Lesson 1 — First Principles: Price Action = Visible Order Flow
Goal: Learn to read who’s in control (buyers or sellers) by how candles print, and only take trades that align with the dominant flow.
Quick Glossary
- PDH / PDL = Previous Day High / Low
- PWH / PWL = Previous Week High / Low
They’re simply yesterday’s and last week’s extremes. Markets often react here (bounces, rejections, or breakouts). In the PA Context HUD, turn on InpUseLevels = true and (optional) InpShowLevelLines = true to see them.
What Order Flow Looks Like on Candles
Impulsive move (one side is dominant):
- Bigger-than-recent ranges
- Large bodies, smaller wicks
- Many closes near the candle’s extreme (high for up, low for down)
Corrective move (balance/indecision):
- Smaller ranges
- Mixed colors
- Closes near the middle of the range
In your HUD: an impulse flags when Body ≥ 60% of range and Range ≥ 0.8 × ATR(14). You can tweak with
InpImpulse_BodyFracMinandInpImpulse_RangeATRMin.
The One Guiding Idea
Trade with the last clear impulse and only get involved after a correction. Fading fresh impulses is where many losses happen.
Your HUD shows Last impulse: UP/DOWN/NONE. Treat that as your bias:
UP → prefer longs. DOWN → prefer shorts. NONE → wait for structure.
How to Use This on Your Chart (Step-by-Step)
- Attach PA_Context_HUD and CapreContext_Arrows_v2.
- Read the context:
- Find the last impulse leg (fast, one-colored push).
- The slow drift after it is the correction.
- Set your bias: trade with that last impulse.
- Only take a pattern (IB mother-bar breakout, Engulfing, Pin, Marubozu) that fires in that direction and is near sensible locations (PDH/PDL/PWH/PWL or the impulse base).
- Start with
InpMinScore = 2or3in the arrows indicator. Higher = pickier.
10-Minute Exercise
- Open an H1 chart (e.g., GBPUSD).
- HUD settings:
BodyFracMin = 0.60,RangeATRMin = 0.80. - Scroll back ~200 bars. Mark 5 impulses by eye.
- Confirm the HUD shows those impulses (UP/DOWN).
- Notice how your arrows mostly print with the impulse, not against it. Adjust thresholds if too many/few signals.
Common Mistakes to Avoid
- Trading a pattern without context. A pin or engulf into PDH/PDL against the last impulse is lower quality.
- Buying/selling into PDH/PDL/PWH/PWL. Prefer setups that leave those levels or show a clear false-break first.
- Detecting patterns on Heiken-Ashi. Use standard candles for detection (your indicator already does).
Pre-Trade Checklist
- Last impulse direction matches your trade idea
- (Optional) EMA-21 trend agrees
- Location helps (near/at PDH/PDL/PWH/PWL in a meaningful way)
- Valid pattern has closed (arrows print on close)
- SL sits beyond structure; position size set
What’s Next
In Lesson 2, we’ll go deeper on Impulsive vs. Corrective: how to map legs, mark the impulse base, and plan the next entry.