This post was
created in answering a question in the indo-investasi forum related to post
"203 Pips on April 30th":
"pcguy007; Hi
Captain, can you explain a little on your GU short trade? Did LST alert you or
did you take it purely on price action?
If you could explain
how you search for entry's and what you confirm when you take the trade that
would help me grasp the method.
thanks"
I witnessed on the
forum that most of traders still talking with the style of indicator base
perspective. This implying that most of them didn't take Price Action in to
their consideration. But, If they were master Price Action they would not in
the forum anyway.
As I have said many times that if you master Price Action you would see the indicator, system
and strategies from the true perspective and you would capable of using just any
system/indicator.
You would say (as I
have always say) that They/systems are talking and telling about the same thing
with different language.
I treat LST as well
as other system as a tool but all my decision is based on Price Action.
The further
explanation use trade picture of the trades on April 30th. On Friday LST did alert me on the existence of
divergence on extreme area (as designed) but I filter it by price action. As
I've stated many times that during a strong trend the price would keep
diverging. Therefore, as LST demand,
there should be a confirmation where should the signal to be taken.
Look at the 15M
chart:
On the above 15M
chart we find 4 divergence but I need a confirmation to take the short. On
Friday the price have broke down the intra-day trend line but didn't take out the
previous low. This has to be taken into consideration.
Later there were 2
shooting star. I didn't take the first shooting star. I waited for the price to
test the high of this 1st shooting star. Additionally there were Resistance/R1
a few pips above this 1st shooting star. I placed the first 2 orders not under
the 2nd shooting star but at the wick/pin of the 2nd shooting star that just 5
pips of the top.
Look at this M1
chart showing price movement on the 2nd shooting star on M15:
As I monitored the
price momentum on M1 chart there were a slowing momentum of bearish while
growing momentum to bullish and take out the 1st shooting star (Vladimir'sForex LST System would say this situation as MORUBOZU) but quickly rejected by
R1 line and made a shooting star on M1 chart. Additionally the situation has
made a narrow range of consolidation.
Before price reverse
and after the first pullback against the prevailing trend the price most of the
time still retrace toward the trend extreme as an effort to resume. This
creates a choppy back and forth topping formation.
Sometimes this test
failed to take out the initial High/Low then strongly rejected "in back of
the hours" which would seen as pin (shooting star/Hammer), RR track,
Engulfing etc. This situation made an M formation.
Sometimes sometimes
made an overshoot but then failed (Morubozu). This is one of YTC-PAT setup;
Fading Break Out Failure.
But this is not a choppy up - down topping formation
but a rounding top + tight range. This situation most of the time create a
"Spring effect" where the price sharply falling and never test the
initial high.
So I quickly place 2
unit short (using script + short cut button, executed on 2 chart to get it work
at the same time) after the shooting star on M1. It was just 5 pips of shooting
star high. With 3 - 3.4 pips GBPUSD spread I set SL 9 pips (using EA: SL-TP
drag and drop). With just 9 pips risk anyone could place a bigger size lot that
equal to 1-2% of account size.
But if I take the entry after the 2nd Shooting Star closed on M15 then it would be 12 pips of the high and my stop should be more than 16 Pips. Therefore, with 9 Pips Stop Loss then I could double my Lot Size with about the same risk as 16 Pips Stop Loss.
The price on M1 fell
sharply and made the second shooting star on M15 chart.
After a retrace on
M1 I place the 3rd short. Al Brooks PA taught to place order after L2. The L2
of this retrace on M1 was a quick fall.
This bar by bar reading only seen on M1 chart while On M15 chart you would only see 2 consecutive "LowClose bear candle". Many would say M1 is too noisy if you use MA but if
you learn YTC PAT and Read Bar by Bar as Al Brooks you won't say that.
