thanks -- I have been wondering about Price Action trading, this helps fill in a big question I had. I am generally on the side of the previous comment about "high probability" without actual counting. But in considering the opposing side, I've read about halfway through Al Brooks book, and have noticed thinking to myself "wow, that's like what I see all the time". I like the screen shots, especially the 2-parts -- one at the set up, the next at how it turned out.
High probability price action by Dr Cornelius
- Thread starter oilfxpro
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thanks -- I have been wondering about Price Action trading, this helps fill in a big question I had. I am generally on the side of the previous comment about "high probability" without actual counting. But in considering the opposing side, I've read about halfway through Al Brooks book, and have noticed thinking to myself "wow, that's like what I see all the time". I like the screen shots, especially the 2-parts -- one at the set up, the next at how it turned out.
Stops should be placed where the market can't take you out of good trades. As a result of placing wider stops your hit rate increases.If you select highest probability entries and trades , your hit rate will be 80 % plus.
If you select a any reasonable trending strategy ,with a stop loss of 40 pips and target of 26 pips your hit rate will be around 65 % , use a stop loss of 20 and target of 22 your hit rate will around 50 %.The profit comes from picking the highest probability entries by increasing your hit rate to 80%.
Think what happens if you put your stop down to 6 or increase to 100 .I have already showed a few trades where small stops actually cost hundreds of pips when getting taken out of great winners of 50 to 100 pips.
Let us say you do a thousand trades ,
800*26 =20,800 profit
200*40 = 8,000 loss
net profit of 12,800 pips per year
* futures account $10 pp = $128,000
Drawdown 600 pips * $10 = $6,000
No good trading 10 cents a pip and making $1,000 a year at a bucket shop like Oanda , and telling mothers how to suck eggs.
Rising wedge in a falling market is a low risk high reward opportunity.
http://caripips.blogspot.com/2008/08/how-to-trade-rising-wedge.html
http://caripips.blogspot.com/2008/08/how-to-trade-rising-wedge.html
Quote from cornixforex:
Whatever your reasoning was, if you can't trade with tight stops it's the problem of your entries and nothing else.
I have run several back tests on intra day trading covering 10 years ,the entries and exits are very important along with knowledge of other factors described earlier.
Stops of 20 pips and 22 profit target achieved 50 % hit rate , stop of 40 with 20 target achieved 65 % hit rate, stops of 100 and target of 20 pips achieved a 75 % hit rate.It was using same criteria except stops on all different tests.
You can guess what a 6 pip stop trading noise ,would do to most traders including the mindset aspect.
I use these wide stops of 100 and use context ,higher probability trading set ups using confluence ,momentum ,support and resistance to achieve 85 % plus success rate.