CANDLESTICK STRATEGY

A CANDLESTICK CHART IS SIMPLY A CHART MADE OF INDIVIDUAL CANDLES, WHICH TRADERS USE TO UNDERSTAND
PRICE ACTION. CANDLESTICK PRICE ACTION INVOLVES PINPOINTING WHERE THE PRICE OPENED FOR A PERIOD,
WHERE THE PRICE IS CLOSED FOR A PERIOD, AS WELL AS THE PRICE FOR A SPECIFIC PERIOD WHEN THE PRICE IS
HIGH AND LOWS.

PRICE ACTION CAN SIGNAL TRENDS AND VICISSITUDES TO TRADERS IN ALL FINANCIAL MARKETS. FOR EXAMPLE,
CLUSTERS OF CANDLESTICKS MAY FORM PATTERNS OCCURRING THROUGHOUT THE FOREX CHART THAT MAY
INDICATE REVERSAL OR CONTINUATION OF THE TREND. CANDLESTICKS CAN ALSO CREATE INDIVIDUAL FORMS
THAT MAY INDICATE BUYING OR SELLING ENTRIES IN THE MARKET.

THE DURATION FOR EACH CANDLE TO BE DISPLAYED DEPENDS ON THE TIME FRAME CHOSEN BY THE TRADER. A
POPULAR TIMEFRAME IS A DAILY TIMEFRAME, SO THE CANDLE WILL INDICATE OPEN, CLOSED AND HIGH AND LOW
FOR THE DAY. VARIOUS COMPONENTS OF A CANDLE CAN HELP YOU PREDICT WHERE THE PRICE MAY GO, FOR
EXAMPLE, IF A CANDLE CLOSES FAR BELOW ITS OPEN, IT MAY INDICATE A FURTHER PRICE DROP.

THREE SPECIFIC POINTS (OPEN, CLOSE, WICKS) ARE USED IN THE MANUFACTURE OF A VALUE CANDLE. THE FIRST
POINTS TO CONSIDER ARE THE OPEN AND CLOSE VALUES OF THE CANDLES. THESE POINTS IDENTIFY WHERE THE
PRICE OF AN ASSET BEGINS AND ENDS FOR A SELECTED PERIOD AND WILL FORM THE BODY OF A CANDLE. EACH
CANDLE DEPICTS THE PRICE MOVEMENT FOR A CERTAIN PERIOD OF TIME THAT YOU CHOOSE WHEN LOOKING AT
THE CHART. IF YOU ARE VIEWING A DAILY CHART, EACH INDIVIDUAL CANDLE WILL DISPLAY THE OPEN, CLOSED,
UPPER AND LOWER WICK OF THAT DAY.
 ENGULFING

THE SHARPLY ENCLOSED CANDLE IS ONE OF THE MOST OBVIOUS PRICE ACTION SIGNALS OF THE CANDLE FOREX
MARKET. MANY TRADERS WILL USE THIS CANDLESTICK PATTERN TO IDENTIFY PRICE REVERSION AND
CONTINUITIES TO SUPPORT THEIR TRADING STRATEGIES. BULLISH ENGULFING PATTERN APPEARING AT THE
BOTTOM OF A DOWNTREND

CURRENT CANDLE ABOVE THE HIGH OF THE PREVIOUS CANDLE IS REQUIRED

REVERSALS USING POINTS

1. LONG POSITIONS – LAST BEARISH CANDLE THE CANDLE AFTER THAT SHOULD BE UP
2. SHORT POSITIONS – LAST BULLISH CANDLE THE CANDLE AFTER THAT SHOULD BE DOWN

STOP-LOSS/TAKE-PROFIT

LONG POSITIONS- STOP-LOSS =LAST LOW, TAKE-PROFIT=SWING HIGH

A PIN BAR PATTERN CONSISTS OF A PRICE BAR, USUALLY A CANDLESTICK PRICE BAR, WHICH REPRESENTS A SHARP
REVERSAL AND DENIAL OF VALUE. REVERSING THE PIN BAR AS IT IS SOMETIMES CALLED IS DEFINED BY A LONG
TAIL, “WICK”. THE AREA BETWEEN THE OPENING AND CLOSING OF THE PIN BAR IS CALLED THE “REAL BODY”, AND
THE PIN BAR USUALLY HAS SMALLER ACTUAL BODIES THAN THE SHORT TAILS.
THE TAIL OF THE PIN BAR DENOTES THE AREA OF THE PRICE THAT WAS REJECTED, AND THE IMPLICATION IS THAT
THE PRICE WILL CONTINUE TO MOVE OPPOSITE THE DIRECTION OF THE TAIL POINTS. THUS, A BEARISH PIN BAR
SIGNAL IS ONE THAT HAS A LONG UPPER TAIL, SHOWING A REJECTION OF HIGHER PRICES WITH THE INDICATION
THAT THE PRICE WILL FALL IN THE NEAR-TERM. A RAPID PIN BAR SIGNAL HAS A LONG LOWER TAIL, SHOWING A
REJECTION OF LOWER PRICES WITH THE INDICATION THAT THE PRICE WILL INCREASE IN THE NEAR-TERM.

HOW TO TRADE WITH PIN BARS

THE FIRST, AND PERHAPS MOST POPULAR, “IN THE MARKET” PIN IS ENTERING THE BAR TRADE. THIS SIMPLY
MEANS THAT YOU ENTER THE TRADE AT THE CURRENT MARKET PRICE.

NOTE: BASED ON THIS, THE PIN BAR PATTERN MUST BE CLOSED BEFORE ENTERING THE MARKET. UNLESS THE BAR
IS CLOSED AS A PIN BAR PATTERN, IT IS NOT ACTUALLY A PIN BAR.

ANOTHER ENTRY OPTION FOR THE PIN BAR TRADING SIGNAL IS ENTERING THE PIN BAR AT 50% RETURN. IN
OTHER WORDS, YOU WILL WAIT FOR THE PRICE TO RETURN FROM THE HIGH PIN TO THE HALFWAY POINT OF THE
ENTIRE PIN BAR’S RANGE FROM HIGH TO LOW, OR ITS “50% LEVEL”, WHERE YOU HAVE ALREADY PLACED A LIMIT
ENTRY ORDER.

A TRADER CAN ALSO ENTER A PIN BAR SIGNAL USING AN “ON-STOP” ENTRY, WHICH IS PLACED HIGHER OR LOWER
THAN THE PIN BAR.

HERE IS AN EXAMPLE OF WHAT DIFFERENT PIN BAR ENTRY OPTIONS MIGHT BE LIKE:

HERE’S AN EXAMPLE OF WHAT THE VARIOUS PIN BAR ENTRY OPTIONS MIGHT LOOK LIKE:
 TRADING PIN BARS CHART LEVELS

WHEN TRADING A PIN BAR COUNTER TO, OR AGAINST A DOMINANT TREND, IT’S WIDELY ACCEPTED THAT A TRADER
SHOULD DO SO FROM A KEY CHART LEVEL OF SUPPORT OR RESISTANCE. THE KEY LEVEL ADDS ADDITIONAL
‘WEIGHT’ TO THE PIN BAR PATTERN, JUST AS IT DOES TO THE COUNTER-TREND INSIDE BAR PATTERNS. ANY TIME
YOU SEE A POINT IN THE MARKET WHERE PRICE INITIATED A SIGNIFICANT MOVE EITHER UP OR DOWN, THAT IS A
KEY LEVEL TO WATCH FOR PIN BAR REVERSALS.

SL BELOW PIN BARS LEVEL

SWING TRADING
WHAT IS FOREX SWING TRADING?

AS THE NAME SUGGESTS, SWING TRADING IS AN ATTEMPT TO MAKE A PROFIT FROM THE SWINGS IN THE MARKET.

THESE SWINGS ARE MADE UP OF TWO PARTS—THE BODY AND THE SWING POINT. AS TRADERS, IT’S OUR JOB TO
TIME OUR ENTRIES IN A WAY THAT CATCHES THE MAJORITY OF EACH SWING BODY.

WHILE CATCHING A SWING POINT CAN BE INCREDIBLY ATTRACTIVE, IT IS NOT ABSOLUTELY NECESSARY.
IN FACT, ATTEMPTING TO CATCH THE EXTREME TOPS AND BOTTOMS OF SWINGS CAN LEAD TO AN INCREASE IN
LOSSES. THE BEST WAY TO APPROACH THESE TRADES IS TO STAY PATIENT AND WAIT FOR A PRICE ACTION BUY OR
SELL SIGNAL.
I’LL GET INTO THOSE VARIOUS STRATEGIES SHORTLY. FOR NOW, JUST KNOW THAT THE SWING BODY IS THE MOST
ATTRACTIVE PART OF ANY MARKET MOVE.

FOREX SWING TRADING IS ONE OF THE MOST POPULAR TRADING TECHNICAL STRATEGIES AND FOR GOOD REASON.

THIS ALLOWS FOR A LESS STRESSFUL TRADING ENVIRONMENT WHILE STILL PRODUCING INCREDIBLE RETURNS.
THIS IS GREAT IF YOU HAVE A DAY JOB OR WANT TO GO TO SCHOOL.

HAVING ACCURATE LEVELS IS PERHAPS THE MOST IMPORTANT FACTOR. IF YOU CAN’T RELY ON THE SUPPORT AND
RESISTANCE LEVELS ON YOUR CHART, YOU WON’T BE ABLE TO TRADE WITH CONFIDENCE.

IN MY EXPERIENCE, THE DAILY TIME FRAME PROVIDES THE BEST SIGNALS. JUST MAKE SURE YOU USE NEW YORK
CLOSE CHARTS WHERE EACH SESSION ENDS AT 5 PM EST. CHECK WITH YOUR BROKER TO BE SURE.

THE BEST WAY TO REMOVE EMOTIONS FROM TRADING AND ENSURE A RATIONAL APPROACH TO THE MARKETS IS
TO IDENTIFY EXIT POINTS IN ADVANCE. IF YOU WAIT UNTIL YOU HAVE AN OPEN POSITION, IT’S TOO LATE.

ABOVE ALL, STAY PATIENT. REMEMBER THAT IT ONLY TAKES ONE GOOD SWING TRADE EACH MONTH TO MAKE
CONSIDERABLE RETURNS.
 SWING TRADING ENTRY

FOREX SWING TRADING IS ONE OF THE MOST POPULAR TRADING TECHNICAL STRATEGIES AND FOR GOOD REASON.

THIS ALLOWS FOR A LESS STRESSFUL TRADING ENVIRONMENT WHILE STILL PRODUCING INCREDIBLE RETURNS.
THIS IS GREAT IF YOU HAVE A FOR ENTRIES ON LONG POSITIONS, YOU LOOK FOR A SWING POINT LOW. TRADE ON
SHORT SELL POSITIONS YOU LOOK FOR A SWING POINT HIGH.

REVERSALS USING SWING POINTS

1. LONG POSITIONS – LAST BEARISH CANDLE THE CANDLE AFTER THAT SHOULD BE UP
2. SHORT POSITIONS – LAST BULLISH CANDLE THE CANDLE AFTER THAT SHOULD BE DOWN

STOP-LOSS/TAKE-PROFIT

LONG POSITIONS- STOP-LOSS =LAST LOW, TAKE-PROFIT=SWING HIGH

A TEST BREAK CAN BE A VERY HIGH PROBABILITY TRADING SETUP WHEN YOU HAVE MASTERED IT AND PLAY IT AT
THE BEST AREAS.

THE TEST BREAK OCCURS WHEN PRICE LOOKS TO BREAKOUT OF A SUPPORT OR RESISTANCE LEVEL, BUT THEN
QUICKLY SNAPS BACK IN THE OTHER DIRECTION, FALSE BREAKING A LARGE PORTION OF THE MARKET OUT.

WHEN THE FIRST BREAKOUT BEGINS PRICE IS LOOKING TO BREAK OUT AND THROUGH A SUPPORT OR RESISTANCE.
IN THIS EXAMPLE, WE WILL SAY THE PRICE IS LOOKING TO BREAK OUT AND THROUGH A RESISTANCE LEVEL.
WHEN PRICE BEGINS TO BREAKOUT HIGHER A LARGE PORTION OF THE MARKET BEGIN TO LOOK FOR THE
RESISTANCE TO BREAK AND WILL ENTER LONG TRADES, OFTEN SETTING THEIR STOP LOSS JUST ON THE OTHER SIDE
OF THE RESISTANCE.

WHEN PRICE BEGINS TO MOVE BACK LOWER, THE MARKET PARTICIPANTS WHO WERE LONG AND LOOKING FOR THE
RESISTANCE TO BREAK BEGIN TO GET STOPPED OUT OF THEIR LONG TRADES. AS PRICE GAINS MOMENTUM BACK
LOWER MORE AND MORE STOPS ARE EATEN AND PRICE COMPLETES THE TEST BREAK.

THE TEST BREAK TRADING STRATEGY OPENS A LOT OF POTENTIAL HIGH PROBABILITY TRADING OPPORTUNITIES
FOR YOU BECAUSE IT CAN BE USED ON MANY DIFFERENT MARKETS, MANY TIME FRAMES AND CAN BE USED AT THE
MAJOR SUPPORT AND RESISTANCE LEVELS.

DO YOU OFTEN GET FAKED OUT OF THE MARKET OR ENTER A TRADE JUST TO WATCH IT QUICKLY TURN INTO A
TEST BREAKOUT?

SOMETIMES THAT IS UNAVOIDABLE, BUT OFTEN THERE IS A PRICE ACTION CLUE AND A FOOTPRINT OF WHERE THE
PRICE IS ABOUT TO MAKE IT’S VERY NEXT MOVE IF WE KNOW WHERE TO LOOK AND WHAT TO LOOK FOR.
IN THIS LESSON, I AM GOING TO SHOW YOU WHAT ‘PRICE ACTION FOOTPRINTS’ YOU SHOULD BE LOOKING FOR, AND
WHY THE TEST BREAKOUT IS SO POWERFUL WHEN YOU KNOW HOW TO USE IT CORRECTLY. WHEN PRICE FIRST
STARTS IT’S A BREAK IN THIS EXAMPLE LOWER THROUGH THE SUPPORT, A LARGE MAJORITY OF THE MARKET
STARTS JUMPING ON BOARD TO GO SHORT AND TO GO WITH THE BREAKOUT LOWER.
 USE SCALPER

AS A SCALPER, YOU ARE LOOKING TO GET IN AND OUT OF YOUR TRADES QUICKLY AND PROFIT FROM SMALLER
MOVES IN THE PRICE ACTION.

WHILST YOU ARE LOOKING TO MAKE FAR SMALLER PIP TARGETS, YOU ARE LOOKING TO DO IT IN FAR SHORTER
AMOUNTS OF TIME THAN OTHER STRATEGIES.

AS A SCALPER, YOU ARE CAPITALIZING ON THE BIGGER MARKET VOLATILITY AND QUICK PRICE MOVEMENTS TO
MAKE YOUR PROFITS.

A SWING TRADER IS LOOKING TO ENTER TRADES ON THE 4 HOUR OR DAILY CHARTS AND THEN HOLD THOSE
TRADES FOR HOURS OR DAYS. WHEN SCALPING YOU ARE GENERALLY HOLDING YOUR TRADES FOR MINUTES AT A
TIME, DEPENDING ON HOW SMALL THE TIME FRAME.

SOME TRADERS LOVE SCALPING AS IT OFFERS THEM MORE POTENTIAL TRADING OPPORTUNITIES, THEY DO NOT
HAVE TO HOLD FOR EXTENDED PERIODS AND THEY CAN CLOSE THEIR TRADES AND FINISH FOR THE SESSION.
BELOW I HAVE INCLUDED AN EXAMPLE 5 MINUTE CHART SHOWING PRICE TESTING A KEY LEVEL AND THEN
FORMING A HUGE FALSE BREAK PIN BAR REVERSAL TO GET SHORT.