The System II (Yes with irony)

Yeah, we're on board.......... keep it coming

Ok

The first thing we need to do is to qualify the swing. A real headache for some Fibonacci traders(no offense intended please).

Well, I decided to do a lil' research some years ago and it's kinda complicated. See, there's something called "intraday range" well, could be daily range, I mean..any time frame you trade has an average range.

As a part of my research, I have some "guru's " friends who assure me (ha!) that a "qualified"( ha! again) swing on the mayors (EUR/USD...GPB/USD USD/JPY USD/CHF) is between 30-40 ticks

I have to go with that. I kinda mock this type of assurance because if you here me talking I use "high probability "or "most likely" in my language...because is exactly what trading is all about. But anywhere between 30-40 pips are just about right.

stay tuned

Peace

Need to go back a lil'

Please look at the atachement. This is just to clear any confusion

Peace

Just to talk a little more about the initial swing AKA impulse wave

This is not a rule set on stone. Maybe you can get away with a initial swing of 20 pips. Just that you need to be aware of what you do. I prefer anything over 30 to be on the safe side.

Ok....Trade management/risk

for years I've been listening to trader about this so called "rule of 20"


The rule of 20 has been used in forex(mayors), some commodities and very much in YM (MIni dow)

I believe the only exception is in dollar/yen as it's swings are smaller.

Rule of 20

20 stop/20 target

or 20 stop/40 target

Does it work?..mmmm surprisingly yes!!

Do you have to use it as a hardcore rule?? no

See, placing the stop-loss is definitely a challenge for many of us.

This is how I manage a trade

My initial bracket is 20/21...20 stop-loss 20 profit and 1 for the landlord

But I need to know how far is the pullback from the follow thru.

I measure this distance and I might place the stop strategically below the pullback

Then I manage my trade / trailing mys top 1 tick at a time. Meaning, once the market moves 1 tick on my favor, my system will reduce (automatically) my risk 1 tick.

If you excuse me I need a small cup of Tea.

BRB

Peace

Ok I am back

Trade management has many colors/combinations

Some people prefers to scale out a position at x many pips and let the trade ride.

Some others trail stops in x amount of increments.

I strongly suggest to include some sort of trailing stops in your management.

You need to find you own flavor on that particular.

Stay tuned...there's more

Peace

There's to things we need to talk about

1) Fibonacci Retracements

2) Indicators based on past price action

I will elaborate in the next post

Stay tuned

Peace

Fibonacci Retracement is a powerful trading yet little understood for many people.

But in my own very biased and personal style of trading, I don't like to sit on my butt waiting for the market to retrace back to 38/61/78 % in order to place a trade. Even for a heads up warning, I don't need any of that. Suffice to say that I spotted a swing high and a failure (pullback ) for me to start looking and positioning myself on the market. I trade as naked as possible...only two lines will do the work..trust me

But for those who wants to use fibo's please listen closely

Don't put any weight on what level the market is retracing. Based your view only on how shallow/deep the retracement is. If you notice the market pulling back real deep and then coming back to the original move, chances are, the swing is a weak one.

Stay tuned

Peace

Trading is stressful by nature

The best thing is to have stress-free chart environment when you trade.

You pull the charts, check the mayors, already have 2 horizontal lines from the day before. You notice that cable has a "qualified" swing and it's retracing...good

Now the market is coming back...you place a stop order a couple of ticks on top of the las swing failure, you have plenty of time to measure risk. You notice that risk is acceptable, the you place your trade. That's it

Past price action indicators makes people "jumpy"..yes that is

I mean....you're in your toes expecting RSI to cross-over the 50 line.

Unfortunately, you can't place a limit order on the RSI. You have to do it on price

isn't?

But there's another problem.

See, market goes periodically into something called "cycles"

This is awfully deep subject that I teach before so I will give you just a peak.

Every time the market goes out of synch, outside it's average range, rest assure that all mathematical calculations that you have inserted on the charts will go down the drain.

How often the market goes into a cycle??? well it all depends....very often in my opinion.

I don't like to bash people for using snakey lines. Just that you need to be aware that building a system off "indicators, cycles will make your system go nuts more often than not.

well, for now I will keep my mouth shut

Thanks

peace

Keep it coming feb, you are a great teacher and your words are truley appreciated.

OMG I forgot the rules LOL..well I have them in one of the charts

Yeah seem like everything have rules in this life.

Here we go

1) wait for the market to have a 30-40 ticks swing at any direction

2) Wait for a retracement

3) set 2 horizontal lines - 1 at the beginning of the swing and 1 at the last swing high/low

4) if the market resumes the swing, place a limit order 2-3 ticks above/ below the last swing

5) your order gets filled. Now it's pretty much up to the market

wash - rinse and repeat

Peace

Just to recap: 5min charts and 30-40 pip swings rite?

Which pairs is this more suited for considering the 30-40 pips, some pairs move more than other so which pairs do you play?

the market is what you make it to be, i believe with a little knowledege and practise we can make something out of the market which i beleive you are trying to do. keep coming we want to know more.

I think EUR/USD - USD/CHF and GPB/USD probably you can go higher with GPB/JPY = 40 ticks

Peace

sorry I didn't reply your question properly

I play any of them, no preference

I think GPB/USD has given me better results..but any of them are good

you guys are attached to spread so my suggestion go with the lower spread

Peace

which charts do you basically work with because it seems you talked of 5min charts which normally one doesn't use to know trade direction in the long term direction. except you just want to get into the market take 5 pips and get out.

Hello DEar Feb2865, Yes i am in. I always have tremendoulsy enjoyed your work and will continue so.

So, another voice saying congrat to have this new thread on your ideas or how you see things

Sincerely

Shreem

Hello, Feb!

Enjoying this "conversation", as would say the samurai Katsumoto

Same kind of doubt, although I think I got the answer (so why asking?). At this extreme-low timeframe (at least for me...) we still are entering trades only with our favorite friend, the trend, right?

Great job! I really appreciate your trading approach!

Ok ..time frames

in reality doesn't matter. I believe you can see what's been happening in 1 hour using a five minutes chart.

You can use any time you want, just that 5 minutes will gives you a quicker entry

Just remember, the market doesn't have time frames. Things can start developing in 1 second or in months. Time frames are made up to make your life easier. I use five minutes because I feel comfortable trading with it. But feel free to use any time frame. The idea is to spot the pullback as soon as is developing.

test the waters to see what works for you...just remember, the longer the time frame, the wider the stop-loss will be. In terms of swings on longer time frames, I will have to see
.

Peace

thanks a lot for your kind words..hope it helps

well, yes..you can still ride the trend either on low time frames. In my charts, I can have them to show period separators for 1 hour or more even on lower time frames. Actually I have them on 1 hour/five minutes.

Thanks for you kind words

peace