Multiplex

GBPPLN, Daily, 2011 July 12

Price has touched the EMA200 Line, CCI High, Stoch High

Short @ 4.5245

Target @ 4.5343

Weekly could go further north till ~4.578 (DR3) if EMA200 will be broken, whereas H1 & H4 gives signals for a down.

Balance

Multiplex Demo Account
Depot 50'000.-$
Beginning Date: 2011 July 01

Equity
2011 July 12

Equity: +86'360.14$

Profit: +36'360.14$

http://www.myfxbook.com/members/Fore...ltiplex/132010

Closed Trades Today
2011 July 12

Results at myfxbook.com:

http://www.myfxbook.com/members/Fore...ltiplex/132010

EURUSD, H1, 2011 July 13

Scalping Trade Example - Breakout Fading

I will try to trade a breakout fading with EURUSD near DR1 1.4076

Short @ 1.4086

See #127

EURUSD, M1, 2011 July 13
Scalping Trade

...and out at 1.4074

Scalping Trade Example - Breakout Fading
Pips: 1.4084 - 1.4074

Profit: + 10 pips

See #126

You can take advantages of such opportunities by fading breakouts.

Fading breakouts refers to trading against breakouts, when you believe that the currency prices will not be able to sustain a follow-through action in the direction of the breakout. We fade breakouts when we expect breakouts tend to fail at the first few attempts and that makes fading breakouts an excellent short-term strategy for forex traders. Fading breakouts tends to be more effective as a short-term strategy and is not meant for the long-term.

False breakouts also known as fakeouts are a bane for breakouts traders but boon for breakout faders.

EURUSD, M1, 2011 July 13

...a few minutes later

The indicators from "Multiplex" could give you a great orientation by "Breakout Fading". You have only to choose the right time frames.

EURUSD, H4, 2011 July 13

Switching through the time cells could give you a more global view about the market.

The market price has reached EMA21 at H4 just now.

How to Fade False Breakouts With the Boomerang Strategy
By Ed Ponsi |

Forex traders can use "The Boomerang" strategy to fade false breakouts.
Most forex trading strategies are based on a market tendency. For example, the currency markets have a tendency to form strong trends, and many trading techniques seek to capitalize on this trait. Other strategies are based on breakouts from an opening range, which are likely to occur during times of high volume and liquidity. One area that has been neglected is the tendency for the currency markets to drift quietly at certain times of the trading day. This begs the question, is it possible to use this less obvious market tendency to our advantage?
After the U.S. forex trading session ends, and prior to the beginning of the Asian trading session, there is a stretch of several hours during which the overall volume is normally low. This illiquid time of day occurs around 5 p.m. New York time. While it is true that traders from Australia and New Zealand are active at this time of day, the big three centers of world currency trading, Great Britain, the United States, and Japan -- lie mostly dormant. It is during these hours that many currency pairs tend to drift aimlessly, and the low volume environment renders any movement, especially a breakout, highly suspect.

What is the Boomerang Strategy?
Why are breakouts that occur on low volume considered unreliable? In all forms of trading, a breakout that occurs on high volume is respected because when traders are willing to put real money into a trading vehicle such as a stock, commodity, or currency, it shows a high level of commitment to that position. The increase in volume is a reflection of that commitment. While the currency markets are far too vast to allow for the collection of exact volume figures, it is understood that volume normally increases or decreases at certain times of the trading day. Therefore, breakouts that occur during times that are known to be liquid are more reliable, and those that take place during times of illiquidity are much less dependable. Since any movement that occurs at this time (5 p.m. New York time) is unreliable and likely to retrace, we can create a strategy that is designed to capitalize on these false breakouts, by 'fading' or trading against them.

The Concept
Since 5 p.m. Eastern time is considered by many to be the beginning of the forex trading day, it is also the time that many market makers have chosen to charge or collect interest. We need to take this fact into consideration, because currency traders who pay no attention to interest charges and credits might be surprised at the amount they are paying, while those who do focus on this aspect of trading are often area able to use interest credits to their advantage.
In order to avoid interest rate charges, orders should be entered just after 5 p.m. Eastern time when using this strategy. This will equate to 22:00 Greenwich Mean Time (GMT), which is the standard measurement of time used by currency traders. It is important to note that GMT does not recognize Daylight Saving Time, which is known as "Summer Hours" in the U.K. Therefore, the time of day for order entry for this strategy will be 21:00 GMT when Daylight Saving Time or Summer Hours are being observed.
Why do forex traders use Greenwich Mean Time as a reference point? Imagine that you are in the western United States, on a conference call with several traders located in London, New York, and Singapore. One participant mentions that important news is expected to hit the wire at 10 am. This can create confusion, because you may not know which participant made the comment, or where that person is located. Therefore, you would not know if that person was referring to noon in London, noon in Singapore, or noon in New York. However, if a one of the participants states that important news is due to come out at noon GMT, there can be no misunderstanding about the intended meaning. All of the traders on the conference call will be prepared for possible short-term market volatility at the time of the news release.
The specific trading vehicle designated for this strategy is the Euro/ U.S. Dollar currency pair. EUR/USD is attractive for short term trading strategies because it has a tight spread. When dealing with short-term strategies, every pip matters and a slightly wider spread can mean the difference between success and failure. For this reason, trading platforms that feature variable spreads may be problematic, because spreads tend to widen during illiquid times of day. Since the strategy is implemented at a time of low liquidity, a fixed-spread platform is recommended when using this strategy.

The Setup
The plan entails the simultaneous entry of a sell order above the market and a buy order below the market. The purpose of the sell order is to 'fade', or trade against, a move higher and the buy order is entered to fade, or trade against, a downward move. In either case, the trader assumes that any directional movement will be short lived since there is unlikely to be much volume behind it. The short-term movement is most likely caused by an order or group of orders that would not have the power to move the market under normal circumstances. Such orders can and often do move the market when trading conditions are 'thin'. This movement should be followed by a retracement of the exchange rate, and it is this retracement that the trader seeks to capture.
The sell order will be located 15 pips above the 'opening price', and the buy order will be 15 pips below the opening price. Since this strategy is only designed for the EUR/USD currency pair, fixed-pip parameters can be used. If other currency pairs were eligible for use in this strategy, it would be impossible to use fixed parameters because of differences in volatility and in the spread among the various pairs. For our purposes, the opening price will be the price indicated at 5 pm Eastern time, as described earlier. The protective stop for the buy order and for the sell order will be 15 pips away from the entry point, which creates a risk-reward ratio of 1-to-1 (one pip of risk per one pip of reward) for this trade. This is a brief 'slingshot' style of trade that is designed to capture a quick profit and is intended for use at one specific time of day only.
If no orders have executed within two hours after the open, all open orders must be canceled. The reason why the orders must be canceled at this time is because Asian trading markets tend to become active around 19:00 Eastern time, and as a result an increase in volume and volatility should be expected. Since the strategy is designed for use in a low-volume trading environment, the increased activity from traders in Tokyo, Hong Kong, and other Asian market centers will create a trading environment that is too liquid for this particular strategy. When this additional liquidity enters the market, any movement in currencies is more likely to have real volume behind it, and therefore may not retrace. A strategy that fades breakouts would be inappropriate under these circumstances, since there is a chance that institutions or other large traders may be committed to the move.
This method of trading is simple but effective, because exchange rates rarely make big moves during the 'dead zone' between the U.S. and Asian sessions. In order for the protective stop to be reached, the exchange rate for the EUR/USD pair would have to move 30 pips in one direction - 15 pips to trigger the entry, plus 15 more pips to trigger the stop - a move which would be rare at this illiquid, non-volatile time of day.

Rules for Entering The Trade
Let's take a look at the strategy in action using the five-minute chart. On February 26, 2008, the EUR/USD pair opens at 1.4991. The trader places a sell order 15 pips above, at 1.5006, with a stop at 1.5021, and a buy order 15 pips below, at 1.4976 with a stop at 1.4961. Within 25 minutes, the exchange rate rises to 1.5012, easily executing the sell order at 1.5006. The trader cancels the buy order, but leaves the stop in place at 1.5021. The target is the "opening price" of 1.4991, which is reached within 30 minutes of the entry (see figure 1).

http://images.tradingmarkets.com/2008/EK/3-6/chart1.gif
Figure 1: EUR/USD pops up to the entry point, then quickly fades back.
Source: FXtrek IntelliChart, Copyright 2001-2008 Fxtrek.com, Inc.

On August 5, 2007, the EUR/USD currency pair 'opens' at 1.3510. Immediately, two entry orders are placed, a buy order at 1.3495 with a stop located at 1.3480, and a sell order at 1.3525 with a stop positioned at 1.3540. Just two candles later, the exchange rate quickly dips to 1.3789, easily executing our buy order at 1.3595. The trader immediately cancels the sell order, but keeps the protective stop in place at 1.3480. The exchange rate immediately bounces back toward our entry point, and several candles later, at 17:45 Eastern time, the pair has climbed as high at 1.3819, easily executing our exit order at 1.3810. The entire duration of the trade was just 35 minutes. The pair continued to rise after the exit point was achieved (see figure 2).

http://images.tradingmarkets.com/2008/EK/3-6/chart2.gif
Figure 2: EUR/USD quickly reaches the entry point, then bounces higher.
Source: FXtrek IntelliChart, Copyright 2001-2008 Fxtrek.com, Inc.

Here is another example; on May 10th, 2007, the EUR/USD currency pair opened at 1.3487 at 17:00 Eastern time. The trader places a buy order at 1.3472, with a stop 15 pips below at 1.3457. The trader also places a sell order at 1.3502, with a stop 15 pips higher at 1.3517. Just under an hour later, at 17:50 Eastern time, the exchange rate dips to 1.3471, creating an entry. At this time, the trader cancels the sell order, but the protective stop at 1.3457 remains in place. At 19:15 Eastern time, two hours and fifteen minutes after the original orders were placed, the exchange rate for EUR/USD climbs to 1.3489, allowing the exit order to execute (see figure 3).

http://images.tradingmarkets.com/2008/EK/3-6/chart3.gif
Figure 3: Five-minute chart of EUR/USD on 5/10/07 shows the open, entry, and exit.
Source: FXtrek IntelliChart, Copyright 2001-2008 Fxtrek.com, Inc.

This tactic can make a nice addition to a trader's arsenal of techniques; it is intended for those 'quiet times' when trading opportunities are rare. The intention is to get in and get out quickly, and while the gains are not particularly large, the percentage of winning trades should be high because of the market's tendency to drift at this time of day.
One more important point to consider - this strategy assumes that interest will be charged or credited at a particular time of day. While many market makers charge or credit interest at 17:00 Eastern time (5 pm), this is not a uniform practice. Rules for the payment or collection of interest vary from on market maker to another, so be sure to check with your broker for these important details before attempting to place a trade using this strategy.

http://www.tradingmarkets.com/.site/...les/-75514.cfm

Fade the Breakout

Fade the breakout you say? Was that just a typo? Did you mean to say, "trade the breakout"?
Nope!

Fading breakouts simply means trading in the opposite direction of the breakout.
Fading breakouts = trading false breakouts.

You would fade a breakout if you believe that a breakout from a support or resistance level is false and unable to keep moving in the same direction. In cases in which the support or resistance level broken is significant, fading breakouts may prove to be smarter than trading the breakout.

Keep in mind that fading breakouts is a great short-term strategy. Breakouts tend to fail at the first few attempts but may succeed eventually.

REPEAT: Fading breakouts is a great short-term strategy. It is not a great one to use for longer term traders. By learning trade false breakouts, also known as fakeouts, you can avoid getting whipsawed.
Trading breakouts appeal to many independent traders. Why?
Support and resistance levels are supposed to be price floors and ceilings. If these levels are broken, one would expect for price to continue in the same direction as the breakage.

If a support level is broken, that means that the general price movement is downwards and people are more likely to sell than buy.
Conversely, if a resistance level is broken, then the crowd believes that price is more likely to rally even higher and will tend to buy rather than sell. Independent retail traders have greedy mentalities. They believe in trading in the direction of the breakout. They believe in huge gains on huge moves. Catch the big fish, forget the small fries.
In a perfect world, this would be true. But the world is not perfect. Frogs and princesses do not live happily ever after. What does in fact happen is that most breakouts FAIL.

Breakouts fail simply because the smart minority has to make money off the majority. Don't feel so bad. The smart minority tends to be comprised of the big players with huge accounts and buy/sell orders.
In order to sell something, there must be a buyer. However, if everyone wants to buy above a resistance level or sell below a support level, the market maker has to take the other side of the equation. And let us warn you: the market maker ain't no fool.

http://babypips.cachefly.net/school/...13/no-fool.png

Retail traders like to trade breakouts.
The smart minority, the institutional, more seasoned traders, prefer to fade breakouts.

The smarter traders take advantage of the collective thinking of the crowd or inexperienced traders and win at their expense. That is why trading alongside the more experienced traders could be very profitable as well.
Which would you rather be part of: the smart minority that fades breakouts or the losing majority that gets caught in false breakouts?

Previous Lesson Mark Lesson Complete Next Lesson

 

1. Trading Breakouts
2. Ways to Measure Volatility
3. Types of Breakouts
4. Spotting Breakouts
5. Measuring the Strength of the Breakout
6. Trading Fakeouts
7. Fade the Breakout
8. How to Trade Fakeouts
9. Summary: Trading Breakouts and Fakeouts

Read more: http://www.babypips.com/school/fade-...#ixzz1Ryh21Ek2

June 22nd, 2011 at 4:53 pm
Forex Breakouts – Trade Them or Fade Them?
in: Articles,General,Trading concepts

Breakouts are among the most popular trading strategies. The concept is simple – to get in on a price move at a time when it is surpassing a previous high or a low. There is a good logic behind it, after all, in order to reach new extremes, the price must clear existing ones. They create either resistances or supports, levels which must be broken, hence the name – breakouts.

Obviously, simply buying or selling breakouts does not guarantee profitability. Quite often the price get stopped at these levels. They are always known in advance and attract orders going betting both ways. Some traders want to join in, following the direction of the breakout, while others will look for reversals and place orders accordingly. It is impossible to know in advance who will prevail. Even if one could see an order book from one of the dealers, it is of little help. The Forex market is so fragmented, that whatever insight is possible to have access to, represents only a very small portion of all orders placed. Besides, many traders will be joining the action in progress with markets, which might skew the balance and render the order book useless.

This brings on an important question – should you trade breakouts, or fade them? Since the success/failure rate is about 50/50, can it be decided on the fly, as the action unfolds? There are some practical difficulties to this approach, because both strategies are based on slightly different principles. It is the matter of confirmation, or waiting for the bar, during which the event occurs, to close. For our purposes here a price bar and a candlestick are synonymous.

http://www.spectrumforex.com/blog1/w...-GBP-CAD-2.jpg
http://fxmadness.com/wp-includes/js/.../img/trans.gif

In this example, the resistance is at 1.5935. A typical order either a buy (trading the breakout) or a sell would be placed a few pips above it. Unless, of course, one would wait for a confirmation, in shape of a completed candlestick, during which the breakout happens. This carries different risks for either of the approaches. Those buying this breakout might miss a big part of the move, thus missing out on potential profit, so waiting for a confirmation might be counterproductive.

http://www.spectrumforex.com/blog1/w...-GBP-CAD-1.jpg

This does not happen all the time, but when trading breakouts we can not afford to keep missing such large parts of the move. Which means, the order should be placed close to the resistance, rather than waiting for the confirmation. But that would not work for fading it. That trade would be massively in the red, if entered at the resistance. On the other hand, waiting for a confirmation, would keep a seller here safely away from a losing trade.

http://www.spectrumforex.com/blog1/w...-EUR-CHF-1.jpg

It is always possible to trade a breakout when it happens, with the intention to stay in the trade until designated objective is reached, but be prepared to switch position immediately, if the breakout candle reverses. This approach demands waiting for the candle to close and then making at quick decision at that time.

http://www.spectrumforex.com/blog1/w...-EUR-CHF-2.jpg

In this example, the price penetrated the breakout point, but that candlestick closed below the entry point, assuming a bearish form. That could have given a signal to fade the market, thus forcing a reverse in position. While this approach would work, this is a hand picked chart, just to illustrate a point. In most cases the initial breakout bar is not that clear, and one could get easily discouraged, or even lose a lot of money constantly taking these double trades. On the plus side, this is the precise situation for fading the market on a failed breakout.

What is one to do? Probably the best solution for a trader is to know what he/she wants to do before a breakout situation and be committed to either go with it or try to fade it, and avoid choosing while the process is under way. Neither approach is necessarily better than the other over time, but one still has to decide which to do. After all, it is hard enough to become consistently profitable doing one thing.
Mike K.

Related Posts

 

1. Breakouts – Trade Them or Fade Them?
2. Failed breakout trading strategy.
3. Failed Breakout Forex Trading Strategy.
4. Failed breakout trading strategy.
5. Trading gaps-case study.

http://fxmadness.com/2011/06/22/gene...-or-fade-them/

See #123

Sorry traders

My extern diary is defect (PalmVx) after 5 years of personal use, where all my passwords were there. I have to make a new Demo Account now.

So this account will be closed now at actual: 36'360.-$ Profit.

...and at myfxbook will appear a new one, also.

(Misfortune seldom comes single. So one of my PCs has making a crash down today which needs also a recovering of all data).

Last result:

>

Multiplex Demo Account
Depot 50'000.-$
Beginning Date: 2011 July 13

Equity
2011 July 13

Equity: +52'717.85$

Profit: +2'717.85$

http://www.myfxbook.com/members/Fore...ltiplex/135854
http://twitter.com/#!/forexcube

2011 July 13

Equity: 53'147.82

Profit: + 3'147.82

http://www.myfxbook.com/members/Fore...ltiplex/135854

EURUSD, H4, 2011 July 13

Financial Opportunities?

H4 Fibonacci Retracements: 50%, 61.8% .

61.8 could be a special focus if the volatility should increase and the market could built up the power to run it down. Here could also be a good aspect for a False Breakout. We'll see.

See #137

Market Price has reached both Fib Levels.

Multiplex Demo Account
Depot 50'000.-$
Beginning Date: 2011 July 13

Equity
2011 July 14

Equity: +56'191.74$

Since 2011 July 13
Profit: +6'191.74$

http://www.myfxbook.com/members/Fore...ltiplex/135854
http://twitter.com/#!/forexcube

Fibonacci Method in Forex

http://www.forexfibonacci.com/
http://www.fibonaccibook.com/
http://www.tradingmarkets.com/.site/...les/-75248.cfm
http://www.forex-day-trading.com/fx-...ci-studies.htm
http://www.how-to-trade-currency.com...-strategy.html
http://www.fibonacciretracement.net/
http://www.babypips.com/school/fibonacci-who.html