Good morning,
Thanks for taking the time to answer my questions.
Regarding the book, it’s strange because the first edition also has a similar error in the same section.
Regarding the risk management, I attached a spreadsheet with a progression I plan to use on a small account I have with Axi. (after finishing reading and backtesting).
There are several problems with it, at the beginning the % at risk is a bit bigger than what is usually recommended, but this can easily be avoided by increasing the required number of “R” before progressing to the next stage.
R is the amount of money at risk on every trade.
Sure your account is at a different stage, but maybe you can find the spreadsheet useful.
If something looks wrong please let me know.
If you always use market orders it is easier to keep the trade size constant, maybe sometimes you don’t have the time to calculate the required position size.
But if you use Axi (on some screenshots from you it seems you do) they provide the mt4nexgen experts made by fxblue.
One of them (the mini terminal) allows you to define the money at risk and the stop loss in pips and it automatically calculates the position size, so this could be helpful. [maybe you already knew this, sorry if it’s old news].
I modified the fibo retracement tool (see the attachments) to provide an easy way to evaluate the potential rewards on the trades I plan to take, you can see it in action on the GBPJPY screenshot.
Those are not actual trades I took, it was more like a quick way to “demo” test without having to actually take the trades on a demo account, but you get the idea.
Haha, you said I can go ahead with more questions, so here is one regarding the pin bars:
It is my understanding that you prefer engulfing bars versus the pinbars. Why is that? Imagine a bearish engulfing bar following a bullish bar, and a bearish pin bar with the close lower than the open (on a H1 chart, for example).
Isn’t it the same price action in both cases, only for the pin bar it happened faster, in only one hour instead of 2? I would say the pin bar carry the same significance in this case, or maybe more.
Of course a bearish pin bar but with the close higher than the open will be less significant than a bearish engulfing.
But if you put a pending sell order below his low (expiring in one hour) and it gets triggered, the resulting trade will be similar to a bearish engulfing trade, right?
Please understand that I really don’t want to be (I don’t know the English word, please fill the space yourself), I’m asking not because I want to be critical or something like that.
But your webpage changed the way I look at the markets, and I want to understand everything I can.
Have a good day!
Cheers,
My Answer:
Thanks for the spreadsheet – I truly appreciate it!
FYI – I only use AXI Trader for charting, not as my trading broker. In terms of candles, I tend to lean towards engulfing candles for entries into supply or demand zones. When it comes to trading pins and engulfs independently, I don’t really have a preference.
You’ve made a good point about pin bars with a lower close than open technically being engulfs. Yet, what we need to remember is: we can only perceive this engulf if we switch to a different time-frame…
If a bearish pin bar forms on the 1-hour chart, composed of a bullish candle and an engulf on the 30-minute chart, traders observing the 1-hour chart would interpret it as a pin bar. This perception influences their reactions differently than how they’d respond to a bearish engulfing candle on the same 1-hour chart.
So, it’s a bit of a paradox: yes, the pin bar is technically an engulf, but simultaneously, it isn’t… To see it as an engulf, we must change time-frames.
I hope this clears things up.
PAN.