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Guys,
I really want to be expert on price action 🙂
After seeing all setup and ready to place trade - moment I am in, market goes against me and either stopped out or need to close trade because I know it will not work.
Am I missing something here, If I print a day chart with 5 min time frame, I can see entry and exit very easily - but problem in live trading.
Any help?
Jeet
We’ve all been in your situation. The chart always looks so clear and obvious at the end of the day in retrospect. Tough one to answer without knowing which specific setup failed.
Beginners are naturally hopeful. They hope every strong move will break into a huge trend. Unfortunately hope doesn’t move the markets; trends are rare.
First make sure you assess which part of the market cycle you’re in. If you’re uncertain, then assume it’s a trading range and assume that every breakout will fail. You are only conclusively in a trend if the market shows sustained buying or selling with repeated breakouts to new highs or lows of the day and Globex (and ideally yesterday’s high and low too). Until you get that, it’s better to be pessimistic and assume the market will fail at prior highs/lows. Sometimes a leg up or down in a trading range can look like a trend.
Before entering a trade, establish your stop placement, and from there extrapolate what your target is. Your target should be at least 1.5RR.
Then consider the following questions:
- Is your target beyond the top of a trading range?
- Is your target beyond the high/low of the day/Globex/yesterday?
- Is your target beyond an obvious trend/channel line?
If any of these are true, then assume the target will not be reached and that you’re buying too high or selling too low... Unless you’ve seen evidence of sustained breakouts to a new high/low. This is not always the case, but until your grasp of price action is more acute it is better to be pessimistic about breakouts rather than hopeful. Your probability is likely higher trading in the opposite direction.
Thanks Kevin,
You cover most of my points and got where am I lacking. I'm in trading for many years in end of day purely in technical analysis which I never liked it (how come some indicator predict market - if does then every idiot in market will be trillionaire by now lol).
After Al price action my search end. This is what I was looking for.
I liked most : "be pessimistic about breakouts rather than hopeful" 🙂
I will remember your 3 bullet points - they are best - spot on.
Cheers
