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Trading the Cable swings via averages

  • #141
  • Nov 23, 2018 5:11pm Nov 23, 2018 5:11pm
So let's look at the trade in the form of a recap of the elements I have described.

1) We begin looking at the chart with a view to starting work at about bar 108 (This happened)

2) The trade often begins with a small RSI divergence. Divergence sends price across the EMA (This happened)

3) Bears find support below the EMA. (This happened)

4) Price ran down but on the RSI it ran into exhaustion so a hedge is attempted to protect profits thus far. (This happened)

5) The hedge ran into divergence so we remove it along with the profits made. (This happened)

6) We measure the pullback in relation to an AB=CD. (This happened)

7) It hit the AB=CD target by which time we had already made our 50 pips. (This happened)

8) All the time watching the action as it is attacking the next average swing low 2784. (This may still happen)

So the trade is completed albeit taking a tad more time than usual. Like detectives we looked for the clues and take the appropriate actions without trying to guess what may or may not happen. So this is not a system as such it is simply paying attention and reacting accordingly.
  • #142
  • Nov 23, 2018 5:16pm Nov 23, 2018 5:16pm
OK you should be well prepared for Mondays action so if you are not confident or fail to understand something get your questions in and lets get it sorted.
  • #143
  • Nov 23, 2018 5:30pm Nov 23, 2018 5:30pm
Quoting Nala66
A word about comparisons... When making comparisons I compare average swing to average swing, never comparing price to average. Zig-zagging an average or bouncing is fairy meaningless because the average is always chasing the price NOT THE OTHER WAY ROUND. In the same way I compare RSI to RSI as you will later see it gives us a very good insight for the next move of price. {image}
So just to be clear, you are only looking for divergence on the RSI 14 and 5 and you do not need divergence on price at the same time? I would think that divergence on the RSI and price at the same time would give you a stronger signal?
  • #144
  • Nov 23, 2018 5:48pm Nov 23, 2018 5:48pm
Your trade recap is very well presented and understandable. Thanks for taking the time to provide an explanation of the trade as it helps alot.
  • #145
  • Nov 23, 2018 10:41pm Nov 23, 2018 10:41pm
Quoting ozziedave
{quote} So just to be clear, you are only looking for divergence on the RSI 14 and 5 and you do not need divergence on price at the same time? I would think that divergence on the RSI and price at the same time would give you a stronger signal?
No worries....

Often we do not see a divergence on the price. In my experience the RSI is showing me something that others are unable to see and I see a heck of a lot more on the RSI. I can't do this with other indicators making for me the RSI the best tool for the job.

>>>>>>>>>>>>>>>>>>>>>>>>>>>

As long as we just dip our toes in the water first then add as we become more confident and move the stop to limit damage we should be fine. A stopped out trade is not the end of the world and these trades pay so well that tiny losses just become par for the course. One thing I have noticed over the years is that people put tiny lot sizes on so they can add to the position if it goes against them, well if it going against them then the analysis was wrong and it becomes a wing and prayer situation as hope springs eternal.

This is the trouble with tiny lots, they give a false confidence to the trader that they can always trade out of the situation. Mostly we could do this but it only takes one that we can't fix and we blow heaps of our account defending it. Then people begin to chase losses and the hole just gets deeper.

Maximising our trade in the first place stops any attempt to do this and the rewards are far greater.

Anyway this is the way I trade and it is very profitable.

Practicing over a couple of weeks should give the confidence to have a go.
  • #146
  • Nov 24, 2018 2:03am Nov 24, 2018 2:03am
Please do not skip my question.
Necessity knows no law except to conquer
  • #147
  • Nov 24, 2018 2:49am Nov 24, 2018 2:49am
Quoting 3ndlessHope
Why are you limiting yourself to a single instrument?
Sorry I missed this question.

I have already explained the GBP/USD provides plenty of daily pips and to use others pairs means a darn sight more work I can well do without.

If I get my three trades on then I have no more money left to trade other pairs.

Why anyone would want to keep flicking between pairs and not just specialising in one is a complete mystery to me.
  • #148
  • Nov 24, 2018 2:58am Nov 24, 2018 2:58am
All clear.
Thanks a lot for teaching.
Have a good weekend all.
Trading S/R with PA only. No indicators anymore!
  • #149
  • Nov 24, 2018 4:08am Nov 24, 2018 4:08am
Quoting Nala66
{quote} I don't try to predict the future... That is the point, only trade the reality of the situation. There are only 3 possibilities London will take, up, down or sideways. These divergences can get us in or out or even hedge trades. Round numbers mean nothing to me. The signs are in the question 'Are we trading above or below the average, if below we look to short the tops, if above we look to long the bottoms'
As soon as one manages to control the desire to predict the future... but focus only on the signals, one will be a professional trader
  • #150
  • Nov 24, 2018 4:11am Nov 24, 2018 4:11am
Quoting Nala66
{quote} Sorry I missed this question. I have already explained the GBP/USD provides plenty of daily pips and to use others pairs means a darn sight more work I can well do without. If I get my three trades on then I have no more money left to trade other pairs. Why anyone would want to keep flicking between pairs and not just specialising in one is a complete mystery to me.
Lack of research and testing makes us think that the other pair is better... if you research enough and test enough only one pair is enough to make a decent living out of forex
  • #151
  • Nov 24, 2018 4:29am Nov 24, 2018 4:29am
Quoting Nala66
{quote} Sorry I missed this question. I have already explained the GBP/USD provides plenty of daily pips and to use others pairs means a darn sight more work I can well do without. If I get my three trades on then I have no more money left to trade other pairs. Why anyone would want to keep flicking between pairs and not just specialising in one is a complete mystery to me.
Thank you for the reply.
I understand your point.
Specializing in a single instrument might work for some people, but most likely the majority will fail.
Having more instruments on your watchlist lets you be more picky when it comes to signals +more opportunity, which is important if your primary income comes from trading.
Necessity knows no law except to conquer
  • #152
  • Edited 11:58am Nov 24, 2018 10:58am | Edited 11:58am
My compliments for the high-level job and the thread.

I started to read it with the hope to find an easy way of trading, instead, this trading system needs a very acute sight to guess divergences in each timeframe between two RSI and between RSI and price.

It is not an easy way of trading.

Because I like to work more comfortable in D1 I am here to ask if there is a configuration for this time frame or it may be the same.

Thank you.
  • #153
  • Nov 24, 2018 11:29am Nov 24, 2018 11:29am
Quoting flashpaul
My compliments for the high-level job and the thread. I started to read it with the hope to find an easy way of trading, instead, this trading system needs an eagle-eye to guess divergences in each timeframe between two RSI and between RSI and price. It is not an easy way of trading. Because I like to work more comfortable in D1 I am here to ask if there is a configuration for this time frame. Thank you.

I believe that Alan has made it clear that the configuration of the charts is the same no matter what the time frame. If you use a daily chart you may be waiting a long time in between divergence signals. I'm sure that Alan may use other types of entry techniques but it takes a while for divergence or any other set up to form on a daily chart. Just as with any methodology that uses a daily chart you are not going to get trades every day.

If you are in a position where you need to trade a daily or 4 hr chart you need to accept the fact that you will not be placing a trade every day and being patient will be your best asset.
  • #154
  • Nov 24, 2018 12:12pm Nov 24, 2018 12:12pm
Another Rocket science... There is only 2 sides down or up... Nothing else... Just buy or sell...
That's it... This will end up with gazillion indicators, possible EA and dead end... But still interesting
to see how people like to over complicate everything..
  • #155
  • Edited 9:41pm Nov 24, 2018 6:00pm | Edited 9:41pm
Quoting 3ndlessHope
{quote} Thank you for the reply. I understand your point. Specializing in a single instrument might work for some people, but most likely the majority will fail. Having more instruments on your watchlist lets you be more picky when it comes to signals +more opportunity, which is important if your primary income comes from trading.
You can use the scatter gun effect if you wish to. You may well take out the fox in the group but you take out the chooks also. Fairy pointless method.
  • #156
  • Nov 24, 2018 6:03pm Nov 24, 2018 6:03pm
Quoting flashpaul
My compliments for the high-level job and the thread. I started to read it with the hope to find an easy way of trading, instead, this trading system needs a very acute sight to guess divergences in each timeframe between two RSI and between RSI and price. It is not an easy way of trading. Because I like to work more comfortable in D1 I am here to ask if there is a configuration for this time frame or it may be the same. Thank you.
Look at the cycles of a daily chart, they take forever to form and there are literally hundreds of trades to be taken at the opposite end of the time scales.
  • #157
  • Edited 9:44pm Nov 24, 2018 6:05pm | Edited 9:44pm
Quoting zigler
Another Rocket science... There is only 2 sides down or up... Nothing else... Just buy or sell... That's it... This will end up with gazillion indicators, possible EA and dead end... But still interesting to see how people like to over complicate everything..
Isn't that exactly what I am saying here.

When trading below the average we are short.

When trading above the average we are long.

All the complication is in your head not mine.

The idea here is to find the beginnings and determine if there is going to be enough movement to make our profit target.
  • #158
  • Nov 24, 2018 6:56pm Nov 24, 2018 6:56pm
Quoting MrMagnet
On the 1h chart there was a failed retest before London open so there was a clue it was going down and on the 1m chart I can see the 2 divergences at support where there would be entries. If I would have taken the 1st entry I would have been stopped out by moving my stop to break even. What is your process for stops for the 3 entries if using the 1m or the 5m charts as well.{image}
Hi Alan, Just a small question you may have over looked. Thanks in advance.
  • #159
  • Nov 25, 2018 12:50am Nov 25, 2018 12:50am
Quoting Nala66
{quote} You can use the scatter gun effect if you wish to. You may well take out the fox in the group but you take out the chooks also. Fairy pointless method.
You clearly did not understand my message.
Necessity knows no law except to conquer
  • #160
  • Nov 25, 2018 1:26am Nov 25, 2018 1:26am
Hi Alan ,
I could get fairly good entries over the last 2 days and it was fairly easy. This is the first time I'm trading something on 5 mins . Thank you very much . For me , picking entries hasn't been much of a problem over the years , but it's when to take my tp and cutting losses . Could you share some light on where you set ur tp and sl . and how you ride the winners . do u move ur sl or use trailing . Or do u always stick to 40-50 pips .
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