[strat]

INDEX TO THIS THREAD http://sites.google.com/site/stratstrading/

On the above, there are actually two Indexes. The first link on the words "INDEX TO THIS THREAD" is the original Index started early in the life of the thread. The second link is a later one to continue where the original ended. The reader should check both Indexes for complete information.

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This whole thread IS The Path of Learning.

The Path of Learning takes you through the following progression:

The very first thing we have to do is learn basic PASR. This involves learning and UNDERSTANDING exactly what PASR is.

We then have to learn how to IDENTIFY accurate SR levels to SUIT our particular trading style.

We then have to learn the basic price reversal candles – Hammer, Shooting Star, BUOB, BUEB, BEOB and BEEB, nothing else. At this point we have to learn the classical definitions of these candles. Do NOT think about or study other candles or patterns as they are NOT reliable and/or consistent for PASR trading.

We then put this all together to do SIMPLE yet very profitable trading:

Trade from support to 1st resistance and resistance to 1st support.

At this stage, you would “paper” trade or demo trade to exercise the technical content i.e., make sure your understanding of basic PASR is correct.

Doing this will bring up many doubts on SR levels and candle types etc. This is part of learning and a stage where every doubt and question must be resolved. How long this takes is up to the individual but there is NO time constraint – you learn within your own time frame.

When you have a very high success rate of doing this, you move in to REAL trading. You open an account with REAL money and trade the smallest lot size your broker offers.

This will OPEN a whole new world of “little men in your head”, “the man in the mirror” and “gremlins and demons” in you. You will learn the importance of a believed, trusted and accepted PLAN. You will go through grief and pain UNTIL you learn to CONTROL your emotions.

Again, how long it takes to master and control your emotions is up to the individual. You will continue to trade until you get to the point that you feel you can “walk on water”. Despite anything written on here, you will go through this emotion and do it. After you have been eaten up, chewed and spat out in little pieces you will learn that you are NEVER in CONTROL of your emotions and you ALWAYS have to be ON GUARD.

As you continue to trade in this manner, things that were difficult to see will become clearer and more obvious.

We will move from trading classical candle shapes, sizes and patterns to “SEEING” who and what is behind the candles, groups of candles, waves of candles etc.

We will learn to recognize market behaviour by eyeballing a chart rather than in depth analysis of a chart.

In short, we will be developing our “feel” for the market. This is a very, very personal attribute. Some get it early, for some it seems to take forever while for others, they NEVER get it.

At this point, we move into other strategies and techniques.

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Support & Resistance Levels – Recognition & Identification
See Posts #7738, #7739, #7740, #7741, #7743 and #7744

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My story begins here:


At the request of traders on other Forums, I have been asked to start a thread on my style and method of trading the longer term time frames, i.e., the Daily and up.

This is my 17th year of trading having traded everything that you can hold, eat, smell, taste and grow. I started out on the Daily time frame, blew numerous accounts and over $200K. I have bought books, videos, tapes, dvds, systems, black boxes, and paid stupid, stupid money to attend seminars by those famous $million traders.

I am a degreed mechanical engineer by profession so I love technical analysis and spent hours, days, months and years modifying and developing indicators and devising my own systems. The dawn of realisation hit me a several years ago when I realised all I was doing was re-living history. At about the same time, I came across a few professional traders and ex - floor traders and thought this was my golden opportunity to learn THE SECRET. Well it was - but not what I expected!

Far from having super - dooper highly fandangled systems, I learned all they had was their EYES and EARS! No fancy squiggly lines for them - if it went up, they bought; if it went down they sold. Every single one of them told me the same thing - TRADING IS SIMPLE, DON'T COMPLICATE IT.

So, apart from a few "home grown" indicators which I use to try to track cycles , I trade what the market tells me.

After having success on the Daily and Weekly time frames, I decided I needed something to do during the day, so I thought I will do the same thing but on M5 time frame. Wow, I couldn't do it. Everything was just moving too fast for me, the wheels between my ears couldn't keep up!

I then stumbled across some professional traders who left their jobs and set up on their own and published their strategy on another forum. I eventually got M5 and M15 to work for me but it was so stressful. After spending all day watching the one eyed monster for a measly 100 pips or so, I felt so mentally and emotionally drained that I couldn't sleep well at night. Then as my health deteriorated, so did my profits.

Again, another moment of realisation for me - I'm not suited for anything faster than trading the Daily. I practiced and trained myself on the Daily and up and that is where I belong.

I will post my analysis and trades here for anyone who is interested and hopefully share further insight with like minded traders.

I will apologise right now for my weird sense of humour but I need balance in my life and I know no better way than having a good laugh - usually at my own expense! I celebrated my 3rd 20th birthday last June but usually feel like a 16 year old! (Anyone know where I can get a 16 year old?)

I was a lead guitarist in a group back in England in the early 60s playing Buddy Holly, Chuck Berry, Roy Orbison and Elvis plus all the other stuff. I made it through the Holly inspired British rock n roll era until Jimi Hendrix came on the scene playing scales I couldn't even pronounce let alone play! (Pentatonic, Lydian, Mixolydian, Aeolian, Locrian, Dorian etc.). At that point me and my 57 Telecaster and 59 Stratocaster decided to call it a day!

I will start this off with my last post on a previous forum:



Originally Posted by Stuart14

Strat, do you like USD:CHF going lower longer term?

Feb 20th as reversal day, with stops above the high?

Entry below the low of the day before?


USDCHF:
Both technically and fundamentally, USDCHF is looking for direction from EURUSD.
Here is what we know technically:

Weekly:
In a corrective up move within the larger, dominant down move. This correction is now losing momentum having been rejected by Fib resistance.
The 20 continues to move in parallel above the 50 telling us to expect higher prices.

Daily:
We have a swing top in place on Feb 20 and now in a down cycle. Prices are in a corrective up cycle within the down cycle trying to re - test the swing high, however, momentum is non - existent. Again, the swing high is at final Fib resistance.
The 20 is above the 50 telling us to expect higher prices but they are converging.
There is major support at 1.1400 which, so far, is being successful in rejecting the downward attack.

What's next?
Who knows? I certainly don't.
A possible scenario is that when both the Weekly and Daily down cycles are in harmony, we may see a retrace down to their respective 38.2% Fib retracements before making a push to newer highs.

Now throw in a splash of funny mentals which are saying "we are in a world financial crisis, what shall I do with my money?" The answer, by the majority of actions, is to go to cash. "But which currency I hear you say?" GBP is teetering on the edge of the cliff with EUR a couple of steps behind. JPY is being whored by BOJ and CHF, although backed by gold, is being overlooked by the big boys so what is left? Well Japan and China are buying US$ which is still the World currency and backed by the World's largest economy (printing press) so that's the situation right now.

So how to trade USDCHF? - don't (at least not until we have clear direction).

Most currencies are in some sort of daily consolidation/ranging phase right now which is when the Pros put their hands on their wallets and the novices/amateurs use theirs like monopoly money.

Wait for the right opportunity - it is already being set up somewhere - our job is to find out where, when and which one, but it is there.

Me, I'm taking the strings off my 59 Strat to see why they are rattling on the frets so I think I'll give her a good going over.

Rock n Roll,
Strat

[ramrob]

Originally Posted by strat

Me, I'm taking the strings off my 59 Strat to see why they are rattling on the frets so I think I'll give her a good going over.

Rock n Roll,
Strat

Nice axe. On older guitars sometimes the buzz is from the not so obvious problem of the nut having been slightly worn to much. I had an old "V" that needed a custom nut and it took me forever to figure it out that it wasn't my settings.

Anyway, do you ever trade lower than the daily?

[strat]

Thanks ramrob,

I never thought to check the nut, but will do so now. I think it's more like that she needs re-fretting - after 50 years, it might be time!

I have tried H4 and H1 but, for me, they require too much babysitting. If you have something low maintenance, then I'm all eyes and ears!

Rock n Roll,
Strat

[elitejets]

Hey Strat!
I have been waiting for you to start this thread for so long!
I have finally followed you to FF.

Strat has been helping me get less stress and more sense into my trading for a while. I am very grateful to him!
Listen up, he often makes a bunch of pips too!

Nicola

[miroslavdm]

Stress Free Trading is everything I need now. looking forward to read about your method.I think that main reason for stress trading is undercapitalised.

Thanks

[strat]

Originally Posted by elitejets

Hey Strat!
I have been waiting for you to start this thread for so long!
I have finally followed you to FF.

Strat has been helping me get less stress and more sense into my trading for a while. I am very grateful to him!
Listen up, he often makes a bunch of pips too!

Nicola

Thanks for the kind words, Nicola.

Now lets rock n roll here on FF - bring on the pips (no, not the group, the MONEY!)

Rock n Roll,
Strat

[hansnl]

Very nice to met you here strat, looking forward to follow and participate in your tread,

regards, rock on

hans..

[dcline]

Far from having super - dooper highly fandangled systems, I learned all they had was their EYES and EARS! No fancy squiggly lines for them - if it went up, they bought; if it went down they sold. Every single one of them told me the same thing - TRADING IS SIMPLE, DON'T COMPLICATE IT.

___________________________________ _____________________

Strat,

I love your intro post. That was my trading experience from the start... gurus and signal services and indicators, indicators, indicators, when all along it is simply price action for entrys and following the tend. Got my mind right when I met Jacko here at FF and started following his mentorship. Now trading is actually boring; my greatest trading enemy is impatience! That is the account killer...

Anyway, welcome...

D

[strat]

AUDUSD:
Weekly:
Made a higher low at major support but still has some downward momentum left over from the last down cycle. The retrace could only manage 32.8% and with the 20 paralleling below the 50 it is telling us there are still lower prices ahead. This week's higher volume suggests a shot at major resistance at 0.6700 with a possibility to maybe touch 0.6850 but it's really more bearish than bullish.

Daily:
At minor support and it's bottom trend line. This is the 4th time testing this bottom trend line so let's see if the Rule of 4 comes into play. Also trapped in a triangle with the trend line from the recent highs so there is a breakout coming somewhere. Price, volume, cycles and momentum say to me that it will bounce back up to the trend line at 0.6570ish before making another attack on it's base line. Too congested and not enough potential for me to trade.

CHFJPY:
Weekly:
In a strong upward cycle but bouncing off major resistance at 84.90. Volume, cycles and momentum look good for a push up to next major resistance at 88.00ish which also coincides with the 38.2% Fib retrace. Although the 20 is still below the 50, this week saw a strong close above the 20 so that is suggesting higher prices.

Daily:
Don't be fooled by yesterday's shooting star or today's hammer - the cycle and upward momentum is still very strong and with the lower volume on these two bars, it suggests profit taking to me. This high is at Fib resistance, major and minor resistance at 85ish so if it clears this we have a good run up to 85.60 and 87.30. The 20 has crossed above the 50 suggesting higher prices ahead confirmed by a cross above the Weekly 20. I'm looking for a minor retrace to go long again.

EURGBP:
Weekly:
In a down cycle with good downward momentum although it stopped dead in it's tracks at major support and the 20 at 0.8760ish with confluence of the 50% Fib retrace. The 20 is above the 50 and both are looking up at the heavens. No brainer here - my one legged blind man knows what to do!

Daily:
Bouncing off minor resistance at 0.8980ish in a corrective down cycle within the bigger up cycle. The 20 which is just below the 50 is also providing immediate resistance but we have two tests of support from the bottom trend line. On this alone, it could waffle about between the 20 and 50 but I'm looking for the Weekly to win out and maybe push it up to the down trend line at 0.9050ish

Lost my data feed so more later

Rock n Roll,
Strat

[strat]

Here is something I posted on another Forum:

Belief Statement from a professional CME Floor Trader
For those of us that are battling our psyche, emotions, the little man inside our head and the guy in the mirror when we are trading, I use a Belief Statement I got from a professional CME Floor Trader. I read it before each trading session and find it particularly calming after having a couple of losing trades or when I reach my maximum allowable loss.

I made the mistake of questioning the $1 million target and was very quickly rebuked as "not having the confidence or belief in myself" so I just read it as copied:

Quote
I am a professional trader. My job is to take risk. If I manage my losses and let my profits run I will be successful. Because I am a professional trader, I will forgive myself easily for making mistakes and move on to new opportunities. I feel great that I have the discipline to control my emotions and the patience required to be a professional trader. I am a professional trader and will make $1,000,000 by year end. I will achieve this by following my trading plan, setting achievable goals, and controlling my emotions. I am confident and believe in my own ability to be consistently profitable because I AM a professional trader.
Unquote

Hope you find this helpful

Rock n Roll,
Strat

[strat]

Another of my posts:

Hey Spitfire,

I hope I'm not flogging a dead horse but from my post #1532 I wrote about how reducing my lot size from $10/pip to $1/pip removed my fear of losing.

It's those gremlins, demons, inside all of us that want us to make a killing to better our standard of living. By following the gremlins and demons we trade $10/pip hoping to get $1000 from a 100 pip move. Unless we have a $50,000+ account, this is way too much for our "real and logical" emotions to handle when the trade turns into a 40 or 50 pip loss.

We have to fight those gremlins and demons and not let them interfere with our logical and "real world" thinking. As others have said, drop down to a $/pip level that is comfortable for you to accept WHEN YOU LOSE. The trick is to base it on LOSING and not WINNING. Forget about thinking how much you will win and instead focus on how much you will lose. Doing this controls your losses and you will find the winners just take care of themselves.

I was told this a long time ago and rejected it - it's taken me 9 or so years (and many $thousands lost) to finally realise and accept this and put it into practice. After doing this, I was finally able to treat my trading as a business - some you win, some you lose and after a loser, just quietly move on to the next trade.

Also, with a lower $/pip, you can put on multiple trades. Bank a third after say 20 pips and move the rest to break-even. This way you make 20 pips no matter what the rest do. If all goes well, bank another third after say 50 pips and then trail the final third.

Don't be an idiot like me, Spitfire, and wait 9 or so years, DO IT NOW!

Hope this helps.

Rock n Roll,
Strat

[strat]

And another post:

Gone back to trading the Daily
I came here because I wanted more action than I was getting trading the Daily and soon found out that the action I got (pressure) was way more than I could handle.

I learned that I am more suited to doing a 20 minute analysis over 10 pairs after 2pm (PST, when NY closes) and placing limit/stop orders and letting them run, than I am doing my head in watching M15 charts all day, which also requires me to be awake and alert at non - social hours (11pm and 5am PST). Plus I can go back to doing other things during the day while my trades are working. Yes, you do need wider stops and therefore a larger account or smaller contract size.

I have just closed my Daily short GBPUSD trade at the close (1.3874) after entering at 1.4788 for a nice 914 piparoonis in 3 days.

I have now placed an order to go long at 1.4029, a couple of pips above the high of the hammer bar with a SL at 1.3615, a couple of pips below the low.

Again, I take my hat off to you guys (and Pip Queen Nicola) that can profit from these short time frames. Keep on doing what works for you.

Rock n Roll,
Strat

[strat]

Structure and workings of Forex
For anyone needing information on the workings and structure of the Forex market, this is a very good link:

The Structure of Forex Brokers

[Levent]

Originally Posted by strat

Here is something I posted on another Forum:...

With all the respect, if you take those CME Floor Brokers lock them in a room with a computer and a TV (like me and you) they will go broke in no time. Those guys get the inside scoop and that's how they make money. The information they receive well ahead of you and I makes the huge difference. They all know what's coming up regarding a buy or sell order at any given commodity long before it hits the electronic trading. One of the NYSE Floor brokers admitted one day that when you know that there are huge buy orders coming at the close a few hours ahead of time the things that you can do...

We are all trying to get a very tiny piece of the action with all odds against us. The system is designed for you and I to lose. All these indicators people follow are mostly full of crap so as all the programs and softwares. The future of a price action has NOTHING to do with the past.

The only thing could be detected by us the little guys who has no inside scoop is the early recognition of the powerful trends and reversals of those. And most of those trends are caused by fundemantals not technicals.

I hope to follow your valuable comments in this thread

[pbalfe@tisca]

Hi Strat,

Good to see you venture out on your own thread, i have watched you from a distance and i have been very impressed
I think we now have the best of both worlds with the short term pimp strategy and your longer term strategy.

Good luck and i will be following you very closely from now on and lets get those pips rolling

Paul B