A new week and a new month began with a new low for the year!
At 8:00 gmt the question of course was, "Will it bounce now ?"
The DB (double bottom) at 1.2706 had plenty of divergence under it. London Open also showed the bulls were ready for some action with a signal candle closing above the previous 24 candles and very little wick on top. All good signs. After the signal candle confirmed, price came back down into the emas before continuing on reaching +20 just 15 mins later.
However with plenty of bearish interest still in play a broad channel formed and it took 12 hours to climb 190 pips. This is an average of 16 pips per hour which I regard as a medium speed trend.
I could simply continue using my standard defensive play in this situation and it would do OK. However I would rather use my discretion to open up the throttle a bit - to suit the conditions.
Medium Trend Setup
Wider stops and double profit targets
Trade in both directions
Keep same as Defensive Setup
Always wait for signal candles to confirm
Do not open a new trade until existing trade is zero risk
Move stop to BE at +20 (ie zero risk)
After BE trail stop 20 pips behind chart price
Lessons I learned...
Wider stops give my trades room to breathe. Moving the stops just 5 pips wider outside the signal candle allowed a lot more trades to survive long enough to reach +20 (and zero risk). If I choke trades down with a tighter stop they get taken out too soon.
Trailing stops make sense here. Because I'm waiting for 3 lagging indicators to all line up my trades are almost always opening somewhere in the middle of a price channel. This means it is very likely if I leave my stops at BE they will get taken out at BE. I might as well grab the extra pips provided by a trailing stop. Plus when I do get a runner the stop follows along close enough to to satisfy my desire to grab those 'Whoosh pips'.
PS To see today's Medium Trend trades in full detail load this template into a new EURUSD 5min IBFX chart...
At 8:00 gmt the question of course was, "Will it bounce now ?"
The DB (double bottom) at 1.2706 had plenty of divergence under it. London Open also showed the bulls were ready for some action with a signal candle closing above the previous 24 candles and very little wick on top. All good signs. After the signal candle confirmed, price came back down into the emas before continuing on reaching +20 just 15 mins later.
However with plenty of bearish interest still in play a broad channel formed and it took 12 hours to climb 190 pips. This is an average of 16 pips per hour which I regard as a medium speed trend.
I could simply continue using my standard defensive play in this situation and it would do OK. However I would rather use my discretion to open up the throttle a bit - to suit the conditions.
Medium Trend Setup
Wider stops and double profit targets
Trade in both directions
Keep same as Defensive Setup
Always wait for signal candles to confirm
Do not open a new trade until existing trade is zero risk
Move stop to BE at +20 (ie zero risk)
After BE trail stop 20 pips behind chart price
Lessons I learned...
Wider stops give my trades room to breathe. Moving the stops just 5 pips wider outside the signal candle allowed a lot more trades to survive long enough to reach +20 (and zero risk). If I choke trades down with a tighter stop they get taken out too soon.
Trailing stops make sense here. Because I'm waiting for 3 lagging indicators to all line up my trades are almost always opening somewhere in the middle of a price channel. This means it is very likely if I leave my stops at BE they will get taken out at BE. I might as well grab the extra pips provided by a trailing stop. Plus when I do get a runner the stop follows along close enough to to satisfy my desire to grab those 'Whoosh pips'.
PS To see today's Medium Trend trades in full detail load this template into a new EURUSD 5min IBFX chart...
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robdee_02feb09.tpl
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