http://www.netpicks.com/tjgiveaway1 - YOUR FREE TRADING SYSTEM I love to receive emails from traders especially when they are talking about something specific I had written. Even better is when what you have written about has paid off for them. This is a simple price action trade setup that appears in virtually every single time frame. The higher the time frame, the longer you may want to consider holding the position. You may have read in one of the posts that a trade equals a setup plus a trigger. You may have a setup but it does not always equal a trading trigger. http://www.netpicks.com/failure-test-trade-setup-in-action/ - Read more

2. I love to receive emails from traders
especially when they are talking about
something specific I had written.
Even better is when what you have
written about has paid off for them.

3. This is a simple price action trade
setup that appears in virtually every
single time frame.

4. The higher the time frame, the longer
you may want to consider holding the
position.

5. You may have read in one of the posts
that a trade equals a setup plus a
trigger. You may have a setup but it
does not always equal a trading
trigger.
By having a trigger in your trade setup,
it will keep you from emotionally
entering a trade

6. There are many names you may want
to use to describe this trade. Failure
test, price probe, stop run, or
whatever name you want to apply to it
is fine but I like to call it a failure test.

7. THERE ARE A FEW THINGS WE NEED
TO SEE FOR THIS TRADE BEFORE AND
DURING THE SETUP.

8. We want to see price have some sort
of run to it. In this case, price had
dropped almost 100 points in just
under sixty minutes.

10. For those who like trend lines and
watching the slope, this certainly had a
slope that would indicate a run in
price.

11. I had to reproduce the charts because I
was not sent the actual charts that
were used.

12. The first part of the trade setup is
complete in that we have had an
extended run in price. This extended
run offers up the potential of a run in
the opposite direction.

13. You want to look for price to start
printing sideways as this is showing
that some of the run is being worked
off.

15. It's also important because traders
have noted the large move in price and
many are feeling like they missed the
move. You also get those that are
always wanting to catch the turns and
they are sitting and waiting to pounce.

16. You can clearly see in the second
variable of this trade setup that price
is ranging inside the high and low of
the lowest candle of the push down in
price. When the trader that emailed
me saw this start to occur, she went on
high alert for a possible trading
opportunity.

18. On the right side of the range, you see
price pop up through the high and
slam down which some traders look at
as the starting flag in a Nascar race.

19. Traders pile in and also note that there
may have been buyers that entered on
the upside break trapped inside that
red candle.

20. With the formed range, we are near
the end of the setup.

21. You now want to see price slam the
low and immediately (relative to time
frame) reject the new price level and
race back inside the range.

22. This trader is a stickler for
"confirmation" and needs the failure
to also pierce the standard setting
Bollinger Band.
If that does not occur, there is no
further interest.

24. The setup for this trade is now
complete and what you need now is a
trigger to get you into the position.

25. A QUICK TRADE SETUP RECAP
A strong run in price
Ranging price action
Break of range and immediate
recovery

26. We still need another piece
of the puzzle.
The trigger is simple and for brevity,
the next chart will cover the rest of the
entire trade.

27. A buy stop is placed just above the
recovery candle with a stop at the low.
There are times where the first
recovery may fail (same trade on
higher time frame) but we don't know
if it failed because the trend is
resuming.

29. YOU CAN ALWAYS RE-ENTER A TRADE
SO TAKE THE STOP IF IT OCCURS.

30. The target (1) was because this area
was already tested and she felt it could
break. There was a Bollinger pierce
(remember what her confirmation was
for the long) and in tandem with the
resistance level, the exit was done.

32. Since there was a strong move to the
upside, being on alert for another leg
was almost routine.
At #2, price pulled back to the top of
the range that started this entire move
and combined with the basic Bollinger
trade, a long was taken.

34. The target was a wait and see at #3.
Price did not extend and once it pulled
back to the mid-line, the trade was
ended.

36. You can see that simple has always and
will always work in trading. Getting
caught up in the complex and "system
hopping" is not a great use of your
trading education time.