Take a look at this price action system

One of the main problems every trader runs through is: where to open a trade. So I’ve been working in this system, which tells us in a very simple way, where to get in the market.

There are plenty of reasons why I don’t like to take trading decisions based on technical indicators: like all of them have a lagging factor, etc. But the most important one is this one:

At the end every single indicator is based on price itself, so why would I base my trading on something (like a technical indicator) that represents a distorted view of price itself? It makes no sense (at least to me).

Anyway, let me show you this chart:

Price Action

 

This is the GBPAUD chart. You know I’ve been monitoring this cross because of the clear way it’s been trading in the last months (just review some of my previous posts and you’ll see what I mean)

So there are two things you need to know about this system:

  • I have taken time out of the equation. Time is no longer important in this system, it doesn’t matter how much time it takes the market to move from one level to the other.
  • If I take time out of the equation, then “price movements” are the most important factor in this chart.

Take a look at your GBPAUD chart and see how different it is from the chart above.

So what do you think?

If you asked me the same question, I’d tell you it is probably the simplest entry system I’ve ever seen.

Before I go, let me remind you that we still have some important fundamental announcements this week:

Wednesday

German Constitutional Court Ruling – According to Forex Factory, The German Federal Constitutional Court is due to announce a ruling regarding the constitutionality of the European Stability Mechanism.

Thursday:

FOMC statements and Economic projections

Now it’s your turn.

What do you think about the system?

Let me know your thoughts about the system and about the entries.

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Raul Lopez

I've been trading the markets for more than 15 years. I believe the best way to trade is by adapting to the market conditions. You can learn it too, join our community .

  • Abal blog

    look easy to read it Raul

    • Raul Lopez

      Hey Abal, it’s definitely easy to read. That’s what I like about this chart. It takes all kind of complicated decisions out of the equation and makes it really easy to determine entry levels. Thanks for your comment! Cheers,

  • Raj

    Simplicity is the key………..thank you Raul!

    • Raul Lopez

      Hey Raj, I definitely agree with you there…

  • Desktop

    Hello,
    It is very similar to the Elliot wave theory, when the 2nd wave down (black candles) can not be bigger then the 1st wave up (white candles).. at the end of the chart, when the wave down with black candles is bigger then the wave up- we can expect reversal. Please correct if i am wrong.
    By the way, thank you for the post

    • Raul Lopez

      Hey,

      Thanks for your comment. I dont see it that way though.

      It’s just about how the market reacts, instead of trying to guess where to enter, this system lets the market tell you when it is ready to go higher (red arrows).

      I think it’s a better, even simpler way to trade this way… do you agree?

      • Desktop

        yes, of course i agree ;) i did not even take a look at this pair until your post.
        Thank you

  • André Lerm

    Great post!
    It looks very simple and effective.

    • Raul Lopez

      Hey André… yep, it’s that simple…