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A Beginner in Price Action Trading

 
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shockr08

A Beginner in Price Action Trading

I used to trade on the 1H charts only. I used a couple of MAs as guides and usually Bollinger Bands. I had limited sucess after 3 years of using this style of trading. I had seen a few blogs about price action traqding where no indicators were used. I thought this was absurd! I mean seriously, how could anyone trade without those trusted indicators to guide you through the maze of trading? But I was curious. I followed a guy on Forex Factory for awhile. He was making money but it seemed like such a risk. How did this guy know when to trade up or down; it seemed like guess work to me. But I did learn some about structure. I read some articles about trading based on structure, but they were mostly just advertisements. 

But about three months ago I watched the Trading Room. Shawn made about 300 pips that day and I was mesmerized. How did he do that? So I started watching the videos on previous Trading Room sessions. It became more clear that what I had seen in the past about trading price action was a very viable way to trade. So I stopped trading on the 1H chart and started with the EU on 1m and 5m as they were doing in the Trading Room. I thought if I could only make 100 pips a day consistantly, I could make my personal income goals. If I wanted to earn more I would just need to increase the trade amount. 

So I have been working on the system as Shawn shows combined with some of the info I have learned about structure. It has been fun as trade sessions are much shorter. I used to set up trades and manage them all week. Now I am trading only 1-2 hours in the morning and enjoying the rest of the day doing what ever I want. I'm retired. Living in Southern California, I enjoy riding my motorcycle most of the year. I usually will go for 300-400 miles a day. I can trade in the morning and be on the road after a quick breakfast.

I set up my charts with some left overs from my past. I have an RSI only to confirm direction. I like the Apiary Pivots and I make them as small as I can. I think I am using a wingding of 160. I could possibly do without them. The key to trading price action seems to be watching the higher highs and higher lows when going long. Or watching the lower highs and lower lows when going short. Structure. When the pattern is broken, you are likely to see a change in direction. When going long you watch for a pullback to enter a new position. The same with going short. The difficuly seems to be when to close. I look for previous support/resistance. Another old skill, I use major pivots from a 4H chart to mark major past turning points. I have not experimented with this but when trading on the 1m and 5m I suspect I should be using past pivots from 1H chart. I'm going to try that next week. More important I find that consolidation tells the best time to get out of a trade. I you find a few candles going sideways, it's time to get out. You can always get back in if things keep going the way you originally thought. Consolidation can be a turnig point, so be ready to start trading in the opposite direction. Actually it's best to trade in the direction of the established trend. But as a seasoned trader you will have a good idea where the market is going. The previous S/R also gives a good indication of a change in direction, or at least a strong hesitancy in the market price action.

Now the hard part. Since I am learning something new I expected some losses. I have lost more in the last 3 monthssince joining the Hive than I did with my old system. But I have freed up some time. I set a target of 100 pips /day or trade from 7-9 PDT. I have gone to the 5% max 3 times. Again, some of the old habits are giving me trouble. It is difficult to wipe the slate and strat clean on a new system. I tend to hold on to trades too long. Since these charts are so much faster than the 1H, there is no time to let things ride. I have placed my stops at 12 pips and TP also at 12 pips. Most of the time I get out before either is hit.

But the good news is that this is the last requirement to move into Gold I! Yeah!

 

 

Thu, 06/14/2018 - 6:47pm
 
hakchinoy

I also trade pure PA with naked charts. You don't need to get rid of your H4 R/S, because they work great--even when trading off M1 or M5. In fact, I prefer to label the major W1, D1, and H4 R/S zones, and I occasionally will label any monthly R/S zones that are within my daily/weekly trading range.

Additionally, there's no need for you to abandon your H1 approach. Why not use a combination of H1, M5, and M1 charts? You could use H1 for trend (and perhaps for trade ID), and you could use M5/M1 for trade entry/management (and perhaps for trade ID). In fact, that's exactly what I use--except sometimes I prefer to use H4 instead of H1 for trend. Either way, that system works well, and if you were to adopt that approach, then you'd be able to combine some of your veteran skills with your recently acquired ones (a hybrid approach) which would give you the best of both worlds.

 
Rookie

@shockr08, yes what he said!

 
unclfestr

I also have the same basic ideas with PA, S/R just wish I was more consistant + not -

 
shockr08

Thanks guys for the helpful hints. On S&R lines, I can understand that all S&R at higher time frames are important. But since I am trading on 1m-5m charts for only 2 hours a day it seems the most immediate S&R would be ample. I have 2 monitors. I run the 1m and 5m on Alveo by splitting the chart as Shawn does. I also run a third chart on my other monitor. It's a MT4 on which I run a 15m, with access to zall the time frames. I do use this before starting trading to get the scope of where the markets is going on the EU. Helps to know where the market has been to get an idea as to where it is going. I'm am experimenting.

 
Rookie

@shocker08, this may be a little basic PA but its all there really is.
https://apiaryfund.com/forum/fast-track-funding-0
https://apiaryfund.com/training/document/basic-trading-concepts-tactics

 
shockr08

Thanks again for you help, guys! Since I am experimenting, I decided to use the approach that Hak mentioned and my intentions as well. I set the 1H S/R lines on the 1M chart that I trade. These lines turn out to be very good! On the 5M chart I installed the 240 and 1D S/R lines. These give very good approximate positions. For the last couple of days I have had the "Risk Today" positive!

 
Rookie

shocky08, smart, very smart; I can't begin to tell you how much I have learned from Hak. So I'll let him tell you;
https://apiaryfund.com/forum/are-monster-returns-even-possible
https://apiaryfund.com/forum/hakinator-gt-microburst-breakout-strategy

 
shockr08

I have found a very good indicator on MT4 for support and resistance. It's simply called: Support_Resistance.mq4 & Support_Resistance.ex4. I don't know how to down loan the files here. But what this gives are S/R lines for any time frame you want. the line all have different colors. So you can put multiple lines on one chart and still know wht that line reprsents. I and using a 15m chart on MT4 and have red .lines for 60m S/R, gold liines for 240m S/R, and aqua lines for D1 S/R. It's great. I wish someone could program this into alveo!