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All the secrets Price Action patterns

Portal Forex trader 20.04.2017 at 17:55

Forex trading strategies, expert advisors, indicators, video training trade

Hello!

Many traders use Price Action methodology, but do it "on a whim". Because the technique is very variable, it has a certain advantage — the ability to develop his own style, but there is a downside — the lack of hard rules makes it impossible to sabotage and fundamentally wrong trade at a seemingly profitable method. Today we will try to fix.

Recently, I had the need to comprehensively study the behavior of Price Action patterns, to figure out how all the same it is better to trade a particular setup to determine the effectiveness of the trade each and the change of efficiency depending on the applied filters. In other words, I had to check out all the ways to trade each of the patterns, as they are better to trade with the trend or against, pending orders or market, what is best to take the ratio of risk to profit, the level should be patterns that can serve as a reliable support and what is not and so on.

you Agree that such information would be very useful to all those in his trade uses candlestick patterns. Since I anyway needed to collect statistics, I decided to issue its findings in the form of articles and share the information with you.

research Methodology

I will sequentially test each of the following patterns:

Doji inside bar outside bar Pin

All these patterns are quite common. In General, all Price Action patterns taken originally from Japanese culture analysis, candlestick charts, just different names and sometimes slightly different approaches themselves. So I'll give a brief description of Price Action pattern and the name of his counterpart in the Japanese version.

the Tests we will conduct at the periods H1, H4 and D1. The testing period will take from 2000 to the present day. The currency pair take the following: USDCHF, GBPUSD, EURUSD, USDJPY, USDCAD, AUDUSD. These are the basic tools most running. If we took to test all currency pairs, our study lasted for a month – only one pattern in the current set will have to conduct more than 500 tests. By the way about them.

the First test we performed to explore the predictive ability of the pattern. Here we no setting stop loss and take profit if you experience a pattern will enter a trade and exit after a fixed time in the candlelight from the opening of the transaction– 1, 2, 3, 4, 5, 6, 8, 10 12. We will compare the result with the result obtained when tossing a coin. In this case, we compare the number of profitable trades, that is, in many cases, the forecast was justified. No matter how far from the entry point left price. Thus we measure the predictive power of the pattern regardless of the system inputs, outputs, money management and control position – the net efficiency in comparison with completely random inputs at the coin toss. Call it a test of forecast efficiency. When conducting this test we will also test various augmentative and debilitating pattern of guidelines and rules. Each table of results for that pair. Columns, mean of closing after a certain candle, line – periods. In the table are the percent profitable trades.

the Second test is to determine the best ratio of stop loss and take profit without any additional filtering of the inputs. Let's call this test a test of Risk/Reward. Each table of results for that pair. Columns indicate the ratio of foot to the take profit line periods. The number of bars in history for finding the extremum for the installation of stop we will take equal to 10. In the table are the final deposits. Trade is conducted with a fixed lot of 0.1.

the Third test input pattern, filtered by the round level. That is, we will enter a transaction pattern only if it is based on circular level. We will also try to apply different ratio of profit to risk. Test the levels. Each table of results for that pair. Columns indicate the ratio of foot to the take profit line periods. In the table are the final deposits. Trade is conducted with a fixed lot of 0.1.

the Following test – taking transactions on pattern at a certain location of price relative to moving average periods of 50, 100, 200. We will also try to apply different ratio of profit to risk. Let's call it test for trend. Also do the test using the position of the moving averages on the contrary – allow sales when the price is above the MA and buy when below. This test will call reverse. Each table of results for that pair. Columns indicate the ratio of foot to the take profit line periods. In the table are the final deposits. Trade is conducted with a fixed lot of 0.1.

Hereinafter, the same test, only with the filtering of two moving averages with periods of 14 and 21 to determine the direction of the entrance. If MA14 MA21 higher, is only possible purchases. And again we will also try to apply different ratio of profit to risk. Test by trend №2. Each table of results for that pair. Columns indicate the ratio of foot to the take profit line periods. In the table are the final deposits. Trade is conducted with a fixed lot of 0.1.

the Following test using the same moving averages (50, 100 and 200) as a support for the pattern. Test level MA (50, 100, 200). Each table of results for that pair. Columns indicate the ratio of foot to the take profit line periods. In the table are the final deposits. Trade is conducted with a fixed lot of 0.1.

And the last test with the use of oscillators: Stochastic, RSI, CCI, WPR. Test oscillator (Stochastic, RSI, CCI, WPR). Each table of results for that pair. Columns indicate the ratio of foot to the take profit line periods. In the table are the final deposits. Trade is conducted with a fixed lot of 0.1.

At the end of each paragraph of the test we will do a brief conclusion about the success of the application of a particular method of trading. Upon completion of all tests for a particular pattern, we will make General conclusions about the effectiveness of its application and the best ways to trade it. Also we will try to combine all the best techniques I found for trading this pattern. Let's call it test pattern.

after receipt of the test pattern, we try to use it to get a signal out. Let's call it a test release.

but in the end turn to the work of all the best that we could find and see what happens. This test we will be called a combined test.

Another point which I would like to discuss before carrying out tests is the subjectivity in the determination of patterns. The fact that the description of the patterns, the authors often use such adjectives with regards to candles, forming a pattern, such as large, small, medium. More often there are features like candle almost without a body and with long tails, for example. The fact that the car, these concepts are alien, the computer understands only the language of numbers. For the algorithm need to be specific. In other words: gentlemen, how to hang in grams? This question can be answered several ways – you can pick up a specific number of points to determine a long candle in front of us, or not, and we can use this wonderful indicator like ATR. The ATR indicator measures the average volatility in the market, which we very useful, because volatility varies from market to market and even from day to day. So, the ATR shows the average volatility value, the length of the candle medium size in the current market. Therefore, we assume that:

Small candle from 0 to 0,6 the value of the ATR; the Middle candle is from 0.6 to 1.4 the value of the ATR; a Large candle, from 1.4 to 2.5 ATR value; a Very large candle, from 2.5 to 4 ATR value; Huge candle – more than 4 ATR.

No body have candles or a very small body – up to 10% of the length of the entire candle. The same applies to the shadows.

Small body (shadow) – up to 30% of the total length of the candle; Medium (body shadow) — from 30% to 70% of the total length of the candle; full-Bodied candle is where the length of shadows is not more than 30% of the total length of the candle.

I Think with the basic definitions we have finished and you can go directly to the actual tests.

Doji Patterns

Doji (doji) is a candlestick where the open and close are equal or almost equal. Must also be available shadow on both sides of the candle about the same size.

Before the doji candle must be a full-bodied candle medium or large size in the direction of the trend. It is this candle and determines the nature of the doji.

When trading doji should wait for confirmation, then there should be another candle after the appearance of the doji. If the last candle closes in the direction of the preceding trend, we get the pattern of Price Action "Move — Congestion – Move" or "Movement – Consolidation – Movement" — the pattern of trend continuation.

If the last candle against the established trend, we have a pattern Reversal Price Point or "pivot Point". In the Japanese version of the pattern called "Morning or Evening Doji star". Exactly the same pattern, but just with a little candle is a doji, is simply called "Morning or Evening Star". If between the doji and its surrounding candles have been the gap, that pattern becomes pattern "Abandoned baby". As in the Forex market gaps are infrequent, we do not distinguish this pattern separately.

as for the doji candle, it is of three varieties:

Doji star has a very small body (10%) or do not have a body, the size of the candle – small (up to 0.6 ATR); the Second type is a doji a tombstone — is very similar to the pin bar, only almost without a body; the Third kind — doji-rickshaw — this candle is a small body located approximately in the middle of the candle and are large enough shadows to both sides about the same size.

it is Also frequently mention the doji candle I mean a candle of small size (up to 0.6 ATR) with a small body (up to 30% of the length of the whole candle). Let's call this candle in this study, the lax doji.

Now, let us Dene the frequency of occurrence of this pattern on the charts of different currencies from different periods. Here we won't use any filters and confirmations. Check just the mere appearance of a medium or full-bodied long candle with a doji candle of one of the four types.

As can be seen, the frequency of appearance of the pattern on the daily charts small enough. However, on periods H4 and H1 pattern appears quite often.

Price Point Reversal

the First test we will conduct will be the pattern of Price Reversal Point or "pivot Point". The Japanese equivalent is "Morning or Evening Star". The entrance we will implement fully according to the pattern rules, pending orders placed by 5 points from the High/Low signal (positive) candles. Test of forecast efficiency is without Stoploss and Takeprofit orders for other tests stop is set to deathbaby extremum. That is, in the next 10 candles is searched for the lowest point to the highest purchases or sales, this point is taken as the indentation 5 of the old points and the resulting level is set stop. Takeprofit is calculated as a ratio of the value of the stop in points – 1 to 1, 1 to 2, 1 to 3, and so on. So how are we going to log pending orders, you must specify a delete rule of orders in case they didn't work. I'll take the common version if for 5 candles order is not activated, it is removed.

the Test of predictive efficiency

Here we test the predictive efficiency of the pattern, that is, how likely is movement in the right direction after a certain number of candles after the appearance of the pattern.

Doji star

Doji-gravestone

Doji rickshaw

Not strict doji

Pivot table

As can be seen from the results, no big difference what type of doji candle is used as a pattern. On some instruments a little better works doji star, on the other doji gravestone and so on. Therefore, in further tests we will combine all types of doji candles in one. In addition, you can see that on average the pattern allows to predict the price with a probability of about 45%. So how then to capitalize on such a pattern, when we are more often wrong than right? The secret is in the correct ratio of profit to risk, which will be discussed further.

the Test Risk/Reward

on the Basis of pivot table, we can conclude that not all tools fit the classic ratio of 1 to 3. If you look at the average values for all pairs, we see that it is best to show the ratio of 1 to 2, 1 to 3 and 1 to 6. However, what the ratio is, the less you will have profitable trades and longer drawdown periods. In addition, for each pair should choose your profit-risk ratio, since, for example for USDCHF is optimal to use the ratio of 1 to 5, but for EURUSD the ratio is the worst. In addition, for different periods, this ratio is also varied. Whereas for TF D1 mostly optimally 1 to 3, then N4 is better to choose 1 to 2, and N1 is 1 to 5 or higher.

Test round the levels

Test the level of MA 50

Test level of 100 MA

Test level 200 MA

Tests on the levels – the pivot table

As the table shows, the pattern based on the level gives a much better effect, and it is not important what is used as a level. And again on different instruments the effectiveness of a particular type, level of different. For example, the round levels are well respected by nature on almost all currency pairs, but in the periods below are not respected at all. To apply for the moving average with the period 50 could be a good idea for daily charts for USDCHF and GBPUSD, and very bad USDCAD. On average, the best level showed MA100. But on the USDJPY all levels perform poorly. In General, then again there is no universal option and everything must depend on the nature of the particular currency pair. But we have seen that pattern, based on the level works in most cases better.

the Test for trend MA50

Test for trend MA50 (reverse)

Test for trend MA100

Test for trend MA100 (reverse)

Test for trend MA200

Test for trend MA200 (reverse)

Test for trend No. 2

Tests on the trend – summary table

As can be seen from the table, the best indicator of trends – the good old rule: when the price is above the moving average, the trend is upwards, and when below the trend is down. While it is best to use the periods of moving averages 100 and 200. While it is best that approach works on the daily charts. Despite the fact that again we have observed individual preferences for each pair and period, in General we can say that working with patterns is trend really improves the original result.

the Test on the Stochastic oscillator

Test CCI

Test WPR

Tests on the oscillators summary table

the Use of a statement of oscillators as a filter, of course, improve the results. While it is best yourself in this role shows a Stochastic Oscillator.

the Test pattern

it looks like the trade pattern on the H1 on the considered pairs:

If you replace the standard stop of the candle on the stop on the ATR indicator, we get the following result:

you can Also add to the trading system trailing stop on the shadow – we will draw our initial stop loss after the price of the shadows of the candles are:

But what if to use the opposite signal to exit the position:

As can be seen from tests the best signal is achieved when setting the stop loss at the level of 2-4 ATR from the entry price and strategy "included and forgot". And the use of the trawl, and the exit condition on the reverse signal only spoil our statistics.

Now let's look at the trade on the H4 period:

Inputs became less well, profitable trades only 25%, but we still earn, putting the foot on the classical rule – under or over shadow candle. Although the drawdown periods are quite long, but the average profitable trade is four times larger than average loss. Let's apply foot 2-4 ATR:

we Have increased the drawdown, average profit is now just less than twice the loss, but profitable trades nearly half. The Expectation grew and the profits increased three times. Let's screw the trailing stop is:

Here data are very similar to the previous one, except that the profit factor increased from 1.4 to 1.55 and the balance curve is smoother. Now add an exit condition by opposite signal:

Such a condition can lower the profit factor and total profit, but dramatically reduced the drawdown from 28% to only 6%.

Insights

, We found that there is no strong difference what type of doji candles is used in this pattern. On some instruments a little better works doji star, on the other doji gravestone and so on. In addition, not all tools fit the classic ratio of 1 to 3. The optimum ratio of profit to loss in this pattern varies from 1 to 2 to 1 to 6 depending on the instrument and period. In this case, and reliance on levels and trend improve trading results. Best as level and as an indicator of the trend to use the good old MA100. But the best oscillator to filter the signals turned out to be Stochastic. As can be seen from the summary of the tests carried out, the pattern really working, ways of filtering the signal with the trend, the levels at the oscillators also work, however, for each currency pair and each timeframe is important his approach.

With regard to the transaction, then it is clear that a trailing stop on the shadow works well only on periods H4 and above. The output of the reverse signal is also found to be effective for the period from H4. But the installation stop loss orders below or above the shadow of a candle proved to be ineffective. Much better to determine the stop loss level will approach the ATR indicator multiplied by the factor 2 to 4.

the pattern of Price Action "Move — Congestion – Move" or "Movement – Consolidation – Movement"

the Frequency of appearance of the pattern MCM

As can be seen, the pattern appears not so often even on the period H4.

the Test of predictive efficiency

Doji star

Doji-gravestone

Doji rickshaw

Not strict doji

Pivot table

As can be seen from the results, no big difference what type of doji candles used in the pattern. On some instruments a little better works doji star, on the other doji gravestone and so on. Therefore, in further tests we will combine all types of doji candles in one. In addition, you can see that on average the pattern allows to predict the price with a probability of about 45%. So how then to capitalize on such a pattern, when we are more often wrong than right? The secret is in the correct ratio of profit to risk, which will be discussed further.

the Test Risk/Reward

on the Basis of pivot table, we can conclude that not all tools fit the classic ratio of 1 to 3. If you look at the average values for all pairs, we see that it is best to show the ratio of 1 to 2, 1 to 3 and 1 to 6. However, what the ratio is, the less you will have profitable trades and longer drawdown periods. In addition, for each pair should choose your profit-risk ratio.

Test round the levels

Test the level of MA 50

Test level of 100 MA

Test level 200 MA

Tests on the levels – the pivot table

As the table shows, the pattern with the support level gives the best effect, and it is not important what is used as a level. And again on different instruments the effectiveness of a particular type, level of different. For example, such pairs as USDJPY and USDCAD not very respect any levels. While MA200 it is best proved on USDCHF and EURUSD, and MA100 on GBPUSD and AUDUSD. From this we can conclude that if you are going to use a moving average as a dynamic level, its period should be chosen for a particular market.

the Test for trend MA50

Test for trend MA50 (reverse)

Test for trend MA100

Test for trend MA100 (reverse)

Test for trend MA200

Test for trend MA200 (reverse)

Test for trend No. 2

Tests on the trend – summary table

And again the best indicator of the trend position of price relative to the moving average. While it is best to use the periods of moving averages 100 and 200. Despite the fact that again we have observed individual preferences for each pair and period, in General we can say that working with patterns is trend really improves the original result.

the Test oscillator is not required, because the pattern trend.

the Test pattern

it looks like the trade pattern on the H1 on the considered pairs:

If you replace the standard stop of the candle on the stop on the ATR indicator, we get the following result:

you can Also add to the trading system trailing stop on the shadow – we will draw our initial stop loss after the price of the shadows of the candles are:

But what if to use the opposite signal to exit the position:

As can be seen from tests the best signal is achieved when setting the stop loss at the level of 2-4 ATR from the entry price and strategy "included and forgot". And the use of the trawl, and the exit condition on the reverse signal only spoil our statistics.

Now let's look at the trade on the H4 period:

Let's apply foot 2-4 ATR:

Let's screw the trailing stop is:

Now add an exit condition by opposite signal:

the Best option again when using the ATR stop without intervention in the course of trade.

Insights

, We found that there is no strong difference what type of doji candles is used in this pattern. On some instruments a little better works doji star, on the other doji gravestone and so on. In addition, not all tools fit the classic ratio of 1 to 3. The optimum ratio of profit to loss in this pattern varies from 1 to 2 to 1 to 6 depending on the instrument and period. In this case, and reliance on levels and trend improve trading results. Best as level and as an indicator of the trend to use the good old MA100. But the best oscillator to filter the signals turned out to be Stochastic. As can be seen from the summary of the tests carried out, the pattern really working, ways of filtering the signal with the trend, the levels at the oscillators also work, however, for each currency pair and each timeframe is important his approach. With regard to the transaction, then it is clear that a trailing stop on the shadow works well only on periods H4 and above. The output of the reverse signal is also found to be effective for the period from H4. But the installation stop loss orders below or above the shadow of a candle proved to be ineffective. Much better to determine the stop loss level will approach the ATR indicator multiplied by the factor 2 to 4.

the pattern of the Price Action Inside Bar with the trend

the Frequency of appearance of the pattern IB

As you can see, this pattern is quite common even on the daily charts.

the Test of predictive efficiency

On the period H4 and a higher price direction, defined by the appearance of the pattern a little better coin.

the Test Risk/Reward

Better the relationship of profit to loss from 1 to 3 and above.

Test round the levels

Test the level of MA 50

Test level of 100 MA

Test level 200 MA

Tests on the levels – the pivot table

From the pivot table shows that it would be optimal to use as a level MA100 and MA200.

the Test for trend MA50

Test for trend MA50 (reverse)

Test for trend MA100

Test for trend MA100 (reverse)

Test for trend MA200

Test for trend MA200 (reverse)

Test for trend No. 2

Tests on the trend – summary table

In most cases, taking into account the direction of the trend in the trade improves the final result.

the Test pattern

it looks like the trade pattern on the H1 on the considered pairs:

If you replace the standard stop of the candle on the stop on the ATR indicator, we get the following result:

you can Also add to the trading system trailing stop on the shadow – we will draw our initial stop loss after the price of the shadows of the candles are:

But what if to use the opposite signal to exit the position:

As can be seen from tests the best signal is achieved when setting the stop loss at the level of 2-4 ATR from the entry price and strategy "included and forgot". And the use of the trawl, and the exit condition on the reverse signal only spoil our statistics.

Now let's look at the trade on the H4 period:

Let's apply foot 2-4 ATR:

Let's screw the trailing stop is:

Now add an exit condition by opposite signal:

it is Evident that this time the trailing stop and exit at the opposite signal has improved our trade.

Insights

the pattern For the inner bar, as with all previous faithful all the classic advice is to trade with the trend, look for the levels and keep the risk to profits above 1 to 2.

the Pattern Inside Bar Price Action against the trend

the Frequency of appearance of the pattern IB

Pattern appears quite often

the Test of predictive efficiency

Even hour time frames for this pattern show well better results than a coin.

the Test Risk/Reward

everything is as usual. I was surprised only the GBPUSD showing the best results at a ratio of reward to risk 1 to 1.

Test round the levels

Test the level of MA 50

Test level of 100 MA

Test level 200 MA

Tests on the levels – the pivot table

Not all couples respect the levels, but basically the best is MA100 and MA200. Traditionally, the "yen" and "canadian" levels of ignore.

the Test for trend MA50

Test for trend MA50 (reverse)

Test for trend MA100

Test for trend MA100 (reverse)

Test for trend MA200

Test for trend MA200 (reverse)

Test for trend No. 2

Tests on the trend – summary table

This table again shows us that any level is better than its absence.

the Test on the Stochastic oscillator

Test CCI

Test RSI

Tests on the oscillators summary table

Test pattern

it looks like the trade pattern on the H1 on the considered pairs:

If you replace the standard stop of the candle on the stop on the ATR indicator, we get the following result:

you can Also add to the trading system trailing stop on the shadow – we will draw our initial stop loss after the price of the shadows of the candles are:

But what if to use the opposite signal to exit the position:

this application RAH stop by ATR, trawl and output improved the quality of trading.

Now let's look at the trade on the H4 period:

Let's apply foot 2-4 ATR:

Let's screw the trailing stop is:

Now add an exit condition by opposite signal:

this time the best results were when using a standard approach. And ATR stop, and trailing stop, and exit on opposite signal only worsened the result.

Insights

We were convinced in the immutability of the main recommendations when trading candlestick patterns. In General, the pattern inside bar gives quite good results.

the pattern of the Price Action Outside Bar

the Frequency of appearance of the pattern OB

the Pattern OB — quite common in any timeframe.

the Test of predictive efficiency

the Efficiency of the pattern to predict the future direction of the prices are a little worse than coin.

the Test Risk/Reward

best for the pattern OB to apply the ratio of profit to loss at least 1 to 3.

Test round the levels

Test the level of MA 50

Test level of 100 MA

Test level 200 MA

Tests on the levels – the pivot table

Any type of level for this pattern proved to be quite effective filter.

the Test for trend MA50

Test for trend MA50 (reverse)

Test for trend MA100

Test for trend MA100 (reverse)

Test for trend MA200

Test for trend MA200 (reverse)

Test for trend No. 2

Tests on the trend – summary table

Pattern OB is definitely worth it to take the direction of the main trend.

the Test pattern

it looks like the trade pattern on the H1 on the considered pairs:

If you replace the standard stop of the candle on the stop on the ATR indicator, we get the following result:

you can Also add to the trading system trailing stop on the shadow – we will draw our initial stop loss after the price of the shadows of the candles are:

But what if to use the opposite signal to exit the position:

Best trading pattern OB works with the trailing stop and stop loss are exhibited according to the testimony of ATR.

Now let's look at the trade on the H4 period:

Let's apply foot 2-4 ATR:

Let's screw the trailing stop is:

Now add an exit condition by opposite signal:

the same applies to the period of the H4 — the best result when applying a trailing stop on ATR.

Insights

Pattern Outside Bar is very good shows itself, especially if trading it, apply an active management of open positions.

the Pattern Price Action Pin Bar

the Frequency of appearance of the pattern is Enabled

a Good pin bar appears on a chart a little less OB, and he is one of the most frequent patterns of PA.

the Test of predictive efficiency

the average predictive efficiency pin not pattern better than a simple toss of a coin.

the Test Risk/Reward

Based on the information in the table again we have an effective Risk/Reward should be at least 3 to 1.

Test round the levels

Test the level of MA 50

Test level of 100 MA

Test level 200 MA

Tests on the levels – the pivot table

the Pattern pin the perfect complement to the dynamic levels in the form MA100 and MA200. And round levels not too bad.

the Test for trend MA50

Test for trend MA50 (reverse)

Test for trend MA100

Test for trend MA100 (reverse)

Test for trend MA200

Test for trend MA200 (reverse)

Test for trend No. 2

Tests on the trend – summary table

What kind of moving average would you choose to determine the trend, it will still be better than not to pay attention to the direction of the price.

the Test on the Stochastic oscillator

Test CCI

Test WPR

Tests on the oscillators summary table

Any of the oscillators can in some cases spoil the end result, but most of all he helps. The only condition is that the individual selection of settings for each currency and period.

the Test pattern

it looks like the trade pattern on the H1 on the considered pairs:

If you replace the standard stop of the candle on the stop on the ATR indicator, we get the following result:

you can Also add to the trading system trailing stop on the shadow – we will draw our initial stop loss after the price of the shadows of the candles are:

But what if to use the opposite signal to exit the position:

When trading a pin bar on the H1, none of our improvements have not proven effective.

Now let's look at the trade on the H4 period:

Let's apply foot 2-4 ATR:

Let's screw the trailing stop is:

Now add an exit condition by opposite signal:

unlike the H1 period, then all our improvement leads to a more interesting result.

Insights

Pattern pin despite its prevalence and wide popularity not lose relevance and profitability. Which is surprising, because a huge number of traders are trading the pin bar. But worse, as we can see from this nobody gets.

all the Test patterns together

it looks like the trade patterns on the H1 for the considered currency pairs are:

If you replace the standard stop of the candle on the stop on the ATR indicator, we get the following result:

you can Also add to the trading system trailing stop on the shadow – we will draw our initial stop loss after the price of the shadows of the candles are:

But what if to use the opposite signal to exit the position:

On the H1 trade all discussed in the article patterns PA gave quite a nice view of the yield curve. With over 10,000 transactions over 17 years telling us that to be bored with this trade don't have at least 2 trades a day should get.

Now let's look at the trade on the H4 period:

Let's apply foot 2-4 ATR:

Let's screw the trailing stop is:

Now add an exit condition by opposite signal:

the Best option when trading on the H4, with the use of stops on the ATR indicator and active position management. Deals with all this, slightly less than when trading on H1. But nerves much less.

Conclusion

In this article, we considered the use of the most common patterns PA and in practice and made sure of the following things:

Trading candlestick patterns you need from the levels; it's Highly advisable to take trades in the direction of the main trend; profit-risk Ratio must be at least 1 to 3.

in addition, we now know that:

every rule has its exceptions and the most efficient trading you need to know the traded instrument, there are couples who ignore the levels, and there are those which one or another pattern just don't go; 30-40% winning trades — this is normal and if you do everything right, abide by money management, your account will grow; Trade drawdown is an inevitable part of trading, especially trading candlestick patterns.

it is believed that when trading Price Action you need to think a head. Today we have seen that even mechanically adherence to mechanical trading rules leads to quite good results. This, of course, does not mean that it is not necessary to think a head. This means that if your trade is plugged it, the results will be much more interesting.

the Price Action Thread on the forum

best regards, Dmitry aka Silentspec

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