LJ Forex Group

Cancelled my orders on UJ - price came closer to the entry area and in doing so decreased the value to the new FLS to an extent that this became a no trade for me. Price still did as expected though.

Nothing to say other than it did as expected.

Took a small win on a Gold long based on the 5min rejection pin off the demand zone. Was targeting a move to 1580 and took some off at the supply zone FLR - price didn't behave itself so scaled out when it showed me the probability of a move up higher was decreasing.

Sold UCHF at 0.9627 and SL at 0.9641

Closed 1/2 at 0.9607 for +20 pips and moved SL to BE+1.

Set TP2 at 0.7577

Missed my "BE+1" by a few pips. Changed TP2 to 0.7587 and will check it tomorrow. Going to bed.

I always get a stream of emails after a losing setup etc asking how I played it or what was wrong with the setup...

When will people wake up and realise losses happen, they are a necessary part of this business so stop getting scared by a loss. There is no place for fear if you want to be a successful trader yet it's the most common weakness I encounter when looking at others trades. Fear is commonly caused by a lack of confidence which in turn is caused by a lack of knowledge and having undertaken insufficient research....only the individual can solve this issue and it's not hard to work out how given what I've just said above!

Okay, with regards UJ setup, as I said above anyone who had the ability to watch their charts should not have taken a 1R loss on the setup (unless their SL was ridiculously close). Splitting the setup in segments...

1. Why Did I Reduce My Risk?

Because price came close to my entry area and moved away - thus the orders at this zone have now be reduced i.e. price has consumed some demand that was sitting around this SR - making the setup weaker from an order-flow perspective. If the setup is weaker then of course my risk has to reduce, it's merely a simple probability based approach.

2. SL Placement

People are getting it so wrong when it comes to SL placement. All you need to remember is a SL is there to cut the trade when 'in all likelihood' the reasoning for the setup has been invalidated.

It really is that simple!

But, all I see is people either a) not possessing the knowledge to know where this is or more commonly b) using wider than necessary stops because of the fear of taking a loss.

People would rather preserve their win rate at the expense of their long term expectancy.

Or to put in more simple terms - people are decreasing their long term net P/L in order to overcome a clear mindset issue. It shouldn't take me to explain how illogical an approach this is and that working to overcome mindset issues is the practical approach...most traders to be frank are lazy and want to take the easiest route possible. I can tell you mindset problems don't go away if you don't face them and deal with them and you will struggle to make good consistent returns in this business without doing so.

My SL went at 79.63 pm this trade - this, if hit is where the setup was most likely invalidated, this is NO subjectivity in this it's pure price action, anyone who thinks this area is lower just doesn't understand price action properly.

I had a pop at some people in my trading room who wanted to base their SL below the SR @ 79.54 -it was the lazy safe option rather than the objective price action based option.

But this is nothing to what I saw some people do (thankfully no-one from my trading room) - placing a SL below the SR and swing low area in the 79.40 region. This is what people asked me on email, was this a right place to use for a SL?!

A circa 35 pip SL on a UJ H1 setup, are you kidding me! Study a UJ chart, look at some SR's and the reactions it gives to price in every day volatility based conditions...look at the SR that the entry was based off, if you seriously think price has to move down to the 40 area for the the setup to be invalidated they something is seriously wrong with your price action knowledge.

Look at what did happen for price to get below that swing low - it took 21 hours to do so, if you cant look at that chart and see that the setup was invalidated long before then, then you need to do a lot of work on your understanding of price movements around SR levels.

I'm not going to give the reasoning for my SL @ 79.63 - part of learning to trade is also learning to think for yourself and not being spoon fed everything. If you want to take an educated guess then please do so either on here or email me and I'll be happy to evaluate your reasoning.

People need to learn that there is no place in price action trading for a mechanical mindset (i.e. if this happens we do this etc) - price action trading is understanding why and how price moves like it does and being able to objectively determine in certain scenarios what price will do next - there are tons of 'system' approaches to price action trading all over the internet, all of them are just a way for the person selling them to make some easy money...selling systems to retail traders is a profitable business, why because retail traders crave for an easy to learn mechanical system over spending the time learning true price action - it's the herd approach. I've been around FF a long time now and out of the 1000's of threads I've seen around here I can honestly say there are only 3 threads that teach true price action trading.

3. Trade Exit

As I explained previously I (a) took this trade with half my originally intended risk and (b) took an approx 0.8R loss.

Price was moving with too high a momentum to be able to reverse and so it made no sense in letting it hit my SL when I knew that it was very likely to hit it.

What other signs were there that price wasn't going to reverse...two obvious ones:

1. The M15 BEOB that formed on the retest of the former support turned resistance - a clear sign that price is much more likely to head lower from here.

2. The daily BEOB - if still in this trade then the daily BEOB was a clear reason to cut. That bar strongly suggests price will hold the FTB SR as resistance (as it closed below it) and move down to the 79.20 SR area.

Holding a trade in hope that price will somehow turnaround is not a trade management strategy. Being able to objectively make decisions based on what price is telling you is the efficient manner in which trades should be managed.

Just my two cents. Didn't spot it in real time but I have mentioned this pattern many times. I don't know how to insert previous posts. Take a look at post #2035, which is similar to this UJ setup, I think.

Not sure what you mean here. Sellers between A & B are not on the wrong side of the market so they aren't being squeezed. Buyers who bought @ A or lower were caught on the wrong side of the market and it's buyers bailing out when price returned to A that is part of the reason why price then falls back down again.

But the only way you can conclude that sellers have been caught on the wrong side of the market is if we get a trap below B...

Take a look at the following two charts. The second chart was edited from the original chart. In this case, I would do touch trade at level A. This is just how I see FTB patterns.

EDIT: I also said before this pattern is very simimar to QM in terms of order flow.
EDIT: BTW, I totally agree on this: "Buyers who bought @ A or lower were caught on the wrong side of the market and it's buyers bailing out when price returned to A that is part of the reason why price then falls back down again."

I would view those two levels as separate valid FTB setups and part of the rationale behind an FTB setup is spotting good zones where there has been a high (relative) number of certain market participants who are now trapped (i.e. spotting the zones where there is a high concentration of buyers over sellers or vice versa) as these participants now contribute towards the order-flow we want when price returns to the zone etc.

With regards a QM I view a QM in terms of traders getting trapped selling the low's - they see the second higher high form (the 'classic' sign of a new trend) and start bailing out and hence we get their order-flow contributing to the order flow at the demand where price bounces and of course as price continues in the reversal direction remaining sellers that sold the lows continue to bail out contributing to the reversal continuing.

With an FTB I view the zones as separate zones for the likes of UJ rather than an overall zone where price can get squeezed down to the lower zone before reversing - cos for me me there are more traders trapped upon price breaking the higher zone then there stands a higher chance of price holding as support on the FTB at this zone because this is the BE point for those sellers. Of course if these sellers held on until price hit the lower zone then they would be in profit and would likely bail (together with the sellers who sold the below the lower zone) which contributes towards the bounce at the lower zone - but the mindset of 'these' traders for me says they are not that savy and are more likely to bail at nearer BE than try and gain some profit. So I'd view those zones as separate valid FTB setups - of course if price cuts through the upper zone like butter (i.e. very quickly, maybe a news based move or something) - then this increases the chances of price bouncing at the lower zone. But on the whole I'd view them as seperate setups that I'd expect a positive expectancy from over time.

In terms of SL placement for the people that went long at the higher zone, I know their reasoning for a SL below 40's was because this was the 'safe' option and where they would conclude the setup at the higher zone was wrong (they wouldn't be thinking about the lower zone at all). But this is wrong, if the setup at the top level is going to work price should bounce pretty quickly, the order-flow that should be present tells us this.

Combine this with any obvious demand zone that was sitting there (which there was and can be seen on the sub H1 TF), the volatility of this pair at SR levels i.e. when price holds an SR level and you can conclude that in all likelihood price doesn't need to go anywhere near 40's for that setup to be invalidated.

But people don't think like this as they don't understand the order-flow, thus don't know how price should move, they don't have the confidence, so place wider than needed SL's 'just to be safe' which destroys the value in the trade and thus why people struggle to make long term profit - because their average R winner is now much smaller and they don't have the trade frequency and win rate to compensate (the two other sides to the expectancy equation).

I see it over and over again...people focussing on being picky (low trade frequency) trying to have a high win rate and using wide SL's to do so thus achieving low average R wins - which leads to a big struggle to have a long term positive expectancy. It's the same old rubbish that is regurgitated all over the internet.

Any decent price action trader knows that being over picky is the wrong approach and win rate is not the important metric and is in the market on average every day. I average 2 trades per day and I focus on mainly H1, H4 timeframes across multiple pairs. There is no reason with all the pairs, instruments and time-frames available to us that people shouldn't be finding multiple tradable setups every day - if you can't then you don't truly understand what brings you a positive expectancy or you possess a lack of knowledge - fear and lack of knowledge are the two main culprits in my experience.

Lack of knowledge comes from the amount of rubbish out there and the fact people are more interesting in learning a mechanical system than actually spending the time to think like a trader and learn how and why price moves like it does. An If X happens do Y is what sells and that's why the internet is full of such tripe.

Just remember that it's only the 'few' that make it in this business and thus following the herd will never bring you long term success.

My interpretation on why both the pattern and QM work may not be correct. But the more important thing is how price moves in this particular pattern and QM, IMHO.

Take a look at the chart that I traded on June 12. Price bounced up even if the lower possible FTB zone is little bit far away.

Still in this USD/CHF trade...

Bought E/J, beartrap setup

bought cable, after the consumption bar combination

Hi xmzhang, just my two cents on your EJ trade.