The Authority’ on Price Action Trading. In 2016, Nial won the Million Dollar Trader Competition. There is obviously a plethora of variables and influences hot forex trading signals affect a trader’s decision making process when analyzing a chart, finding a trading signal and then executing a trade. Knowing what to look for and what the best signals look like is one of the main steps to increasing your chart-reading skills and confidence in your trading ability.
Keep in mind, the signal itself could be substituted with other strategies or signals of your choosing. Tips for filtering trade signals The following tips for filtering trades can be applied to any trade signal or entry trigger, but we are mainly using daily chart pin bar strategies in the examples below, as well as one 4 hour chart example. In the GBPUSD chart below, we can see two more examples of pin bar signals that had clear and obvious protrusions through a level and that also created false-breaks of the levels. Both of these signals lead to substantial moves lower, in fact, price is still moving lower as of this writing from the long-tailed pin bar that created a false-break through 1. The tail on a pin bar is very important, it shows rejection of price. In the example below, we can see a long-tailed pin bar that occurred within the context of a downtrend in the EURJPY. When you see a move against a trend and then a long-tailed pin bar forms, it’s a good clue that the retracement is terminating and the trend will resume from the long-tailed pin bar.
Traders often get sucked into tempting looking breakout trades. Many breakouts result in false-breaks as we saw earlier. For example, in the chart below we can see both an uptrend and a downtrend in the GBPUSD. This is even more accurate for intra-day signals.
A 4 hour or 1 hour signal without any type of confluence behind it is usually not a high-probability setup worth trading. Learning to pass on trades is part of being a trader, and as you get your own filters down like the ones we discussed above, you will start to develop a more refined sense of which signals are worth trading and which aren’t, over time you’ll get better at this. Creating a filter checklist for you trades A good exercise for any trader is to create their own checklist of different filters that they use to scan the markets for potential signals. You can just create a quick checklist with one to three sentences describing what the filter is and then an example image of the filter under it. Look for a signal with a protruding tail that creates a false-break of a level.
Watch for obvious protrusions and false-breaks of key levels in the market. This filter can be applied to trending markets or to counter-trend trades. A long-tailed pin bar is a high-probability pin bar. Long-tailed pin bars work very well in trending markets and as counter-trend signals, as we saw in the examples above. A long-tailed pin bar is always something to keep an eye out for when analyzing the markets.