Price Action in Day Trading by Dadas

Guys, I have just noticed a small error in the Custom_Zone_Candle.mq4
There is a choice to switch it on or off on the chart without removing the indicator.
It should automatically delete all the Zones it had drawn.
There was an error, and I have corrected it.
The corrected file is where it was before and here.

A word of defense pt. 1

Before I continue, I would like to state, hereby, a word of defense for myself.

Everything I write here is based on my own realizations, my own experience.
Not only my own.

It did not appear "out of the blue".
I did brake a number of demo accounts in my career, and I did lose real money, as well.

I have devoted an enourmous ammount of time to Forex.

Yes, in the begining I was the indicator trader, never could figure them out, really.
I wrote my own EAs to see how this works, I wrote quite a number of different ones.
I tested my EAs in the MT4 Strategy Tester, analized each trade, optimised my EA,
and again, and again, and again.

In the tester, I was able to go from $1000 to $600 000 in ca. 5 weeks testing period.
That is when I realized the potential of this Market.
However, the EA work perfectly only on the optimised period. Extending the period,
the EA become a losing one. So, I thought, why is it so?
And, gradually, I came up with the answer.
Because there is no way to programme "somewhere between here and here, but you decide".

This did not help much in live trading, I was making a little, then losing a lot.

Finally, when I got frustrated enough, I posted on a local forum.
Help came very quickly. One full-time, now will have been 8-year, proffesional
trader contacted me on SKYPE. He talked a lot of sense, he straightened out my thinking,
he showed me a simple H1 candle trading method without any indicator, just the bare chart
and drawing a simple High and Low line on the H1 candle and looking out for
engulfing candles ending trends, opposing the previous trend.

This was the begining of my realizations. Because I can programme myself, I
wrote a simple programme to draw these lines for me. That's when another
trader contacted me on SKYPE. The guy who helped me, gave me over 6 hours
of training and then told me I had to figure out the rest by myself, then he
removed me from his contacts list, so I wouldn't take more of his time.

But, the other trader, who is also a very experienced programmer at Assembler level,
was ready to cooperate. We spent every single day exchanging charts, brainstorming,
trying to develop a working strategy. Of course, he his own, me my own.

Thus, with the help of my friend the programmer, the lines became dynamic lines
on the current H1 candle and then, on the D1 candle.

Then came the breakthrough moment - Sam Seiden.
My friend sent me a link to the S/D webinar, because he wanted me to translate
for him. So, I watched and listened carefully. Sam was showing the model
consolidation and how price breaks out or down. Nothing new really, and
a model, not real charts. Then, somewhere by the end, he shows for a glimpse
of time, 1-2 seconds, maybe, the real chart. Bingo! Enlightment!
And also, he said one sentence, somewhere by the end, just one sentence
which is not really on topic, but it is a real eye-opener!

My mind did the rest. The Consolidation Zone idea appeared.
The true understanding of Consolidation came to me.

Some people, especially traders with many years experience and little result,
demand I must stick to "protocol", if I want to teach other people.
First of all, I do not teach, I present my method, my realizations.
Second of all, what "protocol"? Candlestick Patterns?
Candlestick Patterns and their meanings are the direct function of understanding
the construct of the Candlestick and of understanding Consolidation!
Not the other way!
First, Consolidation, from that idea, the Candlestick Patterns.
Why is the Doji Candle a signal of trend reversal?
Because it shows a pure Consolidation in the given period of time.
Not the other way around!
Why is the Engulfing Candle a signal of trend reversal?
Because it shows a Breakout from a Consolidation in a smaller period of time.
Not the other way around!

On the other hand, there is no "protocol" in Forex.
The so called "protocol" is what the Big Sharks have thought you for free on the internet.
Why? For what reason did they allow all this information for free on the internet?
So that they can take advantage, so that they can take Your money from You!

When the majority plays according to their rules, and they know there are no rules,
they move the price where Your SL is, and take Your money.
They are not stupid! They know the same "rules", the same "protocol" you know.

"Protocol" is just a bunch of terminology adapted from the traditional Stock Market.
The traditional Stock Market is a difficult market, fundamentals play a very important role there.
You have to know what is going on in the company you own shares.
It is a slow market. Thus, Candle Patterns are more reliable.

Forex is a very dynamic market, very volatile, price changes,
we operate on the 4th and 5th digit, we use leverage, sometimes huge leverage.
Candle Patterns are not so much reliable here, unless You understand
their idea, their origin, which is Consolidation!

Supply & Demand = Consolidation.

Balance = 0.

The Forex Market must always be = 0.

Otherwise, Your broker will not take Your Market Order!
He will only take a Pending Order, or Requote.

You want to Profit at Forex - You must Free Your Mind of "protocol".

You must be one step before the Big Sharks.

You must understand the chart language.

You must understand Consolidation.

Otherwise, You are just wandering in the thick haze!

A word of defense pt. 2

There are people, it seems everywhere, who demand proof.
They want proof that what I am posting is true.
They want me to show them my trades, which is
supposed to be proof that my method is working, I quess?

I say, OK, if that will help You, I am willing to do so!
And I shall do so, when the time is right.

However, I feel obliged to, at least try to, open the minds of such people.

What I present, here, is true, as anyone can see on the charts.
A lot of different systems work for some people.
Even indicator based strategies work for some people.
I know one trader who "feels the energy of the market".
He does not want to have anything to do with technical analisys.
He makes ca. 10% profit annually - it works for him.

What I am trying to convey here, is that there is no proof!
Nobody, no other person, can ever prove that a Forex strategy works!

What I am presenting is the realization of how the Forex Market works.
It is the realization of what really makes the market.
It is Consolidation.

Having this realization, You can build your own succesful strategy!

I have presented a simple strategy for You to test for Yourself.

You are Your only evidence, and only You can prove to Yourself
that Your strategy works for You.

OK, I show you that my strategy works for me.
How does that apply to You?

There is no Universally Valid Profitable Forex Strategy!

There are basic rules like: Risk to Reward Ratio and Money Management.
People speak of Loss Management and Profit Management.
Those are commonly known elements which must be included in every strategy!

Ultimately it all runs down to only two elements:
When to enter the market?
When to exit the market?

Once we have mastered the ability to read the chart and mastered
the Consolidation, we will be able to read trend forming signals and enter
the market at early trend beginings - that is all proof required.

Once we have mastered the ability to read the chart and mastered
the Consolidation, we will be able to read trend forming signals and exit
the market at early trend beginings - that is all proof required.

If You can do that, the RR and MM elements will keep You safe and Profitable.

Those are the only required rules - the understanding of Consolidation and
thus, the ability to read Price Action, to recognize early signals of trend
formation and trend confirmation - call it Supply/Demand, S/R, ZL, BO, whatever,
it all comes down to one word - Consolidation.

Proof:
1. Enter the market at beginings of trend.
2. Exit the market at beginings of opposite trend.
3. Keep Your R/R at min. 1/2 ratio (SL = TP/2).
4. Manage Your Money (always take 50% of Your profit to a safe place).

Developing strategies:
1. Start with the ammount of time you can spend on analisys and decision making.
2. Decide what Timeframes will be most suitable to your style
(the longer the Trading Term, the larger the Timeframe).
3. Decide Your Pip Profit target depending on the Trading Term
(the larger the Timeframe, the more Pips to take, the more time to wait).
4. Based on Your knowledge of the Market and Price Action, decide what You
have to see in order to Enter the Market.
5. Based on Your knowledge of the Market and Price Action, decide what You
have to see in order to Exit the Market.
6. Decide what Timeframe is enough for You to look for precision Entry.
7. Look at Your charts for as long as it takes for You to see the Entry signals.
8. Open the Trade where You see the right moment.
9. Look at Your charts for as long as it takes for You to see the Exit signals.
10. Close the Trade where You see the right moment.

Here are the 10 Commandments of Forex.

It is Up To You to DO IT.

Nobody will do it for you.

Charts do not show....please post again...thanks

Charts do not show...Please post again... Thanks

Yes, they do show.
The charts for Understanding the chart article are on a different server.
If You experience a temporary error, please try again later.

Please, do not post multiple posts of the same contents.

Greetings Dadas, thank you for this informative thread which I have been following since you started it.

I wonder if you would bear to aid my understanding of the workings of the Custom Zone Candle EA?

I fully understand your Zone Candle concept, as well as the Candle Shadow Consolidation Zone (CSCZ) and how to highlight these manually on a chart. But I am unsure how to highlight the Zone Candle using the EA.

I have attached the EA to my chart and it highlights a zone which extends all the way back historically. My problem is how does one then identify from this infinite historical zone the actual Zone Candle itself from which the zone began? Do we need to change the timeframe value in the Inputs Menu of the EA? Further, what does the current value of 1440 mean in relation to the timeframe setting?

Thanking you in advance of your response.

Regards,
Remlad

OK, So now I have defended myself, hope I pass!

Let us go on:

So, we have the Zone Candle and we can do a few things with the Zone Candle
in application with Day Trading or any other Timeframe Trading.

Day Trading carries the word Day, thus it is logical, that a Daytrader should
look for Profit inside the Day context. No matter if the Daytrader trades the whole D1
Candle or the H4 Candle, the H1 Candle, or even scalps the M1 Candle.

Obviously, if the Daytrader trades the whole D1 Candle, he/she needs a larger Timeframe refference.

Trading the whole D1 Candle, we might find the D1 on MN (Tf 43200) background very informative:
http://charts.mql5.com/1/179/eurusd-d1-fxsalt-ltd.png
The trend becomes clearly visible, retraces are visible even with the naked eye.
OK, this is post-factum, but apply the same Price Action reading as from the Simple strategy article:
http://www.forexfactory.com/showthre...02#post6525102
Wait for trend to form, see the long red Candle at the top?
Perhaps You had gone Long up there, when trend was Bullish, so what, Your SL worked.
If You had been properly managing Your RR and MM, that is just the Risk You took.

So, the day has ended, you see a Bearish trend signal. You wait, this is just the first signal,
a strong one, but could be false. The next day is Bullish, but it never gets close to the previous High,
thus not creating a new High, and there was a new Low. There You have another Bearish trend signal.

For some this is enough to start looking for a precision Short entry. At the Close of the D1 Candle.
Where would they be looking for the Short entry? Exactly in the green CSCZ:
http://charts.mql5.com/1/180/eurusd-d1-fxsalt-ltd-4.png

And then, the M30 might be a small enough Timeframe to enter precisely enough:
http://charts.mql5.com/1/180/eurusd-...salt-ltd-2.png
We are not looking for the trend on the M30, we have already decided by PA signals that
we are going Short. We just want to enter as High as we can.

But, what if we are not that Good? If we, still, are not convinced?
Well, draw the Potential Trend Ending Consolidation Zone (PTECZ)!
http://charts.mql5.com/1/180/eurusd-d1-fxsalt-ltd-5.png

Watch the price, it will take a couple of days more, but the confirmation will be solid.
We see the price Breakdown, we have a signal, another signal, already!
We see the price retracing to the PTECZ - things are going fine!

When the price has plunged into the PTECZ, switch to M30.
http://charts.mql5.com/1/180/eurusd-...salt-ltd-4.png
There You have it, a perfect setup, as they say!

Then continue, watch the Price Action, see the trend.
Be greedy? Close at every CSCZ and Open again at PTECZ.

Be patient, look for trend reversal signals, then Close.

Yes, you are right, this is not Daytrading, more like Weektrading or even Monthtrading.
And, you are correct, we were looking at D1 on the MN background, it is Monthtrading.

Continue here:
http://www.forexfactory.com/showthre...38#post6530938

Hi Dadas,
Thanks for enlightening us with your trading methodology. Attached is my chart. I can't seem to duplicate your chart. When you get the chance. Thank you ...4x4x

Here is the default settings of your Custom_Zone indicator_Candle

But, hold on, let us check something, let us rewind the picture to the very top.
http://charts.mql5.com/1/180/eurusd-...salt-ltd-5.png
That brown Zone at the top. Is it not the CSCZ of the MN Candle?
Of course it is! Could we have entered Short even earlier? Yes, we could have!
How much does it take to believe what we see?
The risk has been calculated. It has, already been taken into account, after all!

What do you mean?
If you want to have all the colors right, you must have the background the same as mine.
MT4 does funny things with colors.

In case anyone is interested, attached my default template.
You can always change things.

Yes, I just thought that there might be some of you who do not, yet know.

1. Custom_Candle_Zone.mq4 is programmed as an Indicator, not EA.
it is in the C:/Program Files/MetaTrader 4/experts/indicators folder.
2. Show_Custom_Zone_Candle true will show the Zone Candle on the chart
false will delete the Zone Candle and not show
There is no need to delete the whole indicator from your chart.
3. Custom_Candle_Zone.mq4 draws 3 Zones:
- the upper Shadow Zone
- the Body Zone
- the lower Shadow Zone
of the last closed Candle of the chosen Timeframe.

In inputs, there is Custom_Candle_Zone_Tf
1 = M1
5 = M5
15 = M15
30 = M30
60 = H1
240 = H4
1440 = D1
10080 = W1
43200 = MN

These numbers must be exactly as shown above.
That is how MT4 works, those are the MT4 values for each MT4 Timeframe.
4. Colors should be obvious, only the HL_Color and HH_Color will not match.
The result is a combination of color, so experiment and choose whichever suits you best.
5. Custom_Zone_Candle_Bckg true will show a colored rectangle
false will show a box rectangle

The concept of the Zone Candle is all explained here:
http://www.forexfactory.com/showthre...96#post6528596

And a hint, if you need some refference to where the begining of the Zone Candle is, just draw
a vertical line at the begining time of your chosen Custom_Candle_Zone_Tf.
It is always the last closed Candle of the Custom_Candle_Zone_Tf.

Dadas, thank you for the swift response. It all makes sense to me now.

Regards,
Remlad

Dadas,
So the Custom_Zone_Candle will automatically finds the CSCZ in TimeFrame my chart is set to?? If a new CSCZ develops in that TF, will the indicator change as well and adapt to the new CSCZ. Sorry for my lack of understanding about the programming of indicator.
Another questions, if I may. If the indicator is applied to a TF, where and how do I find the CSCZ (
I see the indicator runs across the entire span of that TF (for months or so), but where do I look for the CSCZ?

Greetings Dadas, thanks for sharing your knowledge.. with hope will make my feet more stronger to walk in FX world

PS. because your thread I join FF

Observations



Charts are limited to a certain Timeframecontext, but the Market is not.

Trading takes place any time,there is no regulation to say that trading must

take place from the Opening of aCandlestick until the Closing of a Candlestick.



**The limitations traders place upon the view on the market and / or a particular time frame creates great difficulty in the trader’s progress to understand what they are looking at... Simply Price



If the price reached a certain Highvalue and retraced back to the Open value - is it not obvious that

the price Consolidated inside the High-Openlevels?

And in between there might havebeen lots of other smaller Timeframe Consolidations.

Interpretation has nothing to dohere.

Interpretation is what gets peoplestuck on Buy when price shows Sell.

Interpretation is what gets peoplestuck on Sell when price shows Buy.

Because we see what we want to see,we see our interpretation, not the facts.

Price action is about PriceAction, it is about Facts!

It is the Facts that matter!



**This has to be one of the best explanations regarding “trading whatyou see, not what you think” Learning to see can be very difficult as our egos, and belief systems, would have us think otherwise. Some may never be able to step outside this limitation.



Break free of your interpretationlimitation!

Break free of just one context!



**Let’s put forth an example of this. Some will agree... Many will disagree... Here come those “belief systems again” Forex and the use of Volume...Before you get carried away just relax please... Looking a Volume in CONTEXTand adding single events to that CONTEX will allow you to view this (see differently)…Ever notice in your own trading when you begin to see PA differently all of asudden the light goes on. It took getting past the mental block to allow you to see differently.



**What Dadas is saying is break free of your limitations on how you seethe market. How you view price... Put away the indicators for now and focus on price movement. See price for what it is... Not what your belief system thinksit is.



**Is this going to be easy “HELL NO “ but is can be done.



Well done DADAS



TSD

Dadas,

You claim these are your results for February on the other forum. I hope you wont mind me sharing it for others to see but you made it public yourself adding the "Only now, only here etc...".

If you dont mind Dadas.
How long are you trading ?


http://forex-nawigator.biz/forum/resources/image/75137

A message to all my adversaries.

I really do welcome everybody to my thread.
Independant of their trading experience, knowledge, faith, or trading style.

However:
This is my thread regarding my method of trading and my own realizations.

I do not whish and will not allow any private information to be posted in my thread,
other than posted by me, exclusively.

If anybody wishes to use any of my previously posted on other forums information
without my former consent, the post will be Cleaned up.

Anybody who will consitently try to undermine my actions will be added to my ignore list.

In case of harassment and/or mobbing, I will not hesitate to use legal procedures.

Going to study this...
Thanks, Dadas, for the education...

Best,
- JMj