Price Action Swing Trading - The PAST Strategy

[Nigel Price]

Hi Nigel

Yes I would like to see the bulls give up about now. I have a feeling the GBP news at 10.30 may make or break this trade.

Regardless, I will be keeping my trade open for the time being.

Stuart

Morning Stuart! Yep, it's all about whether the market believes Carney will start raising rates soon or not. Any indication that a rate hike is off the cards for 2014, and GBP could suffer. Then in early 2015, there's an election in May etc, etc, etc...

Personally, I don't think he will hike, I think he's bluffing.

***Disclaimer: it doesn't matter what I think, you think, or anyone else thinks. Pay attention to none of them, they know nothing. The only thing that matters is what the market thinks, and that is communicated to us clear as day, in the price on our screen***

 

[anukrh]

Thanks Nigel Sir for your Guidance

To become Good trader we can do surely two things as per PAST :

1- Recognize good opportunity asap and position ourself for a trade in starting itself.

2- keep losses tiny or none by bringing SL to BE.

later wait what market doing


Anu

 

[stuart1984]

Thanks Nigel Sir for your Guidance

To become Good trader we can do surely two things as per PAST :

1- Recognize good opportunity asap and position ourself for a trade in starting itself.

2- keep losses tiny or none by bringing SL to BE.

later wait what market doing


Anu

Absolutely Anu

 

[stuart1984]

Morning Stuart! Yep, it's all about whether the market believes Carney will start raising rates soon or not. Any indication that a rate hike is off the cards for 2014, and GBP could suffer. Then in early 2015, there's an election in May etc, etc, etc...

Personally, I don't think he will hike, I think he's bluffing.

***Disclaimer: it doesn't matter what I think, you think, or anyone else thinks. Pay attention to none of them, they know nothing. The only thing that matters is what the market thinks, and that is communicated to us clear as day, in the price on our screen***

I love the disclaimer.

I have absolutely no clue about fundamentals, never had an interest in it while at school etc which is obviously now a regret.

Because of this, I do not have an opinion on what may or may not happen, I can only use the PA on my charts to create an opinion, most of the time, this suits me fine although I am trying to learn a bit about the basic fundamental of how the markets work.

Stuart

 

[Nigel Price]

I love the disclaimer.

I have absolutely no clue about fundamentals, never had an interest in it while at school etc which is obviously now a regret.

Because of this, I do not have an opinion on what may or may not happen, I can only use the PA on my charts to create an opinion, most of the time, this suits me fine although I am trying to learn a bit about the basic fundamental of how the markets work.

Stuart

I studied economics up to postgraduate level and I can happily confirm that 99.999% of it is completely and utterly useless for trading.

 

[stuart1984]

Morning Anu - I got up a EUR/CAD chart there and I see your predicament! Yes, after a very nice break-out, EUR/CAD has had a very difficult couple of days.

It is not that dissimilar to my GBP/CHF trade which I posted about above - there has been a retrace and now my floating profit has reduced significantly. It is not pleasant. Three choices -

1. Leave the market to decide your trade's fate - leave stop at break-even and see what happens -

Pro - you are giving the trade every chance to get back on track. The daily chart doesn't look great, but the weekly hasn't gone bad yet and the long wick on the monthly is definitely still valid. Maybe this is just a retrace?

Con - The market could continue to the downside and hits your stop - zero profit. How will saying goodbye to those 200 pips make you feel? ?

2. Close out the trade right now for x pips:

Pro - you get a little relief and you manage to be pleased with yourself that you got a little profit into your account. Move onto the next trade.

Con - should that monthly long wick candle play out - you are potentially missing out on hundreds and hundreds of pips.

3. Pick a criteria that you will force you out of the trade if it happens - (for example, if price gets below those lows at 1.4560)

Pro - you might get out with a very small profit. Is that really a pro

Con - Again, nothing to say that price can't rally from here!


Only you can decide your trade's fate Anu. What you need to do is weigh up all of the options and decide on which one you can live with the best - the one that will have the least negative impact on you emotionally, should it occur. Looking at that EUR/CAD chart now, I know exactly what I would do, but there's no point me telling you what that is, you need to manage your trade according to your own trading personality, emotions etc.

But whatever you do, take comfort in this - even if this trade doesn't work out, your chart analysis and trade entry was perfect, well done. If you keep doing that, keeping your losses small, your big weekly winner will come sooner or later.

Watching floating profit fluctuate is one of the hardest things about trading. But you have done your job by getting the stop to break-even. That's your part done. After that, it's largely in the hands of the market. But if you persist, eventually the market recognises your work, and the big winner comes.

Persistence, emotional fortitude and money management!

Doesn't matter whether this one is a winner or not Anu, it's excellent trading by you. Well done, keep it up!

Hi Nigel/Anu

I absolutely agree with everything that Nigel has said in this post but I wanted to add another point that ties into Nigel's post about adding to positions yesterday.

Whilst these large retracements can be very painful to watch when you see a nice 200 pip profit slip away from you back to nearer your entry, rather than feeling pain why not be happy? This might be the market giving you another opportunity to add to your position at great value.

I believe I am relatively aggressive in my trading, I have made the decision that I am not a 50 pip trader, I want a big trade or a break even trade, that is all I am looking for.

Consider this; the market has retraced to within 50 pips of your entry after having been up about 200 pips. When you first opened your trade, did you consider that you were getting in at a good value price? I hope so, if not, you shouldn't have taken the trade. So now you are approaching a price that you once considered to be good value, there was a large drop in price which indicates that the big traders also felt this was good value, do you think they managed to fill all of their orders at that price? I doubt it, so what do they do, they start buying again to drive price up again to an area that they consider fair value and then they come in hard and fast and if you are not quick, you may lose the opportunity to join them again.

So what does this mean for your position? personally, seeing as I don't want a 50 pip profit, could I use some of that profit to add to my position. Yes I can and I can do it without taking on any risk at all. I can look for signs that price is going to turn, move my SL of my original position into a small profit (just enough to cover the initial risk of the additional position). And there I am in a risk free trade that might just work out.............

We are all different, but this is how my trading seems to be going, I am aggressive when there is little or no risk and I am ultra conservative until I get to that point.

We have to think about what the price action is really telling us, because it is telling a story and it is a story that anyone can learn how to read. I am beginning to get a feel for what price action really is, at the beginning, it looked as simple as seeing a pin bar and trading it because I have read that a pin bar is a strong signal for a possible change in direction. There are concepts that you can learn about that will help you read what is happening on a price chart much more accurately. Rather than just knowing what support and resistance, supply and demand, trend lines, candlestick patterns (both individual and collective), volume and order flow are, you need to try and understand why they exist. What is the big money trying to do? These are the guys who actually make the market move and so it makes sense to try and follow in their footsteps.



BY developing an understanding of these concepts, you can put into perspective everything that is happening and make an informed decision on what you want to do.

I want to be clear, none of the above will ever get you to a stage where you can say what the market IS going to do, but it might just get you to a stage where you can more accurately predict what is going to happen.

If you can do that and keep very strict rules about your money management, then you will be on the road to success.

Every day is a day for learning and trading should not be any different.

NIgel - I apologise about the length of this post, I started typing and it just came out, I realise some of these concepts fall outwith the PAST strategy e-book however I strongly believe an understanding of all of the above can only help our PAST analysis.

Stuart

 

[Nigel Price]

GBP/CHF survived the news and now is moving away again. Godspeed!

Click for large view - Uploaded with Skitch​

 

[stuart1984]

If you look at GBPCHF or GBPUSD right now it is a great example of the post I just made above . Look at the charts and speak to yourself out loud about what the candles are telling you, your family and friends may think you have gone bonkers, but who cares!!!

 

[Nigel Price]

We have to think about what the price action is really telling us, because it is telling a story and it is a story that anyone can learn how to read. I am beginning to get a feel for what price action really is, at the beginning, it looked as simple as seeing a pin bar and trading it because I have read that a pin bar is a strong signal for a possible change in direction. There are concepts that you can learn about that will help you read what is happening on a price chart much more accurately.

Great post Stuart, thanks. Spot on, all of it, but this paragraph here particularly spoke to me.

Every single candle tells us something. All of them are communicating to us all the time. What we need to do is take them and listen to what they are telling us. The great skill in trading is to avoid imposing our own interpretation of what is happening in the market over what is actually happening.

That is why I intentionally try to steer clear from precisely identifying candle patterns according to names. I just say long wick and strong reversal. I don't say what length a wick should be, how big a body should be, etc.

I have one of the main books of authority on candlesticks in my office, Steve Nison's - Japanese Candlestick Charting Techniques: a Contemporary Guide to the Ancient Investment Techniques of the Far East

It's an ok book, but for the most part it concentrates on technical details of whether a particular candle or collection of candles precisely satisfies some strict criteria for a "valid" pattern. The implication being that if that criteria isn't met, the signal somehow isn't "valid".

I think that is a very elementary, basic approach to reading price action. A much higher, intuitive, approach is to forget about the funny sounding names, and just concentrate on listening to what those candles are saying, the story they are telling us. Who is in control, bulls or bears? Is one group or the other dominating the market, or is the battle evenly matched? Are the candle bodies long and powerful or small and weak?

With a bit of practice, it becomes like reading a sentence on a page. When you are reading a book, are you looking at each individual letter or spelling, or is your mind focussing on the actual story the words are telling you, not the construction of them.

With price action, it should be the same. You don't concentrate on what a candle might be called, according to Steve Nison, but you focus on the story of what that candle is telling you. You become subconsciously perceptive and are just in tune with the ebb and flow of the market. Rather than swimming against the tide, you just identify the flow and let it sweep you along.

Of course, takes time to achieve this state, to have almost internalised price action right into your mind. I have no reason to believe it's any different to learning to read. And I by no means are there myself fully yet, but that is what I am working towards.

Ok, we're descending into the deeply philosophical now - anyone got a Plato quote I could steal?

 

[stuart1984]

Ok, we're descending into the deeply philosophical now - anyone got a Plato quote I could steal?

Thanks

Haha, yes I think it is time to switch off the charts, trades are looking healthy and it is time to enjoy my day off.

see you all in the forum soon.

Stuart

 

[Abercrombie]

Woke up this morning to find GBPCHF hit my BE stop. Price only went a few pips further before reversing (doesn't it always seem to be that way). Sleeping through the activity of the London session is one of the drawbacks of being in the US and sleeping at night. Oh well, nothing lost (and I slept great - lol).

I had a better entry on GBPUSD and that trade is still moving along well.

Good Luck All.

 

[stuart1984]

Woke up this morning to find GBPCHF hit my BE stop. Price only went a few pips further before reversing (doesn't it always seem to be that way). Sleeping through the activity of the London session is one of the drawbacks of being in the US and sleeping at night. Oh well, nothing lost (and I slept great - lol).

I had a better entry on GBPUSD and that trade is still moving along well.

Good Luck All.

That's a real shame Abercrombie, hopefully your GBPUSD will continue to work and make up for it.

Sometimes I think it might be better off being asleep during the busy market sessions, would you have done anything differently, probably not, other than agonise over a trade when you see it unfolding in front of you and possibly make a mistake due to poor emotional judgement.

The grass is always greener I suppose!!!!!

Stuart

 

[Abercrombie]

Thanks Stuart. I just have to remind myself that we all have our challenges.

I will try to remember your thought about it being better to miss the active market sessions. That will help balance any feelings of frustration.

 

[anukrh]

Hello Nigel sir!

Whether you using horizontal support & resistance levels OR fibbonaci OR psychological levels with PAST ?

Anu

 

[hallettcove]

Stuart

I meant to ask you this on Wednesday when I read one of your posts but I forgot at the time. You said

Hi Nigel

Yes I would like to see the bulls give up about now. I have a feeling the GBP news at 10.30 may make or break this trade.

Regardless, I will be keeping my trade open for the time being.

Stuart

I looked on Forex Factory but there wasn't anything listed at 10.30am for GBP
Which site did you see that?

Les

 

[stuart1984]

Stuart

I meant to ask you this on Wednesday when I read one of your posts but I forgot at the time. You said

Hi Nigel

Yes I would like to see the bulls give up about now. I have a feeling the GBP news at 10.30 may make or break this trade.

Regardless, I will be keeping my trade open for the time being.

Stuart

I looked on Forex Factory but there wasn't anything listed at 10.30am for GBP
Which site did you see that?

Les

Hi Les

I generally use Dailyfx for economic news but forex factory is usually just as good.

I have had a look at the Forex Factory and it did have the news items listed but forex factory looks like it defaults to New York time which meant the news item was listed for 5:30am.

I live in the UK so 5:30am in NY is 10:30am in London (we are currently on GMT +1 because of daylight savings time).

I will try in future to remember to put my time zone in the forum post if I am mentioning a specific time.

Hope this helps.

Thanks

Stuart

 

[hallettcove]

Hello Stuart

Thanks for your reply. I am in the UK but I had never noticed that the news events were all give in New York time.

Les

 

[stuart1984]

Hello Stuart

Thanks for your reply. I am in the UK but I had never noticed that the news events were all give in New York time.

Les

No problem at all Les. Knowing your timezones is fairly important in Forex because it is a worldwide market and so it is always useful to check where the information you are reading is coming from.

Stuart

 

[Jakspratt]

Hi Les


I have had a look at the Forex Factory and it did have the news items listed but forex factory looks like it defaults to New York time which meant the news item was listed for 5:30am.


Stuart

I have found that if you register with FF and log on, the timings on the calendar pages are in your local time

 

[stuart1984]

I have found that if you register with FF and log on, the timings on the calendar pages are in your local time

Thanks Jackspratt, this is useful to know.

Stuart