OK ok, I know I haven’t been very good about keeping up with this blog, but I have a good reason – I have been spending my free time LEARNING new techniques and ideas. These I will share with you…I am not sure what is best or what my exact strategy will end up being, but I have found a lot of great information.
First, let me say that I am still mainly a Jacko type trend trader, I have just added to my arsenal to refine my entry AND exit strategies. For those of you that don’t know – Jacko’s style is to wait for a pull back from a big move and enter the market in the direction of the major (daily) trend. He has a few other ideas that are extremely useful but I won’t get into those as they are on this blog somewhere.
What I have been looking at is mainly Price Action in the James16 Thread @ ForexFactory. He also runs a private group that is subscription based – from what I hear it is extremely successful and a near 100% satisfactory rate from it’s members. I would join, but I think I need to understand the free stuff first and then, if needed, I’ll jump in and subscribe to his group. What I have learned so far that has been useful from the thread are a few bar formations that can lead to understanding what the masses are doing and how to interpret them. One of these formations is a “Pin Bar” – this is short for a Pinocchio Bar – below you is an image with the Pin Bar circled in purple.
As you can see it has a long nose and the open and close is in the lower 1/3 of the bar as well as below the previous bars high. This is a type of exhaustion price pattern – they usually appear at the top of a large move up (or bottom of a move down) and if in the right spot (like an area of major resistance or Fibs or major trend lines) can signal a change of direction. If used sparingly and if you are very selective picking only the A++ Pin-bar setups – they can be very profitable alone. However – it is my idea to combine and meld some of these ideas into one and use them in conjunction with one another to help verify and screen setups.
Another type of price pattern is called an Inside Bar or IB for short. While my analysis has lead me to believe that these are a lot less dependable and you can get a lot of false signals from then, if used in conjunction with other patterns – they can signal some great large moves. An IB is a bar that is completely, high and low, contained within the previous bar’s high and low. They are pretty much indications of consolidation and one can expect a fairly large move after the bar that contains the IB is broken – high or low. In fact the photo above has an IB next to the Pin Bar – double whammy…when the bar after the IB broke the low of the Pin Bar it continued in the direction pretty quickly and decisively.
These are just a few of the things I have been picking up – I promise there are a ton more out there, but I want to get comfortable with these simple ones first and then I’ll move on to more advanced stuff.
Other items I have been playing/working with are areas of MAJOR Support and Resistance drawn off the Weekly charts. I picked this idea up from Clockwork’s Thred on ForexFactory – he is a great trader, and quite the writer too – I was glued to this thread until I finished it and have been using his ideas to work with my trend analysis (Jacko) and looking for Price Action (James16 – IB’s and PB’s) to confirm that the pull back is finished and I can then jump in with the major trend.
Everything that I have been learning has helped me to realize that trading is just not looking for one idea and trading it until your blue in the face – or worse, you blow your account. It is so much more about building a strategy around your trading style – learning from others and using their strategies to refine and modify yours. But MOST importantly is being comfortable trading your style – if you are taking trades from a strategy that you aren’t comfortable with then I can bet you that you will be nervously watching the trade and this will result in getting out too early with a small profit or a small loss that could have turned into a huge winner! Get comfortable enough to be able to trade your plan and walk away from the screen and let your plan unfold it’s self. Nothing is more gratifying then coming back from your day job and seeing that your plan made you money that day. Or if it didn’t, then you will have plenty of information to find out what went wrong – you paid a small price to learn how to do it better next time.
Well, as my fingers are cramping, I think I’ll wrap it up. I have soo much more to write, but I’ll get to that soon – hopefully tomorrow after I get back from golfing (mmmmm golf). See you on the green!