Method Basics Article - "Step 1: Identifying a Trend" Article - "Step 2: I want to make sure this doesn't become a run-away thread and lose its value as an educational tool in price action trading, so I want to lay out a few rules and try to focus on the most important aspects of price action. I will also try and create a standard set of terminology to use for the sake of keeping the thread as uniform and easy to read as possible.
The rules of the thread will continue to develop and grow as things unfold here. To make it simple, if it isn't in the approved list, then we won't discuss it. If you think something should be added to the approved list, then please private message me about it and I will decide if it should be added. Price Action Candles in no specific order: Price Action Patterns in no specific order: Trade Quality Measurement The 5 star system: As long as the trade requirements are met, the setup is now "tradable".
Not all trades that fall within the core requirements are of considered high quality though. I tend to filter out trades I deem as lower quality, and I may increase or decrease the amount of money I risk on a trade depending on its quality. It's important to have a system of rating the quality of your trade. Here we will utilize a 5 star system. A 1 star trade merely falls into the core requirements but may have other poor qualities increasing the risk of the trade.
A 5 star trade is one of highest quality, is a perfectly formed price action signal with great RR and very little resistance along the way. Although most trades will fall in the star range. Remember that measuring the quality of a trade can be very subjective, so if you don't agree with someones rating of a setup, you can respectfully ask them to expound on why they gave their setup a certain rating. After I find a trade that meets my core requirements I then run it through my personal list of filters that are apart of my trading method.
For you as a trader, your filters may include no counter trend trades, no inside bars, or avoiding NFP. You may also filter out trades that are too low in quality I. There are many filters a person can use to make sure they are taking the highest quality trades with the best edge. Here we will teach you about all of the dynamics of a trade and then you can make an educated decision on how you want to filter your trades. Price action occurs on all financial instruments such as currency, precious metals, indices and stocks.
I am not picky on what currencies I watch as they almost all produce good price action. I don't try and get to know the currency or the news behind the currencies, I just want to be watching for price action signals at key PA levels. Finding price action generally takes less than a minute on any candlestick chart.
You are allowed and encouraged to post questions, join discussions, answer questions and post trade screenshots. When posting information about a trade you "must" have a chart showing the trade being discussed with stoploss, entry and take profit clearly labeled. You must also post your opinion of the quality of the trade using the 5 star rating method. This is for your benefit because it will help you begin viewing your trades as unique and of different quality.
Others will also benefit from this because they can ask you why you are rating your trades a certain quality. This will help create healthy educational discussions about trade setups. You must also provide at a minimum, a simple list of pros and cons of the trade you are posting.
Remember though, the more detailed your analysis is of the trade you are posting the better. Not only will writing the commentary help you learn, but thousands of others will also read your post and learn from it.
Wow how encompassing and fantastic this thread sounds I can't wait to see what comes of it. I'm a Christian, husband, dad, mentor, manager, trader, in that order - mentor barely deserves to be in there because I have so little to teach, but I have tackled other peoples' problems with them a few times As a trader, I have tried it all I love entropy and chaos theory and the way it can describe creation, so technical trading and fractals etc was my first shot.
I have started to realize price action especially in analyzing the daily candles is an accurate description of the psychology of the larger population, and it all falls into place. I did pay to sign up for dnb forex price action but every discussion helps to understand, so I hope this thread will go far.
Whenever you help someone, at worst you learn about what you're doing and at best some good comes of it for both of you. I'll be following this thread with interest.
Your the first poster, congrats! Welcome to the thread. I think it will become a great hub for people wanting to learn price action. The 21, 50 and EMAs I believe are the most widely used and the market often reacts to these levels. It can help you jump the momentum at the best price. Again this is proven by how often price reacts to these levels. To understand why I believe 1 hour is the lowest you should go you first have to know what is moving price at any given moment, which could be news stories, day traders, EAs, banks, large corporations converting money, etc.
There really are a ton of things that move the price around. Going lower in TF is like taking a magnifying glass and amplifying the effects of all of the little things that move price. Everything I just listed is noise, and as PA traders we don't care about any if that. We receive those signals from false breaks that occurs at key levels. The key support and resistance levels tell us historically where the market supply and demand has shifted, and the price action false break give us the actual signal that momentum is shifting.
By zooming out of the market we are smoothing out the noise and seeing supply and demand at its purest. An 8 hour candle encompasses a whole trading session and tells us how price started and ended in a given session, a daily signal gives us a better idea of the price story as all of the worlds major markets have weighed in on the price in that candle.
At the end of the day we don't care if corn crops are down in South Africa, or if Apple converted 5 billion USD to CHF, or the jitter from a million EAs auto trading, all of this will kill your account because all of these little noisy things will stop you out.
We just want that pure price action and to be trading with those shifts in supply and demand. Hey Steve, it sounds like you are already starting down that journey of learning price action. For some people it is the first thing they ever learn and for others it's a long road of indicators and systems. I hope this thread can become a good source of learning PA for you. I do think there are some great "pay for" methods out there, but they are few and far between.
I hope it is worth the money. My ultimate goal is that free sources of price action education become more common, such as this thread and the blog I run. I have always admired your intellect on PA.
And willingness to give newbies your wisdom. I have been into forex for little more than 6 month now and luckily happen to start with PA after finishing babypips school. Being a pupil of PA. I would like to get the knowledge it doesn't matter which teacher it come from. My ultimate goal in forex journey is to understand PA and then trade whichever PA way I will be comfortable with.
Furthermore, I would suggest you keep a few reserved post at the beginning of the thread so in the future if this thread takes off there is somewhere where you can post important information. Nice to see that you have your own thread. I am the follower of Mr. J thread and always hope to learn more new things. Hey Boynep, it's good to see you here! There is no doubt that PA is all you will ever need to know to become a successful trader. While it is fairly easy to learn, it takes a lifetime to master.
I like to believe that I am just getting started in this journey, and have plenty of room to grow and perfect my trading. With your experience in PA I think you could could provide a lot of value here. I hope to see you around more. I was going to try and create a 3rd post and reserve it for when the thread grows but by the time I finished the first two posts people already started commenting, haha.
Oh well, I have my first post for introductory and my second for rules and guidelines. Shane thanks for stopping by. Johnathon has a great thing going over their and it is a beast of a thread but I felt it was to restrictive, both in the method he teaches and the fact the tread is only the absolute basics. I will get a feeling for things here once the thread starts moving but I think we can strike a good balance for both beginners and the more experienced traders.
The high and tight flag is my favorite pattern and helped me achieve a 1: That high RR only happened because two high and tight flags formed during the trade and signaled me to not only keep the trade open but helped me to decide to pyramid into more positions. I closed the trade with twice the positions than when I entered, and my account had almost double in 4 days.
It was price action at its best! My name is Willy, and I want to state that I am a Christian, son, physicist, science educator, stock investor and Forex trader. As a Christian brother, allow me to congratulate the beginning of your own thread, Aaron!
I know you really have it in you, and once you mentioned that you had even earned higher income from your trading than your own daily job, I agree that you really should consider doing this full-time as a professional trader yourself. I also run my own blog about investing and trading, and I could tell you here that some of my own strategy are not something that I openly discuss at 'the other thread'. I'm looking forward to reading more about this magnificent thread, Aaron.
But of course, you can always simply call me wm and I'll call you krugman25, just like old time. Maybe you confuse the name with the basketball player "Shaquille O'Neal".More...