Price Action Swing Trading - The PAST Strategy

[Nigel Price]

Interesting thread. Great method -- anything close to raw charts are attractive (thanks Mr Nigel Price).

I know AUDNZD is not on your watchlist, but would you say this is a good potential reversal signal?

• There is a strong trend.
• If the weekly bar ends like this tomorrow, I believe it will be a valid reversal bar (bull close above last bear open).
• Also, there is a long tail bar three weeks back (and consolidation since).

Appreciate any input.

Thanks.

Hi Brodwyn, welcome to the thread!

Yes indeed, if it closes like that it will certainly be a weekly reversal candle, and you could legitimately anticipate that price could start an up move.

Will it happen? Who knows, maybe it will, maybe it won't, maybe it will do nothing and just go sideways. What is key to remember is this:

it's not the perceived quality of a signal that produces the profit, it's how you trade that signal that produces the profit. You could trade the most spectacular pin bar in the world - with confluence everywhere and overbought stochastics and divergences and all the rest of it - if you don't manage your risk properly and stretch out your reward appropriately, over time you will still lose.

Say for instance you trade that AUD/NZD next week and that signal doesn't work out. If you can look at your results at the end of the week and see that you only sustained a few small losers and perhaps a couple of break-evens, that week is a success. Because sooner or later a weekly signal comes along that does work out. It's just we can't dictate when it happens

We concentrate on what we can control and we ignore what we can't. Can we control overall market direction? No. So ignore it.

Can we control our risk/reward ratio? Small losers and big winners? Yes. We alone decide when to press the buy or sell button. We decide when to get out if a trade is going against us. We decide when to take profit. They are all our decisions.

One of the funny thing about us traders is we have the tendency to do the following: we trade in an absolutely ridiculous fashion - we run losers hoping that they "come back", we overleverage, we take profit at 5 pips after a 200 pip drawdown, all the rest of it. And when we look at why our performance is terrible we decide to blame the "system", or that type of indicator "doesn't work", or yer man is a "scammer".

Anything to deflect attention away from the fact that we have been trading like an ass

Good luck with that setup next week Brodwyn! Nice avatar

 

[Nigel Price]

i thought entry on 1h or 4h was just to find a good place(?) now i realize it lets me wager much more since the predictable price movement allows for only 20 - 30 pip stops. on the weekly i had to adjust my position sizes according to a 100-150 pip stop(!)

here is cadchf

That second chart is pure trading poetry

 

[Brodwyn]

Thanks Nigel for weighing in.

Your (consistent) advice is starting to make sense. It is counter-intuitive to what you describe as what we normally do, but it makes sense when pondered.

So what I take away is:
1. We have criteria for when we consider engaging with the market, but that engagement is merely executing our risk management, with no pining of what the market should do.
2. There is no "romantic" sentiment developed with any pair or signal (given strength of confluence) -- we simply execute our risk management and if the pair "behaves", we capitalize, if not, we minimize losses and move on with preserved capital.

We do this patiently from signal to signal (unmoved even if there is a string of no-return outcomes). Occasionally the big wins come, which when added up, will outweigh the drawdowns.

So all that is required of us is patience and consistency. Great!

Quick question on your MM? You seem to allude to fewer pips risked is smaller loss sustained -- can I assume then you employ a fixed lot size method versus a fixed % method WRT risk?

Thanks.

Hi Brodwyn, welcome to the thread!

Yes indeed, if it closes like that it will certainly be a weekly reversal candle, and you could legitimately anticipate that price could start an up move.

Will it happen? Who knows, maybe it will, maybe it won't, maybe it will do nothing and just go sideways. What is key to remember is this:

it's not the perceived quality of a signal that produces the profit, it's how you trade that signal that produces the profit. You could trade the most spectacular pin bar in the world - with confluence everywhere and overbought stochastics and divergences and all the rest of it - if you don't manage your risk properly and stretch out your reward appropriately, over time you will still lose.

Say for instance you trade that AUD/NZD next week and that signal doesn't work out. If you can look at your results at the end of the week and see that you only sustained a few small losers and perhaps a couple of break-evens, that week is a success. Because sooner or later a weekly signal comes along that does work out. It's just we can't dictate when it happens

We concentrate on what we can control and we ignore what we can't. Can we control overall market direction? No. So ignore it.

Can we control our risk/reward ratio? Small losers and big winners? Yes. We alone decide when to press the buy or sell button. We decide when to get out if a trade is going against us. We decide when to take profit. They are all our decisions.

One of the funny thing about us traders is we have the tendency to do the following: we trade in an absolutely ridiculous fashion - we run losers hoping that they "come back", we overleverage, we take profit at 5 pips after a 200 pip drawdown, all the rest of it. And when we look at why our performance is terrible we decide to blame the "system", or that type of indicator "doesn't work", or yer man is a "scammer".

Anything to deflect attention away from the fact that we have been trading like an ass

Good luck with that setup next week Brodwyn! Nice avatar

 

[Nigel Price]

Thanks Nigel for weighing in.

No worries!

Your (consistent) advice is starting to make sense. It is counter-intuitive to what you describe as what we normally do, but it makes sense when pondered.

If you're doing the same as everyone else you are doing it wrong!

So what I take away is:
1. We have criteria for when we consider engaging with the market, but that engagement is merely executing our risk management, with no pining of what the market should do.

I have to be careful what I am saying here, sometimes I get carried away when trying to make my point - it's not that we have no opinion whatsoever of what the market is going to do - there is nothing wrong with having a directional view on the market - it's ranking the importance of that view, and the accuracy of it, appropriately. What I'm trying to say is that managing risk/reward properly is far more important, in my view, than forecasting future market direction accurately.

If you can forecast future direction, by all means go and knock yourself out doing so, that's great. I just acknowledge that I, personally, can't do so on a consistent basis. Most retail traders can't. But I have found that an inability to forecast does not preclude me from making money from the markets.

2. There is no "romantic" sentiment developed with any pair or signal (given strength of confluence) -- we simply execute our risk management and if the pair "behaves", we capitalize, if not, we minimize losses and move on with preserved capital.

That's pretty much the gist of it!

We do this patiently from signal to signal (unmoved even if there is a string of no-return outcomes). Occasionally the big wins come, which when added up, will outweigh the drawdowns.

That's not too far off the mark - I will be doing more on this in the not-too-distant future - there are a few little techniques I use in respect of multiple positions and so on to make sure that I lose as little as possible when signals don't work out, but yes, on the whole, that's pretty much correct.

So all that is required of us is patience and consistency. Great!

Easier said than done!

Quick question on your MM? You seem to allude to fewer pips risked is smaller loss sustained -- can I assume then you employ a fixed lot size method versus a fixed % method WRT risk?

It's hard to give a figure because it changes depending on circumstances. For instance, if I am carrying a significant amount of floating profit, I might be a little bit more aggressive than I would if I was opening a brand new position. The rule is though if you are in doubt, keep it low. You can always add to a position if it moves into profit. Position size is often bandied about as if it is just another rule to throw into the mix along with everything else, and this couldn't be further from the truth.

As I say in the ebook, a position size that would cause me sleepless nights might not cause you a second thought. We are all different, it is something that you have to figure out for yourself. How good are your entries? What is your strike rate? Average winner? Average loser? How many trades do you take? Can you go 6 weekly signals without a winner? Can you go 10 weekly signals without a winner? All of these are considerations that everyone has to take into account for themselves - it takes time to find exactly what you are comfortable with, but eventually you will get your own groove. Me telling you what to do will serve no purpose whatsoever, because I'm not you and you aren't me.

Thanks.

No sweat!

Have a good weekend everyone. Last week of August next week, hopefully we can finish out a difficult month with a profit

 

[myknees]

Nigel - You are the best (flattery gets you nowhere I know!) !

 

[Brodwyn]

Thanks Nigel for the attentive reply.

I also look forward to your posts on multiple positions, etc. in the "not-too-distant future".

 

[oakleaves]

Just a short hello from me

Hello Nigel,

thanks for offering this thread, I subscribed and I hope to be able to contribute something meaningful.

Good trading to all of you !

Mike

 

[oakleaves]

GBPJPY Daily

This pair is on my radar, with quite some time spent in a sideways range and failing to close above 154.00.

But I will wait and see before dropping down to 4h or 1h, in order to apply the break of a trend line strategy, like Nigel shows so well.

Mike

 

[newmillionaire]

What your thought on trading gold and its viability

 

[newmillionaire]

even in times of recession gold is always a profitable commodity don't you think?

 

[hallettcove]

Hello Nigel

I like the logic in this strategy thank you but I have a question. When you draw a trend line on the 4 hour chart how long do you leave it for before drawing a new one?

Forget this request.
Thanks to reading the PDF again and the charts posted by Brodwyn my brain clicked into gear and I now understand when to draw them.

 

[Brodwyn]

My weekly watchlist

The following three weekly signals caught my attention:

And here are the corresponding H1 trendlines I'm watching to be broken:

 

[Nigel Price]

This pair is on my radar, with quite some time spent in a sideways range and failing to close above 154.00.

But I will wait and see before dropping down to 4h or 1h, in order to apply the break of a trend line strategy, like Nigel shows so well.

Mike

Hi Mike, welcome to the thread! Nice long wick on that daily chart!

Big fall in price this morning, hope you managed to take advantage of some of it! No worries if you didn't though, there's always another signal coming along soon. Nice analysis, you are on the right track.

Good luck

 

[Nigel Price]

The following three weekly signals caught my attention:

Brodwyn, spot on - they are excellent charts, probably better than mine!

 

[Nigel Price]

Hello Nigel

I like the logic in this strategy thank you but I have a question. When you draw a trend line on the 4 hour chart how long do you leave it for before drawing a new one?

Forget this request.
Thanks to reading the PDF again and the charts posted by Brodwyn my brain clicked into gear and I now understand when to draw them.

Welcome to the thread hallettcove,

Yes, I think I'll just trade off Brodwyn's charts this week too!

Personally I like to have my trendlines take account of the recent price action. So if there are a few recent lows/highs I can join up that will probably be the trendline I will draw.

The trednlines are just a point of reference for us to decide where to enter and where to set a stop. Sometimes they work really well, sometimes they don't. Make the most of the one's that work and cut the losers fast on the ones that don't! Good luck!

 

[Nigel Price]

even in times of recession gold is always a profitable commodity don't you think?

Hi newmillionaire,

Well it has been very profitable since this nice weekly bullish reversal candle a few weeks ago

In terms of gold being always profitable, I'd be very careful of saying anything is always profitable.

Remember how house prices always went up? When you think always anything, that's usually exactly the point it stops being always.

Good luck!

 

[Nigel Price]

Euro at the moment -

 

[viper77]

Hi Nigel, just came across PAST, finished reading the PDF, will try to follow it closely because it really goes with my philosophy of not being glued to the screen 24/7 to grab just a few pips in the best case...
Thanks!

 

[Nigel Price]

Hi Nigel, just came across PAST, finished reading the PDF, will try to follow it closely because it really goes with my philosophy of not being glued to the screen 24/7 to grab just a few pips in the best case...
Thanks!

Welcome aboard viper77!

Yes, it might take a while to get a position or two established at first, but once a weekly swing pans out nicely you can kick back. There's nothing like having a trade in at the start of a good swing that lasts for a few weeks, or more. It's just a matter of logging in every now and again to check how it is getting on. I don't know about most people, but part of the attraction for me in trading is having time away from the screen, not being in front of it all the time!

All the best

 

[viper77]

Thanks for the warm welcome Nigel!

I was wondering if having a SL so tight doesn´t get you stopped out several times until price really goes in your favor?
I mean, is it realistic to go after hundreds of pips with just a 30 pips SL or so?

Greetings!
Sebastian