Home Trading Strategies Do You Make These Price Action Trading Mistakes?

Do You Make These Price Action Trading Mistakes?

Do You Make These Price Action Trading Mistakes?

hey hey what’s up my friend so in today’s video I only share with you tree tree price action trading mistakes that you are probably probably unaware of and the reason for this is because in this price action trading industry okay a lot of educators and gurus they just simply copy one another’s work right so it’s simply a regurgitation of you know what’s out there so for example someone could talk about support resistance maybe add some new insights and in matter of months right someone else just gonna copy that information and regurgitate it over again and a problem with this is that this whole you know education senior it becomes very you know me to write let you know it’s very hard to you know learn something new because everything is just simply you know a regurgitation of the original sauce right and when this happens right traders are you watching this video you suffer because all the information you see right it’s just you know copycat information you don’t really learn anything new and it makes you know stop thinking for yourself are you don’t you don’t really you know think deeper because that’s what everybody says you assume it’s true so this is why in today’s video I want you to think for yourself I want you to think deeper right about some of the common price action trading techniques that is being taught and I will explain to you why those actually mistakes from my point of view so mistake number one is this you’re a one-trick pony right so for example what do I mean by a one-trick pony so when you you know study price action trading materials on the web you know that for example one of the strategy that they trade they teach right is you know trading the breakout retest so for example let’s say the price breaks out and you miss the move but they’ll say stuff like don’t worry right you can always wait for a retest right where the price retest previous some resistance right becomes support and this is this strategy is fine there’s nothing wrong with it but this is a mistake right if this is the only trading setup that you’re looking for because let’s be honest right often many times the market will not retest you could just do a pullback and then continue higher and if your only trick is to wait for the retest then I can assure you you’ll not be part of the move right you’ll miss the entire move you’ll be on the sidelines right trying to tell us up oh let’s be patient right let the market comes to you be patient right let’s not chase the market and you miss this trading opportunity even though there were opportunities to trade it just that you are unaware of it because you’re just a one-trick pony so let me kind of open up your eyes right through the different ways you can trade this particular market condition or setup right even though the price did not retest your breakout level so let me share with you our two mix then you can use the first technique is what I call a trend continuation trade okay so for example look at this so if you look at this chart ok so this is is the chart of goal price right broke out of this area of resistance and you can I can tell you how many traders many price action traders will look at this chart and tell themself ok ok Rainer so what I’ll do is I’ll wait for the market to come back and retest this previous area of resistance give me a hammer before I go along and then the plan sounds good right I mean it’s a it’s a decent plan but the problem is what if the price doesn’t retest that level so what now are you going to stay on the sidelines so will you watch the market just move on without you I mean if you’re comfortable with it right fair enough you can do that but if you want more out of your trading right if you want to be the best price action trader that you can be then you know you have to develop right other scenarios right to trade if the market doesn’t you know for example comes to your desired level or for example if plenty doesn’t work out what’s Plan B what’s plan C so let me share with you two other plans right then you can consider where now the market doesn’t retest your level the first one is what I call a trend continuation trick so let me just draw this alright so for example what happens is there let’s say market consolidates and it breaks out if the retest Dale doesn’t come what you want to do is to look for a trend continuation pattern it could be like a boo flag pattern right like this a bull flag pattern like this ok the lows of the blue blue flag might not be tensed this area of resistance doesn’t matter right what you’re looking for is a wick pullback where the range of the candle see are relatively small and then if the price breaks above this highs now you have this lows of the pullback to reference to as your stop-loss so even though the market doesn’t retest this breakout level it doesn’t matter right because you can still get on bought the treatment capture piece of the move so again here’s an example on goal so at this point okay you can see over here we have this trend continuation trait over here right market break out of this consolidation can go along with a buy stop order above this highs stop loss can be 180 are below this lows this is a potential trade they could get you on bought the trend even though the retest didn’t occur okay so that’s one there’s a first way of doing it so as you can see right in this case you would probably no capture something on this uptrend so the second technique I want to share with you is what I call the the falls break setup on the lower timeframe so this one is relatively simple this this technique the other technique I want to share with you is what I call a Falls brick setup on the lower timeframe so what this looks like is that again right let’s say the market breaks out okay and it starts to consolidate so it’s kind of like similar to the bootleg technique that I share with you a little for this one it’s a little bit more advanced because you can enter the trade you can time your entry even before the market breaks out of the flag pattern and a way to do it right is you’re looking to time your entry when the market reaches the lows of this are the so-called consolidation pattern so let me give you an example so you look at this this example here this is the pound dollar okay you can see it over here again break out of this of this highs many traders on the sidelines waiting for this retest or a retest of this you know previous swing high becomes support yada yada and guess what market doesn’t always retest so what now so this is ready other technique comes into play so what you do is to pay attention to how the market consolidates right so in this case you can see test that once pounds up slightly higher and there’s a second test over here on this second test you want to go down to a lower timeframe so in this case since your higher time frame mr.

Dale you can go down to the four hour time frame and look for a false break setup to go long right because the reason why you’re looking for a setup to go long because overall right now your bias in this market is you’re bullish you’re expecting higher prices so on the four hour time frame you’ll see something like this okay let me just show you here over here okay so this is the second retest this one here you notice the price came down into this lows that you saw earlier on the daily timeframe on the forward timeframe guess what it’s an area of support right this over here is an area of support and notice how the price came down into the lows of support and then did a quick Swift reversal towards the upside closing higher so this is what I call a false brick setup where the price trades below the lows right only to reverse higher so you can imagine it which which group of traders are trapped well the traders who shot this market who shot below this lows and now trip right because they think the market is going down down lower but what happened is that the market actually reversed and closes back above support so now traders who are shot they’re now trapped they are in the rate they are losing money okay so you are you can take advantage of this phenomenon right by trading in the in the direction rent of this are false breakup so trading to go along and on top of it on the higher time frame you saw that you are in an uptrend so that’s a good chance the market could retest back to this area of resistance and could possibly even break out of it so what it can do is again you can just simply go along on the next candle open or you know if in this case if the candle range is too what you can have a by limb in order let’s say above this swing high alright and stop-loss can set it 180 our pillow this lows so there’s another entry technique that you can use right to get on bought off the move right even though the market didn’t retest the breakout level okay so these are a couple of techniques right too to think about right if the market does a retest your breakout level so now moving on mystic number two what is this all right mistake number two is that when traders they trade where is it price action trading or any sort of trading strategy they are entering their trades far away from an area of value and that reduces the probability of their trade so what do I mean by this so let me give you a just a simple illustration first and then we move on to some real-world examples so let’s say the market it’s it’s kind of like in a channel okay so you know it’s a channel like this so this is the upper channel this is the lower channel and when the market is trading in within a channel you know that the area of value is like possibly near the lows of the channel here here and here and if you wanna sell possibly near the highs of the channel okay you know these are the areas of value so let me ask you if the price comes up to the highs of this channel around around here do you want to be buying over here do you want to be buying at the height of the upper channel probably not right because you know that the market could possibly retest back down to at the lows of this channel and if that happens you’ll you will get stopped out a better approach right is to treat from an area of value which is near this the lowest right of this lower channel and this up overall uptrend so let me give you an example of what I mean right so channel is not the only way to define your area of value there are many ways and I just want to share one example with you a few examples actually so you look at euro dollar so at this point in time you know that the overall market is in a downtrend right it’s actually in a weak trend so where is the area of value area of area of value on this channel now if you assume you’re in the 200 ma in this case right is a pretty good tool right to identify your area of value because you notice that the market test that ones over here right almost twice over here tries and almost four times over here so what this means is that yes I know that you should be shopping the markets but you don’t just want to blindly shut the markets you want to see where you are in the big picture are you near the area of value so for example over here we have this so-called a consolidation over here but in this case I am NOT interested to shut the breakdown of this loss of the breakdown of this consolidation why because as you’ve seen right the area of value is around the 200 period moving average area right where you know this previous support I could become resistance become resistance and it’s also coincides with the 200 ma so if you want to be selling at this lows you’re quite far away from the area of value and if the market pulls back to the area of value like in this case chances are you will be stopped out okay so ask yourself where is the area of value and you want to be trading as close as possible to it and not far away from it so let me give you another example so this one over here it’s a Ossie New Zealand okay you can see over here again market over here we form someone of a double top right test at once test twice area of support price breaks now at this point where is the area of value so if you are a price action trader you know that support resistance right they are an area of value to trade from and in this case the area of value is possibly somewhere at this a previous support that could become resistance so you don’t be trading near this lows over here because the market again could possibly retest back this level and then you can stop down so a better way is to number one you can wait for a retest which is what a lot of traders will do alternatively can be for a consolidation trading the Bear Flag pattern and I’m a tree right you can also use the multiple time frame technique that we spoke about earlier going down to the forward timeframe and trading the false brick setup okay so these are a few things right to consider when you want to trade from an area of value and another additional tip that I want to share with you so if you recall sale for example the pound dollar tree earlier okay how do you know when this consolidation is is ready to break out higher for example you know that we spoke about trading from an area of value this over here is an area of value but how do we know that this over here is an area of valley where the market has consolidated long enough before it makes the next move higher so what I like to do is to use the 20 ma as a guideline when the 20 ma has you know caught up with price this tells me that now this becomes this is now an area of value right and the market is getting ready to break up higher so similarly for the goal example I shared earlier same principle over here right notice how the 20 ma has caught up with price right and it forms this a little this lows over here which now becomes an area of value before the market no breaks out higher so the 20 M is is a very useful guideline for it okay so that’s mistake number two right trading far away from an area of value if you trade far from an area of value right chances are you will you know usually gets topped out on a pullback and mistake number three and this is a big one right how often right have you you know buy it support and then the next even on the market reverse he just stop loss and and then reverse higher scratching you’re here mmm what’s wrong you know I said my stop-loss below support right that’s what a textbook says that’s what a guru says but I keep getting stopped out and the market still goes back in my favor what what did I do wrong well none sir is this is that you do want to put your stop-loss just below support or just above resistance because remember support and resistance they are an area on your channel by putting your stop-loss just below the loads of support right it doesn’t mean that the area is invalidated it doesn’t mean that the area is broken it’s still within the area of support and resistance okay so mistake number three is don’t put your stop-loss right within or near support resistance area or market structure so let me give you an example so if you look at this one Aussie dollar okay so daily timeframe you can see that right at this point some traders they might be maybe longer term trader trading with the trend right market breaks below this lows and they go short and they know that you know okay the trend is only invalidated right if he breaks above the previous swing huh you know that’s kind of the the top process that a trend trader would have so when the trend traders put your stop-loss well they put it above the previous swing high and they put it over here okay mawkish market breaks below this lowest let me go short I see the the previous swing hides here let my stop-loss go above the previous swing high and what happened is that the market somehow rather in knows where your stops is it is attracted to your stocks because it creates a liquidity and order flow in the market so what happens the market reverse up higher in this case you can see in Reverse up higher eat your stop-loss before coming down lower again or I can see that it’s your stop-loss here and then hits down lower again okay so don’t put your stop-loss above resistance in this case if you wanna set your stop loss right set it away from market structure we will talk about that later so let me give you another example this one here the five year Treasury note futures same thing right market you know it’s in an uptrend you want to be by in an uptrend so when you buy you buy near an area of support so the price you can see in this case right okay James it came in to a near my area of support right let’s say support us this area came in somewhere near order so higher close let me go long oh I see this low of support me put my stop-loss just below this law of support well this what a textbook says right stop-loss below support well guess what market knows where your stop is it comes down trigger your stop-loss before reversing up higher so now how should you know protect yourself from this phenomenon if you look left right over here this is the loss of support is the loss again this candle the spike down take up possibly this loss and this loss over here so so what now the trick here is not it’s a quite simple set it away from support net resistance so we can see over here I give it some buffer so let’s say you have identified this loss over here what you want to do is to use an indicator of let’s say the average true range indicator let’s go with currency here so since this is something that’s more from low familiar with your so let’s say you are let’s say you know you want to shut this market and you notice that this is the hikes you don’t put your stop-loss just above this size or 1 2 pips above it give it some buffer so what you can do is use an indicator like the average to range I usually use a 20 period average true range because there is to any trading base and a month ago if SMA because that’s a calculation that I understand and actually doesn’t really matter which type of eme use I use ssme and now I yell to do right is to find out what is the average daily volatility at this point in time and you just look over here to figure it tells me that right now Aussie dollar is moving an average of about 37 pips a day okay so what you want to do then is that if let’s say you somehow or other you want to shut the markets right you want to set your stop loss and away from market structure so you know that this is the nearest market structure you know that this is resistance identify what is the heist so let’s see the highs right now it’s a let’s call it X okay and you know that 1 8 here right now is about 27 pips so just the X plus 37 right and let’s say you get a value of y your stop loss will be at Y so this gives you a 180 our buffer from the highs right this is 180 our buffer this way right noodle if your market spikes up higher at least you have some room right for the trade to survive that sudden spike up higher which you know occurs very often right in the markets so this is how you actually you know protect yourself right from getting stopped hunter does it make sense okay so this so this is a very useful technique to to do and another tip for you right so one each here is a parameter that I use right and some of you it might be too tight or it might be too too too loose it’s up to you to decide what parameter you use if you are more comfortable with having to each here let’s find good with it you prefer 1.

58 here go with it right just bear in mind that the wider your stop-loss right the smaller your position size will be and then in turn right will affect your risk reward ratio later on so again right you have to find something that suits you but the principle here is to give your stops buffer is to set your stop away from market structure so it doesn’t get you stopped hunted and it’s obvious levels on your charts okay so that’s mistake number three I said in your stop loss right just you know below support or above resistance so let’s do a quick recap right number one don’t be a one-trick pony right though for example if you trait breakout and retest all right what if the market doesn’t retest to your breakout level what now I’ll share with you you can look to treat the trend continuation shop better like a bull flag pattern or maybe a ascending triangle pattern you can also use the multiple time frame analysis to look for a false brick setup on the lower timeframe that’s possible as well one thing that idea is that you can also use the moving average right to help you identify the area of value on your chart as well to identify nowhere else you can enter your tree number two all right don’t treat far away from an area of value because at this point if the market is far from an area of value it’s prone to be making a pullback and when you’re entering traits too far from an area of value chances are you’ll get stopped out on a pullback so you know find out where is the area of value and trying to treat nearly as near as possible to it and finally I mentioned right don’t send your stop-loss just below support or buff resistance it is very prone to you know getting stopped hunted right because this is where everyone else set the stop-loss alright so if you’ve enjoyed this video hit that thumbs up button and subscribe to my youtube channel the links are below hit subscribe thumbs up and if you’re a little more a little more about price action trading is something that you know you resonate with right what I want you to do is go down to my website overhear trading with Rainer come the links on top and download this guide over here the ultimate guide to price action trading just click this orange button over here right and you receive it in your email for free how do we learn support resistance how to draw it not a better time your entries and exits trading strategies and much more so go down to my website download the ultimate guide to price action trading level up your trading and I will talk to you soon you


Please enter your comment!
Please enter your name here