Hello, Traders! Today, we’re diving into some essential price action techniques that can significantly enhance your trading strategies, whether you’re dealing with stocks, Forex, currencies, or futures. For demonstration purposes, we’ll focus on the E-mini S&P.
Before we get started, remember that trading is risky. Please ensure you have the necessary funds and risk tolerance before you trade.
Understanding Blueprint Software
I’m using the Blueprint software on the chart, which is available for both Ninja Trader and TradingView. Blueprint creates shaded areas indicating potential breakout zones. The idea is to trade based on the market moving above or below these shaded areas.
Price Action Trading Basics
Price action trading relies on using candles to dictate your market approach. For instance, if the market moves higher or lower, you need a solid reason to enter the trade. The Blueprint software provides signals for long or short trades, helping you identify these opportunities.
Rule 1: Candle Close Confirmation
To avoid false breakouts, wait for a candle to close above or below the shaded area before entering a trade. This confirmation is crucial in price action trading. For example, a long trade signal at 5520 or a short trade at 5475 needs a closing price confirmation.
Audible Alerts and Multiple Confirmations
Blueprint software provides audible alerts for both TradingView and Ninja Trader, signaling new areas of interest. Pay attention to these alerts and look for candle closings that confirm the signal before taking any action.
Rule 2: Always Aim for a Better Price
When entering a trade, aim for a better price. Avoid chasing the market with unfavorable fills or market orders that give you a worse price. Utilize market orders, limit orders, or stop-limit orders to secure better entry points.
Setting Targets and Stops
Setting targets and stops should be based on current market conditions. The Average True Range (ATR) is a valuable tool here. If the ATR suggests a three-point movement, set your targets and stops accordingly. Adjust these levels based on market volatility.
Rule 3: Adjust Targets and Stops Based on Market Conditions
Don’t stick to rigid targets and stops for every trade. Instead, adjust them based on the ATR and current market conditions. For example, in slower conditions, opt for smaller targets and stops, while in more volatile conditions, aim for larger ones.
Limiting Time in Trades
Another crucial aspect of price action trading is limiting the time you stay in a trade. If a trade doesn’t move in your favor within a reasonable time frame (typically 10-15 minutes on a one-minute chart), it’s best to exit. Holding on to losing trades for too long often leads to bigger losses.
Confirming Trades with Multiple Methods
Using multiple methods in conjunction with Blueprint can enhance your trading decisions. For instance, combining Blueprint with Atlas Line or Trade Scalper can provide additional confirmation and increase the reliability of your signals. However, ensure these methods align and do not conflict with each other.
Conclusion and Free Resources
Price action trading, when executed correctly, can be highly effective. Remember to confirm signals, aim for better prices, adjust your targets and stops based on market conditions, limit your time in trades, and use multiple confirming methods.
For more insights and hands-on training, visit Day Trade to Win to get a free member account, download free software, and join our accelerated mentorship class, which includes all our software. Happy trading, and I’ll see you in the next video!
