Trading with the Edge.

Dopey,

The problem I have with pitchforks is that the entry points are arbitrary. That is, my handle will touch a different place than yours.... consequently, there is no "right" way to apply the indicator, because it can be applied many ways to the same chart.

Correct me if I am wrong.

Thx,
TD

Hello everyone,

I have been following this thread for sometime, trying to learn what I can about pitchforks. Dopey I saw your post earlier about the Eur/Usd Short, I missed it and was looking for a re-entry if possible....

This is what I have. I am short from 1.4517. Stop loss is red, and am looking for 50 pips only, if it shows signs of getting to the Median Line I will let it run.
Zones, what do you think?

Zack

You have come to the right place as we have a good teacher in Dopey.
Welcome to the forker family Zack.
Your Euro entry was made for the right reason, your stoploss is also at a good logical position. Now lets wait and see if the market reaches its 80% likely target.
The important point is that you took the trade for the right reason and in the long run if you continue to do that with good money management you will be a winner.

I was fortunate with the news release yesterday. Todays release was deemed as high impact so i did not trade before it. I sold cable on the intersection of 2 opposing forks. According to Morge these energy points attract price and then usually the price moves quite rapidly. I sold at 1.9457 with a stop well above the 50% fib pivot of yesterdays high/low. My stop was 87 and i got stopped out at 89.

Although i am not trading profitably yet, i am however getting more and more confident with each setup. This morning i got stopped out and this afternoon i had an offer at 33. On my platform it showed 32 bid and 33 offered.Then it fell few ticks, i cancelled my offer and was putting in a new offer of 31, when for a nano second it showed 33 bid. By the time my offer was in the platform, the market was already 25 bid. Here was my dilemma, should i chase it or wait to see if i get filled. Of course i never got filled and as i write this it is 95 bid.
That is 1.9495

Why didn't you just hit the 32 bid instead of cancelling and reordering?

What if i had hit the bid and at the same time my offer was accepted then i would have had twice the size that i wanted to trade.
Right now my hunch is that the market will go higher...of course i will not trade this hunch today.

Zones,

Separation is very important also for touches. Any touch that bounces hard is showing good S/R.

It's also important for stop moving. Once you get good separation from a congested area you can feel more secure in moving your stop to the top/bottom of the congestion.

Yep, lots of folks have that problem.

Ok, here's the follow up to the short trade from yesterday. I'm GMT +4 btw. When I went to bed I wasn't able to move my stop from BE because there wasn't a good congestion to hide it over. I needed price to close below 4481 for that to happen and it went up instead, so I left my stop at BE.

When I got up at 6 and checked my charts at 630 I saw that price had broken out of the PF. Once price starts closing outside of it, it's no longer a valid PF. I also know that most times the price will come back and test the PF as new S/R. I didn't have the time to wait around so I closed out on the first bear candle which was 4517. I got in at 4558 so it was a good trade because I made money and I let the PF work itself out.

Zack,

Your thinking was spot on. I suggest you move to the 15 min though for a better look at the entries.

Look at the chart below. We see price come back up to test the UML and it's rejected hard. It tries again, and this is where you go short because you've just seen price rejected, so you get in on the next touch which is what you did. +

However, I would have put my stop right above the high of the previous touch. Because it was rejected the way it was, if it breaks that high, price has probably turned on you. As it is you risked 60 to make 50. You're going to go broke doing that. If you had used the other high of 4530 and watched and waited for a close, your stop would have been 17-20 to make 50. That's a much better trade.

I question the arbitrary nature of just picking 50 pips. I can see trailing 50, but to randomly pick a number after using TA to get in baffles me. If anything, you just trail as I've explained and target the ML.

After all this, see my next post as to why you shouldn't have taken the trade.

It's one thing for price to repeatedly test a line and to pick one of the tests and enter. It's another thing for price to test the line, then move significantly away from it and NOT reach the ML. Once it comes back to the starting line, you're probably going to see a failure, as we saw here.

I used to use eSignal but stopped a while ago because I found myself using MT4 only. In the eSignal PFs, you can insert Fibs. However I can do it easily enough with MT4 (not as easily though).

Just draw a fib from the UML to the ML. Make sure to draw it straight. Then draw a trendline along one of the PF arms because you need the correct angle. Then move the TL to line up with the Fib numbers. See the chart below.

We see that after the initial touches, price moved to the 50% point between the UML and ML. It then came right back to the UML. If it had come back to a line before and bounced back down, then price would have reached the ML. But it just went straight for the UML, which implies failure is coming. Not always mind you. On the higher time frames you'll see this type of action more often and it will hit the ML. But on the lower timeframes it's more common. It's not a bad trade Zack, it's just not as high a probability as getting in earlier because price has just shown you that it had hit some strong support.

Now, if price had reached the ML and then gone back to the UML, I would definitely take the trade back down because the PF had described the price. If you go through your charts you'll find PFs where price will bounce back and forth numerous times between the ML and one of the outer lines. If you only trade in the direction of the prevailing trend, it's a gold mine. Morge has numerous examples of just this type of trading. It works very well on the higher time frames and you move to the 15 min for your entries.

I hope this makes sense.

Although the market has risen sharply, i am happy that i was disciplined enough not to take the trade.

Yesterday the market failed to reach the upper paralel line. It found resistance at the 61.8% of previous weeks down move. Today the market retraced to just below the 38.2% level of yesterdays low/high. I was waiting for it to retrace to the lower paralel at point B to possibly initiate a long position. The market never retraced to my ideal level, so i am on the sidelines waiting for an opportunity.

Edit. A question for Dopey,
In the chart below, where would you have drawn the third pivot of the black fork. Same as me or one prior bar?
Thanks in advance.

Dopey,
I guess the market answered me quite unequivocally.

Hi zones,

Great Journal! Good educational references on PF trading, very clear live trade setups and you even have sort of an online mentor. Adding it to my subs.

Zones,

A lot of times the 3rd pivot is a spike formation as the one shown. It means you're not going to find a nice entry where it tests the line, instead price just takes off away from the pivot. It makes for some interesting trading if you think about though. As long as your r-r is positive, it's something to consider.

In the example above you pointed out the price came back to show that the PF was valid. This is the most important part of trading PFs...having the patience to find PFs that are validated by the price.

If it were as simple as just drawing a PF from any three pivots, then every idiot in the world would be using them. But once you understand what makes a PF valid, and how to enter on a high probability setup, they work pretty damn well. It's like everything else worth a damn in this world, you've got to work hard at it.

Thanks Capitalist,
wow now there are two "heavyweights" here....a couple more and i am going to set up my own belt...WITC...Don King, forget about the kronk gym in Detroit...look here in the FF for the future intellectual heavyweight champ.

We are all quite fortunate to have this wise "Dopey" here.
I have a question for you zones and in particular Dopey. On post 73 where Dopey draws straight fibs between upper and median line. What is the purpose of those fibs and lines? I have gone through both of T Morges sites and i have not found the answer.
BTW Dopey, I am going over a years data with Vhands to see if this 80% rule holds.

Short of 1.9703, sl 1.9723...no profit target as yet.
Edit: my retionale for no profit target. I am going against the trend of the day. The market has been rising for the past 5 days. Today it might have a retracement or it might continue its upward journey. If i am wrong then its ok as my risk is already defined. If i am right then i will ride the journey to the upsloping balck fork and perhaps beyond.
Edit: Stopped out at 23...