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Weekly COT report Analysis + Trade Ideas

  • #9,201
  • Nov 20, 2020 8:17am Nov 20, 2020 8:17am
Quoting shahab8b
{quote} Well, that's a counter trend play. So the probability of failure is more than a setup in the direction of the trend. But if it is done right it can be profitable. I know you are an experienced trader, but I am gonna review some basic stuff for our newbies. I am not talking about this trade in particular but in general. For each trade setup, you need to define three things in advance: 1) your SL (which also defines your % risk and the position size) 2) your TP (then you use your SL and TP to calculate the RRR) 3) the probability of that trade...
Thank you for your time and good will to share your wisdom, Shahab!

What people often fail to see at first is, indeed, a fact that trading is a probability game and you get results over series of trades, not one or ten.

I´m not newbie, but a still a greenhorn. When I opened my first live account I had to go to brokers office and fill papers, literally, and they took copy of my passport, we signed agreement. MT4 was a new revolutionary platform.
I have managed to live off of trading for some years but it went very wrong at some point. So I have been away from serious trading for 10+ years. And markets have changed a lot, computer trading all over. Can´t trade stocks at open anymore, millions or billions orders there, HFT-s.
EU this week range is like it was a normal daily range back when I started. NFP used to throw JPY pairs hundreds of pips and JPY followed DOW, now NFP is is 20-40 pips and correlations work only on extremes (vaccine news). I´m learning and adapting again.

Very important thing to get your posts true meaning is a journal - if you do not keep one, at least as a newbie, you will be f*cked. I screenshot my trades. Not when I take them, but some time after exit, so I can see how much DD I had on that trade, were my SL and TP adequate or emotion driven, did I started to micromanage (and was it good or bad) etc.
If you do not collect and analyze data on your trades, you can't build up your vision about outcome on longer term.
Markets will move to the right.
  • #9,202
  • Nov 20, 2020 8:21am Nov 20, 2020 8:21am
No hidden surprises here for anyone following this thread.
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  • #9,203
  • Nov 20, 2020 12:32pm Nov 20, 2020 12:32pm
OK, it was a relatively good week. But it could have been better. Sometimes it's good to look back and analyze what we could have done better. The example here is the missed long opportunity on GBPUSD. I missed the trade because I had a very bearish bias and I ignored the good technical setups that were in place. We had a very good confluence setup for a long trade based on RN (1.32), fib 0.50, H1 S, and weekly pivot. That's why it is good to stay mechanical and follow the trade setups that you know they work. I missed the trade. However, C-12 was smart enough to take this great trade and I am pretty sure many other traders did the same. Hopefully, those of us who missed it will remember the lesson.

Have a nice weekend
S
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  • #9,204
  • Nov 20, 2020 12:39pm Nov 20, 2020 12:39pm
EJ daily looks interessting
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  • #9,205
  • Edited Nov 21, 2020 10:58am Nov 20, 2020 1:03pm | Edited Nov 21, 2020 10:58am
Quoting shahab8b
OK, it was a relatively good week. But it could have been better. Sometimes it's good to look back and analyze what we could have done better. The example here is the missed long opportunity on GBPUSD. I missed the trade because I had a very bearish bias and I ignored the good technical setups that were in place. We had a very good confluence setup for a long trade based on RN (1.32), fib 0.50, H1 S, and weekly pivot. That's why it is good to stay mechanical and follow the trade setups that you know they work. I missed the trade. However, C-12 was...
Truth is I have been given a harsh reality check over the last 6-8 weeks regarding all my assumptions on PA reading, forecasting and even my trading hours. The market does not give a damn about it and seems I've been doing this all wrong for years. It has been quite humbling.

I have recently found that a very reliable approach is to trade directly off the confluence level and exit at the next level which is almost always 50 or 100 pips to the opposing round number. Those pips are usually quick and easy to collect. (GBPUSD rough chart example below).

Of course RN is just one component of a stacked confluence setup, and there are trend cycles to hold and add to positions for higher RR.

Thanks to this thread, my account performance has gone through the roof but there are still improvements to be made. Stop loss placement, risk management is something I need to fix. I am seeing a massive accumulation of points, but not converting that correctly into R %.

There is a fine line between doing ok against doubling and tripling accounts over and over in short order. That is absolutely a realistic target with this method of trading and the complete opposite to what we are told is possible inside these FF forums, Youtube or Instagram gurus.

Let's keep this going and hopefully others will join in and we can really start picking out levels as a group and combining experience. I have a feeling this place is about to get a lot busier.
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  • #9,206
  • Nov 20, 2020 1:53pm Nov 20, 2020 1:53pm
AUDUSD monthly:

Has reached supply zone, the green rectangle, touching it couple times already. Looks like a good spot to sell, and take profit at 0.66710. Trade safe.
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  • #9,207
  • Edited 8:39am Nov 22, 2020 7:36am | Edited 8:39am
Quoting C-12
{quote} Truth is I have been given a harsh reality check over the last 6-8 weeks regarding all my assumptions on PA reading, forecasting and even my trading hours. The market does not give a damn about it and seems I've been doing this all wrong for years. It has been quite humbling. I have recently found that a very reliable approach is to trade directly off the confluence level and exit at the next level which is almost always 50 or 100 pips to the opposing round number. Those pips are usually quick and easy to collect. (GBPUSD rough chart example...
I agree with what you said as trading based on confluence setups can be extremely rewarding in the right market condition. But I also want to point out (mostly for newbies reading this) this method is not the Holy Grail. I mentioned a few weeks ago that the main challenge in trading is finding the right trading method according to the market cycle/condition. When we have a range/irregular or a regular trending market (by regular I mean a trending market that has up and down swings in oppose to vertical one directional impulsive moves), this approach (i.e. confluence levels method) can be very profitable. In reality, you may find 70-75% of the time market remains in those favorable conditions. However, we need to understand the limitations of this method.

So there are two ways to go about this: one way is to master this technique (i.e. confluence levels method) and recognize when you should not be using it (e.g. during those vertical moves that we had back in FEB/MAR this year). This means you stay away from trading under those circumstances. Or we can be flexible and have a set of proven trading methods that we can apply to different market conditions. I wrote this back in 2012, but it is worth mentioning it again: I think the ideal strategy is what I call an "adaptive design trading approach (ADTA)" in which you switch to different pre-planned trading methods according to the market condition.

I edited this post to avoid the unnecessary complexity.
  • #9,208
  • Edited 8:37am Nov 22, 2020 8:18am | Edited 8:37am
Quoting shahab8b
{quote} I agree with what you said as trading based on confluence setups can be extremely rewarding in the right market condition. But I also want to point out (mostly for newbies reading this) this method is not the Holy Grail. I mentioned a few weeks ago that the main challenge in trading is finding the right trading method according to the market cycle/condition. When we have a range/irregular or a regular trending market (by regular I mean a trending market that has up and down swings in oppose to vertical one directional impulsive moves), this...
That makes sense. I know I've arrived at the confluence method at a very favourable time, but I am also aware after years at the screen that order can quickly descend into chaos as we saw with the Covid outbreak in late Feb/March and during Brexit etc

In these periods almost everything goes out of the window, supply levels, fibs, RN's and you have to sometimes find creative ways to get onboard a runaway train.

These periods can actually be the most profitable if you have the experience to trade them. However, finding entries into these high momentum moves tend to be more discretionary as you're not getting the usual retracements you would expect.

I wish I documented all the examples of how I traded that period, but I tend to forget about those crazy times as things settle back into ranges. I remember being at the screen by 5am watching for false breakout moves around the overnight session highs/lows. They were producing some outstanding RR opportunities.

I am going to go back to that period again and back test it across the majors. It is a good idea to document and categorise all those setups as no doubt they will be needed again.
  • #9,209
  • Nov 22, 2020 9:15am Nov 22, 2020 9:15am
Quoting shahab8b
OK, it was a relatively good week. But it could have been better. Sometimes it's good to look back and analyze what we could have done better. The example here is the missed long opportunity on GBPUSD. I missed the trade because I had a very bearish bias and I ignored the good technical setups that were in place. We had a very good confluence setup for a long trade based on RN (1.32), fib 0.50, H1 S, and weekly pivot. That's why it is good to stay mechanical and follow the trade setups that you know they work. I missed the trade. However, C-12 was...
I dunno, but my MACD showed long entry on 19 th around 3225 for long signal.
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Intraday only.
  • #9,210
  • Nov 22, 2020 9:29am Nov 22, 2020 9:29am
Interesting Trend line on GBP/JPY H4
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  • #9,211
  • Edited 1:45pm Nov 22, 2020 9:42am | Edited 1:45pm
Quoting navk
{quote} I dunno, but my MACD showed long entry on 19 th around 3225 for long signal. {image}
I am unsure of the intention of the post, but this trading method doesn't use oscillator crossovers, apart from divergence as information.

Sure these price following indicators are possibly suited for trend following strategies but they don't appear to be very useful for precision.

The entry outlined in this method was right on 1.32, it was simply a missed setup and that happens.

Let's have a look on H1 chart and see how well the MACD signal actually did. Or is there some other magic sauce setting I am missing?
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  • #9,212
  • Nov 22, 2020 10:20am Nov 22, 2020 10:20am
Quoting C-12
{quote} This trading method doesn't use oscillator crossovers, apart from divergence as information. Sure these price following indicators are possibly suited for trend following strategies but they are not very useful for precision. The entry outlined in this method was right on 1.32, it was simply a missed setup and that happens. Let's have a look on H1 chart and see how well the MACD signal actually did. Or is there some other magic sauce setting I am missing? {image}
The MACD shown in my chart is different.
Intraday only.
  • #9,213
  • Edited 1:32pm Nov 22, 2020 10:29am | Edited 1:32pm
Quoting navk
{quote} The MACD shown in my chart is different.
All I am saying is MACD (or any oscillator) is always going to follow what price does no matter what setting you have. Sure it can be used as a heads up momentum is fading or getting ready to turn etc, but is MACD actually nailing precision point turns on these crossovers?

Did it signal the earlier 1.33 sell this week on GBPUSD or last week that were both captured here almost on the pip?
  • #9,214
  • Nov 22, 2020 10:33am Nov 22, 2020 10:33am
Quoting C-12
{quote} What I am saying is MACD (or any oscillator) is always going to follow what price does no matter what setting you have. Sure it can be used as a heads up momentum is fading or getting ready to turn etc, but is MACD actually nailing precision point turns? Did it signal the earlier 1.33 sell this week on GBPUSD or last week that were both captured here almost on the pip?
yes,

it is useful to me.

I got this setting from a professional.

But yes, sometimes, divergence problem occurs.
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Intraday only.
  • #9,215
  • Edited 1:32pm Nov 22, 2020 10:35am | Edited 1:32pm
Quoting navk
{quote} yes, it is useful to me. I got this setting from a professional. But yes, sometimes, divergence problem occurs. {image}
Did you sell GBPUSD 1.33 last week off the back of a MACD signal?
  • #9,216
  • Nov 22, 2020 10:37am Nov 22, 2020 10:37am
Quoting C-12
{quote} What I am saying is MACD (or any oscillator) is always going to follow what price does no matter what setting you have. Sure it can be used as a heads up momentum is fading or getting ready to turn etc, but is MACD actually nailing precision point turns? Did it signal the earlier 1.33 sell this week on GBPUSD or last week that were both captured here almost on the pip?
this chart, when I use divergence.

the previous one, short at 3300, but with divergence, short at 3275.
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Intraday only.
  • #9,217
  • Nov 22, 2020 10:38am Nov 22, 2020 10:38am
Quoting C-12
{quote} Did you sell GBPUSD 1.33 last week off the back of a MACD signal?
i did, but I am a scalper, intraday
Intraday only.
  • #9,218
  • Edited 1:33pm Nov 22, 2020 11:03am | Edited 1:33pm
Quoting navk
{quote} i did, but I am a scalper, intraday
I am personally not against indicators if there's something useful that enhances your method without side effects. The boss put me onto the idea of using divergence as confluence when price is approaching pre-defined levels.

This is not a new concept but actually one I'd completely forgotten about years ago. This is using Stochastics Divergence indi which seems a bit more visually clear than RSI version, but they are basically the same. I remember redsword11 used it.

The hidden divergences look equally interesting for add on setups like 1.3250 on Friday.

I am liking what I am seeing here but I need investigate further this week in forward testing. But anyway, we are taking this thread off topic a bit.
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  • #9,219
  • Edited 3:15pm Nov 22, 2020 12:11pm | Edited 3:15pm
EURUSD - one final chart showing divergences last week. It seems it would have been quite useful for the long off 50% as an extra layer of confluence.

Interesting indeed. I feel like I have travelled back in time to 2012 with all these re-discoveries.

I've attached the indicator if anyone wants to dabble. We can play around with it and it might prove useful.
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Attached File(s)
File Type: ex4 Stochastic_DivergenceMTF.ex4   40 KB | 697 downloads
  • #9,220
  • Edited 12:43am Nov 23, 2020 12:16am | Edited 12:43am
GBPUSD coming into a level here and might get a setup off 1.3350 to take this back down to 1.33.

1.34 is the level at D1/H4 supply.

EG also back into H1 demand but has taken out 0.89.

EURUSD - added here - aiming for 1.19. Getting up to it though has been like mission impossible.
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