1.. This is a simple price action trading strategy the works on the basic principles of how price moves.

Transcription

1 1.. This is a simple price action trading strategy the works on the basic principles of how price moves. Price is not random at all and can be tracked in flows from one time frame up to the next and back down again. We can read this flow of price to determine the future direction and likely stopping points in any market and any timeframe. 2. For price to change direction the pattern of opens and closes must form an engulf, sometimes this will take more than 1 bar. Here is a chart with just opens and closes, see how price can only change direction when the pattern of opens and closes switches... (we call this closing over s/r on it's own timeframe). So here's the exception... and it's obvious with some thought... sometimes the engulf has already hit the higher TF SR EXAMPLE: H4 GOLD & DAILY GOLD

2 3. And here is an example of price taking more than 1 bar to engulf... I call these a 2 bar engulf. It is just as reliable as a regular engulf and in terms of price action and s/r it means exactly the same thing.. Focus on the pattern of opens and closes. RR 4. Now this is the important part... what does it mean when price closes over s/r on it's own timeframe? what does an engulf mean?

3 1. If price closes over s/r on its own timeframe then it will continue to the next higher TF SR This is the same for every TF... H1 ENGULF - TO H4 S/R H4 ENGULF - DAILY S/R DAILY ENGULF - WEEKLY S/R The only time this can fail is if the engulf bar has already hit the higher tf s/r So now we can determine where price is likely to go. how can we find low risk entries to get the big risk to reward trades.? First we are going to wait for H4 to close over s/r and signal a move to the next daily s/r at least, this can be an engulf or a 2 bar engulf... Then we are going to switch to m15 and trade the next m15 engulf / inside bar or outside bar in that direction. EXAMPLES: EJ H4 EJ M15

4 -- another example.. USD/NOK H4 CLOSES BELOW S/R DROP TO M15 AND TRADE NEXT SIGNAL

5 --- Brent futures

6 8. Brent example with h4, m15 entry and daily s/r target 9. Some people might argue that when their H4 bars start and end will make a difference to results.

7 You will get some variance in opens/closes that's true, but... if the market is really selling off... you will both get the signal, you may have a different pattern or get the signal at a different time... but over time it make hardly any difference at all to the results. So one may get an engulf and the other a two bar engulf, one may get an outside bar the other an engulf... Remember it is impossible for price to turn around on any timeframe without price switching from closing over the previous bar to closing under. Opens and closes show the weight of bias and direction, I run two accounts on different h4 opening times both accounts offer the same opportunities (with very few exception). With regards S/R (high/lows)... the swing points are pretty much the same... Compare these 2 h4 charts from different brokers Here is a nice example of how we can use the principles to track price. RR Example is gold daily and weekly

8 20. For support and resistance I am looking at the high, low, open and close of a bar, the most recent bars hold the most relevance. The high and low can be used with the pattern of closing of the open/closes to read where price will go.

9 When we look at a swing on a chart we are actually looking at a high and a low on a higher TF, that gives us some information about where support and resistance are, what it doesn't tell us is where we are pushing from and where we are going, for that we need to see the open and close on the higher TF. Have you ever noticed that if a bar just closes up it will most likely be followed on the next bar with a move (not necessarily a close!) in the same direction, at least to the next s/r on its own TF, it's not always true because sometimes it would of already hit a higher tf s/r. When a bar closes up over a previous down close there is a switch of control... It's pretty hard to describe in a single post, but I will keep posting examples until you spot it... and it's a beautiful thing when you see it! EXAMPLE1: See how the EU weekly downtrend had a little pause at some s/r but didnt really change direction until we hit a monthly s/r line and that forced it to 'engulf' and close over a previous down bars open? Once that occurred we knew we would go up to a monthly line... and it did In the next picture we can see some H4 swing points, I have marked them and placed s/r lines on them, when we switch to a higher tf chart, weekly in this case we can see that the swings are just the points/extremes on weekly bars. What's the difference? well if we know its a weekly trend we know it won't stop until we hit a monthly s/r, so there is no point putting an order on a daily line and expecting it to reverse? you may get a retrace but good luck!

10 -- daily s/r on EJ

11 22. Expanding on the idea of using closes, engulf's to tracked movement here is a H4 example, See how the close up gives us a HINT that the uptrend will continue, a hint that we have found the higher tf s/r... then when we get the close over we have confirmation of the move to the higher TF, Hint's and confirms, on all timeframes, on any instrument, this is the nature of price. Have a look at your charts now, see how clear price action really is. remember the 2 important concepts are: 1. if price closes down, the movement down will continue until the same TF S/R (unless it was hit by the previous bar)

12 2. if price closes over its own TF s/r it will go to the next higher tf s/r (unless the previous bar already hit it) RR 23. Here's the current H4 chart for silver and I've highlighted an engulfing candle, signalling price should trade lower?

13 Here's the daily - showing the higher tf support which is the target? So now down the 15 min for the trigger? I've left the H4 candle area highlighted, so if I'm correct we'd be looking at two options to enter the trade?

14 Mike youre bang on the money... lovely example. I wouldn't of got an entry on the first m15 engulf because I enter with a break out from the signal candle, the second set up triggered perfectly. I need to talk about expectancy and invalidation, if the first m15 engulf is a loser I will take the second and sometimes, very rarely a third, but if the next h4 closes against the engulf then the signal is invalidated. The ethos behind this strategy is removing fear by obtaining big risk to reward ratio's. Because we enter on the m15 into a daily move (h4 engulf signals a move to higher tf...i.e daily) our winners can give 3, 4, 5R or even more. So, we dont need a high win rate, generally I expect around 50%, with runs of more than that and runs of small losses. The beauty of the strategy is if we believe a trend has to begin with an engulf / close over s/r then sooner or later we will catch the start of a trend and some big R winners... Of course we need to have a repeatable exit strategy too... I will go over them soon. 27. With any trading it is vital that you have total belief in your system and I know the idea of price movements being predictable flies in the face of what we are led to believe, but believe it we must if we are going to just trade price. Here is the last move up on EU, now if what I am suggesting here is true then we should be able to track price from the low timeframes all the way up to the monthly and at any time be able to plan where price is trying to get too... H1

15 H4 D1 W1

16 M1 RR 33. Here is an example on Gold from last week. Daily gave us the green light to move up to the next weekly line, Then H4 engulfed, we dropped to m15 and had a low risk opportunity to get in with massive R/R potential. You could of let it run all week or had multiple entries and exits... You can modify the way you trade this to suit your available time and personality. GOLD DAILY

17 GOLD H4 GOLD M15 As long as those H4 keep closing up, we can just keep buying those M15 engulf.

18 RR 39. Traditional S/R teaching tells us to look for lower swing hi's and lows in a down trend and higher swing hi's and lows in an uptrend. But without know what timeframe the move is coming from, then we have no way of knowing where the move will likely end and which support and resistance we should be watching. Here's a chart of traditional s/r teachings, I don't dispute any of that information, but sometimes we can present information in a different way and it will become infinitely more useful and then easier to trade profitably. See how easy it was to put the s/r line down now all the swings are in place?... but it's never that easy real time is it?... which swing are we looking to break and retest, I can see 3 or 4 on that chart you could of picked and failed with...

19 Circle: why did the breakouts from the red circled s/r not work? Here is the same chart on the H4 TF...See how clear the trend change is now? and we know we can safely short down to the next daily s/r line because H4 will need the higher tf s/r to stop it. Support, resistance and trend are all in fact the same process and can be best described as the pattern of highs, lows, opens and closes over multiple timeframes.

20 40. Once you have the concept of price action clear you can build infinite strategies to suit your personality and available time... you could wait for weekly engulf and then drop to daily and take the next daily engulf.. daily engulf with H1 for entry... H4 engulf with M15... Here's a chart of EJ weekly... take long to pick direction for next week?

21 and here's daily closing over on the following monday for a lower risk entry into the weekly move The sharp eyed would of spotted another engulf in that previous weekly chart that I left out? Looks like a loser? said up next week?

22 but if we drop to daily... did we get an entry? RR 51. Another price action example here... Traditionally we are taught to trade breakouts either in the direction of the trend prior to price ranging, or to wait for a close outside the range and a pull back, again this works perfectly well in hindsight, but if you have ever tried it forward testing it can be very very difficult, false breaks and waiting for a pull back can take a lot of discretion, and that is where mistakes happen. HERE IS AN M15 CHART WITH AN EXAMPLE OF WHAT I'M SAYING

23 Now look at the same chart but use the higher TF to get some context, how much easier is it to get the direction right now? 55. All price action patterns boil down to the same 2 simple concepts, price is either : 1. closing over s/r on its own timeframe (the pattern of opens and closes has changed from down to up or vice versa) and will continue to a higher tf sr before stopping. 2. closing up or down and will continue in the same direction at least to an s/r on its own timeframe.

24 Engulfs, hammers, pin bars, outside bars, inside bars are all elements of those 2 process' and can only be used to their maximum potential if you understand these concepts. Hand in hand with that is the understanding that if h4, for instance, is closing up over h4 s/r and then switches and closes below h4 s/r then the extreme point it has turned from is a higher timeframe s/r. In other words h4 swing hi's and lows are daily/weekly/monthly s/r. This is why pin bars at extremes are far more successful than pin bars within consolidation. When you can combine true price action reading with multi timeframe sr you have a really powerful tool and you will begin to notice that everything else, macd, trendlines, channels, fibs can only work as a result of these basic truths, everything else can be broken down and explained by the flow of price up and down the timeframes. 69. Looking at this weekly chart for EU, looks to me like the up push off the monthly is still in control... The market is still long bias on EU despite the down move on weekly, looks very much like its looking for the level to go long. EU WEEKLY 125. Had a little trade on BRENT, got stopped for a small loss... shame because it went 70 pips.. keep fishing... seems I sussed a reasonable work around on posting charts too

25 126. strategy expectancy 50/50 win rate, minimum 3/1 R/R... Thats your target for profit every week... Don't close early, don't leave valid trades, be in the game when the big trend moves happen... It's purely a numbers game using higher TF SR to give us a slight edge In general I go for 4 or 5/1 trades, sometimes I will catch a big spike move, but on the whole im looking for a days move and will get out and in again if h4 says the trend has got more to run. I will use larger stops below the h4 signal if I am going to be away from the charts, but for me I find taking a few m15 hits to catch the move feels right for me. There is no right and wrong way to play it, its a compromise and finding something that fits and works for you, I get the feeling you want to build more of a position and get bigger R trades, the pay off wil be seeing some 3 or 4/1 trades close out on you but you will get some lovely big wins too.

26 134. the biggest problem we encounter trading, once we have learnt how to trade technically, is dealing with the fear of losing. There are 2 obvious ways to deal with it, a bigger stop and less losers, or smaller stops so the losers are less significant. When you decide which route you will go you need to look at the risk model, how many trades will you get? what is your win rate? what is your risk/reward ratio. BUT!!! whatever you choose your stops MUST BE PLACED TECHNICALLY... you must look at the flow of price closing and have your stops the other side of the s/r you are using as the fulcrum for price. example... If h4 has engulfed we are saying that it has hit a daily s/r, so if you are going to risk a full H4 stop loss your stop MUST go the other side of the h4 swing low or high. If you are going to use the m15 engulf for your entry the point of invalidation is still the low of the h4, but you are prepared to have more than 1 go at it by using the m15 swing... if the low/high of the h4 engulf is breached prior to the m15 signal then that s/r has already been invalidated and trading m15 is likely to lose RR tracking gold h4 from weekly s/r to weekly sr p.s I did trade the h4 engulf short earlier too... managed to get out when h4 closed against me and then took the small loss on the chin and reversed long.. Im just trading with the higher tf s/r and taking small bites until I hit the multiple R trades 144. this post was a sort of test, but also wonder if in this case we consider a engolfo? candles inside the circle.

27 A couple of things... Hasn't really closed below the s/r has it, im guessing if you looked at those h4's on m5 it would look like it was ranging. It doesn't mean it will lose but it's higher risk than if we had closed under the s/r of course. It all depends on what rules/restrictions you want to apply to your trading and how much flexibility you want to allow. From an sr point of view h4 has closed down meaning we will likely go to a h4 s/r, but that could weel be right where the new h4 has opened Not trading EU right now, but was a few nice price action and sr examples today.. Remember if price hits the s/r that is going to stop it, it will turn and close in the other direction.

28 -- Hello 60M - do you mean we can add long position on the notation 5? thanks yeah exactly that...as long as H4 is still closing in the direction of the move you can trade the retrace of each and every H4... Now the 3rd continued to close up but we did make a lower high... So you would exercise some caution there, but I think even that entry on m15 would of won too... or at least broke even EJ... H4 closed down at the daily s/r again, might get 3/1 trade down to daily s/r line

29 --- Is your close the low of the previous day's candle ( FXCM) on that EUR/JPY trade? Any of those daily levels could be the bottom of this move... we still have that weekly engulf and I think EJ needs to come down a bit more this week, there's certainly been nothing on daily to say its gonna break north from here

30 187. Two chances to get on EU H4 for me today. RR H4 closed over the h4 S/R at the high, invalidating the SR up there and confirming our move upto the next Daily SR L - M15. R - H4 The arrow below is the circle area above.

31 189. POSSIBLE TRADE ON EJ LONG THIS MORNING, NOT SAYING I TOOK THE TRADE, BUT JUST WANT TO SHOW THOUGHT PROCESS WITH COMBINING TF'S.. (RR - trade inside bar on H4) THE SIMPLEST WAY TO FOLLOW THE FLOW IS ALWAYS LOOK FOR H4 TO TURN FIRST, THEN LOOK FOR A LOW RISK ENTRY INTO THAT MOVE TO DAILY SR -- Great example. However, when switching to M15 on a H4 breakout, we generally get a worse entry price than with an H4 engulfing. Yes H4 engulfing is definitely my preferred signal (self: b/c you have to wait for the breakout)

32 196. GU... another missed trade, but a good example to learn from. H4 engulfed, then gave this lovely set up on m15... GU signals around London love to push through the h4 low or high before going (see how the m15 long signal was just below the low of the h4 engulf signal)... see that stop play all the time, guess its a move to catch the breakout traders In this case, would you have traded the pin break or the engulf break? then engulf break 202. GOT AN ENTRY INTO GOLD... NOT A TEXTBOOK EXAMPLE BUT I JUST KEEP TAKING SMALL RISKS UNTIL I HIT THE MOVES

33 204. BRENT... JUST PATTERN TRADING...

34 ---- Gold closed +40 at the daily s/r Brent targets:

35 slicing through daily sr now, wants the weekly

36 214. Hello 60M - Is it valid engulf bar when there is a bid of gap between current open and previous closed, example of this brent pattern? Thanks. RR yes Ttran, it's fine, the important part is that we go and close under the open of that last up bar... what is important is that the price starts to flow down again Daily engulf will go to Weekly SR predictable price movements BRENT DAILY / BRENT WEEKLY RR 242. ok first look at this chart with no wicks on, just the open's and closes...

37 Can you see that it is only possible to change direction when the pattern of opens and closes change. So in a down trend we are looking for the first close over a bear bar's open... In an uptrend we are looking for the first close below a bull bar's open... For simplicity we call that an engulf, but it may take 2 or 3 bars for it to happen. No this isn't specific to certain instruments or timeframes, all charts move this way, they have too. Knowing direction is only valuable if you also know how far it may travel... so (this bit's important... remember it..) An engulf means we will hit an s/r on the higher TF M15 ENGULF - H1 SR H1 ENGULF - H4 SR H4 ENGULF-DAILY SR DAILY ENGULF TO WEEKLY SR EXAMPLE: BRENT DAILY ENGULF GOING TO THE WEEKLY SR

38 If we know we will go short until the next TF's SR we can just place a line on the next SR... but there's a problem? if what I have just said is true then every engulf would win??? so you could just EA it and be rich?? So here's the exception... and it's obvious with some thought... sometimes the engulf has already hit the higher TF SR EXAMPLE: H4 GOLD & DAILY GOLD

39 Finally on your video you looked at H1 engulf going to H4 SR, which is fine and will work but M15 is going to use up too much reward to use as a confirm. The H4, M15 combo works well because of the larger R/R, if you want to use H1 i would go down to M5 for entry signal or 4 losers are not uncommon, but if we take every H4 engulf we will catch those big moves Eurusd Daily Chart Question

40 im a bit confused as there are so many s/r in daily. any of these might stop the downward movement. How do we determine which s/r to take as main reference? Pink line is line drawn in daily chart. H4 Chart Hi Jasper... to confirm an S/R line we look for the lower TF to engulf... If H4 has engulfed then it has hit a higher TF SR...(daily or weekly) If H1 has engulfed it has hit a higher TF SR (H4, Daily etc etc) When I draw my lines I only put on the very next s/r or at most 2, so you only need 2 lines above price and 2 below, then you watch price action at those lines to confirm if they will hold or break EU DAILY WITH DAILY S/R (WERE LOOKING FOR DAILY BECAUSE ONLY H4 HAS

41 STARTED CLOSING SHORT BELOW S/R... SO WE EXPECT DAILY S/R TO STOP THE H4 MOVE) 276. There is nothing special about Oil other than it trends nicely. If you dont have the option something like GA or EA also trend nicely. SP500, that trends well on H4, or the DAX??? What I do avoid is have lots of pairs like EU GU AU etc, if you want to trade dollar, trade it against 1, or 2 at most, same with Yen How disciplined are you when it comes to waiting for the H4 Close before looking for the M15 setup, eg. if the engulf has happened will you look for an entry before the H4 Close? J. It's 80% discipline, if you don't wait for h4 to close then you need to design a new strategy. You will miss some moves, you will also save your self from some losses... Being flexible is a dangerous strategy, even though I have advocated it in the past you must be very careful and clear of what you can be flexible with. Right now my plan is.. 1.H4 engulf or outside bar.(all of them, no leaving set ups, for any reason at all) 2.M15 engulf - inside bar/ outside bar 3.minimum 3/1 TP The only flexible part is if H4 has engulfed and h4 starts to trend I can take multiple M15 entries not just the first H4 retrace. That simple plan will make profit week in week out... you will have losers though! 3 or 4 on the trot, frequently... you will also get 5/1, 7/1, 10/1 etc winners This is how i see it in my mind, opinions please? Evidence to the contrary? It's an important discussion...

42 maybe 5% will master this by becoming excellent at reading the multi tf s/r flow and only selecting the best trades. 50% could master it by just playing the probabilities, take all the set ups and only close winners with 3/1 r/r or more. 80% are probably trying to be in the 5% here is a really nice example happening now... RR First look at EJ H4... whats the direction? which one are you gonna trade? which are you gonna leave?... almost impossible right? So let's just follow the simple plan, let's not try to be clever, we will just play the numbers game and take a few losers if we have too... Heres the M15...

43 -- 60Minuteman, I am quite sure that you would have closed the 1st M15 engulf entry (marked as win) when the 2nd H4 engulfed short... Am I right? yeah, hard one to call... would of already been some pips negative so might of just left it for SL or TP... IF it was 2/1 up and the next h4 engulfed short then I would definitely of called it a day... Never the less, you could of closed that for a small loss and you would still of got the big win at the end and been in nice profit Here's gold and brent h4 m15 trades today...

44 303. From a basic strategy point of view, we had a H4 engulf for longs but m15 just didnt give a set up, we sort of had a 2 bar engulf but we missed the guts of the move and so lost out on the big R/R... unfortunate is all you can say RR H4 engulf M15 2 bar engulf. (self: could have trade break of outside bar.) From an S/R point of view... Monthly engulf is long, daily engulfed short yesterday but hit the weekly and monthly SR lines... longer TF still wants to go long --

45 Maybe better entry earlier? yes if you gave the SL that extra buffer, I put mine below the m15 swing low so would of been stopped on that entry. The most important part is how reliable the h4 engulf is at letting us know the most likely direction 306. I tried today on EURJPY. I spotted an engulf here on H4: Once the H4 closed - I drilled down to the M15, and spotted another engulf, which failed - the engulf just 2 candles later (highlighted with the green pointer) would have been a pretty good winner - missed it though, c'est la vie. I am on the right track here? Welcome CR... what a gutter... you needed to take the next m15 set up... Other than that you

46 understand the strategy and how to enter so the pips will come. p.s that scenario is quite common, 2 entries into the h4, first losing and the next being the winner. You hardly ever get 3 because if you haven't turned by the second m15 set up then h4 will have closed against you Here is how i enter on m15.. I want to see the high (or low) or the engulf candle to break to trigger the entry. Stops below the low or the swing - some discretion needed dependent on the set up, but preferably the swing so we have the S/R to act as protection for our stops. (you do not have to enter this way, it is just my chosen way...) 327. how you manage each trade and how you exit each trade. RR Hi Maximan, welcome... There are a few exit strategies you can use, all are good, I couldn't say definitely which is the best but all will work and it's a case of deciding what works best for you... EXIT 1: H4 TRAIL This works well if you want to stay in the long trends for more than a day, we just trail behind the low (or high for shorts) of the last h4 to close in the direction of the trade, if h4 closes against us we don't move our stops. pro's are mechanical and possibility of very large R/R. con's won't work for countertrend moves.

47 EXIT 2 : S/R EXIT For this we need to read all the timeframes to determine where price is likely to go, it is just a case of looking at each time frame to see if it has closed over its own S/R and then we find the next S/R on the higher TF... Pro's... when you get good at this you can exit within a pip of the turning point or the end of the move. Con's.. Very difficult skill to learn. I will always use elements of this exit for all trades, It gives me context and probabilities to make better decisions. W1. (self: below charts are on the same currency pair)

48 D1 H4

49 You have to put all the parts together and work out where the move will likely end... So in the example weekly and daily have still not turned and closed down below their s/r, but they have not engulfed long either.. so the bias is that they are retracing to find the point to go short. H4 though has turned so we can safely take a trade to Daily s/r at least... Now I very much doubt that has helped much... it's a skill and it takes some practice, I would suggest opening a chart and seeing if you can track some moves that already happened, look where they ended, find the s/r and trace it back to its origin... EXIT 3 : COUNTER SIGNAL This is simply exiting when we get a h4 engulf against us, or even if h4 just closes against us... upto you. Pro's, it's mechanical, simple and works very well, you catch the trends and stay in them. Can also be used for hedging your position if you want to protect profits but stay in a longer TF trend until its end SR. Con's, doesn't really have any other than not working well for counter trend and occasionally give back large chunks of profit, although that is an element of trading you just need to accept from time to time... jeez long post, but it is a big subject...oh, 1 more... you could just aim for minimum 3/1 or 4/1... that is simple, I like simple Do you close part of your trade at key S/R levels, or do you let it all ride until the end? I understand that partial close feels particularly comfortable to us as traders (i used to do it and advocate it all the time) It's perfect, we guarantee a small win and stay in the trade. But, whenever I have gone down that route I have never really managed to maintain good profits, it becomes 1 step forward, 1 step back until you have a bad discipline day and you're back to where you started. I don't think conservative profit taking works, I think we want to be conservative with risk.

50 Whatever the real %age is, the majority of traders lose, and if you spend time reading traders strategies, what profit target do most aim for or achieve?... 1/1... maybe 2/1... sometimes 3/1... you ever heard of anyone aiming for more than that? 4,5, 7/1... never see it... maybe that's where the majority are failing????? You can pretty much guarantee you will get 1 or 2 days where the market really moves each week... I want a chance to be in those trades and I want to ride them, I want to know that if I catch 1 good trade I can secure a big profit for the week. In the mean time i'm happy to take small losses... anyway im rambling, to cut a long story short... I believe the secret is to stay in your trades and only ever use a technical reason to exit 336. fake moves, accepting losers and risk/reward One of the favourite moves for the real money players is to move the market one way, suck money into following the move and then dumping everything back into the trend. People will always get sucked into this because so many use systems that take no heed of higher TF trend and most will quit or lose confidence after that first loss, they then sit out and miss the real move. (we've all done it, it's infuriating!) If we have a system that wins about 50% of the time and we only take profit at 3/1 or greater then we don't need to always get our analysis correct, we just need some discipline and to take the available trades. Here is the current BRENT H4 chart... look how many days the second (engulf) move would of been the big winner... would we take the second signal after the first loss? RR So what is really going on in these instances is price is being pushed back to SR (in this case daily sr) H4 engulf back to daily SR before positions are being reversed and pushed back in the direction of the higher TF trend, If we keep our risk small (m15 entry) then we can just play the probabilities and make consistent profit... but it is vital we let the trades run, the system will survive losers but it will not survive small wins.

51 m do you have any record of average on stop loss? and also what is probably more important, did you miss many trade because you did not take the 3 or 4 chance to entry the trade.? I think this is the most difficult part, have the confidence to get into the trade again even if you already loss 3/4 trades. Obviously the smallest the stop, the easiest to get 1/3 1/4, the inconvenient is when market get choppy and this is very normal on 15M. Remember a H4 signal only remains valid until the next h4 closes against it (i.e if we have a h4 bullish engulf and the next h4 closes bearish... consider the long invalidated.) So that is only 16 M15's sometimes, very rarely you will get 3 m15 engulfs in a h4 that lose... I dont think I have ever seen 4. Size of stop you can't do anything about really, it has to be technical, so that means below the S/R, then it is down to the size of the signal bar...nothing we can do about that and you will get the odd one that is massive, you can reduce lot size... but again we're talking about very rare occurances that wont affect profit and loss over time. You will struggle with confidence after a few losses, that's normal, but do your backtesting, get some data, then forward test with discipline for a week or two... trust me, once you get to the end of the month with a healthy chunk of profit, those losers suddenly don't seem to bother you so much... once you crack that mental hurdle you are on your way. Average stop loss depends on instrument, but therefore so does the average profit... it's the R/R that matters... risk 50 on gold to win 150 is just the same as risk 20 on EU to win as long as you adjust lot size in the correct manner of course RR 340. Here is a previous example on USJPY. The chart is in 15M. have a look on different types of entry and different risk/pips. Being very aggressive with the stops, on the third trade market will turn to positive. Total investment -20. not bad. Will be very easy to get 1/3 Placing the stop on 4H, risk is 35 but never got hit. To get 1/3 we need practically a daily atr. And finally daily stop loss with 120 pips risk. with this one we need 3-5 days to get 1/ options. exist..

52 1. What does H4 and Daily SR say? have we got there yet? 2. Have we hit more than 3/1? 3. Has H4 turned long? Trail behind H4? 351. GOLD H4 ENGULF/ M15 2BAR ENGULF -- Gold at 3/1 160 pips and 6R on a bank holiday... very happy 354. Still not trading GU but an easy 5/1 trade today H4 2BAR ENGULF

53 M15 ENGULF ENTRY I only really watch a few pairs, gold and oil are in there because they always move... and are easy to read,look at H4 and daily, very simple to follow. Other than them I have got EJ, those 3 are just giving me a trade or two a day, and that just feels right. Nothing wrong with GU of course. 2. You have 2 choices... a/trade all the signals and play the numbers game... This just requires discipline and the ability to hold for a technical exit. b/ Do higher TF analysis and filter bad trades. H4 closing over H4 s/r only guarantees a move to a daily S/R and if you have already hit one then there is no reason it can't turn around right there. So you will need to look at daily and weekly closes too... This is a skill that requires time and practice and you can make mistakes...

54 If you like I can do some for this week on pairs you like to trade, just to show you how it can be done...? Either way you will take losses, just a part of trading as you already know... If you're catching a couple of 5R, 7R or more trades a week those losers suddenly become very insignificant. I fear missing the move much more than taking a few losers in the meantime RR 359. JUST WANT TO ADD A BIT MORE TO THE PREVIOUS DISCUSSION... WHEN PRICE ENGULFS THEN WE ARE BEING TOLD THAT WE HAVE HIT A HIGHER TF SR LINE... (I.E H4 ENGULF BECAUSE WE HAVE HIT DAILY OR HIGHER TF S/R) THEREFORE THAT SWING POINT, HIGH OR LOW IS WHAT GIVES OUR TRADE A SLIGHT EDGE, THEREFORE ENTRIES AT CLEAR SWING POINTS WILL OFFER THE BEST REWARD AND HIGHEST WIN RATE Markets are chaotic in nature, chaos creates repeatable patterns from random events. Markets adhere to laws of scale, anything that is true on m15 must also be true for all other timeframes. An Engulf is just the pattern that has to occur for price to change direction.

55 No guarantees, just probabilities and scale May I ask you if your overall profit is due to a particular one and compensate for a loosing one... or these 3 are separately profitable for you? I would say the same Ferru, anything that trends well on daily seems to work well. All markets are chaotic so the same patterns will occur on all charts and all timeframes, the only variance will of course be fundamental when the perceived value of the currencies are similar... AU, NU... etc Would be nice to look at some other commodities, sugar, cotton, they're volatile too... maybe it's volatility that is the important factor, but we're off down a road I honestly know nothing about now --- Are you saying that for you, EJ is profitable by itself, Gold is profitable by itself and Brent is profitable by itself? Yes, and I would go further and say that all instruments should be profitable as long as they have a tendency to trend on daily chart EJ H4 inside bar trade I rarely take these trades but technically its exactly the same principles. TP at daily S/R, will wait for H4 to close over now for a re-entry.. Really to do them justice is a whole new thread, and I haven't the time or energy... They may well suit some people though??? 376. EJ TOP DOWN ANALYSIS. RR MONTHLY HAS ROOM UP, CONFIRMED, WEEKLY HAS CLOSED UP BUT NOT OVER THE WEEKLY S/R SO THIS BOTTOM IS NOT YET CONFIRMED.. DAILY HINTING THAT THE WEEKLY RETRACE MIGHT BE OVER, NO CONFIRMATION

56 YET. H4 ABOUT TO CONFIRM A MOVE UP TO DAILY RESISTANCE... BIAS CLEARLY STILL LONG BUT H4 (IF IT ENGULFS LONG) COULD ALREADY OF HIT THE DAILY TOP, WE HAVE THE ADDED WEIGHT OF WEEKLY AND MONTHLY PUSHING LONG, SO IT WILL HAVE THE POWER TO PUSH THROUGH... AS ALWAYS CAN NEVER GUARANTEE WHEN, BUT FOR SURE THIS TOP IS NOT THE TOP MONTHLY WEEKLY DAILY. Self: Top and bottom horizontal lines are weekly S/R as show above. The middle is the daily S/R.

57 H GU TOP DOWN. RR HIGHER TF STILL SAYING LONG, NOTHING ON LOWER TIMEFRAMES TO SAY WE HAVE HIT THE TOP... THEREFORE MORE LONGS, IF IT AIN'T SHORT IT'S GOTTA BE LONG H4 CONFIRMED MOVE DOWN TO DAILY S/R DAILY NOT CONFIRMED MOVE DOWN TO WEEKLY YET WEEKLY AND MONTHLY STILL LONG

58 378. BRENT 385. SILVER TRADE TODAY AND ANALYSIS

59 M Being able to analyze the market with this system also gives hint that the market should turn, therefore there may be times when you are entering early in your illustration above example EJ h1 engulf (h4 pinbar) at the daily supp area. Not something you encourage here of course...but there will be hints Yes Tunda, what I have presented here are a way to track the market and plan safe exits, likely stopping and turning points. I have also presented a way of trading it using H4 and M15 that is consistent and with a little practice successful, of course if you understand the mechanics of this then you can design multiple systems based on it, one of those just trading the s/r line with higher TF analysis. 401.