Top 3 Secrets: Price Action Trading (very IMPORTANT)
Published: 2017-12-10
Status:
Available
|
Analyzed
Published: 2017-12-10
Status:
Available
|
Analyzed
Predictions from this Video
Incorrect: 0
Prediction
Topic
Status
The speaker will reveal their top three secrets for price action trading.
"I'm going to do while this trade plays out live on the screen is talk to you guys about the top three secrets to price action trading."
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Risk management is identified as the most crucial aspect of trading.
"the very first thing we're going to talk about is risk management this is by far the most important part of your trading"
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A key component of risk management is determining the right time to start trading with live funds.
"the very first part of risk management is knowing when to go live"
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New traders often face significant losses, ranging from 20% to 100% of their account value, shortly after starting with live trading.
"From putting their live money in the market they realized very quickly that it's not so easy from here it can branch off they can lose minus 20% of their account before they realize this and it's really dependent on the person they can lose 50% of their account value and some people will even lose 100% of their account value"
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Risk management must be in place before engaging in live trading.
"before starting to trade with a live account as where risk management comes into play"
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The speaker lost a significant portion of their life savings by trading in the stock market without proper preparation.
"this was me in the stock market about seven years ago... I took my life savings and I put it into a Scottrade account this was one of the worst decisions financially that I've ever made"
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The speaker lost 60% of their life savings within two months of trading.
"around 2 months later I had lost 60% of my total account value of my life savings"
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Testing trading strategies on historical data and calculating win/loss ratios is a crucial step in developing a successful strategy.
"I learned how to test strategies in historical data... coming up with a winning percentage how many times did you lose versus how many times did you win"
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A risk management plan should be developed based on the win/loss percentages derived from historical data testing.
"after that coming up with a winning percentage... then you can come up with your risk management plan"
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After establishing a risk management plan, the speaker utilized a demo account to practice implementing trading strategies.
"after creating the risk management plan let's went straight into a demo account to see if I could implement the strategies I learned and tested"
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The speaker practiced in a demo account for approximately five months.
"I stayed in a demo account for about five months after that"
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Five months of demo trading significantly boosted the speaker's confidence in their trading abilities.
"doing this demo account for five months really helped me to gain confidence in my own personal trading"
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It is critical to trade only with 'risk capital,' which is money that can be lost without negatively impacting one's financial situation, rather than life savings.
"do not risk your life savings like me another crucial part of risk management is risking what's called risk capital"
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Risk capital is defined as funds that, if lost, would not adversely affect your financial stability.
"trade with risk capital the amount of money that if you lost it would not affect your financial situation"
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Understanding market structure and trend is the second key secret to price action trading.
"the second secret of price action trading is going to be structure and trend analysis"
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Traders should establish their own specific rules for defining market trend and structure levels, rather than relying on universally set rules.
"having rules that define when a markets in trend and rules that define a major and minor level of structure these can be rules you create it's not a set in stone thing"
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The definition of an uptrend can vary based on an individual trader's specific rules and how they interpret price action.
"this is not how an uptrend always looks is it sometimes we'll have a trend that looks like this and now what is this still an uptrend or is it a downtrend well that depends on your rules"
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Major structure levels are identified by price points that have been touched multiple times, suggesting they could act as future support or resistance.
"I look for levels in the market that have been touched multiple times in the past because this gives me an indication that that level could be used as support or resistance yet again"
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Identifying trading patterns is the third essential secret to price action trading.
"and last but not least it's definitely going to be patterns"
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Patterns serve as the trigger for trade entries when combined with prior analysis of market structure and trend.
"the reason patterns are so important is because once you combine the structure and trend analysis that you learn the patterns are going to act as your entry reason"
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Specific market conditions (like trend or overbought/oversold status) should be met before looking for certain candlestick or chart patterns.
"I need to see a market in a downtrend before I look for a flag pattern I need to see a market in an uptrend after a pullback before I look for a hammer I didn't see a market overbought before I look for a hammer candle"
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Advanced trading patterns include the Bat, Dart, Li, Butterfly, and Cipher patterns.
"advanced patterns such as the bat dart Li butterfly or cipher"
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Fibonacci retracements are a necessary tool for identifying advanced price action patterns.
"advanced patterns you have to use Fibonacci retracements in order to find but it's still a price action pattern"
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