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Karmo's trading strategy trading GBP/JPY

  • #21
  • Aug 18, 2007 1:02pm Aug 18, 2007 1:02pm
Quoting Ash
Thanks Karm. I have been having a difficult time in applying FIB's to my charts. Now I have an idea. In applying a FIB's to weekly and daily, how do you determine which high / low's to apply them to?
On the daily/weekly TF, I usually look for the last major retracement we had and then draw from there. For example, on the daily GJ I've drawn from the low of 221.xx to the high of 251.xx, and this week we had 100% retracement. so if on monday we don't test the low again, I'm going to draw a fib from the high of 251.xx to the low of 219.xx, and that will give us the fibs of how high will it retrace from here (resistance levels)
Trade what you see, not what you think.
  • #22
  • Aug 18, 2007 1:13pm Aug 18, 2007 1:13pm
Quoting karmostaji
Monthly = Green fibo levels
Weekly = Blue fibo levels

Looking at the weekly chart now, we can see the price opened the past week just below the 23.6% fibo and went through the 38.2%, 50% and touched the 61.8% but it came back and closed just above the 50%. Plus you can see the 23.6% monthly fibo and the weekly 50% fibo are very close to each other, this should be a good support level. The candle has broken and closed below the weekly lower trendline.


http://img441.imageshack.us/img441/6870/weeklyfp7.gif


Hi Karmo,

First, I truly appreciate you putting this together and posting in a new thread and thus sharing your strategy with all of us. This is invaluable to and we can't thank you enough (same applies to Aus as well.)

Could you plese explain how you determine the low and how points for drawing your Fibs. 'Cause I notice that your lowpoint (100%) on this weekly fib is 200.52 while one could have drawn it with the low near 192 or the one near 189 as well. How do you determine which is more appropriate.

Thanks in advance.

~G.
  • #23
  • Aug 18, 2007 1:15pm Aug 18, 2007 1:15pm
Quoting rumbey
This was my problem. As the price retraced on the daily the trend was still UP on the daily therefore you look for a retracement off the fib lines to go LONG. My stop is usually 200 below, but on several occasions because the fib lines are approximate areas or support/resistance I let the losses run too much. Then the same on the 50% and the 61.8%.

Because the trend is still UP its very dangerous to SHORT the market although looking back its clear but as we all know its not at all clear at the time you are trading.

Ironically, when I posted I was long last week everyone was saying that the trend is DOWN, but is it? Maybe I need to trade the 4hr and just keep an eye on the other timeframes.. How do you determine the EXACT trend?

So how do you determine if you are going to go long or short just by looking at the fibs.

Presently you could draw fib lines from the low to high AND high to low. Which fibs will you TRUST because they conflict unless you know the overall trend direction... Are you clear what I am trying to say?

Dave
The daily trend was up, why would you long at every retracement level when the daily candle clearly broke the fibo level? you should wait for the daily candle to close to see whether the fibo level will hold or not.
Even on other timeframes, I wait for the candle to close convincingly below/above any fibo level before considering it being broken, plus sometimes the price will come back and test the fibo level it broke.

The daily chart shows a 100% retracement, if on monday we make a newer low, I'll consider the daily to be in a downtrend, but it would make more sense to me if price went up because looking at the weekly chart, it retraced to the 61.8 which price usually does before resuming it's trend (Upward based on weekly).

About drawing the fib from low/high or high/low, that depends whether it is a bull-run (upward movement) or bear-run (downward movement)
If price has risen from 221 to 251, you will draw the fibo from low to high, which it will tell you how low will it retrace before resuming it's trend.
If the price has fell from 251 to 219, you will draw the fibo from the high to low, which it will tell you how high it might retrace before resuming it's trend. Remember if it retraces 100% then that fib and close well below 100% retracement is nomore valid because it would mean we're getting into a new trend.

The daily fib we have now shouldn't be considered but I will wait for monday to close without making a new low, then draw a new daily fib from high to low, which will give us the levels of how high it might retrace. Remember weekly trend is still up and it completed the 61.8% fibo, we could be going higher than 251 in the coming weeks based on weekly chart.

I hope I have answered your question.
Trade what you see, not what you think.
  • #24
  • Aug 18, 2007 1:20pm Aug 18, 2007 1:20pm
Quoting karmostaji
On the daily/weekly TF, I usually look for the last major retracement we had and then draw from there. For example, on the daily GJ I've drawn from the low of 221.xx to the high of 251.xx, and this week we had 100% retracement. so if on monday we don't test the low again, I'm going to draw a fib from the high of 251.xx to the low of 219.xx, and that will give us the fibs of how high will it retrace from here (resistance levels)
So in other words the trend is now SHORT on the Daily, and all other TF's except the Weekly and Monthly?? If you trade off the weekly you are saying that the 50% fib has hit therefore we go LONG (always trade with the trend)

OR

Daily = TREND DOWN therefore we look to SHORT at say the 61.8% Fib level

This is where the confusion lies??

My only solution is do you need to take into account Fundamentals to decide if you are LONG or SHORT. You can't be both!


You MUST be Long as you expect the price to rise to the Daily 61.8%?? which doesn't make sense. You should be short from the failure of Fridays price to break this level?

Dave
  • #25
  • Aug 18, 2007 1:26pm Aug 18, 2007 1:26pm
Quoting AlphaGA
Hi Karmo,

First, I truly appreciate you putting this together and posting in a new thread and thus sharing your strategy with all of us. This is invaluable to and we can't thank you enough (same applies to Aus as well.)

Could you plese explain how you determine the low and how points for drawing your Fibs. 'Cause I notice that your lowpoint (100%) on this weekly fib is 200.52 while one could have drawn it with the low near 192 or the one near 189 as well. How do you determine which is more appropriate.

Thanks in advance.

~G.
Hi AlphaGA,

We are all here to learn, aren't we? we don't need to thank each other

I totally know what you are saying and it is indeed very hard to draw a 100% accurate fibo level, especially on longer timeframes such as the weekly. I had a hard drawing this fib on the weekly myself, I just decided to draw it from the 200 point since it a nice uptrend move started from there. I have drawn from the points you mentioned, and it gets even more interesting, we will have to keep an eye and see which one is going to be the more appropriate one.
Trade what you see, not what you think.
  • #26
  • Aug 18, 2007 1:46pm Aug 18, 2007 1:46pm
Quoting karmostaji
Hi AlphaGA,

We are all here to learn, aren't we? we don't need to thank each other

I totally know what you are saying and it is indeed very hard to draw a 100% accurate fibo level, especially on longer timeframes such as the weekly. I had a hard drawing this fib on the weekly myself, I just decided to draw it from the 200 point since it a nice uptrend move started from there. I have drawn from the points you mentioned, and it gets even more interesting, we will have to keep an eye and see which one is going to be the more appropriate one.

If you draw the weekly from low at 165.37 on 6/3/01 then this weeks low was more or less on the 38.2% fib so a valid signal as well
  • #27
  • Aug 18, 2007 1:51pm Aug 18, 2007 1:51pm
Basically on current price you are either:

LONG with stop 50 pips below the 38.2% fib

or

SHORT with stop above (+50pips) the 61.8% fib

You shouldn't have any stops within these ranges. These stops should keep you clear of any whipsawing. There is nothing worse in my opinion apart from loosing a trade than losing your position due to a stop being too close

Do you agree Karmo?
  • #28
  • Aug 18, 2007 2:08pm Aug 18, 2007 2:08pm
Quoting rumbey
So in other words the trend is now SHORT on the Daily, and all other TF's except the Weekly and Monthly?? If you trade off the weekly you are saying that the 50% fib has hit therefore we go LONG (always trade with the trend)

OR

Daily = TREND DOWN therefore we look to SHORT at say the 61.8% Fib level

This is where the confusion lies??

My only solution is do you need to take into account Fundamentals to decide if you are LONG or SHORT. You can't be both!


You MUST be Long as you expect the price to rise to the Daily 61.8%?? which doesn't make sense. You should be short from the failure of Fridays price to break this level?

Dave
I don't trade relying on the fib levels only, I use candlestick patterns as well. we are still in an uptrend channel on the monthly, and we have a nice pin-bar/doji/hammer on the daily chart, I expect the price to go up.

I trade on the 4H chart, I could go long and short in the same day and make a good amount of pips, I just use the daily/weekly for confirmation and like i said to have an idea of the bigger picture.
Trade what you see, not what you think.
  • #29
  • Aug 18, 2007 2:21pm Aug 18, 2007 2:21pm
Quoting karmostaji
I don't trade relying on the fib levels only, I use candlestick patterns as well. we are still in an uptrend channel on the monthly, and we have a nice pin-bar/doji/hammer on the daily chart, I expect the price to go up.

I trade on the 4H chart, I could go long and short in the same day and make a good amount of pips, I just use the daily/weekly for confirmation and like i said to have an idea of the bigger picture.
What about stop loss levels.. Do you use pivots and daily support/resistance levels?

I use MT4 with daily pivots etc plotted if anyone is interested in using these on MT4 platform. I can post them here

I also use trailing stops minimum 100 behind but more often I place stop above/below the next fib level +50 or a daily resistance/support line
  • #30
  • Aug 18, 2007 2:54pm Aug 18, 2007 2:54pm
Hi Karmo - My first post, too. But I've been trading with FF constantly for the past two months, especially Aus thread. THANK YOU! Thank you for this thread, and for the amazing help you've given me in my trading. I'm not the first to say this, certainly not the last. I look forward to studying your method, and applying it to my steep learning curve. Thanks also to Auslanco, Markham, and others who give generously of their time and knowledge.
- Abacus
San Diego, CA
_______________ Here 2 Learn
  • #31
  • Aug 18, 2007 3:34pm Aug 18, 2007 3:34pm
Karmo,

As you add or clarify or tweak your strategy, (as this thread becomes heavily traveled) if appropriate could you possibly utilize the edit feature off of your post #1 and expand any particular concept so newbies and the rest can always know immediately where to go for the complete introduction rather than have to sift through dozens of minor posts and responses you no doubt will be making in the days and weeks to come. (I think the edit feature even gives an updated date for easy reference)

Just an idea.... that came to me.... while

sleepinginadumpster
  • #32
  • Aug 18, 2007 4:20pm Aug 18, 2007 4:20pm
Quoting Abacus
Hi Karmo - My first post, too. But I've been trading with FF constantly for the past two months, especially Aus thread. THANK YOU! Thank you for this thread, and for the amazing help you've given me in my trading. I'm not the first to say this, certainly not the last. I look forward to studying your method, and applying it to my steep learning curve. Thanks also to Auslanco, Markham, and others who give generously of their time and knowledge.
- Abacus
San Diego, CA

"Abacus"

That's a good moniker (monikker). Probably helps you calculate your
pip totals faster than the rest of us.... and no downtime with power
outages. lol

Mine provides me peace and solitude while the masses face foreclosures.

"sleepinginadumpster"
  • #33
  • Edited 5:52pm Aug 18, 2007 5:40pm | Edited 5:52pm
I am a total newbie at Forex trading or any kind of trading whatsoever, so what I am about to say maybe completely of target or worse plain stupid, I had a moment or two to decide if to post or not but here it goes:
- All that I know about Fibbonaci retracement is what I’ve read on babypics and from seeing your charts.
- But what I do know is that price moves in waves, impulse/correction waves, and every wave has its smaller compounding waves on smaller TF hence the different so called trends. In my view to have a good fibonaci you just have to catch a wave from start to end dead on.
- The weekly chart is the one that caused me a lot of head ackes, where to start it from, and like AlpahGA very well pointed out, you have different start points(swing lows). Then it came to my mind that price is only set by people perception of it, but what do they perceive? Except from the levels that represent round numbers, 220.00 for example, where do the rest of the levels come from? My simplest response would be that they come from previous fibonaci retracement levels (that we know they work) so price stopped there a lot of times before moving on so we have many intersections so we have levels, if the logic is correct should work the other way around, so to catch a wave we only have to know it started after beating a level. so the fibs should be from that level on. In our case on weekly we have at least 3 important start levels: 200.52(your fib), 192.61, 189.50.
- To put it short, a good fib in my view should start from the levels with most intersections, by only looking back at these 3 levels I can see that 192.61 is the best level to choose for the fib to start.
- If you find that I have at least came close to something useful we could ask Que to write a software for to decide which level in a designated area has the most intersection and work from there on…, if you find it total rubbish and that I missed some key points about fib drawing just delete my post, and suggest some good reading for me.

Hope I havent bored the hell out of people reading this
  • #34
  • Aug 19, 2007 12:07am Aug 19, 2007 12:07am
Mine provides me peace and solitude while the masses face foreclosures.

FourXTrader -- I'll bet your dumpster is a mighty fine place. There is much to desire in a simple life. I am aiming to get there, if I can learn to trade like many of you veterans in this forum. Alas, my abacus is still too complex. I use my fingers and toes to count, and that seems to work just fine.
_______________ Here 2 Learn
  • #35
  • Aug 19, 2007 12:26am Aug 19, 2007 12:26am
Quoting Abacus
Mine provides me peace and solitude while the masses face foreclosures.

FourXTrader -- I'll bet your dumpster is a mighty fine place. There is much to desire in a simple life. I am aiming to get there, if I can learn to trade like many of you veterans in this forum. Alas, my abacus is still too complex. I use my fingers and toes to count, and that seems to work just fine.

Isn't it great to find such generous traders as A and K willing to share
their successes on these threads so we might all achieve and maintain
the simple life.
  • #36
  • Aug 19, 2007 2:57am Aug 19, 2007 2:57am
Hello Karmo, congrats for your new thread as its very very valuable for all newbie. I have been following your call for 2 weeks and I always impressed with the result. Last week, you are absolutely a Knigth Bear Green Pips as I didn't see anyone that put their target as low as you did.

When you open position, do you always let the SL blank ? and will lock in + 10 pips after the market go in your direction for 50 pips? Just curious to know, and maybe this is a stupid question as your decision is 90% right, but how about the market go against you before the 50 pips occurs? I ask this question since my capital is so little.

I don't see any line of 5 SMA in all charts.

Congratulation again
  • #37
  • Aug 19, 2007 3:34am Aug 19, 2007 3:34am
Hi Karmo,

Happy to see that you have started this thread after watching you performing an excellent analysis and highly successful GJ trades for some time through Auslanco thread.

I am wondering if you like to keep the chart analysis from your end or don't mind some input from others?
  • #38
  • Aug 19, 2007 4:19am Aug 19, 2007 4:19am
Quoting Majd
Hi Karmo,

Happy to see that you have started this thread after watching you performing an excellent analysis and highly successful GJ trades for some time through Auslanco thread.

I am wondering if you like to keep the chart analysis from your end or don't mind some input from others?
I'm agree with input from others but not strategy from others. This will be confiusing newbie like me. If other people want to show their strategy, just create their OWN THREAD. Its better i think.
  • #39
  • Aug 19, 2007 7:14am Aug 19, 2007 7:14am
Hi everyone

Thanks Karmo for this thread , it's really helpful .
If i can be of any help , just let me know

Seb
COT: The precious data ignored
  • #40
  • Aug 19, 2007 7:40am Aug 19, 2007 7:40am
Thanks karma you honoured my suggestion.It will help us Learn more and more.One more thing since i am following AUS's thread for some time i have seen at the time Dow opens nobody is sure which direction the market moves buti have observed there is stark resemblance ( at least for last week) during open hours between Dow and G/J so why not Draw Fib. and trend lines on Dow's or its futures chart and see how it chalks out .
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