Swing Trades using Price Action

I started learning to trade around 1999...by phone and 56K dial-up modem.
I started live trading three weeks after I started learning to trade...which was a big mistake in some ways but great in other ways. The account lasted about 4 months before I closed it...and by the time I closed the account I had lost over 1/2 of my money.

I am a "momentum" trader and only use support/resistance and the 6 and 12 EMA to weigh the 1 and 5 minute charts. Nothing more. I trade EUR/USD during the Asian session when prices rarely trend.

In the 23 years since then, I have worked with various time frames, indicators, signal services, EAs and systems. I have been a full-time trader on and off for many years. I made a lot and lost a lot...6 figures on one account and I lost a lot in November 2008.

I wasn't trading this system at the time and it's not my main system today...but







Trading 1:1 RR you can expect 70-80% winning trades... on some pairs
To find these pairs, extensive backtesting was required.
It's your job to backtest...if I list the best pairs, you'll learn nothing.

So what's the problem, why isn't everyone using this?
...because it's swing trading...there's very little movement.
But...price is fractal, so these setups also occur on the lower timeframes and you can test them on the lower charts.

****** You have been trained to Expect Action.

****** Algorithms know how to take your money

My rules are simple...

1. Daily chart with 8 and 16 EMA (it works fine on shorter timeframes, just more volatile)
2. Trade only based on trends...
3. Wait for a hammer, shooting star, hanging man, long candlestick doji ... ( any candle with a long wick... the long wick must be at least ⅔ of the total length of the candle ) . Wait for this candle to close.
4. The long shadow must touch or pierce at least the 8 EMA ...this is the "qualifying candle".
5. Enter at the opening price of the next daily candle.
6. Place your stop loss at the top (or bottom) of the qualifying candle.
7. The take profit point is up to you, but start from 1:1 of the stop loss point size... if the stop loss point is 150 pips from the entry point, then your take profit point is at least 150 pips.

This is the basic rule. Most currency pairs are traded approximately every 4 to 8 weeks on the daily chart, and approximately once a day on the hourly chart.

Backtest, backtest, backtest your favorite currency pairs, stocks, indices, and more before committing live funds.
By learning to recognize more setups, more trades can be made... I built this example based on just one candle type... a specific "Pinbar". As you become more experienced at identifying specific candles or patterns, you can find more trades.

EURJPY is a good example

More profits can be made with this approach by taking part of the profit and letting the rest run based on trend strength etc.

Alternative exit criteria such as pivots, Fibonacci, Parabolic SAR, etc. can be used to improve money management and profits. Another exit strategy might be to take profits if the price breaks above the 16 EMA or closes back within the 8 EMA.

I recommend risking no more than 2% per trade using a personal account.
For a Prop Firm account, I recommend a maximum trading risk of 1%, as you may have 5 or 6 losses in a row.

This is a very simple method using price action, 8-period EMA and common sense.

Please let me know what you think...
Here are some trade examples.

For UpToDate backtesting of multiple pairs, see page 10 in this topic.

For my trades in the $100,000 Challenge, go to page 18, post #342