How to use ProfitFarmers- Chapter 5 [PART 2] - Price Action Scanner (PAS) Tool
Hey there ProfitFarmer,
Here's everything you need to know about the Price Action Scanner (PAS) tool.
On the navigation bar (left side of the dashboard) you will find the Price Action Scanner (PAS). It is a tool that will greatly enhance your trading if used correctly.
But first, what is it?
The Price Action Scanner is a tool that tracks Fibonacci Levels in 11 Periods & Price Trends in 8 Timeframes.
Trading can be very time-consuming with a lot of researching and analysis but actually very little action. This tool helps remedy that by allowing you to identify interesting coin pairs out of hundreds in a matter of minutes.
If you are planning to trade manually in parallel with ProfitFarmers copy trading, then this tool will allow you to get your life back rather than wasting your time scanning hundreds of charts for a trade setup.
To further understand the PAS and fully grasp its uses, you need an understanding of Fibonacci Retracement ( there are a lot of learning materials on youtube, here's one).
But for the sake of this article, Fibonacci Retracements are commonly used ratios to identify Support & Resistance levels as well as potential reversal zones.
The most popular among them is 38.2% which is widely used during strong trending markets. Crypto is peculiar and has the tendency for larger drops all the way to 61.8% & even 78.6%.
A little disclaimer though, what the PAS is NOT is a sure-fire indicator to magically pick out which trades are going to make you a profit.
It is one of many tools and should be used side by side with other indicators (Like our RSI scanner) to maximize the chances of you creating a winning trade plan.
So how do you use it?
First off, you need to know what you are looking at. So here it is:
“But wait a minute” you might ask. “What's up with all the colors?”
Well, those colors are the key to making the PAS one of the most convenient trading tools out there. They identify the Price Action TREND of the coin during specific time frames.
Here is what those colors signify:
Dark green - strong uptrend
Light green - sideways with a bullish tone
Dark red - strong downtrend
Light red - sideways with a bearish tone
Grey - sideways with no bias
Combinations and Highlights
Interpretation of the colored patterns is necessary to find out which coin pairs have good potential. Don't worry though, we provide an overview analysis of the different types of color patterns to assist you.
We’ve also picked out interesting patterns by highlighting the coin pairing. Click on a highlighted coin pair to see our basic explanation of the situation the system thinks it has spotted.
If you see something highlighted in green it means it fits the criteria of one of the standard trading setups that we have configured.
Finding interesting trade ideas by using the ‘Fibos’ and Peak gains
- The Fibonacci calculation period, which you have 11 to choose from, indicates where a Fibonacci retracement will be drawn to and from.
The Live Fibo is showing you the current retrace/pullback from the Peak gain within that given time period.
For example: ‘Coin A’ moved up $1000 over the last X days. This is the peak gain. The live fibo pullback shows 75%. This means the coin has fallen back $750 (75% of $1000) and would be sitting on the 75% Fibonacci if you were to draw this.
This means at a glance you can quickly spot coins that are trending and have pulled back to interesting areas where you can buy the dip or short the bounce.
An important consideration:
As said before, the tool is not a magical device that dictates the trade - you still need to get on the chart and you need to take a look at what's happening with the price action (like knowing what happened previously to the current move).
Once you open the live charts, you’ll need to identify the moves that have already happened and think about whether a reversal is likely to happen given the trend.
A word about market cap and volume
On our PAS, we indicate the coin’s market cap and volume. This is because low market cap coins can be wildly erratic and move rapidly without volume. Hence, coins in these low marketcap areas are where the “crazy pump and dump” phenomenon usually occurs (therefore price action can be easily manipulated).
Low volume coins indicate that there is less interest in trading those coins.
So as a general rule of thumb: low market cap coupled with low volume = very risky coins to trade.
Other ways to use the scanner
Find coins in accumulation/consolidation and get in on the breakout
Look for coins that have been trapped in a downtrend and then a period of sideways price action.
Check the scanner each day for the first signs of an impulsive move out of the range. This can be seen earliest on the M5 and M15. If spotted, pull up the charts and look for an entry.
Trend reversal
When you see a coin that has a heavy downtrend but recently bounced, a good rule of thumb is to look for a +25% gain on the 3day measurement setting.
More often than not this confirms that a trend reversal has taken place and you should look to join in with the new direction ASAP.
Why use the ProfitFarmers PAS?
Identifying the Price action (of coins) is among the most popular trading concepts because it is very simple and it works.
Instead of simply looking at lagging indicators that are derived from the price, traders who use this strategy focus on technical analysis of the movements of the price itself - they look at candlestick patterns, Elliot Wave patterns, trends, pivot points, and major support and resistance areas (amongst other options) to make low risk, high probability, and high ROI trades.
Usually, this takes a lot of time and skill to do - but with the ProfiFarmers Price Action Scanner half, the work is already done for you, saving a lot of time and brain juice.
Not only that, but with the ease of realizing trends in multiple timeframes (make sure to read our analysis!) and the addition of the Peak gains and live Fibo - you will have an idea of what pairs are moving, what the current pullbacks are looking like and the context of current trends.
A few tips on how to use the PAS
- Make it a part of your trading workflow
- Begin to familiarize yourself with where trends are changing
- To be an effective day trader, use it at least twice a day every day.
This is so that you can be familiar with what is currently trending and how it is trending just by looking at PAS - once you’ve gotten the hang of this, you will be able to easily spot a pullback and know which trades you can enter. (in the higher time frames its green but starting to go light red in the lower time frames)
In conclusion,
The PAS is an effective and convenient tool for your trades that can save you time and effort by easily spotting trends. Use it alongside other indicators to maximize your chances of profit! Good luck!