The TAW system

For the purpose of the charts the indicators will all be at their defaults. Unless you know what the indicator is and what's doing any why you shouldn't be changing them. RSI default is 14 and applied to close.

Yes I do look to see how a given currency is doing broadly against the others. As an example if you're going to trade EURUSD then checking GBPUSD to see how its doing against the pound too does make sense.

HOWEVER, there are fundamental differences between the various crosses. But when you see a currency doing well broadly against many other crosses that is also a strong indication of strength.

By little confirmation I mean that on the daily TF both EURUSD and GBPUSD are still on the candle that has fallen. There are no past downward candles, the pair isn't showing overbought, the moving averages are still under the candles ... and so on.

edit: typo fix

Okay that clears alot for me thank you.

I apologize for the stupid questions I hope in some time I can give more to the thread

In a previous post I talked about short entries in EURUSD at 1.2345 and GBPUSD at 1.41.

The market moved with me for a bit, an initial 10 pip profit taking stop was set at 50 pips of gain. According to my system once I get ~80pips in profit then I switch to a 50 pip trailing stop. EURUSD hit a low at 1.2284 which is 61 pips before EURUSD turned and went the other direction and my position closed 10 pips in profit.

GBPUSD made it to a low of just 1.4079 before turning around (so no profit taking stop yet). That one I had a stoploss set at 20 pips below my close. However with EURUSD also bouncing I closed the position a little early at 12 pips of loss making for a total loss of 2 pips on those two trades.

Now at this point it's important to cover EAs. In my opinion trying to program an EA to actually trade for you is impossible. (well, impossible to program one to trade profitably)

I actually use an EA to calculate the proper order size, then to manage open orders (set stoplosses, change to profit stops at the right time, then to a trailing stop at the right time) so that I don't have to babysit my orders. I can place them and walk away.

However also use EAs to provide me alerts. When GBPUSD hit a low not very far from my entry and reversed direction my EA gave me an alert which allowed me to get back onto my account and check the situation out. I was able to see that both pairs were bouncing giving me a pretty good idea that just trying to "ride it out" was a bad idea. Again, now I don't have to babysit a position or fret about a position when I go to bed. The worst case situation would have been I had taken a nap or something at which point I'd have been at only a 10 pip total loss (10 pips of gain but 20 pips of loss) which isn't really a big deal for a single day. (to be fair those were not the only two positions I had open but I don't think it's fair to talk about those as "going back" is cheating)

Before anyone asks ... no, I won't be providing my EAs as part of the system. I'll tell you what they do and if you want that in most cases it isn't hard to program or find someone to program for you. I'll be explaining how I trade but actually executing is something you need to do for yourself, and that includes any programatic alerts. That will help you to be a better trader because you'll know exactly what's in any EAs that you use instead of trusting some random guy posting on the internet.

Lastly, I'm still going to be watching both of these for new shorts however I rarely place new trades on Fridays so more likely than not it won't be until Monday that I really consider a new position. Tomorrow I will be going into further detail and providing other examples of how I make entry decisions.

edit: added A BUNCH of stuff

It was my original intention to talk in more detail about the analysis that I perform as it relates to the technicals. However I realized that doing that was going to be counterproductive as far too many people don't know nearly enough about the indicators and what they actually means.

So instead, I'm going to do this.

First, let me say that there is no one single indicator that provides enough information or enough of a view of the market to truly be reliable. You need to be looking at several. The indicators that I look at the most are:
MACD, RSI, and SMA (simple moving averages)

However I also look at Ichimoku, Parabolic SAR, and Envelopes.

The issue that I have found is that few people really know what these indicators are showing and why or even what the various settings mean and why you might want to change them and so on.

So here is my VERY strong recommendation to anyone following this thread:
Spend some time on YouTube and look these indicators up. Learn about them and what they are and what they are ACTUALLY showing.

This weekend I'll start talking about how I look at them and use them to perform my analysis. However I think everyone following this thread would be well served by having at least a basic understanding before I go into it.

hello Woohiye,
the short trade E/U @ 1.2345
on the daily chart I don't see any 3 consecutive down days from resistance?

assuming u r honest, then u should be a harsh gambler as stopped what u r doing good after 20 yrs n start doing a different business

Gambling ultimately became BORING ... I mean crazy, insanely boring. Trading at least for the moment isn't. I'll do this until I'm not bored then do something else.

I talked about that here:
https://www.forexfactory.com/showthread.php?p=10899142#post10899142

Also it wasn't 3 consecutive, it's 2. But should there be a shift in fundamentals or something else where I think the long term trend will resume I'll place a trade early.

u didnt get it.
u made ur biggest bet of ur gambling career as switching from pro gambler to trader after 20 yrs
u r still gambling

Yes, lots of people say that. What's funny is that lots of people also say that my entire approach to how I trade isn't trading at all, it's actually investing because of how long I will hold a position.

If it is your opinion that I'm "gambling" as a trader, I'm not going to try and change that opinion. Have it if you want. Those people that have the opinion that I'm really "investing" instead of trading I won't try and change their opinion either. They can have it if they want.

Opinions are like mouths (or other body orifices if you catch my drift), everyone has one.

I make my living trading the way I do. If that's gambling to you then fine ... I'm gambling, making my living doing it, and having a good time.

And maybe it's an ego thing (it probably is if I'm being honest), but because I keep up on world news and I see how that affects market movement that makes me significantly more knowledgeable about what's really going on in the world than almost everyone around me. At parties and events and such I like being the most knowledgeable person in the room about what's pushing something one way or another and people coming to me to ask me questions.

To get this thread back on track after going on off a bit of a tangent, later today I'll put out a couple of videos that will go over some things that have already been talked about (basically I'm going to cover the system so far but in video, some people like that better) but I'm also going to do a video on trend identification because it often isn't as easy to see as it is on the EURUSD example that I used to start this thread off.

Look for that later today.

In this video I give a more complete overview of the TAW system.

https://youtu.be/4V2ZEAf6BdM

Today is the first video on identifying a trend when it isn't so obvious as it is with EURUSD. We take a look at the much murkier picture posed by AUDUSD to determine what kind of trend the pair might be in.

https://youtu.be/TH-XsgtO3iY

In this video I go into detail into how to analyze AUD and what drives the economy. I answer the question regarding the "most important commodity" in this video. In the next video I'll actually do the analysis, but I wanted you to know what I was looking at and how to do it for yourself first. There is a few seconds of delay before the video starts ... and because of a ton of activity happening around me, 10 or 15 seconds of silence in the middle of the video because I had to mute the mike for a bit.

https://youtu.be/Xc3m57NQjFo

Before I go into the actual AUD analysis, are there any questions to this point?

I'd like to talk about EURUSD real quick and finish up talking about AUDUSD and why sentiment analysis is so important.

There are lots of people that noticed the bounce off the horizontal resistance for the sideways channel and placed shorts.

That may SEEM to be in keeping with my system (not saying they were following my system, just talking about that people have opened shorts).

While those positions for more than a few may end up positive ... let me say again, that's not really TAW trading.

EURUSD is still locked into a sideways consolidation movement ... but I don't think it's going to stay that way. I think EURUSD is going to push upward some more and here's why I think that ...

Right now we have the asian stock markets doing pretty good, the US stock market doing pretty good. Traders and major players are feeling pretty good about the global economy. This is driving up risk appetite. That often means real investment leaving US dollars for various Asian currencies to invest there. It is literally the selling of dollars and the buying of other currencies.

Increasing risk appetite is very nearly always negative for USD. Add into that consider this. The stronger other currencies become as their economies improve with the global economy the more possible it also becomes for the IMF to create it's "basket of currencies" and begin the process of eliminating the USD single currency trading standard and that is REALLY negative for USD.

While no one is really talking much lately about going off USD as the global trading currency, the efforts to do it are still underway; which like I said causes USD weakness.

My point here is that right now, with global risk appetite swinging upward so much, it creates USD weakness. This means that all USD crosses for the moment are likely to be moving against USD and toward the other currency (meaning EURUSD goes up, USDJPY goes down as examples).

These temporary pull backs at strong resistance points are just that, temporary pull backs.

For the moment, we're only putting EURUSD on the "watch list" because let me say this ... I don't think it'll be a whole lot longer (though how long, who knows) before something happens once again in Europe. This upward push is going to cause a quite sharp knee jerk reaction back downward.

We just have to wait for that to happen.

With other USD crosses it's a different scenario but for the moment we're still looking at USD weakness. This pull back gives us the opportunity to look at those other crosses where maybe the trend is currently up (AUDUSD as an example) to look for entries there.

In fact, if you look at the daily chart, AUDUSD looks like it's on a short term downward facing trend and the recent push downward is pushing AUDUSD to a support point that I think it will bounce from.

While, as is common when gobal risk appetite is high, Gold prices are falling. However, industrial metals such as Nickel (which is up A LOT), iron, and copper are up because of the growing Asian economies. Also, while there's been a little bit of a pull back in the grain commodity prices, with the growing Asian economies I doubt that will hold and demand will push prices upward there also. These are all good signs for AUDUSD moving upward ... AT SOME POINT.

Much like with EURUSD that doesn't mean I'm necessarily looking for that to happen today. It's more than a little possible that I won't see any real trades in AUDUSD until late Wednesday or Thursday. However I am looking for AUDUSD long.

In this video I talk about a big mistake I see traders making and what you should be doing instead.

https://youtu.be/KKV1OLPjkxk

Real fast, I want to talk for a minute about "trading rules" or "entry and exit rules"

As a general rule, with my system I make extensive use of trailing stops. I don't set profit taking points on trades before hand. In fact doing so is technically "against the rules" of my system.

HOWEVER, when it comes to trading you can follow your rules off a cliff if you adhere to them too rigidly.

My point here is that EURUSD has been crazy range bound for quite a while. So when it bounced off the upper resistance point of the range and started heading back down, I opened up a new short (1.24385) ... and actually SET A TP on the trade at 1.23025 (basically at a very recent support) which it is very nearly to that spot.

Is it possible that EURUSD will run all the way to the bottom of the range (~1.22495ish)? Sure it is. Especially with economic sentiment in the EU having fallen.

That said, the RSI on EURUSD is looking oversold on most TFs below the 1D. So at this point I think it's a safer bet to "break the rules" and potentially leave a trade a little "early". I'm a big believer in trading safely and at this point that seems to me like a safer trade to make. Basically I'm going to take my 130 pips and be happy with it)

Which brings me to something. I had previously talked about the fact that I don't really look below the 1D TF ... and over the last few days I've realized that's actually not true. I actually use the lower TFs to help give me early warnings/indicators of what's going on with the pair. So I do sort of "reference" the lower TFs if that makes sense.

Because I see so much about arbitrage around here (much of which is B.S.) I wanted to put up a video about what arbitrage is for those of you following this thread.

https://youtu.be/-gs3uFmOMSM

AUDUSD is VERY near the bottom of the upward facing channel on the daily chart and over the last couple of hours have formed a short term support on the 1H which is creating a wedge pattern. I'm looking for the pair to bounce upward here fairly soon.