Trading Forex is Hard

your words are nice, but what is your " consistent positive approach"?

My consistent positive approach is to analyse our prior trades so that we may improve our weak areas rather than getting caught up in the trade's results.

Genius.

The take profit was hit for 10 pips.

totally forgot about this thread and i have to thank you venividivici for ideas which helped me to "get it".

before London open. I guess today it will be wild again.

Hey!

Jens wanted this to be public for everyone to benefit from it.

Here’s an hour or so of chart action that’ll serve as a basis for explaining how his thought process evolves in the heat of the moment. He’ll explain in more details when he gets the time.

Thanks Jaymantos!

can't wait

Here we go ...

Jaymantos already said it, this is about the thought processes or the reasoning behind my decisions to make bets. Of course, a YouTube video is easy, and some might say that hindsight is always 20/20. However, that is not what this is about. I'm not selling anything. So it's not about advertising the strategy Veni presented here in the thread, nor is it about promoting myself, but simply about using moving pictures to explain what I actually observe when I look at a chart because Jaymentos and I are of the opinion that it might be more helpful to others than static pictures, which you often find here in the forum.

Let's just start with the bottom pair: USD/JPY. A brief summary of the situation could be as follows:
The pair has broken down from a narrow range (far left on the chart at the beginning of the video) between 130,300 and around 130,450 and has now been in a slow upward movement, with minor setbacks, towards the lower edge of this old range (130,300) for some time.
This upward movement is similar to a channel albeit a bit dirtier without the textbook-like symmetry. The upward movement exists because every time there was a setback, buyers came back in and took the selling pressure out of the market.
If one had started earlier, this would be a great example of a nice long bet where we could very easily buy a setback somewhere in the middle without much risk and ride it to wherever it goes. However, since we are too close to the old range, which has now potentially become a resistance, this would be a bad time.

We can play the whole thing as follows:
If the price breaks this old range above (above 130,450), that would potentially be an opportunity to jump in late on the buy side. Personally, I don't like to do that without doing further analysis. My motto is either early or not at all. Unless I know of market circumstances that make long-lasting movements likely. But neither this chart nor the others, which also include the USD and where USD strength is already underway, look like that.
So let's concentrate on that possible bounce to the downside.

I like to talk about a kind of point-based decision-making. So here are the ingredients again in a nutshell:

1. Clear, steep leg towards a resistance? No. Not at all steep and clear.
2. But: It is not just any resistance in the middle, but one of the quite important main marks if you look at this chart. Scrolling further to the left would probably have provided more clarity.
3. Furthermore, an incipient dollar weakness in the pair would correlate with what we already see in the other pairs.

Basically, it looks like this: The individual parts for the probability look good, but are not fully convincing. The win-to-loss ratio, on the other hand, looks very healthy. For me, this is enough to prepare a possible short bet.

At about minute 3:10, stagnation sets in that correlate very well with the old range; the old support of the starting range at the beginning becomes our new resistance. Here we should slowly consider placing a short bet. The implementation varies somewhat between traders. I would like to discuss this separately later so as not to make the analysis part of this text unnecessarily complex with interwoven implementation methods.

Now in the next 20 minutes or so we see that this bet worked out well. But what if it hadn't? Then we would have paid with a loss for the information that the upward pressure of the USD, at least against the yen, is currently very strong and should factor that into the decision of subsequent bets. We would have lost money, but it is up to us to decide whether we also lose our heads over it or take the information gained.

Around minute 26:30 this downward movement ends. Should we now make a long bet here? I'm not sure I would have taken it. The argument in favour would be that quite strong movements usually trigger a subsequent movement that is at least long enough to go out with a small profit. The fact that the short bet was not entirely steep and clear would have argued against it, i.e. partial setbacks were used by market participants to jump on the downward movement later and the likelihood of this happening again isn't too low. We could scroll further to the left to find more clarity on whether we have a decent supporting level here or not. In principle, I like such ping-pong situations, but I can't give a proper judgement based on what I see here. When I enter such a ping-pong scenario, it can also be that I merely exchange short for long positions until the price visibly runs out of steam and the trend tends sideways, as you can also see in the later course. When something like this occurs in the morning of the day (i.e. Europe session), more movement usually comes back into the market later in the day, mostly in the Europe/US overlap or around the close of the European session.

Execution
Now let's return to the short bet for a moment. We can see here very nicely that every now and then a slight stagnation occurs and shortly afterwards the price gains some new momentum to the downside. Such slight stagnation phases can be used very well to increase the size of the position. To do this, we simply place another short position just below the stagnation zone (sell stop order), so we basically consider this small stagnation as a micro-level, so to speak, as Veni already presented it here in the thread. Size-wise, we stay well below the initial bet so that we only have to risk our unrealised gains. Pseudo-mathematically speaking, we thus improve the risk-reward ratio again in the course of the bet.

Now, the key part of the execution: Placing the bet
As I mentioned elsewhere in the thread, I usually use stop orders to place the bet. I do this primarily for two reasons:

1. Accurate positioning so more or less distance from the resistance to stay within the example of the initial short bet or to wait out micro-levels, such as we could have done when extending the short bet.
2. In addition, this variation also allows me to watch the price action while making adjustments if necessary, without the stressful situation of manually executing with my finger eagerly waiting on the buy or sell button.

Accurate positioning can be a little tricky and the initial short bet is a pretty decent example of this. As mentioned at the outset, the initial upward leg was fuelled by late-emerging buyers who took advantage of any small setback to jump on. A similar situation can of course be expected when placing a short bet just below the mentioned resistance. But there is no perfect option here:

1. We can get in early and perhaps see the bet blow up when new buyers come in again.
2. We can enter later but then pay for an increased probability with a poorer risk/reward ratio.

A perfect solution does not exist for such bets, unlike reversal patterns following steep and clear legs. Personally, however, I would lean towards early entry given the currency strength factors mentioned and the presumed quality of the resistance.

Let's come to the end of the excursion through my thoughts on placing a bet.

I'll be away from steadily connected civilisation for around one week from Monday, but after that, if there is interest, we can do it again with clips of days with different market behaviour if Jaymantos or someone else offers to upload them (in a similar layout please). If anyone has questions about other time markers in the video, I'll be happy to look at them again separately when I return.

On a side note: I haven't forgotten my text about stop-loss management. It's still in my pipeline.

Thank you Jens and Jay

It takes time for me to respond this post because there are so much information presented
First impression is i was wrong about how you might trade, i thought you only pick nearest resistance or as you said as just any resistance in the middle.
Then you will see how price moving toward that resistance, if it was clear leg, then just wait for any sign or reversal to short it.
I've been doing it sometime and shows quite good result

Any reason why you pick that level as resistance?

The moment you short USDJPY, and price moving downward. Did you consider what happened on EU and GU? where the price was also moving downward, showing conflicting movement.

Thank you for your insight and please answer whenever you have time.

Hello everyone,
I like this idea of the 1 minute trade. With that said, I would not make a habit of staying long in the trades because of the MM stop hunts. Maybe 8-10 pips if you can and get out. The safest trades that work for me are any trades that don’t involve the USD trades.
In the USD trades you have to watch the US Dollar and you have watch the pair that you’re trading. I no longer trade the US pairs. And my loses have dropped 56% in one month.
Everyone have a great weekend.

Perhaps I should have formulated/explained that better. The price level that I call resistance here was used 2 times as a support, on the third test as support it did not hold and the price broke through and dropped. On the 4th test, it was a clear resistance.


Now to repeat the most important piece of information: I am looking for bets with a good risk-to-reward ratio with good enough probability. That is exactly what I found there. The probability was not perfect but good enough to justify the very limited risk.

You have to realise one thing for the trading day, either by observation or by one or two small losses at the beginning of each day, which were then just money paid for information: Do periods of weakness in the price, attract late buyers or sellers who confirm the previous direction or does a price reversal set in here? In the former case, we see the above patterns, i.e. small trend-like movements or channel-like patterns. In the latter case, we see clear legs, sometimes steep, sometimes less steep, but they tend to start and end predictably at around the same prices (think of horizontal lines). This is how I tell trading days apart (in a nutshell). In both cases, the outer support and resistance areas are those with the highest probability and the strongest counter-movement. In the former case, however, you need that certainty and strength to make repeatable profits while they're just nice to catch in the second case. This is exactly why the market behaviour shown in the video is harder to trade: You have to pay attention to more details to cut out the noise and need more discipline when waiting and that's why I always recommend beginners to limit themselves to clear and steep rangebased days first - well, those were rare last week. Later you can add days like the one in the video or trade nice channels. Step by step.

One could also say that I trade not one, but two strategies, perhaps even three, and select the one that is suitable for the situation on the basis of observation by assigning the market behaviour to two or three broad schemes that experience has shown to remain in place for several hours.

Did that help? Did this approach of explaining it better illuminate the differences between the days and why I would have chosen to trade from this level?

I did notice the signal conflicts shortly after the reversal started. Now, this was not a live bet, just an analysis of a video that Jaymantos picked for me. We discussed the idea beforehand, not the market situation. How I would have reacted live to that detail is hard to say, but I would have seen no reason to cut the bet prematurely because the entry point was chosen at a resistance that I judged to be sufficiently well-tested and not it did not exist in the other pairs at least not at around the same time. A proven way to mitigate the risk of a quick and strong return to the original direction is to tighten the stop-loss.

Thank you for your clear explanation.
Regarding risk reward ratio, how you determine the potential reward.

Do you think below is the proper level identification?
I think in this case, it is the clear leg kind of trade

So, I'm not back home yet, but at least I'm back on solid ground here in Florida.

The level that you have drawn in your second chart is the area that I was sort of looking at as a likely minimum target because the price hovered around that quite often. It didn't always bounce there, but as you can see on your whole chart from left to right, it showed slight stagnation phases there again and again. If such zones are close, it is my experience that the price will at least reach them again.

You are absolutely right, that would have been an excellent bet but I limited my analysis to the beginning of the video. I only used the visible "history", as in a real working day, to identify interesting levels. Perhaps I should have communicated that as well ... Regardless, from a purely technical point of view, the reversal of the leg you marked with the arrow fulfils 3 very interesting criteria:

1. Reversal on a seemingly well-tested resistance
2. Reversal on a relatively clear and steep leg compared to the rest of the chart
3. The whole thing is also in the direction (short) of an overarching slow trend (which later seemed to have ended with that reversal). A look further to the left in the history would probably have shown a well-tested support zone there.

No rocket science really.

Thank you for the answer.
Your explanation is very straight to the point.
It makes perfect sense.
So far i have no more question, i will try to put it in practice
And i hope you will still post more nugget here.

Thanks

Sir. Jensg these are some precious pieces of informations that either beginner and experienced can benefit from. Thanks for taking the time to share it.

Personally i find the exit much more difficult than entry point. My psychology acts a bit weird when i have to decide if it's time or not to exit a trade.

Interesting. Can you elaborate on that? Do you tend to exit too early or too late? Getting out too early is a typical symptom of feeling uncomfortable with money on the line while being too late is often easier fixable by baking a more straightjacket-like exit approach into the strategy.

Jens, Jay thanks for all the effort into such an informative post!! This video format of showing how you trade is very helpful and i can assure you there's definite interest. @Jaymantos i'm happy to try to help upload videos so we can keep this discussion going!


one thing I am curious about Jens. you mentioned the level around 130.20 was what you were eyeing as a minimum target. What would have kept you in the trade when there was some indecisive action there? There was some reversal-like price action with a tiny "micro level" break.

additionally this level was a well tested previous resistance turned support correct? couldn't we apply the same logic you had for the short trade to this level? was there something else that would keep you from exiting or even considering a long there (ping-pong action)?


there is kind of what looks to be a range around 130.05-130.20. wouldn't buying in the middle also be risky around that area? And when youre "riding it to wherever it goes", are we basically letting price make higher-highs/higher-lows and when price makes a lower-high than before that would be your exit point?

hope the questions make sense. thank you again for sharing!

that's why I am trying to trade the news and it's been more or somewhat easier to understand for me