A Newbie Journey To Financial Freedom

The problems with trading during holidays are lack of volume and "skeleton" staff in the big boys. Lack of volume causes prices to be stagnant and directionless but the real problem is "unsupervised skeleton" staff at the big boys. Without supervision of their "head" traders, these guys can put through orders which may otherwise have been held for normal working hours, which can cause erratic moves in the market. Often times they will run stops just out of sheer boredom. If you pull up charts during holiday periods, especially the big ones, you can see long legged dojis all over the place.

I will not initiate positions during holiday periods and will tighten stops if I am holding substantial profits.

I will hold existing positions through weekends but generally do not like initiating new positions on a Friday unless it's a 'no brainer"

from Strat #Post 1791

PASR, whether you use it for day scalps, 2 or 3 day positions, swing trading or trend trading, will provide you with a method to consistently make money from the market. Learn it until you can do it with one hand in your sleep!

Once you are consistently making profits, FOCUS your attention on LOSING. Forget about how much you will win, your consistency will take care of that. Instead, focus on how much you could LOSE on each trade you take. Doing this will filter out MOST of your losing and unprofitable trades.

By doing this, you will become a more profit efficient trader. After you prove you can be a profit efficient trader, you can then move into the realms of where the BIG money is made in trading.

from Strat #Post 1871

USDCAD

Boss

Worker

Sunday bars

As I have stated before, I use Sunday bars in my analysis and yes, I know I'm in the minority BUT it works for me. Since Asian trading on "their" pairs (JPY) is becoming more significant and not just the "meat" for London to retrace, I believe more and more traders will consider the impact of Sunday bars. My logic is that Asian trading, especially on their pairs is just as significant on Sunday as it is on any other day of the week. I even take it one step further in that, because it is a "separate" day, it tells me the thinking and sentiment of the trading houses in Tokyo.

I know there are just as many arguments against Sunday bars as there are for them, BUT, for me they are invaluable so save your arguments as they will fall on my DEAF ears and BLIND eyes!

Out of respect for our professional traders, I thought I would keep in line and ignore these Sunday bars. My first and last time at doing this!

See EURUSD chart.
I recommended a "tongue in cheek" long up to the trend line and major resistance -Tokyo obliged and would have given me around 75 or so pips.

Had I taken the Sunday bar into consideration (as I normally do), I would have placed a sell stop below the Sunday bar and would have been 130 pips or so in profit at Monday's close.

Now, because I didn't take the Sunday bar, I am left with a huge BEOB of 256 pips meaning, to take this trade I need a SL of 260 pips or so to take a trade down to major support at 1.3180 - or in other words, a risk of 260 pips for a 130 pips profit - not for me.

Again, had I taken my Sunday bar, I would now be up 230 pips as of where price is at now.

Back to Sunday bars for me!

from Strat #Post 1749

BREAK OUT TRADING

Break out trading can be BOTH very profitable AND losing.

First of all, it depends on the pairs. USDCAD is pretty volatile - look at the long wicks and tails - also, the big boys know where the break out orders are and frequently drive prices there to suck everybody in - called false break outs AND stop runs.

Second, it depends where the price is relative to the Daily and BOSS trends. If it's in a strong trend either way, then break outs above highs and lows are USUALLY very rewarding.

BUT, in a situation like USDCAD where it is basically oscillating around 1.2200, it is a very risky game. If you draw in the 1.2200 line which is so very important to this pair, you can see that it has mostly acted as support. Add to this that the 150 EMA is also providing support. On this basis, you would expect support to hold and prices go North but it is not sufficient for me to put my account on the line.

Third, if I was expecting a trip South, I still would NOT place a sell stop below that support because of my first argument. I would much rather let it close below that line and then RETRACE and TEST that line as RESISTANCE and sell from there.

This is really where it separates the men from the boys or the amateurs from the Pros. The boys/amateurs want to jump in with all guns blazing and get in from the beginning and make a big kill. (Sounds similar to what you asked - right?). The men/Pros want the Queen to reveal herself (maybe show Baba G her grail) and confirm she means to go South (by way of the test of resistance).

Yes, there is the possibility that you will lose some profits and yes, there is a chance that the move may be so strong that there may not be a test but at least YOU HAVE NOT LOST ANY $. Usually, there is PA somewhere to get you into a strong move.

So it all comes down to how far you have grown as traders.

Can you excercise patience?
Can you excercise discipline?
Can you think like Pros?
Can you think more about LOSING and less about winning?

Always remember - we want to play WITH the big boys NOT against them NOR be their breakfast!

from Strat #Post 1846

don't get carried away thinking price MUST go up because of this support - ALWAYS wait for PASR to tell us what, where, when and how to trade.

Keeping an open mind, what would it tell us if price closed below both these support areas?

from Strat #Post 1961

Never beat yourself up about missing a trade - I used to and it drove me crackers! There is always a trade being set up somewhere.

from Strat #Post 1962

it keeps on going up until it stops going up - Has it stopped going up? Has it got on the turntable yet? Has it started going down yet? Have you looked at the BOSS? Have you looked at the BIG BOSS?

Can't you see the UPstair - stepping action? Have you looked at the 20? Have you looked at where price is RELATIVE to the 20?

Unless you are a shorter time frame trader, there is NOTHING, NOTHING on the Daily time frame telling you to short this market!

from Strat #Post 1967

WHERE TO TAKE PROFITS
This is just as bad as those who ignore RISK and forget about LOSING and never think about SL placement.

Always remember we need to REWARD ourselves for trading - we do this with PROFITS - it is the very best medicine for our psychology. There is no better feeling (well there is, but that's for another time!), than taking PROFIT from the market and putting it in your account - even if it goes another 150 pips after that - you STILL have PROFIT in your account.

Bloom, and I'm sure many others, are struggling with this also. Until you gain the experience to do different, Here is what I recommend, and I'll use Paul's trade as an example:

Trade 3 contracts (adjust $/pip if necessary to remain within your account %)

Take PROFIT on 1 contract at the 1st support -

Now, depending on your risk aversion, either place your SL at BE on the 2 remaining contracts or trail above the previous high.

Take PROFIT on 2nd contract at next support and bring 3rd contract SL above previous high.

On 3rd contract (with 2 contracts already with PROFIT taken), stay in UNTIL a PASR REVERSAL set up.

If this is not to your liking, you can still do 3 contracts but take PROFIT at each 50 pip level which will give you:

1st Contract 50 pips
2nd Contract 100 pips
3rd Contract 150 pips
TOTAL 300 pips

Whichever way you do it, ALWAYS take PROFIT from the market. Forget about thinking it may go another 150 pips - as soon as you do that, your emotions kick in BIG TIME and you are a TRAIN WRECK waiting to happen. Be satisfied with what YOU got from the market. As long as you are CONSISTENT in trading, your pip haul will increase but it will take time, lots of it.

Paul - did you read Blackeagle's post # 2009? Did you understand it? That should tell you something.

Always remember Dr. Joe - it keeps on going down until it stops going down!

You only need to know when it has STOPPED going down - you don't need to worry about when will it end or where will it end - it ENDS when it ENDS!

from Strat #Post 2028

The best advice I can give anyone starting out on The Path of Learning is, after learning the basics and PASR, is to take the two MAIN reversal bars, the Shooting Star and the Hammer, and only trade those signals until you know them inside out and the tricks they play. Forget about any others - they are a distraction - focus, focus and focus. Look on Daily, Weekly and Monthly charts - these are where you find the strongest and most reliable signals.

I also recommend you start and keep a journal on each Shooting Star and Hammer trade focusing on those candles - where were they? how long was the nose, body, where did they close? what was the sequence of bars prior to the candle? what was the size of the candle relative to the prior bars? etc. Observe where the next bar is after the candle, where did it open? where did it go? what did it do? Observe the swing after the candle, how long did it last? how many bars? Of course, all this should be done within the context of trends. Within your journal, you should take a snapshot of the candle, the bar(s) after it and the swing after it.

I see too many new and wannabe traders taking a trade and not really knowing why they took the trade and worst of all, not analysing their trades.

The analysis of your trades reveal EVERYTHING about YOU and where YOU are in YOUR trading. Those that don't analyse their trades have NO CLUE where they are in their trading development. Even worse, are those that do not analyse their WINNING trades. The analysis of a winning trade is EQUALLY as important as the analysis of a losing trade. We need to know what we did right and why we did it.

from Strat #Post 2126

USDCAD
got out

+53.4
+44.7

How I Draw My TLs!

I also draw TLs in between swings to give me an indication of momentum. There are so many things you can do with TLs providing you know what to do with the information they give you.

As Blackeagle says and as I have said in earlier posts, connecting the close of major swing lows and the close of major swing highs and projecting them forward reveals further S&R especially when they are in confluence with horizontal S&R or fibs - when this happens it is very powerful.

I also use the open on swing highs but many times these are in parallel with those from the close.

TLs are worth their weight in gold and reveal far more information than "experts" give them credit for PROVIDING you know what to look for.

Caution: Don't put too many TLs on your charts as 1) you will not see the overall picture clearly and 2) our brain/subconscious sees them as boundaries and subconsciously "limits" our thinking/analysis to the restrictions imposed by those TLs.

from Strat #Post 2369

If you "look" for trades, you will always "create" one to satisfy your hunger to trade. "Creating" a trade is the fastest way to empty your trading account.

from Strat #Post 2405

Remember, a price reversal bar has not failed UNTIL the OPPOSITE extreme price has been taken out.

For example, the Shooting Star:
This fails when the high price is exceeded. Until it's failed, it's still valid.

The Hammer:
This fails when the LOW price is exceeded. Until it's failed, it's still valid.
The Hammer I had on my USDCAD is now a FAILED HAMMER since the low of the Hammer has been taken out.

Breaking of price reversal bars with "thrust" or "momentum" is very good for our trading psychology as it gives us a nice "buzz" or adrenalin rush.

However, I prefer to see IBs after solid price reversal bars as it gives me a chance to get in with a discount price.

from Strat #Post 2579

This is how I draw SR lines. I start with monthly and try to determine obvious SR lines. To do that, max. zoom out your chart and always switch between candle and line charts to see if high/low prices have any meanings relative to closes, if highs/lows are fakes or they are just price shootings/anomalies.
Then go down to weekly tf and do the same thing. SR lines that are not too obvious on monthly are clearer on weekly, therefore, normally my SR line drawing procedure is complete at this stage and I go down to daily tf to fine tune the ones drawn on weekly and monthly. Don't forget to switch between candle and line charts on weekly, too.
Re. daily charts, I either use them to fine tune SR lines drawn on monthly and weekly or if the price is in uncharted territory, I try to determine new SR lines.
You don't need to use open prices to draw SR lines because FX market is not like equities or commodities, since it is a 24hr market, open prices are normally just a few pips away from close prices except Sunday openings. For Sunday case, you can use Friday's close instead of Sunday opening, that's fine.
If you draw your SR lines correctly, then you don't need to amend your lines everyday or every week. They are valid for a long long time. Do you know that 0.7300 level on AUDUSD is coming from 1994? Only if you are in uncharted territory, then you can amend your recent lines depending on how the chart shapes up.
One last hint is that you should see these SR lines as a thick line, not a pinpoint and then watch PA around those lines. Because sometimes PA does not give us enough clue around SR lines or move through those levels without stopping due to news or strong momentum in which case we pass the trade. This is where patience and discipline play a vital role in trading, because if price gets away from recent SR line due to lack of PA, then you need to wait the price reach the next SR line.

from Blackeagle #Post 2593

It is IMPOSSIBLE and DOWNRIGHT SUICIDE to set targets like this. Why? Because YOU can ONLY take what the MARKET GIVES YOU! What do you do if the market is quiet and not really worth trading? Well, because you have this target, you HAVE to trade it. Guess what happens then? You lose! Now you are not only 20 pips behind on your target but you are now IN THE HOLE for the amount you lost! So next day comes and you are an absolute nervous, stressed out, freaked out, pressured out maniac which is a recipe for disaster BEFORE you even look at a chart. Add to this that on shorter time frames you are under a TIME CONSTRAINT and have to make decisions faster which usually end up wrong. Then you have indicators which lag so much that most of the move is over by the time your trusty indicator gives you a signal and by the time you enter, you are already going the wrong way!

So, enough of this tripe - if there are any of you lot still setting yourselves some type of goal - FORGET IT! DON'T DO IT! DO NOT PUT THIS ADDITIONAL STRESS AND PRESSURE ON YOURSELVES!

YOU CAN ONLY GET WHAT THE MARKET GIVES YOU

whether that is on a daily basis, weekly basis or monthly basis - IT DOES NOT MATTER!

ONLY TRADE WHEN THE MARKET HAS SOMETHING TO GIVE YOU

FORGET ABOUT SETTING TARGETS - what it is at the end of the month is WHAT IT IS!

STOP THINKING IN PIPS - FORGET ABOUT PIPS - think only in terms of % relative to your account.

from Strat #Post 2668

If you had a PLAN, and a PLAN that you BELIEVED IN and ACCEPTED, then you would already have ACCEPTED the risk, the loss AND the thought of LOSING.

When you have a PLAN that you BELIEVE IN and ACCEPT, AND, is ACCEPTABLE to BOTH your MM and your trading psyche (emotions), then YOU have accepted the LOSS. When you then place your trade, you should be EMOTIONLESS, you should not care whether it wins or loses, your emotions should not be a factor. There should be no pain.

If you are experiencing pain from losses, then you are doing something wrong.

from Strat #Post 2727

1. 2801 How to draw TLs (from Strat)
2. 2687 EURAUD trade details

Don't get so wrapped up in S&R lines being "set in stone" and that price MUST bounce at such and such a level. Keep an open mind. Look at what happened to the important levels on AUDUSD and USDCAD. Expect the unexpected and REACT to the unexpected but don't get caught in a trap thinking it will only do "one" thing.

from Strat #Post 2725

Some of us are already positioned long and in profit but don't let that influence your decision as the Boss Swing has lots of resistance above it.

from Strat #Post 6694

Trading psychology accounts for 90% of our success as traders. Those that don’t believe it have NOT traded real money. Everything about us changes when we put our money on the line. This is where you find out about yourself and WHO you really are.

The specific emotions we have to recognize, address and control are:

PATIENCE
DISCIPLINE
FEAR
GREED

PATIENCE and DISCIPLINE are the back bone to PASR successful trading and are major learning steps on The Path of Learning. We continually reinforce these on the thread in as many ways as we can. Each individual trader HAS to recognize why these two are important and then practice them daily. We MUST be patient in waiting for the correct PASR opportunity and the DISCIPLINE to trade ONLY PASR with our correct Money Management rules.

PATIENCE and DISCIPLINE will keep you out of “bad” or “high risk” trades.

FEAR and GREED are what hits the mentally unprepared trader as soon as his position moves away from his trade entry. Based on my struggles and fights with these two demons, what works for me, and most others, is having a PLAN. Not just any PLAN but a PLAN that you TRUST and BELIEVE in 100%. See my earlier detailed posts on Plan the Trade and Trade the Plan. This includes our thinking of LOSING first BEFORE winning. Our PLAN details what our loss will be if the trade goes against us and it is here, IN THE PLAN, that we deal with FEAR and GREED. We go through all the GREED and FEAR scenarios IN THE PLAN so that when finished, the PLAN has covered all eventualities.

Once in the trade, we just let the trade work itself out WITHIN OUR PREDETERMINED, AGREED & ACCEPTED PLAN. We let the trade run to its conclusion which will either be taking profit or being stopped out. WE DO NOT INTERFERE WITH THE PLAN.

If you have to interfere with your PLAN, it means your PLAN was NOT worth the paper it was written on. You cannot and should NOT trade without a PREDETERMINED, AGREED & ACCEPTED PLAN – EVER.

Look what happened to me on my experimental USDCAD trade – I thought because I was proving my Momentum Cycles I didn’t need one – WRONG.
The Professional Traders, Money Managers, Fund Managers, Banks, MMs ALL PLAN their trades and TRADE the PLAN without interference or deviation.

I strongly believe the PLAN is the only way to successfully control FEAR and GREED.

When you have your PLAN, agree, accept and trust it, then there is NO NEED to interfere during the day. Your PLAN includes going from one daily CLOSE to the next daily CLOSE or to an agreed price level – there is NOTHING TO INTERFERE with. If you have to interfere, then you have a PLAN that you don’t believe in.

from Strat #Post 3016

The Power of the 20

The 20 is used by most institutions, banks, funds and big boys as part of their trading. Some use it with the cross of another MA or MAs as a system. Many of the little guys (us) use the 20 in some form or other in our trading. Some professional traders use the price and 20 as their method by buying a close above the 20 and selling a close below the 20 (don’t try this at home, as they say, as the Professionals also use filters to avoid whipsaws and “false” moves).

To a certain extent, the use of the 20 becomes, like Fibonacci retracements, a self fulfilling prophecy.

Our use of the 20 is not as a trigger in any shape of form, but as one of the tools to help us in our decision making process. It should never be used in isolation and never be taken as “the last word”.

Think of the 20 as equilibrium, or the balance line which is the point at which buyers and sellers AGREE on price. Remember we are dealing with energy both of the market and its traders. Energy ALWAYS seeks balance through the path of least resistance. If you haven’t done already, you should study thousands of charts (daily and up) with the 20 and 50 moving averages on and note several things:

The slope of the averages
The cross of the averages
Price relative to the averages

You should also take note:

What the market is doing when the 20 is flat
What the market is doing when the slope is up AND how STEEP that slope is
What the market is doing when the slope is down AND how STEEP that slope is
What happens to price when the 20 acts as resistance
What happens to price when the 20 acts as support
How price reacts around the 20
What happens when the 20 is broken
What happens to price when it crosses the 50
What happens to price when, and after, it is trapped between the 20 and the 50
What happens to price when it is stretched away from the 20

Think of the 20 as a magnet which attracts price (equilibrium). Outside forces greater than the power of the magnet ( buyers or sellers) pull prices away from the magnet. As price pulls away from the magnet, it takes the 20 with it but at a slower and lagging rate. The price reaches a certain point beyond the 20 where the 20 invokes its elastic limit and pulls prices back in line.

If you take the time to study each pair going back as far as your data allows, you will find that there is, for each pair, a certain number of pips that price moves away from the 20 before the 20 pulls price back into line (equilibrium)

The slope of the 20 gives you a “rough” approximation of momentum – use this with my TLs and you have a very good Momentum system.

The slope of the 20 and the cross of the 20 above the 50 tells you which direction you should be trading in.

The 50 is not as powerful as the 20 but when price “uses” the 50, take note.

As per my style of no spoon feeding, I have given you the pointers, now you do the work and prove the value of the 20 for yourself. Nothing works better than something you have proved for yourself AND therefore BELIEVE in.

Add the knowledge of the power of the 20 to our PASR and we have an edge over most traders. In case of any conflict, PASR rules over EVERYTHING.

Never underestimate the value and power of the 20.

from Strat #Post 3163

the REAL secret is practicing on thousands of charts until you can do it in your sleep. THEN, when you are faced with a situation in REAL TIME, there is no thinking, your brain has been trained to the degree and level that it goes into "automatic pilot". You automatically do what you have been practicing on when faced with a situation in REAL TIME, without stress and without fear.

There is NO shortcut to learning how to trade - The Path of Learning is never ending.

We must practice, practice, practice and practice on THOUSANDS of charts and then when we have done that, practice, practice, practice and practice on THOUSANDS of charts and keep practicing until we can do it in our sleep.

from Strat #Post 3184

NZDJPY

Big Boss

Boss

Worker

TREND WITHIN A TREND WITHIN A TREND....

The style we are teaching on here is conservative, safe, low risk, stress free trading on the Daily time frame and up. One of the ways to do this is to ALWAYS trade in the direction of the trend. This then begs the question "Which trend". The answer is and always will be, THE IMMEDIATE TREND. The next question MUST be "is the immediate trend in agreement with the next larger trend". We need to know this to determine whether we are trading with the trend or against the trend. A trade with the overall trend has more chance of success (profitability) than a trade against the trend and is emotion free and far less nerve wrecking!

To determine where you are in a trend you must first zoom out to get the BIG PICTURE - see attached USDJPY Daily chart. Just eyeballing this chart you can tell straightaway it is in a downtrend - yes? We can then break this down into smaller separate legs ( Major Swings) identified by the thick red and green arrows - yes?

Now, look to the left of the chart in the May 2007 to Feb 2008 period. Using the 20 as a guide as a filter, shown by the short, thick yellow lines, we can identify the smaller and shorter trend - yes?

You can keep repeating this to identify the trend by zooming in until you find the portion of the chart you are wanting to trade - yes?

Note that any trade taken in the direction of the red arrows is IN AGREEMENT with the OVERALL TREND and is "usually" longer and more profitable.

Trades in the direction of the thick green arrows (Major Swings) are COUNTER TREND (against the overall trend) but because they are "corrective" swings, will also "usually" be profitable but will be shorter.

Now note the thin green arrows marked "counter trend" in the May 2007 to Feb 2008 time period. These are counter trend trades against a "Swing". Note how each successive trade gets shorter and shorter. These are the trades which, while they look good looking back, will blow your account and your mind WHEN you don't have the experience to trade these.

So, the point I was making was ALWAYS know ALL the trends of the time frame you are trading AND know which part of the trend you are in. This allows you to determine the risk and "comfortability" in your PLAN.

For all those in the early steps on The Path of Learning, IGNORE all counter trend trades and only FOCUS on those trades which are in agreement with the overall trend.

If you think you are already smarter than you are, then consider your trend to be a huge concrete ball on a gentle slope. You can push the ball down the slope (requiring less effort, energy and attention) to gain momentum (trading with the trend) or you can push the ball UP the slope (requiring huge amounts of effort, energy and attention) (trading AGAINST the trend) and eventually running out of energy and the ball rolling back down and flattening you! (blown account!)

Trend recognition is fundamental and part of our total PASR trading method/style.

from Strat #Post 3360

RULES

 

1. Rule #1: Capital Preservation
2. Rule #2: From High TF To Low TF
3. Rule #3: Keep On the Day Chart
4. Rule #4: Always Trade in the Direction of the Trend
5. Rule #5: R:R>=2
6. Rule #6: Total Risk <=2%
7. Rule #7: Max Currency Pairs at one time <=5
8. Rule #8: Don't Add On When Lose
9. Rule #9: Don't Sell into Support, Buy into Resistance