Plutonite's Trading Manual

The Australians are some of the craziest *^)*&%^$ you'll ever encounter, chart-wise, but money made just the same. Red circle shows difficult period.

PS: All these trades are during the past month, just to make it clear that this is not some dream game.

Will let you chew on this (please view it on your charts and use my pics only as guides, so you can see more clearly) for now. Still more difficult stuff tomorrow.

Best Regards
-P

I downloaded the template from Dexis (post 78) and promptly cruelled my SBFX4. It just comes up with a fatal error and closes too fast for me to screen catch the message. So I uninstalled it, re-installed from the strategy builder site made sure the indicators and template were not kept and still the same problem, It's done something and I don't know what. So far not affecting the other programmes on my computer (thankfully). My copy of SBFX4 at work is fine and no problems.

it's better to stick to the original anyway to compare the pictures one by one even you might not like the color....

Thanks for the warning, serves you right for trying to get a prettier chart than mine! My colors are wonderful, I don't understand you people

PS: try to delete the meta-trader folders manually after uninstallation. I am assuming "SBFX4" is a metatrader client for a broker called SB.

Yes you are right Plutonite and I apologise sensei, "wax on wax off" as someone also as wise once said.

Alex

The GBPUSD is bigger than life. It's a great pair to trade, but the market sometimes goes through difficult periods where sentiment is changing, participation is minimal and things just simply suck. Thankfully they usually don't last for very long.

Let's talk a little about the above chart.

In the first entry, the bars face resistance as expected near the deviation bands and the fibs, but the move up is very hard whereas the fall (on which we enter) is very meek. The price action is far from exemplary..the market is barely moving and there are major fights going on in small ranges, so we are likely to abandon for only 50 pips or so before the big news which drives the price up.

Now we get a second entry with more decent price action, and we enter short again, this time for a good 120+ pips or so before resistance is faced near the bottom of the channels. We can go long again once the price moves solidly higher, again paying attention to the price near the mean and the target area at the top.

The third white circle shows where we expect the price to halt, but it moves up valiantly (so we get suspicious) and starts going in a nasty range instead of cleanly falling, which finally happens on strong news again for another 150 pips to the vegas fib target below. On very powerful sells such as these it is not wise to enter long on the first H4 bounce, but even if you do enter, there is a clear low below which we abandon the position and short again for 100 pips until the market runs out of breath.

That's about 500 pips on a single pair in 2 weeks, practically milking the market up and down. In the next chart, the storm begins..

For this one you will definitely need tea, I suggest black and non-flavored, as little sugar as possible. Commentary to follow.

We make a decent, level-headed entry (white circle) upon noticing that the break down has dried up and the bears have packed up and went home. As I said before, long winded strong moves rarely give up immediately i.e you never get an immense movement down then an immense movement up right away..the market just doesn't work that way. What happens is that it faces resistance, goes down again a little, then if the selling is over some nice, steady movements ensue in your direction.

This is what happened here. Some news created a problem half way through the trade, an opportunity for some filthy scalping to be done, but we soon get going again towards the predicted targets.

Now at the mathematical limits we have what appears to be a nice top, so we short like the good citizens we are, but wait! Soon our top is taken out and we lose all of 15 pips and are forced to go long with the heartless bulls. To make matters worse, the market barely gives us our pips back (30 or so) before it faces more resistance (doji..etc) and we are forced to abandon ship. Then it gets stuck for 40 hours or something in a crappy range. We are tired and furious!

Then, just as we are about to use foul language, the pair moves another 30 pips up and gets stuck again for another 3 days. At this point we leave the pair completely and watch from the sidelines as people pull their hair and say things about each others moms.

Actually, I am guilty of scalping with a short here, as cesarnc will tell you. We were watching the psychological 2.000 resistance (something that the whole market agrees upon, and therefor interests us) getting broken, and I with my infinite wisdom saw that the breakout was way to slow, very weak movement, signs of dead bulls. So I shorted, scalped 45 pips and went to bed. Next day, it goes up again, very ugly looking chart.

Now at 2.0010 (28th JUN) we have some convincing price action so we enter a very risky long, but soon are rewarded with 150 pips or so before resistance is met. We are now at historic highs, very overbought in the short term and the math is all dead with the numbers being skewed with new sentiment.

We say out and wait until some blessed bears appear and provide solid selling at 2.0120 or so, and we short with a heavy heart, not knowing anything about the "trend" now that short term setiment seems to be overwhelmingly bullish. This means targetting anything below the mean would be dangerous, and sure enough our 45 pips of bearishness are probably the best anybody made with that short.

So..11 June 2007 to 11 July, very strong GBP but very untidy action. Ranges are VERY low in size, and despite doing quite well in terms of predictions, we get only 60+180+15+30+150+45 pipsies in a whole darn month of stressed filled insomnia. Compare that to 270 pips GJ on a single trade. The cable is not feeling well, is it?

More to come soon. Questions welcome.

Points of interest in the previous story could not all be shown on the same chart. This is the rest of it, as already described by my "commentary"

Hope it makes sense.

So if I am understanding the basic methodology, 95% of the time price action will be around the median of the bands, ie: BB and/or Scrat. The other 5% of the time price action will be at the outer limits of the bands. When we hit the outer bands we look for price action that suggests a reversal and that's when we enter a position? Am I getting this so far? Would it be a fair statement to say, if you really wanted to be conservative, you would determine the 4 hr trend and only take those signals that agree with the trend?

Dave

Yep, thats pretty much the theory, except that the 95% rules dont apply as much as we like due to changing probability sets/market sentiment.

Hello folks, some live action from yesterday's trades (if you were following the USD/JPY thread) that finally went into business today.. first a quick mathematical glance at the Dow Jones.

Very smooth topping on the Dow helped our decision, and right now it is at the 50 SMA which is the middle of the channel and generally a place of resistance if not reversal.

And the USDJPY and GBPJPY charts respectively. Our decision is mostly based on the UJ, with the pound-yen being a follower, for the dollar rules above all.

Ok, this is a stupid question, but I have to ask it....if you're trading off of Scrat, why have the Vegas up? Seems to cloud up the chart....

Thanks!

Pip Meister

I am not trading off scrat (linear regression mean) or standard dev means/bollinger or vegas. I am using all three to judge the situation in the market. And when they coincide with the vegas fibs they usually give very neat price action. Will show examples of this later.

Good luck
-P

I would appreciate that!

PM

Pluto, what other indicators are you using besides Scrat and Vegas?

thx

PM

If you read my short articles in the beginning really really really carefully, you'll see that I don't have reason to believe in the significance of anything other than probability theory and self-fulfilling things like fibs

I also believe in good tea

You said earlier...and I quote, "So why is this interesting? Well, think of this..if you threw those pebbles all at once and you slowy took a survey of about 47 out of 50 distances..imagine you found 5 pebbles that were already at 2 standard deviations away from the mean so far. Now before you look at the rest, you can practically rest assured that they will be closer to the mean than the 5 outliers, because of the nature of "randomness". Since you've already reached the normal limit of numbers that have strayed from the mean, the rest should (provably) be closer. Do you see the dollar signs now?"

Could possibly elaborate a little more for me on this? You said we could ask! lol.

PM