Trade What You See - Almost Naked Trading

3 tap set-up

I dont know if anyone else caught this trade today

here is a GU trade that I took this pm (UK time)

It has most of the things that I am looking for in a trade

GU is clearly in a downtrend for the week and is making LH and LL on hourly chart so I want a low risk way to get short, with sufficient space to move down

I want to find a supply area - an area where price has moved away quite sharply short - indicating - at the time - an imbalance of supply and demand

Hopefully (a) price will be attracted back to that level to pick up remaining orders and (b) there will remain a sufficient imbalance to push price down with the trend to the previos demand point

I attach a chart of the trade; I had already taken GU short this am on the LO down to 1.5665 and was waiting for price to retrace to the supply area at 1.5730 to 1.5740

I placed a pending short order at 1.5725 with stop at 1.5745 - with a first TP at 1.5702 and the balance at 1.5665 - hoping that price would retest the previous demand point

Fortunately the trade worked out for 20 pips on 2/3 and 55 pips on remainder

thanks once again for the thread Lawgirl; your approach has certainly helped my thinking in terms of the importance of higher TF trend

No LG. It stayed flat. I got out. I must be nuts. It's 2 A.M. Saturday morning here and I'm still looking at charts.

Hi all,

First, please forgive me as I must admit I hadn't enough time to read all the thread before posting. I wanted to share one way of trading I use from time to time. I'm a noob so I can make mistake and hopefully, experienced traders will help to improve the method.

The advantage of the method is it works with (almost) no indicators. Just a chart and your eyes to spot about 10-15 setups per day per pair. The win ratio is impressive after a few hours of training (so you can easily spot bad setups before you enter them). The bad news is it's stressful and requires to monitor your chart every second.

First, the pinbars you want to trade : Pin Bars

I like to trade those on M1 chart, there's more setups and trades are usually short (a few minutes). Attached chart shows 18 possible setups in a 6-7 hours time frame.

Pre-requisites :
- Low spread broker (you can only trade M1 with less than 2 pips spread).
- Fast execution of orders on broker's side. Below 1 second is fine.

Indicators :
- There's really only one helpful indicator : Better Volume (doc here and here, indicator here).
- You can also see if the KPI attached helps. It shows the buying/selling pressure on each candle. It's far from mandatory.
All other indicators are useless, they all tell you about the past. You don't care about what happened in the past, you can see it on the chart ! You want to know about the future. The pinbars are all about that.

Entry rules :
- Youy're looking for good shaped pinbars. The wick should be more than 2/3 of the candle. 75-90% wicks are the best setups, showing a strong rejection and so a stronger move in the opposite direction.
- Previous bar wick is preferably short. Previous bar high is no more than half of the pinbar. The lower, the better.
- Now, the pinbar closed and the next bar opened. Same rules apply : if the price goes too high in the pinbar direction : forget the setup. If the price continues to move in your direction, you enter the trade just at the pinbar's low.
- See setup #15 on the chart as a perfect one : this is exactly what you are looking for.
- For more security, you could want to play only in the trend direction. In this case, use M15 to find short term trend and confirm at H1 or H4.

Exit rules :
- Stop loss : at the opposite end of the pinbar. The longer the pinbar, the larger your stop. But longer pinbars give better odds to your trade, so it's fine.
- In all cases, no fixed TP : you stay in the trade as long as the price is going straight in your direction !
- When you're 5 pips positive, move sl to break-even.
- Option 1 : close the trade as soon the price begins to move against you, whatever the profit. This is conservative option, less risks, less pips !
- Option 2 : if applicable, you can use a down trend line that starts at the pinbar. When the price breaks the line, exit.
- If you can run the trade for more than 10 minutes and 15 pips profit, jump to a higher time frame (M5) and see how it looks. You could use a trend following indicator like Heiken Ashi to try to stay in.

Samples :

#1 : Not a good setup. The pinbar doesn't go lower than the high of the previous bar. However, the down wick is very nice and the pinbar is beyond the close of the previous bar. Conservative people don't want to trade this. Aggressive ones will give it a try (and, in this case may lock in 30-40 pips, but this is luck).

#2 : Not a good setup. Not a pinbar.

#3 : Not a pinbar.

#4 : Not the nicest one can find, but it's worth trying. The volume indicator also confirms you could be at a bottom. Without this last information, you could stay out, but with this yellow volume bar, you jump in.

#5 : Not a pinbar.

#6 : Touchy. Two pinbars and the price falls below their low only a couple of candles later. During this time, the Better Volume confirms you it's a top (two green bars). This is a risky trade : it doesn't show a clear rejection but two consecutive green bars on the volume indicator is a good sign. This one would have been a winner.

#7 : A nice 10 pips winner.

#8 : A very nice setup you should not miss. Volume is increasing for this bar but the reject is clear. You want to take this trade. You'll loose 10-12 pips on this one. It happens.

#9 : Not as nice as #8, but still a setup you should give a chance to. Volume is increasing but the pinbar is still well formed. Risky trade, but this one would give you back the money you lost on #8.

#10 : Price is moving slowly, pinbar is short. Risky setup.

#11 : Price has been playing higher two bars before and volume is increasing (it should decrease) : setup is not clean. Stay away.

#12 : Previous bar high is too high into the pinbar territory, pinbar is small. On the other hand, volume tells you this may be a top (red bar before the spike) and is slighty decreasing on the pinbar. You can try to enter the trade, the pinbar is small, so will be your stop in case the trade goes against you. You would probably close this one with 5 pips at most.

#13 : Not perfect, but a setup to play with.

#14 : The price has got high on the bar following the pinbar. But, the context is the price made a high (#13), then a small pullback and could be reverting down. The bar is small so you play with a tight sl here. It is worth the risk.

#15 : PERFECT ! No doubt, this is THE setup of the day. Better volume confirms this is a top (two red bars just before the pinbar).

#16 : Nice pinbar. However, previous bar went far into price territory of the pinbar. You should avoid this kind of setup, but the pinbar's shape is really good, so ...

#17 : Nice shape, but the price is already playing at this level since 3 bars, so the rejection is not so clear. Some risks involved in this trade.

#18 : Small bar but a setup you could give a chance to. Unfortunately, in the best case it is a break even trade, if you're not qucik enough, a looser.

We saw 18 possible setups. 10-12 of them really worth the trade. You end up with 1 looser, a couple of break-even and several winners. Depending on your exit rules, you would have been making between 50 and 130 pips during this 7 hours time frame for this pair. I call this a nice day

As with any trading system, knowing the S/R will be of great help. Murrey Math can help (indicator here) and display some levels. See on the attached chart how the price has been rejected several times from MM levels. Don't forget about other S/R levels and try to avoid taking a trade against them.


My $0.02.

this looks interesting but may be u should open a new thread, and develop idea there,youll have more space for your system. There is no need to complicate LG thread...

Hi Lawgirl21, Its been a while since I spoke to you, Great thread, I am
just getting into your system, seems very simple, Heres a pic of
Gbp Usd Mn using your RSI 3, and a couple of trend lines.
Congrats on your new thread, looks like a lot of traders are interested.

fishman356

Lawgirl, I would like your opinion on which way the Gbp Usd Chart may be heading? This a daily chart with the pair in an up trend, Now this at the bottom of the channel , and has strong support on the short side. The
price has just bounce three times off the channel line, which means it should reverse and go long, but also it just had a double top formation,
It seems to be in a deciding time fram because of the rsi indi is at about 4:00 oclock, highlighted in blue. I thinks it may go lower, but what the hell do I know. "just kidding" I forgot the divergence, I will post one more chart and let me know what you think.
fishman356

Something to look at over the weekend.

I think i have found something very simple and very good but was wondering if anyone else had any thoughts on it.

I have a m10 chart with triangular moving averages of 10,25,50, 75, 100, and 150

and where the higher the number TMA the stronger the trade action is. I usually wait for the 25 to cross the 50 and then for a second confirmation wait for the 75 to cross both the 25 and 50. and if it keeps going the 100 will cross all of them then the 150 will.

so far it has done really well for me making average of 16 pips a trade with an average time of trade at about 30 min.

I usually set limits and stop losses, set and forget.

what are others ideas and thoughts??

Hey,

If you gonna use so many MA's why not wait for them all to come within a close distance of eachother...?

This is a phenomenon known as Moving Average Compression...
What follows is a violent burst of momentum in the opposite direction of the prevailing trend... My guess is we'll starting seeing it any day now on the DJIA as the MA's are all coming together nicely...

Try it... You'll see what I mean...

Thanks Lawgirl for taking the time to maintain this thread. I love the simplicity that you've introduced. Am working my way through the thread & am excited by what I'm learning.

Steves life is an EA as well

I can't speak for others, but my thought is that this sort of question has absolutely nothing to do with this thread, and simply increases the noise:signal ratio.

in fact....this guy should open a new thread to release his giga strat. ; )

weekly+daily rsi up, 3rd touch,lets see what happens

thanks Jalarupa i will check that out!

well i would if i could but seeing that i am a junior member i cant start a new thread yet.
I actually tried to and it didnt let me. but thanks anyways.

Yes, thank you PhAn and DuffyP...let's stick with the simple plan.

Careful podgy, you are reaching too far back for an H4 chart. Should be no more than a week back.

LG, I believe you said you have been trading FX for about 4 years. How long did you practice before going live, and what made you stick with this 3 tap system?

I have been trading forex for about 4 years, but I have traded for many years...a chart is a chart.

I still practice..

What makes me stick with the 3 tap and BO systems? Profit.