Post by traderAllen on Dec 13, 2014 10:55:50 GMT -5
"traderAllen, when you took the trade (34 pip profit one) did you look to the left of the chart to see if price was in an area of resistance, or did you base it on the price action (engulfing bar) alone?"
In Forex scalping and especially on a fast printing chart candlestick patterns are the last thing I care to look at. I've studied candle patterns in the past like most aspiring traders. But I found their use on the right edge of the chart is all but worthless. And engulfing bar for instance, show me one on a chart that worked and gave you a heads up, and I could point out 10 on the same chart that failed miserably. Therefore there is no edge in a candle pattern. Many may disagree, but that's what I found.
My main focus is on buying and selling pressure that's what I look to identify. I do this by looking at the speed of which the candles are printing off. I look at how they're being formed at the very moment. I keep an eye on the order flow as it comes in. There are places on the chart were typically you find buyers, sellers, with trend traders, countertrend traders, and Fibonacci traders. I look to identify those traders and where they're at. Then I use their trading to my advantage.
A simple example is a breakout trade/range trade. If the price is in a 20 pip range for let's say the last hour, the price is moved up again for say the fourth time(no value in 4 just a number) I watch as price nears that level of resistance, my fingers on the trigger ready to fire off in order, especially if I see buying pressure. I don't trade just because price brakes level by one tick. I'm watching now the speed of the candles being formed, and the orders coming in. If I don't see new orders coming in at a faster rate as the market attempts to break out. I hold off on the trade. The lack of orders tells me the breakout traders are not there, yet I that am more likely to sell at this still intact resistance level, covering part of my position at the mean and the other half just before support.
The point being even if I did think there would be any value of a candle pattern, on the right edge of the chart there is no time to think about identifying candle patterns. They are another example, of what is commonly taught to traders because it looks good on a chart in hindsight.
