Forex4noobs price action analysis

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Well those stats scared me so I started looking for things to do. I was always a bit of a nerd in school and I always I had an interest in coding websites. The idea of building a site that thousands of people would see day in day out always appealed to me. To cut a long story short, a few months of dabbling around with coding and site design I came up with Forex4Noobs. It was ugly, not very user-friendly and slow loading but people loved the content.

Over the past 2 years as my coding skills improved so has the site immensely. I released the first NickB Method e-Book back in and it got popular very fast. It made Forex4Noobs a huge site visited by thousands of traders daily. In I released the second version. Now in I am releasing the third version. It has been well over a year and a half since the last version of the NickB method e-Book so hopefully this lives up to the anticipation. Like the search for the Fountain of Youth that system has never been found.

Searching through forums like a crazy person looking for the magic combination of indicators is the short road to failure. If you are reading this eBook looking for a method of trading that will make you a successful, consistently profitable trader then keep reading.

Trading is not a get rich quick scheme; it takes hard work and dedication. My method is not a system, I do not use any indicators, and there are hardly any set-in-stone rules. My method is based on candle patterns and support and resistance lines. These are not to be confused with pivot points or Fibonacci lines. The best thing about my trading method is you are not tied down to one specific style. You can implement certain aspects of it, and add others, to tailor make your own trading style.

I know that not using indicators sounds crazy, but I have been doing it for 4 years and I am still around. It is up to you to make the choice. Are you going to embark on the futile search for the Holy Grail trading system? Or are you going to learn how to really trade? Keeping it Simple The foundation of my method is to keep things simple.

I am against over complicating trading. In my opinion, the simpler your method is, the more effective you will be. Making something extremely complicated is only going to waste time and add stress. That is why I try to keep my trading as simple as possible. Over complicating something that works very well is counterproductive. Some methods you see are just a mess of indicators; so many that you can barely see the candles.

This is not the way to trade. If you can be consistently profitable keeping it simple, with just a few lines, then that is obviously the better option. So as you read on, and find out that my method is just a few simple lines, do not run away. These simple lines have been making me a lot of money consistently for 4 years. Simplicity is a good thing, not a bad thing. Adaptability Another foundation of my method is adaptability.

A system is limited in that it gives you a very constrained method of trading. You have rules that are set in stone, and they do not change when the market changes. Thus, a system works amazingly well some months during the year, and fails miserably other months. I do not have a system. I have a method based on the analysis of candle patterns and support and resistance lines.

The most important thing about my method is that it adapts to changing markets. A huge part of my trading is analyzing current market conditions and trading accordingly. This may sound hard, but when you learn the basics it becomes second nature. One look at your charts and you will know that you need to tweak the way you traded last week to suit the market this week.

CC www. Support and resistance lines are basically just showing us where the price action is stalling and where the market is shifting direction. Anyway, what I am getting at is that I do not have a system. The method gathers together a hundred different aspects to form an extremely effective and adaptable style of trading.

It is something that will take you time to learn. Scouring forums for Holy Grail systems is not your answer. Like I said, systems are limited to the market conditions that spawned them. Systems do not adapt to changing market conditions. There is a tool however that allows traders to adapt to changing market conditions.

Can anybody guess what it is? It is your brain! Those new to Forex trading, who have spent time on multiple forex websites, expect me to have some kind of generic, crappy, enter-when-this-crosses-that system. The reason they expect that is because that is usually what is offered.

This is not what I am offering you. I expect you to be an active participant in trading; using your mind, and making good trading decisions. My system involves the use of your brain every trader has one , and that is why after 4 years, my method is still profitable.

The method is tested mainly on these three pairs. So before you trade another pair you need to do some testing. Time frame: 4 hour charts for all of your analysis. The 15 min chart can be used to manage open trades if you want to. Indicators: None!

What broker Do You use? This is one of the most common questions I am asked. I use and highly recommend GFT Forex. They are by far my favourite broker and as far as I am concerned nobody else comes close. If you want to sign-up for a demo with GFT please click here.

When you visit that link you can put your details on the form to the right to get a demo account. Types of Analysis As I said above I do not use any indicators. The problem with indicators is they lag. So I use price action analysis instead. So I trade primarily by analyzing the current movement of price. To analyze this I use three main types of analysis: 1. Candlestick analysis Reading price action 2. Candlestick Analysis This is definitely the most important part of my trading method.

Using candlesticks to read live price action is amazingly beneficial. It is a skill that would benefit any trader using any method. Basically what I do is use candlestick patterns, formations and recent price movements to: 1. Decide if and when to enter a trade. Decide when to exit a trade early or when to stay in a trade.

Maximize profits and minimize losses. Spot bad set ups before entering. Unfortunately, candlestick analysis is something that I cannot fully teach in this e-Book. It would take me hundreds of pages or hours of video to cover it all.

However, I can go over the basic concepts so you have an idea of what to look for. The rest you need to learn from experience They are basically areas in which the price has historically had trouble breaking through. Sorry but placing them is a skill you will have to learn yourself. Traders are usually told candles such as doji's, hammers and shooting stars indicate a pending reversal. Even though this sort of thinking can be profitable it is a very narrow viewed approach to candlesticks in trading.

Candlesticks are much more than just patterns. The important thing to understand is that candlestick analysis is not just about pattern recognition. So forget what you know about candle patterns these are not candle patterns. This is candlestick analysis. The overriding goal of candlestick analysis from here on out referred to as CA is to allow you to figure out who is in control of the market.

Once you figure out who has control of the market it allows you to: 2. Place trades with more confidence. Monitor open trades and close them out early or leave them open beyond your targets. Pull more pips out of the market. Trade reversal trades. The possibilities are endless. Knowing CA back to front is an essential part of the NickB method and it is also an essential part of any trading method. In my method, you use candles mainly to figure out who has control the bulls or the bears.

You also use candles to spot possible reversal points in trends and jump into reversal trades. The Basics I am going to start with the bare basics. This is stuff you probably already know but read through it anyway because it all ties in with the more advanced stuff. This candle has yet to move a single pip in either direction.

It is a completely neutral candle. By the time this candle closes it will have moved and closed in an either bullish or bearish direction or sometimes it will close neutral as a doji. However, which way the candle closes gives us a clear indication of who currently controls the market. The bulls and the bears. The bulls are always trying to push the price up and the bears are always trying to push the price down. So if the baby candle above pushes up and closes higher than open it becomes a bullish candle and indicates to us that the bulls control the market currently.

If it pushes the price down and closes lower than open it indicates that the bears are in control. So for that particular period in which the candle is open, depending on how it closes, we know who has control of the market.

Taking it one step further, when we see a whole series of bearish candles we know that the bears are in complete control of the market. We call it a bearish trend and we know, for the last however many candles, the bears have been in control and pushed the market down. This is all very basic but there is a point.

The point here is that when you look at candles you need to look at them in terms of the struggle between the bulls and the bears. You should look and see a clear sign that the bears are in control. Then you should wait for an indication that the bears are losing control and jump in for a bullish reversal trade. Who Has Control Figuring out whether the bulls or the bears are in control of the market is easy.

It is what all price action analysis is built around. It obviously grows from here and expands into some really cool more advanced stuff but identifying who is in control is where it all starts. Who has control of the pair? Are they controlling it strongly? Is there any sign that they are about to lose control? Having that information clearly laid out in your head helps you make a whole range of decisions. For example, imagine you are in a short trade. At one point in the trade you ask yourself those three questions and the answers are: 1.

The bears have control. There is an indecision reversal candle forming. If the bears are moving weakly and a reversal candle is forming your short may not survive much longer. In the next few pages, I will go over some of the more advanced price action analysis techniques. What is an Indecision Candle? On the previous page I explained what a trend was. Obviously when a pair is trending strongly it has decided on a direction and there is no indecision. However, as soon as certain types of candles start forming we know that the pair is not trending anymore.

There are literally thousands of different types of indecision candles. It is impossible and a waste of time to go over them all. As long as you to read a few types of indecision candles you will be able to read them all. The indecision candle is obviously the one that has been magnified. The green highlighted wick — If you look at the long lower wick it tells you a bit of a story. While this candle was open the bears tried as hard as they could to push down. They obviously succeeded in doing so.

However, before the candle closed the bulls managed to push the candle back up. This suggests very clearly that to start off with the bears had more power. However, by the time the candle closed the bulls had power. The blue highlighted body — The fact that the body is bullish just gives us a tiny bit more assurance of the indecision candles strength.

It tells us that not only did the bulls have enough strength to push the price back up, they actually also managed to close with a bullish body. If the body was bearish it would still be an indecision candle. As you can see, this is mostly just logical thinking.

This goes far beyond the normal type of candle patterns you learn in Forex. Thinking about it in this way actually allows you to understand what is happening with the price. It allows you to make informed decisions. The blue highlighted body and lower wick — Up until this candle the bears were pushing down strongly.

Then all of a sudden on this candle the bears could barley push down a few pips. There is hardly a lower wick and the body is bullish. The green highlighted upper wick — There is a bit of good news for the bears. The upper wick shows us that during the life of this candle the bulls managed to push up quite a bit. However before this candle closed the bears obviously pushed the candle back down. The bulls closed near their opening price so anything could happen with the next candle.

This is pure and simple indecision. You have your trends and then you have your indecision candles that usually signify the death of a trend. What is happening right now is always more important than what happened a few hours ago. This can be seen clearly in the example above. In the first half of the candle the bulls obviously pushed the price up. We can tell that from the large wick. However, before the candle closed the bears pushed back down. That tells us that coming into the next candle the bears might have more power.

You should always assign more importance to what happened during the second half of the candles life. How and why indecision candles form. What indecision candles mean. It may not seem like it but those few skills give you a huge advantage in your trading. The more you practice CA the more you will come to learn it. And eventually you will gain the ability to read the market like a very predictable book. CA allows you to see what will likely happen next. What you learned above also helps a lot when monitoring open trades I discuss this in detail later.

The main use of CA is obviously reversal trades. In one way or another I use all types of indecision candles in my analysis. However, when it comes to trading reversals I limit myself to the strongest types. Long wicked patterns are, in my opinion, the strongest type of reversal pattern. The Preceding Trend. The Indecision Candle. The Preceding Trend: Is any trend that indicates to us that the bulls or the bears are currently in control of the market.

In other words, it should be very clear that either the bulls or the bears are in control of the market. However, only the one with the tick is what I would call a trend. The candles are too small and weak. In a preceding trend the market has to have a clear direction. Big strong candles indicate a clear direction. The preceding trend is the most important part of a reversal trade. If there is no preceding trend there is no reversal trade.

Identifying a preceding trend is not hard, but it is also not a science. I know it is a little hard when you do not have an exact rule to follow, but with just a little practice you will be able to spot trends with ease.

As I said on the previous page, I only trade the strongest types of indecision candles as reversals. So this type of indecision candle has to have a particular look: 1. The wick must be longer than the body of the candle. The wick must be pointing in the same direction as the preceding trend.

Take a look at the picture below to see a proper LWP indecision candle. As you can see, the red arrow is pointing to the wick which is longer than the body and pointing in the same direction as the preceding trend. In the picture above, the body is white but it can also be red. The only difference is that in a reversal from a bearish preceding trend an indecision candle with a white body is slightly stronger.

The LWP with a white indecision candle is slightly stronger. It is stronger simply because the indecision candle itself closes bullish, which indicates that the bulls have a lot of power. The weaker LWP does show that the bulls did fight and pushed the price up from the low. However, since the body closed bearish it indicates that the bears are fighting back.

A preceding trend that is made up of four or more strong candles. An indecision candle like the one described above. So if the indecision candle forms without a preceding trend it is not a LWP. Are You Paying Attention? If you have been paying attention you may notice this is where it begins to come together.

A few pages back I talked about the importance of the second half of the candle. What does the second half of the indecision candle above tell us? They got down quite far too. They managed to completely counter the bearish movement. Now this obviously suggests that the bulls will likely carry that power through to the next candle. This is why I consider this type of indecision candle the strongest. The difference is grouping patterns have their strength in numbers.

However, the fact that five weak indecision candles are grouped together makes the GP strong. The Indecision Candles. I still trade them based off shorter trends, but they are definitely more powerful when they form in very large and long running trends. I consider a long trend to be over 8 candles in length.

The picture below gives you a general example of the kind of preceding trend I look for in a GP. Grouping of Indecision Candles: There must be at the very least, five indecision candles before I would consider it a GP. Five candles is the minimum. I would much rather see six or more.

Generally speaking, the more reversal candles the stronger the GP. The grouping itself must not favour any direction. It must basically form a straight line. Now this does not mean it must be perfectly straight, it can move slightly up and then come slightly back down. It is just important that it does not have an obvious bias for any direction. If you have a very strong preceding trend that consists of many candles and the grouping itself has 6 or more candles you can consider it a strong GP.

Preceding Trends One day I was trying to explain the importance of a preceding trend to a very smart woman. A preceding trend is exactly like throwing a ball against a wall. When you throw a ball against a wall the harder you throw it, the harder it will bounce off of the wall. The same concept works with preceding trends. The bigger and more aggressive the preceding trend is the bigger the reversal is probably going to be.

So, preceding trends are very important. If the preceding trend is very weak or non-existent you should probably avoid the trade. That being said, at the start of this book I said that I give very little rules, only guidelines. Preceding trends having 4 or more candles is just a guideline. There are times when I may take LWP trades based on a single large candled preceding trend.

Once you gain some experience reading price action and candlesticks you can start making exceptions to the guidelines. Trading Reversal Patterns So far you have learned exactly how to identify the point at which a possible reversal might occur. An indecision candle only indicates that there is indecision in the market. It means the bears are fighting back.

Will they win the fight? If you take a trade every time an indecision candle closes you will not be profitable. Confirmation is an essential part of reversal trades. Remember how I said I have very few rules? Well this is one of them, if there is no confirmation there is no entry, period! The problem most traders have is knowing when to enter that reversal.

In the picture below, you see a LWP formation. However, it is clearly a LWP formation. There is a strong bullish trend shown by the green line followed by an indecision candle with a long upper wick highlighted in blue. At this point, you should be thinking that a reversal is probably coming.

You could enter here but personally I find it a little too risky. I like to find the closest applicable line or place one and use that as my entry. If there is a scalp line scalp lines discussed next nearby you can use that as your entry level otherwise you will need to place a temporary line. Placing Temporary Lines There is no precise distance from the indecision candle that you will need to enter. I do this all by eye because it depends greatly on: 1.

The market conditions slow moving market or trending market. This is something you will easily learn to do. Even just by looking at a few of the examples below you will get a feel for how far away I place my line. It is never closer than 30 pips though.

In the example above, there is no scalp level so I need to place a line at the nearest applicable level. Here are some types of levels I consider applicable. These levels are only significant because as humans our minds are fine tuned to look for patterns. So naturally traders group their stops near rounded numbers such as psychological levels.

You may have noticed the 0. This is because it marks the halfway point of every pips. If you do then that is usually a perfect entry for your reversal trade. Below is an example of placing the entry at the nearest psychological level on the trade. Below is an example of placing the entry at the low of the indecision on the trade above. However, it is not always an option as sometimes the wick is too big or too small. Entering a Reversal After you pick your confirmation line all you need to do is wait for it to be broken.

On the trade above, I picked the It was the obvious choice. With reversals I enter pretty much as soon as the line breaks. I manage the trade on the 15 minute chart as I do all my trades. How I manage is explained later. Reversal Trade Targets Since my method can be traded on multiple pairs targets vary greatly.

Now I am calling them constant lines. These lines are called constant lines because they have been on the charts for decades. Constant lines are lines at which we expect the price to find a permanent or temporary barrier. This is based on the price finding a barrier at this line in the past.

These lines act as a dam would in a surging river. They hold the price from moving further. But when the price breaks through one of these lines it can come surging through and we can make pips So what exactly is a constant line, and why would the price magically stop at some seemingly arbitrary horizontal line?

Simply put, constant lines are areas traders expect the price to have trouble getting through. A constant line only exists because a long time ago the price happened to bounce away from it strongly. Because humans are programmed to look for patterns the next time the price approached that line it was traded as if the price might reverse from the line.

This happened over and over until this line became widely recognized as a line at which the pair has trouble breaking through. So as it reaches that level they start closing positions thinking they might see a repeat of last time. So, again the price has reached 1. The more this happens the stronger the line becomes. Eventually they become commonly viewed as areas at which the price will have trouble getting through. How I Use Constant Lines The basic idea behind these lines is to watch how price will react when the line is reached.

Ideally what I like to see is the price approach the line, break through and then rush past the line. I usually trade the break of the line. So I enter when the line is broken and target a certain amount of pips. I will also trade bounces from the line. So if the price reaches the line and our candlestick analysis tells us that it may bounce from the line. Ideally with this kind of setup I want to see a trend heading to the constant line.

Then a candlestick pattern that indicates a reversal forming on or just before the constant line. At the end of the day, all you really need to do is identify areas in which the price has reversed from or had trouble breaking before. The main thing to keep in mind when placing lines is to make the lines fit the price not the price fit the lines. Many newbies try so hard to place lines they end up counting any minor price spike to the line as an actual bounce.

So you should only place the obvious lines that really stand out. The daily chart helps clear up some of the noise and allows me to more easily spot the obvious lines. The next step is to identify recent areas of support and resistance.

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Uses of Candlestick Analysis 3. Why it Works 4. Transitions of Power Intermediate 1. Here I describe exactly what an indecision candle is and the best types of indecision candles and grouping patterns. You may have read this stuff before but in the course I plan to take this to another level.

Advanced Candle Reading How do you know when a reversal is a reversal? This is the first step to having a full understanding of candle patterns. This term is thrown around a lot and it seems very basic. Here I explain in a lot of detail how to benefit from spotting higher highs or lower lows.

A lot of the times understanding this turns a 50 pip trade into a pip trade for me. Or turns a trade in which I could have lost 70 pips into a break even trade. Here I talk about how to use what you have learned so far to improve your overall trading.

Well I do. And how to recognize a bad trade and run for the hills. This is the first major step towards becoming a very profitable trader. Advanced 1. Trading Reversal Trades The basic reversal trade forms randomly on a chart. If traded right it can be a consistent winner.

This is explained in extreme detail with plenty of examples on real charts. Trading Ugly Reversals Not all reversals are beautiful. I explain how to spot reversals most traders miss and how to successfully trade them. However, it leads to the mind blowing stuff.

Trading Trend Line Bounces This is where it gets really interesting. Here I combine everything you learned about candles and I explain how to use them to trade trend line bounces. This will be mind blowing. This is some very advanced stuff I have never discussed before. It pretty much involves using everything together.

Advanced Candle Reading How do you know when a reversal is a reversal? This is the first step to having a full understanding of candle patterns. This term is thrown around a lot and it seems very basic. Here I explain in a lot of detail how to benefit from spotting higher highs or lower lows. A lot of the times understanding this turns a 50 pip trade into a pip trade for me. Or turns a trade in which I could have lost 70 pips into a break even trade.

Here I talk about how to use what you have learned so far to improve your overall trading. Well I do. And how to recognize a bad trade and run for the hills. This is the first major step towards becoming a very profitable trader.

Advanced 1. Trading Reversal Trades The basic reversal trade forms randomly on a chart. If traded right it can be a consistent winner. This is explained in extreme detail with plenty of examples on real charts. Trading Ugly Reversals Not all reversals are beautiful.

I explain how to spot reversals most traders miss and how to successfully trade them. However, it leads to the mind blowing stuff. Trading Trend Line Bounces This is where it gets really interesting. Here I combine everything you learned about candles and I explain how to use them to trade trend line bounces. This will be mind blowing. This is some very advanced stuff I have never discussed before. It pretty much involves using everything together.

Spotting Great Chart Patterns Again it is not mind blowing but it leads directly to the mind blowing stuff. Putting It All Together This is what it is all about. Using all those forms of analysis together. Here you will learn how to trade bounces, continuations and breaks. This is what price action analysis is all about and this is the most important section.

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