Price Action Swing Trading - The PAST Strategy

[Aquarius]

Sorting the good excuses/entries from the bad

.... Sorting the good excuses from the bad I find much more difficult.

Maybe because of impatience I am still looking around to build / find the "system" which suits me best. I came across "Trading made simple" on FF. And though I thought I left using indicators I studied the usage of TDI.

I did an analysis of my top 40 losing entries since visiting this forum on Earnforex and trying to use principles of PAST.

Well, the TDI would have kept me out of 25 of my 40 losing entries among them 5 of my top losing trades.
I did the same with the top 15 of my winning entries (yes, I do have a lot more losing entries!). 11 of the 15 entries were supported by the TDI used as described in Trading made simple.
These figures made me make a template with the TDI as the filtering indicator for taking trades.

That makes me deviate from PAST maybe too much. At least in regards as using a trendline break. What I still want to achieve is catching swings. Entries will be based on PA (mainly engulfings, possibly pinbars).
I will have to define ranges in which I will enter trades so my initial stopp loss might very from about 30 to 100 pips because I will use last H/L as place to put my initial SL.

If nobody objects I will continue posting here but I might switch to Trading made simple also. Best of luck next week.

 

[GRS]

We enter a trade to participate in an expected movement. What do we enter on? A certain 'rule' like :

1. A break of a trendline
2. A retest of a trendline
3. A break of an engulfing bar (at a support or resistance level)
4. A break of a pinbar (at a support or resistance level)

That is what I call excuses to get in to a trade. Is this searching for an entry on certain levels really that important?

For me, it is very important because entries are part of my edge. So while there will always be numerous excuses to enter at ANY price (indicators, pa, fibs etc etc) there is only a select few I will take regardless of my expectations of a larger move. If I can't get in with the entry that sits me, then I'm happy (well maybe not "happy" but accept) to miss the move.

 

[Aquarius]

AUDJPY Long trade

Entered a long after a pullback after a break of a trendline. Long based on an engulfing bar. Profit about 120 pips. I entered a short immediately after closing the long. The short has been stopped out for +10 pips.

 

[Aquarius]

Caught the 400 pip drop?

Hi Nigel,

Did you catch that 400 pip drop in GBPJPY to which you referred in this weeks letter?

I must say I did not!

It's been so quiet around here. Even you did not show up

 

[myknees]

I have a 2 candle reversal on the PAST indicator - DOW Weekly - But cannot see a good trendline on a lower timeframe!

 

[GRS]

haha of course not. I'm looking at this as a potential break of an ascending triangle. there seems to be some well defined horizontal resistance around 20.45 and price is starting to compress up against it. It would be nice to see a false break down below support then back into the range before a convincing break up and away

damn you silver, right when I wasn't watching!

 

[Nigel Price]

Morning Everyone! I've been missing you all! Time has been very tight for me the last couple of weeks so unfortunately I haven't managed to be in here as much as I would like. But I have cleared a few things off my desk so I'm free to be a bit more active in here this week - woohoo

Time is our most precious commodity so you always have to spend it wisely. Although I love posting my charts in here, it is very time-consuming, so apologies to anyone has been disappointed at my no-shows!

First things first - my bonus 1 hour chart for this week's report seems to have got lost somewhere in the internet cables so I am posting it again below. For those who haven't seen the report, the main focus this week is on AUD/CAD, but I am keeping an eye on GBPJPY too this week. I have a feeling that it is going to be one of those cases where price teases you for weeks, just long enough for you to get frustrated and move on elsewhere, then as soon as you close your chart price zooms away! The market is a tough master sometimes!

As for my 1 hour chart (that didn't make the cut for some reason!), during the course of this morning price seems to have tagged the underside of the trendline as hoped and has now fallen away. Plenty of time to get a stop to break-even. Would have been a nice trade, but I was in my bed so I'll have to wait for the next opportunity!

Good to be back in here - hope you all keeping well

 

[Nigel Price]

European Championships 2016

Can all Germans, Gibraltarians, Georgians, Scots and Poles kindly identify themselves immediately.

 

[Nigel Price]

The PAST Strategy - Price Action Swing Trading

Current outlook on GBPJPY is below. This pair will have tried the patience of a saint over the course of the last couple of weeks. Despite all the wicks in either direction though, the main trendline levels are still holding.

So:

Short on rallies up to the upper trendline

Short on breaks/retests of the lower trendline

Stand aside on a break of the upper trendline

As always - remember to listen, even when the market is telling us what we might not want to hear. Price settling above the upper trendline is the market screaming at the bears - get out of the way! If we hold our shorts open when price is clearly moving upwards, we are just asking for trouble. Cut the losses and live to fight another day!

The foremost concern of ours is to keep losses to a minimum - if we don't like the look of the way price is moving, we close out the trade and wait until it is moving in accordance with our view again. We can always get back in, often at a better price too.

 

[Nigel Price]

Got to admit - I am a bit annoyed with myself that I wasn't up in time this morning to get this - expensive lie in…

There'll be plenty more opportunities though, the week is young yet

 

[Nigel Price]

For anyone who saw the report and managed to get in on this trade - first of all, congratulations for not being a Lazy Lawrence.

Second of all, as price moves into profit, consider getting your risk neutralised by bringing your stop to break even. This could be a great entry for a big reward-to-risk trade.

If price for whatever reason moves back up and knocks you out at break-even, it's no sweat, you haven't lost anything. And you can rest assured, if price does manage to get back up there, I will be right alongside you selling again

 

[myknees]

Welcome back sir ! Thanks for the updates and the video links

 

[Nigel Price]

Hi Nigel,

Did you catch that 400 pip drop in GBPJPY to which you referred in this weeks letter?

I must say I did not!

It's been so quiet around here. Even you did not show up

I did manage to grab a few pips on that drop Aquarius, although I did give up quite a few too when price rallied back up. No nice long swing has developed yet, but I'm hopping it's only a matter of time...

Liking your signature, by the way…

 

[Nigel Price]

Knowing this is a FOREX Forum, some might find the following contribution as welcome as flatulence at a Poetry reading.

brilliant basilc - hahaha

Are you speaking from experience?

 

[Nigel Price]

OR modifying PAST to suit your trading. In which case it might be appropriate to take profit or partial profit more often if that is what works for you.

Excellent point GRS

I really hope that no-one either reading the ebook or indeed reading this thread has gotten the wrong end of the stick. I have always tried to make sure that I am never prescriptive about how to trade or how not to trade. That sometimes annoys people because they are looking for someone to tell them the step-by-step secret to success.

In trading there is no step-by-step.

What I have always tried to do is alert readers to the aspects of trading that they need to be thinking about if they are going to progress from being a system follower to being a trader. It's not always an easy progression to make, but often people don't even know what they should be looking at. Topics such as risk v reward, edge, risk management. Once they are comfortable with these topics they will find that they will naturally gravitate towards a style that suits them personally, and not try to implement what suits somebody else. That is where you find longevity and sustainability in the markets.

There's nothing to gain from trying to learn someone else's trading style exactly - it's like trying to learn someone else's taste in food. It just doesn't work.

But what you can do is take the basic principles and mould them into a style that works for you. I personally find that very small losers and large winners works for me. That comes with its challenges because sometimes I have to endure a long time without a winning trade. Others might prefer to trade with lots of small winners and the odd large loser. That equally comes with its own challenges - you might be sailing along nicely for a few months and then a massive loser comes along and wipes out 2 or 3 months of profit.

It's horses for courses, there is no way around these challenges, they are unavoidable. The market squeezes everyone in one way or another - anyone who tells you otherwise is pulling your leg.

It's the trader who accepts it, deals with it, puts in place measures that help them cope with these inevitable challenges when they come along - that's the guy that stands a chance.

It's risk management, edge, and risk v reward guys - everything else comes way down the list of priority.

Sorry for the rant

 

[Nigel Price]

Hi Nigel,

I have no words to thank you. Not only for sharing your strategy, but specially for helping us to THINK like a pro trader. This is a huge forum thread but I'm totally happy to say I read it all.

It's amazing how understand about psychology and the mental process triggered when we lose.

As a FOREX beginner (less than 6 months) I can say you changed me from "probably one more frustrated loser" to "a beginner with a lot of potential".

THANK YOU VERY MUCH.

brubrant - really makes my day to hear that - thank you for taking the time to post such a lovely comment. Thank you.

If you ever have any questions, don't be afraid to post them or drop me a line. I'll be more than happy to help any way I can.

 

[Nigel Price]

I know that everyone takes something different out of learning, but for me the "Ah-ha" moment thanks to Nigel isn't "let your profits run". For me the concept of taking several small bites at a position rather than one big all or nothing attempt is the biggest change of thinking.

I know this isn't exact. If you don't get in the trade until the 3rd attempt then maybe your entry price isn't as good etc. But if you're buying on a trendline break sometimes you'll be entering on a retrace at a better price. And sometime the trade will go no-where but you'll lose either a smaller amount or nothing compared to a traditional entry.

Finally a trend line break is confluence. You can enter on a price action signal confirmed by a trendline break (or H&S neckline break or double top break etc) and increase the chances or a successful trade. You are taking your normal price action signal, and combining it with another confirming signal that you may not usually consider.

So for my own trading, the first change I'm making isn't to shoot for multi-week multi-pip wins. I'll stick with looking for bleedingly obvious pin bars and long wicks and shooting for traditional 1:1 and 2:1 targets. However, I now try and get more out of each trade by taking multiple attempts at much smaller risk, smaller stops and getting to BE to claim my 'free life' ASAP. With time I may gradually learn to hang on longer and shoot for bigger MWMP trades, but this isn't as much of a priority for me. Taking good setups and amplifying the gains with less risk but the same targets (in pips) is enough for now!

It is only when these rare MWMP runners are amplified by the small stop entry position that they become extremely profitable and outweigh the low probability of their occurrence. And it is only when you get your stop to BE quickly on small risk punts that your account will stop haemorrhaging while you wait for the elusive MWMP play.

I'd love to hear Nigel's thoughts though.

Beginning to feel a bit inadequate coming back in here and reading all these great posts!

I have highlighted the particularly excellent parts of this post - it is a beaut.

Not sure I can add much to it, to be honest!

 

[Nigel Price]

AUD/CAD - bulls are going for it….

 

[Nigel Price]

AUD/CAD - bulls are going for it….

The red box has held the bulls back pretty much to the pip and price has now fallen away.

No reason why we couldn't get a short entry in there with very small risk - if we waited for the trendline itself to be tagged, we could have got in with as little as a few pips risk.

Price is now roughly 25 pips lower now, so ample opportunity to get risk off the table completely with a stop at break-even. We want to have the smallest amount of capital at risk for the shortest period of time. If we continue to do that over time, the market only has a tiny window of opportunity to get under our skin and test us. Eventually it runs out of ideas to frustrate us and then the big winner always comes.

 

[Nigel Price]

Thanks GRS. I must admit I sometimes open trades from my mobile and that are not always the best trades.

Very hard to trade from a mobile when you have other things going on around you! I tried that before too - I don't have any broker apps installed on my mobile devices now!

I think PAST is a good strategy

so do I

but during the day I can not always follow the martket around H4 closings. And my mobile does not have the same charts! Also I would like to be able to catch up with a trend although it already 'left the starting point'.

Absolutely - not everyone can be in front of the screen all day. That doesn't need to be a problem unless you make it one. People only make it a problem when they try to trade during the day, while they are preoccupied with something else, as if they are a professional sitting looking at the screen all day with 100% focus. I never tell people what they can and can't do, but what I will say is that everything points to it being extremely difficult. It might be possible to graduate from being very successful sitting in front of a screen all day first, and then progressing on to mobile trading - but the chances of finding your trading groove on short-term charts, on a mobile phone, while doing a day job, must be really very slim indeed!

The other important thing is this: if you are working a full time job, you cannot possibly give it the attention it requires to do properly if you are thinking about the markets all the time, sneaking a look at your phone to check trades, getting frustrated for the rest of the day when a trade doesn't work out. A day's work is enough to have you tired by the end of the day, never mind the additional stress of having money on the line in the short-term markets. You should give your all to your work during the day and then give your all to the markets out of work, if you want to.

"But the markets are only active when I am at work!!" I hear you cry! Yes, so the reality of the situation is that you have to lengthen your horizon. Instead of a daily or weekly anchor chart you might have have the monthly. Do you your entries on the 4 hour/daily chart. Most people baulk at that idea because they are impatient. In response, I would say go ahead and try to trade the 5 minute chart on your iPhone at work and see how far you get!

So yes I am adapting PAST to suit my trading. I am still looking to find these MultiPips trades though. I think that the heart of PAST is minimize risk and let profits run.

Absolutely - it's the relationship between risk and reward that is important, not the numbers themselves. Nothing wrong with doing your entries on a daily chart with 50, 100, 150 pip stops. But if that is the case, for me, I'd be looking to gain multiples of that for my reward. Can't happen? Course it can.

The break or retest of the trendline is an 'excuse' to get into a trade. So yes, maybe I am moving to use other 'excuses'.

Not sure I would call it an excuse. The trendlines govern my entries for very good reasons:

1. Stops me fighting the trend when looking for a reversal
2. Often gives me a nice "pop" when they break - allowing opportunity to get stop to break-even very quickly.
3. The retests often give opportunities to get into the market at extreme prices - sometimes the last final push by the bulls/bears before a collapse/strong rally.

Can't beat a nice retest!

I hope I am still allowed to post my trades here.

Course you are

I wonder if anyone else reading this forum is taking (demo)trades? I sure would like them to post them.

Hopefully my posts help a bit. To be honest though, in terms of live trading, the live posts that I have done in this forum already detail pretty much everything I do and think. All I'm doing now is repeating it