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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

  • #43,401
  • Sep 9, 2009 2:22pm Sep 9, 2009 2:22pm
Some will disagree - feel free to do so. i won't lose sleep or money over it. I think it is instructive to look at a sub-par bar from time to time.

CJ 4Hr.

hey look - an outside bar (marked)

Hey, cool - it crossed the 85.00

hey cool - it closed in the bottom third

Hey - an entry 10 pips off of the bottom will clear the bar lows to the left. (white dashed line)

Now scale it out. Hhmmm... bar highs on the four hour....

Now look at the daily - trading into the PPZ

Draw some fibs...

this trade may run for miles and miles, but just because it is a OB on a round number does not make this trade a good setup. So rather than acting like "Jo Jo the Circus Boy" (no offense if you are a circus boy) look at the area a bar forms.

In fact - I like to see upcoming areas FIRST, mark them and then stalk a bar at that locale. it keeps me from getting in a lather over crappy bars, and lets me sleep at night.

An 'A trade' a day keeps Jim's voice from ringing in my ears.
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I'm pretty much done with all this ...
  • #43,402
  • Sep 9, 2009 3:22pm Sep 9, 2009 3:22pm
How's this for a horrible fill? I had a buy stop at 992, got filled at 988.60. Spread at the time was 11 dollars.

First from FXPro

Second is from my FXDD feed
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  • #43,403
  • Edited 3:48pm Sep 9, 2009 3:37pm | Edited 3:48pm
Quoting bundyraider
Hi Judith,

I took a trade earlier today (OZ time) because of that Aud BEOB. Not directly though.

It was good how it closed convincingly well below the previous 4 bars. Always pricks my ears up.

I think like me maybe you seen (??) that it wasn't strong enough to counter the steep rise the chart has given us the past few days. And not enough room to that first potential trouble spot. It nearly looked like one of those retrace fakeouts you learn to notice after a while didn't it?

The BEOB itself hadn't hit the previous peak...
Well said Bundy.

My thoughts were that Price would at least hit the blue S/R level before hitting the .8600 or above. ( the black line was my stop loss, .8620) I knew those Highs (orange line) were a "trouble spot", but I had confidence that the quality of the setup would push to the blue S/R level. It did not.

If another setup presented itself like this one, I would take it again and not change a thing. (that's just me. )

Jim
(Sorry, I can't post current charts)

http://i28.tinypic.com/11ig8kl.jpg
Indicators show the past. Price Action "Indicates" the future.
  • #43,404
  • Sep 9, 2009 3:45pm Sep 9, 2009 3:45pm
Quoting benji533
Hey!!!!!
Watch where you are going!!!
Please don't trade against me you will may get hurt

Ben
Nice one Ben.

Are you keeping your stops at break even? How are you managing this trade? Just curious. Looks like it could go to the moon.

Jim
Indicators show the past. Price Action "Indicates" the future.
  • #43,405
  • Sep 9, 2009 4:12pm Sep 9, 2009 4:12pm
Quoting muntu ntu
Are you with me on the natgas?
I got in at 2.79. Plan to load more around 2.9. Won't have take profit, just trail my SL
Looks kind so far.
muntuntu
As the first resistance area (3.2) was too far for such a countertrend move, I completely closed the position at 3.0 round number.
Hope you did well too

Bye
  • #43,406
  • Sep 9, 2009 7:15pm Sep 9, 2009 7:15pm
Let's see what happens if this breaks to the upside, I will cancel the order if the last low is breached.
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  • #43,407
  • Sep 9, 2009 7:30pm Sep 9, 2009 7:30pm
Quoting StoragePro
hey look - an outside bar (marked)

Hey, cool - it crossed the 85.00

hey cool - it closed in the bottom third

Hey - an entry 10 pips off of the bottom will clear the bar lows to the left. (white dashed line)

Now scale it out. Hhmmm... bar highs on the four hour....

Now look at the daily - trading into the PPZ

Draw some fibs...
I think you are vastly overestimating the amount of thought that goes into a chump trade

I'd probably limit it to

Quoting StoragePro
hey look - an outside bar (marked)
.. followed by 'press buttan on internets for making moneys!'

-------------------

Quoting Dale
Let's see what happens if this breaks to the upside, I will cancel the order if the last low is breached.
At least you know exactly where this one is going and probably stopping
When you have to shoot, shoot. Dont talk.
  • #43,408
  • Edited 8:56pm Sep 9, 2009 8:40pm | Edited 8:56pm
Quoting esbatu
Hi guys, just out of curiosity,
what is your most consecutive losses in trading PA?
imho, this is a very subjective question. it cannot yield 1 general answer.

it's basically trader-dependent:
an experienced & an inexperienced trader can trade PA differently, hence the results will definitely vary.
an experienced trader can see a PA setup & discern if it's tradable & what is its potential/probability for success. while an inexperienced trader may just simply trade every PA setup he/she sees with no respect to other factors (PPZ, S/R, confluence, PA size & location, etc) or to its probability for success.

i hope i am wrong, but it seems u still have little confidence on what is being presented in this thread. more reading, more practice will definitely improve your confidence in the method at hand.
Also, imho, it's better to concentrate on making correct & profitable trades than for u to focus on losses/lossability (as opposed to winnability) of this method.
james16 method revolves around PA setups, S/R, PPZs & these are the bedrock of trading, i think no1 will argue against that. if u can learn & master this (or at least be consistent), i am sure the sky is the limit
  • #43,409
  • Sep 9, 2009 9:38pm Sep 9, 2009 9:38pm
Quoting supremeChaos
imho, this is a very subjective question. it cannot yield 1 general answer.
It can for me: 2
When you have to shoot, shoot. Dont talk.
  • #43,410
  • Sep 9, 2009 9:45pm Sep 9, 2009 9:45pm
Quoting Icehocey77
How's this for a horrible fill? I had a buy stop at 992, got filled at 988.60. Spread at the time was 11 dollars.
First from FXPro
Second is from my FXDD feed
In the last few weeks I started using limit orders for everything. Even when I want to put in a market order, I just use a limit and make the price @ the Bid/ask and I get an instant fill just like a market order. A little extra work, but you save on any slippage. The trade off is that it is possible you may not get filled.
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #43,411
  • Sep 9, 2009 10:19pm Sep 9, 2009 10:19pm
Hey guys, I've been reading this thread and I am new to Forex, and Forex Factory. After some research on the board and many hours of reading, I have decided to study the James16 Price Action system. I have some questions if you guys don't mind. I have read and re-read the first 50 pages many times, and I feel I understand the price action system basics... All the price action signals, etc. Looking at charts in the past and and looking at what's going on currently, all I can say is it's phenominal!!

Well, I am a complete newbie, and I know James16 recommends daily's and weekly's for guys like me. I have seen a couple of pin bar setups and was going to start the demo trading on my Oanda demo account, but it looks like on the daily/weekly charts, I need huge stop losses compared to when I drop it down to the 4h/1h time frames. I have to be honest here and tell you I don't fully understand money management yet, or the Forex trade in general, so that is where most of my questions are concerned. Can anyone point me to a very detailed artical explaining this?

And for a short answer, (on a pin bar setup for example), how many pips apart do you generally put your stop loss from your buy stop/limit on a daily? It seems really far away to put the stop loss on a daily chart at the top of the pin bar and the limit 10 pips from the bottom. It's risking a shitload of pips. Am I missing something here? On a 1h,4h TF, the 30-50 pips will usually do it.

I am sorry if this question has been asked somewhere, or if it's a completly stupid question. This thread is gigantic now, but I'm constantly reading through it.

Thank you.
  • #43,412
  • Sep 9, 2009 10:38pm Sep 9, 2009 10:38pm
Hi Supreme, thanks for your post.

Frankly, the reason I asked the question was because I was a bit frustrated with some trades that I took recently. Those trades did shake my confidence. Not to the materials in this thread, but more to my ability to trade the PA.

I started to trade PA two months ago, where the market was quite accomodating. Almost every trades was a winner. I became over confident and reckless. I took all PA setup that I saw. Guess I am paying the price now. Market really has its way to humble you.

But as you said, I believe that with more practice and more reading I could master this PA concept. Now everytime I look at the PA setup, I imagine all the seniors standing behind me shouting "Be picky, be picky, Only A set up"
  • #43,413
  • Sep 9, 2009 10:56pm Sep 9, 2009 10:56pm
Quoting Monroe
Hey guys, I've been reading this thread and I am new to Forex, and Forex Factory. After some research on the board and many hours of reading, I have decided to study the James16 Price Action system. I have some questions if you guys don't mind. I have read and re-read the first 50 pages many times, and I feel I understand the price action system basics... All the price action signals, etc. Looking at charts in the past and and looking at what's going on currently, all I can say is it's phenominal!!

Well, I am a complete newbie, and I know James16...
Hey Monroe

Welcome and I think you will be quite pleased with what we do around here. Simple and effective, just takes time and practice.

Yes you are missing what is called position sizing. Basically pips don't mean anything it is all about position size. So you can have a 50 pip stop or a 500 pip stop and both equal to the same percentage of your account size.

For more information check this out
http://www.forexfactory.com/showthre...osition+sizing

(MM = posts 18-33). Go through it a few times and it will make sense.

Again welcome and ask questions when you have

Mike
  • #43,414
  • Edited Sep 10, 2009 12:17am Sep 9, 2009 11:13pm | Edited Sep 10, 2009 12:17am
Quoting Monroe
Hey guys, I've been reading this thread...
Congrats on making your way through the wilderness and into the light

Quoting Monroe
I have to be honest here and tell you I don't fully understand money management yet, or the Forex trade in general, so that is where most of my questions are concerned. Can anyone point me to a very detailed artical explaining this?
Most people use the %R system, which means you stake a certain percentage of your account on each trade - less than 2%. StoreagePro uses 1%, and is consistently profitable trader - using this gives him effectively NO risk of ever, ever going broke. I'd recommend everyone new sticks to this or lower since you probably arent going to be consistently profitable at first.

Quoting Monroe
And for a short answer, (on a pin bar setup for example), how many pips apart do you generally put your stop loss from your buy stop/limit on a daily?
You really want to base your stop on the PA, not the number of pips. So, with a pin bar for instance, put it 10 pips past the nose.

So how do we reconcile the two? Easy. I note that you use Oanda, which is half the battle won

*note* this is a simplified thing I sent to a friend who was acting a fool with huge position sizes and blew up like five accounts. It's just an overview to stop people that have no idea from losing at life. See below for some references that will make you a position sizing ninja. *edit* or just listen to mike above, as usual

1. First, take the % of your account that you are risking, from above. Let's say you go for 1% and you have a $10k account. Easy, you want to risk $100. This is your total risk, the most you can lose on this trade.

2. Now, look at how many pips you need your stop to be. Say that your stop is behind the pin, and that ends up being about...125 pips. Remember, your trading system (ie, entry and exit) and money management system are separate. Set your stop based on the chart, not your account.

3. Next, you need to work out your position size which reconciles the two. So you want to risk $100, and want that to equal 125 pips (your risk on the pin). Open calc.exe (or grab your handy HP12C *nerd alert*) and work out 100/125 to find out the dollars per pip... 0.8, in this case.

4. Finally, calculate the number of contracts.. as you probably know (but some people out there might not), a pip is a hundredth of a cent, so a ten thousandth of a dollar.

A 'full lot' is worth $100,000, so dividing by 10,000 gives us $10/pip
A mini lot is $10k, which is $1/pip
A micro lot is $1000, or 10c a pip.

So, since you want to risk 80c per pip, you want to trade 0.8 of a mini lot (which Oanda will let you do), or 8 micro lots (if your broker offers them)... and you know that if it goes 125 pips against you, then you will lose $100 and live to trade another day with the 99% of your account that is left.

Similarly, if you have a $1000 account, 125 pips @ 1% risk = 8c per pip, so you want .8 micro lots.

((account size) * (risk% / 100)) / stop in pips = mini lots, x10 for micro
($1000* (1/100 risk))/125pip stop = .08 mini lots = .8 micro lots

This is a huge simplification, but it is enough to stop you going broke and ending up like the 90% of chumps out there.

There are a few tricky parts, like needing to convert non xxx/USD pairs to make sure your %R in USD (assuming you have a USD account) = your %R in whatever currency you are trading... but unless you are trading a huge amount of money, it probably isnt all that important for a new person. Then again, if you are new, you shouldnt be trading a huge account anyways.

There are some more advanced stop-placement strategies, too, to try and finess your risk:reward and profit ratios, but you dont want to mess with them until you really know what you are doing.

FOr more info, Van Tharp is a big fanboy of the %R system. His Trade Your Way to Financial Freedom and Definitive Guide to Position Sizing are very highly recommended by basically everyone.

Dont want to pay? Well, Diallist is your man. He has a whole thread of awesome here, or do a search on his name.

---------
The trap that most people run into is that they think 'i have a thousand dollars, I can set a 10 pip stop and trade $100 a pip! and when I catch that thousand pip move, i'm set!'

You arent. Risking too much of your account on any trade will send you broke. And you are just setting an arbitary stop based on irrelevant, non-market information (ie, your account size). So your stop will get hit. And you will lose your whole account, and have to start again.

Using a professional risk management system is what stops this happening, and ensure you can take trade after trade after trade, and compound your account into whatever you want.

You might think that you will never make enough money, when your hundred pip move nets you like eight bucks. But that is because you dont have enough capital. Increasing your risk might increase your returns, but it will also send your broke sooner - especially if you dont have a consistently positive expected value. You think professionals risk their entire $500m portfolio on one trade? Hell no. Consistent returns and compounding are the name of the game.

Base your stops on PA, limit your risk, compound your account, make dollars. Easy game.
When you have to shoot, shoot. Dont talk.
  • #43,415
  • Sep 9, 2009 11:27pm Sep 9, 2009 11:27pm
You do really well taking those trades too, on the whole!

For the record, your blue S/R level was my thought too for ending the trade if it made it. (...That's where it was at the least going to retrace IMO.)

I don't know how else to explain why my confidence on it pushing through was less than yours.
...I suspect for the same reasons Judith was uneasy about it.
...Probably along the lines of the 'turning an ocean liner around' parallelism we use. It was more like it stopped and backed up for a little while, rather than turned.

Forgetting all that though , the main reason that talks me out of those tight trades most in the end is -- I like 'management' room to be there foremost.
I like signal bars like that BEOB, but I also want to soften my risk exposure by having a little more room to play with as well. It means a little more waiting, but any eventual trades tend to be much less stressful. That's why I switched down to 15 mins and just left it there in the background to look at everytime my new bar alarm sound went off. It's a different playground then. An all new chart with a bit of higher time frame knowledge.

Another reason for liking a little more room to play with is , I'm of the belief that more room gives opportunity for more traders to commit and help with the momentum build up. It's kind of the "falling knife" analogy we use, but in a good aspect -- drop a knife from half an inch off your hand and it might scratch you. Drop it from a foot and it's likely to do a bit more. lol
I think a LOT of people are like me and won't enter the trade if the next S/R is too close. They'll wait for better opportunities. As we all know the more money lingering behind our trade ideas the better.

And my stop was around your stop level too, BTW.


Quoting jarroo
Well said Bundy.

My thoughts were that Price would at least hit the blue S/R level before hitting the .8600 or above. ( the black line was my stop loss, .8620) I knew those Highs (orange line) were a "trouble spot", but I had confidence that the quality of the setup would push to the blue S/R level. It did not.

If another setup presented itself like this one, I would take it again and not change a thing. (that's just me. )

Jim
(Sorry, I can't post current charts)

http://i28.tinypic.com/11ig8kl.jpg
Bundy's status today: "Waiting..."
  • #43,416
  • Sep 10, 2009 12:02am Sep 10, 2009 12:02am
joelcf, your the man bro!!! thank you!! I get it now... Wow, exactly what I was looking for. I have read about position size, I just didn't completetly get it. You explained this perfectly, that's kick ass. Thank you very much for taking the time to do that.

mbqb11, thanks a lot for your reply as well, this post by diallist is excellent as well.

I have learned so mch from this this thread alone in the past week, it's unbelievable!! I am going over some of the PA stuff again, learning more about how to use confluence to determine if a price action signal is worth it. So far I understand how to use fib retracements on swing high's and lows, PPZ's and S/R levels for setting SL/TP's and generally determining how the market is going to react, and the MACD for seeing if there's divergance. Great info!! damn... you guys are good. thanks again.

I know that ma's are not important for me right now, but do you guys typically use sma's/ema's for extra support/resistance levels? This I am unsure of, but from what I understand, it seems you guys are using different ma's settings depending on the TF. Is there one common one, like the 365ema?
  • #43,417
  • Sep 10, 2009 12:07am Sep 10, 2009 12:07am
Quoting Monroe

I know that ma's are not important for me right now, but do you guys typically use sma's/ema's for extra support/resistance levels? This I am unsure of, but from what I understand, it seems you guys are using different ma's settings depending on the TF. Is there one common one, like the 365ema?
Glad you are learning so much, this is what it is all about.

Typically the main EMAs used in this thread are the 365 and 150 ema. With quite a few using 200ema, and 50 ema. There are variations of this you will find as you go through the thread, but no need to get bogged down on all that yet.

-Mike
  • #43,418
  • Edited 1:20am Sep 10, 2009 12:50am | Edited 1:20am
Quoting bundyraider
You do really well taking those trades too, on the whole!

For the record, your blue S/R level was my thought too for ending the trade if it made it. (...That's where it was at the least going to retrace IMO.)

I don't know how else to explain why my confidence on it pushing through was less than yours.
...I suspect for the same reasons Judith was uneasy about it.
...Probably along the lines of the 'turning an ocean liner around' parallelism we use. It was more like it stopped and backed up for a little while, rather than turned.

Forgetting...
Man Bundy . . . you word things so clearly . . it's probably why I'm one of your biggest fan. I like that . . . more room to manage . . to allow momentum to build in an already momentum buildt setup. Good stuff, because it makes sense . . easily.

The 4 hour Aud/Usd BEOB was in a consolidation area not at a peak or highest point. This should have gave me more pause as well.

The Daily Cad PB is a good example of what your saying here. It fits it to a tee. Orange line is not giving any room to manage and stalling momentum.


Thanks Bundy.


Jim
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Indicators show the past. Price Action "Indicates" the future.
  • #43,419
  • Sep 10, 2009 12:54am Sep 10, 2009 12:54am
Quoting joelcf
Congrats on making your way through the wilderness and into the light

Another Joel classic.

Thanks brother.

Jim
Indicators show the past. Price Action "Indicates" the future.
  • #43,420
  • Edited 1:19am Sep 10, 2009 1:01am | Edited 1:19am
Quoting Dale
Let's see what happens if this breaks to the upside, I will cancel the order if the last low is breached.
Nice one Dale. I like that a sell below was not an option, against the trend.


Best regards,

Jim
Indicators show the past. Price Action "Indicates" the future.
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