A Price Action Strategy
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Thread: A Price Action Strategy

  1. #1
    Hi Guys (new member, first post )

    OK, I know this journal is not about ccy's, but I hope you can all forgive me. One more thing to add is that I might not start posting actual trades until... well maybe not until next week, however, I wish to examine the fundamentals before I start posting the trades.

    So, lets get into the nitty gritty of the egy:


    The trades I post will be for the popular Eurex futures contracts - EuroStoxx 50 futures and Bund stocks. I will look to make trades between 07:00 and 18:00 for Bunds, and 08:00 - 18:00 for the Stoxx (the money market in stocks does not open till 08:00, thats the reason ). I won't hold any overnight trades, which means I will have to close positions by 21:00 at the latest (the exchange closes).

    Strategy principles

    The egy is basically comprised of two factors:

    1) Mark out significant prices in the market structure

    This basically means support / resistance. All prices aren't created equal, some are more significant than others - that the first part of the egy is to highlight the important ones and pay attention to these.

    2) View the price action at those important levels

    When we get to those levels, we watch the behaviour to have a heads up of the new price discovery prejudice (which way it is likely to proceed ).

    My Strategy particulars

    I will be using volume bars at two different periods (originally, 20k and 2k, but these are susceptible to change) - a bar/candlestick is shaped when x many contracts have exchanged. Volume is the lifeblood of any market! I know getting accurate volume amounts can be tricky in forex, but I guess you can use tick/range pubs or plain old time pubs if you wanted. You guys play around with it and post the results if you want.

    What exactly are we searching for?

    The quickest way to describe is by taking a look at the pdf's I will unite, but just in case...

    The support/resistance part is fairly self explanatory, so I will concentrate on the decrease timeframe (well, volume frame) stuff...

    The lower TimeFrame (TF) will be utilized for entrances only. We will concentrate on the swing highs and swing lows - we all know the Lower Low / Lower high idea, and it is for a change in this dynamic that puts us right into a position. We seperate the Highs / Lows to a top edge and a lagging edge. In a downtrend, the swing extremities are the top edge, along with the swing highs are the lagging edge (and vice versa). If we do not receive any clear indiion of the bias against the price action, we define the price as rangebound and change to a breakout egy.

    If you have a look at the lengthy Entry PDF, I have seperated it into three parts. The first part is what we look for in a trade off service (just reverse it all for shorts off resistance)...

    1) Long entry

    At service, we are set to amber once we get a poorer leading edge - in this case, a Higher Low. We then put orders in to trigger a trade long once we receive a break of the lagging edge - in this case, a Higher High. The stop moves behind the Higher Low.

    However, it does not always work for this, so we will need to be ready for chop...

    two ) Range Definition

    If we are set to amber and waiting for the green light, but the Higher Low is breached (hence setting a Lower Low)we pull on the order and place the range as appropriate - we are then on the watch for a.. .

    3) Breakout Strategy

    Once we've set a range, the next thing to do is to await price to exchange away from the range. If we exchange over the range we look for longs, brief if we exchange under. We wait for a pullback after the breakout (so we know where to put our cease ) and put an order in over the high / beneath the low.

    One thing to note is that firstly, we are looking for a change - but when (by our definitions) price goes to a rangewe can exchange both OR short.

    Thats about it for entrances.


    like I mentioned previously, our lower TF is ONLY used for entrances. In my experience, micro handling trades on a lowly TF makes you too early. My basic philosophy on lower time frames (but you define low) is that they are only useful a number of the time; when you think there may be some sign because of the particular context of the broader market. If the current price is not significant in term of market construction (i.e. at or close a particular service or resistance level) then that which on the decrease TF is merely sound generated by order flow.

    It follows, then, that our exits are managed on the Longer TF. Plain and simple, we look for the upcoming significant level in the market, and place our targets a two or three before it. Stops behind pullbacks, but only pullbacks on the higher TF, not the lower.


    The following example is from EUR/USD (I will try and post setups on the major intruments if and when I get the time, but I thought I'd place a forex one for you guys in my first post).

    Firstly, we'll have marked out the reduced of 25th March as a significant price in the market arrangement.


    We then look at our lesser TF (in this case, 60m) for an entry...


    in this examplewe see a lengthy entry triggered by the sequence...


    The particulars are that we will have been LONG 1.3348 (one tick above the HH) with our stop under the Higher Low (so stop at 1.3264). Our exit order is set just underneath the last swing high on the daily chart (remember we do not look at the decrease TF for exits), which by my reckoning is at about 1.3680, making our exit order 1.3 678. I've put it all on the 60m chart only for clarity to start things off.


    I am pretty sure I will have left out something, so any questions just ask, and please don't hesitate to comment!


  2. #2
    The news on Greece seems to be favorable, which ought to offer short-term service to the Euro and narrow Greek spreads a fair bit.



  3. #3
    OK, for some reason the images I added are visible if you click the post reply button and read the article from that point. I will attempt to set them in this post, but I can not really get off the ground till I can attach more charts.

    The Daily Level:


    And the 60m entrance here:


    and the whole thing zoomed out so you can get a better look:


    So, theres an illuion of what I Am Searching for in a Long entrance. I will attempt to post examples of other kinds of Low / Low sequence on other markets when I can add more charts.

    Enjoy the rest of your weekend everybody;-)

  4. #4
    OK, looks like I have now got full member status, so I ought to be able to place charts as and when I could. If any of you men want to take a peek at the Bunds / Stoxx contracts you can get all the details at http://www.eurex.com (the exchange website). The tickers are FESX for its EuroStoxx 50 and FGBL for the Bund. I don't know a lot about the spreadbetters so can not tell you exactly what the tickers are - sorry.

    As a general introduction, I have attached a daily chart of their current contracts (currently June' 10) for both to give a synopsis of the current conditions.

    As we speak the EUR/USD illuion trade is just a little bit offside.

    Great Trading

  5. #5
    OK Quickly before, this is an example on Cable, using the 60m and 5m timeframes...

    I will try and insert the charts with notations, however the trade would be something like short on a break of 1.5438 with stops at 1.5478 looking for 1.5300

    I need to add that I absolutley hate trading cable so you should probably ignore this setup, but I just wanted to give you an idea of what a trade resembles in actual time.

  6. #6
    So there are intriguing amounts coming up in the Stoxx and the Bund. If anything puts up I will probably have to just post the amounts (entry, stop, goal ) and add the chart after, OK?

    These are both 25k Volume charts.

    The Cable installation triggered brief by the way.

  7. #7

    Nicely Bunds got into our level and subsequently sold off pretty difficult, almost at where we'd look to be taking our profits. We're now looking for a bounce off teh resistance support amount in purple on the chart.

    Stoxx are still on the table though. . We've bounce off the amount, and are now awaiting a greater Low (LL LH LL HH HL HH )

    charts attached

  8. #8
    So we now are set to amber on the Stoxx. We do not know if the greater low will maintain here, however provided that it does not print a new Lower Low we count it as a greater Low.

  9. #9
    We are in on the Stoxx trade!

    We published above the Last High at 2879, and bought at the deal of 2880. Our stop is under the Higher Low pullback (in orange) at 2872. Targets is just two ticks under the top on the Higher timeframe chart, which is at 2893.

    LONG 2880 STOP 2872 TGT 2893

  10. #10
    Hi Jonty

    I exchange a smilar style to you (using HH, HL,LL, LHs)
    couple questions:
    a) How do you place SR - my webpage sometimes looks like a 6yr scribbling!!
    How do you chose what is a significant SR?

    B) How to identify whether the trend has changed (instead of the usual correction)?

    C) Do you enter on the third/forth iteration (e.g. when there's HL, LL, HL, LL would you enter on the next HL?)

    D) Your charts on first post do not show?



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