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Priceactiontrader

Learn What is PULLBACK and WHY It is Important For TRADING In the today's post, we will discuss the essential element of price action trading - a pullback. There are two types of a price action leg of a move: impulse leg and pullback. Impulse leg is a strong bullish/bearish movement that determines the market sentiment and trend. While a pullback is the movement WITHIN the impulse. The impulse leg has the level of its high and the level of its low. If the impulse leg is bearish, a pullback initiates from its low and should complete strictly BELOW its high. If the impulse leg is bullish, a pullback movement starts from its high and should end ABOVE its low. Simply put, a pullback is a correctional movement within the impulse. It occurs when the market becomes overbought/oversold after a strong movement in a bullish/bearish trend. Here is the example of pullback on EURJPY pair. The market is trading in a strong bullish trend. After a completion of each bullish impulse, the market retraces and completes the correctional movements strictly within the ranges of the impulses. Here are 3 main reasons why pullbacks are important: 1. Trend confirmation If the price keeps forming pullbacks after bullish impulses, it confirms that the market is in a bullish bearish trend. While, a formation of pullbacks after bearish legs confirms that the market is trading in a downtrend. Here is the example how bearish impulses and pullbacks confirm a healthy bearish trend on WTI Crude Oil. 2. Entry points Pullbacks provide safe entry points for perfect trend-following opportunities. Traders can look for pullbacks to key support/resistances, trend lines, moving averages or fibonacci levels, etc. for shorting/buying the market. Take a look how a simple rising trend line could be applied for trend-following trading on EURNZD. 3. Risk management By waiting for a pullback, traders can get better reward to risk ratio for their trades as they can set tighter stop loss and bigger take profit. Take a look at these 2 trades on Bitcoin. On the left, a trader took a trade immediately after a breakout, while on the right, one opened a trade on a pullback. Patience gave a pullback trader much better reward to risk ration with the same target and take profit level as a breakout trader. Pullback is a temporary correction that often occurs after a significant movement. Remember that pullbacks do not guarantee the trend continuation and can easily turn into reversal moves. However, a combination of pullback and other technical tools and techniques can provide great trading opportunities. Please, let me know if you have any questions! Also, please, support this post with like and comment! Thank you for reading!
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OANDA:XAUUSDEducation
by VasilyTrader
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AUDCHF: Swing Short Explained 🇦🇺🇨🇭 On the today's live stream, we discussed AUDCHF. The market is trading in a long term bearish trend. In the middle of August, the market started a correctional movement within a bearish flag pattern. After the price reached the confluence zone between a horizontal resistance and a falling trend line, the market dropped and violated a support line of the flag. It will most likely push the prices lower to 0.5626 - current low. ❤️Please, support my work with like, thank you!❤️
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by VasilyTrader
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🔴 MATIC Hello Dear friends The price chart on the daily time is below a downward trend line and so far this trend line has been preserved. The indicator from RSI has issued a negative divergence on the four-hour time frame. And as we can see, the resistance areas are not fully consumed. But we lost support areas in almost every corrective move. Currently, it seems that the possibility of forming a corrective trend is much higher and the possibility of breaking the downward trend line from this range with this movement momentum is very weak. What do you think?
MShort
by BiTBingo
If It Looks and Acts like a Chicken, It's Probably a ChickenA foundational concept in "pure" price action trading that underlies all trading decisions is that price will never "exactly" repeat itself. What I mean by exactly is that current and future price will never be 100% identical to past price. At first glance it may seem the same, but when boiled down to the lower time frames, you'll notice that current price is ever so slightly, different from past price. This makes more sense from a philisophical point of view. If the markets are a living breathing entity just like you and I, it makes sense that past price will never repeat itself to the perfect degree. Similiar to the way you and I, as humans, will never be identical in terms of actions, thoughts and biological makeup when compared to past versions of ourselves. Now, if the price action trader views the markets in this way, it can make a non-price action trader confused as to how a price action trader can profit from a chaotic entity such as the market. Afterall, a price action trader solely uses price to analyze the future direction of price. Let me explain to you how. We all know the phrase, "If it looks and acts like a Chicken, it's probably a Chicken". Meaning that if the characteristics of a chicken are there, well.... it's probably a chicken. Infering that 100% confirmation that a chicken is in fact, a chicken, is not nessecary for a chicken to qualify as a chicken. It's the same in price action trading. If your price analysis dictates that price will go up, even though there are some pieces of the puzzle missing in your analysis, your analysis qualifies as legitimate analysis. Now don't get me wrong. Just because your analysis qualifies as legitimate analysis doesn't mean price will follow in suit. That's an entirely different subject. The point I'm trying to get across in this post is simple. Price Action analysis cannot be so rigorous that you must wait for a 100% replication of past price. Simply for the reason that past price will "never" identically repeat itself. This pitfall of waiting for perfect replications of past price leads to the trader becoming overly conservative. Causing you to miss out on trades that had sufficient analysis, but was missed out on due to the "misunderstanding" that past price repeats itself. So the next time your analysis states that price should go up; don't let the inevitable nature of markets to never repeat itself stop you from entering that trade. Remember! If it looks and acts like a chicken, it's probably a chicken. I hope this helps! Have a great day! Ken
Education
by TradingForexPriceAction
5
Analyzing with PrecisionWhen it comes to price action trading, price analysis is at the foundation of our trading methodology. This analysis dictates all our eventual actions in trading. So seeing that price analysis is at the core of the price action trader's trading, we want to assure that we analyze with as much precision as we can. So how is that done? Let me explain how I go about making sure my price analysis is as precise as possible. To begin with, it starts with a "state-of-mind". A clear mind that can notice the subtle hints in price that sway our analysis. In order to achieve this state-of-mind, one must understand what a "hasty" and "impatient" mind is in comparison to a "calm" and "patient" mind. The impatient mind is easy to replicate. Try breathing with fast and short bursts; similiar to the breathing pattern one gets when sprinting. Notice the impatience in the mind.That although seems sharp, lacks the serenity in the mind that one has when they are not sprinting. On the other hand, the calm and patient mind can be glimpsed through remembering what your mind feels like on a Sunday morning, in which you have no work, scheduled engagements or activities you must attend to throughout the entire day. This serenity that you experience is the patient mind you want to adopt when analyzing price. With this state-of-mind comes an effortless yet powerful foundation which allows one to analyze with precision. It's quite counter intuitive that precision comes with such relaxation. So how do I acquire this skill you ask? Well, it comes with practice. If the ability we wish to achieve is a relaxed mind when analyzing, all we have to do is "take our time" when trading. However, this is easier said than done. The markets, especially on the lower time frames, tends to activate the "impatient mind". Where we are analyzing while literally having the same mental state as when we're sprinting. Are breathing shortens and speeds up in repetition. Breaking this habit may take time. But if practiced, anyone can achieve a patient mind whilst analyzing price. Start by changing your eating habits. Most of us tend to finish our meals in 5-10 minutes. An outcome of our busy lives and also a great example of carrying over our impatient minds into moments of the day when relaxation should come naturally. Begin making it a habit to chew your food 50 times before swallowing. As you slow down the pace in which you eat, notice the sense of serenity and calmness in the mind. Compare it to the quality of the mind when eating fast. There should be an obvious difference. After 3 days of implementing this habit, slow down other aspects of your daily activities to acquire the same effect on the mind. You'll begin to notice the connection between the mind and speed of activity. If you hurry the activity, the mind will follow. If you slow down the activity, the mind will slow down and become more relaxed, patient and serene. Upon testing this correlation and becoming more adapt to it, try it on your price analysis. Take your time with your analysis. Slow down your analysis. If time doesn't allow, decrease the pairs that you analyze or trade the higher time frames. If you do, you'll begin noticing the subtle hints in price analysis that perhaps were hidden from you while you adopted an impatient mind. I hope this helps! Have a great day! Ken
Education
by TradingForexPriceAction
3
How to Stay One Step Ahead of the MarketHey Guys! As traders, we always want the sense of being one step ahead of the market. In other words, what's happening with current price should not be of consequence to your trading. It's just another bit of information that's added into your analysis of what will happen next. Now the polar opposite of this situation is chasing the market. Where a trader is reacting to what price is doing currently. After years of trading, one thing I can state with confidence, is that if you're chasing the market and reacting to current price, you won't make it in trading in the long-term. I mean, you may get lucky from time to time, but ultimately you're luck will run out. So the question becomes how does a trader stay one step ahead of the market? At the basic level, if a trader can stop focusing on price "direction", and instead begin focusing how price travels from point A to B, they have a shot at being one step ahead of the market. Let me explain. As you guys know, on the Eur/Jpy pair during the month of February 2022, I was consistently taking short trades as price pulled back to the 132.80 levels. Now this is even if price at the moment of entry was moving up. ( I wasn't focusing on price direction) Instead, I was focusing on "how" price moved from point A(on the chart) to point B.(on the chart) Initially, there was 1 minute strong long strength sparking the explosive move up however, there was even stronger 1h strong short strength confirmed on the lower time frames in the beginning of the 1st range. At this point I was already viewing this pair to be short biased,(I was one step ahead of the market) and even if price continued up, as long as there was no confirmation of further long strength I will continue entering short positions. I was able to confidently take multiple short entries because "how" price was moving from point A to point B was not indicative of a long market. Or like I always say, " The lower time frame's price action wasn't complimenting the higher time frames move up." Then finally, there was further 5 minute confirmation of strong short strength and price began its descent. However, if a trader at this point was basing their trades on "current price direction", they're likely to take long positions on this pullback for a possible next move up. A devasting outcome as you can see. So if you always find yourself on the wrong side of the market, firstly, stop putting value onto current price direction. It is just a result of previous price action. Begin asking yourself, "What is the context of the current price direction". Or even better, learn how to read price to know how price traveled from point A to point B and begin staying one step ahead market. For if you a can do this, perhaps you will have a shot at staying in this game for the long haul. I'm sure you guys have questions! Don't hesitate to ask! I'll gladly help! Have a great day guys! Ken
Education
by TradingForexPriceAction
6
NATGAS/USD Daily Timeframe Price action AnalysisOANDA:NATGASUSD Hello Traders, Here is my Daily timeframe price action analysis. After reaching a 12 year high in October 2021 of 6.409 , the price trended downwards to the current yearly low and key level of 3.6 , which was respected multiple times throughout 2021. We see a turn around in the daily trend at the key level of 3.6 and have been trending upwards since. Please note the key level from 4.65 to 4.75 , which again, was respected multiple times in 2021, currently the price is vibrating around this level and has been doing so since 16th Feb 2022. 4 hourly timeframe analysis alongside potential position entries to follow this evening. Please leave a comment and let me know what you like/dislike or agree/disagree with.
OANDA:NATGASUSD
by jslcox
Trading Price Action in Volatile TimesHey Guys! The world markets are on a wild ride at the moment. With urgent news being released by the day. Traders around the world are trying to guess the next fundamental news to be released and further guess how the markets will react. The world markets become a huge guessing game arena.... Now, that's fine if that's your cup of tea. The adrenaline rush or even the pure intellectual rush one gets from contemplation(speculation) is exceedingly addictive. For me however, what happens in the world really is not of consequence to how I trade. Price action trading reads price and simply acts on its messages on a day to day basis. Whether the markets are in the wild west, or if it's peaceful like a calm lake. It's all the same. Some say that the world of business is all about people. If you understand people, you'll do fine. In trading, its all about price. If you understand how to read price , you'll do fine. Trading Price Action takes away the stress that comes from a turbulent and constantly changing world by exponentially diminishing the "guessing" aspect of trading. To me, that's a huge merit in terms of my quality of life. Just a thought! Have a great day guys! Ken
Education
by TradingForexPriceAction
1
Mandatory Price PatternsHey Guys! When it comes to price patterns, there are many. I mean, look up "price patterns for trading" on google and you'll find countless variations. Just like in the movie "A Beautiful Mind", where Russel Crowe's character locates patterns in Russian Codes; a price action trader, can find endless variations of patterns on their charts. However, these variations actually deter the trader from their sole purpose of trading. Which is to make money. Period. With so many patterns multiplied by the different time frames that a trader utilizes in their trading, it is bound that there will always be multiple price patterns on the chart at any given time. What does that do? It confuses the heck out of the trader. That said, price patterns are a foundational element of price action trading, and is necessary to trade at higher levels. But it is not the amount of patterns that a price action trader must master. If the price action trader can master the Double Top/Bottom, and the Head and Shoulders patterns at the initial level. Out of my experience, these 2 patterns alone are more than enough to extract consistent profits from the markets. Simply put, it's about quality over quantity. That's it! Hope this provided some insight into price patterns! Have a great day! Ken
Education
by TradingForexPriceAction
6
Characteristics of Price Action TradingHey Guys! I know price action trading can be somewhat a mysterious and confusing style of trading. So I just wanted to jot down the basic characteristics of price action trading to help clarify this ambiguous trading style. #1 Price action trading only uses price action to make trading decisions. No indicators, fundamental analysis, intermarket analysis, etc... Just price alone will do. #2 The Price action trader "Reads" naked price ( using candles, trendlines, price patterns, distinct ways that price itself fluctuates) to predict how much future long/short strength there is in a asset and makes trading decisions. #3 To the price action trader, misanalysis is never the fault of price, fundamentals, or any other analysis method. The fault is always on the price action trader's misinterpretation of price. #4 Price action trading techniques can be directly applied to any time frame, thus can be used for any style of trading. Long term/Swing/Day Trading. Moreover can be applied to any asset class.(though some techniques must be tweaked somewhat.) #5 The price action trader does not require a logical understanding of "why" price moves in a given direction. They have the mentality that if it works, there is no reason or need to explain it. #6 To the price action trader, current price is more valuable than past price in terms of analysis. So what happens closer to current price has more weight in the analysis process. Thus must watch current price and cannot just buy /sell and let a higher power take the wheel. That's it! Hope this clarifies price action trading a little! Have a great day guys! Ken
Education
by TradingForexPriceAction
3