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zoopy's trading journal

  • #601
  • May 2, 2008 8:44am May 2, 2008 8:44am
Decided to post this chart in particular because I find it interesting. It's one of those charts where you ask yourself "what do I do when...?"

Three wave structures... what to do. Pretty much just wait until it breaks out. There was a slight piercing to the downside but not too convincing for me. Based on what I'm seeing though and if I had to pick a side, I'd be bias to the downside because of that "suggestion" the current wave may have started to collapse. What I'd be watching in this case if I was to short would be to make sure price doesn't go above the previous wave's high (around 0.9433). If it does then we're obviously wrong.
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  • #602
  • May 2, 2008 9:40am May 2, 2008 9:40am
Hey Zoopy,
Really enjoying reading your thoughts on the lines/waves.
Just interested in what you would do in this instance below. I.e. there was no retrace or there hasn't been one yet.
Would you ever consider taking the trade on the break alone?
By the way, this is assuming I have understood the whole wave thing in the first place.

Cheers
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  • #603
  • May 2, 2008 9:49am May 2, 2008 9:49am
Quoting cologg
Hey Zoopy,
Really enjoying reading your thoughts on the lines/waves.
Just interested in what you would do in this instance below. I.e. there was no retrace or there hasn't been one yet.
Would you ever consider taking the trade on the break alone?
By the way, this is assuming I have understood the whole wave thing in the first place.

Cheers
You can take the trade on the break but also keep in mind there is a possibility of a pullback. Trading the break tends to be aggressive so I'd probably be inclined to adjust position sizing because of that. Another thing to point out (and I'm glad you asked that question) is if you take the trade on the break, your stops tend to be larger. In your example, I probably would have entered around 104.75 based on what I'm seeing but my stops would have had to be right down around 103.75. Pullbacks tend to be safer and your stops tighter.
  • #604
  • May 2, 2008 1:19pm May 2, 2008 1:19pm
Before I leave for my trip this weekend I'm going to be posting a few other things that I feel traders should really think about when trading. I found I had to do these little "exercises" of mine to help filter out information. To do this I had to start a journal and analyze my behaviour and how I trade (I highly recommend this whether it be online or in a book).

Firstly, I'm going to make reference to Graphic Design again. I know most won't really give a damn which is fine too but I want to give you some reasoning as to why I'm approaching trading the way I am. You need to see where I'm coming from and be involved with the process in order to see where I'm going with this.

One of the things I was taught as a designer was to be able to take information (in some cases an overwhelming amount) and to synthesize it down so that the user can understand it. When the user is put in front of too much information, they become confused, in some cases doubtful, agitated, frustrated, angry and in turn has a huge psychological effect on them. Imagine having to rush to the airport because you're about to miss your flight. Upon arrival, you have all these airport signs (some in different languages) blaring in front of you and to add to the chaos, everyone is rushing around trying to find out where they need to be. You have to process all this directional information in this chaotic environment in order to reach the checkout point. At this point you're "hoping" to find it soon otherwise you're doomed! Mind you, this is probably when your stress levels go way up.

So... how does this relate to trading? Think of your chart as the airport. You have to get from point A (analyzing what price is doing) to point B (making the trade). The more information you have to process, the more likely you're going to make the wrong turn and in some cases even miss the flight. Having said that, is there a way to possibly make a quick, confident decision, without having to think through all the noise? This is where the line chart comes in and here is a closer look at the comparison.

In chart one and chart two, I have the bar chart and the candlestick chart. Both show the highs, lows, open and close. My question is, do we really need all that information? Some may argue yes we do because that's how we determine price pivot zones or support/resistance levels. To some degree that is true but here's a follow up question. Is there a "definite" price or is it more of an area? If it is definite, is it guaranteed 100% that it will stop in that area? The point I'm trying to make is, it's the general area we look for and to find the general area, the closing price is sufficient enough. Remember, the more we see, the more our brain has to process and along with that comes the psychological effects I mentioned earlier with information overload. From a designer's point of view, I actually think this is one of the main causes that effects a trader's mind and to be in that state when making a decision where money is on the line... definitely not a good idea. You need to be able to think clearly, confidently and in a calmly manner.

Below is also the line chart. It displays the same information that the other two charts have with the exception you can't see the open, the close, the highs and lows. As another "exercise", try taking a chart, one with candles/bars, the other a line chart. Before beginning, I would also like you to time how long it takes to analyze each chart (we will use this for comparison). First... on the candle/bar chart, mark the peaks and valleys. Then... do the same with a line chart. Which one do you find easiest to analyze? Which one is quicker?

Definitely try the exercise because I think it's good for analysis purposes but also helps you in identifying peaks and valleys. You need to train your eye to see these things otherwise you'll miss it completely.
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  • #605
  • May 2, 2008 2:22pm May 2, 2008 2:22pm
  •  MPP
  • Joined Jun 2007 | Status: Be yourself, everyone else is taken | 2,734 Posts
Quoting zoopy
Before I leave for my trip this weekend
Definitely try the exercise because I think it's good for analysis purposes but also helps you in identifying peaks and valleys. You need to train your eye to see these things otherwise you'll miss it completely.

Zoopy
Have a great break

thanks for the classes i look forward to your further teachings, as always with FF there's always something new to learn, and Zoopy you are a great teacher.

kind regards

Jason
  • #606
  • May 2, 2008 2:51pm May 2, 2008 2:51pm
Have a great weekend zoopy,
Basically, what you are doing is using line charts to identify 123 patterns, except you arent buying on the break of the high (or selling the breach of the low)you are waiting for a pullback and then buy/selling. Line charts make things a lot clearer, especially on the higher timeframes. See you next week, rest up hehe, Raz
Never say never.
  • #607
  • May 2, 2008 4:32pm May 2, 2008 4:32pm
Quoting MPP
Zoopy
Have a great break

thanks for the classes i look forward to your further teachings, as always with FF there's always something new to learn, and Zoopy you are a great teacher.

kind regards

Jason
Thanks MPP

I look forward to your posts too.
  • #608
  • May 2, 2008 4:34pm May 2, 2008 4:34pm
Quoting zoopy
Just checking in quickly before heading back to bed.

Sean, you're starting to get the idea although your analysis of the first wave may be pushing it. I've attached a copy of your chart with my analysis of where I see the waves (remember, look for well defined waves - if you're not sure it qualifies as a wave, it probably isn't significant enough to be used).

Having said that, ignore the entries on the first two arrows that you have. I would have entered a long at the first noticeable dip as well as where your 3rd arrow is. However, your last arrow I probably would have entered on the first peak. You're getting the hang of it though and I can tell you're starting to pick up the rhythm of the market.

For those that are following these exercises. You do have to leave your brain at the door. Even though it's hard, try to forget you ever learn't trendlines, fib retracements, round numbers, PA and to some extent support/resistance levels (although we are using wave structures to determine this but it's based on the prior wave). This is not about predicting, this is about trading what's happening "now".
Thanks for taking the time to correct me. It now looks silly to me that I read the waves the way I did.

Thanks and enjoy your vacation,

Sean
  • #609
  • May 2, 2008 4:49pm May 2, 2008 4:49pm
Quoting razldazl
Have a great weekend zoopy,
Basically, what you are doing is using line charts to identify 123 patterns, except you arent buying on the break of the high (or selling the breach of the low)you are waiting for a pullback and then buy/selling. Line charts make things a lot clearer, especially on the higher timeframes. See you next week, rest up hehe, Raz
Raz

What I'm doing is identifying two sequences of waves. A wave sequence moving up and one moving down. It's pretty much 123 patterns although I don't want to label waves or say how many number of waves there are. The reason for this is because if we were to use a "5 wave structure" or start introducing Elliot Waves, what's going to happen is when we reach wave 5, everyone is going to think "OK, everyone watch out! The reversal is coming now". Meanwhile... the market continues going creating 2 more waves. Maybe even 10. In fact, who says it should stop there now? lol. I think this is where having respect for the market comes in.

I'm using line charts not only to easily identify waves and when the market changes from one sequence to the next, but also to help deal with the psychological aspect of trading (seeing too much information, especially all at once becomes information overload and that leads to making poor decisions). This is why those that trade longer term timeframes are more successful because they spend less time at charts (they see less) and when they are at their charts, they have more time to process all the information before pulling the trigger.

As for buying and selling on the breaks and dips, I do both.

All this material has been mentioned over and over again by many traders. It's been out there for ages yet I don't think anyone really pays any attention to any of it. I definitely don't deserve any credit for these "discoveries" of mine since it was all there in front of me, just that I wasn't paying any attention (left too much of my brain at the door)
  • #610
  • May 2, 2008 4:54pm May 2, 2008 4:54pm
Quoting seanchicago
Thanks for taking the time to correct me. It now looks silly to me that I read the waves the way I did.

Thanks and enjoy your vacation,

Sean
Thanks

You're not the only one. Took me more than two years to come to this conclusion lol. I look like the class idiot right now and the worst part is, it's posted in my journal online.

I only leave for my trip on Sunday so have a few more days. Going to be posting some analysis on Euro later.
  • #611
  • May 2, 2008 6:05pm May 2, 2008 6:05pm
Here is my analysis for the eurusd next week.

Chart 1 (weekly)
Shows the wave going up is still intact.

Chart 2 (daily)
Shows that we did have a wave collapse. This tells me this may be the start of waves going down (keep in mind if we trade with the major trend, even the moves up will still haul in a considerable amount of pips)

Chart 3 (4 hour)
There is currently no signs yet of a move up. What should we be looking for? A well defined wave going up and then breaking to the upside. Either that or we get a break of 1.5625 area which is the last wave. Also keep in mind if price was to travel up that fast to break it, there may be a big pullback so no need to rush.
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  • #612
  • May 2, 2008 6:14pm May 2, 2008 6:14pm
Here is what I see on the crosspairs. For the most part, the waves on the daily charts have all broken to the upside with the exception of audjpy. As long as the waves stay intact and there aren't wave collapses I see these pairs heading up higher.
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  • #613
  • May 4, 2008 7:59am May 4, 2008 7:59am
I posted this in Razldazl's journal but decided to also add this to mine. Hopefully this will shed more light onto not only waves but why one should stick to simplicity. If you can find one tool to do the job that four tools can do, why make things harder for yourself?

Anyways, here are a few questions that hopefully will make everyone think deeper into what they're doing when trading. I am by no means saying to trade this way OR to use waves the way I do, that's up to the trader. Just do realize first what you're doing. Don't just follow, know why.

1. When you draw trendlines, what are you using as reference points?
2. Support and resistance levels, if you look at them carefully, what are they really?
3. Fib levels. Everyone loves using them because they say price bounces in those areas. What do you think you'll find in those areas?
4. Some use PA setups. Have you ever thought about what PA really is? Find a setup and look at a smaller time frame.

If the answer to all of the above questions are "waves". You've just past the test in understanding the basics to any market.
  • #614
  • May 5, 2008 5:11pm May 5, 2008 5:11pm
Hey Zoopy,

it appears our friend Bernanke is abiout to speak in a couple of hours time (Weird time as it will be 8.30pm New York time). Anyway the market in the last few hours has made gains therefore i believe he has worked again. I lost where we were up to in the tally??? Was it around 9 out of 10.

On another note you have successfully screwed with my mind. Right when I had brought my thinking around to stay away from everything not Jacko and had your Journal was a nice place to trove for friendly discussion re the same you go on to start posting all this wave stuff that has some real merit and is obviously well thought out and thought provoking. I am purposefully not reading too much into your recent posts as I know it will convince me to look deeper and that will drag me away from giving Jacko's method a real unbiased go.

Keep up the good work and look forward to some good light reading on waves....

Cheers,

K8
  • #615
  • May 6, 2008 9:30am May 6, 2008 9:30am
Market is at 1.5580 I think market has bottomed and we will not see a another low. Market has rallied over 200 pips north from the last low. I will wait for the pullback and try to enter long. Maybe at 1.5550 or if its going to pull back strong I'll wait for 1.5500
  • #616
  • May 6, 2008 10:21am May 6, 2008 10:21am
  •  MPP
  • Joined Jun 2007 | Status: Be yourself, everyone else is taken | 2,734 Posts
Quoting kaunasny
Market is at 1.5580 I think market has bottomed and we will not see a another low. Market has rallied over 200 pips north from the last low. I will wait for the pullback and try to enter long. Maybe at 1.5550 or if its going to pull back strong I'll wait for 1.5500
Not realy in keeping with Zoopy's trading style though is it, i know what your saying and i see it too, but in keeping to the theme, i believe we are mid wave and price needs to break either 1.5630 (buy at 15650) or 1.5360 (sell at 1.5350).

don't trade this as i'm still trying to pick this method up
  • #617
  • May 6, 2008 11:02am May 6, 2008 11:02am
Hi all,
Maybe the below is something to keep an eye on?
Possibly re-entry around 1.5500?
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Enter Signature
  • #618
  • May 6, 2008 2:51pm May 6, 2008 2:51pm
Attached Image


I wonder how much luck I will have with posting the image.
Concerning zoopys wave method, I was backtesting it for some a while. I find it difficult to use it by it self alone. I get too many whipsaws. So I feel that this wave method need something more to it. Ofcourse it is a good way to tell when a reversal is happening or had happened. Combining this with some S/R's we might filter some of those whipsaws.

Anyway, going back to zoopys method if we look at H4 chart we broke the wave, headed up a little, now we would need a retrace to 1.5500 for an entry. Taking on consideration recent price action this could be a valid point to take the trade. Unless ofcourse I'm not getting something and ofcourse if we look at higher time graphs we don't see this.

Well lets see how this goes.

Looking at it again buying at 1.5500 feels a little agresive as it still feels as the trend is down. Looking to buy after it had reached 1.5650 might be the better bet.
  • #619
  • May 6, 2008 3:20pm May 6, 2008 3:20pm
  •  MPP
  • Joined Jun 2007 | Status: Be yourself, everyone else is taken | 2,734 Posts
here's another take on it, will be interesting to see Zoopy's reply to this one.

so i have used a 50% fib setup to show approximatly what i think we are looking for, this can be seen without the fib but it help to demonstrate my point.

As yet we have not broken the wave in either direction, we have bounce of the bottom for a small retrace and then will break through for the short.

Attached Image (click to enlarge)
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  • #620
  • May 6, 2008 3:23pm May 6, 2008 3:23pm
Quoting cologg
Hi all,
Maybe the below is something to keep an eye on?
Possibly re-entry around 1.5500?
you had much better probability after pullback to 5450 early in the morning.
when oil reverses its course and ecb cuts on thursday, we can easily be looking at pullback to 5350 and beyond...
.
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