Welcome!
My name is Aaron Kruger and I created this thread to discuss price action and to create an educational environment that teaches both the fundamental and advanced techniques that create a successful price action strategy. Price action is simply the study of price over time. The best medium to read and understand price action is through candlestick charts. When you combine key price action candlestick with key support and resistance areas, it can create high probably trade setups with high reward and low risk. In this thread the discussion will be all things price action, and focus on the “price action that matters”. When I say “price action that matters”, I am talking about anything that moves the market and creates those powerful and highly accurate entry signals we are looking for as price action traders. My opinion is that if it matters to the market, it matters to me.
Price action is used to help determine if supply/demand is shifting and will soon trigger a price reversal or if price is likely to continue a given trend. I believe that learning price action is fairly easy and provides the best trading edge compared to anything else that may exist out there such as indicators or EAs. Here I will strive to strike a balance between keeping PA as simple as possible, without sacrificing your trading edge. You as a trader will have to decide how many tools you want to have in your trading basket. The larger your trading basket, the more advanced your trading the more profit you will be able to make.
Focus: My primary focus of this thread will be to discuss price action and the patterns/tools I believe are effective in price action. I have found these to be effective over years of experience and study. These patterns/tools will be boundaries of what is discussed here. My secondary goal is to teach how I specifically use price action and method I use to be successful trader. After a trader learns PA and my method of trading, they may want to continue to trade that way, or may decide to tweak it a bit to fit their own personality and style. Either way is fine, and I want to make sure you have the flexibility to make this price action "your own".
Price Action… : The first two words of this thread are “Price Action”. Price action is simply looking at the price movements of a given instrument over time. Every tick on a chart is price in action. Since price action is studying price movement on a chart, we can categorize two different types of price action signals: individual candles and patterns.
Candles - Price action candles are individual candlestick formations that occur such as a pin bars or inside bars. These signal the trader to immediate shifts or continuations in price.
Patterns – Price action patterns don’t focus on the individual candles but rather the shape or pattern of a group of candles. These signal a potential reversals or continuations in price.
…that Matters: Price action by itself generally doesn't tell us much. But when price action occurs at key support/resistance levels, it can tell us key pieces of information about the likelihood of a reversal or continuation in price. Through my experience, I have found are a handful of key S/R areas that the market reacts strongly to. These include horizontal support and resistance lines, trend lines, channels, EMAs, Fibonacci retracements and volume. By learning and understanding everything that the market reacts to, you can know key areas to look for good PA candles/patterns to form, and also be aware of areas your trades might stall or reverse. You can choose to watch or ignore these key areas, but it doesn't change the fact that the market is always reacting to them. What matters to us is whatever matters to the market, and causes reactions from the market. The list of S/R tools I use, I have found to be the ones that the market reacts strongest to.
Conclusion: Hundreds of pages could be written on all of the dynamics of price action and the tools that are used to find those key S/R areas. I won’t individually discuss all of those in this first post, but they will all be discussed and analyzed as this thread develops.
MyFxBook: This is from a demo account, but I for the most part mirror trades from my real account. This way I can post my trading results while keeping some of my financial information private. My biggest fear is that others will use me as a benchmark and this will do more harm than good. So let me say this, we all trade differently and are at different levels of our trading experience. You may do much worse or much better than me but that doesn't mean anything. What matters is that you are comparing yourself to yourself. By that I mean use your own trading history as your standard, and try to constantly improve on it. Also, month by month trading results don't mean much. A quarterly or yearly result will be much more accurate, so don't get down by comparing your months results to someone else. There are simply not enough trades taken in a month to get a good long term view of someones trading ability. Also, I am constantly trying out different patterns and tweaking my trading style, and I use this demo account so I don't throw away my hard earned money on testing. Because of that this won't exactly match my live account but it should give a general idea of my results using the methods I teach here. If I do a lot of experimental trades I will let everyone know as it will probably show up on the trade results.
Why am I doing this? To be honest I think most Forex teachers are full of crap about the success of their methods(pardon my bluntness). They offer valid reasons why they won't show their live trading account and I fully agree with those reasons, but I think there are ways to show your method works without showing the world your personal account info and trading history. As time has gone on I tend to be more and more skeptical of teachers asking for big money for their course but they can't show one iota of evidence that it actually works. I tend to believe that many do not work.
There may be some that are on the fence about price action in general or about the specific way I approach price action and perhaps this will help push them over the edge to join up here. There will always be skeptics and I'm not interested in appeasing skeptics. This is for those here that are risking their hard earned cash by using methods and techniques taught here by me, and this will hopefully give them a little more confidence in what is being taught here.
Quick Navigation (links to key articles and discussions)
Method Basics
Article - "Step 1: Identifying a Trend"
Article - "Step 2: Finding Key S/R Areas"
Article - "Step 3:Watching for Price Action at Key S/R Levels"
Article - "Part 1: Retracement Techniques"
Post - "The 5 Star Rating System"
Post - "Pairs I trade"
Post - "Trading Rules For Pinbar, Engulfing bar, Inside Bar, Morning/Evening Star, 2 Bar Patterns"
Price Action Candles
Video - "How to Identify Market Structure and What a Pin Bar Is"
Video - "Price Action Pin Bar Tutorial #2"
Price Action Patterns
Video - "Price Action Flag Pattern Tutorial"
Post - "Bearish Flag (Entry/SL Techniques)"
Post - "Broadening Top"
Support/Resistance
Post - "Noise On the Charts"
Post - "What Time Frame To Apply EMA's"
Trade Management
Post - "Warning Signals DURING a Trade"
Post - "Take profit techniques"
Post - "How to Move Your Stoploss"
Money Management
Post - "Fixed % Vs. Fixed $"
Post - RR Calculation
Trader Psychology
Post - "Reduce Emotional Drain From Trading"
Market Psychology
Video - "Why Pin Bars Form"
Trading Plans/Journals
Member Contribution - "Sample Trading Plan: Template #1"
Member Contribution - "Sample Trading Plan: Template #2"
Notable Chart Analysis
Post - "Pin Bar H3"
4-5 Star Chart Setups
Post - "USDSEK - Double Bottom Retest + Inside Bar False Break - 4 Star"
Post - "CADCHF - Rising Wedge Pattern - 4.5 Star"
Post - "GBPCAD -Multiple Pin Bars - 4 Star"
3 Star Chart Setups
Post - "NZDJPY - Resistance Turned Support Pin Bar - 3.5 Star"
Post - "GBPCHF - 2 Bar Reversal - 3 Star"
Misc. Articles
Post - "Why most Price Action Guru courses DO NOT work"
Post - "What To Do When You Are Losing"
Post - "Times When PA Trading and Retracements Don't Work"
Post - "The Affect Of News On Price"
Post - "When Price Stalls Right Before TP"
Post - "To Trade Or Not To Trade During News"
FXCM FAQs
Post - "Removing 20 symbol limit"
Upcoming Articles:
Part 2 of Retracement Entry Techniques
Trading Inside Bars
Trade Management
Rules
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.
Topics Discussed Here
Price Action Candles
Price Action Patterns
Finding Key Support/Resistance Areas
Volume Analysis
Managing Risk/Reward
Stop Loss, Entry, Profit Techniques
Trade Management(Pyramiding Into/Out of Trades or Holding Flat)
Money Management Methods(Fixed $ and % Risk)
Trader Psychology
Market Psychology
Price Action That Matters
cool, I'm impressed. 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 failed because the market is too complex, as is the human condition (greed / fear, etc). 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.
Quote Originally Posted by charlietrading View Post
Wow how encompassing and fantastic this thread sounds I can't wait to see what comes of it.
-I've heard a lot of people use the 50 EMA as dynamic S/R, but can you explain why you use the other moving averages?
-What TF's do you trade and why?
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 100 EMAs I believe are the most widely used and the market often reacts to these levels. EMAs themselves are just ways for people to measure to strength and direction of a currency compared to what it has done historically, but enough traders use them and trade off of them that they really can become key areas of S/R in there own right. The 21 EMA is mostly a short term EMA, and really shines in a strong trending pair. It can help you jump the momentum at the best price. The 50 and 100 EMA are more longer term EMAs that a longer term traders tend to watch. Again this is proven by how often price reacts to these levels.
I stick to trading H1 and higher although I can't remember the last time I took a H1 trade, primarily H4 and D1. 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 are watching for areas where the overall supply/demand is shifting among investors. 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.
Quote Originally Posted by UncleSteve View Post
cool, I'm impressed. 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 failed because the market is too complex, as is the human condition (greed / fear, etc). 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.
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. Overall I have found very little that pay for systems/methods offer than I wasn't able to find on my own doing some google searching. My ultimate goal is that free sources of price action education become more common, such as this thread and the blog I run.