You Already Know How to Trade! (Supermarket Deals)

I have heard it said that women make the best traders. While I do not have any empirical evidence, this may be closer to the truth than many of us would want to admit.

What is trading? Is trading really sitting at a desk or phone watching charts for hours on end to click a green or red button and collect the resulting profit? Perhaps it is more than a couple of averages crossing or violated deviation envelopes. What if successful trading is, simply put, getting the best price for the product you are wanting to purchase?

Let us say you are going to your local market to pick up tonight's dinner. If you are like me you have a set budget and will stay within your purchasing power to procure your meal. Will you grab the first thing you see regardless of its price? Would you not rather get the best 'deal' and locate the in-season produce thereby stretching your money as far as possible? In fact, you would shun the overpriced apples, in favor of the 'on sale' bananas, potatoes, what have you.

Perhaps we as traders become blinded when we first see those flashing lights and all the multitude of squiggly lines. Did you choose candlesticks or line graph? Are your settings the same as mine? It doesn't matter! What you should be looking for is the sign over the shaving cream that screams, 'Half Off Today Only'! If you are an extreme couponer then you have the mindset to be a GREAT trader!

I would wager every one of us notices when the price of Gasoline moves up 20cents. And we equally pay attention to the opportunity to buy gas 15cents cheaper at the station across the street. Is trading really any different? If only we applied these same skills to trading we would be far ahead. Instead, we believe that we 'know nothing' about trading and listen to every person that comes along that possesses a flashy suit and smile. You already know how prices work! Don't you? When it is low, buy! That is what you do every day!

You are probably thinking, "How do you know when a currency is low or high?". Here is a question for you. Do you know if a carrot is cheaper today than yesterday if it is the first time you shopped for a carrot? No? Me neither! Make no assumptions. Follow that price every day the same way you do gasoline. You are bound to learn something about when it is cheap/expensive. Also, don't expect to know about the prices of everything in the store all at once. If you start out with only one you will be fine.

This may sound too difficult or slow. Patience. Observe. Practice. Reflect. Repeat.
Ask as many questions as you can think of. When those are exhausted... Ask some more!

Charting, in my experience, has been subtractive. The less on my screen the better. I understand this is not so for everyone. That doesn't bother me in the least, good on you! I am amazed at both the rainbow chartists and the Level 2 traders. What I think brings us all to the same level is 'The Deal'. Without a deal none of us will make a profit.

Edit 12/15/2019:
I have color-coded all my charts for ease of interpretation. Each color signifies which TF I have taken the information from. Levels are refined on the TF immediately below them.

Purple = Weekly
Red = Daily
Blue = 4H
Green = 1H

To take the supermarket analogy a step further we can explore the idea of price cycles.

Every product has cycles in its price. For produce, the variability in its price is directly tied to its availability. As availability increases price decreases and vice versa. So in countries of origin at peak production(In Season) any given product will be at its lowest price point. And conversely imported products out of season will have the highest price.

In trading, we should know and exploit the same kinds of cycles. Financial cycles are slightly different but do exist. Every week, for example, there is a 'Payday' for employees, therefore, creating a demand in the currency which is to be paid to the payee. If your company headquarters is in Japan but its main sales are in the US then you will need to exchange some of those Dollars to be able to pay in Yen. There are also monthly, quarterly, yearly, and tax cycles that affect every currency.

What most traders seem interested in though are the Daily price cycles. These are affected most heavily by news events, market opening, and market closing. This is decidedly more complicated in the Forex market since it is a 24hour market where market open and closes overlap and news from multiple nations can be a volatility factor.

All of these cycles produce opportunities for 'Sale' prices.

If you are lacking experience in a market you will need practice finding the best deals you can. Nobody that I know of walks into a Flea Market their first time and gets the find of the century. It takes time and experience.

Thankfully we are given historical documents on price that can go back years in time giving us an advantage. Most of us are completely ignorant of what those documents mean when we first start out.

One key, I have found, to find the best deals is making the most of every chart. With practice, you can gain three timeframes of price structure data from only one.

1H price structure = Green Lines

4H price structure = Blue Lines

1D price structure = Red Line

All on a single 4H chart.

If you observe this chart long enough you may find the relationship between price and the S/R levels that I have chosen. It took me more than 10years of charting to find. Yes this is an after the fact chart and looks cherry-picked. I assure you the relationship is there and repeatable in a live market. I will say, it is not applicable to timeframes lower than 1H. I would call all these S/R 'deals'. These are my 'Fire Sales'/'Everything Must Go'. For you, it may be different since we are all individuals.

Just for clarity, I will say these are 'Pullbacks' not 'Breakouts'.

Green = 1H
Blue = 4H

What if we ignored all that juicy historical price data? Would we ever know when something went on sale? That would put us at the complete mercy of the market. Have you ever tried to buy an apple in midsummer? Not only are they expensive they don't taste nearly as good as in the fall. This is not much different than a new trader. They complain about losing money. Ah, perhaps you are no good at buying the on sale items... Yet...

Here is a 1H chart. The 1H structure looks good in the beginning but moves into a channel. How do you trade the channel? You take a risk if you are trading the extremes without knowing the larger picture. Can you tell me where this is headed with nothing other than this single picture? If you can my hat is off to you. I cannot and I suspect many others cannot either. Where is the safest sale price on this chart?



I find the answer to these puzzles on higher timeframes. Here is the same pairing on the D1 chart.

forward testing/practice/guessing is for the ignorance like me
hindsight charting, even my 5 yr old daughter know where is the downs and ups, hence no fun

They told me to Mind the Gap, everyday as I board the train.

Thin liquidity plus a GAP.
Bad habit die hard, yet a hindsight chart, but hopefully it serves as a reminder to mind the gap.

When you can find the answers to your questions before they happen is when trading is the most fun and lucrative. I only post these hindsight charts as good examples so that some may study them and learn. Live trading is dynamic. My hope is that my postings would bring enlightenment. Thanks for your ideas.

Here is my thought process on something a little more current.

Two good Daily price structure moves up complete with pullbacks after HH and HLs within the larger Weekly structure.



The Daily pullback is right to my firesale S/R.



The 1H firesales turned price down to meet with the Daily firesale.



Right where we are is where I become a buyer to reach for higher prices. Perhaps into the 110.50 region.

While there is no guarantee for price to do what I say I am more than satisfied with my projection. My risk is minimal as I enter minimally at the beginning.

Well that's an idea I hadn't considered before, probably because it made too much sense. Thanks a lot. The only problemI see is that it negates the need for my new, never fail When The Snake Pokes Her Head Out Of The Ground And Lays Her Eggs In The Tree system which I was going to sell to fund my trading when I blow my account from using the 3 Headed Dragon Spitting Water system

Snakes and Dragons. Sounds dangerous! I hope you never have to use them again.

Have you ever had to make a purchase and the day after you do your item goes on sale? Or were you waiting for a sale but the store ran out of your product? You don't stop shopping just because you missed the 'As Is' sign and couldn't return the shirt with a stain on it.

I like the way this guy describes trading. Probably someone has already posted this video somewhere on this forum but I think it is definitely worth watching at least once.

Hi Skracor247,
Thank you for the tread. I have been slowly moving to longer time frames and found this removes lots of noise/chaos from charts. So your idea makes total sense.
How do you handle entries around those significant levels - do you enter just on price alone (as it comes to the level) or do you wait for some reversal pattern?
Thanks again!

I do both. Since most of what I do is already following the 'Trend' in price I feel very safe entering right away. If I don't enter immediately I will get an inferior price most of the time. I also like to enter when the reversal has already started on even lower timeframes when I am feeling unsure of the outcome. Generally if price moves against me I will add a little at a time in a sort of 'Rescue Mission'. All of this stops, of course, if a true reversal/continuation shows itself, I will take my loss if I have lost confidence in my original idea.

The mid band at 1.1081XX might hinder the upward thrust but EUR all daily percentage in the green except EURJPY 1.75 daily percentage in the red.

Not sure what you are talking about... Probably a language barrier thing. No big deal. If you have a question please ask.

Once you have acquired your desired position the most important thing to do next is wait...

Trade complete. I got the best price I could and rode it until my target. I hope this example has helped someone. Trading is only as difficult as we make it.

Hi Skracor247,

Could you comment on your decision-making process with this trade, please.
- The entry point was not as soon as the price reached the 2 red lines and not after an obvious reversal, so how did you work it out? On what timeframe?
- would you set your stop under the low of the 29th November as the nearest swing low?

And thanks for that video too!

I put my decision-making process into the post below before I took the trade.

I did not tell anyone my exact entry. It was 109.71 by the way(spread was very wide at the time 6pips). I did take the trade before any other supporting price action or obvious reversal as I was very confident in the trade working out.

Stops IMO are for emergencies and not to invalidate a trade. My stop would be far enough away to ensure I am not stopped out by normal price action which would include the Nov 29 swing low. My stop would be more like 108.50(think Black Swan event). I exit a trade when it becomes obvious I have made the wrong trade decision.

If you have any further questions don't hesitate to ask.