Do you want to “top up” your trading results? Of course you do! Read on because today's lesson is a powerful price action trading tutorial that offers you some solid, actionable strategies that you can start implementing immediately to improve your trading results.
The following "tricks" are essentially some of the strategies in my war chest trading. the same techniques that I use every week to be very likely to enter the market. I've written about some of these over the years on this blog and in our members' area, but I wanted to give you a brief summary of my favorite tips and optimizations that will help me improve my overall R-return. As you may know, I measure my returns in R (R = risk unit) and not in percent. For me it depends how many Rs I risked and how many Rs I returned. To learn more about it, read my lesson on risk reward and money management.
Here are my 3 favorite trade tricks that greatly increase my chances of returning more Rs per trade …
Second chance entries for important signals or outbreaks
A nice signal is often formed and for some reason we will miss the first entry. In this case, you do not need to panic or "chase" the market, as most of the time there is the possibility of entering the trade with a second chance. You just have to be patient.
The idea is that a market often returns at least once after the first step to an area from which it has broken out or to a strong price action signal. He will often return there more than once.
We can implement this strategy simply by waiting for the price to return to where an obvious price action signal has formed, or to an area with a strong breakout level or event area. Once the price has returned to this area, simply enter the original direction of movement.
Here's an example:
In this case, the S & P500 had worked out an obvious support zone / event area near 2590-2530. When the pin bar signal formed, which is circled in the table below, this was a second chance (and an obvious one) in the upcoming upward trend …
In the next example table below, we see a clear AUDUSD pin-bar reversal that is formed at a very strong resistance level. Now I will be the first to notice that this would have been a somewhat difficult trade at the time because it was a counter trend. But the market followed deeper and then returned to where the first pin header had formed and formed another pin header, giving you the obvious second chance to sell again …
In the last example table above, you could have entered with a stop loss above the first high of the pin-bar reversal and would have had a very good risk-reward ratio if you had gone back on tracking the end of the pin-bar. This can significantly increase the potential R-return of a trade as your stop loss is small and there is great potential for a strong move if you are not stopped. You can see what happened above. Note: You certainly do not have to use a "narrow" / small stop loss for these second chance entries or try to achieve a "narrow" / small stop loss. A broader stop loss is also fine, and in fact a broader stop often allows you to stay trading longer and reduce the likelihood of early shake-outs / stop-outs before the market moves in your favor. Training, time and practice will make you better at stop loss placement.
50% entries of signals and swings
I personally LOVE 50% entries of both price campaign signals (mainly pin bars) and after 50% tracing a major market upturn …
A 50% pin bar entry is something I often refer to as a "pin bar optimized entry" where you usually set a limit order at the 50% level of a pin bar. Often the price will drop to the 50% level, especially for longer tail pens. This leads to a very narrow / small stop loss and thus significantly increases the risk-versus-reward potential of the trade. For more information on this input technique, see an article called The Trade Entry Trick.
Here is an example of entering a current gold pin bar that reaches the 50% level of the pin bar. Note that it was almost two weeks later when the price reached that level, but it doesn't matter. What matters is patience and understanding these entry-level changes and waiting for them to occur …
There are whole books on trading with 50% retracements of important market fluctuations. Indeed, history shows that most market movements track around 50% and then resume the original direction of movement. This is obviously a big clue that we can use and look for.
The following example shows two 50% retracements of downward movements in AUDUSD. Both also had a signal confluence, which means that a price action signal has formed near the 50% level, which gives you further confidence that a step back would come in the other direction …
Pyramiding – Snowball wins in out of control trend markets
Note: This is only for advanced and experienced traders, as implementation is relatively difficult and advanced knowledge and understanding of price promotions and market dynamics are required to be successful.
I am talking about a pyramid position in a very strong / out of control market. This allows you to significantly increase the reward potential of a trade and is really the only way to quickly make a lot of money in the market.
I recently wrote an article detailing graphs of how to trade an out of control trend. So look at that first.
However, the basic idea is that if you are sure that a market is moving aggressively in one direction, ideally after a significant signal or breakout, you can try to set up a pyramid by adding positions at strategic points. This will help build a bigger position, and if the market continues to move aggressively in one direction, you can make a nice part of the changes in a short time. Of course, you have to plan your exit strategy so that you don't lose all the money if the market continues to move in your favor!
Even with this pyramid strategy, you should only ever be at risk of 1R (you move earlier positions to break even or secure profits as trading progresses in your favor), and you would normally aim for 2R, but in one out of control Guessed Trend You Are In. With pyramids, the same 1R seed can become 5R or even 10R rewards. Note that with larger positions, the risk of weekend gaps is greater. The market could create a gap with you. This is another reason why this strategy only applies to advanced traders.
Perhaps my favorite trade trick that will definitely "boost" your trading results is trading with confluence.
This means that we are looking for several supporting factors or pieces of evidence that match for a trade. We are waiting for the “stars” to align, so to speak, to take advantage of the opportunities in our favor. Indeed, this is how the success of trade is born and wealth made, and the central issue here is patience. You may have to wait weeks or months for the right trend, level, and signal to match, but if you have this T.L.S. Registration You know that you have a very strong trade on your hands.
Now let's look at some examples of different T.L.S. Combos. You don't always need all three, for example, you can consider and accept trades that have only one trend and one signal. Just know that the more confluence pieces line up, the better. I am expanding in more detail with many more chart examples of all the different confluences that I am looking for in my price promotions course.
This example shows a nice pin bar signal that has formed in line with a strong trend. Note that in the context of a downtrend, it was a pin-bar sell signal after the price pulled back slightly upwards, which I call "sales strength in a downtrend":
The next example shows how you can enter into a trade with just one key-level signal. This was a recent pin bar signal in the Dow Jones Index that has formed in an obviously important support / event area. So you had a clear / obvious signal at a clear / obvious level, but the trend was not obvious, more of a sideways market, but this shows that 2 out of 3 can sometimes work:
- "The perfect storm" …
After all, I would call this a trading strategy for "lonely islands". I would take the trading strategy to a lonely island if I were stranded there for years (somehow with good WiFi, lol) and could only choose one strategy.
This happens when the trend, level and signal are in line. You can also have more confluence lines in a row, such as: B. an EMA or 50% retrace swing point, etc. The more the better. But if you have a T.L.S. It's time to stop thinking and acting:
The trade tricks and optimizations you read about above have helped me improve my profitability by giving me an advantage on my trading entries and allowing me to increase the risk to reward ratio and increase my returns per trade improve. You really need to maximize your winners because frankly, good trades don't happen too often. If you act correctly (be patient and disciplined, etc.), you will not act often, but with a low-frequency approach, So keep the tips outlined above to maximize your winners.
Understand that I don't use these approaches on every trade, but I'm always looking for them and looking for ways to apply them while analyzing the market daily and ultimately looking for trade setups on the day of the trade.
Trade is really like war. They are not only against every other trader, but also against you. You literally need to have your "war chest" full of different "weapons" to increase your chances of winning and maximize your returns. The strategies discussed above, as well as the concepts that I teach in my course on advanced pricing, offer you everything you need to fight a successful market and hopefully emerge victorious.
What do you think about this lesson? Please let us know in the comments below!