But, just because I get a high win rate with these strategies, doesn’t always have to mean you will magically get the same high win rate. That’s because the more important key to a high win rate in trading, is not a high win rate trading strategy, it’s when to not use that same high win rate strategy. Most of the time markets are bad and not worth trading and if you can read the charts and identify the good and bad markets, getting a high win rate and an entire month of green days is easy. And in this absolutely Free Trading Rush Price Action Course, you will see the best price action strategies I found after trading for thousands of hours with price action only, how I identify the market conditions to get a high win rate, and how I got an entire month of green days by combining price action with the best indicator strategies that actually work.
The entire Price Action Course is available for Free on the Official Trading Rush Website and in the Trading Rush App. So what are you waiting for, visit the Trading Rush Website now, the link is in the description! Thanks!
Let’s say you are new to trading or directly started using an indicator trading strategy. There is no problem with directly jumping to indicators or other advanced strategies as long as you can make money in the long run. But after watching the Trading Rush Price Action Series, here are some advantages you are going to have in the live market.
You will be able to identify trends and especially the range market without using any kind of moving average, and that’s one of the first things you should learn as a trader, because most people overtrade and lose money in the range market. Indicators lag, so identifying the market conditions without using an indicator is always a good idea.
If you are using an indicator to find entry signals, you will be able to filter the false signals even further, and that’s really important, because understanding when your high win rate indicator doesn’t work, will result in you winning more trades in the long run. And even your dog knows, fewer false signals equals more winning trades, and that equals more money in the long term.
To increase your win rate in trading, we will have to learn about the Japanese Rice Trader. This is a Japanese Rice Trader, and according to Wikipedia, the Candlestick charts are thought to have been developed in the 18th century by this Japanese rice trader. Then a Western guy comes along, and introduces Japanese Candlesticks to the Western World. That’s all you need to know about the Japanese Rice Trader.
What you really need to understand is this:
Let’s say there is Bill the first, who is the best Japanese Rice Trader in his neighborhood. Then there is Bill the Second, who is in the market to buy 1kg of rice. When Bill the second asks, the cost of 1kg, Bill the first replies, 1kg for 2 dollars. Bill the second remembers his neighbor Hill got the same rice for 1 dollar in the morning. So right now, the price seems too high!
But then, Bill the first says, the Rice was selling for 4 dollars per Kg in the afternoon. Suddenly, the 2 dollars price tag sounds cheaper when compared to the prices of the afternoon. So Bill the second makes the deal and goes home.
The next day, the market opens where it closed yesterday which was at 2 dollars. But this time, not many people are interested in buying rice. In other words, there is not enough demand to buy. Since no one is buying rice, the rice sellers reduce the prices to attract more buyers. The price of 1Kg of rice drops from 2 dollars, to 0.5 dollars. Once this change is made, suddenly more people are interested in becoming a buyer.
As you can see, the prices of rice we plotted using the candles, look very similar to the candlestick chart we see on a Stock Market or a Forex Chart, and you saw how these prices affected the behavior of the trader, and gave a new view on the market.
When the 2 dollars was looking too high, Bill the first said the high was actually 4 dollars, and suddenly the 2 dollars price tag was cheaper. And when the rice was selling for a lower price than the previous low, suddenly everyone was interested in buying as it looked like a big discount.
Usually on a Stock Market and Forex Chart,
If the price goes up, a green candle is formed.
If the price goes down, a red candle is formed.
Between the opening and closing price, a candle body is formed.
If the highest price and lowest prices were different from opening and closing prices, the highest and lowest price will be indicated using the wicks of the candle, also known as the shadow of the candle.
In one of the upcoming chapters, you will see how these candles form different patterns and how those patterns tell us something more than a big discount on a chart.
Price in the Forex and Stock Market is like a train. If you see a train moving in one direction, you don’t stand in front of it, you ride the train. Similarly, if the price is moving in one direction, why stand against it? If you can identify in what direction the price is already moving, your job is pretty much done. When I took over 5000 trades with many different trading strategies to find their win rates, you saw how most of them made money. One of the main reasons they made money was because we modify the strategies as a trend following strategy. Now we did use the 200 period moving average to find the trend direction, and there is nothing wrong with that. But the moving average, especially a long-term moving average like the 200 period moving average, lags. So, to improve the win rate of your trading strategies, it is a good idea to have the skill to identify the start and end of the trending markets, by directly looking at the candlestick charts, and not some lagging indicator.
In a trend, the price moves in one direction, but this trend is pretty useless unless you are trading the short-term upward momentum. You see, when the price makes this kind of short-term upward move, you will never know the top of the trend. So if you buy when the price makes a move in the upward direction like this, there is a good chance you will end up buying at the top of the trend, and even your dog knows that is a bad idea.
Once the price makes an upward move, what you want to do is wait for the price to come back down. But this setup is pretty useless too, because this is not a trend. That’s right! If you thought this pattern was an uptrend pattern, watch this.
You see, I never told you what the price was doing before making this uptrend pattern. The same pattern can also found in the range, and when the price is ranging, even your neighbor’s dog knows the price has a good probability of going in the downward direction when this pattern is formed.
The proper uptrend where the price has a higher probability of moving in the upward direction, looks like this:
When the price makes a strong move in one direction, you wait for the price to give the first pullback. You do not look for buying opportunities on the first pullback. Also, the pullback should not be 100% of the upward move.
Your uptrend is confirmed when the price breaks above the top of this first upward move, also known as the swing high. You don’t buy at the top, you wait for the price to give a pullback, that is not 100 percent of the new upward move. Then you simply look for buying opportunities using the patterns and strategies we are about the see in the next chapters.
The proper downtrend looks similar to the uptrend, just opposite. You don’t sell when the price gives a pullback after making the first downward move. You wait for the price the make a new swing low, confirming a downtrend. And then you look for selling opportunities using the strategies we are about to see next.
Someone once said, trading is nothing more than buying at the support, and selling at the resistance. That is not far from the truth. If you have watched the live trading videos or the Trade Analysis Posts on Patreon, you know how I use support and resistance to increase the probability of winning even further.
Think of it like this. Let’s say there is Bill the first. He goes into a store to buy an apple. A single apple is selling for 499.99 dollars. Bill the first wants to pay in cash, all of it. Now imagine yourself in this situation and think, if you are buying something for 499.99, and you give the cashier 500 dollars in cash, do you ask for that 0.01 back. Probably not.
Now imagine that there is Bill the second who is trading on a daily or a weekly timeframe, or is looking to invest in a stock of a good company for 10 years. Let’s say the stock is trading at 11.65 dollars right now, and Bill the second wants to buy when the price drops a little. Let’s say the price drops to around 10 dollars. Now, will Bill the second care about the decimal points while buying and holding the stock for 10 or more years. Most people won’t. Most people will simply put a limit order at 10 dollars, and not something like 10.45. Because of this, the price levels with multiple zeros at the end, for example, 10 dollars, 11 dollars, and 100, 200, 500, become the psychological support and resistance levels on the charts.
These are not strong levels, but when the price reaches these levels, it has a good probability of slowing down or making a good move in the opposite direction.
The strong support and resistance areas look like this.
As you can see, the price reversed from the same area multiple times.
Think of support and resistance areas like the ceiling and floor of a room. If the ball is the price, the ceiling is the resistance, and the floor is the support. Imagine that there is no gravity, and you throw the ball towards the floor. The price finds support at the floor and bounces back towards the ceiling. When it reaches the ceiling, the price finds resistance and changes its direction.
If the price breaks the resistance after being between the support and resistance for a while, it’s called a breakout. When that happens, the resistance the price just broke, becomes the support. Similarly, if the price would have broken below the support area, the same support would have become a resistance. Simple as that!
To identify the strong support and resistance on a chart, all you have to do is find the area that looks like a floor or a ceiling. In other words, find an area where the price has reacted multiple times from.
Something like this. Remember that support or resistance area is not a single line on a chart. It’s an area where the price is most likely to reverse.
Also, remember this floor and ceiling example, as we will be referencing it when we create a strategy in the next chapters.
In the previous chapter, you saw two kinds of support and resistance. The first one was the psychological numbers that people are used to. And the second one was the area where the price has reacted multiple times in the past.
But on a chart, there are other kinds of supports and resistances as well.
Remember the ceiling and floor example from the previous chapter? Well, if the price keeps breaking the ceiling, or in other words, if the price keeps moving in the upward direction, it will form new higher swing lows. If you connect the swing lows using a straight line, you will get something called trendline support. Similarly, when the price keeps breaking the floor, or in other words, if the price keeps moving in the downward direction, it will form new lower swing highs. If you connect the swing highs using a straight line, you will end up with a trendline resistance.
Personally, I find trendlines to be weak support and resistance points on a chart compared to the normal support and resistance areas where the price has reacted multiple times before. When the price breaks below trendline support in an uptrend, it does not mean a downtrend. It simply means that the upward momentum is slowing down.
The other kind of support and resistance areas are the swing lows and swing highs respectively. These are also weak support and resistance areas. If you have seen the In-depth Trade Analysis Posts on Trading Rush Patreon Page, you know I always set the profit target below the swing high resistance in an uptrend, and above the swing low support in a downtrend. That’s because even though the price has a good chance of breaking these areas in a trend, if the price starts ranging, my profit target will still have a high probability of getting triggered.
The other important support and resistance area is the 200-period moving average, because a lot of long-term traders and investors use the average of the last 200 days while analyzing the chart. In the live market, you don’t want to take opposite trades near these support areas. For example, if the price is near a resistance area, you don’t want to buy. Similarly, when the price is near a support area, you don’t want to sell as the price has a higher probability of slowing down or going in the opposite direction.
Now that you understand what candles are, and what different types of support and resistance are, it is time to combine candles with support and resistance to better understand the price structure. Remember the Japanese Rice Trader example from the previous chapter, where Bill the first was the Rice Trader, and Bill the second was changing his mind after realizing the high and low of the day? Well, you see, a new candle forms every 5 minutes if you have the timeframe set to 5 minutes, and every day if you have the timeframe set to 1 day. But most of the time, the data that candles show, or in other words, all candlestick patterns most of the time are not that useful. For example, if the price is in an uptrend, and a red candle is formed, it doesn’t mean the price is going to change direction. However, there are few exceptions. If you are trading the strong short-term momentum especially on a smaller timeframe, you can use the first red candle that shows up after a series of green candles to exit the long trade and book a profit. Or if you are trading on the daily or higher timeframes where there is less market noise, every single candlestick pattern holds more value than it does on smaller timeframes.
But candlestick patterns are best used to see the reaction of the market participants near the support and resistance areas. For example, let’s say you drew a potential support area on the chart, but you are smart. You don’t want to immediately take a long position as soon as the price touches the support area, because there is still a decent chance that the price can go straight through the support area if there is enough selling pressure. Instead of buying immediately, you wait for the candles to show the sellers stepping out, and buyers stepping in. In other words, you want a candlestick pattern to form near the support area, that shows the buying pressure.
What’s a buying pressure candlestick pattern look like you ask? Well, let’s see the most important candlestick patterns and what they mean in the next chapter.
Here are the important candlestick patterns that you should know speed run.
First, the Bullish Candlestick Patterns, or in other words, if the following candles are formed, it indicates a higher probability of price making a move in the upward direction.
After a series of red candles, a Hammer Pattern indicates a potential upward move. It’s called a Hammer Pattern, because it looks like a hammer. Here, the price made a move in the downward direction, but then there was more buying pressure, that took over the sellers.
In the inverted hammer, the price first made a strong move in the upward direction indicating a strong buying pressure, but then there was a good selling pressure. However, the selling pressure was not strong enough to take out all the buyers.
Then there is a Dragonfly Doji. This pattern is formed when the price makes a move in the downward direction, but then the buyers bring the price back to where it opened. This pattern is similar to the hammer pattern, except the price didn’t close above the opening price.
Bullish Engulfing Pattern is formed, when the buying pressure is so strong, that the green candle completely engulfs the body of the previous red candle.
In the Morning Star Candlestick Pattern, first a big red bar is formed indicating good selling pressure. But then a small green bar is formed indicating a loss of selling pressure. The Morning Star Pattern is completed, when another strong green bar appears confirming a buying pressure after the loss of selling pressure.
In the Three White Soldiers Candlestick Pattern, three consecutive green bars with almost no wick at the top are formed after a series of red candles.
There are other candlestick patterns, but these are the most important and reliable patterns out there.
Here’ are the Bearish Candlestick Patterns that indicate a potential selling pressure:
Shooting Star. As you can tell, this one looks like a shooting star, and opposite of the hammer pattern. When the shooting star pattern is formed after a series of green candles, it indicates selling pressure. The buyers made the price move in the upward direction, but then the sellers took over all the buyers and a red candle was formed.
In the Hanging Man Candlestick Pattern, there was an increase in selling pressure as soon as the previous green candle was closed, but then there was some buying pressure from the bottom. However, the buying pressure was not greater than the selling pressure.
Gravestone Doji is a pattern where the buyers made the price move in the upward direction, but then sellers entered the market and brought the price back where the candle opened. This pattern is similar to the shooting star pattern and indicates a potential downward move.
In the Bearish Engulfing Pattern, the red candle completely engulfs the previous green candle. In other words, the sellers completely took over the buyers of the previous candle.
In the Evening Star Pattern, first a green candle is formed indicating a buying pressure, but then the buying pressure is lost and a small red candle is formed. The Evening Star Pattern is completed when a big red candle is formed confirming a strong selling pressure.
Three Black Crows Pattern is formed when three consecutive red candles are formed with almost no wick at the bottom after a series of green candles.
There are also Neutral Candlestick Patterns.
They are formed when the buying and selling pressure is pretty much equal. A neutral candle can look like a Plus symbol, also known as a Doji candle. Or can also look like a spinning top. When these patterns are formed, it means there is no strong buying or selling pressure and you should wait for other confirmations.
If everything is edited as I thought it would be, I should have said that I started trading with Price Action Only, but after trading for thousands of hours and making money with it, I quit. We will get to Why I stopped being a Price Action Only Trader in the next chapters, but in this chapter, we will see what I found, and one of the price action strategies I actually traded.
After thousands of hours of trading with price action strategies in the live market, I found out that these three patterns work the best. These are the most reliable patterns in the long run, especially the engulfing pattern.
Now, if you have watched one of the candlestick patterns videos I did on the Trading Rush Channel, you know that the Hammer Candlestick Pattern and the Bullish Engulfing Candlestick Pattern are basically the same things, or in other words, they are telling the same story. Same thing with the Shooting Star and the Bearish Engulfing Pattern.
In both of these patterns, the price goes in one direction, and then the opposite pressure makes the price go in the opposite direction. The only difference between the two is that, one did it in a short time, and the other one took a while, resulting in two separate candles.
For example, imagine that there are two candles, but one has fewer seconds left to close than the other. In the bullish hammer and the engulfing pattern, the price makes a move down indicating selling pressure. The price movement is exactly the same, but this time, the second candle closes when the price makes a move in the downward direction, resulting in a completed red bar. Since the first candle still has enough time to close, when the buying pressure increases and the price makes a move in the upward direction, the first candle creates a Hammer pattern, but since the second candle was closed in the middle, it ended up creating a Bullish Engulfing Pattern, even though the price made the exact same move.
Since the engulfing patterns were most reliable in my experience, I was able to make money by simply buying when a bullish engulfing or a hammer pattern was formed near a strong support area. And by selling when a bearish engulfing pattern was formed near a strong resistance area.
This simple strategy was quite effective, but there is a slight problem with these setups. We will see them in the next chapters.
Although Candlestick charts are the most popular charts, there are two other types of charts that you will see some traders use. One is the Bar, which looks very similar to the candlestick chart, except there is no candle body. Then there is the Heiken-Ashi Chart, where the candles look a lot smoother. That’s because Heiken-Ashi means “average bar” in Japanese, and the whole point of Heiken-Ashi charts is to make the charts more readable.
Even though Heiken-Ashi looks better than normal candlestick charts, most professional traders will not use it and stick to the normal candlesticks or bar charts that sometimes look like a mess. That’s because the smoother chart comes with a cost. Heiken-Ashi is basically taking an average of the price movement, but by doing this, a lot of data is lost that a professional trader might find useful.
Since Heiken-Ashi smooths out the price data, the Heiken-Ashi candles don’t change color frequently as the candlestick charts do. So Heiken-Ashi is best used to trail the stop loss and stay in the trend for a longer period of time, read the price movement better, and analyze the strength of the trend.
To analyze the strength, or in other words, to see if the momentum is slowing down or increasing, all you have to do is look at the size and shadow of the candles.
If a green Heiken-Ashi candle has no shadow below the candle, it indicates upward momentum. If the size of the Heiken-Ashi candle is relatively bigger, it shows a strong upward momentum. If the size of the green candle is smaller, it shows a weak upward momentum. If the Heiken-Ashi candle has shadows on both sides, it means a slow, or a sideways momentum. If the red Heiken-Ashi candle has no shadow above the candle, it indicates downward momentum. If the size of the Heiken-Ashi candle is relatively bigger, it shows a strong downward momentum. If the size of the red candle is relatively smaller, it shows a weak downward momentum.
Now there are a lot of chart patterns out there:
So far, I have only talked about and recommended things I actually made money with or were helpful in the long run. But out of all of these patterns, I have only found three patterns that work the best. You have even seen 2 of them in one of the live trading videos on the Trading Rush Channel.
The first one is the bullish flag pattern, where the price makes a strong move in the upward direction, then gives a small pullback, that looks like a flag you drew as a kid. Sure, the quality is a lot better, but when this kind of flag pattern is formed, the price has a higher probability of making a good move in the upward direction after the price breaks out of this flag. This kind of flag pattern can be easily found on the stock that opens with a gap.
The other kind of pattern looks very similar, but this time the price doesn’t make a new lower low. In other words, the price finds support at pretty much the same place, but the new swing high keeps forming at a lower point. When the price breaks above this pattern, it has a higher probability of making a move in the upward direction. The first and second patterns tell the same story, there was a strong buying pressure. But then there was a not-so-strong selling pressure indicated by the small and weak pullback. When the price gives a breakout, there is strong upward momentum to capitalize on.
The third one is the head and shoulders pattern. This one is best understood by actually understanding how it is formed. Also, this pattern works best in a strong resistance area. When the price reaches a resistance area, selling pressure is increased as expected, but the selling pressure was not strong to take out all the buyers. When the buying pressure is increased, the price breaks the resistance, or in other words, the price gives a breakout. But then the buyers fail to make the price go higher. The selling pressure is increased and the price is back inside the resistance area, resulting in a false breakout. The price retest the resistance area again, and after all of this rejections and mess, when the price breaks below the support, or in other words, when the price breaks below the area where the buyers were stepping in, the buyers are taken out and a strong selling pressure can be seen most of the time.
Of course, there is a chance none of what I just said actually happens, but these 3 patterns, and especially the first two, I have found to work the best after trading for thousands of hours with price action only.
Before we talk about the important bits, here’s everything I have said so far put to the test.
Here’s a live chart of the Apple Stock. As you can see, the price is in a good uptrend. I’m using a smaller timeframe for this liive trading example, otherwise, this video will take forever to complete.
On this chart, we know the price is moving in the upward direction, or in other words, the price is in an uptrend. But if you look closely, you will notice that after making the upward move, it went in the sideways direction for a while. We saw how to draw support and resistance like a pro in the previous chapters, and on this chart, this is the resistance where the price has reversed multiple times.
As you can see, the price broke above the resistance, so now the resistance will act as a support area. Since we know the price is in a long-term uptrend, we will look for long trading opportunities. We will wait for the price to come back near the support area, and take a long position when we see buying pressure. We will use the candlestick patterns that we saw in the previous chapters to find that buying pressure.
But as you can see, the price went straight through the support area resulting in a false breakout. Here’s what happened. When the price gave a breakout above the resistance area, the sellers who had the stop loss above the resistance got stopped out, and new buyers stepped in. But then there was a strong selling pressure that took over all the new buyers resulting in strong selling pressure. Since we were waiting for a bullish candlestick pattern near the support area, which never appeared, we have no reason to enter the trade. If there was some kind of bullish pattern near this support area, we would have set the stop loss below this breakout support area.
When the price was moving in the sideways direction, we can see the price found support in this area. And right now, the price is near that area again. Furthermore, when the price touched this support area, we can see a big price rejection from below. Since the candle is still red and not green, it is not the bullish candlestick pattern we are looking for.
But then, as you can see, the next candle completely engulfs the body of the previous candle, resulting in a Bullish Engulfing Pattern, or in other words, a signal to buy. So we will take a long position when the candle is completed, and we will set the stop loss below the support area. For the profit target, let’s set it just below the swing high resistance, which ends up being around 1 times the stop loss distance. If the swing high was far away, we could have used a 1.5 to 1 reward risk ratio, because after taking 300 trades to find out the best reward risk ratio, we found out that 1.5 to 1 is the sweet spot. But here, only 1 to 1 is possible before the swing high resistance.
“Definitely Elon Musk” with 500000 biscuits in the chat asks: Isn’t the entry price close to the previous resistance?
Yes, if you were paying attention, you probably noticed that I took entry near the previous resistance. You see, there are two kinds of resistance areas. One is weak resistance, and the other one is strong resistance. Identifying and telling the difference between weak and strong resistance will come with experience. But basically, the resistance and support areas that are visible on the higher timeframes, are strong resistance areas, because everyone can see them at the same place. But these kinds of support and resistance areas are weak resistance. Because, on our entry timeframe, we can see this as a resistance, but if we switch to a higher timeframe, the resistance area is not clearly visible. So many traders on higher timeframes will not see any kind of resistance.
Since we know the price is in a good uptrend, and even your dog knows that the price has a higher probability of breaking the recent resistance area in an uptrend, and we saw the strong buying pressure when the price touched the support area, and we took entry after the engulfing pattern which is one of the most reliable candlestick patterns I found after thousands of hours of trading with price action only, the price not only has a very high probability of going in the upward direction, but our trade has an even higher probability of winning, because the stop loss is below the support area, and profit target is below the swing high resistance.
This can sound confusing, but it will get easier with practice.
If we fast forward the live trading clip a little, we can see the price went exactly how we anticipated. No indicators were used, and all of the analysis was done in the live market with the price action alone.
The live trading example was important, because there was no hand-picked setup where everything went perfectly. And as you saw, when the analysis is done in the live market, you will see things going against us, and not so smoothly. But hopefully, this was more helpful than a hand-picked setup from the past. If you want to see even more In-depth Trade Analysis like this, support Trading Rush on Patreon. After all, every trade is different from the previous one, and one liive trade example is not enough.
Making money in trading is easy, making money with price action is easy, but not understanding when not to try to make money, is where people lose money and blame the strategies. Even your neighbor who bought Bitcoin when it was at the top knows, that to make money more consistently in trading, or in other words, to have a higher probability of winning, you have to trade in the direction where the price is already heading. The trend! But if your strategy is a trend trading strategy, the last thing you want is to risk your money when the market is ranging. It sounds simple, but people lose money first, and then realize that the market was not worth trading.
Here’s how you identify the range market. In the previous chapters, we saw that if the price is trending, it looks something like this. If it is up-trending, it will make higher swing highs and higher swing lows. If your trend trading strategy gives entry signals near the end of the pullbacks, you will take trades somewhere around here. If the price was making higher swing highs at the time of entering the trade, the entry is completely valid.
But if the price does not make a new swing high, it is an early sign of a slow or a sideways market.
At this point, the price can make higher swing lows while creating relatively similar swing highs. If this happens, you will probably end with a chart pattern that we saw in the previous chapters.
On the other hand, the price can reverse from the previous swing high, and find support again at the previous swing low. This is when the range market is pretty much confirmed, and the uptrend is most likely over.
In an uptrend, the best time to stop taking new long trades, is when the price doesn’t cross above the previous swing high. And in the downtrend, the best time to stop taking new short trades, is when the price doesn’t cross below the previous swing low. But there are different kinds of range markets. One is a wide range, that is usually visible on multiple timeframes, and another one is a small range that is only visible on your entry timeframe as we saw in the previous live trading video.
If more people can clearly see a slow or a range market, more people will take trades while keeping the range in mind. If only you can see it on your smaller timeframe, and on the higher timeframe the price is in a strong uptrend, the price has a higher probability of breaking the resistance of that weak range.
But when you see the price could not cross above the previous swing high in an uptrend, it is a good idea to stop taking new long trades, especially with profit targets above the previous swing high. Similarly, if you see the price could not cross below the previous swing low in a downtrend, it is a good idea to stop taking new short trades, especially with profit targets below the previous swing low. But that’s not all…
But that’s not all. Although people lose money when the market is ranging, the range market is fairly easy to identify. The beginner traders really lose money is when the market looks like this, and not like this. As you can see, the price on both of these charts are trending and is not in a range. But one chart looks easier to read and clean like something out of a fairy tale, but on the other hand, there is this mess. This is a choppy market, and this is where most strategies, including your indicator strategies, become less reliable.
You see, when I started trading, I used to take screenshots of the winning and losing trades, and store them in two separate folders. After a while, when I used to analyze them, I noticed that most of the charts of the winning trades looked like this, and most of the charts of the losing trades looked messy like this. To identify the good and the bad market, here’s a technique I developed that was extremely useful as a beginner trader. When the price is messy, it can still move in one direction like a good trending chart, but when price movement is choppy, most candles don’t move away from each other. For example, when the price movement is good, multiple green or red candles will form in a row. Furthermore, most candles move away from the previous one. But in the choppy market, fewer green and red candles are formed in a row, and most move towards the opening price of the previous candle. So when most of the candles, are moving away from each other, the price movement is most likely good. But if most candles are not moving away from each other, the chart probably looks something like this, and the price movement is most likely choppy and you should avoid taking new trades.
If this sounds confusing, simply have a screenshot of a good trending chart on your screen for reference while looking for new trades.
Now that you understand candles, trends, chart patterns, range market, bad market, what to do and what not to do, here’s the Best Trading Rush Price Action Strategy that I actually made money with after spending thousands of hours in the live market.
Step 1. Open the higher timeframe chart. If your entry timeframe is 30 mins, your important higher timeframes are every popular timeframe above 30 mins.
For this example, let’s say the higher timeframes are 1h, 4h, and 1 Day.
Step 2. Draw the clearly visible support and resistance areas on that higher timeframe by using everything you learned in the previous chapters. Don’t draw a single line, draw an area, because support and resistance are areas on a chart, not a single line. Make sure the price is trending and not ranging on the higher timeframes.
Step 3. Switch to your entry timeframe, and make sure the price on the entry timeframe and the higher timeframe, is trending in the same direction. Identify if the market is choppy or not using everything you saw in the previous chapter. If the price is choppy, you don’t want to take the trade, as the probability of winning will be lower.
Step 4. Draw clearly visible support and resistance areas on the entry timeframe, including the support and resistances of the chart patterns, if there are any.
Step 5. If the price is in an uptrend, buy at the support area, when one of three important bullish candlestick patterns that we saw in the candles chapter appear. Set the stop loss below the support area, and set the profit target below the swing high resistance, or below the strong resistance you drew using the higher timeframe if that is closer. Set the profit target 1.5 times the size of the stop loss if possible. In other words, aim for a 1.5 to 1 reward risk ratio, because that’s what we found to be the best after taking 300 trades on the Trading Rush Channel.
If the price is in a downtrend, sell at the resistance area, when one of the three important bearish candlestick patterns that we saw in the candles chapter appears. Set the stop loss above the resistance area, and the profit target above the swing low support, or above the strong higher timeframe support area if that is closer. Set the profit target 1.5 times the size of the stop loss if possible.
This 5 Step Strategy has worked for me for a long time, but then I stopped using it. You see, most of the time, the market is ranging. If you have watched other videos on the Trading Rush Channel, you understand how important Money Management and Trading Psychology are. When the market is ranging, you can identify the range market using the steps I mentioned in the previous chapters and sit back patiently. But the thing is, the market can stay in a range, or even choppy for a long period of time. And when that happens, a human can become impatient, if you are staring at a Forex or a Stock Market Chart for a long time, you will start seeing things that are not even there. You will start to see support and resistance that are weak, or the entry patterns that are not even there. This is coming from someone who has traded with price action only for thousands of hours in the live markets.
If you are trading with price action alone, you can simply set a limit to the number of trades you can take in a day, so you don’t end up overtrading in the bad market.
But the main reason I stopped trading with price action alone, was because I found something better. The biggest thing to master as a price action trader is the consistency to see things as they are, and not what your brain imagines when it is tired. But one thing that does not have such weakness is a simple indicator that has a high win rate. And everyone who watches Trading Rush most likely knows by now that we tested different indicators more than 5000 times in total to find their win rates, and even gave them a Trading Rush Score.
And by combining Price Action with the high win rate indicators, I was able to get an entire month of green days and a high win rate, and made money more consistently in the long run. Since this is a Price Action Only series, we can’t talk about indicators here, but I have already made detailed videos on what price action combined with indicator strategies I exactly use to get this high win rate on the Trading Rush Channel, and on the Trading Rush Patreon Page. Also, support Trading Rush on Patreon, and get to see more In-Depth Trade analysis with the current best strategies I use. Thanks! That’s all!
