Tuesday, September 13, 2011
Price Action Basics I - Bar selection
The indicator above plots a red dot above any reasonable bear bar and a blue dot below any reasonable bull bar. Naturally, this means it misses some of my important setups such as OR/1Rev at b3 and possibly some 1PB setups.
If you did nothing but trade these bars, most of your trades would be wins. Your losses would only be from b45-47 chop and possibly b74 L1. If you swung any contracts for any of your previous trades, you probably earned money overall.
Lets add some common sense to the mix and eliminate counter-trend trades and H1/L1 against strong moves. This gives only b45 as a losing trade of the day. Add a second common sense rule and do not take shallow H1/L1 with-trend unless its close to ema or trendline and you already have an all-winner day.