Price Action Swing Trading - The PAST Strategy

Discussion in 'Trading Systems and Strategies' started by Nigel Price, Jul 1, 2013.

  1. fortunatus

    fortunatus Trader

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    Yes. the bears are coming in strong, sorry i discouraged you on that one

     
  2. Olu

    Olu Master Trader

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    usdcad


    Hi Fortunatas

    Thanks for your chart. We dont really need a retracement in the usdcad to enter just a break of the trend line you put on the chart. If I was in the trade from my trend line I could have used the break of your trendline to add more

    Olu
     
  3. Olu

    Olu Master Trader

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    No worries man. I did take my eye off the ball too...:D

    Olu
     
  4. Olu

    Olu Master Trader

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    usdsgd

    Trade closed. Price action developed a doji right at support (last week's low). So I took profit on half and moved the other half to b/e. This morning the other half was stopped out at b/e. I appears some $ strength is coming into the market. We'll see how long this will last.

    Olu
     
    Last edited: Jul 17, 2013
  5. Olu

    Olu Master Trader

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    UsdJpy Again

    Testing Support line right now. Again after a runaway upwards...
     

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  6. fortunatus

    fortunatus Trader

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    Yes bro got my eyes on that too. The BOC Interest rate tampered with the USD/CAD plan, but sometimes it doesnt matter. Its the middle of the week, I'd re analyse the currency pairs generally, cos it looks like some are establishing a new phase.

     
  7. Olu

    Olu Master Trader

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    Again another runaway to the upside...

    Olu
     
  8. basilc

    basilc Trader

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    Hi Olu & fortunatus,
    I've been following your comments with interest and was wondering if either of you are experiencing the same problem that is bugging me. Nigel's PAST strategy is great but after 2 weeks I have yet to make 1 penny as I keep getting stopped out. Am I just having a run of bad luck or are my Entries incorrectly placed?
    Nigel seems to be taking a break so any suggestions would be welcome.
     
  9. myknees

    myknees Trader

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    basilc - Just trying to be fair here - I could post the following:

    The strategy is great, after 2 weeks I have (made loads/lost loads/broke even)

    I have also read the eBook (which I also think is great) and I follow this thread with interest, what I can say is that I have picked up and learnt a lot but I am for sure certain that this will be a learning experience of many months not 2 weeks. I will continue to observe the charts and the kind updates Nigel and others post in here and hopefully one day chip in myself.

    No offence meant at all whatsoever in any way by this post, just trying to be fair. Even if I picked up the best free eBook in the world on rocket science I don't think I would be asking why my rocket only rises 2 metres before falling after just 2 weeks of practical involvement :)
     
  10. Olu

    Olu Master Trader

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    Is this strategy worth it?

    My answer is yes. Absolutely. The market last week had a lot going on and hence volatility increased. Mr B threw everything all over the place and the week was full of push-pull action. I must say it was frustrating that usdcad did not break down but we are traders and anything can happen in this market.

    Lastly, and I think this is important. This strategy tries to catch the trend change and will fail if the trend doesnt change. So the way I traded this was to be prepared to get to b/e as the first priority and then managing the trade to pick up profits

    In summary. Dont give up on the strategy yet. Give it more time. In the the end it might not be for you but you can only come to that conclusion after trading according to the rules for some time

    Olu
     
  11. Nigel Price

    Nigel Price Master Trader

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    Hi Guys, I’m just going to do a review of this week’s price action – it seems as though a few people in here were concentrating on short dollar positions so I will look at USD/JPY.

    The chart below is a weekly USD/JPY chart without the latest candle.

    Price over the course of the previous week had seen strong bearish action, finishing with a close below the open price of the previous bull candle. This is a sign that we look for to indicate that the balance of power has potentially shifted from the bulls, who had controlled the previous 3 weeks' price action, to the bears.

    The preceding trend was not the best I have ever seen, at only 3 candles, but it was tradable.

    So we have identified a preceding trend and a potential reversal signal. Now we can drop down to a lower timeframe to see if there were any trendlines we could use for low risk entries. Remember, none of us will draw identical trendlines, but this doesn't matter. The trendline is there simply to ensure that we just aren't blindly shorting strength, which is something the majority of retail traders are prone to doing.

    I'll drop down to the lower timeframe chart in the next post... :D
     

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  12. Nigel Price

    Nigel Price Master Trader

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    I dropped down to the 1 hour chart on this to give us a clear look at the price action. As I have said before, it does not matter what timeframe you look at, use whatever you feel most comfortable with.

    I have shown 3 potential trades on the chart below that could have been taken during the course of the week. Each moved into profit, but subsequently the bulls took over and, had we have been trading these particular lines, we would have either been stopped out at breakeven or for a small loss.

    So despite the fact that the weekly signal went against us, we either lost very little or nothing at all.

    :D
     

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  13. Nigel Price

    Nigel Price Master Trader

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    It follows then, what happens if and when a weekly signal goes for us?

    Take a look at the USD/JPY weekly chart again, but scroll back a few weeks.

    A very similar reversal signal (orange arrow) with the bears closing below the open of the previous bull candle in an uptrend. The uptrend also lasted 3 weeks.

    But the difference is that on this occasion the weekly signal was successful, and price fell 750 pips.
     

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    Last edited: Jul 20, 2013
  14. Nigel Price

    Nigel Price Master Trader

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    Asking ourselves why a particular pattern or signal didn't work out, or worse, blaming ourselves for a trade not working out, is a futile exercise. Every single trade has something unforeseen that can come along and blow it out of the water.

    So when a trade goes against us it isn't our fault. And similarly, when a trade goes for us, it doesn't mean that we are trading geniuses. We have very little to do with either outcome.

    Far more productive is to ask when a trade goes against us - "did I control my losses as tightly as possible" and when trade goes for us - "did I make the most out of that opportunity?"

    Perhaps you traded a weekly signal last week that didn't work out. If you can say to yourself truthfully that you were disciplined and controlled your losses, that trading week was a success. Maybe there will be a few more weeks to come until a winning week comes along. But they always do, sooner or later.

    When it does, the small losses are compensated for very quickly :D
     
  15. Nigel Price

    Nigel Price Master Trader

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    So if we were thinking of trading USD/JPY according the PAST principles this week how would we approach it?

    The weekly chart is below, including the latest week's candle.

    In the PAST Strategy, we do not treat a bearish reversal signal candle as being negated until we see a close above its open price (or in the case of a long wick candle, the high of the candle). So in the current case, the bears still have control of the market. If we wanted to, we could still be looking for opportunities to short.

    Obviously the fact that the bulls can push right up through the last bear candle and close quite high is a cause for concern; it would be far more preferable that the bears managed to push price down convincingly, but that hasn't occurred on this occasion. We must trade what the market is doing, not what we would like it to be doing.

    So we are left with 3 choices for the coming week:

    1. continue to trade this set up and acknowledge the fact that it is perhaps not as strong as we would like;

    2. look for another more convincing reversal signal; or

    3. stand aside for the coming week
     

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  16. Nigel Price

    Nigel Price Master Trader

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    Below is how I would analyse the 4 hour chart in terms of trendlines for the coming week.

    We have acknowledged that the bears are stronger than we would like, but they still haven't managed to negate the reversal signal.

    If price continues to move on up we should stand aside and allow it to do its thing. We will conserve our capital until price is moving in the direction that we want it to. Should price weaken and fall, and in doing so breaks/retests our trendlines, we should be entering short with the anticipation that price could continue to fall on the weekly chart.

    Hopefully this review has been of some use to the readers of the thread! Enjoy the rest of the weekend! :D

    Nigel
     

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  17. Nigel Price

    Nigel Price Master Trader

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    Hi Basil

    Yes absolutely, breakevens are very frustrating. When price action is choppy and lacking direction unfortunately there is nothing we can do about it. I like to think about it like the market making you put in a few hard shifts before giving you your payday. The market can often be quite directionless, especially during the summer. That's why all the big boys leave for July and August!

    But I would encourage you to look at it this way - say for instance you traded for two weeks and neither of the weekly signals you traded worked out. You have had a run of breakevens and a few losses and you have lost, say for argument's sake, 200 pips. Hopefully it would not be as bad as that - you might have done better or you may have done worse, I don't know. But say you had a bad couple of weeks and are 200 pips down.

    However, when you look at that 200 pips in the context of what is achievable when a weekly signal is successful, you will see that 200 pips is nothing.

    The other week I had two shorts on EUR/AUD and from memory I had a floating profit of something like 300 pips, maybe a few more. Both positions ended up getting stopped out at break-even. Frustrating, yes, but it doesn't make me want to give up. Why? Because looking at the weekly chart of EUR/AUD, had it broken down in my direction, that pip tally would have tripled or quadrupled very, very quickly. The average weekly range of the EUR/AUD at the moment is 370 pips!

    As long as you continue to control your risk and keep an eye on the bigger picture, the successful trades come along in time.

    I might add too, there is nothing wrong with using a daily chart as an anchor and making your entries on intraday timeframes if that is what suits you better. A successful trading strategy will always be the one that is tailored to suit you. It's just that I prefer the weekly/monthly charts, so that is what I concentrate on.

    All the best with your trading - any questions feel free to ask :D
     
    Last edited: Jul 21, 2013
  18. Nigel Price

    Nigel Price Master Trader

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    Morning All,

    I'm just going to post a few charts this morning to show you why it is important to keep slogging through the difficult weeks when we suffer a run of breakevens or small losses.

    I know anyone can go back in time and pick out great trades, but it is important too not to ignore what our goals are.

    We trade on the low timeframe with a view to having it develop on the higher timeframe.

    As long as we continue to conserve our capital, these moves develop sooner or later, they always do. For those of us who are patient enough to wait for them, they offer significant potential.

    By now we should all be very familiar with the following signal:
     

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  19. Nigel Price

    Nigel Price Master Trader

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    After seeing this signal, what do we do? We drop down to the lower timeframe and start to draw trendlines.

    We all draw different trendlines, some of us will be in front of the computer when they break, others will miss them, some of us will be stopped out while others aren't, some of us will have smaller stops than the rest of us, some will do breaks, some retests, etc - we all trade differently.

    None of that is important. What is important that we are managing risk on a small timeframe and targeting reward on a long timeframe.

    Below is a 4 hour chart of the price action after the reversal signal. It would be poor trading if we all didn't get at least one or two of the breaks that subsequently occurred.
     

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  20. Nigel Price

    Nigel Price Master Trader

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    Below is the weekly chart again - the entries that were taken on the 4 hour chart all occurred in the blue box.

    The chart is the current weekly chart of EUR/AUD.

    These signals do not happen every week, but when they do, the potential is enormous.
     

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