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Trading the Cable swings via averages

  • #6,341
  • May 14, 2020 11:31pm May 14, 2020 11:31pm
Quoting Paulnz57
https://www.forexfactory.com/attachm...1&d=1589446399 Hi Alan, hopefully no questions is too stupid and I haven't missed something obvious here, but from a trade mgt perspective, was there an option to hedge when you closed entry 2? Also, was entry 1 left open during the downward move from entry 2's closure? Am new to the practice of hedging and am trying to understand as much as possible of the thought process when deciding to hedge or not and trade mgt in general. Many thanks....Paul. PS sorry about...
Yes certainly one could have hedged there, I just chose not to. Yes entry was left open because this is where we are expecting the hook so we don't want to lose this good position, better to be stopped out for a few pips profit.

All the time we have to be thinking in terms of the bigger picture of our prediction and attempt to trade it accordingly. We are not by any means going to win them all but we don't have to as along as we keep making the attempts we will win through.
  • #6,342
  • May 14, 2020 11:33pm May 14, 2020 11:33pm
Quoting Andy1501
{quote} Would this finding encourage you to adjust your entries for long trades in the future ? For example , waiting for a second pull back before entry ( to compensate for the volatility )....
Not really because after the first runs for the day I quit trading, can't hang around here indefinitely just waiting for something to happen.
  • #6,343
  • May 15, 2020 2:08am May 15, 2020 2:08am
Divergence forming/formed on the 1 hour chart.
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  • #6,344
  • May 15, 2020 3:06am May 15, 2020 3:06am
Regular divergence again in the 5 minute chart unless i am mistaken, its small but its there.
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  • #6,345
  • May 15, 2020 7:08am May 15, 2020 7:08am
Quoting MaxiPip
Divergence forming/formed on the 1 hour chart. {image}
There is no divergence there...

Here are some I drew on your chart because I can't match yours with mine.
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  • #6,346
  • May 15, 2020 7:17am May 15, 2020 7:17am
If the EMA is going to make the LL A

Then price should reach the next level B
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  • #6,347
  • May 15, 2020 7:32am May 15, 2020 7:32am
Thanks Alan,

that makes sense, it did head up by about 20 pips but took out my stop loss at a 10 pip profit,

I will get the hang of this yet.
  • #6,348
  • May 15, 2020 10:37am May 15, 2020 10:37am
Hi guys,
just wanted to post my week results.

I am still getting used to the system at the moment and trying to increase my confidence at pulling the trigger at correct times i definitely made some mistakes and missed some of the bigger moves through out the week.

This week i traded between 8am uk time to 12pm every day with this method.
I finished the week at a loss, i was stopped out at break even x11 trades, losing trades x4, winning trades x2 , i leverage my trades usually between 0.50 to 1.5 per
trade putting my stoploss at a variable 2% risk.

I will post my trades next week so i can try rectify the mistakes i am making.

Have a good weekend everyone.
  • #6,349
  • May 15, 2020 11:48am May 15, 2020 11:48am
A good week end to everybody and thank to Alan for the charts
Chris
  • #6,350
  • May 16, 2020 1:04am May 16, 2020 1:04am
Quoting Elsaloon
A good week end to everybody and thank to Alan for the charts Chris
Remember we are trading between the averages and must bear this is mind all the time we are trading. I see so little evidence on the charts you guys post. There seems to be a fixation on divergence but these are only going to work at the appropriate times.

Look at the 5 min chart below our analysis would begin at A, this was the Average swing high, the average swing low followed at C.

Now we have the situation sorted with the High A and the Low C trades taken between these tow levels are scalps, not likely to be big enough to constitute a full blown trade.

From C price climbs back to the A average but look what is happening when it gets there. It is showing Bear divergence and this could easily stop the average climbing any higher. If the price cannot break past A then it is mathematically impossible for the average to climb higher than A also. So B is likely to be the fail point of this up move. It is a high probability not a sure fire thing by any means so we just take a small chance with our first entry.

All goes well we cross the EMA and the bears find support allowing us our 2nd entry. We have plotted D as our possible target but look at the position marked X price is struggling to cross the C level.

Our problem is we only have our 1st and 2nd entries on so we cannot have made our profit target but we are worried at this point price could simply turn and take out A + as it drags the EMA to a higher high. Don't underestimate this pair can easily do this. Our options are to close and call it quits for the day or HEDGE our work at X.

Now one of two things are going to happen,
1) The hedge may become the primary trade and entries 1 and 2 will be stopped out for no loss.
2) The hedge will fail and will be stopped out for no loss. We could also close the hedge at the bear support because it was in a div situation. If price continued up we would still be winners as 1 and 2 get stopped out.

The bears then managed to find a new support allowing entry 3 and then price runs to D and we have done the dirty deed to death.

This is why trading is so stressful and why we have to have a great deal gong on in our heads. Clearly we can see these levels play important roles and we have to plan for them and no what to do as they crop up.

There are times when price runs from B to D without taking a breath, a nice number of pips but hardly the profit we want because the 2nd and 3rd entries are difficult to get on.

To sum up...Watch what these averages are doing and get the levels on your charts priority number one.
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  • #6,351
  • May 16, 2020 6:10am May 16, 2020 6:10am
Quoting Nala66
{quote} Remember we are trading between the averages and must bear this is mind all the time we are trading. I see so little evidence on the charts you guys post. There seems to be a fixation on divergence but these are only going to work at the appropriate times. Look at the 5 min chart below our analysis would begin at A, this was the Average swing high, the average swing low followed at C. Now we have the situation sorted with the High A and the Low C trades taken between these tow levels are scalps, not likely to be big enough to constitute...
Thank you Alan for this very clear explanation
  • #6,352
  • May 18, 2020 12:57am May 18, 2020 12:57am
Quoting Nala66
{quote} Remember we are trading between the averages and must bear this is mind all the time we are trading. I see so little evidence on the charts you guys post. There seems to be a fixation on divergence but these are only going to work at the appropriate times. Look at the 5 min chart below our analysis would begin at A, this was the Average swing high, the average swing low followed at C. Now we have the situation sorted with the High A and the Low C trades taken between these tow levels are scalps, not likely to be big enough to constitute...



Hi Alan,

thanks for this, that makes a lot of sense. I was focusing more on divergence you are quite correct and that is only one piece of the puzzle.
  • #6,353
  • May 18, 2020 1:33am May 18, 2020 1:33am
Hi Alan,

I am still struggling to understand the money management part with two trades and hedges. It would be very grateful if you can help to post a small video.

Sorry if I am asking too much.

Thanks in advance.
  • #6,354
  • May 18, 2020 6:10am May 18, 2020 6:10am
Today results so far

B - stopped out B/E
C - stopped out B/E
D - i entered a short at the average high you can see sitting below D as on the M30 alan divergence and it reversed into stoploss immediately. (i took the screenshot after the divergence happened but you can see where i placed the lines) (not a trade i would usually enter as it creeped above the average high on the 5m but took a chance on the divergence) LOSS

3rd week trading the system -25% of account, hopefully i can pull this back.

My biggest issues seems to be confidence pulling the trigger then pulling my stoploss down to B/E to soon.
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  • #6,355
  • May 18, 2020 10:33pm May 18, 2020 10:33pm
Quoting pipparkar
Today results so far B - stopped out B/E C - stopped out B/E D - i entered a short at the average high you can see sitting below D as on the M30 alan divergence and it reversed into stoploss immediately. (i took the screenshot after the divergence happened but you can see where i placed the lines) (not a trade i would usually enter as it creeped above the average high on the 5m but took a chance on the divergence) LOSS 3rd week trading the system -25% of account, hopefully i can pull this back. My biggest issues seems to be confidence pulling the...
I can't put all the stuff on the one chart here but you are certainly not reading it correctly.

Your 108 bar is wrong should be later.

The trade begins with A bullish divergence on the 5 min based on the notion that the 1 hour is trying to get back to the average and indeed try to break it.

The 5 min move up to your B which was a swing high average and a bear div so this could be a 1 hour failure and it may turn south. It did. We have two options at B, we can either hedge our long trades consolidating them into 1 or we can close and take a short beginning our trade anew. A hedge is always the best and safest way to go and we would expect our longs to be stopped out at A, thus the hedge would have won the day.

As it happens in this case price turned north again at C and when it found Bull support we close the hedge for whatever profit it makes and we are continuing with the long trade until our profit is realised.

Your chart doesn't show the next 5 min EMA swing level so how would you know where it is going?
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  • #6,356
  • May 19, 2020 1:17am May 19, 2020 1:17am
Quoting sanme
Hi Alan, I am still struggling to understand the money management part with two trades and hedges. It would be very grateful if you can help to post a small video. Sorry if I am asking too much. Thanks in advance.
Well perhaps you can help me, I haven't got a clue how to make a small video

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Looking at the diagram above we have plotted the target level to be the swing high average.

We can put a box on this representing our full profit target i.e. 40 pips and we see it fits comfortably in the range we expect.

We begin at A by dipping our toe in the water with a smallish trade. As the trade progresses and our confidence builds we add to the winning position until we are fully loaded by the time we reach B

However we could run into trouble at any time and may suffer a pull back from our desired direction and just in case we get a complete turnaround we want a measure of insurance, this is where we would hedge the trade essentially locking it up neither winning more or losing less until we determine which way price is going to go.

Americans cannot do this due to trading regulations. (It is not a free country)
  • #6,357
  • May 19, 2020 1:19am May 19, 2020 1:19am
Quoting Nala66
{quote} I can't put all the stuff on the one chart here but you are certainly not reading it correctly. Your 108 bar is wrong should be later. The trade begins with A bullish divergence on the 5 min based on the notion that the 1 hour is trying to get back to the average and indeed try to break it. The 5 min move up to your B which was a swing high average and a bear div so this could be a 1 hour failure and it may turn south. It did. We have two options at B, we can either hedge our long trades consolidating them into 1 or we can close and take...

Hi Alan i really appreciate you taking the time to reply thank you! I will read over some of the rules again to be sure i am not missing something. My 108 bar is currently set at around 8am BST as i am here in the UK and I did have the next level on the chart it was just further up as there was a large gap to the next 5m average high.
  • #6,358
  • May 19, 2020 1:19am May 19, 2020 1:19am
Targeting 2294?
  • #6,359
  • May 19, 2020 1:20am May 19, 2020 1:20am
Maybe clearing stops for a move south if it fails to pull the average higher.?? that was a nasty spike.
  • #6,360
  • May 19, 2020 1:24am May 19, 2020 1:24am
Quoting pipparkar
{quote} Hi Alan i really appreciate you taking the time to reply thank you! I will read over some of the rules again to be sure i am not missing something. My 108 bar is currently set at around 8am BST as i am here in the UK and I did have the next level on the chart it was just further up as there was a large gap to the next 5m average high.
No worries, the diagram I have just posted should help a lot.
Bar 108 shows as 9am my chart time which is 3:30 pm for me here.
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