Price Action Swing Trading - The PAST Strategy

[Nigel Price]

GBP/CAD

Right Gents, let's take a look at this one this morning and see what the craic is.

AUD/USD is a little bit messy this morning because it gapped above the trendline and now is back below it again.

So, on GBPCAD, this is the weekly.

Hopefully by now, this jumps out at everyone as being a good example of a weekly preceding trend followed by a nice long wick reversal candle.

Remember guys, this is a weekly chart - they move slowly. It takes some time for it to move, but as it does, it covers a lot of ground. Big potential swings, big potential profits, but a bit of patience required.

 

[Nigel Price]

GBP/CAD

This looks like a good trendline for the medium term on the 4 hour chart.

If the bears managed to force price below that, we could say they are taking control of the market.

 

[Nigel Price]

GBP/CAD

But, since we are sitting down to the screen to do a bit of intraday trading here, let's look a little lower to see what is going on a bit closer in. Could it be possible to trade a weekly signal with a 10 pip stop? Maybe, maybe not. But we can try...

5 min chart...

 

[Nigel Price]

GBP/CAD

I have no clue what GBP/CAD is going to do this week or next week or any week.

All I can do is have a suspicion, a theory. If I am correct I try to make money, if I am wrong, I try to keep my losses under control.

How many times have you been right and not made as much as you could, or been wrong and lost way more than you needed to? That is what you need to address to improve your trading, not your powers of fortune-telling or prediction.

Trying to become some sort of an economic prophet is a lot more difficult than just making sure that you manage your risk properly.

 

[Nigel Price]

GBP/CAD

Around 1.7448 would be the price I am looking at...

 

[Nigel Price]

GBP/CAD

In now

My immediate attention now turns to where to pull the plug if this doesn't work out. We need to maintain a healthy scepticism - always assume that we will be wrong.

1.7458 would be 10 pips, but I think we can go even tighter than that

 

[Nigel Price]

Right we are back above the trendline now which is not a good sign. Wouldn't want to see above 1.7455

 

[Nigel Price]

OK that's me out -8 pips

 

[Nigel Price]

GBP/CAD

New trendline - if this one doesn't work out, that will be it for the day for me.

Stand aside if price is not behaving as you want it to

 

[Euroman]

Thanks for the live updates Nigel, I find them very useful. What a great example of keeping losses small! My entry point was at 1.7444, which missed being triggered, though I was looking at a stop at 1.7460

Reading through this thread, you have a great series of posts as you traded AUDCAD live, starting on page 45, they give a great insight on how you are thinking about risk.

 

[Nigel Price]

GBP/CAD

Price has respected the trendline with a bounce. Waiting to see what happens next...will short on a break/retest.

 

[foodaba]

aggressive

for those a little more aggressive perhaps an entry at a break here?

 

[Nigel Price]

GBP/CAD

nibble at 7458

 

[Nigel Price]

12 pip stop for now, but if we get motoring I will tighten

 

[Nigel Price]

Quick spike up took me out. Total loss for today -20 pips.

When you see a few losers like this, it might be tempting just to say to yourself, why bother trying to keep a tight stop? Why not just lengthen it out and give the trade "room to breathe"?

I reason I don't do that is because there are plenty of occasions when your trade works out on the first or second attempt. When that happens, your risk:reward ratio can be insane - 1:10, 1:20 even 1:50 can be achievable.

GBP/CAD will have to do some work now to tempt me to try again today. It would take a decisive move below the trendline now for me to take a trade. Or I might just wait out a break and just short if/when a retest occurs.

Hope this has been of some use some of the readers. Sorry I can't regale you with magnificent, enormous winners every morning! If that is what you are looking for, there are plenty of other places you will find it. This is real trading, and the truth of it is more often than not it is a bit of a hard slog. It's not meant to be easy!

Good luck!

 

[Nigel Price]

for those a little more aggressive perhaps an entry at a break here?

Hi foodaba, only after seeing your post now! I'm even more aggressive than that this morning - I'm on the 5 min chart! Looks good though!

 

[Nigel Price]

GBP/CAD

By the way, thanks for pointing that out foodaba - this is pretty aggressive, what I am doing here on the lower timeframes.

Conservative traders would wait until a longer term timeframe trendline is broken.

I am still really fighting the trend here, and that is reflected in the reluctance of price to roll over. But as long as we remain aware of controlling risk we can afford to be a bit aggressive every now and again

 

[Nigel Price]

GBP/CAD

Finally a break. In at 1.7462. Looks like we might have a bit more momentum this time...

 

[Nigel Price]

GBP/CAD

Let's go back out to the weekly chart again for a second. What have we got to play for?

 

[Nigel Price]

GBP/CAD

Some perspective...

Say this trade works out (it might not work out, but bear with me) -

I get the current trade stop to break-even, so my realised losses are 20 pips.

And price makes its way down to 1.70 as hoped.

What does my strike rate need to be (taking both losers on board as well) to be profitable over the long term?

Just over 4%.

That's why I'm not in here everyday telling readers about the dead-cert trading opportunities I have to recommend. I don't have any of those. The fact is that most trades are losers. But that has no reflection on our ability to achieve an edge and turn a profit