Price Action Swing Trading - The PAST Strategy

[Nigel Price]

And now the worst thing: I did this so many times before. Nigel, how can I get over this hurdle????

Aquarius, thanks for your comment and all the charts!

What's the first step towards solving a problem? Identifying it. Often once you know what the problem is, you aren't all that far off solving it.

If you know you will be tempted to lengthen your stops, for instance, think about what you might do to stop yourself from doing it. Maybe close down your platform after you open the trade. Just do whatever suits your own circumstances and what you think would work best.

I know one technical trader who finds it very difficult to separate his fundamental views on what an instrument should be doing from what the price is actually doing on the chart. He found himself fighting price all the time, losing money, not respecting the chart.

What did he do? He changed his trading platform to one that he could hide all the symbols, so he didn't actually know what the instruments were while he was doing his analysis. Just a quick example

I actually wrote an article for the site about this type of topic a while ago. Maybe that will help you a bit

All the best!

 

[Nigel Price]

Actually, when you come to think of it, if you know where you are going wrong, you are probably ahead of most other retail traders already. A huge number of retail traders just wander around from strategy to strategy, never really understanding what they need to change.

 

[GRS]

Stopped out BE today

I exited with about 80pips profit due to the conflicting bullish pin bar. Waited for the retrace back down to 86.05. I did stop and reverse but got taken out of the long at BE (86.05). Looking at the chart now I wish i'd taken another stab at a long after the stop out!

 

[GRS]

With "normal" PA there are commonly touted figures for the high probability setups, generally 50% win rate for 1:2 target and 65% for 1:1. I don't know that these are accurate, but they are what educators generally quote. The 2% account risk per trade is also another common figure quoted. But if 2% is appropriate for a 50-65% win rate, is it still ok when we expect a PAST entry may take several attempts? Maybe instead drop to 0.5% to allow 4 loss attempts at an entry with still only 2% potential account damage per anchor signal?

Speaking of trade probabilities, you don't use support and resistance when considering trades (ie the reversal signal doesn't need to be at a S&R level for you to take a shot at it), is this something you've found doesn't add to success of trades?

I will keep that in mind GRS and will go into that topic in greater detail in future posts, no worries.

But there is a very clear and deliberate reason why I am very careful not to get into specifying lot sizes, strike rates and so on. It is my opinion that trading can NEVER be prescriptive, ever. Even with totally mechanical strategies, because no trading can ever be initiated, maintained, and concluded without human intervention somewhere along the line. Because of that indispensible human element, results will always, always, differ.

I could very easily do here what other people do - specify a lot size, a strike rate you should achieve, the size of the average winner you should expect, and the size of the average loser you should expect - say there you go, that's the PAST Strategy, go and knock yourself out.

Would that improve anyone's trading here one bit? Absolutely not, I guarantee you that. My statistics, or anyone else's statistics, will become a distraction, people will try to imitate them, replicate them, target them. Which, given that we are all different in personality, is just a completely futile and frustrating exercise.

What is far more important is that readers think about these topics in relation to their own trading and their own personalities. Concentrate on your own statistics, where your own pressure points are and what triggers them.

The last thing I want in this forum is for a discussion of a topic as diverse as individual results to take hold, and in doing so distracting people from thinking about how they can improve their own results by implementing their own style of managing risk and stretching reward. None of us should be trying to copy anyone else in here, we should all be concentrating on developing our own strengths and abilities.

I hope this goes some way towards addressing your question! Good luck with your trading

Nigel

 

[Nigel Price]

crikey, these fractals are getting scary aren't they!

Nothing to say that price has to continue to follow, but when you look at the chart - very hard not to be intrigued!

link

 

[Nigel Price]

Hi GRS!

Could you clarify for me what you refer to in the first part of your question and then I will be able to give a more accurate reply?

With "normal" PA there are commonly touted figures for the high probability setups, generally 50% win rate for 1:2 target and 65% for 1:1.

Do these think these figures relate to the price action signals themselves, or to the trading statistics of the person using them?

 

[Nigel Price]

crikey, these fractals are getting scary aren't they!

Nothing to say that price has to continue to follow, but when you look at the chart - very hard not to be intrigued!

link

8,000 on the Dow by summer?

 

[Nigel Price]

Speaking of trade probabilities, you don't use support and resistance when considering trades (ie the reversal signal doesn't need to be at a S&R level for you to take a shot at it), is this something you've found doesn't add to success of trades?

I'll just repeat what I said to another forum member here over PM, if that's ok!

Hi x, I suppose we all are trading support and resistance levels in some way, whether we are aware of it or not. I don't think there is any harm in being aware of these levels on your chart, but I think it is important to be cautious and patient if you trade them. If you have a suppoert level marked on your chart, the temptation is to assume that price will bounce from it. But as we all know, sometimes support holds, and sometimes it doesn't!

So the most important thing is to wait for the price to communicate with you what it is intending to do. I personally wouldn't trade the supply and demand levels by themselves, but if I saw a candle with a nice long downward wick and it was at clear and obvious support level, it might give me a bit more confidence in the trade. But for me, price action always comes first!

So in summary, there is no absolutely no harm in using support and resistance levels, but just be aware that just because they are there doesn't mean price has to respect them!

Hope that helps.

 

[GRS]

I understand what you're suggesting, but really I'd say both. You can have someone like Chris Capre who had stats for pin bars based on automated backtesting of his entry and exit criteria, so supposedly non discretionary. Then I've also heard Walter Peters quote his strike rate for pin bars as 75%, but having feedback from students manually backtesting generally in the range 60-75%. Are these figures truthful and do traders achieve them in live trading? Who knows, but I think it's a reasonable starting point for discussion.

 

[Nigel Price]

I understand what you're suggesting, but really I'd say both. You can have someone like Chris Capre who had stats for pin bars based on automated backtesting of his entry and exit criteria, so supposedly non discretionary. Then I've also heard Walter Peters quote his strike rate for pin bars as 75%, but having feedback from students manually backtesting generally in the range 60-75%. Are these figures truthful and do traders achieve them in live trading? Who knows, but I think it's a reasonable starting point for discussion.

Very interesting! I wouldn't mind having a look at that backtesting to see what criteria was used. Obviously you would need to see what was the risk and reward ratio was too, because strike-rate by itself it pretty meaningless. Preceding trend is important too.

If you were looking for a fairly low reward in relation to your risk on pin-bars for instance, 60 - 75% might be achievable. But I would strongly suspect it is nothing close to 1:1 risk v reward.

If you do the simple maths, a 1:1 risk reward ratio coupled with a 75% strike rate implies a 50% ROI which, in my world anyway, is bonkers (bonkers in a good way). If you can achieve backtest results that are anything like that I would strongly suggest you bite their arm off!

What is more realistic is that there is discretion involved, where someone would trade some signals and ignore others. That's when these stats start to lose their usefulness for me, because it's impossible to compare like with like. I have no doubt that some educators can achieve these results, but they are likely to be very selective with their trades. Furthermore, getting back to the personality point I made earlier, we aren't Walter Peters and Walter Peters isn't us. So, his statistics might be interesting, but for my own trading improvement, I see them as being a bit irrelevant.

Good conversation though! Everyone in here should certainly be thinking about these topics alright, but if they want to see improvement in their trading, they should be thinking about them in relation to their own statistics, not attempting to emulate you, me, Chris Capre or anyone else.

Simply my view though! - others might disagree with me, and I have never have any problem with that.

 

[Nigel Price]

GRS, I hope our intellectual conversation hasn't distracted anyone from GBP/AUD!

 

[Nigel Price]

In short at 1.8282 - watching closely...

 

[Nigel Price]

GBP/AUD is quite a jumpy pair so we could afford it a bit of a licence to move, but not too much!

I certainly would be thinking of stopping it out if we saw price poke its ugly head far above 1.8300.

 

[Nigel Price]

I'll do a post sometime about the psychology of traders during a trendline break when I get the chance. Save to say, right now, the bulls are sh****** themselves

 

[Nigel Price]

poking up to 83 now, finger over the close button

 

[Nigel Price]

Price backing off now, highest point reached was 8302 on my chart...still in

 

[Nigel Price]

Stop at 8306 - risk 24 pips.

 

[Nigel Price]

This pair moves fast! In profit now, price at 8277.

Thinking at all times - how to I keep my exposure the absolutely smallest it can possibly be - keeping one eye on the potential big drop ahead.

Remember, I am trading a weekly signal here. No reason why I shouldn't be targeting a few hundred pips, easy.

 

[Nigel Price]

Looking healthier now - 8260, so 22 pips to the good.

Waiting to bring the stop to b/e and take risk off the table completely.

Limit/eradicate the downside risk, and leave yourself open to take as much as the market is prepared to give.

 

[Nigel Price]

Up to 40 pips profit so am going to bring stop to b/e and wait to see what happens.

If I get stopped out I will have lost nothing, which is the aim of my game.

I wouldn't be averse to giving it another shot to the short side even if I do get stopped out, as long as we stay roughly below the trendline.