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Price Action Trading Strategies, Part One
Today, I’m going to answer a question that has come in fairly frequently, recently, and it’s really a good question. I want to let you know, I really appreciate your questions, and here it is:
“When we get a very aggressive move up, how can we find opportunities to enter?”
In this case, for example, (see video) we get a move down from here, up to here, and it’s a very sharp angle right, more than a 45 degree angle and it’s a very aggressive move. One of the ways to identify these kind of moves, is to draw rectangles from the bottom to the top and with that time. Example being, it’s higher here than it is wide there, then that means it’s a very, very aggressive move, because it’s going up, it’s covering more price over a short period of time. Basic XY access analysis, right?
Price Action – An Important Note
By the way, very, very important, everybody looks at the price axis In other words, if we were looking at price pattern, support resistance levels, indicators that calculate things based on price, and that’s all great you should absolutely. However, the problem is, I find that very few people focus on time, the x-axis, where they’ve just never really been taught it.
That is a huge mistake if you haven’t delved into that yet, please do, because that’s half of the chart right? A chart is two dimensional objects. You get price and time, that’s it. If you ignore the time aspect of the chart, the X-axis in this case, then you’re leaving out 50% of the information on the two-dimensional object. How can you therefore establish a probability scenario if you’re leaving out 50%?
We are spending a short amount of time, covering a large amount of price action trading strategies, which is a very aggressive move, and we don’t get any real retraces here. People who like to buy retraces on an uptrend well, where are the retraces? There’s really no retraces coming in here to buy again, but there are. We just have to go to a different time frame in order to identify them.
Price Action and Optimal Ratio
If we drill down to a shorter timeframe, we can look at a two minute chart during the same period of time. The timeframe here, from 9:00 to 11:00, about two hours, it goes up. Here we have the 2 minute chart and, as you can see here’s 9 o’clock, there is 11 o’clock, just to mark those general times. Now, as you can see during the same period of time, we get swings.
In the last one, we had no waves, no swing high, or swing lows. Here we get up moved down one, two, three, four, five, failed seven goes down to 6, full 7, 8, and 9. So, when you see an extreme, steep angled move, and you don’t see any retraces, you can look at a different time frame, from a different perspective, and get entries. Just drill down to a shorter timeframe.
I prefer the 1 to 3 time ratio. That’s why I used a 2 minute in a 6 minute chart here, 1 to 3 ratio. One to 4 is also okay, so if I was using a 2 minute, I could also use an 8 minute if we’re going to do 1 to 4. Now, if we wanted to go 1 to 5, I would go two minute to 10 minute, but I don’t find that works very well. The 10 minute is too slow compared to the 2-minute so, 1 to 5 ratio, not so good. For me, 1 to 3 is the optimal ratio. You want them to synchronize enough to be tightly correlated, and not for the longer one to be much slower.
Alright, now we’re gonna do a part two video on price action trading strategies as well, so you can look forward to part two. In part two we’ll talk about the opposite. This one was how to use two time frames to get in to an aggressive move. Now part two will be about, let’s say we’re doing it the opposite. We’re looking at a short-term time frame like this. How would we determine the markets not really going to keep going up any further than that. Then we look to the long term chart. Our time is up for this video, so stayed tuned for part two.
My Gift to You
I’ve got a complete trading strategy, a little mini trading course actually, on how pros trade differently than amateurs. In that course I will give you my Rubber Band Trade. It’s one of my favorite trade strategies and it comes with everything. Where to get in, where to get out, to the penny, to the pip, to the tick, so it takes longer than a 10 minute YouTube video here. We offer that separately, but again absolutely free, and it’s a great trade. I still take it to this day!
Just click the upper left hand corner of the video. Should be a little card up there, a little image and when you click on that, it’ll take you to the page where you can register for that free course. Also, there’s a link in the description below. You can also email your request to Barry@topdogtrading, and I will personally email that video to get you started. Please paper trade it first. This is meant to give you an actual trade strategy that you can make money with, not just theories or ideas.
GET MY FREE MARKET ENTRY TIMING INDICATOR
BTW, if you’re interested in the indicator that I use personally for very precise entries and exits, I’m happy to share that with you. Just send me an email at Barry@TopDogTrading.com, and I’ll show you how to get access to that indicator.
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