How To Trade PRICE ACTION Like A PRO (the best Price Action strategy on YouTube...)
Published: 2020-06-04
Status:
Available
|
Analyzed
Published: 2020-06-04
Status:
Available
|
Analyzed
Predictions from this Video
Incorrect: 0
Prediction
Topic
Status
The speaker's trading strategy typically yields a 55-65% win rate on trades.
"The combination of techniques that I use on the exact currency pairs timeframes and with the exact rules that I use for them normally gives me about a 55 to 65 percent chance to win a trade any given year"
Pending
The Aussie New Zealand currency pair was in an uptrend on the daily chart and pulling back to a previous resistance level, indicating potential for trend continuation.
"on this chart the Aussie New Zealand has started an uptrend Ok we have broken above levels of resistance looking left we have put in more than a 1 to 3 move and what the market was doing at the time we placed this trade was pulling back into a previous level of resistance"
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To increase the chance of high risk-reward trades, use the higher timeframe bias of trend continuation.
"the first step in creating these massively profitable trades again all trades don't end up being a 9 to 1 risk reward but a way of giving yourself a better chance of hitting a winning trade at a 9 to 1 at a huge risk reward is by taking the higher time frame bias of trend continuation"
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Entering trades on a lower timeframe allows for a very small stop-loss, exemplified by a 25 pip stop loss in a specific instance.
"the reason we do this for a lower timeframe entry the reason for that is because on a lower timeframe with that entry we're gonna have a very small stop-loss in this case it was only a 25 pip stop loss"
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Identify the daily chart trend (uptrend in this case) and the most recently broken level of structure (resistance) as key steps for trade setup.
"remember first step is the daily chart in trend in this case daily chart was in an uptrend second step find your level of structure on the daily chart that was most recently broken as structure resistance or support in our case here it was this level of resistance looking left in this zone right here"
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On a smaller timeframe, a preferred trading method in specific areas is a double bottom or top pattern with confirmation.
"then dropping down to a smaller time frame one of my favorite ways to trade in these areas is a double bottom or top with some type of confirmation"
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A green candle on the second bottom of a double bottom pattern can serve as confirmation of upward market movement. A full strategy tutorial is available via a link.
"you can have my second bottom needs a green candle that would give some type of confirmation that the markets heading higher from your second bottom right and I've actually taught that strategy here on YouTube the full version of that strategy I'll put a link for that in the top right hand corner"
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A more conservative approach to trading double bottoms involves waiting for a full break of the neckline.
"you can also if you're more conservative wait for a full break of this neckline of the double bottom that is a very conservative way to look at double bottoms"
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An even more conservative method involves waiting for a break and close of the neckline, a pullback, and then a green candle or candlestick pattern before trading in the direction of the higher timeframe trend.
"and then an even more conservative way so wait on the break and close of that neckline and wait on a pullback to it and then wait on that green candle or some type of candlestick pattern and then trade in the direction remember of the higher time frame trend"
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After identifying the daily trend, find the most recent broken structure level. Then, on a smaller timeframe, look for a double bottom or top with confirmation.
"second step find your level of structure on the daily chart that was most recently broken as structure resistance or support in our case here it was this level of resistance looking left in this zone right here then dropping down to a smaller time frame one of my favorite ways to trade in these areas is a double bottom or top with some type of confirmation"
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On a smaller timeframe, look for price action patterns such as Head and Shoulders or flag patterns.
"the second part of those price action tips that I'm going to share with you in this video is down on your smaller time frame you want to look for some type of price action pattern this could have been a Head & Shoulders pattern this could have been a push up from our zone that turned into a flag pattern"
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Double bottoms and tops are favored for their ability to facilitate a small stop-loss, placed below the swing low of the pattern.
"for me one of my favorite ways is double bottoms and tops in these areas remember the reason the reason is because I am looking to get a small stop-loss and if I have a double bottom for me I can have a stop-loss under the bottom of the swing low the swing low of that double bottom"
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Stop-losses should be kept small, for example, below the swing low of a double bottom or below the head of a Head and Shoulders pattern, especially when compared to daily chart movements.
"you want your stops small let's say below the swing low of a double bottom below the head on a Head & Shoulders pattern will still give you a pretty small stop in comparison to what you're looking at on a daily"
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A favored target-taking strategy is to exit the first target at a one-to-one risk/reward ratio, then move the stop-loss to break-even.
"my favorite way of taking targets in this case is to take my first target off at a one-to-one risk/reward so that I can have my I'm safe I've got my one-to-one risk/reward my next stop loss has moved up to break-even"
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A trading plan rule can dictate taking targets at the previous resistance level, which, while not yielding a nine-to-one reward, can still provide a 4.4-to-one risk reward.
"have a rule in place in your trading plan that states that you take off targets at the previous level of resistance now that would not have provided a nine to one risk reward but still a four point four to one risk reward is not a bad position to be in"
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The speaker managed a position and exited based on a reason found on the 4-hour chart, achieving approximately a nine-to-one risk reward.
"I personally was managing this position on the way up and whenever I found a reason to exit on a higher top frame I actually used a 4-hour chart for my reason for exit on this trade I went ahead and took that trade off once I got that reason to exit right up here around a nine to one risk reward"
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A profitable strategy involves identifying the daily trend and latest structure level, then looking for price action patterns on the 4-hour or 1-hour timeframe when the market returns to that level.
"looking on a daily chart finding my trend and my latest level of structure on that daily chart when the market gets back in that level after breaking above that level of resistance in this case when the market gets back in that level I like to look on a four hour or 1 hour time frame for price action patterns"
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With the speaker's specific trading information, there is an average 60% chance of being correct, meaning 40 out of 100 trades are losses.
"with all of that specific information I have about a 60% chance of being right on average that means I'm losing 40 out of 100 trades"
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Experiencing losing streaks of 8 trades or more, with a risk management of 1-2% per trade, is not problematic for the speaker.
"I've lost more than 8 trades in a row before and losing 8 trades in a row with my risk management at 1 to 2% per trade does not bother me"
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Historically, an exact trading situation has resulted in a 60% win rate and an average risk reward of 1.5 to 1.
"on the past 100 times this exact thing has happened it's provided me with a 60 percent chance to win in an average of a one point five to one risk reward"
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