Thanks Chris
You are correct - it can be done without P.A., and in fact....I have even tested it. In my opinion, if you go with the trend, and look to buy at support in an up trending market.....well - that's enough to make money.
How I've been looking at it so far I do have a general idea of trend in the back of my mind from the monthly and/or daily but I don't neccesarily place the trade with that bias in mind because if the chart is really 'blocked up' does trend actually exist or are we just trading between zones? So what I do is if I think the trade is in the direction of trend I will keep the stop in it's original position for longer. If I think it's countertrend I move to b/e plus a few pips much sooner if I see price stalling a little and trail stops much tighter based on PA. If I'm wrong in my bias I can miss out on part of a larger move, but if right I catch most of the move before reversal.
I see in your post something I once fought with. (I could be wrong, but I think I see this anyway.) I think you are making it way too complicated. So the question then becomes WHY? It's almost always the same thing: Fear of loss. I say this because normally over thinking this is because we are looking for that "sure-fire" way to trade. It doesn't exist. I'm not giving you a hard time, just suggesting you ask yourself that question.....
No, I know there's no sure fire way but the aim is to increase skill before going into the market and blowing it. Fear of loss is bad because with that you'd never place a trade but fear of TOTAL loss or a drawdown you can't come back from is IMHO GOOD. I believe that's why you only risk 1% per trade? It all comes to probability of making money and if you don't know your probability +/- some before going into the market you're gambling. Likewise, if you think after testing you can only make, say 10% a year, you're wasting your time and may as well put the money in a fund or some such product.
One answer to your questions is that I tend to put my stops behind a round number no matter what. Why you ask??? Because it gives me double protection. It might be the bottom of a pinbar AND under a handle as well. Sure....you and I both know the difference between 1.4990 and 1.5000 is only ten pips - but there is almost always some kind of reaction to those fat round numbers.....
OK, I do see this and I know about round numbers BUT the thing is we're talking about general zones of x pips. Let's say we have a previously marked out zone at 1.6450 to 1.6650. We see a nice pin bar and preceding PA at 1.6550 and so take the pin short but...this is a zone, what level is being tested here by the pin? - we assume 1.6550 and put our stop at say, 1.6600, maybe a bit beyond. Price then drops a little but then retraces all the way to 1.6720 (beyond our originally plotted zone) before forming another pin which triggers and goes in the 'right' direction. This shows our original directional bias was right and our thought the market will turn soon was also right but our assumption that the market may turn at the level signalled by a strong pin at 1.6550 was wrong. That's really what I was getting at.
How I've been playing it so far is more a breakout style, I think price may react somewhere in the zone but I don't know how or at what level so I see how price moves in the zone, gauge momentum and then wait for price to go where it doesn't want to be i.e. out of the zone and place a trade in that direction. In some ways you may be losing part of the move doing this but I'm looking to take a big chunk out of the middle of it rather than catch it from the start. The initial stop is placed just beyond the round number which is generally in the middle of the zone, so stops initially are large (position size accordingly) but is then moved up sharpish depending on PA. You DO get whipped on occasion but so far (and this may just be me being rubbish at PA LOLZ) the success rate seems higher than the other way and definitely profitable in test.
...Horses for courses, different strokes for different folks maybe.
The bar itself, well....it just shows the reaction to an attempt on a S/R area. It's more of a visual clue. In my forum, I have examples of 2-3-4 bar combinations and what they mean. They almost always mean the same thing, but it might be over 12 hours instead of 4 or 24.....but really: What's the difference? A rejection of price at a specific point is just as valid if it is over the course of 3 hours as 16.
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You are correct - it can be done without P.A., and in fact....I have even tested it. In my opinion, if you go with the trend, and look to buy at support in an up trending market.....well - that's enough to make money.
How I've been looking at it so far I do have a general idea of trend in the back of my mind from the monthly and/or daily but I don't neccesarily place the trade with that bias in mind because if the chart is really 'blocked up' does trend actually exist or are we just trading between zones? So what I do is if I think the trade is in the direction of trend I will keep the stop in it's original position for longer. If I think it's countertrend I move to b/e plus a few pips much sooner if I see price stalling a little and trail stops much tighter based on PA. If I'm wrong in my bias I can miss out on part of a larger move, but if right I catch most of the move before reversal.
I see in your post something I once fought with. (I could be wrong, but I think I see this anyway.) I think you are making it way too complicated. So the question then becomes WHY? It's almost always the same thing: Fear of loss. I say this because normally over thinking this is because we are looking for that "sure-fire" way to trade. It doesn't exist. I'm not giving you a hard time, just suggesting you ask yourself that question.....
No, I know there's no sure fire way but the aim is to increase skill before going into the market and blowing it. Fear of loss is bad because with that you'd never place a trade but fear of TOTAL loss or a drawdown you can't come back from is IMHO GOOD. I believe that's why you only risk 1% per trade? It all comes to probability of making money and if you don't know your probability +/- some before going into the market you're gambling. Likewise, if you think after testing you can only make, say 10% a year, you're wasting your time and may as well put the money in a fund or some such product.
One answer to your questions is that I tend to put my stops behind a round number no matter what. Why you ask??? Because it gives me double protection. It might be the bottom of a pinbar AND under a handle as well. Sure....you and I both know the difference between 1.4990 and 1.5000 is only ten pips - but there is almost always some kind of reaction to those fat round numbers.....
OK, I do see this and I know about round numbers BUT the thing is we're talking about general zones of x pips. Let's say we have a previously marked out zone at 1.6450 to 1.6650. We see a nice pin bar and preceding PA at 1.6550 and so take the pin short but...this is a zone, what level is being tested here by the pin? - we assume 1.6550 and put our stop at say, 1.6600, maybe a bit beyond. Price then drops a little but then retraces all the way to 1.6720 (beyond our originally plotted zone) before forming another pin which triggers and goes in the 'right' direction. This shows our original directional bias was right and our thought the market will turn soon was also right but our assumption that the market may turn at the level signalled by a strong pin at 1.6550 was wrong. That's really what I was getting at.
How I've been playing it so far is more a breakout style, I think price may react somewhere in the zone but I don't know how or at what level so I see how price moves in the zone, gauge momentum and then wait for price to go where it doesn't want to be i.e. out of the zone and place a trade in that direction. In some ways you may be losing part of the move doing this but I'm looking to take a big chunk out of the middle of it rather than catch it from the start. The initial stop is placed just beyond the round number which is generally in the middle of the zone, so stops initially are large (position size accordingly) but is then moved up sharpish depending on PA. You DO get whipped on occasion but so far (and this may just be me being rubbish at PA LOLZ) the success rate seems higher than the other way and definitely profitable in test.
...Horses for courses, different strokes for different folks maybe.
The bar itself, well....it just shows the reaction to an attempt on a S/R area. It's more of a visual clue. In my forum, I have examples of 2-3-4 bar combinations and what they mean. They almost always mean the same thing, but it might be over 12 hours instead of 4 or 24.....but really: What's the difference? A rejection of price at a specific point is just as valid if it is over the course of 3 hours as 16.
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