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GBPUSD Magic Number

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  • First Post: Dec 2, 2007 12:15pm Dec 2, 2007 12:15pm
Hey all, nice to be back here

After reading most of the post in FF, i think we all missed on one point, its the price itself. there arent any thread discussing the price behaviour. well, ok, price go up and go down but the path are the same, its kind a personality of the pair.

Here are some thought that i have been using repeatedly, there are magic numbers in price especially in GBPUSD or some other currency pairs (never got the time to test it, yet) :

the magic number is lies there in the last two digit of the pair :

2.xx50
2.xx20
2.xx00
2.xx80
2.xx50
2.xx20
2.xx00

yes, it looks like a support and resisstant price but it happends everyday. bounce back and forth. it depends on how you use it: well, here is my way to use it:

1. Downtrend
if price want to go down it have to break xx50 price level if it breaks it will find support on xx.20, if the price breaks again it will find support xx00. but if it fails to break xx50 it will bounce back and find resistant on xx80 if it breaks it will find second resisstant on xx00 level

2. Uptrend
usually if price want to go up first it have to break xx00 level after the break it will find another Resistant on xx20 it this breaks again it will find second resistant on xx50, but if it fails to break xx20 it will bounce back again to xx00 level and again if it breaks xx00 it will find support on xx80 and so on

confused???

now lets put the theory in action :

on last friday, cable starts opens at 2.0636 its beetween xx20 and xx50 so its too early to trade, it starts to rally to xx50 up to 2.0663 (fails to break xx80 , on 15M chart we saw a reversal candlestick, so we put pending order sell stop at 2.0650 ( a little bit risky ) set stop on the highest swing, set take profit to 2.0640 (conservative) or 2.0620 (agressive) or 2.0600 (extreem:surprised)
almost everytime it hits 10 pips profit, 20 pips profit (sometimes) and 50 pips (rarely). so after you got that 10 pips just wait
again the price didnt even touched 2.0600 after we saw reversal candlestick we set buy stop at 2.0620 and tp on 2.0630 or 2.0640 or 2.0650
this time the extreem guy get the biggest profit.

BANG!! the price just passed away and breaks 2.0680. Again it fails to break 2.0700 so we place sell stop at 2.0080 (lil bit risky) or sell stop at 2.0050 and so on.

the magic number can act like stop loss level : sell on 2.xx20 sl at 2.xx50 and so on...so on
and if you like you can use "cut and reverse" strategy, many improvement can be made....
Test it to filter your system

i have my own system to work with this magic numbers and it works well,
great for scalping. but it restricted on GBPUSD pair only

Try it, you'll love it, any comments will be great

see you all on my next post, tomorrow



hope this useful.........
______________
nice to come back
Hi,

Strategie seams to be interesting.
But could you post a graph to help us

thanks
in a way you are right. G/U price really finds some kind of supp/res in these areas, some might say 50 and 00 are more important and others have said the same as you (i have read something like this in other forum, don't remember where). My question is: DEFINE BREAKOUT ! ....Do you mean if price closes above/below these levels ? What timeframe breakout ? I am asking this because there is so many cases where a for instance on 15m chart price breaks these levels, goes 7,8,9 pips and then goes back to that level leaving only shadows. Or if it doesn't go back it is already too far and the next level is near to get some decent pips and the stop loss is wide.

all in all it is great to look back at history charts and find out that indeed this system and millions of others look good and so on. But the minute you are making a trade you understand how difficult it actually can be.

But i agree with you about the big numbers....they are psycological points and many traders put their TP near these levels.
very good question....Lumesh

any attempt to trade sudden price breakout is risky, cause you'll get whipsawed. here is my strategy :

Lets look at the fact shall we?

Asian Market average 60 pips range
European Market average 80 pips range

No trade on early US market specially on news

on my observation there are 2 price conditions:

1. Ranging market very often xx00 to xx80, price opens at any price between this range.

Rule 1 :
In asian market the price will range 60 pips, creating new lows or highs, watch any bounce near the magic number to take your trade.

In early european market, very often the price has decided which way to go (trending) up or down, i use buy stop one level below high, and sell stop one level above low

if high is near xx00 i will buy stop at xx80 (current price is below xx80 and above xx50)

if the low is near xx00 i will take sell stop at xx20 (current price above xx20 and below xx50)

2. Breakout market (G/U is ready to go to the new price level ex; 2.05xx to 2.06xx)

there are only 1 rule apply to both asian and early european market :

Rule 2 :

if price try to trending up the low price should not less than xx50 and the place buy stop xx80 or buy stop xx00

if price try to trending down the high price should not more than xx00 take sell stop xx50 or sell stop at xx20

in real live trading you can use a either rule 1 and rule 2 or both

Remember it is not a buy sell trading system, use your system to determine buy or sell condition.

I use my own system Tenno System ver. 2 ( i have posted the original system in FF few months ago)

i will post screen capture for this concept
Later i will post my today's trading review as example to my concept


_________________
Happy Trading ....
Monday is favourite....
Thanks for the clarification jogatrader....may i ask you how long have you been trading forex ?
Quoting lumesh
Thanks for the clarification jogatrader....may i ask you how long have you been trading forex ?
many thanks,

the truth is i have been trading forex about 2 years now, kind a hobby, long enough to watch the GBPUSD price up and down. find support there set resistant here bla bla bla....after months looking at the chart you will see a pattern...took me long time to understand it....but its worth

Today is ranging and breakout market
_______________________________________________________________

November 03, 2007

G/U has find strong support at 2.0549 (near 2.xx50) so i set buy stop at 2.0580 tp 2.0600 sl 2.0550 = price breakout to 2.0639 (profit 20 pips)

yet after the price didnt even touch 2.0650 and begin to retrace i set my second trade on sell stop at 2.0620 but this time i only take profit at 2.0610....and the price went again to 2.0600 ( didnt even expected to break 2.xx00 again) but hey its 10 pips profit

cause it breaks again to 2.05xx level after breaks 2.06xx the price went crazy so i stand aside.

After the price penetrate the low, i waited after it fails to breaks 2.0520 (2.xx20) i place buy stop at 2.0550 tp at 2.0570 sl at low price ....again
we have 20 pips profit
________________________________________________________________

well 50 pips is enough for me
how about you?

all i have to say is, this is the road that cable gone thorugh everyday in any condition in any news, this price level acting just like a bus route, be there and you'll catch the bus to take you where ever you want to go.

and of course i do use few EMA as confirmation...yes, i do use indicator
but its not the point why i started this thread....


Thank you for viewing this thread
still working on the screenshot


__________________________
Happy trading
Quoting jogjatrader
many thanks,

the truth is i have been trading forex about 2 years now, kind a hobby, long enough to watch the GBPUSD price up and down. find support there set resistant here bla bla bla....after months looking at the chart you will see a pattern...took me long time to understand it....but its worth

Today is ranging and breakout market
_______________________________________________________________

November 03, 2007

G/U has find strong support at 2.0549 (near 2.xx50) so i set buy stop at 2.0580 tp 2.0600 sl 2.0550 = price breakout to 2.0639 (profit 20 pips)

yet after the price didnt even touch 2.0650 and begin to retrace i set my second trade on sell stop at 2.0620 but this time i only take profit at 2.0610....and the price went again to 2.0600 ( didnt even expected to break 2.xx00 again) but hey its 10 pips profit

cause it breaks again to 2.05xx level after breaks 2.06xx the price went crazy so i stand aside.

After the price penetrate the low, i waited after it fails to breaks 2.0520 (2.xx20) i place buy stop at 2.0550 tp at 2.0570 sl at low price ....again
we have 20 pips profit
________________________________________________________________

well 50 pips is enough for me
how about you?

all i have to say is, this is the road that cable gone thorugh everyday in any condition in any news, this price level acting just like a bus route, be there and you'll catch the bus to take you where ever you want to go.

and of course i do use few EMA as confirmation...yes, i do use indicator
but its not the point why i started this thread....


Thank you for viewing this thread
still working on the screenshot


__________________________
Happy trading
this was for the european session?
BK
Also mate is this correct:
1.if the price fails to break the 20 level go long @ 50.
2.if the price fails to break the 2.xx00 level then go short @ 80.
3. if the price fails to break the 2.xx00 level then go long @ 20.
4. if the price fails to break the 2.xx80 level then go short @ 2.xx50 level.
5. if the price fails to break the 2.xx20 level then go long @ 2.xx50 level.
BK
Quoting bksujal
Also mate is this correct:
1.if the price fails to break the 20 level go long @ 50.
2.if the price fails to break the 2.xx00 level then go short @ 80.
3. if the price fails to break the 2.xx00 level then go long @ 20.
4. if the price fails to break the 2.xx80 level then go short @ 2.xx50 level.
5. if the price fails to break the 2.xx20 level then go long @ 2.xx50 level.
BK
yes, u can write it like that way but in real live trading you have to keep both eye to high and low of the day, Differ high and low price based on market time. what goes in asian market stays in asian market open your fresh mind to european market.

so if you see any breakout 2.xx20 dont bother to go long coz the price would go further down to 2.xx00 and if the price continue to break 2.xx00 (ask price not bid) dont bother either to go long wait if it fails to break 2.xx80 then now you can go long.

using this concept prevent you to take trade against the daily trend, many time losing trades come from unpatient behaviour.... just to play luck...roll the dice...bamm...you loss

patient my friend ...patient, wait for the bus to get to you...and ride
wait the price to bounce or break at these price level and take those trade...

i consider myself as a scalper trader not a day trader....

in order to get most of this cocept you have to use some kind of trend friendly indicator...at least 1H trend

i have my own system but i urge you to use one of yours' too
i will post today's trading review later



_________________________
Happy Trading
bilang saja ....ok
You and trademanx seems interested in certain "special prices", trademanx called in his thread as logical number:

http://www.forexfactory.com/showthread.php?t=57561

You called it Magic number.

Please post more charts.

Thanks.
I normally do not comment in anyone else's thread especially in a negative way, but in this case I will make an exception.

Are you kidding?

People, please learn to trade. There is no great secret or magic numbers, only knowledge will may you successful. I am a professional trader and I can promise you nobody trading a multi million dollar account would think like this.

I only comment when ideas are so out of line people could blow their account.

PT
Zone Breakout Method
Quoting PowerTrader
There is no great secret or magic numbers
Who knows? Sometimes it's smart to think out of the box ...
Maybe, this what some people called it as "psychological number/price".

See price at these magic number


Quoting PowerTrader
I normally do not comment in anyone else's thread especially in a negative way, but in this case I will make an exception.

Are you kidding?

People, please learn to trade. There is no great secret or magic numbers, only knowledge will may you successful. I am a professional trader and I can promise you nobody trading a multi million dollar account would think like this.

I only comment when ideas are so out of line people could blow their account.

PT
Attached Image (click to enlarge)
Click to Enlarge Name: gumgcnumber.gif Size: 24 KB
Quoting PowerTrader
nobody trading a multi million dollar account would think like this.
PT

Show of hands..............how many people on FF are trading multi million dollar accounts?

Sorry, couldn't resist...
Quoting learningtheropes
Show of hands..............how many people on FF are trading multi million dollar accounts?

Sorry, couldn't resist...
The point is, they should learn to trade as if they are trading big accounts. Some are trading more than they can afford and do not need to lose their money. Oh, and by the way, I know many people here who trade for companies and some trade multi, multi, million. Bottom line is, no magic trades. Sorry I couldn't resist!


PT
Zone Breakout Method
Quoting PowerTrader
The point is, they should learn to trade as if they are trading big accounts. Some are trading more than they can afford and do not need to lose their money. Oh, and by the way, I know many people here who trade for companies and some trade multi, multi, million. Bottom line is, no magic trades. Sorry I couldn't resist!


PT
If people are trading more than they can afford, that's ignorant on their part, regardless the "strategy(ies) employed. Oh, and by the way, the VAST MAJORITY of people here do not trade multi-million dollar accounts for a company or otherwise............so lighten up. It was just a joke!!
Quoting learningtheropes
If people are trading more than they can afford, that's ignorant on their part, regardless the "strategy(ies) employed. Oh, and by the way, the VAST MAJORITY of people here do not trade multi-million dollar accounts for a company or otherwise............so lighten up. It was just a joke!!
Never said anything about the vast majority, and it was a joke from me too. Did you even look at the strategy behind the comment. I was trying to help! So you lighten up!
Zone Breakout Method
Quoting PowerTrader
Never said anything about the vast majority, and it was a joke from me too. Did you even look at the strategy behind the comment. I was trying to help! So you lighten up!
All right, enough of that already, I didn't mean to offend you, or not provide meaningful feedback! Let's be friends.

I DID look at the strategy, and I think there is nothing wrong with with referencing and respecting psychological barriers. Is it an ultimate trading "strategy"? I think it has merit in an intraday setting if you can keep the R:R in line. But, without the gut feel it normally takes to be successful with short TF strategies, I agree, it may be a losing proposition long-term, or a lot of work to grind out positive pips if you try to make this completely mechanical.

So, I wouldn't load up my account and dive in aimlessly, but this does at least offer the ability to get away from a dozen indicators on your charts, and begin to see price action. It's always a beneficial exercise to get screen time with NAKED charts, imho.
No Problem! I have given this thread 10 times the exposure it deserves by commenting in the first place.
Anyone who wishes to trade Magic Numbers I wish you well.
My whole point in the first place was to get people to learn the basics to be successful. Price Action, Fibonacci, Trend Lines, Support and Resistance, and Money Management. But then why would you want to spend all that time learning these things when you have Magic Numbers?


Good Luck,
Pt
Zone Breakout Method
Quoting PowerTrader
No Problem! I have given this thread 10 times the exposure it deserves by commenting in the first place.
Anyone who wishes to trade Magic Numbers I wish you well.
My whole point in the first place was to get people to learn the basics to be successful. Price Action, Fibonacci, Trend Lines, Support and Resistance, and Money Management. But then why would you want to spend all that time learning these things when you have Magic Numbers?


Good Luck,
Pt
Ha, ha! Exactly!!
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