Forex Price Action

Trading Plan

By: Rush2112
November 22, 2019
Rev 0
 Table of Contents

Overview.............................................................................................. 1

Pre-Trading Analysis............................................................................ 2

ABCD Pattern Definition / Criteria ........................................................ 3

Trade Entry – Set Up ........................................................................... 4

Trade Entry – Candle Formations ........................................................ 7

Trade Entry – Checklist........................................................................ 8

Trade Management ............................................................................. 9

Money Management ............................................................................ 10

Appendix A – Advanced Pattern Definitions ......................................... 11

 Forex Price Action Trading Plan

Market Forex

Sessions Traded Asian, US Market Sessions

Currency Pairs Any combination of these major currencies

USD, JPY, GBP, EUR, AUD, NZD and CAD

Broker Oanda

Charting Program Ninja Trader, MT4

Evaluation Charts H4 (Bias / Directional Chart)

M15 (Entry Chart)

Trading Frequency 5-10 High Quality Trades / Week

Objective 20 pips per day, which is averaged from the month's results

1
 Pre-Trading Analysis

Tools Used For Analysis

Structure Analysis – This will provide the “expectation” or bias towards where
price is going

Area of Interest (AOI) – Based on structure, these will be areas where I believe price
will react and has potential to reverse direction

Support / Resistance – Areas based on past supply and demand

Fibonacci Retracement – Based on natural price movement, these areas are ratios
which price corrects to and traders recognize and respect

Key Retracement Levels – 38.2%, 50%, 61.8%, 78.6%

Fibonacci Extension – Based on natural price movement, these are areas where
price is beginning to reach exhaustion

Key Extension Levels – 127.2%, 138.2%, 161.8%, 200.0%

One to One (ABCD) – Price moves in ABCD patterns and markets typically strive
for harmonic movements completing one – to – one moves

Daily Process

H4 chart, ID current swing using proper 38.2% correction. We will use this chart
to determine our bias for direction on the entry chart

H4 chart, draw 1 to 1 swing with Fibonacci retracement and extension levels.

This is what the overall market is working towards

M15 chart, complete same process as above

Mark “Areas of Interest” (AOI) of support/resistance above / below current price

2
 ABCD Pattern Definitions / Criteria

ABCD Pattern

BC = 38.2% – 78.6% retracement

AB = CD (1 to 1)
> 127.2% extension of AB leg

3
 Trade Entry – Set Up

Signal 1 C buy / sell with structure (areas of interest) in conjunction with 50% to
78.6% Fibonacci level and in line with higher timeframe trend.

Entry Rules

1. C point buy / sell in the direction with higher time frame (377R / H4)
2. Price must reach AOI (area of interest)
3. Correction is 50% or greater
4. Risk:Reward (R:R) ratio is 1.5 or greater
5. Price has absorption towards AOI
6. Stop loss placed 10 pips above / below point A (or adjusted with structure)

Signal 2 D buy/sell with completion of ABCD pattern with Fibonacci confluence and
structure (area of interest), which is in line with higher timeframe trend.

Entry Rules

1. D point buy / sell in the direction with higher time frame (377R / H4)
2. Price must reach 1 to 1 and minimum 127.2% extension of AB leg
3. R:R ratio is 1.5 or greater
4. Price has absorption towards AOI
5. Stop loss placed 10 pips above / below 161.8% extension (or adjust w/ structure)

Signal 3 Double top / bottom buy/sell with Fibonacci extension 127.2% to 161.8%
and confluence with structure in line with higher timeframe trend.

Entry Rules

1. Entry is in the direction with higher time frame (377R / H4)

2. Price must reach 127.2 – 161.8% extension of the double top / bottom leg
3. R:R ratio is 1.5 or greater
4. Fibonacci extension (127.2 – 161.8%) must coincide with AOI and structure
5. Price has absorption towards AOI
6. Stop loss placed 10 pips above / below structure high / low

4
Below are examples of each trade signal entry.

Signal 1

Signal 2

5
Signal 3

6
 Trade Entry – Candle Formation

Time and Tick Charts

Invitation Candle Weaker sign candles toward entry. I.e. Doji’s, hammers, etc.

Rotation Candle Entry candle, which must meet the following criteria:

• Must be over 1/2 body and finish strong

• Must take out at least 1/2 the body of the previous candle

Decision Candle A candle which closes higher / lower than previous

Absorption We must see the absorption of buyers or sellers as it approaches the

price zone. This means candles getting smaller and the presence of
buyers/sellers active towards AOI.

Candle Structure

View Candle in 1/3s Strong Weak

7
 Trade Entry – Checklist

Are you focused and ready to TRADE THE PLAN?

Price in my “Area of Interest” (AOI) and meets correction expectation

Absorption takes place towards/in AOI

Rotation candle present

Signal 1, 2 or 3 (Fibonacci, Structure, ABCD pattern)

Trading with the H4 Chart

Is the Main Swing >60 pips

After being taken out at BE, only re-enter at better price, next level up / down

Check news schedule – no entries around news

8
 Trade Management – Point C Trades

Stop Loss Placed above / below NSH / NSL

Once prices test the highs/lows, move stop to breakeven + 5 pips

If price has made a NSH / NSL, but before one-to-one or 127.2% extension and >40
pips in profit, trail on structure. If less <40 pips stay at BE + 5 points

Once the one-to-one or 127.2% extension level is reached, aggressively trail on

decision candles until taken out of the trade

Trade Management – D – Pattern Completion Trades

Trade will be entered at the 1-1 completion and price will be between the 127.2% and
161.8% extension.

Stop Loss Placed 10 pips above / below 161.8% extension (adjust if structure
is nearby)

Once price begins to correct at the 38.2% retracement level of the AD leg, move stop to
BE + 5 pips

Once price moves past 38.2% retracement level, begin to trail on structure

At the point where price reaches the 61.8% retracement level, lock in profit there. If an
expectation failure occurs, trail on decision candle.

Trade Management – “Rescue” Trades

Once the trade tests a 100% retracement (between 90-100% area), the trade will be
considered a “rescue” trade with the goal of exiting “gracefully” with minimal loss or
perhaps a small profit. As the trade bounces off the 100% retracement level, we will
look for an entry signal per our plan above. It is important to see absorption towards the
100% level. If rotation and absorption are not present, we just take the single trade
entry loss.

Once the trade has a candle close in profit, trail on decision candle until we reach
breakeven for the expectation to play out. If expectation has failed but stop loss is not
hit, we trail on the decision candle until we exit the trade.

9
 Money Management

Mini Lot Plan

A sophisticated money management system will be utilized to determine contract size

and optimize profits, as well as to preserve capital. The system is a “smooth ratio” and
uses the following parameters:

Starting Equity = $1,000

Minimum Amount – This is the amount to use for trading = $800

Initial Mini Lots - 1

Delta - change in account balance to increase by 1 mini lot = $400

Standard Lot Plan

Once the account reaches the $20,000 threshold, we will convert over to a standard lot
plan using the following parameters:

Starting Equity = $20,000

Minimum Amount – This is the amount to use for trading = $16,000

Initial Standard Lots = 1

Delta - change in account balance to increase by 1 standard lot = $20,000

Maximum Lots – largest number of standard lots traded = 10

The money management template spreadsheet will be used to track weekly profit / loss
and for appropriate time to adjust lot size.

10
 Advanced Pattern Definitions / Criteria

Bat Pattern

AB = 50% retracement of XA leg

BC = 61.8% retracement of AB leg
CD = 1 to 1 and 161.8% extension of AB leg
AD = 88.6% retracement of XA leg

Gartley Pattern

AB = 61.8% retracement of XA leg

BC = 61.8% retracement of AB leg
CD = 1 to 1 and >127.2% extension of AB leg
AD = 78.6% retracement of XA leg

11