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Nial Fuller

NIAL FULLER
Professional Trader, Author & Trading Coach

The Anatomy Of How I Enter Price Action Forex Trades

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By in Forex Trading Strategies By Nial Fuller Last updated on | 87 Comments

Spot_Trading - CopyWhat goes on inside the mind of a successful Forex price action trader as they enter a trade? What is the process they use to succeed?

This article will demonstrate five trades that were valid price action trading setups over the last two months. I will walk you through them one by one and explain to you the reasons for taking them, what the proper entry and exit parameters would have been, and why. You should use this article as a reference tool and also to learn how an experienced price action trader thinks about and trades the Forex market…

GBPUSD – Fakey with Pin Bar Setup – 18th April 2011:

This price action trading setup was a fakey with a pin bar. We can see the momentum was higher, as evidence from the 8 and 21 day EMA’s suggests. Price showed clear rejection of the horizontal level near 1.6150 on the day the pin bar formed. So, we had confluence with the existing bullish momentum, the horizontal level rejection, and a very well-defined fakey with pin bar trading strategy.

This setup had two potential entries. The first entry would have been a limit buy entry near the 50% retrace level of the pin bar. This 50% entry is an option on fakey’s with long-tailed pin bars like the one in the example below. The other entry option would have been a break of the high if the inside bar. Since the inside bar and mother bar high were so close in this example, you could have entered at the inside bar high. Normally the fakey is not triggered until the mother bar high breaks though. Stop placement would have been below the low of the pin bar if you had entered at the 50% retrace. If you had entered on a break of the inside bar high you could have placed your stop near the 50% level of the pin bar.

Achievable rewards on this setup were at least a 3 times risk winner if you entered at the 50% retrace, and at least a 2 times risk winner if you entered near the inside bar high breakout. We can see after giving us a 2 or 3 times risk win potential the market reversed sharply, this is an example of why it’s good to take a profit of 2 or 3 times risk when it presents itself, or at least lock it in by trailing your stop loss up.

This was a solid price action setup that had multiple factors of confluence supporting it, and it was very obvious; there was no guessing or hoping with this setup. We clearly identify our edge and trade it. If there is a lot of doubt or confusion, there is probably no setup worth risking your money on.

GBPJPY – Fakey with Pin Bar Setup – 11th May 2011:

On May 11th a large pin bar / false break occurred in the GBPJPY. Three inside bars preceded this false break, and the momentum was clearly lower as the 8 and 21 day EMA’s show us in the chart below. Furthermore, the pin bar showed clear rejection of the horizontal resistance near 134.00. So, we had confluence with the bearish momentum, the rejection of resistance, and an obvious price action setup.

This setup could have been entered near the 50% retrace of the pin bar, just like the setup discussed above. It also could have been sold on a break of the inside bars as price came back the other way, or the mother bar.

Now, the obvious problem with this setup was the significant support level near 130.00, which price would need to break through for this trade to have any chance at providing a decent risk reward potential. However, in the previous trade example above, the GBPUSD was facing stiff resistance near 1.6400 as well, and that trade worked out nicely. The point here is that we never really know for sure which trades will work and which will not, and while we generally do not want to sell into support or buy into resistance, sometimes if there is a very obvious price action setup with the trend, you have to take a stab since your edge is present.

Now, let’s assume this trade was a loss of 1 times risk because as we can see the market did not follow through to the downside; we are still ahead because in the GBPUSD trade above we made 2 or 3 times or risk. This is an example of risk reward in Forex trading.

EURUSD – Inside bars after false break – 24th / 25th May 2011:

On May 23rd the EURUSD created a false break “bear trap” at support near 1.4000. Over the next two days the market consolidated and formed consecutive inside bars just above this support.

We can see in the chart below that the market then exploded higher as price broke above the mother bar high on May 26th. Now, this setup was definitely more advanced because it was against the recent bearish momentum, however, given the obvious false break and the consecutive inside bars that followed, forming above support, it was a valid price action setup worth taking. There was a strong potential for a rotation higher back into value. As we can see price shot significantly higher, moving past the 8 and 21 EMA’s before stalling just below 1.4700.

This trade gave us the potential for at least a 1:2 or 1:3 winner. The stop loss would be placed just below the mother bar low and entry would need to be the high of the mother bar. This is the typical stop loss and entry placement for the inside bar setup. Once again, this trade is another find example of why taking 1:2 or 1:3 winners as they present themselves is usually the best thing to do, or at least lock in that profit; look how sharply the market reversed after offering you 1:3.

NZDUSD – Pin Bar / Inside Bar Combo Setup – 25th May 2011:

On May 25th the NZDUSD formed an inside pin bar combo setup. This is one of my favorite setups to trade as it is generally very accurate and can allow for a tight stop and large reward potential.

This particular inside pin bar came after price had rejected a strong weekly support level near 0.7750 and the 8 and 21 day EMA’s had recently crossed higher; indicating more bullish momentum was possible.

We can see as price broke up through the mother bar high it had a lot of momentum behind it which propelled it substantially higher before consolidating for a few days and then forming another pin bar before re-testing the highs near 0.8250.

This setup provided a reward of at least 2 times risk. We can see a very significant resistance level that came in near 0.8200 – 0.8250. If you zoom out and look at the monthly chart you can see this level was clearly significant, and so if you were long from the inside pin bar on May 25th, you would have considered taking your 1:2 profit near this resistance.

GBPUSD – Pin Bar Setup – 3rd June 2011:

On June 3rd a bullish pin bar setup formed in the GBPUSD that showed rejection of a significant support through 1.6300 and was in-line with the recently crossed higher 8 and 21 day EMA’s.

While this setup seemed pretty solid due to its rejection of support and confluence with the ascending EMA’s, it formed in the midst of a market that had just failed to make a new high. We can see the market failed to re-test the high at 1.6750; this indicated momentum may be transitioning from bullish to bearish or from bullish to sideways.

So, whilst this pin bar setup did have enough definition and confluence to consider taking it long, it lacked the support of a clear / directional market. Setups like these sometimes work and sometimes do not, its part of the game. As long as you are taking valid setups with supporting reasons of confluence and effectively managing your risk, you are executing your edge and should not become emotional as a result of losing a trade.

GBPUSD – Pin Bar Setup – 14th June 2011:

Finally, the last setup we will look at was a bearish pin bar that formed on Tuesday of this week (June 14th). This is a great example of how pin bars from key levels can be very high-probability trading strategies.

Note the two previous pin bars that had worked out nicely which formed at the same approximate resistance level around 1.6500 – 1.6450. This meant when the third pin bar formed we had a very high-probability setup because it formed off a previous event area and had confluence with a very significant resistance level. Even though this market is ranging and not really in a trending state, we can still use significant levels combined with well-defined price action setups to trade with. This is part of the beauty of trading with price action; it works in all market conditions.

Due to the smaller size of this pin bar you had the potential for a quick profit of 2 to 3 times risk since the stop loss required was relatively small. The support near 1.6200 made an obvious target area.

Conclusion:

All of these trades above are examples of valid price action setups that I would have traded, and I did actually trade and profit off of some of these setups. The point here is that as long as you are executing your edge flawlessly, you are doing nothing wrong.

Now, flawless execution of your edge means you have mastered price action trading, you have a concrete and practical Forex trading plan, you are tracking your progress in your Forex trading journal, and you effectively manage your risk on every single trade you take. The examples above include losing trades that were pretty decent setups. This goes to show you that even good price action setups will lose sometimes. Because you never know WHICH particular setup will be a loser, you HAVE to manage your risk diligently on EVERY single trade you enter. Even the best looking price action setup can fail, so don’t bet the farm just because you convince yourself you are “right”. To learn more about how I trade with simple price action setups check out my price action trading course.

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About Nial Fuller

is a Professional Trader & Author who is considered ‘The Authority’ on Price Action Trading. He has a monthly readership of 250,000+ traders and has taught 20,000+ students since 2008. In 2016, Nial won the Million Dollar Trader Competition. Checkout Nial's Professional Trading Course here.
  1. Medi September 14, 2019 at 5:29 pm

    You tha God sent!

    Reply
  2. NGUYEN QUOC THANG September 14, 2019 at 1:28 pm

    Pls support me to explain more about ” Event area ” in the line ” Retrace Entry Back to an Event Area or Prior PA signal.

    Thank you
    THANG

    Reply
  3. Mahmudul Hasan September 14, 2019 at 1:32 am

    Super Nial bro…..

    Reply
  4. Diário de um Poupador March 5, 2018 at 1:32 am

    Hi, i am a brazilian guy who trades for years. I pause my trades during some years, and i came back about 2 months ago. I’ve been trying a strategy with short take, and it has given to me a lot of profits. I am trying to make my mind strong to ignore the market’s movement after i book profit. You have said a very right thing here: the market always makes a retraction.

    This article was very good, thanks. Keep it that way. God bless you.

    Reply
  5. Solomon Olusegun Oyeniyi December 13, 2017 at 9:24 am

    Thank you for this article.

    Reply
  6. GANDUS December 4, 2017 at 6:10 am

    Great always to hear you big brooother Nail. God bless you. timely article for me. love

    Reply
  7. Noor Azman Abd Aziz November 26, 2017 at 2:10 am

    Nice and very interesting. This article answer the questions why i always close trades with losses while actually I have been profitting during the trading session.

    Reply
  8. Sboniso Malambule November 24, 2017 at 6:22 pm

    ive bee reading your lessons im impressed

    Reply
  9. Azmi Yusoff October 17, 2017 at 2:52 pm

    Interesting article. This happen everytime. The idea of wanting to wait a little more time may cause us to lose what is supposed to be a profit instead.

    Reply
  10. Ayanda Mabuza September 18, 2017 at 10:56 am

    reading such artecles really opens my mind.Thanks Nail

    Reply
  11. Roy Peters September 1, 2017 at 2:39 am

    This happened to me recently on Eurgbp. Up 200 pips and thought it’d go higher. Next day market came down and I booked only 40pips!
    I learn a big lesson.

    Reply
  12. Rafari July 31, 2017 at 1:29 am

    ok, its been almost 2 years since I start to learn how the market move. I can say most of your articles give me a vision about how to, what to do and don’t. It’s cool because I start move to learn draw some major snr, I got stuck on making it, but your articles show me some clever way to draw “a key level” and some short term. I’ll try my best to practice it everyday !!!

    Thanks Nial, You’re Awesome !

    Reply
  13. kgothatso July 28, 2017 at 6:00 pm

    U ar really a genus.sir u teached me that i should take a risk than to lose the chance **#great things come to those who hustle (lovely)$$$$$

    Reply
  14. Alan Gillanders June 25, 2017 at 3:25 am

    Hi Nial,
    Thanks for the lesson. This has been my problem for some time. Greed. Always waiting to take more with a small investment. My profits evaporate and majority of times end in a loss.
    In the last 6 weeks I have been taking the small profits. 100 – 200 points instead of trying to get 500-1000 points. seems to be working ok. Thanks again

    Reply
  15. oluwatosn Matthew June 23, 2017 at 5:50 pm

    That’s a good trading guide. Thanks nial.

    Reply
  16. Ages Justice June 22, 2017 at 5:40 am

    Keep it up Mentor. God bless you more!

    Reply
  17. Louis June 21, 2017 at 11:43 am

    This is exactly what was missing from my trading. Realistic exit plans. Thank you Nial.

    Reply
  18. endurance oki June 21, 2017 at 8:05 am

    thank you sir for your well prepared article. Im a victim of this very situation , i’ve almost hit my profit target then i said i should let the profit run but to my very face , the profits were evaporating until i closed the trade .

    Reply
  19. DAVID SHUBE June 20, 2017 at 7:48 pm

    Thanks Nial, booking profits on-time is right, cos too much emotional traits is involved when one realized that the trade is going to retrace unexpectedly.

    Reply
  20. PEERALLY June 20, 2017 at 6:21 pm

    Thank you, Nial.

    Reply
  21. Kate M June 20, 2017 at 6:49 am

    Thanks Nial, way to go. You keep writing evolving lessons like these, Ill always have something to learn. And again an opportune time to write this particular article, I think you are the Yoda of trading:)

    Reply
  22. Lucas Obiora June 19, 2017 at 9:07 am

    Thanks Nial, that’s an eye opener to me, I have that problem of letting profits run into losses, thank you very much for the article.

    Reply
  23. Kay June 19, 2017 at 8:49 am

    Thank you Nial, well explained and organized article. Definitively help me to prepare my Profit plan. Regards

    Reply
  24. smg June 19, 2017 at 3:17 am

    Thank you

    Reply
  25. richadi36 June 19, 2017 at 2:07 am

    Thanks Nial. I really got immense knowledge about booking profits.

    Reply
  26. Suleiman Bhadmus June 18, 2017 at 11:14 pm

    Amazing,am definitely going to include all this point in my trading plan. Though am still on demo, but what have learned from this article in very key to a successful trading.
    Thanks a lot Mr.Nail Fuller.

    Reply
  27. Matt June 18, 2017 at 5:25 pm

    This happened to me last week. Was up 700 proffit and closed with 700 loss because i had such an attachment to what i thought was a fullproof longterm move in one direction so i wanted to ride the waves but it looks like it wasnt the long term move in that direction i thouht it was.

    Reply
  28. akhtar butt June 18, 2017 at 4:44 pm

    Hi, Dear Nial Fuller, , excellent, well-explained with reality and experience. Thank, cheer

    Reply
    • Bebe April 30, 2019 at 7:57 pm

      Excellent article,Thanks Nail

      Reply
  29. Akpos June 17, 2017 at 6:46 pm

    Nice….this has been my bane in trading. Not booking profit….

    Reply
  30. John Promise June 17, 2017 at 6:02 pm

    Thanks Nial. My mentor.
    Remain blessed.

    Reply
  31. Thendo June 17, 2017 at 4:58 pm

    Thanks Nial.. great advise. Am looking forward to not closing or closing when the trade goes against you but hasn’t hit your stop loss…

    Reply
  32. Luis June 17, 2017 at 12:20 pm

    Thanks so much Neil as always, great article!, mm please i have a question, what about the case that all the other trading books and gurus says about let profits run until at least 1:2 Risk reward ratio? , because they say if i close before that 1:2 im cutting my profits and that can damage me in the long run! , but in the real life im bored to wait sometimes for a 1:2 and when im at 90% to achieve that profit target the markets turns down eliminating all my profits and making a loss for me, but when i book the profits i see my account growing, what you can reccomend me about that?.

    Reply
  33. Bruno June 17, 2017 at 10:48 am

    Before reading the whole article, I’m writing this! Just the header alone struck the cord. Toy, Nial, are a mind reading mentor! I’m at that stage in my trading where my edge is consistently delivering profits! But, yes, most times, these profits evaporate. Alot is happening around the political and business world and price is fluctuating between these events. Yes, price still does was it’ll do, but the whipsawing is alarming! I can’t say enough how soothing this article is to me because I make sizeable % of my Acct only to watch some diminish or disappear, even into losers.

    Thank you for this article.

    Reply
  34. Mavhungu Lufuno June 17, 2017 at 9:14 am

    Amen

    Reply
  35. Elpadrino June 17, 2017 at 4:54 am

    Thanks Nial #Legendary

    Reply
  36. Alin June 17, 2017 at 4:20 am

    I am one of those loosers who do not book much profits on the trades, because I’m setting
    way too large TPs. Thanks for the posting!

    Reply
  37. Shankara Motay June 17, 2017 at 3:59 am

    Thank you very much

    Reply
  38. Rongsquare June 17, 2017 at 12:44 am

    Amazing thank you Nail

    Reply
  39. Mike Coe June 16, 2017 at 11:27 pm

    Your articles just keep getting better and better, Nial! Great stuff! Thank you very much.

    Reply
  40. Siyabonga Mkhize June 16, 2017 at 11:10 pm

    Powerful thank you sir

    Reply
  41. KRISTOFA OKENTA June 16, 2017 at 9:37 pm

    Good Teaching As Always.
    Thank you For Sharing Your
    Heart With Us.

    Reply

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