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5 Things To Look For Before You Place A Trade (Price Action Trading Strategy)

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5 Things To Look For Before You Place A Trade (Price Action Trading Strategy)

hey hey what’s up my friend so in today’s training i want to share with you five things to look out for before you place a trade because i get it right when you’re trading the markets there seems to be like so many things to look out for you know support resistance trend line multiple timeframe analysis indicators candlestick patterns chart patterns here right now so i get it right you are overwhelmed you’re confused and you don’t know what to do right so in today’s video i’m just going to break it down to you step by step right and to point you in the right direction right to focus on just these five things if you can focus on these five things you can pretty much ignore everything else sounds good then let’s get started the first thing that i want you to pay attention to is market structure so the point of market structure is all about asking yourself where’s the path of least resistance so if you see a chart right the market is in an uptrend then what do you want to do well you want to buy of course you want to be buying in an uptrend and likewise if a market is in a downtrend then what should you do you should buy and i’m just smoking you right you should be selling right you should be selling in a downtrend and if the market is in a range you can trade both sides either you know buying or selling so that is pretty much right what you’re trying to do with the first step right identify the market structure identify the path of least resistance and the way to do it is to classify the type of uh trend the market is in is it in an uptrend a downtrend or range don’t complicate things further and let me give you a few examples so you see this one over here right this one clearly right uh the five-year treasury note futures what is the trend of this market i’m sure you can agree that this is a uptrend right the price is making a series of higher highs and higher lows over time series of higher highs and higher lows simple stuff right so in this type of market condition in this time frame right you want to be looking for buying opportunities right likewise look if you look at this one over here uh the oil market what is the market structure at this point in time again simple stuff don’t complicate things series of lower highs and lower lows so what should you be doing buy no of course not selling you want to look for selling opportunities in this market condition and i know some of you might be thinking ah right now you know these examples they’re all you know clear as daylight though you know but there are times where you know it’s not so straightforward rainer i get it right so let me just share with you some less straightforward example all right how about this one here so if you look at this one this is the s p 500 and from the looks of things you might think that oh right now this is a uptrend you should be buying right look at this rainer market is hitting higher but then if you look back a little bit more then rainer there is this strong bearish momentum towards the downside as well but if you look even further back there is this uptrend over here ah ready to help should i be buying or selling right now so this is where a little bit of uh multiple time frame analysis comes into play if you are looking at a certain time frame and you can’t tell whether you should be buying selling just go up one time frame higher and see the big picture all right things will be clearer than so in this case right since uh on this one is the daily time frame you want to go up a time frame higher which is the weekly time frame if you look at the weekly time frame right things are different isn’t it at this point in time you can say that this market in the long term it’s in an upfront right you still see a series of higher highs made over time and you don’t necessarily have a higher low because at this point right the price has pretty much taken out this previous uh area of support this swing low but you can agree right that at this point the price is still hitting higher about to re-test this highs over here possibly so at this point right you can conclude that this market this trend the overall trend is still towards the upside and you want to look for buying opportunities right just one more example right to nail home the concept how about this aussie dollar if you look at this chart again similar right rainer should i be buying or selling because if you look at this rainer this is where the price is heading higher but rainer over here the price is heading lower so should i be buying or selling hmm again don’t complicate matters right if you are not sure just go up one time frame higher so from the daily you move up to the weekly so now now my friend do you see how much clearer things have become at this point clearly you want to look for selling opportunities right where because on the weekly time frame the price is making a series of lower highs and lower lows okay so i hope this gives you an idea right to know whether you should be buying or selling at any one point in time and one golden tip that i have for you is this if you are in doubt stay out there are so many markets out there don’t force yourself to trade a certain market if it’s not clear so there will be times right trust me even though you have applied the concept i’ve shared with you right looking up a higher time frame you will still be confused i don’t know whether you should be buying or selling hey stay out of the market no one is pointing a gun in your head and tell you to place a buy order okay so with that said let’s move on now that you understand the first thing to look out for is market structure what’s the second thing number two area of value so once you have identified the market structure the next thing to look out for is where is the area of value where my potential buying or selling pressure come in because just because the market is in an uptrend it doesn’t mean that you want to be buying immediately because the market might be ready for reversal it might be about to make a pullback so you want to trade from an area of value an area of value can be defined numerous way it can be support resistance trend line moving average channels etc so there are many ways to define an area of value and i’m just going to walk you through right a few ways right to define it so moving on you see over here dollar against the turkish lira if you look at the weekly time frame right you would see that at this point the area of value might not be very obvious but when you pull out let’s say a moving average in this case the 50 period moving average you find that this market tends to find value at the 50-week moving average right tested once over here twice tries uh almost four four times five times so if you ask me there’s a good chance that you might find value again at this six dollar price point which is a confluence of this uh area of uh resistance and this is the 50-week moving average so this is an area of value to look out for on the dollar against the turkish lira okay next one how about this one aussie against the swiss franc in this case you have multiple areas of value right you have the 50-week moving average again right see this one test it once twice twice almost four times then you have your classical support resistance right you can draw this one over here this line right where the price previous support which is resistance okay and same for this one this area of resistance and there’s another one over here as well so in this case right you have multiple areas of value on this chart and it might even be possible to draw a downward trend line trend line as well and let’s see one more example uh how about the smp okay so in this case the area of value i would say possibly this over here you can see that this is an area of support tested once twice and this third time over here very strong price rejection and that’s not all if you look back in time right you are able to draw actually an upward trend line going back 2009 financial crisis something like this so you can see you have multiple areas of value on this chart number one could be this area of support over here number two could be this upward trend line which i can just do another parallel one to to define the area there you have it right multiple areas of value on this chart make sense okay so this is how you define an area of value so this means when you are looking for buying opportunities this is a potential area to look for buying opportunities this is another one okay so once you have identified your area of value doesn’t mean you buy the moment the price comes into an area of value because you want to look for confirmation right that you know hey buyers are stepping in right and you know ready to take the price higher so this is where you move on to the third thing to look out for the entry trigger this is what will get you into a trade this is what will tell you hey rainer oh hey john doe now is the time to buy right so you are looking for an entry trigger an entry trigger okay numerous form could be a simple price rejection like a bullish engulfing pattern shooting star hammer or a break of structure on a lower time frame or a trendline break or some people even use indicators right you know crossing from over sold to overbought right as an entry trigger that’s fine as well so in this case let me just walk you through a few common entry triggers that you can use right in your own trading so first one over here euro new zealand eight hour time frame let’s have a look and see what it offers so in this case this is what i call a a price rejection or a false break at this point right this two this two candle here okay you can see that this two candle actually took out this lows over here this swing low over here right and then price reverse up higher bullishly back above this area of support back above this swing though this is what i call a bullish price rejection a false break right where the price actually broke down below this swing low and then reverse strongly in the opposite direction this is one example of an entry trigger that’s not the only one of course you can also look for what i call a break of structure so if you look at the s p 500 the daily time frame okay the number of lines over here let me just remove it so at this point you’ve seen earlier that the s p 500 it found area of support over here around the two three two one area and before in reverse right what you see right the price action is that it made a series of lower highs and lower lows over here there’s another low a minor low over here and another low over here right so at this point right if you look at the at this point right you can see that clearly right the sellers are in control they’re just pushing the price higher making a series of lower highs and lower lows so now a break of structure means right that the price has invalidated this existing market structure so this market structure right now is making a series of lower highs and lower lows and to break it you need to make a series of higher high and higher low and this is what happened all right at this point you can see that the market made a higher high when he broke out of this swing high with a higher low so this is what i call a break of structure and it’s another entry technique that you can use right to get into a long trade i mean you can use it for a short trade as well and it will just be a lower high and lower low okay so this is what i mean by a break of structure and finally you can also use what we call a trend line break so what you’re looking for is in essence right let’s say market is in an uptrend okay and you are thinking where should i buy the pullback right how do i time my entry on a pullback well you can use a technique called the trendline break okay so again over here you can see you can draw a trend line right from the highs over here this is one trend line there is possibly another one over here okay and when the price breaks out of the trend line in this case let’s say broke out of this trend line over here okay this one over here this trend line draw lower in this case this one the price broke out of this trend line you can look for buying opportunities to get locked so again of course right this trend line on hindsight it looks easy to trade right so one tip that i have for you is this is that sometimes like when you do or trade the trendline break you don’t want to be too early because if you see right in this case if i have another trend line over here okay and you trade a trendline break this might be either a losing trade or break-even trade so one tip that i have for you is again let the price come to an area of value first then you trade the trend line break right i don’t go too deep into it because i will talk more about it later but generally the idea is again let the price come to an area of value first so in this case the price is at the area of value then you apply the trendline break technique this one quite almost there so this one might be a little bit uh discretion up to your discretion whether you’re going to trade it or not over here you can draw another trendline break okay at this point where the price came into this area of value then you applied a trendline break technique so this means right before you apply the trendline break technique you want to make sure that price the market is at an area of value right before you use this entry trigger right that’s just one tip for you so now that you understand right the entry trigger you know how to look out for it the fourth thing you want to look out for is the exit if you’re wrong this simply is to ask yourself right have i click like and subscribe to the channel well if you haven’t do it then do it right now okay so where was i yeah exit if you’re wrong see i got carried away right exit if you’re wrong this means right is where do you put your stop loss on your trade at what level will the market prove you wrong at what level will your trading setup get invalidated so let me just give you a very simple uh explanation okay head and shoulders pattern right you know what it is right it looks like just three triangles like that so let’s say the market breaks down below this line and you go short so let me ask you at which point on this chart will this head and shoulders pattern look distorted will it look funny will it look wrong well the answer is above the highs right if you imagine the price breaks down and it goes back all the way up high to this size does this still look look like a hidden shoulders pattern to you not quite right it looks like some i don’t know some some mountains or whatever so clearly this is where i’m coming from right you want to place your stop loss at a level where it it invalidates your trading setup okay so let me walk you through a few examples right because this is something that you will be using on every trade so the first one over here is uh let’s look at how about pound aussie okay so if you look at pound aussie the weekly time frame you can see that okay where is the area of value so area of value i would say it’s possibly here okay here here and let me just draw one more online so let’s say the market now is at this area of value and you are long maybe there is a bullish reversal pattern like a hammer like this and you go long so let me ask you right now at this point in time right at which price point on the chart would this setup be invalidated would this area of value be broken at which point on the chart right would the previous resistance that you act and support right be destroyed and i’m sure you can agree with me that if the price were to reach around this let’s say 180 level okay or maybe just about here and clearly this area of value this area of support right is invalidated it’s no longer intact because the price has just breached through it it has broken below it make sense another example let’s say how about the aussie against the dollar the eight hour time frame so at this point you can see that you have a series of higher highs and higher lows so let’s say you know you bought the breakout of this heist okay now let me ask you at which price point on the chart right would you know that your breakout has failed okay so if you ask me there are two possible levels number one you can reference from these lows over here and you know at this point if the price reaches this level then clearly when the price breaks out and comes back down this breakout has failed right because it breaks out and then reverse down lower i know this is a very familiar picture right because many of you buy breakouts get caught stopped out and the market reverse higher again right so so not trying to traumatize you but that is a logical place to put your stop-loss right at a point where your breakout trade has been invalidated another way you can put it for more aggressive traders is that if the price let’s say it breaks out okay let’s say over here to see breakout level it breaks out right and it comes back to the middle of the range here then clearly the breakout has failed as well it doesn’t mean that the trend is invalidated but it means that the breakout trading setup that you have traded right is invalidated right because the breakout trade doesn’t look like how a breakout should be like right because if you imagine this the price breaks out of this highs and it comes back down lower to the middle of the range it doesn’t quite seem how a real legitimate breakout should be like so okay so here are two possible levels to consider right depending on how aggressive or conservative you want to be so this is what i mean by placing your stops right at a level where it invalidates your trading setup and just one final example right looking at this one over here if you look at this again this is the five year bond futures again you can see the potential ascending triangle that’s being formed right and a higher lows into this highs so let’s say the market breaks out of this ascending triangle at which price point would this chart pattern be invalidated is it over here is it over here or is it over here so let’s call this a let’s call this b and let’s call this c what’s your answer five seconds one two three four five the answer is c right that at point c if the price reaches point c clearly this ascending triangle pattern is invalidated the price can go back to a or b but you can see that the ascending triangle is still intact because the the trend line is not broken yet this is the trend line that i’m referring to okay so this is a a very simple concept right but it’s useful right to placing sound logical stop loss okay and that’s the fourth part right knowing when to exit when you’re wrong and finally where to exit if you are right what if the market moves in your favor where do you exit the trade so for this part right you need to look out for two things number one ask yourself are you trying to capture a swing or are you trying to ride a trend so using uh with different goals in mind you would use different trading techniques so if you’re trying to capture a swing right they want you to do is have a fixed target profit usually at swing high swing low support resistance some people even use fibonacci extensions it’s up to you for trailing stop loss you can use techniques like you know moving average price structure chandelier crosstalk there are many out there but again i’m just going to go through with you the few popular ones right and if you want to explore further right you can you know look through at the other training materials out there so first and foremost let’s talk about fixed target right this is very simple let’s say this is new zealand okay let’s say eight hour time frame let’s say you know you have a entry trigger to go short right maybe there’s this price rejection over here a bearish engulfing pattern you went short and you want to capture a swing in this market so ask yourself right looking at this chart right now where might potential buying pressure come in because you’re selling at this point in time so you want to exit your trade before the buyers step in and push the price higher so if you look at this chart ask yourself where might potential buying pressure step in and from the looks of things right i would say they could possibly come in around this area of support somewhere here okay so if i want to take profit if i want to capture a swing i would say the 64 price point right would be a level i’ll be looking at to take profits make sense okay great moving on what about palladium okay palladium daily time frame so if you look at this one over here right let’s say you happen to buy the breakout of this heist all right let’s just let’s say hypothetically market is an uptrend so let’s buy okay so you bought the breakout and you want to capture a trend so what can you do well one way to go about is using the moving average right so what you can do is depending on the type of trend you want to capture you can use the 20ma for capturing short-term trend 50ma for capturing medium-term trend and 200ma for the long-term trend so in this case let’s say you want to capture a medium-term trend you can just overlay the 50ma and then trail your stop-loss right using the 50-period moving average so when the price closes below it right then you exit the trade so in this case you would you know write the move up higher swallow this draw down this retracement but because it’s not close below the 50ma yeah you’ll still hold on to the trade then it goes up higher higher higher higher down retracing retracing ouch ouch pain pain pain retracing ouch ouch ouch ouch all right then you you get you exit the trade right when the price breaks and close below the 50ma right so this is how you trail your stop-loss using moving average and one final technique again i can share with you is using simple price structure so you know that in an uptrend the market consists of a series of higher highs and higher lows so at this point right let’s say again hypothetically you bought the break of this heist and then you’re on the trail using price structure right you can see that the price hits up higher retrace heads up higher and it returns down lower and breaks below this swing low so at this point okay at this point this specific specific price point the price is broke below this previous swing low and you exit the trade okay so you can see that uh it’s not foolproof right there are times you might exit the trade prematurely but the key idea here is just to simply trail your stop loss using the previous swing low the previous swing low and to write the wave up wave up higher okay so another option to consider so with that said right uh again all right we have covered quite a bit right so let me share with you a few examples on how to piece the puzzles together right on the five things to look out for so if you still remember right what i’ve shared number one we talked about the market structure first thing to look for is market structure number two is the area of value right where is the area of value number three the entry trigger what is the thing that will get you into the trade what is the signal number four is the exit when you are right and exit when you are wrong basically where’s your stop loss and where’s your targets if you are trying to capture a swing so yeah so for this part it’s actually two right this exit if you’re right or wrong so there could be another e over here right this could be exit if you’re right this is exit if you’re wrong so as you can see this is what we call the may formula right so some of you might be familiar with it some of you not doesn’t matter so let’s walk through a few examples right and see how we can apply this may formula to your own trading right it doesn’t matter whether you’re trading stocks forex the daily time frame on the weekly time frame this concept can be applied the same first example let’s have a look at the euro against the swiss franc how about that right so at this point right what is the market structure of this chart that you’re looking downtrend yes great right so we know that the market structure here is in a downtrend next thing area of value where is the area of value so from what i’m seeing over here right we have a possible area of value at this area over here right where this uh is an area of resistance so area of value is resistance number three entry trigger do we have an entry trigger to trade this market from the looks of things i see a price rejection over here and then another price rejection over here so multiple price rejection i would say that is a entry trigger to short this market so let’s call it a pj right price rejection oh sorry pr okay what about exit if we are wrong right is the other e where will you exit if you are wrong i would say at this point right where the resistance will be invalidated if the price you know reaches at this level over here if you can reach this level i would say hey you know this resistance it’s broken and i should be out of the trade so yes we have our exit if you’re wrong call this the stop loss okay and finally exit if we are right so again this depends on what you’re trying to achieve are you trying to write this downtrend or you’re just satisfied with capturing one swing if you’re just happy with one swing then this is a possible target right to exit your trade at this area of support okay so let’s call it swing we have this area right to capture this one swing so this is how you apply the may formula to your trading right let’s look at another example canadian yen again what is the market structure i would say market structure is down right market is in a downtrend aerial value where is it i would say this is an area of value at resistance so call it r entry trigger right so this m this is a entry trigger do we have an entry trigger at this point not quite right because the price is still a little bit off from the area of value so this one not yet so once we how about exit if we are wrong right we know that if we have an entry trigger to go short right we want to be out of the trade right if the price you know reaches around this 79 dollar price point because you can if you can reach the 79 dollar price point then clearly this area of resistance is broken right and we want to get out of the trade okay so this exit if we are wrong but what what about exit if we are right how are we going to handle this so maybe this time around you want to write a trend that’s cool right so what we can do is you can use price structure to to write the trend maybe the price comes up get rejected we go short and we continue holding the trade right as long as the price makes a series of lower highs and lower lows okay so this is how you apply the may formula one final example all right sounds good copper right so let’s look at one final example so when you look at this chart again uh you’re confused man right now i don’t know whether i should be selling or should i be buying oh rainer said look up one time frame higher so let’s do that right now so you look at the weekly time frame you see that hey copper is actually in a long term downtrend right this is simply a retracement right against this long term downtrend that’s great so looking at the daily time frame okay we could look for possible trading opportunity but you know what let’s go down even one time frame lower and look for a break of structure sounds good so at this point in time right you can see that clearly the buyers are still in control if you just pull out your trend line okay you can see that the price is still above this trend line so what you’re looking for is a break of structure so the existing structure right now in this market is a series of higher highs and higher lows up trip so you’re gonna see the price break below this price structure right if you can come down lower we test and break down at this point you have a lower high and lower low and your and your trend line right your upward trend line is broken as well so now you have a break of structure and this broken trend line so that could be an entry trigger to go short right when the price forms are lower high and a lower low over here so now you know that the market structure in this case this one is a little bit more advanced because you’re using multiple time frame analysis but you’re seeing that yes overall the trend is still down your area of value it’s at this uh area of our resistance over here which i think you can’t see it but if you look at the higher time frame you said it’s resistance your entry trigger is a break of structure what about stop loss what about stop loss right so this one is a bit special so in this case right you can reference your stop-loss at two possible options number one is at this swing high over here or number two this one over here depending on how aggressive or conservative you wanna be so let’s say you’re more aggressive you’re willing to go with tighter stop-loss you can reference this highs over here so your stop-loss can just be somewhere over here because if you think about this if the price breaks down and then reverse back up higher then clearly right this trend line is not broken right it’s just pretty much a false break and you’re wrong and you should get out of the trade okay so this is a e exit if you are wrong what about exit if you are right okay so let’s say if you want to capture a swing you know that this is a possible area right where potential buying pressure could come in and this swingle over here you can look to talk look for targets right at this area of value that this swing over here then that could be exit if you are right does it make sense okay so these are the five things to look out for before you place a trade i hope you got a deeper understanding of how this works and to do a quick recap number one look at the market structure number two look at the area of value look for the area of value number three look for a valid entry trigger to get into the trade number four look to know where to get out if you’re wrong right exit if you’re wrong and number five you must know where to exit if you are right as well okay so with that said i hope you got value out of this training uh if you want to learn more then what you can do is just go down to my website over here tradingwithrainer.

com this link over here and just download this guide the ultimate guide to price action trading to learn more about price action in the markets or if you want a little more about candlestick patterns then this guide is really useful okay and it really would complement right what you’ve just learned today so with that said i have come to the end of this training if you’ve enjoyed it smash the thumbs up button subscribe to the channel and i will talk to you soon you

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