How to Trade with Price Action (Strategies) Trading Setups, Rules & Examples Galen Woods ©2014GalenWoods Contents Notices&Disclaimers . . . . . . . . . . . . . . . . . . . . . i Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . iv 1. A Simple Inside Bar Day Trading Strategy Using YM Futures . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.1 Time-frameForDayTradingYMfutures . . . . . . 1 1.2 TradingRules-SimpleInsideBarDayTrading. . . 2 1.3 SimpleInsideBarDayTradingExamples . . . . . . 3 1.4 Review-SimpleInsideBarDayTradingStrategy . 5 2. TradingConsecutiveUp/DownDaysWithLowerRisk 7 2.1 Trading Rules - Consecutive Up/Down Days Low RiskEntry . . . . . . . . . . . . . . . . . . . . . . 8 2.2 ConsecutiveUp/DownDaysTradingExamples . . 9 2.3 Review-ConsecutiveUp/DownDaysLowRiskEntry 11 3. Three-BarReversalPatternForDayTrading. . . . . . 12 3.1 TradingRules . . . . . . . . . . . . . . . . . . . . . 13 3.2 TradingExamples . . . . . . . . . . . . . . . . . . 13 3.3 Review-Three-BarReversalPatternForDayTrading 15 4. NR7TradingStrategy . . . . . . . . . . . . . . . . . . . 17 4.1 TradingRules-NR7TradingStrategy. . . . . . . . 17 4.2 NR7TradingExamples . . . . . . . . . . . . . . . . 18 4.3 Review-NR7TradingStrategy . . . . . . . . . . . 19 CONTENTS 5. ASimpleandEffectivePriceActionTradingSetup . . 21 5.1 BasicDefinitionsForPriceActionTrading . . . . . 21 5.2 TradingPremise . . . . . . . . . . . . . . . . . . . 23 5.3 TheTrendBarFailureTradingSetup . . . . . . . . 23 5.4 Conclusion . . . . . . . . . . . . . . . . . . . . . . 28 6. Two-leggedPullbacktoMovingAverage(M2B,M2S) . 30 6.1 TradingRules-Two-leggedPullbacktoMA . . . . 31 6.2 Two-leggedPullbacktoMATradeExamples . . . . 31 6.3 Review-Two-leggedPullbacktoMA . . . . . . . . 33 7. CandlestickandPivotPointDayTradingStrategy . . 34 7.1 TradingTools . . . . . . . . . . . . . . . . . . . . . 34 7.2 TradingRules-CandlestickandPivotPoint . . . . 35 7.3 CandlestickandPivotPointTradingExamples . . . 36 7.4 Review-CandlestickandPivotPoint . . . . . . . . 37 8. TradingTheEngulfingCandlestickPatternWithMar- ketStructure . . . . . . . . . . . . . . . . . . . . . . . . 39 8.1 TradingRules-EngulfingCandlestick . . . . . . . 39 8.2 EngulfingCandlestickTradingExamples . . . . . . 40 8.3 Review-EngulfingCandlestickwithMarketStructure 41 9. HikkakeTradeSetup . . . . . . . . . . . . . . . . . . . 43 9.1 TradingRules . . . . . . . . . . . . . . . . . . . . . 43 9.2 HikkakeTradeExamples . . . . . . . . . . . . . . . 44 9.3 Review-HikkakeTradeSetup . . . . . . . . . . . . 46 10.CaptureHighProfitswithLowVolumePullbackTrad- ingStrategy . . . . . . . . . . . . . . . . . . . . . . . . 47 10.1 TradingRules-LowVolumePullback . . . . . . . 47 10.2 LowVolumePullbackTradingExamples . . . . . . 48 10.3 Review-LowVolumePullbackTradingStrategy . 50 11.What’sNext? . . . . . . . . . . . . . . . . . . . . . . . . 52 11.1 HowtoTradewithPriceAction(eBooks) . . . . . . 52 CONTENTS 11.2 HowtoTradewithPriceAction(Online) . . . . . . 52 11.3 DayTradingwithPriceActionSelf-StudyCourse . 53 Notices & Disclaimers Copyright©2014byGalenWoods(SingaporeBusinessRegistration No.53269377M).Allrightsreserved. FirstEdition,October2014. Published by Galen Woods (Singapore Business Registration No. 53269377M). All charts were created with NinjaTrader™. 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Please consult with your financial adviser beforemakinganytradingorinvestmentdecision. Affiliate Disclaimer Trading Setups Review seeks to provide you with the best trading resources.Asaresult,wealwaysincludeusefullinksinourarticles. Someoftheselinksareaffiliatelinks.Itmeansthatwemightreceive a commission from your purchases made through those links. But youdonotpaymore. Fortransparency,wearedisclosingourlistofaffiliatesbelow: • Amazon • MarketInOut • TheStreet.com • Bookdepository.com • Firstrade • Optionshouse • ADVFN • ForexSmartTools Youshouldassumethatanylinkstothecompanieslistedaboveare affiliatelinks. However,weincludelinks(affiliateorotherwise)inourarticles onlyifwefeelthattheyprovidevaluetoyou. Pleasedon’thesitatetocontactusifyouneedanyclarification. Introduction ThiseBookcontainsaselectionofarticlesIhavewrittenonTrading SetupsReview.Youcanfindoutmoreaboutmebyclickinghere. (All articles in this eBook are available for viewing online at http://www.tradingsetupsreview.comforfree.) InthisStrategiesEdition,Ihaveselectedthe10mostpopularprice action trading setups reviewed on Trading Setups Review. These strategiesusepriceactionpatternsandminimalindicators.Thelast setupfocusesonusingvolumetocomplementpriceaction. I hope you find this eBook a friendly companion for your offline learning,andIwishyouallthebestinyourtradingcareer. 1. A Simple Inside Bar Day Trading Strategy Using YM Futures To day trade successfully, we need a market that is volatile and liquid.S&P500E-mini(ES)andNASDAQ-100E-mini(NQ)futures are popular day trading markets. Beyond them, the E-mini DOW (YM) futures contract is also a great choice. Among equity index futures,thetradingvolumeofYMfuturesranksrightafterESand NQfutures. LikeESandNQ,YMfuturesisalsoanelectronicallytradedcontract. Its underlying is the Dow Jones Industrial Index. For a one-point movementintheindex,itsvaluechangesby$5. Ifyouarecompletelynewtofutures,youshouldspendsometime browsingCME’swebsite. Readonforasimpleinsidebardaytradingstrategywithexamples fromtheYMfuturesmarket. 1.1 Time-frame For Day Trading YM futures The 5-minute time-frame is a common choice among day traders. Butthatisjustaconvention. Instead, I use the Price Action Time-frame Index (PATI)* to find time-framesthataretradeable.Itfindsthesmallesttime-framethat is tradeable for a price action trader. As long as you are trading above the minimum tradeable time-frame (MTT)*, price action