do you think it takes to move the market through a fib stop on an hourly bar? Or a 15m bar? The distance is alot smaller, so it takes alot less. My grandma's checkbook could bust your stop. And she's dead.

(most of the 'power' people attribute to fibs has more to do with profit taking than with magic numbers...but I digress)

*resume regular program here*

4. You are on the hourly. Yes, reaction times and everything comes into it more, and you say those arent a problem. And maybe you are right - but that isnt the point. As a general rule, as your timeframe decreases, random market noise increases. You are *only* making it hard for yourself, honestly.

-----------

With pins like these, if you *want* to play them, I always find it safer to wait for a retrace and then take them on the break. If I really like them, I might wait for a retrace through one level and then a break of the next one down (eg, let it hit/break the 61.8, then grab it when it comes back through the 38.2).

That way, if it goes against me, my stop is smaller. And if it never comes back and just blows through the top of the bar, I dont even get on the trade. Downside is that I might miss some pins now and then, but whatever - plenty of fish in the ocean and all that.

But generally only on the break of the pin. Its safer. And easier. And more reliable.

Hell, with the amount of traffic this one had to clear, I probably would have even waited for a break of the pin *and* the PPZ. I do the same around round numbers now, so they dont eat me alive.

Then again, with the immediate resistance on that one, I would have passed anyways.

-----------

You seem to be a pretty eager learner/studier, and that is commendable - you seem to put in alot more hours than people who are looking for an 'easy fiux' - but I honestly think you could benefit from slowing your roll a little.

You are still demoing, so demo the 4H instead of the 1H. Before you take a trade, make a copy of the chart, draw your PPZs in, look at what price might do. Write a trade plan - there are tons of examples in this thread where people lay out each potential roadblock and each potential TP, and your plan for what happens when price hits each one.

My winrate shot through the roof once I started doing that. You give yourself the time to check and recheck and make sure it is a good trade. You see things you missed the first time.

That's why posting setups here is a great way to learn - you have to take the time to re-examine the trade (to avoid looking clueless!) and then you get people like Mike, Jim and Ghous who tell you why your trade sux.

Mainly, it just stops your itchy trigger finger from firing off a few rounds in the heat of the moment

Good luck with it - I suspect you are going to be sucessful at this in the long run.



(also, as an aside...Fibbonacci was crazy, not some magic mathemagician. Hay guyz, watch me turn this lead into gold!)

** my grandma isnt really dead. sorry gramma!
When you have to shoot, shoot. Dont talk.
  • #40,039
  • Aug 6, 2009 1:48am Aug 6, 2009 1:48am
Scotty B,
wow.... Scotty B in the house...
what a refreshing post...
Hope u post more from time to time here, Sir.



ady27,
so are u a mountain climber too?
thanks for clarifying... i'll check your mentioned hidden div. statistic out.

btw, i believe lilmoe is the "divergence master" here in FF.
i'll try & compare your stat with his posts.
Thanks for sharing!..
  • #40,040
  • Aug 6, 2009 2:02am Aug 6, 2009 2:02am
Quoting supremeChaos
Scotty B,
wow.... Scotty B in the house...
what a refreshing post...
Hope u post more from time to time here, Sir.
I will when I can (although I don't know too much of your J16 lingo), One more thing..and I don't have all the time to go into it right now (you guys can figure it out though) When looking at eurusd, what other pair corrisponds very closely with it? Oh ummm, eurjpy? When you look at both charts they move very much alike..Move for move that is and even trend wise. knowing this very simple point, there are ways you can cover your own butt by trading both pairs in unison, and not using stops. Don't just jump in and start doing this, just think about this as you continue in your trading education. A huge order in one currency is going to shift all the other in some fashion. Tie these things together as you go investigate this keeping just the 1 hr in context: 90%+corellation+ time= X...Whoever is interested...This is all stuff that probably does not belong on this thread, sorry Jim for trailing off topic.
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