Hello Traders,
here’s another trade example of how to trade the obvious. If you want to learn how , download this ebook:
But first up…
Ok, let’s get to it….
Everything here is just price action trading. Nothing else. Its all about price action and behaviour. When you trade this way, there is less confusion and much more clarity.
I’m not saying this is the right way to trade. That’s just my belief…I may be wrong or right, but who cares? What works for me may not necessarily work for you, because we are all different… remember that.
THIS BUY TRADE WOULD NOT MAKE SENSE IF YOU JUST SAW IT LIKE THIS…
This is the daily chart of EURAUD.
BUT WHEN YOU PUT SOME STRUCTURES INTO PLACE, IT WILL START TO MAKE SENSE…
This is the same daily chart as above with trendlines drawn. Now, it starts to make sense why I took the trade.
AND WHEN YOU DIG FURTHER DOWN, IT STARTS TO MAKE EVEN MORE SENSE..
This is the 4hr chart. Notice the pin bar and how it bounced from the upward trendline? Can you notice also 5 candlesticks near the trendlines and how they have shorter lengths as well as very short body lengths in comparison to the prior candlesticks?
What does this tell you? Answer: Downward momentum is slowing down.
This was not the timeframe I used to enter.
THIS IS THE 1HR CHART…
You can see there’s a doji cross candlestick(almost spinning top candlestick as well)which touched the trendline. This was a good buy signal in my opinion. But its not the timeframe, nor did I used that candlestick signal to enter.
THIS IS THE 15 MIN CHART
I was watching the price action in this timeframe and my buy signal was a pin bar. See chart below.
WHERE IS THE POTENTIAL LEVEL PRICE WILL GO IF MARKET MOVES AS ANTICIPATED?
Often, when I take trades like this, even though I took it in the 15min timeframe, I step back out into the larger timeframe like the daily and ask myself this question:
“Where will the price most likely go if the market moves favourably?”
The answer to the question will be my profit target. See chart below:
Does my profit target always get hit? No.
Why?
Because the market can change its direction and I get stopped out with a loss or my trailing stop loss is hit and I may walk away with a small profit.
Who knows? The price seems like its really going to head up nicely but this can change in a few hours and it can come down again and hit my stop loss…If that happens, I going to walk away with a 16pips loss (if I have not move my stop loss to breakeven by that time).
But if my profit target gets hit, I walk away with a lot more than I risked initially.
TRADE UPDATE 10th Jan 2015
Hello Traders, just an update on this trade I took. Price came back down and I got stopped out with a 16 pips loss. See chart below:
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