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Trading the Cable swings via averages
- #8,465
- Edited 2:47am Oct 26, 2022 2:33am | Edited 2:47am
- Joined Apr 2019 | Status: Trader | 1,997 Posts
- #8,468
- Oct 27, 2022 4:01am Oct 27, 2022 4:01am
- Joined Apr 2019 | Status: Trader | 1,997 Posts
A day of ranging so far unless you guys caught the first 30 pip drop down at London open.
- #8,469
- Oct 27, 2022 5:43am Oct 27, 2022 5:43am
- Joined Mar 2016 | Status: Trader | 6,389 Posts
A day of ranging so far unless you guys caught the first 30 pip drop down at London open.
- #8,471
- Oct 28, 2022 9:12am Oct 28, 2022 9:12am
- Joined Apr 2019 | Status: Trader | 1,997 Posts
Been a tough week fighting me all the way but managed 4.6% for the week. Better than -4%
Playing with hedging again and not easy whilst doing my Full time job as well.
Keep at it guys.
Playing with hedging again and not easy whilst doing my Full time job as well.
Keep at it guys.
- #8,472
- Oct 28, 2022 11:04pm Oct 28, 2022 11:04pm
- Joined Mar 2016 | Status: Trader | 6,389 Posts
Been a tough week fighting me all the way but managed 4.6% for the week. Better than -4%
These choppy situations mean we have to be trading for longer periods which is not my style. If I can't get my trade on and won at or around the 108, I simply walk away and await a better future.
Many traders have to be in a trade of sorts for whatever reason and end up struggling to keep their heads above water whereas a little patience can go a long way to making life a little easier. The best practice is to pick your battles on your terms with all the clues to the outcome being on the charts for the analysis.
Looking at the 5 min chart below I was initially short via the 1-minute chart and closed at the bull div on the 5-min chart. However, let's take a look at trading a hedge situation and how we manage the risk.
Suppose I did this and got the stop to the hedges break even closing my shorts now in favor of the single hedge trade. In this case I would have been stopped out and would have to start the whole entry process all over again with the tentative entry and so on. However, I have lost nothing and kept most of my short winnings. The upshot is I would have taken a very safe chance and it didn't make good this time.
Now let's look at a different situation.
Suppose I am a tad late and spot this first div as being a long opportunity. This is actually my preferred method. I measure from the div to what I assume is the price target and convert this distance to my risk. It is about 71 pips so let this = say 2% (you do the math with your account) So if I risk 71 pips I could lose 2% it being an initial 50/50 trade.
Now we see the price went 20 pips against me to form another div and the target this time is about 90 pips. So once again we do the math to limit our risk to 2% for 90 pips. We have two trades on long and we are risking a total of 4%. The next thing I do is to average down the risk and move both stops so I am back to risking 2% total for the two trades but my now my targets are at 4% total.
Now we need to manage the trade, meaning adjusting the stop. Don't be in too much of a hurry to do this the darned hook may get you.
Spotting the hook presents another opportunity for a trade and we measure this at about 75 pips so we can risk another 2% so our total risk is back to 4% and our profit is at 6%. Again, the next thing to do is average down the total risk to bring it all back to 2% so we are risking 2% for 6% profit.
We can continue to do this as long as we have enough money to do so. In this case there is one more opportunity and this is for 50 pips so follow the same procedure risk 2% for the 2% profit. then average down the risk back to 2% total now with an 8% prize.
Bingo we got it. A very nice 4:1 reward to risk and our account has benefited by 8%.
How was I sure it was going to this target price? Well, I can never be totally sure else I would not need stops all I can do is manage the risk/reward in a logical manner. This would be a long-term trade for me running for nearly 8 hours duration. I prefer the 2-hour duration of the earlier short trade. Each to their own style of trading.
- #8,478
- Oct 31, 2022 8:22pm Oct 31, 2022 8:22pm
- Joined Mar 2016 | Status: Trader | 6,389 Posts
{quote} Many thanks Alan. Yeah, I think I understood what you mean. You are sticking with your trade management principle: entry lot by lot, only add to a position when you have an opportunity, but try to keep risk level unchanged. I have no difficult to get profit with your method, if I trade 01 entry, and sometime 02 entries. But I still got problem when I am trying to get 03 entries in a row. More often than not, my SL had been hit. So, I am trying this approach: 1/ Entry trade 01 at Div 2/ Entry trade 02 at Hook. If there is no Hook, so let...
The numbers I use are for illustration purposes of this principle, don't take them at literal fixtures. The reason for 1, 2, 3 trades growing in size is because as we approach the price target the distance is shorter thus the lot size increases to maintain that 2% win on each entry. Each entry requires the stop to be adjusted to keep to the 2% risk We may not be trading for percentages but rather a fixed dollar sum we wish to make but putting all our money in at once and risking 2% means we can keep swinging from a win to a loss and get nowhere over time.
As far as getting those additional entries on it is not that difficult if we take the inference from the higher time frames and take the pull backs at the lower time frames, the earlier they are put on the cheaper they are since they have a bigger run to the price target. If you can't see quick entries on the 5 min chart then look to the 1 min chart for them.
Below I have the 5 min and the 1 hour showing the section of the chart I was interested in. It begins with a HD on the 5 min and then the bears found support and resulted in a nice 5 min trend down to my target. Note how I have the 4-hour EMA on the 5 min chart (blue). If we look at the 1 min chart, we see price starts trading below the average very early so we can get our trades on quickly.
You may also notice I am counting the legs which is not easy to do because there are many combinations and variations requiring me to write another book. The key here is legs 2 to 3 and 4 to 5 are the prime movers.
This chart show some of these counts, each red rectangle is a set.
These are often difficult to plot in real time requiring lots of practice. We think of a set forming and it turns into an ABC with a 161.8 fib target.
One doesn't need all this knowledge though because the EMA gives us plenty of opportunities.
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