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Found 37 results

  1. Hello! I am new to this forum. I am interested in learning about candlestick reading. I would appreciate hearing from any that will answer this post WHICH book you found the most helpful?
  2. Too often I see traders getting wrapped up in how to make money trading Forex before they even know why they're trying to make money trading Forex. In this article I'm going to address one of the most overlooked keys to success as a Forex trader. I'll also share with you some insights into my own journey as a Forex trader including how I learned to control my emotions before taking a trade. What if I told you that in order to be profitable you first have to know why you want to be profitable? It's not enough to say, "I want to be rich". There's more to it, and it all starts with a simple question... Why are you trading Forex? Is it to go on vacations with your family, become a prop trader, or maybe you want to teach others how to trade someday? Regardless of your reason, if you want to be a profitable Forex trader, you need to ask yourself this question and be honest with yourself when you answer. Just as you need to answer certain whys to enter a trade, called price action confluence, you also need to answer one BIG why before you can become profitable - why am I trading? The way you answer this question is important because it's going to help keep you focused and disciplined throughout your journey to profitability. The answer to this question is also what drives your emotional tendencies as a Forex trader.Therefore knowing and understanding the answer is critical to your success. Before we get into answering the question and learning to control emotional tendencies, let's find out why the Forex market has such a strong effect on our emotions in the first place. The Forex Market is an Open Playing Field For most of us, the unlimited freedom and creative expression that Forex trading offers is all but unknown. We tend to grow up in societies with rules and boundaries. If you cross a boundary, someone is usually there to put you back on the “right” course. When you were a child, it was your parents. Now that you’re an adult, it might be your boss. The point is that your entire life has been guided by society in some way, shape or form. Trading Forex has no limits or boundaries. Think about it. With the exception of abiding by regulatory rules, the Forex market is a “boundary-less” playing field. You open a position when you want, close a position when you want and hold a position for as long as you want. There’s no limit to how much money you can make, just as there’s no limit to how much money you can lose. All of this sounds great, and these are all reasons that lure most of us into the world of trading in the first place. But what happens when there’s no longer someone around to tell us “No”? Most of us don’t like to create rules for ourselves, especially when it was the lack of rules that lured us to trade Forex in the first place. It’s rare to meet a trader who didn't suffer considerably before realizing that more structure was necessary. Sometimes this suffering goes on for months, sometimes years. But I’m here to tell you that it doesn't have to be this way. This section was sourced from and dedicated to Trading in the Zone. If you haven't read this book yet, I highly recommend it. So how do we begin to take control? It all starts with your intentions; your why. Have You Updated Your Intentions? Do you remember putting on your first trade in the Forex market? Even though it was on a demo account (I hope) you still had certain intentions. You had obviously heard about Forex and were intrigued enough to open a demo account. So your intention was to see how it all worked. To see if you really can make money at this Forex thing. If that was your only intention when you opened the demo account, that's okay! That's what demo accounts are for. But the fact that you're here reading this tells me that you want more. So the next question you should ask yourself is, what are my new intentions? When you placed that first trade in your shiny new demo account you were just testing the waters, right? So your intention was to find out if you'd like to pursue Forex trading further. For some of us it may have been love at first site (myself included) but the fact is that we still knew nothing about trading at the time. The demo account was our risk-free way of testing the waters. Fast forward to today... You obviously liked it enough to pursue it further. So then I have to ask, why are you here? A logical answer might be, "because I want to learn more about trading Forex". And I applaud you for that. But why do you want to learn more? Do you see what I'm doing here? If you keep asking yourself the question, "why do I..." enough times you'll eventually end up at the root of why you want something. The answer to that root question is the one you'll want to focus on. So have your intentions changed, or are you still just testing the waters? You may think your intentions have changed because you've given thought to trading full time. Or maybe you've thought about those amazing vacations you could take as a profitable Forex trader. But have you defined what you want out of Forex? It's critical to your success as a Forex trader that you mentally update your intentions by defining what you want. I've never met a profitable trader whose mental attitude was, "I'm still trying to decide what trading Forex has to offer". Every profitable Forex trader knows exactly what they want to get out of the market. And it's not just money. There's more to it! So how can you start to mentally update your intentions? It All Comes Down to Two Questions I always like to keep things simple. So when I started to think about updating my intentions years ago, it began with two basic questions. What am I passionate about? What kind of lifestyle do I want? Both of these questions are very personal, so I can't answer them for you. What I can do is tell you how I answered them. What am I Passionate About? I'm passionate about being self-sufficient. I don't want to rely on a boss for a paycheck, nor do I want to be told what to do every day. I've worked in an office environment before, and I just don't believe I'm supposed to live that way. I'm sure many of you can relate to at least one of those statements. Most of all, I'm passionate about sharing my Forex experiences, both good and bad, with others who share the same passion. I want to leave a mark on this world, and what better way than through selfless giving? Before we move on, let me be very clear about something. My statements about working in an office environment are strictly my own perspective. I worked in that environment for a long time and had a lot of fun while I was there. My parents, the two most influential people in my life worked in an office environment their entire lives. There's nothing wrong with it, it just isn't for me. What Kind of Lifestyle Do I Want? When I first asked myself this question years ago I really had no idea. I had never sat down to think about the lifestyle I wanted in detail and how trading Forex could help me achieve it. I finally came up with one word that could define my image... "ability". I wanted the ability to travel the world and live life to the fullest. I wanted the ability to provide for my family - to give them everything they deserve and more. In talking with others, I've found that many people never do this exercise because they're afraid of the "what if". What if I don't achieve it? What if I fail? In most cases they don't even realize they're avoiding the exercise for this reason. That's the power of the subconscious mind at work - protecting us when it thinks we need protection. If you're part of this group that has put off answering this question, trust me when I tell you that you're not alone. But you do need to act on it and decide for yourself what kind of lifestyle you want and how Forex trading is going to help you achieve it. The longer you wait, the longer it's going to take for you to be able to control your emotions and become profitable. Bringing it All Together So why does all of this matter? It matters because in order to set out on the journey of becoming a profitable Forex trader, you first have to know the destination. The best example I can give is using GPS in a car. When you set out on a 1,000 mile road trip, it's best to know the destination address and enter it in your GPS. This way you get to your destination faster and without the stress of getting lost. Without knowing the exact address, you'll most likely make some wrong turns, deal with the stress of getting lost and it'll take you longer to get to your destination. Trading Forex is no different. You have to know the destination address (your "why") in order to get to your destination (becoming profitable). But it's not good enough to just know it; you have to see it. Your why has to be so clear in your mind that you can reach out and touch it. Sure, you can figure out your why along the way. But just like not knowing the destination address for your GPS, it's going to take you longer to get where you want to go and you'll experience more stress along the way. In closing, your answer (and vision) to why you're trading Forex is what's going to guide you in the right direction. When your emotions start to get the best of you, all you have to do is think about your why and let it correct your course. Before every trade setup you should be asking yourself, "is this trade setup good enough to get me where I want to go"? But in order to answer this question, you first have to know where you want to go... If you ask yourself this one question before every trade, you'll be one giant step closer to becoming a profitable Forex trader. Your Turn Why are you trading Forex? What kind of lifestyle do you want and how can trading Forex help you achieve it? Stay Diligent, Justin Bennett Daily Price Action
  3. Many traders come to trading with dollar signs in their eyes and dreams of a yacht docking at the Bahamas. Whilst this dream is not unattainable the percentage of traders that are ever going to make that type of money is extremely small. What can be realistically achieved? What you will be able to gain out of the market is largely based on the amount of money your trading account has. Someone with $1,000 is going to struggle make decent living and ride out what are inevitable losses that will come, compared to someone with $100,000 who is going to have a far better chance. It is simple maths that the more money in the trading account the less percentage that the trader has to make, to make a decent living. Are you kidding yourself? Are you expecting to open an account with $10,000 and quit your job? If so I think you need to realistically asses your situation. Example: Let’s say that you need to make $50,000 per year to make a living. Account balance A= $10,000 to make $50,000 profit = 500% per annum Account balance B= $200,000 to make $50,000profit = 25% per annum As you can see from the above example trader A needs to make 500% yearly to make a living, whilst trader B only needs 25%. This is obviously not including compound interest from within that year however trading on the assumption that you need to make any more that 5% a month is very risky. Some people will say "only 5% a month". Well 5% a month is 60% per year, and if you add compound interest with the growth of your account it is 80% per year! If you can make 80% per year growth you are doing very well! How does having unrealistic expectation hurt my account? Getting rid of unrealistic goals will help you with the mental application of your trading plan. Traders that are trying to reach trading percentages that are large will in most cases do two things; 1. Over trade 2. Risk too much money per trade Overtrading is a very common mistake made by many traders who are unrealistic in what they can achieve. They operate on the assumption that trading more will make them more. This is in fact is the complete opposite. Trading more will lead them to taking setups that are not worth taking and they will begin to lose. Risking too much will in most cases lead to an account being blown. Occasionally a trader will get lucky and pull off a large winner. Over time however the same trader can’t keep it up and when the losses come their account is crippled. What is needed to become consistently profitable? To become profitable a trader needs to realistically asses their situation. Every trader is different. How they trade and what method they will use will vary greatly from trader to trader. Learning a method such as Price Action trading and perfecting that method will greatly increase the chance a trader will have of making consistent returns in the market. If a trader can learn to trade Price Action and start using strict money management principles they will set themselves apart from the pack and give themselves a good chance of becoming consistently profitable. I hope you enjoy this article. It is designed to show you what is possible but at the same time bring you into the correct mindset that is needed in such a competitive market such as Forex. Safe trading, Johnathon Fox
  4. The secret to day trading is that there is no secret. Smart-ass, huh? Bear with me, I'll explain. A secret means that not a lot of people know about it. When trading, do you want to look at something that only a few people are looking at? So that when you make the decision to enter, it's you against everyone else? Hell no! That makes no sense. Even Paul Rotter, probably the largest individual futures trader, said he wouldn't be able to go against everyone else if the market was going one way. So you want to be on the side of with the most volume. And where does the majority of futures volume goes through? Trading Technologies' (TT) gateways (I remember a quote on their site that said about 70% of all futures volume goes through them). And what do you see on the screen of every professional trader? Columns of red, blue and prices. What is it? MD Trader that is part of TT's X_Trader (or a competing product that looks pretty much the same)! Don't you think professional traders would tell TT if there was something essential missing on MD Trader if this is what they use all the time? What about X_STUDY (TT's charts that are also part of X_Trader). How many chart types does it support? Not many. How many indicators does that have? Not many, and most of them are based on volume. And why don't traders complain about X_STUDY? Maybe they don't look at charts for decision making? So might it be possible that all the information you need can be seen on this small MD Trader window? Is this even possible? Paul Rotter (same guy I mentioned above) says he looks at charts for orientation, but doesn't make decisions based on that. What does he use to make decisions? The MD Trader! (Btw, this is not a commercial for MD Trader, you can use any competing product that shows you the same information). And what does MD Trader show you with just 5 columns? • All Bids • All Offers • Last Trade (Price and Size) • Volume by Price (a.k.a. Volume at Price, Market Profile, etc) • Your Orders inkl. your estimated position in queue (shown as EPIQ) Why is this relevant? Because this is a market, not some magic world. Bids and Offers make a market and the last trade shows transactions that took place in that market. See, this is simple. This is just a market, no magic. Think of it as a bazar. No one uses charts or indicators on a bazar to make the decision to buy or sell something. Same with the trading pit. And traders in the trading pit also use something else: noise. Noise meant momentum. How can you see momentum in the MD Trader? It's how quickly bids and offers change and how much is how quickly traded. So momentum is another important information that you can't put in numbers, but you can feel looking at the order book. What about Volume by Price? It allows you to find out how much has traded at a price when the last trade information is changing too quickly. It also summarizes the entire day's trading. You don't know whether the volume that you see there are still open positions or whether they have been already closed. But some of them are likely to be open. And those traders care where price is right now. You don't know when the traders that are on the losing side are going to puke, but you know that they are going to puke at some point. And that point comes closer the more the market moves against them. And they don't care whether there was an S/R on the chart or there is some indicator telling you to buy or sell, when they want out, they get out and this will affect the market. What about EPIQ? It shows you how likely it is that your limit order is going to get filled. Do you really need this? No, but it's good to know. No reason to enter at market, if your EPIQ is 10 and you expect a few more trades at that price. I hope I've given you something to think about. And please don't flame me in this thread, it won't change anything. That's like saying Newton's law of gravity does not apply to the part of the world that you live in. It is what it is. I'll post a few snippets of my favorite posts made by other traders from this forum to illustrate what I mean by all this.
  5. I've been trading for over eight years now, and I'm looking to get more involved with the trading community. I don't know anyone else that trades really. I'll be posting daily trade recaps and walking through each trade I made for the day. I think it will be good for me to be public with this, and hopefully you guys gain from it as well. I've never been a part of forums before, so bear with me. I trade short term price action on the emini russell 2000 and emini s&p contracts. So far in April I'm up 8.6% with a max drawdown of 3.2%. In March I made 22.7% with a max drawdown of 4.5%. I'm very analytical and have a robust trading spreadsheet I update daily to monitor my performance (true performance, risk adjusted. not just looking at %p/l which doesn't tell us much) and my susceptibility for making trading/money management errors. I'm looking forward to this!
  6. This article is all about one of the most powerful and reliable Forex price action set ups available. It is the bearish or bullish Engulfing Bar. Some traders call it the bearish or bullish outside bar. When played from the right areas and with the knowledge of how to be used correctly the Engulfing Bar is an extremely useful price action tool to have in the traders armoury. The acronyms for bearish and bullish engulfing bar are BEEB and BUEB. Engulfing Bar structure: The Engulfing Bar as it states in its title is formed when it fully consumes the previous candle. The Engulfing Bar can engulf more than 1 previous candle but to be considered an Engulfing Bar at least the previous candle must be fully consumed. An example of a valid Bearish Engulfing Bar An example of an Bullish Engulfing Bar When looking for Engulfing Bars we are looking for the large and very obvious bars that stick out. The bigger the Engulfing Bar the better. Engulfing Bars are momentum bars, and we want to trade with momentum on our side! The bigger the bar, the bigger the momentum! Not all Engulfing bars are tradeable signals and this is where the knowledge of where to look for them to form is absolutely key! The 2 basic criteria that need to be followed for an Engulfing Bar, to be a tradeable Engulfing Bar are: 1: Must be large and obvious, 2: Must form at a swing point. Those are just the 2 very basic things you need to look for when assessing an Engulfing Bar. When I say the Engulfing Bar must form at a swing point, I mean if in an uptrend it must form at a swing low or if in a down trend it must form at a swing high. Example of large and obvious Engulfing Bars When combined on high timeframes such as weekly and daily charts, and used with correct money management the Engulfing Bar is a very reliable and profitable Forex signal that every trader should have in their arsenal. I hope you enjoy this article and can put this Price Action to work.
  7. *I've been on summer vacation for about 6 weeks so been a bit since I've written but back in the saddle again, so you will see contributions from me regularly now. Here is my latest article on breakouts, particularly identifying pre-breakout conditions so you can trade and find high probability breakout scenarios. Breakouts are some of the more difficult environments for traders to engage in, and understandably so because they represent a lot of potential, and have high energy behind them, but often fail. We have to separate breakouts into two scenarios: Pre-Breakout and Post-Breakout The main question for trading breakouts is to find the right opportunities. But the question then comes; How do you identify them and what are the key elements that precede strong breakouts? This is the main point of this article - to give you three important tips or components often found behind strong healthy breakouts. By doing this, you'll avoid getting caught in many false breakouts, while capturing the lion's share of a healthy breakout along with optimizing your entry. I will go over the three main components often preceding a healthy breakout. Then I will briefly highlight what is behind them from an order flow perspective. By learning to spot these three components or variables, you can position yourself to trade higher probability breakouts. 1) A Well Defined Support/Resistance Level The first pre-requisite to identifying a healthy pre-breakout situation is having a clearly defined barrier in the form of a support or resistance level. The classic case is when you have a trend in place (lets say uptrend) and then the price action runs into resistance at a key level. Ideally, you want there to be at least two touches on this level before defining it. The more horizontal and neater this level is - the better. But it should be noted, this is just a pre-requisite and generally by itself not enough to identify a healthy breakout setup. The reason for the two touches is to identify a sticking point where players are parked and what level they are defending that the (bulls in this case) are unable to penetrate. By finding both parties present, we have the environmental potential from an order flow perspective to create a healthy breakout. In this example, the sellers are clearly holding a price they want to defend and have stops just above it. By them staking their defense in a clear location, it communicates where their orders and stops are likely parked. It is tripping those stops, along with bringing in new buyers that is the goal of the bulls. Below is an example of a clearly defined resistance level after a downtrend and consolidation period, communicating there are bears clearly defending a level. Image 1.1 2) Pre-Breakout Pressure or Tension (Price Action Squeeze) The second ingredient you want prior to a breakout is a type of pre-breakout pressure or tension that manifests as a squeeze. This pre-breakout tension is highly important because it creates a friction and pressure upon the defenders (in this case the bears). As the bears realize their rejections off a key level are getting smaller, while the bulls continue to gain more upside and territory, it causes a friction in their minds that forces them to make a critical decision (either stay in and defend, or exit the market). As the room gets smaller and smaller for them to work with as the bulls squeeze the bears out, sellers defending a level will often exit early, leaving the defense to those who are not realizing the game is up. This further weakens the defenses at these levels until very few are left to carry the burden. You can easily identify a price action squeeze and this pre-breakout pressure, or tension, by the price action forming higher lows in attacking a resistance level, or lower highs when attacking a support level. This is a combination of the current bulls willing to buy up the instrument at a worse price, along with new bulls wanting to get long before the breakout. A good example is presented in the same chart which I will zoom in on to highlight. Image 1.2 3) The 20EMA Carry Another key ingredient often preceding healthy breakouts is how the 20ema begins to carry price, leading up to the key resistance or support level that is being defended. This is not so much that traders are placing orders there prior to the breakout (although many will), but also a visual representation of how the squeeze is taking place. Just looking at the chart above, we can see in the beginning, after the first rejection off the key resistance level, price penetrated nicely below the 20ema. But as we get closer and closer towards the right where the squeeze is taking place, you see the market barely go below it for more than a single candle before resurfacing. Also, you will notice how the first few times the rejection approaches the 20ema, it breaks through after one candle. But towards the end many candles start to float above it where some traders are entering in anticipation of the breakout. Another really good example was one I traded and blogged about ahead of time with the AUD/USD on the 1hr time frame. The pair had been trending up for 110 pips over two days, but ran into a key resistance level that it got stuck on at 1.0081 (image below). Image 1.3 In the image above, notice how the 20ema in the middle of the chart is penetrated about 20pips, but then as we get closer and closer to the resistance level and the squeeze begins to happen, notice how the 20ema begins to carry the price action, and the penetrations get smaller and smaller? This is a combination of very few sellers defending the level, while the bulls in anticipation of a breakout (realizing they have control) are likely entering new positions to get in ahead of the upcoming breakout (I was one such trader and am still long since $1633). Eventually the pre-breakout pressure and tension became too intense and the bears gave up when the bulls made their push, tripping stops and creating a large breakout bar with a strong close. In Summary Breakouts can offer highly profitable opportunities when you can position yourself well. But to do this, you must be able to identify highly probable breakouts with these 3 key elements which are; 1) Well Defined Support/Resistance Level 2) Pre-Breakout Pressure/Tension (Squeeze) 3) 20EMA Carry If you can learn to spot these key elements prior to a breakout, regardless of the time frame you are working with, along with reading various other price action clues, you will find yourself entering in higher probability breakouts, increasing your success and profitability. You will also find yourself not getting trapped by false breakouts which can wreak havoc on your account and confidence in trading them. Thus it is critical to read and identify the key elements prior to a breakout. You can see various other videos and articles I have on price action. I look forward to your comments. Kind Regards, Chris
  8. An example of profiting in forex can be seen when a trader enters into a long position and the value of the asset has increased when the trade is closed. Short selling profits, however, would require prices to fall at the time the position is closed.
  9. Price Action is used by technical analysis traders to place trades and forecast future price moments. The main belief of these traders is that previous price action will indicate future price direction and investors use this analysis to place trades.
  10. Whatever method you use to analyze the forex market one thing is for sure; confluence of signals will lead to greater accuracy for any given trade. Most traders rely on multiple indicators, price levels, or price patterns in their trading method. A solid trading method will require your entry trigger to include a convergence of more than one of the tools you use to analyze the market. When this happens it is called confluence. Confluence of signals is the best way to build your confidence in a trade and gives you the best chance at profits. Where many forex traders go wrong is jumping the gun and entering a trade without confluence, or when they are only seeing one aspect of their entry parameter happening. The urge to trade after a series of winners can be especially strong. This is the exact time that many traders due the most damage to their trading accounts. If you find yourself feeling this way the best thing you can do is remove yourself from your trade station. The next best thing you can do is to read over your trading plan again and stop to ask yourself whether you are truly seeing a confluent trade setup or just acting off emotion. Waiting for confluence of signals means you must have patience. This will require you to pass up many trades that might work out. The point here is that you are acting like a tiger in the wild by laying low and waiting for the most obvious trade to come along with the most confluence. Tigers don’t go running after every gazelle that comes their way, they sit and wait for hours and sometimes days or weeks until the perfect opportunity comes along. This way they give themselves the highest success rate possible with little wasted effort. It is very important that you act like a tiger in the forex market and conserve your trading account by sitting and waiting for the best trade setup with the most confluence to come your way. Traders often think by trading more they are taking advantage of more opportunities and giving themselves a better chance at profiting. This belief is fundamentally wrong but it is how we are wired as humans. This is what makes trading so difficult. You have to realize that not being in the market is a very important and valuable position because you are not losing money and are waiting for a profitable setup to come along. Waiting patiently for all your entry parameters to come together is immensely important in the world of forex trading. Of course first you must define what your trading parameters are. If you look at say a couple price action signals, Fibonacci levels and support and resistance levels, then the best trade setup would be confluence of all of these signals. If you only get one or two of them then you wait. You wafornt the trade setup that is like the baby gazelle in the African plains; just limping along and ripe for the picking. Don’t fall into the trap of thinking that more is better in the forex market, I promise you it is most certainly not. Nial Fuller is an expert on price action forex trading strategies, you can visit his website at Learn To Trade The Market
  11. What Is Price Action? Before I begin discussing various price action strategies, methods and tools for reading and trading price action, I must begin with a working definition of 'what is price action'. From this broad working definition of price action, I will then talk about how it relates to order flow and the relationship between price action and order flow. By explaining these basic premises which form the root of my approach to trading price action, I will be able to further explore price action trading in my follow up articles. A Broad Definition of Price Action The broadest working definition of price action would be to define it as 'Price's movement over time'. Unfortunately, this is vague by itself, so I will expand this definition by saying 'on any timeframe'. Technically, this means that on a tick chart, if the price of the AUD/USD moves from 1.1000 to 1.1001, this one pip adjustment in price is a working example of price action. So in its’ rawest form, price action = price's movements over time on any time frame. These various price fluctuations will look different based on what time compression (time frame) you are using when looking at price action on any instrument. What Is Order Flow? Order flow is a general term which refers to the transactions (buying or selling) that cause the price of an instrument to fluctuate. Any transaction, whether it be a market order, a buy limit order, buy stop order, etc., is an order or transaction. All of these transactions on a daily basis refer to the order flow in the market, or the flow of orders, so this is what I am referring to when I talk about order flow on a basic level. Price Action and Relationship to Order Flow The bottom line is price does not move unless there are transactions or orders in the market to buy/sell the pair at whatever price the institution or trader wants to. Thus, all price movements and price action are the result of order flow. It does not matter if a participant bought or sold the EUR/USD because of a fundamental event, such as Ben Bernanke telling the market he is keeping interest rates on hold till 2014. None of that is why price moves. Price moves simply because of the transactions that are executed in the market. Because of this - price action is really the offspring of order flow. Many things can affect price action and how it manifests, such as; -The total liquidity available in the market for that instrument -The total number of buying and selling orders executed in the market -The volume (size of the position) of each buying and selling order executed in the market But ultimately, when there is a balance between the buyers and sellers in terms of orders, the market will have no directional bias. This creates a range-bound environment for price action. However, when there is an imbalance in the order flow between the buyers and sellers, this will create a directional bias in the price action, and it is this balance or imbalance we should be learning to read in the price action because it will communicate to us the directional bias, along with where the institutional players are likely getting in and out of the market. Thus, trading price action is not about trading simple patterns, like pin bars, inside bars, and just responding to the pattern. That leaves you totally un-empowered because there will be times when trading pin bars are optimal, and where they will fail miserably. Your success as a trader to use price action patterns successfully will be in your ability to read the price action and understand what it is communicating. Just some basics of what can be gleaned from learning to read price action are; -Speed of buying and selling -When a trend is likely to continue or reverse -Key locations institutions are entering and exiting the market -Optimal places to put your entries, stops and limits -Whether your price action signal is likely to succeed or fail and more... Thus, it is critical to learn how to read the price action and order flow behind it.
  12. Price Action Trainer This indicator helps the new traders to tune-in to the price bar formations as the market unfolds. It reads the Price Action at the micro level, then prints the formation names on the screen. Formations: ib = Inside Bar FTP = Flat Top Pennant fbp = flat bottom pennant ccc = congestion, convergence, centering This indicator is in beta; comments and suggestions are welcome. I will collect all the suggestions and make an update when possible. You are invited to post your renditions as well. If you want to be notified of updates, please make sure you press the "Mark as Installed" key. The code should run in MultiCharts and TradeStation, but I am not sure about OEC. I have uploaded a PLA file for MultiCharts. TradeStation users: if you don't know how to import the code into your software, please spend 5 mins on your users manual to find out how. Price_Action_Trainer_(MultiCharts).pla Price_Action_Trainer.txt
  13. to relieve our stressful trading hours and days.... may i present for your immediate relief and bemusement some pix.... the blue triangle denotes long .... and the red bar denotes short .... enjoy everyone.... hope everyone have a wonderful trading day and made a bundle as well.... :deal:
  14. Now that I have written on the basic components for my working theory of price action, I will build upon this by talking about impulsive and corrective price action moves. If I had to look at price action as a structure, it would be a pyramid, with the base being how price action is a reflection of order flow (particularly executed transactions). The next part (or level above) from that base would be understanding price action through the lens of impulsive vs. corrective moves. I will briefly describe what impulsive and corrective moves are, giving the key characteristics of each type of move. Then I will discuss what they generally communicate from an order flow perspective. After this I will talk about what is the general pattern they will form, and how you can use this for your trading. What Is An Impulsive Move? An impulsive move is one whereby the market moves quite strongly or heavily in on direction, covering a great distance in a short period of time. These moves tell you when the imbalance between the buyers and sellers is really strong and there is heavy participation from the institutional side. Logically, more money can be made during these impulsive moves, as they cover more points or pips in less time. They are generally more volatile, and thus provide us with great opportunities to get more R (reward) with less risk since the market will stretch more easily in one direction. But no matter what, we want to be trading with these moves as much as possible, not against them. Three Characteristics Impulsive moves tend to have three characteristics common amongst all of them. These three can help clue you in to when an impulsive move is starting, or in play. They are; 1) Large Candles (bodies) 2) Mostly of one color (blue/bullish, or red/bearish) 3) Closes towards highs/lows of the move Let’s examine all three points. 1) Large Candles communicate to us there is strong participation and order flow behind this particular candle. Strong imbalances during a candle will translate into larger candles than the norm. When you see large candles forming consistently in one direction, they indicate strong order flow behind them from the institutional side. Since the larger players are behind them, they give us a clue of the direction we want to take, essentially surfing the waves they (institutional) are creating. Take a look at an example below. Image 1.1 – EURUSD 1hr Chart *SEE ATTACHMENT BELOW Notice how in this chart, the candles that stand out the most are the red ones, particularly the ones towards the top left? They are the largest in this entire series, communicating strong order flow behind them. In fact, if you look at candles 1-8, all but the blue doji in the middle are solid in size. Yet candles 9-17 are all contained within the highs and the lows of last 2-3 candles in this down leg, communicating weak order flow and participation behind them. As a whole, impulsive moves tend to have large candles (bodies and wicks) behind them. 2) Mostly of One Color – this ingredient is also common amongst impulsive moves as it communicates something critical to us – time. More specifically, how the bulls or bears were able to maintain control of the price action over time. In the chart above from image 1.1, you will notice in the down leg, there is only 1 blue candle, meaning for 8 out of 9hrs, the bears had complete control of the market (almost one full trading session). By maintaining control over time, the market is communicating who is the more dominant side because they are not allowing the other to take control of a candle for that time period. The greater the imbalance is between the bulls and bears over time, the greater the dominance is from either the bull or bear side of the market. It is important to look at price action not just based on structure of the candles, which is one dimensional. Price doesn’t just move in a vacuum, it moves in time, and HOW price moves over time can communicate a lot of information to us as traders. 3) Closes Towards the Highs/Lows of the Move – If you think about it, when the market is in a strong trending move, let’s say using a 4hr chart, and the candle that closed in the direction of the trend (in this case uptrend) has a very small wick, thus a strong close towards the highs, what does that communicate? It should communicate that there is very little profit taking from the players behind that candle. If they were worried going into the close of that candle about an upcoming resistance level holding, or perhaps the bears may take control of the market, they would likely close their position, or take profits right before the candle closed. But when you have a strong close with a very small wick, this usually indicates very little profit taking, thus a confidence the move will likely continue. This is highly useful to us as traders, and will be common amongst impulsive moves like in the chart below. Image 1.2 GBPUSD 4hr Chart SEE ATTACHMENT BELOW Starting with the top left of the chart using candles 1-4, the price action moves in a sideways corrective fashion until candle 5, which if you notice, increases in size tremendously (rule #1 of impulsive moves). From here, price continues on selling for the next 9 candles, 10 total in a row, or 40hrs of selling (rule #2 of impulsive moves). But looking at the candle closes, you can see most of them are towards the lows, showing very little profit taking along the way, thus suggesting likely continuation. Only until candle 11 do we get a strong rejection, and from here price then moves sideways in a corrective fashion until candle 16. But what happens at candle 17? The candle expands (rule #1) telling us the trend will likely continue. So these are three examples of the common characteristics of impulsive price action moves. What About Corrective Moves? The good thing about corrective moves is they are easy to spot, since they have the inverse characteristics of impulsive moves. Meaning, they tend to have; 1) Smaller Candles 2) Greater mix between red/blue or bull/bear candles 3) Closes more towards the middle with larger wicks Thus, if you apply the logic of impulsive moves, you can easily understand and identify corrective moves. How Do They Relate to Each Other? Generally, impulsive and corrective moves tend to have a common pattern or dance with each other. The general pattern that tends to play out between them is the following; 1) Impulsive moves about 75% of the time are followed by corrective moves. These corrective moves can either be horizontal, slightly against the impulsive move, or even slightly in the same direction, but they denote a change in the order flow and participation. 2) 75% of the time, these corrective moves are followed by impulsive moves in the same direction as the original impulsive move. Why? Because those who are in control, rarely give up control unless encountering a strong counter-trend force. Even then, they usually make a second attempt to take out a recent swing high or low before giving up. Only when they fail a second time will they usually exit the market, either waiting for a new chance to get in on a pullback, or reset completely. This is why V-Bottoms are quite rare and only form about 10% of the time. Usually there is a 2nd bottom, which is could be a LL (lower low), HL (higher low) or a similar low. 3) This series between the impulsive vs. corrective moves will generally continue until the market encounters a counter-trend impulsive move, which usually translates to an equal or greater force on the opposing side of the market. Very similar to Newton’s Laws of Motion about an object in motion will stay in motion until acted upon another object with equal or greater force. Let’s look at an example below. Image 1.3 AUDUSD 4hr Chart SEE ATTACHMENT BELOW Glancing at the chart above starting with the bottom left at move A, you can see how it was an impulsive move, followed by a corrective move (B). This series continued until…it hit a counter-trend impulsive move in G. It was only until here did the bulls finally relent control as the opposing bears took control of the price action with the bulls likely taking profit or exiting all together, especially after the low point from move D was taken out. Ironically, what followed move G, was a corrective move after, followed by the bears continuing the down-leg. In Summary This is just an introduction to how I approach price action, but it is highly effective for many things, such as; -finding the right direction -staying in the trend -spotting great pullback opportunities to get back in with trend -knowing when the market will continue and when the market is likely to reverse -how to find some of the more profitable moves in the market (impulsive) -knowing who is in control of the market and more… There are many other facets and subtleties to trading impulsive and corrective price action, but this is a good introduction to my base theory and model for trading price action. If you can learn to spot the impulsive and corrective moves in the market, they can greatly enhance the odds of your trades along with helping you spot key characteristics in the markets. To learn more about trading impulsive and corrective price action, visit my website at 2ndSkiesForex
  15. Price Action trading is not rocket science, it’s just a logical way to trade. Everyone that has been reading these articles and watching these videos for a while now will know this whole site is dedicated to helping traders learn to trade Price Action in the Forex markets. Price Action is one of the best tools a trader can have in their trading tool box. Price Action is just looking at what price is doing and what it is telling us. We don’t need to carry a devise when we look a person’s face to see if a person is happy, sad or confused etc. We also don’t need indicators all over our charts to tell us that price is going up, down or sideways. We don’t need indicators or black box systems to show us that price is rejecting a support/resistance line as we can tell by how price behaving if it is respecting a level or not. This article is going to go over some recent setups and exactly how traders could have used the information that was there for all to see in the raw PRICE only. The Aud/Jpy 4 hour chart below shows that price is in a nice down trend. Once again we don’t need moving averages and trend lines to see this. We can tell that from left to right price is falling away. A simple horizontal line at a previous swing high shows us that price pulled back twice to this area and gave us two solid Bearish Engulfing Bars that were both very simple and logical trades. These trades form all the time in the Forex market. Both trades could have given about 2:1 risk reward depending on how you played them. AUDJPY 4HR CHART The next Price Action trade was on the Aud/Chf daily time frame with again another Bearish Engulfing Bar. This pair was in a sustained and very obvious downward spiral. A quick look at the chart tells us that the smart play would be trading in line with the recent down move. A pullback in this down move to a previous support area and the old price action principle of “old support becomes new resistance” comes into play. Again some nice pips to be made on a very logical setup. Price did move against the trader momentarily and this just goes to show that in Forex trading discipline is the key along with the patience to just let the market do its thing. Price eventually moved down allowing the trader to take some profits off the table and move their position to break even. AUDCHF DAILY CHART The last chart I want to highlight is the GBPCAD which has been a gold mine over the previous few months with price respecting levels continually. The daily chart below shows us the psychological round Number 1.6000. Price could not close above this number and gave us a clear story of rejection. The Bearish Engulfing Bar and Bearish Pin Bar on this chart were big clues to Price Action traders that a reversal was about to take place. This chart had no clear trend direction and when trading markets like these trading away from important levels become even more important. Both trades highlighted on this chart gave the trader more than enough chance to take profit and move their positions to free trades. GBPCAD DAILY CHART Price Action trading is the smart and logical way to trade. Just a few simple principles with some patience and discipline and you too will be on the way to being a consistently profitable trader. All these methods and principles have been around for a long time in all forms of trading. Along with sound trading and Money Management plans which are taught at Forex School Online, you can turn your trading around and get on the road to success. Safe trading, Johnathon Fox Price Action Trading
  16. The 2 Bar Reversal is similar to the engulfing bar in that they are both reversal Price Action signals. The main difference between the 2 Bar Reversal and the Engulfing Bar is the 2 Bar Reversal does not have to fully engulf the previous candle or bar where as the Engulfing Bar does have to engulf at least one previous bar. The psychology behind the 2 Bar Reversal is quite simple. For a bearish 2 Bar Reversal the first bar must go up and close near the sessions highs. This makes the rest of the market think that particular pair is breaking out higher, but this is a lie. When the second bar opens it whips back lower and fakes out the market, taking traders stops along the way. The second bar must then close near the session’s lows and preferably below the first bars open. An Example of a Bearish 2 Bar Reversal: 2 Bar Reversals can be found in all markets and all time frames. This does not make all 2 Bar Reversals tradeable however. Not all 2 Bar reversals are created equal. The very best 2 Bar Reversals can be found when a strong trend is in play and a pullback occurs to a logical pullback area. An example of this can be found below: Because 2 Bar Reversals are reversals signals it is critical traders look for them at swing points. When looking to trade short traders must look to trade from swing highs and when looking to go long they must look from swing lows. Failure to follow this rule and to trade 2 Bar Reversals as continuations signals would be a risky move. Quite often you will notice 2 Bar Reversals will be the catalyst for a large change in the trend direction. An example of this can be found below. Notice the trend had been moving very strongly up before a very solid Bearish 2 Bar Reversal formed? Another Example of a Bearish 2 Bar Reversal From Swing High The 2 Bar Reversal is a very easy Price Action formation for Price Action traders to identify on their charts. The next step is for a trader to learn the art of managing the trade correctly once they have been entered. More information on trade management can be found in the Price Action Course. Before trading the 2 Bar Reversal on a live account traders are advised to first perfect their method on a demo account. There is no reason to lose money whilst learning in Forex. Traders should first prove to themselves that they can make money consistently for a period of a minimum of 3 months before attempting trading live. Stick to a demo, perfect your method and then go live. Johnathon Fox Price Action Trading
  17. Most of you have heard the term, "Pure Price Action" many times and probably believe it to be a great method of trading. First let me clarify that there is no argument here. We trade "Pure Price Action" everyday, however we take it many steps further. For you to truly understand price action you should understand that it is nothing more than a painted picture of many things. Trading psychology and Supply and Demand are the most important things within price action. If we ask ourselves why price moves in any given direction there is always one answer..... because of the equilibrium of Supply and Demand. If the equilibrium is off, supply or demand will create balance once again which causes price action candles, bars or other chart types to display a trend. If the equilibrium is in balance then we will show sideways movement. Every candle, bar etc. represents thousands of people making a decision on the value of a particular instrument. Learning how to properly analyze this psychology is key. We then have the ability to use pre-defined trading strategies to capitalize on the markets. We focus on the imbalances in price and locate the highest probability areas in which the equilibrium is off. This gives us the ability to locate supply and demand on multiple time frames. Using pre defined trading methods, we can now use pure price action to give us exact entry, stop, and targets.
  18. Lately we've seen markets ignore what most people perceive to be negative market moving news. We've also seen markets ignore what most people perceive to be positive market moving news when prices have a muted reaction. But one very common misperception is thinking that markets are moving because of how individual investors are trading. It’s simply not true. Studies show that 60% of trading volume is automated -- based on algorithms. These algorithms trade on many indicators that are overlooked by almost every mainstream service. Believe it or not -- and this is going to sound totally impossible to some -- the media is constantly drilling into your head a false picture, false assumptions, and pretty much lots of B.S. If analysts or the media have nothing to say, or if they say: “I don’t know,” then they will cease to exist. So they just spit out whatever they can to stay in business. You don’t want to know how I could know this for a fact. But ask any insider in the financial media business who truly knows, and they can say the same. It’s scary. I’m talking MAJOR networks where they create stories and where the talking head “analyst” has an earpiece with someone telling them what their opinion should be. Sure, much of the time, they are correctly reporting on why markets are doing what they are doing in the short term, when it’s obvious, but they almost never get it right when it comes to the FUTURE, and that’s because the short-term movements they report on have virtually no predictive power in the stock market. Their hedge: There’s usually no way to prove that the reasons they give for market movements aren’t accurate. The real predictive power of short, medium and long-term is in technical analysis. If markets are moving in a trend, then THAT’S what’s going on -- and nothing more. Big investors don’t decide to start buying or selling stocks and then, as soon as they do, call media outlets and show them their cards. The media often just attaches a reason for movements in the market and -- as scary as it seems -- convince the world that what they are saying is a fact. It’s like astrology. One can read ... “The New Moon in Sagittarius offers up new possibilities for adventure. This is a great day to plan a trip to a place you've always wanted to go.” … and then look around and find several possibilities for adventure. The horoscope seems to be spot on. I admit, this comparison may be a stretch, but after being an investment insider in many aspects of the business for 15 years, I can tell you it’s really not very far off. And the astrologist isn’t putting a major part of your life at risk. If anything, they make you more positive. The financial media does serious damage to your investment account -- no joke! Markets can only move when people are acting on their sophisticated research. They don’t move on “stories” as much as they move on “action”. Why do bear markets bottom out long before the economic recovery is “underway,” and the before media starts reporting reasons for the bounce? Think about this: rookie money manager are able to literally move stocks 20%, 50% or 100% if they were small cap stocks that only traded 50,000 - 100,000 shares per day. This was with NO NEWS on the company. Just based on their humble opinion that it was worth more. In fact, anyone reading this article can use what they have in the market to actually move certain stocks up 30% or so, if those stocks trade light enough volume. I’m talking illiquid stocks. This is because a) there aren’t many shares outstanding, and b) there isn’t much of a market (not many sellers of the stock you’re buying). But when a few people can change directions of stocks like Exxon Mobil, Intel and Microsoft that have 5-8 billion shares outstanding and trade 20m to 200m shares per day, you know those people have the cash to get the true story. And when the market closes, you’ll hear the media creating reasons why it happened (they have 5 easy canned reasons that apply to any move -- just in case). Listening to those reporting on what financial markets are doing can often do more harm than good. If everyone knows this already, then why do they bother to keep listening? ANSWER: Because they don’t feel confident enough to formulate their own opinion on the market. But I’m telling you right now you DO have that ability. You can formulate your opinion based on what the power players with the market-moving money are telling you. They are speaking to you whether you know it or not, just as a crime scene speaks to a crime scene investigator, or the way a body speaks to a doctor or coroner. Big players leave clear footprints, and history repeats itself. Price action tells the true story. You can formulate your opinion by understanding technical analysis. These players are casting their votes with dollars every day. You just have to do two things: Understand how to hear what they are telling you (simple education of technical analysis that anyone can grasp). Actually bother to listen to what you’re hearing (which means fighting your own human emotion that causes the most seasoned technical analysis veterans to stray from their time tested indicators and systems). Syndicated from Tycoon Report
  19. Opening a new trade is generally less complicated than closing it. Technical hurdles aside, you will most likely find it easier to enter a new position with a fresh approach, than dealing with uncertainties inherent in financial markets when already in a position. You might choose to hold on, or doubt your target, and altogether clutter your decisions with second thoughts. The relative easiness does not liberate you from proceeding with great discipline and care because the entry decides upon the outcome eventually. The entry decides whether you will be enjoying a smooth ride, or getting yourself into trouble. When, where, and why you open a position should depend on your own tactics, but there are a few criteria which apply to all traders. Support and resistance levels: Be especially aware of potential S&R levels which can be horizontal or in the formation of obvious trend lines. This is your preparation work. Without it, you are clueless about what is happening in the market. It is not an exact price, but more an approximate level which is visibly identified in recent price action. I generally find the 4H time frame best for instruments which trade around the clock such as futures or currencies. The 1H time frame works better for stocks that have their regular trading hours. Identify areas where buyers or sellers gained or re-gained control. In any case you are buying into a downtrend with the ambition of trading a turnaround, look closely at what happens near former support areas. They can pose a threat to bullish traders by acting as resistance. Large Version: http://www.streetcoup.com/wp-content/uploads/2011/12/trendlines.png The reaction: Once you know where the support or resistance is, watch how price reacts at those levels. Do not blindly buy or sell into it. Observe price action closely instead. If the price is visibly moving down below resistance or even breaking support zones in the process, you have your short entry. A long entry is at hand if the market is rallying up from support and breaking resistance areas. Stop-loss order: Stops are placed right after the entry to protect your equity and limit the maximum potential loss. In a short position, it is commonly placed above a recent peak, or below the recent trough for a long position. By gradually adjusting your stop after each minor pullback, you are effectively securing more and more profits. There is no need to look for target areas unless your strategy is based on different methods from trend following. Always expect the opposite of your plans to materialize, and plan accordingly. By doing so, you automatically minimize the risk and maximize the potential. For example when you enter a trade, you obviously hope that it will be profitable. Do a mental switch: You have to fear that the market will go against you instead. This will make you respect risk and set a protective stop at all times. On the other hand, when you are in a good trade and consider to close it with each pullback, you have to be greedy and hope for it to turn around in your favor. This will prevent unwanted emotions from taking over your trading decisions.
  20. The wonderful thing about Forex trading over trading so many other markets is that traders can make good money and only trade at the end of the day or the end of the New York session. This allows traders to keep their job and trade successfully at the same time. Many people have jobs they love or to be honest, cannot just leave at the drop of the hat. That doesn’t mean these people can’t trade and make good money also. In fact I advise traders when learning to trade to only trade the daily charts, and to only trade the end of session in New York. I am personally a massive fan of trading the close of New York setups. The reason so many traders like trading the daily charts are; - Daily candles do not have the noise that the intraday charts have. By trading the daily time frame we can more accurately predict the flow and trend of the market. Markets tend to be very choppy on the intraday time frames. By trading the daily charts we don’t have to deal with this volatility or market noise. - Lifestyle. Many traders come to Forex to enhance their lives, not to have Forex running it. This is a huge factor for traders trading the daily charts. Trading the daily charts takes anywhere from 5-20 minutes depending on whether there is a set up to trade or not. If there is a trade, the trader can place the trade and then come back and manage at the next close of the candle in 24 hours time. - People can keep their jobs and still trade. Obviously if traders are trading the daily timeframes they can place trades and then hop of to work or come in from work and check the market depending on which country and time zone they live. - Simplicity. Trading the markets on the daily charts offers a much simpler way to trade than sitting and watching computer screens all day long! Learn to Trade the Daily Charts I advise all new traders to Price Action to first start learning to trade on the Daily time frame. Once they have perfected their trading method on the daily time frame they can then begin to explore possible trading opportunities on the intraday charts. I recommend progressing in this manner because the daily charts are lot easier and less complicated to navigate. The intraday time frames tend to be more choppy and volatile. Traders have to learn to deal with noise and fast market movement when they move down the time frames. Many traders find that after trading the daily time frame and becoming consistently profitable they have no need to trade any of the lower time frames. They realise they can have the best of both worlds of having a busy and happy life and still being able to trade successfully. Perfect Your Method When learning to trade Forex there is no need to rush. The majority of traders do not make money in their trading careers and you don’t want to be one of these! When learning to trade the daily charts take your time and perfect your method. Before going live you want to be completely confident in your trading method. You can build this confidence by trading on a demo account. There is no set time frame a trader should be profitable on a demo account before going live, however I would definitely recommend being profitable for at least three months before putting any skin in the game and risking money. Moving Down to Intraday Charts As I said earlier a lot of traders find that after trading daily charts and becoming profitable they see no need to trade any other time frame. If you do want to trade the smaller charts such as the 1hr and 4hr charts you don’t just want to jump into the deep end. After moving from the demo account on the daily charts and becoming profitable on a live account you need to repeat the process. Your next step would be to move down to the 4hr charts and begin practising on the demo account. Once profitable on the demo account for a period of minimum three months you could consider also beginning to trade the 4hr charts live along with your daily setups. To trade the 1hr charts or anything smaller you should repeat the process. There is no need to lose money when learning to trade. If the majority of people trading do not make money you should start doing the exact opposite of what they do. The majority of traders will not learn on a demo and perfect their method. They will go straight to a live account and lose money. If you want to have things that most people don’t have, you must start behaving differently then how most people behave! Do not follow the crowd as nearly all the people in the crowd are losing money. Be smarter than the rest and start doing the exact opposite of what most traders are doing! Safe trading this week, Johnathon Fox Forex School Online
  21. Today's article is going to touch on a subject most traders never even consider working on improving. Ironically this is the very same thing that always with out a doubt stops them from creating consistent profits from the market. I am talking of course about trading psychology and the mistakes traders commonly make. Common emotions Professional traders know trading is very much a matter of having control over one’s mind and emotions. Some of the more common psychological mistakes are; - Fear: of losing, being wrong, missing out etc - Greed - Boredom - Revenge trading Fear Traders experience fear in a lot of their trading experience. Fear can be brought in by simply placing a trade or when a trade goes into negative territory. This fear can be crippling for a trader and can lead to that trader being frozen. Normally fear is a result of the trader either risking too much money or not having a sound trading plan. Traders that risk too much will tend to always worry with fear as they know it is only a matter of time before their account is crippled. Fear can be hard to banish. Traders can get rid of this awful feeling by learning a solid trading method as well as very sound money management techniques. Traders are less likely to be in fear mode if they are risking only a few % of their accounts and they know they will be able to trade another day. Trading with only money that a trader can afford to lose is also likely to limit the affect fear has on a trader’s mental state. Never ever trade with money that is supposed to be for something else such as rent or food! Anything can happen in the Forex markets and trading with money that one cannot afford to lose is a sure way to being frozen with fear. Greed Greed is trait that brings many traders undone. The feeling of making a lot of money in a short amount of time appeals to a lot of people. This then increases the trader’s appetite to risk too much, on too many trades and bingo their account is crippled! Another all too common situation is the trader in the winning position and is up a tidy sum of money. Instead of taking the money when the market makes it available the trader hangs on looking for more and more! You can guess what happens……… Yep the market turns and the trader is left with a loss. I have a motto and that is “Always leave some for the next guy”. I never look to pick the bottom or the top instead looking for a logical place price will turn. I place my take profit a few pips above or below this level as to make the chances of my target getting hit a lot higher. When the market makes profit available to you, take it and move on to the next trade. There will always be another trade! Boredom Forex trading is not a form of entertainment. It is a business! When new traders are bored they will quite often turn to the markets for excitement. This in turn tends to lead to over trading. They want to feel the rush of being in a trade so they place just any old trade. Do not fall into this trap. Have set times that you scan the markets for setups. As soon as your done, turn the computer off and do something else. Do not look to the market to fill the feeling of boredom. Revenge Trading Quite often when amateur traders lose a trade and money, they will look to make that money back straight away. This is regardless of whether there is a viable trade to be placed or not. This then leads to the trader losing more money and on the cycle goes. Trading is a random event. No matter how good the setups look you just don’t know which trades will be the winners or losers. If you have a proven edge on the market you know that over a large sample size of taking only the viable setups you will be up. Do not take average trades as they decrease your edge on the market. When you place a losing trade move on and look to the next trade. You should definitely learn from the trade but start to look at the market as a random event. Two traders can have the exact same method with all the same equipment. One trader makes money consistently and the other losers. Why is this? It’s because the trader that makes money has mastered their beliefs and frame of mind. They have learnt to deal with the problems detailed in this article. Trading is all about dealing with your emotions and subconscious beliefs. If you can start to work on your state of mind whilst trading you will increase your edge in the market. I hope you have enjoyed this article and can implement some of the thoughts and strategies into your own trading. Safe trading, Johnathon Fox
  22. Often new traders come to the market with many false beliefs about what is needed to make money consistently in the markets. This article will explore some of those false beliefs and how you can fix them to become a successful trader. False Belief 1 – I need to watch the markets as much as possible This is a very common belief that many new traders find themselves falling into. Quite simply trading does not have to involve long hours staring at the screen and many traders actually find that once they begin to cut back their screen time their success rate climbs. Traders need to identify when is the best time to place trades and then step away from the screen. An example of this might be a trader that trades off the 4hr chart. They may choose to look at the charts and scan for trades during the US and UK sessions when the 4hr candle closes. If they find a trade they place it and set stops and targets and then turn the computer off until the next 4hr bar closes. If there is no trade to place they simply turn the computer off until the next 4hr bar closes and they scan again for trades. Watching the markets endlessly will not produce any more trades for you to enter compared to scanning at a set time. Continually watching the markets will wear you down and make you a lot more likely to over trade. The feeling of wanting to be in a trade just for the sake of it is hard to fight when you are just watching the market endlessly. False Belief 2 – The more indicators and junk I can place on my chart the more likely I am to predicting the direction of the market Many traders believe that placing indicators on their charts give them a great chance of picking the right side of the market. The problem with this is indicators are built off what price has done or off old price data. What does this mean? It means traders who use any indicators at all, are using old price to predict what may happen in the future. This may sound crazy but it’s true! All that’s needed to trade successfully and to consistently make money is simple Price Action. Price Action is the key to all moves in Forex. Price Action is people’s behaviour placed on a chart for us to analyse. As all indicators are made of old price information, it makes sense to use the current live price information to base our trading around. False Belief 3 – I can’t be wrong Traders often look at trading as a matter of being right or wrong on each particular trade they take. I prefer to look at the market as a random event. I can never know for sure no matter how good the setup looks that it will work! I try to take only the best setups but does that mean they are all winners? No, the outcomes are random! I make money consistently month after month because I know I have an edge on the market that produces more winning trades than losers over a span of time. I may lose 3 trades in a row but I know over 30 or 40 trades I will always be up. Start forgetting and stressing over this trade and the trade the just went past. You are not right or wrong. Trading Forex will always produce a random result. False Belief 4 - I have to analyse every little thing and know everything inside out Whilst it is good to be a master at the method you trade you do not need to know about every little thing. People often come unstuck falling into analysis paralysis. They can never believe that things can be simple and more than that, making things simple is the way to success and profitability. SIMPLE is the way to go. Pick just one method to trade with such as Price Action and perfect it. Do not try to involve 100 methods with 10,000 indicators and just as many timeframes! Keep it simple and perfect you’re one chosen craft! I hope you enjoyed this article, Johnathon Fox
  23. Those who philosophize about the root causes of market movements will have certainly come to the conclusion that there is an ongoing battle between bullish and bearish participants. To help you understand this concept better, let us use a metaphor: Imagine resistance being an immense wall that protects a city. Across the wall you have guards who make sure that intruders will be kept off. As an encroaching army of buyers gets closer to the fortified city, their aim is to defeat the guards and break beyond that wall which is preventing them from pushing the market higher. If you were a defenseless inhabitant of this city, and you saw the immense wall crumbling before your eyes, would you honestly rush in to fight this influence? Believing that the buyers would suddenly ease off is a fatal illusion. That is why I keep warning my students about shorting near support and buying at resistance. It is simply not a sensible thing to do if you want to receive a rewarding outcome. Sadly, inexperienced traders often seem to be in emotional distress, and repeat such mistakes over and over. In summary, a support and resistance is nothing more than a congestion zone in which many market participants had an agenda to fulfill. One group wanted to break behind a wall that the other group needed to protect. Both sides have very opposing interests. Unlike indicators, price points out potential barriers with great precision. These barriers continue to have an effect after its break because those traders who hung onto their position will see an opportunity to exit with the least loss. This explains why former support barriers will act as resistance once price recovers back to it. If you are learning to read price action, you need this basic understanding to make sense of the market’s movement. So turn off all indicators for you to begin recognizing support and resistance areas.
  24. Why Use Price Action Analysis to Trade Forex? Below Nial Fuller Talks About Why Traders Should Use Price Action Analysis to Trade Forex. Trading Forex successfully is both art and skill. You need to learn to read the natural ebb and flow of the market if you want to truly understand the price dynamics that occur within it. Trading based off rigid rule-based systems, or black-box systems is a thing of the past that is quickly losing popularity amongst savvy Forex traders. You have probably already experienced the mess and frustration that comes with using numerous indicators on your charts or with trying to trade solely off software trading programs. The core problem with such approaches to trading is that they are not natural. If I may, I would like to make an analogy with food here; when you eat unhealthy food that is not natural, your body suffers, and everyone knows this. Similarly, in Forex trading, when you try to use unnatural trading strategies that are not based off the ‘pure’ price data of a market, you end up polluting your mind and as a result your trading results will be poor. You see, to trade successfully you need a clean and calm mind, just like you need a clean body if you want to live healthily. You get a clean body from eating natural foods, and you get a clean and calm trading mindset from trading natural price action based trading strategies. Price action trading allows you to ‘resonate’ with the market by being as in-sync with it as possible, just like eating natural foods will work to keep you healthy because they are what your body needs and they ‘resonate’ better with your body’s cells than do unnatural or highly-processed foods. Why price action trading is effective in the Forex market I have used about every trading strategy available, because when I first started out in the markets I was stuck in the cycle of analysis-paralysis that so many traders get stuck in, jumping from one strategy or system to the next and trying to analyze as many economic news reports as I could get my hands on. Eventually, I realized that the most efficient and effective way to trade is to simply learn to analyze a ‘naked’ price-only chart. My unique way of trading with price action strategies is the result of many hours of time spent analyzing price movement on price charts. Forex trading is a process of trying different methods and tweaking them and eventually ending up with your own unique trading method. Price action analysis is the art and skill of identifying specific price action patterns in the market you are trading. Forex is an excellent market to use price action analysis in because it is open 24 hours a day 5 and half days a week and this means there are more opportunities for you to take advantage of. All you need to know is how to identify and trade specific price action strategies and you can learn this most effectively from a professional price action trader and by studying the charts. Price action analysis works very well in the Forex market because it is such a dynamic and liquid market. The beauty of price action trading is that it is a naturally flexible method of trading that gives you a perspective on the market that allows you to make sense out of what is happening at any given time. I have been profitable by concentrating on just 2-3 good price action setups that have proved consistently effective for me. If you learn how to read what the chart is telling you and focus on just 1 to 3 setups that you like, eventually you will master these setups / patterns, allowing you to have a better chance of making make money from your trading. Where people go wrong is with using indicators and other overly complicated methods and then constantly jumping from one trading system or strategy to the next. You have to find a truly consistent edge in the market and just concentrate on that until you truly master it, remain in one frame of mind, focus and master those setups first, and then you can add more tools to your arsenal later on. Forex trading is difficult enough without having an overly complicated trading system that tells you to look at numerous indicators when you could just be looking at a simple Forex price chart. Perhaps the best reason to trade Forex using price action is that any indicator you use on your chart to analyze market movement is derived from price and is just showing you in a less vivid format the same thing price is showing you. Some people like indicators because they give you rigid buy and sell signals without you having to think for yourself. The truth is, rigid trading systems and strategies will never stand up over time because the market is not rigid, and you have to trade a strategy that allows you to resonate with the market, not fight it. Just because your charts come with a hundred different indicators doesn’t mean they are going to help your trading or make you money in the markets. Trading success depends mostly on your mindset and your ability to remain disciplined in a realm of constant temptation to over-trade and over-leverage. We are trading currency markets, and the ‘core’ of what we are doing is trying to profit off of price movements. So, why so many traders do not want to make their trading decisions off of pure price action is beyond me. I promise you that if you simplify your trading method and concentrate on using price action strategies you will wonder how you ever traded any other way
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