Price Action Swing Trading - The PAST Strategy
- Thread starter Nigel Price
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Taking Profit - The PAST Strategy
Morning All
Not much happening on our AUDCAD trade, which is to be expected after the large daily down candle.
Price moves, then consolidates, moves, consolidates. Right now it is consolidating.
So my primary focus is still on the candle with the green arrow, and my stop is still at B/E. Hopefully we get some more sideways action and then another brisk move to the downside. But if that doesn't happen and we get stopped out, it's not the end of the world.
We want to be around during the moves, and want to be busy doing other things during the chop.
It is with this in mind that I am taking an early weekend and going to stay in a nice hotel for a few days. I'll let the trade look after itself.
Will be back in here next week.
Morning All
Not much happening on our AUDCAD trade, which is to be expected after the large daily down candle.
Price moves, then consolidates, moves, consolidates. Right now it is consolidating.
So my primary focus is still on the candle with the green arrow, and my stop is still at B/E. Hopefully we get some more sideways action and then another brisk move to the downside. But if that doesn't happen and we get stopped out, it's not the end of the world.
We want to be around during the moves, and want to be busy doing other things during the chop.
It is with this in mind that I am taking an early weekend and going to stay in a nice hotel for a few days. I'll let the trade look after itself.
Will be back in here next week.
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Here is a trade I am looking at...thoughts? The anchor is on the H1 chart (I am looking for a shorter term trade on this one). The sharp move up on the H1 chart shows some significant weakness and has developed a small UpTrend on the M15 chart. I will short at the break with a 20 pip stop (this stop is above the trendline and above the previous high). I will move my stop to break even after a 10 pip move. While the PAST strategy says to exit a trade when you see a strength gaining against your position on the anchor chart, I like to have a target so I can more easily calculate my risk:reward. In this case I'm targeting 1.4445. That would give me approximately a 90 pip reward. so my risk reward is 20:90 so just better than $5 profit for every dollar risked. However, if it breaks well enough I will be able to move my stop and get all risk off the table. I'll if I get entry.
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Just after noticing, we are over 500 posts!
Here's to another 500
A prize for post number 1,000 ?
Hi Shiner, I wouldn't normally go as far down the timeframes as using a 1 hour chart as an anchor myself - but if it works for you, go for it
Hi Guys, I'd just like to draw your attention back to this post I wrote a while ago.
It was about how when the MIT blackjack players from "Bringing Down the House" played conservatively when the deck was cold - i.e. low numbers on the cards coming out, therefore a lower chance of winning. Then when the deck turned "hot" - a lot of high number cards coming out, signifying a greater chance of winning, they were aggressive and upped their stakes substantially.
The last few trading days was one of the times that the deck in the currency markets was "hot". Lots of movement , lots of opportunity to profit.
The two trades alone that I have been tracking on this thread (AUDCAD and GBPUSD) are up nearly 500 pips between them.
We make hay while the sun shines - then when the market goes back into consolidative mode, or moves against us, we become defensive again. We control risk tightly, waiting for the deck to swing hot again.
Hope this makes sense
It was about how when the MIT blackjack players from "Bringing Down the House" played conservatively when the deck was cold - i.e. low numbers on the cards coming out, therefore a lower chance of winning. Then when the deck turned "hot" - a lot of high number cards coming out, signifying a greater chance of winning, they were aggressive and upped their stakes substantially.
The last few trading days was one of the times that the deck in the currency markets was "hot". Lots of movement , lots of opportunity to profit.
The two trades alone that I have been tracking on this thread (AUDCAD and GBPUSD) are up nearly 500 pips between them.
We make hay while the sun shines - then when the market goes back into consolidative mode, or moves against us, we become defensive again. We control risk tightly, waiting for the deck to swing hot again.
Hope this makes sense
Taking Profits - The PAST Strategy
Hi Lads,
Just an update on the AUD/CAD trade from last week.
I was away on Thursday and Friday last week and while the trade did move a little further into profit, it has given back some of the gains this morning.
My stop is at breakeven.
Now, as I mentioned previously, taking profit is all about balancing your responsibility of exploiting a winner as much as possible against the obvious need to manage risk.
As my account is looking quite healthy right now, and I am not under any huge pressure to close a winner, I am minded to leave this trade open for a bit longer to see what happens.
There is some event risk due tonight with an Aussie rate decision due, so I would expect to see some volatility in either direction. But I am happy to leave the stop at breakeven for now. If it gets stopped out I will not be too worried.
Remember, at the statistics I am operating at I only need to close out very few winners to gain a healthy profit.
I understand that not everyone will trade like this, if you preferred you could close out some of the position before the news, just in case it causes a large rally. It all depends on your perspective, outlook, risk tolerance, etc.
Let's see what happens
Hi Lads,
Just an update on the AUD/CAD trade from last week.
I was away on Thursday and Friday last week and while the trade did move a little further into profit, it has given back some of the gains this morning.
My stop is at breakeven.
Now, as I mentioned previously, taking profit is all about balancing your responsibility of exploiting a winner as much as possible against the obvious need to manage risk.
As my account is looking quite healthy right now, and I am not under any huge pressure to close a winner, I am minded to leave this trade open for a bit longer to see what happens.
There is some event risk due tonight with an Aussie rate decision due, so I would expect to see some volatility in either direction. But I am happy to leave the stop at breakeven for now. If it gets stopped out I will not be too worried.
Remember, at the statistics I am operating at I only need to close out very few winners to gain a healthy profit.
I understand that not everyone will trade like this, if you preferred you could close out some of the position before the news, just in case it causes a large rally. It all depends on your perspective, outlook, risk tolerance, etc.
Let's see what happens
Attachments
Taking Profits - The PAST Strategy
Morning Gents!
The bulls are mounting a bit of a fightback here on AUDCAD and the bears, me included, are beginning to sweat!
But because I am managing this trade on the higher timeframes I have some time to figure out how best to balance my desire for big profit versus my desire for small profit. Loss is taken off the table for now, as the stop is at breakeven.
I also have to remember that I have 26 pips loss that I incurred before I got this position going, so I don't think it would be prudent for a floating gain to turn into a loss.
If there is to be a golden rule in the PAST Strategy it has got to be:
Never, EVER, let a winner turn into a loss.
Get stopped out at breakeven all day long, I have no problem with that, but we should never go from a position of large floating profit to a loss.
So at the very least, I should stop the trade out if it gets to within 26 pips of my stop.
So I am going to keep an eye around the high of the large down candle with the purple arrow pointing to it.
If we get a daily close up around these levels, I will concede that the bulls have shown more strength than they should have if they had real control of the market and I will look to close out. With a very small overall profit.
I hope you can see my train of thought here - I am a risk manager. I am constantly weighing up my potential downside risks against upside reward. I am trying to do so a such a way as to put me a position:
(a) to generate a positive return
(b) to give the winner every opportunity to grow
(b) to achieve an outcome that I, personally, am satisfied with, in the context of (a) and (b) above.
I can't help you with the last one. I know what works for me. You have to figure out what works for you.
Hope this is helping readers and addressing some of the questions that were being asked about taking profits.
I'll update again soon.
All the best
Morning Gents!
The bulls are mounting a bit of a fightback here on AUDCAD and the bears, me included, are beginning to sweat!
But because I am managing this trade on the higher timeframes I have some time to figure out how best to balance my desire for big profit versus my desire for small profit. Loss is taken off the table for now, as the stop is at breakeven.
I also have to remember that I have 26 pips loss that I incurred before I got this position going, so I don't think it would be prudent for a floating gain to turn into a loss.
If there is to be a golden rule in the PAST Strategy it has got to be:
Never, EVER, let a winner turn into a loss.
Get stopped out at breakeven all day long, I have no problem with that, but we should never go from a position of large floating profit to a loss.
So at the very least, I should stop the trade out if it gets to within 26 pips of my stop.
So I am going to keep an eye around the high of the large down candle with the purple arrow pointing to it.
If we get a daily close up around these levels, I will concede that the bulls have shown more strength than they should have if they had real control of the market and I will look to close out. With a very small overall profit.
I hope you can see my train of thought here - I am a risk manager. I am constantly weighing up my potential downside risks against upside reward. I am trying to do so a such a way as to put me a position:
(a) to generate a positive return
(b) to give the winner every opportunity to grow
(b) to achieve an outcome that I, personally, am satisfied with, in the context of (a) and (b) above.
I can't help you with the last one. I know what works for me. You have to figure out what works for you.
Hope this is helping readers and addressing some of the questions that were being asked about taking profits.
I'll update again soon.
All the best
Attachments
Thank you Nigel, this is some helpful info from a money management perspective. Given a scenario where, lets say there are anchor candle set ups for say 4 different pairs. Is your preferred approach to select one pair and focus on it until one position sticks and even open more than 1 position (assumed previous positions at break even) or would you rather try to open a position in each of the 4 pairs?
Hi pa_pips
Great question!
Generally speaking I try to pick a couple of pairs on the weekend and just concentrate on them during the week. Some people are able to move around lots of different screens and instruments while at the same time maintaining a top level of concentration, but I find that very tiring and difficult to do.
The other thing is that I don't like to be stuck at the screen all the time either. As everyone knows, forex is 24 hours a day, and it can really suck you in to looking at prices all week, day and night. Not only is this really unhealthy, but your trading results rarely improve just because you managed to watch a whole trading session while you were meant to be asleep.
Other people might be different, but for me, if a pair is moving in the direction I want it to go, I will be at the screen looking for entries. If it is moving against me, I tend to close the trading platform and take that as the market telling me to take a break. That way, I am fresh for when the market is moving the way I want it to.
So, in short, I think the best answer to your question is this:
Stick to these two rules (i think you already know these but I'll repeat them for other readers):
(a) Never open another position on any pair unless the previous position you have is at break-even, i.e. risk off the table
(b) Never open a position unless there is a break of a trendline.
If you stick to those two rules, I'd imagine you could spread yourself out amongst a few different pairs if you wanted to, without over-exposing yourself.
The key is just not to put yourself in a position where a sudden move against you could cause large losses. You want to be able to switch into defensive mode quickly when price moves against you. You can't do that if you have positions open all over the place with no stops or stops far away from price.
If you have stops at breakeven, price hits them and you might be a bit annoyed but damage is minimal and you live to fight another day.
Then, on the occasions that price moves quickly and unexpectedly in the direction you want it to go, you get a very nice surprise in your account.
Control the downside and then give the upside time and space to work its magic.
Taking Profit - The PAST Strategy
Right I'll not bother posting a chart of AUD/CAD this morning because not much has changed since yesterday.
The bulls are really putting us bears under pressure now and it is sort of an inflection point in the market.
I am still keeping an eye on the red level from yesterday's chart at 9970. My finger will be hovering over the close button if we get above that level. Certainly if we get a daily close above there I will close out.
The more attractive scenario would be for the bulls to give up right around now and then just puke back down to the lows, but we have to wait and see what happens
Right I'll not bother posting a chart of AUD/CAD this morning because not much has changed since yesterday.
The bulls are really putting us bears under pressure now and it is sort of an inflection point in the market.
I am still keeping an eye on the red level from yesterday's chart at 9970. My finger will be hovering over the close button if we get above that level. Certainly if we get a daily close above there I will close out.
The more attractive scenario would be for the bulls to give up right around now and then just puke back down to the lows, but we have to wait and see what happens
Taking Profits - The PAST Strategy
The bulls did indeed give up around these levels and have eased back during the course of the day.
I think the Aussie employment data due out tonight will probably decide whether this trade is going to get going or not.
The more attractive scenario would be for the bulls to give up right around now and then just puke back down to the lows, but we have to wait and see what happens
The bulls did indeed give up around these levels and have eased back during the course of the day.
I think the Aussie employment data due out tonight will probably decide whether this trade is going to get going or not.
Seems like a good call there Nigel
Looking forward to your report this weekend - It's a pity you cannot perhaps provide an overview of all the 20 instruments, I know that's cheeky and you already provide a great strategy and weekly update for free - Just saying
Good weekend.
Looking forward to your report this weekend - It's a pity you cannot perhaps provide an overview of all the 20 instruments, I know that's cheeky and you already provide a great strategy and weekly update for free - Just saying
Good weekend.
Taking Profits - The PAST Strategy Day 7
Hi Gents
AUDCAD has put in a nice lower top right around the levels I was posting from the other day and has continued downwards.
It was up nearly 200 pips at one point today but has eased back a bit after the London close.
You can see the updated analysis on the chart attached. I have drawn a trendline joining the high and the lower high that we have put in now and I will probably start to use that as a guide to the power of the bears. Above it, I will be thinking of closing; below and I will look for further declines.
If you look at the lower timeframe charts you will have seen a few trendline breaks which you could have used to build up a larger position but I am just going to concentrate on the one position here for the purposes of this Taking Profit commentary.
I'd just like to point out one more thing before the weekend - apart from a few hours last week getting the initial position in place, I have spent next to no time on this trade. It can be checked once a day, or even less, just to see how it is getting on. In fact, I have spent far more time posting the charts than I have on the trade!
I say in the ebook that there is nothing better than getting a position on a nice big swing and then just checking it every now and again to watch it grow. Some people might see this as boring, but I would say to them that the last thing the market is there for is to entertain you.
One of the things we spend far too much time on as traders is entries. We always look to close a trade and then to open the next. Brokers love this behaviour because it increases transaction costs (broker profits), but the increased time and greater workload rarely manifests in our accounts as increased profits.
Something to think about over the weekend anyway
All the best.
Hi Gents
AUDCAD has put in a nice lower top right around the levels I was posting from the other day and has continued downwards.
It was up nearly 200 pips at one point today but has eased back a bit after the London close.
You can see the updated analysis on the chart attached. I have drawn a trendline joining the high and the lower high that we have put in now and I will probably start to use that as a guide to the power of the bears. Above it, I will be thinking of closing; below and I will look for further declines.
If you look at the lower timeframe charts you will have seen a few trendline breaks which you could have used to build up a larger position but I am just going to concentrate on the one position here for the purposes of this Taking Profit commentary.
I'd just like to point out one more thing before the weekend - apart from a few hours last week getting the initial position in place, I have spent next to no time on this trade. It can be checked once a day, or even less, just to see how it is getting on. In fact, I have spent far more time posting the charts than I have on the trade!
I say in the ebook that there is nothing better than getting a position on a nice big swing and then just checking it every now and again to watch it grow. Some people might see this as boring, but I would say to them that the last thing the market is there for is to entertain you.
One of the things we spend far too much time on as traders is entries. We always look to close a trade and then to open the next. Brokers love this behaviour because it increases transaction costs (broker profits), but the increased time and greater workload rarely manifests in our accounts as increased profits.
Something to think about over the weekend anyway
All the best.
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