Learn Price Action Techniques for Avoiding Bad Trades

Recently I have been showing you how to use price action to enter trades. However, there is a whole other side to price action that is rarely discussed…

… Using price action techniques for avoiding bad trades.

I am a very conservative trader. While my strategy usually shows ten or more trades per week, I tend to only trade two or three of them. This is because I usually filter our all but the best trade set-ups. Not everybody who trades my strategy does the same though. There are some traders who take every trade they can catch. There are some who filter out some trade, but aren’t as picky as me.

In the end, there is no right or wrong way to approach the strategy. As long as you follow your money management rules and your trading plan, you should be okay.

Using Price Action to Filter Out Bad Trades

If like me you want to filter out as many bad trades as possible, price action is the best way to do so. In the video below I show you a recent bad trade, and how using price action would have saved you from this trade.

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Avoiding Bad Trades

In the end, you will never be able to avoid all bad trades. However, by using a few simple price action techniques, you can avoid a lot of them. In this trade, a simple combination of minor resistance and a bad risk/reward ratio kept me out.

One important thing to note is that you shouldn’t be overly cautious. If there is minor support or resistance in the way but you can still set a good target, the trade may be worth taking. You need to learn to find a balance between smart caution and skipping every trade.

If you enjoyed this video, or have any questions, please leave a comment below. I try to reply to every comment.

If you want to learn more about how I trade Forex, check out my free Forex Price Action strategy.

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41 thoughts on “Learn Price Action Techniques for Avoiding Bad Trades
  1. Hi Nick,

    Thanks for the video. Always helpful and educational! Great idea posting videos of your failed trades (though I hope you keep them at a minimum of course ;-)). As you learn from your mistakes, why not let others learn from them as well, right?

    Past few weeks (months really) have been one big waiting game for an end-of-day trader like me, due to the very low volatility. I’m glad that the holiday season is finally over.

    Keep up the good work!

    Cheers, Sander

  2. Thanks for this Nick, I took the exact same trade using your strategy and failed. I made a note on my journal that I should have had my entry a bit higher as the confirmation candle pulled back down or wait for the confirmation candle to complete and I should not trade against strong down trends.

    But now I know I should have paid more attention to the minor R&S area

    Looking forward to more of these type of videos

    Thank you
    J

    1. Hi Jay, sucks that you took this trade. Glad that you learned something from it. I tend not to let the main trend stop me from entering.

  3. Thanks for this tutorial Nick. You are always real and honest in your presentations. When I looked at your chart knowing that you were going to talk about a failed trade, I realized that the overall trend was down (lower highs and lows) so was guessing that you are going to advise keeping the overall trend in picture.

    However you pointed out something I had not thought about, thank you for that.

    But do you ever keep the overall trend in mind, or it is enough to have the s/r levels plotted properly and identification of hesitation candles is all you need to take a trade?

    I know you are a counter trade trader (you trade reversals) but does the overall trend come into your consideration at all?

    Thanks

    1. I do not pay much attention to the overall trade. A few months back there was a pretty lively debate in the advanced course forum about the overall trend.

      I maintained that trading against the trend was not a big deal. Some other members were convinced that we should never trade against the trend. Since that time I have been tracking my counter trend trades. I see only a very minor difference in success rate with counter trend trades.

      Generally these trades are still profitable. However, most of them only hit the first target.

      So, in my opinion, the trend is not very important. There is no such things as a trend completely dominated by either buyers or sellers. In a bearish trend buyers will push up sometimes, in a bullish trend sellers will push down. I take trades when the buyers or sellers counter the main trend. Since I only look for small moves…. I am profitable more often than not.

    1. I do not really recommend brokers or reveal my broker. If you need a broker just go for a broker from a well regulated country. Swiss and UK brokers are usually your best bet.

      1. Okay, I understand you don’t want to tell your broker’s name. But can you just tell me how long you’ve been with your broker (without revealing the broker’s name)?

  4. Hi Nick!

    Thank you for the videos and your patience :)

    It was great by showing the failed trades. It is a little crazy what I will propose to you now:
    Why don’t you create a special section of only failed trades? I learn more watching them! And I think that it avoids the ilusion the newbies have that there are a strategy in the world that never fails :D.

    Thanks a lot !

    1. As I explained in the video, I did not enter the trade. I am not sure if the people who entered considered the news. For the most part we ignore non major news.

  5. Thanks for the vid Nick, I always look forward to your updates!

    You mentioned that you usually see 10 or more trades a week, but only trade on 2-3. How many pairs are you currently trading ? I’ve noticed the number of pairs that you post Support/Resistance areas for has gone down over the summer.

    Also, you mentioned in your last post that you would be updating the strategy section soon. Have you done that yet? If so, which areas should I make sure to check?

    Thanks again!

    1. Peter, it is hard for me to say how many pairs I am trading. In the advanced course forum, there are probably 30 or more pairs traded amongst all the members. When a trade is posted, I open up the chart. So these days, I tend to trade whatever comes up on the forum. There are some odd pairs no EUR/NZD that I will stay away from even if they are posted. However, for the most part, these days I do not know how many pairs I look at any more.

  6. HI Nick,

    Appreciate your effort in explaining the fail trade, now coming back to the question. The example you showed of the failed trade, just before that there was another Shorting opportunity where price moved up and showed Indecision candle , the lows of that candle was broken but then price went up and could have triggered stops, so could you explain that failed trade.

    Also, do you think adding a 20 EMA or 50 EMA would help people keeping out of bad trade as it can work as Minor R&S and we can also use it as reversion to mean and use it as first target

    1. It’s hard to say. I personally only trade ten actively. This may sound like a lot, however, on high time frame charts this is very low maintenance. Also, in low volatility conditions, you have to trade a lot of pairs to get enough trades.

      The thing is, in the advanced course forum, there are a lot of traders. I think when you group everybody together, almost every Forex pair is traded. So if somebody posts a trade in the forum for a pair I do not normally trade. I will probably take the trade.

      So, in reality I trade thirty pairs. However, I only monitor ten pairs personally.

  7. Hi Nick….Wonderfull strategy you have….But I feel you should also consider the trend while analysing…Have you considered the trend behind it is a short at that point…Why shoul we not consider the trend?.

  8. Hello Nick! I have followed you all videos tutorials and learn lot of things from your videos. Actually Incredible. I have nothing words to say about that. Thank you so much. Anyway may I know that how do you play the forex chart from previous candles into future candle on thins video? It’s grate. So using this, we can practice easily of the market. May I know that what is that system? Thanks!