Trade Articles
Disclaimer: The views on the posts and charts are for educational and illustration purpose only, as past performance is not necessarily indicative of future performance. They are provided for general information only and therefore should not be taken as any offer or solicitation to do any investment or trade.
Note: Non-Members are strongly recommended to sign up for the online free course to have a better understanding of the setups as discussed below:
KISS Your Chart
KISS YOUR CHART
Keep It Simple, Stupid (KISS) Chart
Among the challenges that new traders face when they start trading is to decide which trading system to use on their chart.
Initially, a new trader will spend much time to do research, read up on trading books on the best trading system and starts trading. Some may spend a few thousand dollars on trading courses in the pursuit of finding the holy grail trading system. Finally, they may end up with the chart below:
Overloaded Chart
The problem with a cluttered chart like the one above is information overloaded. There is an overdose of information to analyse. This will prevent the trader from executing his trading plan efficiently and achieving his trading goals.
Mixed Signals
Firstly, the different indicators on the charts maybe sending different signals to the traders. These signals may cause confusion to the traders to come to a trading decision. As a result, you will have problem pulling the trigger when have two conflicting signals. Shoot! Don’t Shoot! ??
Lagging
Secondly, certain indicators are lagging in nature. By the time the signal comes in for the trader to enter, price may have moved far away from the break out price. Subsequently, the risk reward ratio for the trade setup may not be favourable for the trader to enter as the odds of a winning trade is reduced.
KISS CHART
The price action technique uses clean chart. The “Keep It Simple, Stupid “ (KISS) principle in the chart has features and benefits as explained below:
Features
- Price action candlesticks
- No Lagging indicators
- Support, Resistance and Trend line marked
Benefits
- Allow traders to focus on price action without the distraction of noise (indicators)
- All trading information (news, earnings, economics data…) is reflected in the candlestick formed on the chart. Together with the important support and resistance levels, the price action on the candlestick helps traders make decision easier and faster.
- No lag in processing data. Unlike signals from lagging indicators, there is no delay in the trading signal as traders can process price action on the time frame he is trading immediately as it happens.
- Better Risk Reward. As the trade signal to a trader that uses a KISS chart may be earlier than a trader that uses a trade signal from a lagging indicator, the risk reward ratio can be higher. Consequently, the probability of a winning trade is increased.
Price Action Candles in Chart
By focusing on price action on the KISS chart, the important things to identify are the price action candles. The following are three important price actions that we use in our price action technique:
- Pin Bar (PB)
- Inside Bar (IB)
- Engulfing Bar (BE)
Below is an example of price action candles in actions on a KISS chart:
Conclusion
Price action technique on KISS chart can be used for stocks, forex, indices and commodities. By adding more indicators on the charts, traders may unknowingly make trading more complicated and difficult than it needs to be. Without additional indicators and just focus on price action on a clean chart, traders can remove the noise to find a good trade signal.
For the smart traders, Keep It Simple!
You may like to check out how I set up my chart on POEMS Mercury with these chart settings.
Happy Trading!
One Good Trade
Note:
- If you would like to receive price action setup signals in Members’ Area, you may like to sign up as a client and member with Sign Up.
- For existing clients of Hector, you may refer to your email to sign up as a member to receive price action setup signals in Members’ Area.
