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Using Balance and Unbalance to your advantage

  • #121
  • Sep 9, 2015 11:34pm Sep 9, 2015 11:34pm
Quoting gspajon
I HATE this...but it happens to me alot...often this tells me I am trailing my stop too close or too soon...
You are not alone, gspajon, this happens to me a lot too. Usually to the pip. It feels like the market knows exactly where my measly stop order is and goes all that way just to say FU. Of course in reality the market couldn't care less about where our stop orders are, unless they're congregated with a whole load of other stops at the same level. And thinking that the market is out to get you is counter-productive and bad for the soul. Even so... it hurts.

Widening the stops too much to avoid it probably isn't a good idea. After all, it's a nice feeling when you get stopped out and the market continues to go against you. You took your sensible loss, break-even, or profit and now you are out. You were wrong about direction (it happens), but right to exit early and move on to the next trade. It kind of makes up for the FU stops. The secret of trading is to manage your risk and win more than you lose, right?

By the way, not sure if you've already mentioned this or not, but do you usually exit trades with (trailing) stop orders? Or do you try to predict where price will get to and place limit orders?

Also, you mentioned a crude oil setup last week, but didn't follow up on it. Did you cancel your orders or get stopped out? Thanks.
You reap what you sow.
  • #122
  • Sep 10, 2015 7:58am Sep 10, 2015 7:58am
Thanks again North Trader. Here is an update on all the positions outstanding that I am working:
Oil:
I think originally I was looking to trade this long, but price never came back to recheck the lower balance zone (seen best on daily chart). Instead, the order flow has balanced in a typical volatile fashion near the top of this retrace and in effect is retesting the lower balance zone seen on the monthly chart. So I am short, after price broke down. as well, I have a second position to add in at a higher point, if price continues to be volatile. The position is currently 152 pips positive.
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Gold:
After breaking through the most recent balance zone, price here has stalled, and may be trying to balance once again just ahead of the lower weekly balance zone. The position is currently 503 pips positive, and I have moved my stop down slightly to protect 280 pips. Nothing more to do here.
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EUR/JPY:
This market reflects what happened on the Kiwi, but my stop wasn't as close to the market. I have added a 3rd position. Again, what you see here is the aggregate of all entries. I have kept my stop just above last week's high and now the intraday chart is looking like it wants to balance...that is a good thing, as the order flow must first balance before it reverses.
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EUR/USD:
This market has required alot of patience. While it continues to "grind" higher, each higher move is met with selling. It is an interesting display of order flow. Neither side, buyers or sellers, is giving up, each side will have a surge which is only met with a renewed opposition. Thus the candles look the way they do, long wicks on either side and no real clear "winner". I am trying to keep my stop out of the way on this pair, because before one side gives up, there will be some volatility that will "hunt" the stops. So as I have a risk free trade for the moment, I am inclined to leave my stop where it is.
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  • #123
  • Sep 10, 2015 11:02am Sep 10, 2015 11:02am
Quicky update on EUR/USD:

FINALLY!! it looks like something resembling a "whoosh" is occurring. It now appears the shorts are stopping out. Position is now 148 pips positive.
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  • #124
  • Sep 11, 2015 9:02am Sep 11, 2015 9:02am
Hello All...Good Morning from the US!

Here is an update on the trades we've been tracking.

EUR/JPY: Stopped out for a -130 pips loss. Not the best trading I've done here, but that's the way things go. I have posted here a screen shot of the monthly chart. Sometimes I forget to look at this chart and it now explains the volatility seen in this market. This has been balancing for 3 going on 4 months. and appears to be stuck betwen to other balance zones, one above and one below...so I believe I will set this market aside for a while until this resolves.
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EUR/USD: This trade is currently 160 pips positive, but appears (on a Friday) to want to balance yet again on an intraday basis. I have left the stop where it is for now, as I feel there may be more volatility to come and do not want to choke off this trade too soon. I am expecting volatility around the US Federal Reserve announcement, and feel that is why this market has been so choppy of late. Obviously this announcement will have some profound effect on this market, so I still have a risk free trade and am inclined to leave it that way until I see a clear indication that unbalance has come to this market.
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Gold: The position is currently 600+ pips positive and appears to be breaking down again into the lower (weekly) balance zone. This coming week as well, I expect to see some volatility not only because of the Fed announcement but also because there will be a battle zone in this area. Stop is locking 280 pips, and I may move that closer, at the end of the day, depending on where I see the price.
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Oil: This market is balancing on the daily chart. Back and forth, and that balance appears to want to extend out to the weekly chart as well. I may end up with a small loss on this trade but will make that decision later today also. My first instinct will be to cancel the pending order above the market, and move the stop in to just outside the balance area....this will put my stop at risk for a "stop hunt" and the FU stop, but will also reduce loss...if hit...decisions...decisions...
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That's it for now...I will update toward the end of the day IF I move my stops on any of these positions...I do not anticipate any new entries for at least a week or more.
  • #125
  • Sep 11, 2015 11:05am Sep 11, 2015 11:05am
Update on EUR/USD:

we are starting to see the medium and longer term shorts liquidate before the weekend. This rush of short liquidation (buy orders) is causing price to accelerate up to the high of the week, and past last week's high. Toward the end of today, I anticipate price will fall somewhat as short term long's exit before the weekend.

I have moved my stop a little closer now to yesterday's low, locking approx. 60 pips. The position is currently 220 pips positive. That should be it for the rest of the week on this pair.
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  • #126
  • Sep 11, 2015 2:19pm Sep 11, 2015 2:19pm
Quoting Unabletrader
Another exampler on EURUSD (future contract). {image} You can observe a huge negative deltas. So it means that sellers were more agressive. Delta represents : buying markets orders - selling market orders. Huge negative deltas but price is struggling to move down: what does it mean? Think about liquidity required (market orders) vs liquidity available (limit orders). Limit orders absorbed market orders. And again who the fuck is able to absorb that king of huge selling? Only large traders or market-makers (btw large traders may act as liquidity...
Hello. What is this platform?
i would like to begin study volume and VSA. I need a free chart with footprint and Delta ad your chart. Is there some platform whit free REAL TIME VOLUME and footprint whit marketing delta?.
  • #127
  • Edited 3:25pm Sep 11, 2015 3:12pm | Edited 3:25pm
Quoting 81raffae
Hello. What is this platform? i would like to begin study volume and VSA. I need a free chart with footprint and Delta ad your chart. Is there some platform whit free REAL TIME VOLUME and footprint whit marketing delta?.
Hello 81raffae...I assume you mean the charting platform I am using to display the charts? I am using a free version of Metatrader 5. It is freely available on the internet and is not necessarily connected to any particular broker or data feed. I like the simplicity of this platform.

I admire your willingness to want to study volume and volume/spread, and that was the path I took on my way to understanding and learning to "see" order flow. However, you must do your studies on another market, such as futures, or stocks. The spot FX market has no volume information because it is decentralized and therefore there is no repository of data. The "volume" information you find on any spot FX platorm, is "tick volume", which is just a fancy way of saying a "tick counter"...or it is counting the number of transactions that occur. It is not actually measuring the volume (in lots) of those transactions. Thus,
for example, if you and transact a a single lot each, that transaction as the same value as the Head of Toyota transacting at 500,000 lots as he repatriates some yen. (an exaggerated example yes but you get the point). The difference in volume is significant, but is not measured because the "volume" in Spot FX is only counting "ticks" or transactions...not true volume in lots.

Does that make sense?

**Edit** Ooops now that I wrote all that I see you weren't even asking me...sorry, but I think you will find the statement from unabletrader was referring to futures...most charting packages from futures brokers have volume info. Sorry for the mistake
  • #128
  • Sep 12, 2015 2:19am Sep 12, 2015 2:19am
Quoting gspajon
{quote} Hello 81raffae...I assume you mean the charting platform I am using to display the charts? I am using a free version of Metatrader 5. It is freely available on the internet and is not necessarily connected to any particular broker or data feed. I like the simplicity of this platform. I admire your willingness to want to study volume and volume/spread, and that was the path I took on my way to understanding and learning to "see" order flow. However, you must do your studies on another market, such as futures, or stocks. The spot FX market...
Thank you. Also if inwould like to begin to study futures , i think your answer is vero important for me and other trader. Not all the trader know the difference betwen volume and volume tick.
  • #129
  • Sep 12, 2015 4:18pm Sep 12, 2015 4:18pm
Interesting. Good thread. Your definition of the balanced zones seems very similar to identifying potential supply-demand zones.

After 11 months and 3500 pips down, engulfing the previous 2 years(which to use your definition would be entirely unbalanced?), it seems those that were predicting par for the eurusd may see that day come soon enough. Of course a healthy retrace might be in order.

Attached Image (click to enlarge)
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Charts are limited in nature. What is the relative location?
  • #130
  • Sep 13, 2015 8:08pm Sep 13, 2015 8:08pm
Quoting bmac
Interesting. Good thread. Your definition of the balanced zones seems very similar to identifying potential supply-demand zones...
Thank you BMAC, yes balance zones can be viewed in a similar way to supply zones. Purely speaking if one side (buyers or sellers) overwhelms the other, the established terminology is supply for sellers, and demand, for buyers. I am currently working with a student that trades in that same manner, and we are very close in how we see the market. I still prefer to call it by order flow terms, simply because that is closer to the "truth" as I see it.

An example would be oil. Over the last two weeks the prices of oil have risen from the low, but not because "demand" has suddenly increased. In fact, oil is more "over supplied" than any time in the last 10 years, as well even more supply is expected as soon as the US and Iran finish their deal. However prices rose? This is because buying came into the market...WHY that buying took place...is anyone's guess. But it is easier (for me) to spot areas where buying and selling are transacting as opposed to where supply and demand are effecting the price, semantics perhaps.

Am I making sense?
  • #131
  • Sep 14, 2015 9:30am Sep 14, 2015 9:30am
Hello all...a little late this morning with the updates...took time to hit my goal for the day on the futures market.

EUR/USD: This market is starting a retrace from the top of a much larger range, and I must watch it carefully. Price is currently at an area that (based on the intraday balance zone), I anticipate more buying...if I do NOT see that by the end of the current 8 hr candle I will tighten stops to lock in more profit. If we do not see a break above the larger range, I suspect price will plummet back to the lower portion of the range very quickly.
Attached Image (click to enlarge)
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Gold: This market continues to "grind" down and as I am trying to get the management out to the weekly charts, I am leaving my stop further away, so as not to "choke off" the trade too soon. But I see that buyers are active at the stop of the weekly balance zone and may put up a fight to lower prices...there's not enough information here on these charts to justify stop tightening, or closing the trade just yet.
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Oil: The buyers and sellers are "duking it out" on the daily chart. So far only there is only a stale mate (balance zone). I am eager to reduce risk in this trade, but again must balance that with the volatility that I sense is soon to appear. For now everything stays as placed.
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  • #132
  • Sep 14, 2015 10:55am Sep 14, 2015 10:55am
Another update on Oil:

After seeing this position move down to the bottom of the daily balance zone, I have decided to move the stop closer to the market. Stop is now reduced to 50 pips risk, and I have canceled the pending sell order above the market.
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  • #133
  • Sep 14, 2015 7:54pm Sep 14, 2015 7:54pm
Working from cell phone.

Update on EUR/USD: I have moved my stop up to lock in 160 pips. As price is at the top of a weekly range AND now starting to balance. I felt it a good idea to lock in some profit. Tomorrow will tell if I have chosen well.
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  • #134
  • Sep 15, 2015 9:48am Sep 15, 2015 9:48am
EUR/USD...looked like it wanted to move further, but then gave out...we are nearing stop out. Not completely unexpected as we are at the top of a larger, (monthly) range.
Attached Image
  • #135
  • Sep 15, 2015 10:01am Sep 15, 2015 10:01am
Stopped on EUR/USD long for 160 pips

Note how the intraday charts are starting a "whoosh"... so I was not the only one stopped out here.
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  • #136
  • Sep 15, 2015 10:08am Sep 15, 2015 10:08am
With the exception of two commodities trades, gold and oil, I am pretty much flat the FX market right now. I don't forsee any good entries in the next couple of days, and of course, that will largely depend on what the US FED does on Thurs. So I thought now would be a good time to answer any questions if there are any? Once again I feel like I'm talking to myself here...I know there are readers out there...I invite your comments and/or questions. Lets try and keep it positive shall we?
  • #137
  • Sep 15, 2015 10:26am Sep 15, 2015 10:26am
Hi gspajon. I've look at your charts...nice work, but its not clear what process makes you open a position. Seems you enter at the break or retest of ranges (balance), but what do you check before taking the right side of the range and not a fakeout?
  • #138
  • Sep 15, 2015 10:38am Sep 15, 2015 10:38am
Quoting gspajon
EUR/USD...looked like it wanted to move further, but then gave out...we are nearing stop out. Not completely unexpected as we are at the top of a larger, (monthly) range. {image}
Hi gspajon;

Do you take Zones of Supply/Demand into account?

EUR/USD has been moving between a Zone of Supply and Demand since early this year.

It depends on how many Sell Orders are still active at this Level, the Market might have to drop before it can find enough Demand to give the Market the Momentum it needs to break through this Supply Zone.
Attached Image (click to enlarge)
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  • #139
  • Sep 15, 2015 11:58am Sep 15, 2015 11:58am
"
Quoting gspajon
With the exception of two commodities trades, gold and oil, I am pretty much flat the FX market right now. I don't forsee any good entries in the next couple of days, and of course, that will largely depend on what the US FED does on Thurs. So I thought now would be a good time to answer any questions if there are any? Once again I feel like I'm talking to myself here...I know there are readers out there...I invite your comments and/or questions. Lets try and keep it positive shall we?
"

i must say,your way of trading is very prolific...am one of the readers you talked about...lol......do you trade these way on stocks too,why am asking is i tend too notice more gaps on stocks chart that usual..hence,you might be missing some levels as they might not appear. it seems this method is most prolific on the daily,what do you think.
  • #140
  • Sep 15, 2015 12:13pm Sep 15, 2015 12:13pm
Quoting Ainur
Hi gspajon. I've look at your charts...nice work, but its not clear what process makes you open a position. Seems you enter at the break or retest of ranges (balance), but what do you check before taking the right side of the range and not a fakeout?
An excellent question!! Please keep in mind that I cannot "predict" the future. My entries may indeed be wrong. But I ask myself, "what is more likely to happen". As I mentioned at the beginning there is an 80% chance that price will move my direction and give the chance for some profit (not always as much as I want) once the order flow has changed from balanced to unbalanced.

I place my order in the same area where I saw the one side overwhelmed the other. It is never an exact point...always a "zone" so I try to place my order in the middle of that zone. There are times where my order is not triggered, or other times where my order is triggered and immediately stopped out.

Getting back to the idea of a "false" break...as I am reading how order flow effects price, there is nothing false about any break. What is more likely is that an unexpected or unanticipated order flow against my position causes it to stop...and that is indeed why I have a stop, just in case I misread the order flow or it just happens to be against my position.
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