LJ Forex Group

Novice traders get scared when they see price moving quickly. I on the other hand typed one digit too many in the order book! Trade size increased x10 fold! Good thing we know where to place our orders in this thread.

This was a 4h S zone, with 30 min PB and 1m entry.

LJ , I have been going through your videos again I really like that break out and retest stuff ... I have been doing something similar on the daily but want also to learn to trade intraday ... I have been practicing it ... But I am having a not so good time putting together a trade management technique to align with it ... Have a look at the chart below ... In it , I have shown two potential trade setups ...

1 ) Break out and retest of an SR zone

2 ) FTB of SD zone ...

When you have free time , please explain how you would have managed them in real time ... Initial stop loss , take profit , when to go BE ...

Yes, these are two good FTB setups - there are two more also in the recent past on that chart...

Do this exercise for me:

1. Take these 4 setups, use the H4 and smaller TF's to identify the key decision area within each zone (as per my post and video on the subject.).

Identifying the decision areas tells you where to place your entry and gives you logical SL options (because you're identifying where the main supply and demand is).

2. Once you've marked these up highlight where your entry should go and the possible SL options.

Remember the entry (most of the time) should go at the 'first possible area' price could bounce from - this will be (for a long setup) the first possible source of demand within the zone.

Most of the time there are various options for a SL as there are multiple decision areas within a zone down to the source of demand/supply - the SL placement will depend on individual risk tolerance - but at 'worse' it would go just below the source of the initial demand/supply that lead to the breakout etc. Mark these various SL option points on the chart.

3. With regards the FLR/S this will be the first possible demand / supply or support /resistance that price could turn back from after reacting at the FTB entry area. I would use the H4 and H1 to identify these.

I believe people learn a lot more by finding out things for themselves with a little guidance than me annotating lots of charts...so have a go (and anyone else) and I'll review your responses.

Yep - spot on.

Chanya - this chart should give you some hints for your CJ setups...

My exercise below ... In hind sight , it look to easy ... I hope in real time , it is easy too ...

Hello LJ, I give this a try... and also ask some question. Do you analyze chart in this fashion D, 1H then VLTF? Or from D straight to 1/5 mins TF?

edited: just saw your answers =)

Came across this image while web surfing. I think it fits current scenario viz. the more money Central Banks injecting in the market it demands some more.

Summarising the PA on AU at the daily supply from Friday...

Okay, let's take each of these CJ setups in turn. Only got time at the moment to go through the first one, rest will follow later.

Now the outcome on H1.

I'm going through these in a lot of detail to make it abundantly clear to people what I'm looking at and why.

I know the critics will say this is all rather complicated - it's not, it takes time to get used to doing, but the rewards of understanding supply/demand and the importance of decision points are very high.

It's very easy to follow some rule based system or some subjective lets keep it real simple approach - but they are not how a Pro trades and not how to make some real money.

Take FTB's for example:

1. There is one corner of the PA trading community that would consider touch trading aggressive (I will explain why it's not and why this belief just demonstrates a big lack of knowledge which leads to this ignorant comment in a future planned vid).

2. Another corner that teach and trade FTB's as a mostly rule, based mechanical system which a) demonstrates a lack of knowledge and b) as with any system based approach leads to low trade frequency and poor %R and thus a struggle to make some 'real' % returns.

Now take this setup and the potential options that were described in the post below.

Option 1 - trade entry from the lower decision point.

Entry @ 80.44, SL @ 80.59 (above the area mentioned plus spread etc).
Exit - 50% off @ FLS 80.20 and 50% off @ 79.81 (i.e. 2nd target)

Result + 2.9R

Option 2 - trade entry at higher main source of demand area.

Entry @ 80.50, SL @ 80.59
Exit - 100% off at 2nd target (as mentioned on the chart - chance of price breaking FLS is now higher and look at the way price is moving - that tells us to hold onto this trade and look for that 2nd target) i.e. @ 79.81.

Result +7.7R

Note: even if you'd opted for an ultra safe SL above the whole zone i.e. @ 80.70 you'd make +1.67R and +3.45R - that's the power of understanding supply/demand and decision points for you - regular good %R winners.

Too many PA traders focus on being picky and win rate - it's a BS approach. As I tell people in my Trading Room - being ultra picky is for wimps, people who trade scared. I trade to make money, serious money in fact (whilst having a sound risk management approach), this fact is neglected by most IMO.

People need to think about what 'expectancy' means - it's a function of trade frequency, win rate and risk/reward. If you only focus on the win rate part of it you're gonna have a limited expectancy. The most efficient approach is to focus on maximising all three - which is exactly what I do and why the strategies I teach and trade and the setups I share in my Trading Room have the ability to make such large %R gains each month.

As I've said before if you're not making 10R+ as a minimum per month then there is something wrong with the strategy you are trading or with your mindset.

Time for setup 2 - pretty simple this one.

Entry @ 79.82, SL @ either 79.70 or 79.66
Exit @ 80.15 - the clear FLR.

Result + 2.75R or +2.06R

sorry lovely , but what is rbr , looked at ur abbrev but it is not there

I've now added it to the abbreviations, it means Rally Base Rally and is a type of Supply / Demand zone.

The four types of Supply and Demand zones are explained in this post.

Okay, onto the 3rd CJ setup.

Firstly finding the entry and SL options, same process as previous.

Now for the FLS. This time we are using other price action knowledge to objectively decide where price is more likely to go to as a FLS.

Whether you decide to hold onto all or some of the trade in order to see if the pseudo bear flag / compression channel can break is an individual's choice.

Notice how the decision making is objective, it's not system / mechanical / rule based it is using knowledge of real price action to tell us what price is more likely to do next.

Result: Entry @ 80.29 or 80.32 with a SL @ 80.47.
Exit @ 80.06 being the FLS which gives +1.73R and +1R.

thx lovely , appreciate that ,, but let me inform u that u need a golden medal... thx again for this lovely work

LJ, thank you very much for lessons and everything else

Okay, lastly setup 4.

FLR identification on chart below.

Result: Entry @ either 79.25 / 79.21 with a SL @ 79.12
Exit @ 79.43 i.e. the FLR.

Resulting in either +1.38R or +2.44R

This little exercise should go a long way to highlight how to look at SR zones and SD zones and find the key decision points within them which tell us where to expect price to 'react' at.

There is a reason why I've uploaded the videos to my website in the order I have and why I have not yet uploaded anything on trading strategies (like the FTB strategy which the CJ setups were).

Knowledge of supply/demand, decision points and simple (but the most important) price action techniques centred around rejection, consumption and how we can see this via liquidity spikes, compression and certain patterns like flags etc is far more important as a first step in the (re)education process than trying to learn a strategy.

Read the posts and watch the vids on my website and go and spend hours watching the concepts on your charts and then you'll be fully prepared to to learn and understand how to use these concepts in the trading strategies that I'll be discussing over the coming weeks.

This is real price action trading, no rule based BS, no subjective reasoning, 'real' professional price action trading to make some 'real' %R returns that anyone who puts in the hours can learn.