Price Action Model # 1

 

Price Action Model # 1 (15 to 20 Pips per Trade)

Preparation:     

a)      Economic Calendar: Regularly check the Economic Calendar for upcoming news events that may impact the market.

b)      IPDA Data Range: Determine the IPDA Data Range of the last 20 Trading Days. (Exclusive Sunday). Mark the Highest High and Lowest Low in past 20 trading days.

c)       Liquidity Draw: Inside the dealing range analyze for potential next draw on liquidity. Identify whether the price is reaching for a liquidity pool or seeking to rebalance at a specific PD Array. This assessment forms the basis for bias determination.

d)      Bias Anticipation: Anticipate price to move to a PD Array that would support our Bias on a day and Economic Event, found on the Economic Calendar with the current or next Trading week. This is what we wait for. This can either a run on liquidity or rebalancing inefficient price delivery.

Opportunity Discovery

a)      Identity the Liquidity pools under the old daily lows, inside the 20 days IPDA Data Range when the bias is bearish. On Opposite, identify the liquidity pools above old daily highs, inside the 20 days IPDA Data Range when the Bias is Bullish.

b)      Identify the Discount PD Arrays inside the 20 Day IPDA Data Range, when the Bias is Bullish. Identify the Premium PD Arrays inside the 20 day IPDA data range, when the Bias is Bearish.  

Trade Planning

                Bearish Scenario

a)      Plan > Enter >  Manage > Exit > Learn > Profit.
When the market is primed, we want to look for a convergence of both manipulation in price, opposite to our trade bias, at a time the Economic Calendar suggest a volatility injection will likely unfold. This will cause retail to chase price & thus provide excellent liquidity for our own trade entry.

b)      Bearish Scenario: When we are Bearish, we will frame a short entry when price has moved up into a daily premium PD Array, maybe there is a FVG, Bearish, Order Block, Bearish Breaker, then trades lower. The market will then retrace off, of a Discount condition & into a new swing high formation. We will short the next New York session OTE pattern.

c)       Bullish Scenario: when we are bullish, we will frame a long entry when price has moved down into a daily discount PD Array, then trades higher. The market will then retrace off, of a premium condition & into a New Swing Low formation. We will buy the next New York session OTE pattern.

d)      When we are Bearish, we will target the Sell side Liquidity below any Old Daily low inside the 20 day IPDA data range. The immediate or next logical old daily low, will be the initial objective, there will likely be multiple old daily lows inside the IPDA Data Range, but we use the one that frames the potential for a least 15 to 20 pips.

Trade Execution

a)      When we are Bullish, we will note the 7am to 10am time window in the New York kill zone. We will anticipate a 5minute chart optimal trade entry to form inside of a retracement lower, between the times outlined above.

Short Trade Management

a)      When we are entering a Short, we will place a sell limit order, ono all positions we will execute with our demo account.  We will use the 62% Fib Level, minus 5 pips as our entry price when using the sell limit order. If multiple orders are used, all use the same entry price in the sell limit orders.  

b)      When we are entering a short, we will place a limit order to take 15 pips as our objective on one position. We will place a second limit order to take 20 pips as our second objective. We will use multiple orders to manage the trade idea. If you wish, a 3^rd positive can be used to capture a longer-term objective.

c)       When we are entering a short, we will note the 7am to 10am time window in the New York session, Highest High. We will place our stop loss above this high, plus 5 pips.
We will not reenter if the trade stops out. We can monitor it, for experience, but no reentry is taken. One & done.

 

Short Trade Management

a)      When we are entering a long, we will place a buy limit order, ono all positions we will execute with our demo account.  We will use the 62% Fib Level, plus 5 pips as our entry price when using the buy limit order. If multiple orders are used, all use the same entry price in the buy limit orders.  

b)      When we are entering a long, we will place a limit order to take 15 pips as our objective on one position. We will place a second limit order to take 20 pips as our second objective. We will use multiple orders to manage the trade idea. If you wish, a 3^rd positive can be used to capture a longer-term objective.

c)       When we are entering a long, we will note the 7am to 10am time window in the New York session, Lowest Low. We will place our stop loss above this high, minus 5 pips.
We will not reenter if the trade stops out. We can monitor it, for experience, but no reentry is taken. One & done.

Short Trade Management

a)      When we are in profit 25% of our expected objective, stop loss can be reduced by 25%.
When we are in profit 50%  of our expected objective, stop loss can be reduced by 50%
When the position is at 75% of the expected profit objective, stop must be at Breakeven.  

 

Money Management

a)      Position Size Calculation Formula
Positive size = (Account Equity x R%) / Stop Loss in Pips
Position Size is the amount of leverage your trade(s) assume.
Account Equity is the total amount in your Trading Account.
R% is the percent of Risk you are willing to take on per trade.
The difference between the entry price and your stop loss is the number of pips you will use to divide the result of Equity x r%

Example:
Account Equity $20,000 USD
Risk Per Trade: 1.5% or 20000 x 1.5%  = 300.00 USD
Stop required for trade = 20 pips

In Micro lots (1000 each or $0.10 per pips)
20 pips x $0.10 = 2.00 USD
$300 divided by $2.00 = 150 micro lots per trade or 1.5% of the account equity. Always round down.

In Mini lots (10,000 each or $1.00 per pips)
20 pips x $1.00 = 20.00 USD
$300 divided by $20.00 = 15 mini lots per trade or 1.5% of the account equity. Always round down.

In Standard lots (100,000 each or $10.00 per pips)
20 pips x $10.00 = 200.00 USD
$300 divided by $200.00 = 1.5 standard lots or 1 lot per trade. Always round down. Mini lots are more flexible.

b)      If your demo account takes a loss on a trade and it is the full R% you’re assumed.
Drop the R% by 50% and when the loss is recovered by 50%, you are permitted to return to the maximum R% per trade.
If the reduced R% trade assumes a loss, reduce the R% by 50% until the previous trade loss is recovered by 50%

If you take a series of 5 winning trades in a row, drop your R% by 50%.
You are likely to assume a loss, eventually, and this will build in equity leveling and reduce the likelihood of a large drawdown.
You want a smooth equity curve that slopes or stairs steps higher. Not a jagged roller coaster with deep declines.

Start Back testing

a)      Collect a month or two of sample sets will this trade plan. If you are unclear about some of the process, re-watch the lesson on this price Action model. I will provide sample set but do not rely or wait for mine. Dig into your chars and study what was provided here.

 

Price Action Model Algorithmic Theory

Note: The following algorithmic theory is designed for educational purposes and should be thoroughly back tested before real-world application. The algorithm is based on a Price Action Model for identifying potential bullish and bearish trading opportunities in the market.

Price Action Model #1 – Bullish Algorithmic Theory:

Conditions for Trade Entry:

1.      Identify previous Highs in the past 20 trading days (excluding Sundays).

2.      Confirm Institutional Order Flow is Bullish.

3.      Price has broken a Swing High on the Daily chart.

4.      Price is not in a premium. Otherwise no trade.

5.      If today is Monday, Tuesday, Wednesday then conditions are ideal

6.      OR If Thursday and Price has yet to trade up to the previous high,
then look for a Bullish OTE (Optimal Trade Entry) between 7 am to 10 am on a 5-minute chart.

7.      If it’s Friday, No Trade.

Trade Execution:

·         If a 5-minute chart forms a Bullish OTE between 7 am & 10 am.

·         Buy Long at the 62% Fibonacci level, plus +5 pips.

·         If Long trade is entered, use 5-mintue Fibonacci OTE anchor Low minus -5 pips for initial Stop Loss Order placement.

·         If stopped out, No Re-entry for the day.

·         If the trade rallies to OTE anchor high, take the first partial profit at that price level.

·         Then raise the protective Stop Loss up to lock in 5 to 10 pips profit.

·         If the trade rallies to the previous High or Fib extension #2, take the second partial profit.

·         If the trade rallies to the previous High or Symmetrical Swing extension, close the balance of the trade at that level.

·         No trades after 10 am.

Fibonacci Levels Up to Down

-1	Symmetrical Swing
-0.62	Target 2
-0.27	Target 1
0.0	0.0 First Profit Scaling
0.5	Equilibrium (50% Level)
0.62	62%
0.705	70.5% OTE (Sweet Spot)
0.79	79%
1	100.00

 

 

Price Action Model #1 – Bearish Algorithmic Theory:

Conditions for Trade Entry:

1.      Identify previous Lows in the past 20 trading days (excluding Sundays).

2.      Confirm Institutional Order Flow is Bearish.

3.      Price has broken a Swing Lows on the Daily chart.

4.      Price is not in a Discount. Otherwise no trade.

5.      If today is Monday, Tuesday, Wednesday then conditions are ideal

6.      OR If Thursday and Price has yet to trade down to the previous Low,
Then look for a Bearish OTE (Optimal Trade Entry) between 7 am to 10 am on a 5-minute chart.

7.      If it’s Friday, No Trade.

Trade Execution:

·         If a 5-minute chart forms a bearish OTE between 7 am & 10 am.

·         Then Sell Short at the 62% Fibonacci level, minus -5 pips.

·         If Short trade is entered, use 5-mintue Fibonacci OTE anchor High plus +5 pips for initial stop loss order placement.

·         If stopped out, No Re-entry for the day.

·         If the trade declines to OTE anchor low, take the first partial profit at that level.

·         Then Lower protective stop loss to lock in 5 to 10 pips profit.

·         If the trade declines to the previous Low OR Fib extension #2, take the second partial profit off at the price level.

·         If the trade declines to the Previous Low OR Symmetrical Swing extension, close the balance of the trade at that price level.

·         No trades after 10 am.

 

Fibonacci Levels Down to Up

1	100.00
0.79	79%
0.705	70.5% OTE (Sweet Spot)
0.62	62%
0.5	Equilibrium (50% Level)
0.0	0.0 First Profit Scaling
-0.27	Target 1
-0.62	Target 2
-1	Symmetrical Swing