Some Setups On Singapore Stocks

Just for fun I decided to scan through some Singapore stocks and see if I can spot any setups. Did manage to find some, will monitor them in the coming weeks/months to see how they turn out.

GLP

Neratel

SIA Engin

Tat Hong

AUDNZD Compression + Liquidity Spike Trade

Just want to share an interesting trade I just took on demo. It is based on compression followed by a liquidity spike, similar to the pattern I mentioned in a previous post.

AUDNZD M15

AUDNZD M1

I'm happy because the setup worked as expected, and a little peeved because I got stopped out by the 15 pip spread caused by NFP. Its cute when you see it on the charts huh? Price didn't even come close to my SL but I got stopped out. Thankfully its only on demo, really wonder what I could have done to avoided it though, probably nothing. It doesn't make sense to set a extra wide SL just to cater for news based spread widening.

Anyway, I've been going through a very reflective period, and some events have really led me to feel very blessed. Some conversations with Mark (http://www.thetradersguild.co.uk/) as well as deeper study of his material has really opened a whole understanding of what price action really is, what most traders (including myself) have got wrong in their approach to trading, and how much more there is for me to learn and practice. It is really humbling, and yet I feel so motivated and excited to learn more and get better at my price reading. So Mark if you're reading this, thanks a lot for everything, truly appreciate it!

Accumulation Pattern And USDCHF

I like to study and save charts of repeating patterns I observed with the belief that over time I'll get better at spotting them and anticipating a move. Here is an accumulation pattern that I've noticed many times. Again I don't know what to call it. The pattern formation goes something like this:

1. Huge spike down - Selling climax in VSA?
2. Price subsequently tries to make 1 or 2 more stabs down but fails to make significant lower lows. This indicates a weakening in selling pressure and often shows up as bullish divergence. The stabs down might also stop hunt previous swing lows, allowing pro money to load up longs.
3. Price then breaks out of the pattern

Here are some chart examples:

It would be good if this pattern takes place at a HTF demand zone. It is also similar to a falling wedge pattern.

And now... I think I'm seeing something similar on USDCHF H1. It is still a small distance over a significant demand zone (blue area) so I won't be surprised if it takes another stab down into the zone first.

USDCHF H1

And here is the anti climax -  I don't know how to trade this pattern! I guess some ideas might be to trade PA bars at the 2nd or 3rd stab down (aggressive), or trade the breakout (in which case I don't know where to put the stop). 

Just something which I thought might be interesting!

AUDCAD - Watch To Short

AUDCAD Weekly

AUDCAD is approaching a very major level where there is a nice confluence of factors. If this was a H4 and below chart,  I would without a shadow of doubt place a sell limit to short the supply zone. However it is a weekly chart and to do so would incur too wide a stop loss. My plan for now is to wait for price to form new levels of H4 supply within the weekly zone and then short those.

Just thought I would post this because it is such a clear as day level that I believe every trader would be watching it no matter what system he is using.

Perils Of Unregulated Spot Forex

Spot FX is unregulated, and as such traders are at the mercy of their brokers. Unscrupulous stop hunting is one of the biggest complain (the market makers know where their clients' orders are). I just want to point out what this problem really looks like on a chart.

The top chart belongs to Broker A whom I'm so tempted to shame, the below chart belongs to Broker B. Ironically Broker A is one of the most reputable spot FX brokers, which is why I'm shocked at the blatantly obvious stop hunting that is going on. Now I have many MT4 platforms, and it only takes a couple of minutes to verify across a number of brokers that the problem indeed lies with Broker A. No other broker has those ridiculous spikes. And mind you this is not a rare occurrence, 10 in one screen and on a major pair on a relatively high time frame is a very serious matter! I've been observing this broker's charts and know that this is a very common occurrence. I don't see how it even manages to keep its clients.

So in conclusion, it is very important to select a good spot FX broker. Sure low spreads are important, but factors like execution speed, integrity of charts, ease of funding, technical stability are equally important. I used to neglect that until I experienced platforms that keep disconnecting, or orders that hang and refused to be processed so you cancel them and reenter a new order, only to end up with a duplicate position. In spot FX we have the luxury to try out demo platforms for free, take full advantage of it and at least trial a platform for a week or two before committing to the broker.

Some Trades Based On Fakeout With Compression

Refer to my previous post where I shared about the double top with compression pattern. Here are two recent trades I took based on a similar logic.

NZDUSD

GBPCHF

Cool eh? Zero draw down on both trades, caught them nearly at the top, exited right before price turned. Multiple R trades. Do charts like these make me seem like a pro?

Now here is the thing. Those trades are real, so are the reasons for entries and exits. But here is another thing:

1. Those trades are taken on a demo account. Even for demos I have a serious demo where I track everything and trade according to rules, and another casual demo where I try to test setups and trade random lots. These trades were taken on my casual demo.
2. I took a risk with the ultra tight stops. Yes we have fake out bars which closed with an upper wick, but those are not strong rejection bars like a big red bearish pin. Especially for GBPCHF, who is to say price wouldn't want to go deeper into the zone?
3. I traded these with very small lot size. So while at first glance those might seem like multiple R trades, in reality the profits were very small.
4. Those were actual partial closes. For both trades I was actually trailing the remaining position, both of which got stopped out at a higher price. But if I included the trailed positions in the above charts, I'll lose the "exit at the very bottom" guru effect right? I wonder how many of the forum posters are utilizing this same trick...

Now here are some other scary facts. I could have placed sell limit orders at various logical places (M1 supply zone, S/R flip etc). Some of those orders would have worked out while others fail. I could easily select the order with the lowest draw down and post it, appearing as though I managed to nail the trade to the pip. People will believe me because I did have a reason for the trade - the M1 supply zone, S/R flip etc. What they don't know is that there might be 10 other logical areas which failed. Oh and did I mention you can actually adjust the trade markers on the chart? Anyone can be a M1 god of trading. 

Oh ya I recently came across another "trick". There is this guy who is pretty active on FF, he sometimes post trades before the fact, and with pretty good results. I was pretty impressed by him and yet I don't understand why he took those trades. Few weeks ago I saw him post a trade during Asian hours where FF has the least visitors (Maybe this was unintentional). I followed the trade closely and knew that it was a loser. I went back to check the post, but lo and behold the post was deleted! That taught me another way to manipulate results - Take a scalp trade on M5 or some very low time frame so the result can be known very quickly, post during the dead Asian hours so less people will notice, and if the trade is a loser quickly remove the post. Thankfully that guy started an AceGazette journal, and I know now from his results that he is not as good as he portrays himself to be.

With those points, do you now see how results can be easily manipulated, and how important it is to only study traders who post before the fact, consistently and with explanation? Its a scary world huh?

On a side note, those zero draw down trades and getting out partially right at the turn felt really good. Maybe it is luck but I really took and exited those trades based on logic, it is nice to be able to predict the failure of a breakout. The main key and secret is the compression. That signals the intention of the pro money. I will continue to test my entries, if I'm able to replicate such results consistently, I might bring it live.

Thoughts On S/D Trading

I was actually writing a reply to a comment I received, and realized that it is better to put it up as a post in case it could be useful to some readers.

I've spent many months trying to understand and trade S/D concepts, and quite honestly have been through the same stage of being overwhelmed, frustrated, and cynical.

If you ask me, I would say the biggest problem is that there are so many ways to trade S/D concepts, and most threads/sites don't have fixed rules, so you might have a rough idea of what an engulf, Quasimodo, compression, bearish engulfing candle is but you don't know when they work and when they don't. So you might see posters who take engulf trades or a bearish engulfing bar and those trades turn out as big winners, but when you try to replicate it you get multiple losses and wonder why. Good thing about AceGazette is, after some time you realize many of these posters only have a 40-50% win rate and their equity curve isn't pretty, which means there is a problem with their trades to begin with. There is no reason to study their trades except to learn from their mistakes. In short, simply taking engulfing bars at any S/D zone will not cut it, taking any engulf or Quasimodo which appears in the middle of no where will not cut it, touch trading a zone just because there is compression leading to it will not cut it.

I realized all that through hundreds of failed trades, and from observation of many other journals. Now this doesn't mean that AceGazette, ReadTheMarket etc are teaching wrong stuff, far from it. But there are many nuances which most traders fail to notice and this makes ALL THE DIFFERENCE. Here are some of them:

1. It is very very important to trade with the higher time frame trend and respect higher time frame zones. So for etc, suppose we see a M30 bullish engulf. We try to long the source of engulf when price comes back to it and it turns out as a loss. A very common reason for this is because the engulf is into a HTF supply zone, say H4. Or it could be because we're too high in the curve and the profit margin for longs is no longer there. I've done this dozens of times and seen many people do it too, it is probably the most common reason why engulf trades fail. 
2. Quasimodos are powerful, but I realized they have to be taken at a HTF zone and not in the middle of no where. So for etc we want to long a M30 Quasimodo in a H4 demand zone, not when it is dangling in the middle of no where.
3. Compression can last longer than expected. Just look at the AUDNZD pair, compression is everywhere and many times it is not filled. Compression works best after an engulf (Can can pattern), or if price is compressing up to an extreme and high quality zone. Do not touch trade a zone just because price is compressing to it. Sometimes we see a M30 demand zone and ecstatically buy it because we see price compressing down to it, but we fail to notice that the zone is weak, and there is a much stronger H4 extreme zone underneath which will act as a magnet to pull price to it. 

There are so many such nuances, and the sad thing about AG and RTM is that many of the pioneers/seniors are no longer that active. The legendary and genuinely good traders often post without explaining the reasons for trade (Julexo, Ken etc), and those that do explain are mostly enthusiastic newcomers. Much of their trades and analysis are wrong (the dangerous thing is these sometimes end up as winners giving the impression that it is right), but few of those posts are corrected by the seniors. There is no one to blame, because the forums are free so the seniors have no obligation to correct the young traders, and most people are more interested in trading than teaching. 

So in conclusion, I really believe the methodology of the various sites is good, but you need to have a lot of practice, really understand all the nuances in order to make it work. Once you really understand the markets, you'll realize why some zones are touch trade worthy and why it is safer to wait for PA on others. I'm still far far from being good at S/D trading, but I've managed to eliminate many recurring mistakes in the past few months. It really takes months and probably years of chart time and experience.

As for reliable sources to study S/D, here are some:

1. PriceIsEverything FF thread. Redsword is the man who started it all. Ifmyante, Ken and many others all spawned from this thread. Here is a man who dares to post before the fact, explains his trades, and is consistently and uncannily accurate. A new reader might not be understand the first few pages, but keep reading and after 100 pages or so, you'll notice some recurring patterns (whipsaw engulfing, pins at zones etc). Coincidentally I'm planning to hardcore study the thread from today onwards, with the aim of completing all 1400+ pages of it.
2. Alfonso's FF thread. Again here is a trader who posts before the fact, is able to explain his trades, and has consistently good results. He has managed to come up with a rule based S/D system, and to be honest it is my bread and butter for now. I'm very active on this thread because after months of filtering and deriving my own rules, I somehow ended up with very similar rules as him so I really agree with his methodology. It is actually nothing new, but his rules help filter most of the mistakes that many RTM and Sam Seiden traders make. I know because I have made those same mistakes hundreds of times.
3. Lovejoy's FF thread and his website. Also check out Balhana's posts on that FF thread, he is really good and his posts are full of explanations that make sense. Lovejoy has some fantastic videos, in my opinion must watch videos for any aspiring S/D trader. 

At the end of it all, I feel it is very important to decide on a certain style (touch trade or trade PA bars) and focus on it. It is very very difficult to try to learn multiple styles at once, so master one before starting on another. I have one account for touch touching (which I've tested and am confident in), and another demo account to practice trading PA patterns and bars. Pen down trading rules and strictly adhere to them. Journal every trade and study them from time to time. It is amazing how often recurring mistakes occur, and we'll be oblivious to them unless we journal our trades. 

Hope this post helps!

How To Save Time When Studying Trading Forums/Sites

I just came across this article and man do I agree with it. In fact the third kind - Honest Ninja Guru is growing rapidly and I've seen many such examples in the Singapore trading scene. The thing is, this isn't just limited to gurus selling courses, but also active posters on forums. My heart aches at the amount of time I've wasted trying to understand why certain traders take and manage their trades. Many of these people are very active on the forums, they post mostly winning trades and often go around correcting others. As a result they're highly hailed as expert traders, and due to their connections they're often highly vouched too.

Now recently I had a series of eye openers, which led me to a conclusion I will share about later. I'm so grateful for sites like AceGazette, where trade journals not just have to include the trades, but also the account statement and the reasons for the trade. It is through there that I realized how many of these traders are actually not even profitable. I've also seen statements of traders who multiply their accounts within a very short time only to over trade and blow up another one before long. Their equity curve is like a roller coaster and their win rate is low. There is one common theme: They mostly post winning trades after the fact, and their results are inconsistent. Why should I study such traders? Now I'm not trying to say they're out to deceive or have any ill intentions. But given the enormous and endless amount of trading resources and threads out there, shouldn't I spend my limited time studying the really good and consistent traders? So now here is my conclusion, only study traders and posts with the following attributes:

1. Posting before the fact. This is very obvious, you know a good trader because he posts when he takes the trade and not after the trade has ended as a profitable one. 
2. Able to explain his entries and exits. This is super important. Now if you're only interested in a signal service, you might not care about this, but if you really want to learn, the trader you're studying has to be able to explain his trading strategies coherently, and you must be able to observe from his trades that he does adhere to them consistently. This point alone eliminates many traders who only post their winning trades but are very evasive and unwilling to explain their entries/exits.
3. (Optional) Positive and consistent account statement. This is optional because if points 1 and 2 are fulfilled, I don't really need to see their account statement to know if they're a successful and consistent trader. Nevertheless, an account statement is the best proof. 

There, I've grown wiser based on that criteria, and no longer waste time studying or listening to traders who sound very knowledgeable and are hindsight kings but still lack profitability. 

Double Top With Compression Pattern

I've been going through charts and filing patterns which I've noticed repeatedly. It is so fun to do so and helps increases my confidence in them. In this post I want to share another powerful pattern. It is some what like a double top, but the defining factor is that there is compression prior to the second top, and the second top is often into a supply zone. A bearish divergence is also almost certain. Here are some charts:

This is similar to the CP + LS pattern - compression followed by a liquidity spike. In this context, price first forms a first top. It then drops and slowly compresses up. This compression is the pro money's attempt to remove buy orders so that the subsequent move down is unopposed. After the compression, price spikes up. This stops out early shorts as well as traps breakout longs, providing liquidity for the pro money to go short. A huge reversal then happens. The way to trade this is to wait for a candlestick pattern or rejection wicks at the supply zone where the second top is occurring. More aggressive traders can just take a touch trade at the zone with a stop above.

Great Article - Passion VS Interest

Really like this article, probably because it is relevant to my current situation.

http://2ndskiesforex.com/strategies-for-forex-trading/forex-articles/difference-trading-passion-interested/

The below excerpt really spoke to me:

I think many people get depressed when they lose focus or motivation because they think that successful people have some unstoppable passion and willpower that they seem to be missing. But that’s exactly the opposite of what this coach was saying.

Instead, he was saying that really successful people feel the same boredom and the same lack of motivation that everyone else feels. They don’t have some magic pill that makes them feel ready and inspired every day. But the difference is that the people who stick with their goals don’t let their emotions determine their actions.

Triple Witching

DJ 30

Notice the four super high volume days in the chart? I always knew it was due to options expiration, but I only just realized these four days occur on days of triple witching. According to Investopedia this is an event that occurs when the contracts for stock index futures, stock index options and stock options all expire on the same day. Triple witching days happen four times a year on the third Friday of March, June, September and December.

As such, traders using volume analysis might want to interpret the volume on these days with a pinch of salt. Just scroll through some stocks and you'll notice this disgustingly high volume on them too. Interesting huh?

New Chart Pattern - Last Breath Pattern

I think I've discovered a new chart pattern. I hate thinking of names so I shall call it the Last Breath Pattern for now. I seriously don't even know what the logic behind it is and why it works, but I've seen it so many times to know it is not a fluke. The pattern basically starts off with a compression like up move which then curves down a little and shoots up as if taking its last breath. It finally drops back down rapidly and breaks the origin of the final spike up.

This is going to sound stupid but I don't know how to trade this pattern. You can't short at the top because you don't know whether it'll spike back down or not, and you can't short the support break because you don't know whether it'll be a genuine break or not (yes it does false break and go higher too). This pattern only gives a high probability that the support will break, it doesn't guarantee that the break will follow through. :P

There is one use for the pattern though - Avoid going long when price is returning to the origin of the spike up. You see, I managed to discover this pattern because I fell for it many times by going long at the origin of the spike up and getting stopped out. After some time I can't help but find it familiar. I'm happy to say that in the past two days, I've avoided two losing trades simply because I remembered this pattern. Every other trading rule of mine stated that those trades were valid but I just couldn't pull the trigger as something "didn't look right". Well that discomfort saved me 2R and I am even more convinced that there is something going on behind the scene of this pattern. Maybe I should add this to my trading rules - Do not trade if there is a Last Breath Pattern. :P

It Is Not The Critic Who Counts

It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat. ― Theodore Roosevelt

That quote has to rank among one of my favorites. I've read it many times and I still feel so inspired and encouraged whenever I read it. To me, it has to do with critics vs vision. Every successful person has a vision, be it Mother Theresa, Nelson Mandela, Steve Jobs, or President Obama. There will always be people who don't agree with your vision, ALWAYS. Critics will rise up, and in this generation where social media is prevalent, their voices will sound out far louder than ever before. However, successful people know this - They have to choose their battles. Not all battles are meant to be fought. Every second spent answering or pacifying a critic is a second that could have been spent furthering the vision. In other words, critics = distraction, and a visionary has to be very careful not to be caught up with such distractions.

In the trading context, not everyone will agree with your trading methodology. However, every second spent debating and fighting in the forums with your critics is a second that could be spent improving your strategy, back testing, reading, practicing. It is the same for every aspect of our lives, every vision, every journey. Critics will never understand the ironic relationship of the inevitable yet necessary occurrences of failure. They devote their time and energy to nitpicking on you, hiding in the shadows and ready to pounce whenever you make a mistake. Fast forward a few years and the focused visionary who failed repeatedly would have gained a treasure trove of lessons from his failures. He would be at a much higher level than where he was a few years ago. And the critic? I shall leave that question open. :)

Update On EURNZD Trade

Just to update the EURNZD order which I mentioned in the previous post. So price continued down and did not retrace enough for my entry. The original target has been hit so I've pulled my order. This actually happens very often. I find myself cancelling more than 70% of my orders because some criteria gets broken, but it is how it is. There are more than sufficient opportunities every week. Price is now in a strong D1 demand zone, so surprising as this sounds I'm going to start looking for a setup to go long. The criteria for this would be for a H1 supply zone to be absorbed/engulfed as a sign of bullishness. I'll then buy when price retraces back to the source of engulf. A lot of people will find it hard to buy after such a steep drop, but we should instead love such steep moves because the entire sharp move down is a liquidity gap (at least on the D1) which can be easily filled without trouble. Just look at the prior few steep moves up and down, notice how price subsequently moves from one end to the other quickly and easily? This is because there is no zone in between to stop the move, and we know that price moves from zone to zone. Besides, I'm not taking a blind entry, I'm waiting for a lower time frame supply zone to get engulfed as a sign that the bulls are interested in higher prices. Can it go wrong? Sure it can, but if it works out, I'm potentially entering based on a H1 demand zone with a D1 supply zone as my target. In the best case scenario that my trailing stop is never hit, the RR could be as high as 20:1 or more, depending on the width of the H1 entry demand zone.

EURNZD D1

Pending Sell On EURNZD H1

EURNZD H1

A nice short setup just occurred on EURNZD H1. Downtrend, demand engulfed, very distinct supply zone with strong departure (signifying a huge order imbalance there) for entry and clear S/R flip level for target. Just want to share what goes on in my mind with this concept of trading. We know that trading is a probability game and expectancy is what matters. This trade if successful would yield approx 3R. If I lose, I lose 1R. I only need to be right 25% of the time to break even. Do you think shorting such a nice supply zone in a downtrend with clear space below has at least a 25% chance of working out? If so, take the trade.

This is the way I'm approaching every single trade now, measuring the reward-risk vs the probability of the trade working out. With regards to the above setup, I would say it should have at least a 65-75% chance of being successful. There is no reason not to take the trade! I used to be very uncomfortable with limit orders and preferred to wait for candlestick confirmation. However I realized that while waiting for candlestick confirmation might result in a slightly better hit rate, it greatly reduces the reward-risk ratio of the trade and hence my overall expectancy, especially if the candle is a big ass one. However this is definitely an issue of preference as I do know some really good candlestick traders too.

The fact that price moves from zone to zone is one of the best kept secrets in trading. It gives confidence in entering at the point with the lowest risk and holding to the next opposing zone.

With regards to the above trade, I'll only cancel it if 1) Price doesn't trigger me and goes on to hit my target
2) Price starts making higher lows on the way to my entry, signifying a possible trend change 3) I'm not in the trade by NFP tomorrow. I don't trade before NFPs, and with the Syria issue looming I'll certainly prefer not to hold trades over the week end.

Update on Silver Trade

Just to update the Silver trade I took previously. I trailed my stop below a H1 DZ and it got hit just now for a +0.5R. The fact that price failed to make a new high and the possibility of it forming a H4 head and shoulders now is giving cause to potential bearishness. Side note: I'll be very cautious of trading in the next two days due to ECB conference on Thurs and NFP on Fri.

Silver

AUDUSD confluence with the AUD crosses

Just want to write a short post to describe a form of confluence that could aid an analysis. In this example, we can observe nice H1 zones across the various AUD pairs. This means that if price should retrace, there is a high chance they'll hit their respective zones around the same time, hence acting as a form of confluence for any AUD related trade.

At first glance one might wonder duh doesn't this always happen? Well it doesn't. Sometimes we could see AUDUSD rising strong and forming a nice Demand zone, but the rise could be due to Dollar weakness. In this case, It is likely that pairs such as EURUSD , GBPUSD, NZDUSD would also be rising and USDJPY could be dropping. What we have then is a muted reaction on the various cross pairs.

In this case we have clear zones formed across all the AUD crosses and even on AUDNZD (NZDUSD is highly correlated to AUDUSD, so for a strong zone to form here is pretty rare). This is a sign of clear AUDUSD strength which was a result of the positive morning AUD GDP news. The idea then is to pick the best looking AUD pair to trade. I've personally chozen AUDNZD as I think it has the nicest price structure and most space to move. We will not want to enter multiple trades on the various AUD pairs as that would result in excessive losses should all the trades fail.

China Minzhong - Another Reminder On The Danger Of Equities

China Minzhong Daily

Once in a while something like that happens to remind me why I quit trading equities. This stock got screwed by a short seller (similar to what happened to Olam) and dropped 50+% in a single day to its all time low. No matter how much one sucks at trading, reading charts or fundamental reports, nobody deserves to lose that much just like that. My heart really goes out to the retail investors who are affected, especially those who placed their hard earned money in the stock. It is exactly moves like this that potentially leads to suicide cases. Note that the shitty cash market brokers in Singapore do not provide stop loss orders, so unless you're trading CFDs or happen to be around when that spike happened, chances are you'll incur losses so big it'll take many winning trades to recover. So yep you can be a damn good trader, killing the markets and having a decent win rate. All you need is to get hit by one of these every few months and a big dent will be created in your account. The damage will not only be financially but psychologically. There will be a huge sense of unfairness and indignance coupled with discouragement. And mind you this happens far more often than one would like to believe. In the case of CMZ, at least it was a spike down so some people might still have got out in time either via stop or market orders, albeit with huge slippage. Most of the time though news is released when the markets are closed and huge gaps can occur overnight. Your stop loss order will not protect you then.

One might argue that huge spikes/gaps can occur in your favor too. I agree, but as a trader I'm more concerned about managing my downside than hoping for the big break.

Oh and did I mention that if you were short before the trading halt, the gap up today would have wiped out your account overnight? Welcome to the world of equities.

Pending Buy Order On Silver

Silver Daily

Based on the strategy described in my previous post I have a pending buy order on silver at a Rally Base Rally (RBR) demand zone. The upward momentum is obvious from the strong bull bars. I also believe that price would want to test the weekly S/R flip (my target) and that should act as a magnet to pull price. This trade if successful would net around 2.8R. As it is based on the daily time frame, the challenge for me would be to avoid being shaken out by lower time frame movements, something which I'm pretty prone to. Hope it works out!

August Trading Result + Brief Summary Of Trading Method

So finally I hit double digit % monthly return, though its only on a demo account. The following account was created at the start of Aug and here are the results after 1 month.

That amounts to about a 10% gain which is still far from my target (30%), but its the best I've achieved so far and we should celebrate little successes shouldn't we? :P Btw do ignore the win rate, it should be higher than that. I have a separate scalping account but due to carelessness I keep mistakenly entering trades on this account instead (about 3 or 4 such trades) and end up having to immediately close them for a small loss. Definitely not a mistake I want to make on a live account.

So anyway, the main point of this post is to describe a trading strategy which I'm totally convinced is highly profitable. The above result is based on this strategy, but I got distracted along the way and tried out lots of other stuff (especially scalping) and as a result missed out on many potential trades. I'm going to stick my neck out and say this - I honestly believe that this strategy when executed properly with a 2% risk per trade could possibly net 50% or more monthly. The strategy itself is simple, the psychology is not. And that is my biggest problem.

Ok back to the strategy, obviously it is too much to describe on a single post, but this FF thread by Alfonso has detailed description and videos on it. Initially I was skeptical of him because of all the fancy indicators, but damn he has got the concept nailed. Do not think it is anything new, it is pure supply demand concepts, it is Sam Seiden, it is ReadTheMarket, it is Kenneth Lee. The difference is this, he has ingeniously managed to tie everything in and create a very conservative rule based system. What I really like about him is that he pays huge attention to the higher time frames. A lot of S/D traders don't and end up getting killed.

I do not exactly follow Alfonso's rules but the core logic is this: wait for a trend to be established by the creation of new zones which engulfs an opposing zone, and then touch trade a retracement to that zone. In layman's terms we're trading a breakout pullback. Here are some example screenshots:

EURJPY M30

AUDCAD H1

GBPAUD H1

The secret to this strategy is this: super low risk, and as such freaking good RR. The initial stop would be placed just behind the zone of interest. I personally would then trail my stop beyond each newly created zone. Based on this, the EURJPY trade itself could potentially have netted 10R. 2% per trade = 20% on one trade. Needless to say I missed this one out :P Alfonso didn't, and he did net 10R on this. The other two trades would also have been multiple R winners. In hindsight I really don't know how I missed all these setups, I'll need to be more diligent and watch the charts more closely in the coming month.

The thing is this, an Engulf tells you price wants to go to the next zone. Placing a limit order at the source of the engulf is a super low risk high reward way to enter a trade. If this ends up as a loss, it means that either you were faked out or a trend change has occurred. Now a trend change usually occurs when price has reached an opposing higher time frame zone or S/R flip level, that is when you want to stay out. This also does not work in a ranging environment as lots of fakeouts will occur then (EURUSD in the past few weeks is a good example). There is obviously more to this, and I have a lot of odds enhancers (no trading before major news, watch for correlation with Dollar Index, watch all yen pairs as a whole, watch approach to zone, watch for confluence or chart patterns etc) but yep that is the basic idea.

Will Smith Secrets Of Success

http://www.youtube.com/watch?v=q5nVqeVhgQE

That video really fired me up. This stuff is real, its the core of books such as Think And Grow Rich, it is biblical. I really like something Will said - "There is no reason for Plan B because it distracts you from Plan A". I'm wholly committed to becoming an excellent trader, and I refuse to harbor thoughts of going back to my previous profession or trying out something new in case this fails to work out. There is no turning back, I've burned all the bridges behind me.

One of the biggest and most important lesson that trading has taught me is how essential failure is. Society, education, and culture portrays failure as something negative, as if that is the end result. However I've come to realize that every failure is just life's way of showing us one more option that doesn't work. The path to success is built upon failure, or more precisely the continual eradication of the options that doesn't work. I've eradicated many mistakes in my trading, but there are still many more to go.

And so, I have my dreams, goals and targets, but I must not be naive to think that this journey would be smooth sailing. Just because you have a target and you feel fired up doesn't mean you'll definitely hit it. Disappointment and discouragement will hit you time and again, and it is in those times where you don't feel so fired up anymore when the true test of your mental capacity and character surfaces. Self encouragement and positive confession doesn't come naturally, it takes sheer willpower to discipline the mind to think positive thoughts and the mouth to speak positive words. It is easy to do that when you're feeling fired up after a good book, video, or sermon, but what matters is that you're able to do so even during times of failure and discouragement.

Here is one of the governing verses of my life:
Proverbs 23:7 - For as he thinks in his heart, so is he.

Common Scheme of Course Peddlers

I hope this post can save some people money. Recently I've been rather bothered by the increasingly shameless marketing techniques of course providers, especially those from my country. I must admit, their marketing skills are top notch, and the amount of students that they managed to suck in is a testimony of that. I'm not gunning down all course providers as there could be legit and good ones out there. However, from what I heard and from the courses I've took so far, the dark nature of many providers is very apparent. I'll just describe the core and most powerful technique they use.

Basically, many course providers provide a private forum, a facebook group, a whatsapp group chat etc. Through the week they'll make many calls/recommendations, some will turn out well and others will not. There will also be students who trade those calls and will boast about their winnings or thank the mentor for the calls. Now the course provider will then take screenshots of the original recommendation posts + the winning outcome together with the student thank you posts and put them on their public site/forum/blog. Some will also include the actual trade records. The idea is to give the public an impression that they made those calls before the event actually happened and hence boost their credibility. What people don't realize is that the losing calls and losing student posts get buried under the carpet. Now these providers are not dumb, they do know that no one wins all the time. So once in a while they'll post a small losing trade with some golden words like "Trading is a probability game, no one wins all the time, as long as we keep our losses small we'll make money in the long run". Again statements like that connect readers to them and instill trust. Many will also portray a very close mentor-student relationship by posting mushy SMSes. Some will even put on a good guy image by encouraging charitable acts or claim that their goal is to educate the public so they won't be slaughtered by the manipulators out there. Now who is the slaughterer?

Oh ya I just remembered another technique which I've noticed a few times recently. I know of a few courses who advocate trading pin bars on a 50% retracement. First of all I don't see the logic behind it, there is absolutely no reason why price should turn at an arbitrary 50% level of a freaking bar. Do you really think some huge Goldman Sachs trader is out there waiting for price to hit the 50% level of a H1 pin bar to press the buy button? No, price moves from S/D zone to S/D zone, period. Every market, every time frame, every single turn. Check it out yourself if you don't believe, there is ALWAYS a zone or an ignored zone where price turns. The only reason why Fib levels, moving averages, trend lines, indicators etc sometimes work is because they coincide with a zone. The best traders I've seen trade purely on naked charts. Ah I digressed, back to the 50% retracement thing. So these providers will then take a pin bar which turned out well, post it on their public site with a description like "If you had traded this pin bar using our 50% retracement strategy you would have made a whopping 6R profit!". This really grinds my gears because some of these pin bars could be pathetically small and lousy ones that aren't even good to begin with. So if you take a small pin bar and trade the 50% retrace of it, you'll obviously get a very tight stop and a small move will net you a multiple R profit. This kind of stuff looks good after the fact but did the provider actually take or post the trade before it happened? Another common one is posting inside bars that worked out. Inside bars are everywhere on every time frame, it is easy to just pick a few winning ones to show how effective your inside bar breakout strategy is!

It took me years to see through all this and experience it for myself. It is dark and sad but true. There are many shameless and evil people out there. I still struggle with a mixture of doubt and jealousy when I see some of their after the fact posts, but I constantly remind myself that they're just posting the winners and not the losers. It does not profit myself to get bitter and emotional about it. Our greatest competition is always the man in the mirror. I must discipline myself to stay focused and committed to my goals, to improvement, to growth. Too many people waste their time debating, arguing, and shaming others on forums when that time could be better spent on the charts, webinars, or educational resources.

In summary, never ever trust any course provider who does not post their calls/trades before the outcome. It is not enough to see screenshots where they appear to have made the calls before hand to a private group of students. Please do not ever get taken in by that. Also, it is ironic but the best educational material I've found so far are free. James16 (though they also have a paid group), ReadTheMarket (though they are also going to start selling a course), Sam Seiden's webinars, LoveJoy's videos, PriceIsEverything FF thread, and many other forum threads. The thing is this, people can't seem to believe that they can learn tonnes from a forum thread. The material is often unstructured and messy, it requires days and weeks of digging through hundreds of pages before the pieces start to fall in place, and a paid course often seems like the easy way out. However, I've realized that many forum threads are really treasure troves of knowledge, but the treasure will only be found by those who're willing to put in the hard work and time to dig for it. So.... if one is not willing to put in the hard work, he probably won't succeed in trading anyway and no amount of courses will help him.

Whew enough rant for today, glad to get it off my chest. Back to trading! :)

Self Mastery

I really feel that a huge part of trading is about self mastery. The ability to make decisions based on sound proven methods, to trade according to rules and not P/L, to manage our emotions etc. Well that seems very cliche and I've read and learned that from the start, but as time goes by the true meaning of it is really beginning to sink in. I'm just going to say this: "IT IS SUPER HARD".

I don't know if it is just me. I wonder if there is anyone who managed to attain a certain level of self mastery in just a couple of months. All of us have our inner demons, and they'll manifest themselves over time through our trading results. One big one for me is that I feel very uncomfortable whenever I'm in profit, especially if it is a multiple R profit. I'll then find any reason to get out of the trade, be it a lower time frame candle stick pattern or some lame reason like I'm going to sleep soon. The good thing for me is that I recognized that and I'm slowly overcoming it. I'm happy with my past few trades because I trailed my positions according to my rules and did not get out early at the slightest sign of trouble.

Our issues will manifest one by one and will continue to haunt our results until we overcome them. I reckon the entire process will take many years. Some traders manage to attain a level where they're completely emotionless about their trades, that is obviously the highest level but I really feel one does not need to berate himself if he still feels the euphoria or fear when trading. The important thing is to still be able to stick to the rules even though your emotions are crying out to do so otherwise. That is the stage I'm in now. Recently I could really feel my flesh crying out to just take profits quickly or prematurely cut loss etc, but I managed to discipline myself and not do it.

A trading journal is super important, I never fail to be disgusted by myself when I study my trades in retrospect. However disgust is one thing, progress is another. I really make a point to be very conscious about recurring mistakes in my trading and implement rules to work on them.

Emotional control also involves circumstances which can be very unpleasant. For me this is the typical stopped out by 1 pip before price takes off in my original direction, stopped out because spread got ridiculous during news spikes, and other unforeseen circumstances. I'll name some from today. My MT4 broker decided to mysteriously remove all my pending orders. I reentered them and it got removed again. Only on the third try did the orders not get removed. That wasn't too bad because I didn't miss out on any trade. However what happened next was epic. My broker decided to not fill any of my pending orders. That includes limit and stop orders. Imagine my shock when price hit my stop loss and I was still in the trade. I then had another trade which didn't execute because my limit order didn't trigger. To test it out, I placed multiple small orders on a pair to see if they'll execute. I'm looking at it now and I've never seen anything like this before. Price is just moving up and down my orders without triggering them. Only market orders work. Something is definitely wrong with my broker today and I have to do something about it before I continue trading. Heck I can't trade even if I want to. Times like this require emotional control eh? :P

Oh well, enough rant for now. So many things on my mind recently, hope I'll have the mood to write more about them :)

Holy Grail Of Trading

The above screenshots are from ReadTheMarket, and this concept of PAZ and Engulf is claimed by some to be the holy grail of trading. There is obviously a lot more to it (how to identify zones, multi time frame analysis etc), but slowly the light is beginning to dawn on me. I was looking through my journal and I realized a lot of my failed trades were due to taking a trade without waiting for an Engulf. It is hard to put it in words, but the above concept really is the missing piece of the puzzle. Not expecting a new reader to understand the screenshots without thorough studying of the other Supply/Demand concepts at RTM, but really it is worth the effort.

Potential Long Setup on S&P Futures

S&P Futures

This is the kind of demand zone I'm very comfortable to touch trade. Uptrending market, very clear consolidation right below a resistance level and a strong breakout. Broken supply becomes demand. When price returns to this level, the chance of it holding is high. As of now the reward risk of this setup is almost 3:1. My only concern is that price is rather high up on the curve, and arguably it is at a funky looking supply zone so we don't know how much supply will kick in. I will definitely place a buy limit at the zone, and will only pull it if I don't like the way price is approaching the zone. By this I mean if price starts consolidating and basing just above our zone, I'll pass on the trade. This is because the base will act as a supply zone, that in turn will be a major trouble area for our trade as well as greatly diminish the RR of our setup.

USDCHF H4 Short Trade - Win

USDCHF H4

This may be a 1R+ trade but I'm not happy with it at all. I took the trade based on M30 PA. The reason why I did not touch trade this is because the supply zones are stacked, which means price could easily shoot through the bottom zone to hit the top one. As such I waited for PA before I took the trade, which came in the form of multiple rejection wicks/pin bars on the M30. I was very aggressive with my stop loss and placed it above those wicks rather than the entire supply zone, this gave me a very tight 27 pips stop loss.

Because the market was up trending when I shorted it, it is hard for the mind to believe such a big move down is possible. When I took the trade, I kept telling myself better be careful with this one because it is counter trend. I managed to persuade myself to TP when price formed a M30 pin bar off a M30 demand zone. Now herein lies a very important lesson. If you took a trade based on a H4 zone, DO NOT TP early until price hits an opposing H4 or higher zone. If your read is right, price should do just that. This is how many professional traders make tonnes of money, they enter as a scalper but hold as a position trader. They find low risk opportunities to take a trade on the LTF, but select their target based on the HTF.

What I should have done was to simply move my stop to BE instead of TPing early. Again I broke my own rules and got shaken out early. Look at that sharp move down, my simple rule of trailing the stop behind each supply zone would mean I have at least 6.5R of profits locked in now. In fact, I would have been 12R in profits at the lowest point. A freaking 24% increase in the account.

I also want to take this opportunity to discuss a very popular method of trade management - Taking partial profits at the first trouble area and trailing the remaining half. Two of the best traders I know (Redsword and Julexo) do that, many others do so too. However I'm still not convinced that it is the best way to manage a trade. No doubt partial TPing is very mentally and emotionally assuring as you're guaranteed of a winning trade. However, I believe that expectancy wise doing so is inferior to trailing the entire position. Just look at this USDCHF trade and my previous GBPCAD trade. Trailing the entire position would have resulted in a lot more profits. Indeed I will have a lot more BE trades if I do not partial TP, but I truly believe the profits from these runners will be far greater than those who only let 1/2 or 1/3 of their position run. Again who am I to correct those legendary traders, but like everything in life, the way to convince yourself of something is to test it out yourself. That is what I'm doing, if over time I'm convinced that trailing the entire position is more beneficial for the expectancy than partial TPing, heck that is what I'm going to do.

Each day goes by with me believing my dream is possible. The greatest obstacle to that is the man in the mirror, because I keep sabotaging my trades. The thing is this, we need runners to offset our losses and create that massive growth in the account. It is of paramount importance that we really let our winners run. How many more times must I commit the same mistake before I conquer this fear?

Common Pitfalls and Lessons From S/D Trading

Kinda in a blogging mood again so just gonna attempt to list them common pitfalls and lessons I've learned from observing the trades of myself and other S/D traders. I'm kinda lazy to look for example charts though so hope the following points are easily visualizable.

1. Trading a lower time frame zone which is just before a higher time frame zone. This may sound basic but I committed this a lot when I first started touch trading. For example we may have a nice looking Drop Base Drop (DBD) M30 supply zone, however there is actually a H4 supply zone right above it. The higher time frames represent the biggest institutions, so think about it. If you're a big market maker, there is a M30 supply zone but you also know that there is another bigger H4 supply zone just above. Greed is your nature, what do you do? You'll simply shoot price through the M30 zone to fill your sell orders at the H4 zone right? That way you not only get more sell orders filled (hence more commissions), you also benefit from the extra liquidity provided from the M30 bears getting stopped out. The same concept is also applicable to stacked zones (one zone on top of another), it is similar but I think the perils of trading a LTF zone which is not in a HTF zone is higher than that of trading a lower stacked supply zone.


2. When I first started touch trading a few weeks ago, I felt like a fish on land. Seriously it was very alien to me as I used to trade PA bars. My win rate was horrendous (thankfully on demo), but it also prompted me to dig deeper into my own trades and the trades of others. I started watching Sam Seiden's webinars all over again, and I studied Kenneth Lee's famous supply/demand thread thoroughly. I learned so much that I actually felt thankful for the losing streaks I encountered. I realized that it is absolutely important to be able to identify the best zones and be very familiar with Sam's odds enhancers. Now the term "odds enhancers" may suggest that those are just additional strengtheners of something that already works. I realized that it is not so. Trading supply/demand without the odds enhancers is account suicide. Just try touch trading every single zone out there, I believe you'll end up with a win rate of 30% or less. I see so many traders trying to touch trade zones that have been tested multiple times, others that treat every swing high/low as a S/D zone, and yet others who try to short every DBD speed bump supply zone in an uptrend. I've tried all that and had my ass handed to me. There are just so many nuances in S/D trading that makes all the difference.


3. I dare say that my ability to identify the best zones have improved a lot since I first started touch trading. There are two main price structures that I feel most comfortable touch trading. First of all is that tiny supply zone that forms just before the break of an obvious S/R flip level. If price breaks down and comes back to retest it, there is a high chance that this zone will hold. The second is simply shorting the previous DBD zone in a downtrend. If the zone is well defined, we really get a high odds and low risk way to join the trend. However once price starts breaking supply zones and is making higher lows, I'll no longer take any touch trade shorts as a trend reversal could have happened. This is a more conservative way of trading which I picked from up Alfonso in his thread. As with every trade, it is absolutely important to check where price is coming from. If price has already hit a HTF demand zone and is bouncing off it, I'll also refrain from shorting.


4. There are many ways of trading S/D concepts. The two main branches are touch trading zones and waiting for some form of price confirmation at the zones before taking a trade. After trying out both, I came up with a hybrid which I feel makes total logical sense. If a zone fits my criteria for a touch trade, I'll touch trade it. Otherwise, I'll wait for price confirmation first. So for etc if a zone is not fresh, very wicky, or it is a lower stacked supply zone, I'll wait for some PA bars or a LTF pattern like Quasimodo before taking the trade. Yes it will increase my risk, but it'll also increase my win rate. 

In the end, I just want to say that it is very very important to first be able to identify good zones. Even pro traders who wait for PA bars at zones are able to do so. I restudied the Price Is Everything thread, Redsword makes it look easy but seriously, the zones he points out are actually really good ones. The same goes for another legendary trader Julexo. I'm always a student of the market. Loving trading more and more still and really hope to be able to achieve my goals soon. :)

Quick Ramblings

Haven't been blogging much because for some reason I rather spend my time trading or focusing on trading material. Just want to jot down a few quick ramblings before I lose the blogging mood again :P

1. There are really all sorts of traders out there. Seriously I see many kinds of persona in forums, facebook groups etc, and like in every arena of life, one has to be very careful who he trusts and pays attention to. Some people are gifted with the glib of tongue, they're able to portray themselves as some trading guru, going around giving trading advice and correcting others. These people often only posts their winning trades after the fact. Mind you there is a huge amount of such people out there, some do so because they're course providers or provide some form of trading service, others do so because they enjoy the glory and fawning other traders bestow upon them. You'll often hear them say things like "That trade was so obvious, how could anyone not see it?", or "I knew it wouldn't work out, didn't I tell you so?", or "Sigh I only made 20% this week, could have been much better"....  I guess I'm kinda annoyed because I've wasted precious time trying to make sense or understand why the trades of these people work, when many times I don't even think they were good trades. I soon realized that I was right, many of these trades are lousy ones to begin with, they only worked because bad trades sometimes do end up in profit too. Such trades are many aplenty on forums, and one has to be very careful who he studies. Seriously do not ever ever listen to someone who only posts trades after the fact. A trader could identify 20 zones on the M1 chart, take all of them on a demo account, and probably 1 of them will result in a 10R profit. Post that trade on the forum and naive readers will flock to him and worship him. I thought a lot about it and this is my conclusion - I'll only render respect to the trader who is willing to post his trades the moment he takes them and not after the fact. Even so I'll only render respect to him if he is humble, generous, and willing to share and help others."The older I get the less I listen to what people say and the more I look at what they do." - Andrew Carnegie


2. Keeping to our trading rules is harder that I thought. I have no problem cutting losses when I should, but my biggest problem is taking profits prematurely. It has been my problem for months, and ironically still is. However, as I witnessed the destructive effects of this time after time, the significance of it is beginning to sink in. I have a dream, this dream sounds ludicrous at first but when you break it down, you'll realize that it is not impossible. This dream is to take a 10k account and grow it to a million dollars within 18 months. I did the math, in order to do so, one has to grow his account by 30% every month. Compound the profits monthly and a 10k account will grow into a million within 18 months. That will mean I have to make 7.5% every week, 1.5% daily. Now is 1.5% daily hard? I would say yes, but not impossible. I risk 2% every trade, that means I have to make 0.75R daily. To find out if that is possible, simply trade and prove it to yourself. I was analyzing my trades for last week and here is the shocking discovery. If I had stuck to the trading rules I had set for myself, I would not only have met my weekly target, I would more than doubled it. I'll post a trade to illustrate why.

   

   GBPCAD H1

   This trade could have been 9R (18%) if I had managed it according to my trading rules - trail stop above each supply zone. There is nothing magical about it, I simply took a short at a well defined supply zone. The problem is this - I was watching it on the M1 chart, and the trade put me in the green and back to the red about 3 times. It is very frustrating when you see a sharp breakdown and your mind goes "Yes this is it!", and the next moment prices retrace all the way back up and puts you back in the red. Fear sinks in, you wonder whether it was a fake out, whether you should just get out to be safe. Repeat that 3 times and the mind/emotions is totally drained. In the end I told myself screw it I'm just going to get out around breakeven, anyway I'm going to sleep and can't monitor the trade anymore. Can you imagine how disgusted I felt when price sunk the way it did the next day? This trade imprinted something deep in me. I realized that it is possible to make a million in 18 months, but I MUST stick to my rules. Did I expect such a runner? Nope. Does it always happen? Nope. But the key is this - The way to catch a runner is to stick to the rules. The tricky thing is this - Trailing a stop means you'll never get out at the exact top/bottom. You'll ALWAYS lose out on some profits. Also, perhaps 7 out of 10 times you'll not get a runner. It can be frustrating to keep getting stopped out at BE or a small profit. However, one must bear in mind that once the runner comes, it can make the week or maybe even the month. And the above is only one trade. There are a couple others that I also broke my rules and exited prematurely. As such, until proven otherwise, I'm going to believe that my dream is possible. Of course to achieve 30% monthly consistently is easier said than done, at some point the psychological stress of seeing the P/L fluctuate by the thousands will kick in. But I'll deal with that when it comes, right now I just want to focus on getting my strategy and discipline right. 

The Traders Guild - Excellent Source Of Supply/Demand Material

http://www.thetradersguild.co.uk/trading-education/

I just love it whenever I chance upon great sources of information. The above site is fantastic. I'm halfway through the videos but I just had to post this. Great explanation, very thorough, and very organized. It basically sums up so many trading concepts, and the owner definitely has a great understanding on the markets. Understand how S/R lines are a result of multiple supply/demand zones, how PA bars are the by product of S/D zones, what is the orderflow dynamics behind a breakout and a breakout retest, what is compression etc etc. So far everything I've learned and know is in there. Lots of educational videos, twice a week webinars, FAQ, live twitter feed, all for free. I really respect and appreciate the owner Lovejoy for his incredible generosity and willingness to teach, do check out his FF thread at http://www.forexfactory.com/showthread.php?t=288707 too. The world needs more of such people.

Candlestick Patterns And Their Life Cycle

The past few days were fantastic. It really does help to have a trading plan. My demo account is growing once again, and most importantly I had many Eureka moments. Just want to share three of them here.

1. One of the revelations I had recently was that it is absolutely super important that a PA bar has to be taken at a supply/demand zone. Actually I knew that before but because I thought hey its just a demo account, I went berserk last week and took PA bars everywhere. It taught me a lesson I'll never forget. The best looking PA bars will slap you in the face and stop you out if they're not at a supply/demand zone. Additionally, the best looking PA bars will also fail if there is an opposing zone just above/below it. Never trade into a zone. Sadly this is something most PA traders will never realize. 


2. I also realized how I'm missing out so much by limiting myself to the two core price action bars that I was used to - Outside Bars and Pin Bars. After reading the Price Is Everything thread I learned about Engulfing Bars. I then thought to myself, if the reason price turns at a zone is because of a supply/demand imbalance and not a candlestick pattern, why the heck should only outside bars and pin bars work?! I had the opportunity to do some homework, check out the screenshot below, notice how effective engulfing bars and stars are? And these are only two patterns! I'm shocked at how blinded I've been all these while. Opportunities were dangling everywhere but I couldn't see them because I was only looking for outside bars and pin bars. I'm committed to re study the candlestick patterns and will do even more homework and train my eye to spot them more. One of my goals for now is this: Spot better zones, identify more candlestick patterns. Put those two together and we have a potent combination
   

   

   Engulfing Bars and Stars

3. I further convinced myself why lower time frames is the way to go. You see, once you've correctly identified a good zone, you basically know that you're going to take a trade there. Aggressive traders will touch trade the zone, conservative ones like me will want confirmation, if even the slightest. So how do you get confirmation? Through candlestick patterns. On which time frame? Well if you think about it, if the zone is really good, wouldn't a confirmation even on a low time frame suffice? Say the zone of interest is a 4H one, wouldn't a candlestick pattern on a M15 chart be enough? It already beats touch trading right? Lets look at this amazing example of the life cycle of candlestick patterns across different time frames:

   

   Candlestick Patterns Life Cycle

   That is so wow isn't it??!! Picture this scenario: Trader A - Trader E all saw the supply zone that is of interest. Trader A saw the bearish engulfing on the M30 and took it. Later on Trader B saw the Pin Bar on the H1 and took it. Yet later on Trader C saw the Bearish Engulfing on the H4 and took it. You get my point. Suppose, just suppose that we do end up getting a weekly pin and price proceeds to drop a few hundred more pips. Can you imagine how much Trader A would have made if he saw the PA bars forming on the various time frames and as such had the confidence to hold on to his trade made from the M30 Bearish Engulfing? Now imagine an ace trader who took the trade on the M1 time frame, how tight his stop can be... Imagine if he added to his position as price continued to exhibit price confirmation. Imagine a few such trades... Double an account within a few weeks? I say it is possible. So many traders are doing it, not with unrealistic leveraging but with pure skills. I make it sound simple but I still lack the experience and expertise to do this. However I'm trying, and I'm devoting every single day to hone my craft to such levels.