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  • #701
  • May 14, 2008 8:56am May 14, 2008 8:56am
  •  MPP
  • Joined Jun 2007 | Status: Be yourself, everyone else is taken | 2,734 Posts
Quoting zoopy
I was using that more to demonstrate the concept. I think if I was to trade this it's probably best to pick a timeframe and just trade it. If you start looking at different timeframes you'll get conflicting waves the same way as when you look at PA and the weekly may say down but daily says up.

If we look at gbpchf for example the daily says down but the 4 hour tells a different story. What I would probably do is just stick to what the 4 hour tells you, even on audjpy which to me looks like up (on the 4 hour). If you don't have the time to watch charts then just use the daily. Just be sure to account for the bigger stops and make sure you use proper money management.
i'll most likely stick to the 4h, taking between 50 and 100pips tp, this gives us smaller stops and more trades IMO
  • #702
  • May 14, 2008 9:05am May 14, 2008 9:05am
Quoting MPP
i'll most likely stick to the 4h, taking between 50 and 100pips tp, this gives us smaller stops and more trades IMO
Yah I agree. Plus I'm noticing even with the 4 hour I don't have to babysit it as much as I originally thought I would have when I first started trading this way.

I'm not sure about you but before when I was looking at bars/candles, just the movement of them was what made me keep an eye on my charts. Now... since I can't see it, I don't really care. Not sure if this is a good approach but I prefer that I don't see them.
  • #703
  • May 14, 2008 9:36am May 14, 2008 9:36am
looks like you would need up to a 500 pip stop on that gbpchf , but its just an example right?? But what you are saying is if it starts waving up rather than down, you would consider it risky and close before that, right? Hmm, think Im understanding a bit better, thanks, Raz
Never say never.
  • #704
  • May 14, 2008 9:55am May 14, 2008 9:55am
Quoting razldazl
looks like you would need up to a 500 pip stop on that gbpchf , but its just an example right?? But what you are saying is if it starts waving up rather than down, you would consider it risky and close before that, right? Hmm, think Im understanding a bit better, thanks, Raz
Yes just an example. Even if we were to use a 500 pip stop, it would be a temporary one because chances are, before price goes up, it has to create a wave and break it to the upside. That will be when I would then exit because I know the market is telling me I'm wrong at that point.

What I threw out on the table with all these wave charts started off as an exercise for me but after I did the exercise I started to realize what I was getting into. Funny how things work out sometimes. Later on I might try do a similar exercise just using a bar chart. Would be interesting to see the results on that and to compare.
  • #705
  • May 14, 2008 1:43pm May 14, 2008 1:43pm
Some very good information on these current posts. I'm following all this line trading. However I have trouble with this type of trading, or likely I don't have a well thoughout trading plan for this type of trading.

I've been trying to historically test these, but I encounter numerous problems and questions while doing so without any luck trading.

So.. as I understand your are using Take profit as profit taking technique. Question #1. How do you take profit? If thats just take profit as a # of pips is reached (50 - 100 ) how do you decide how many pips TP ?

While backtesting I get alot of difficulty on H4 charts to see any patern in the waves ( if daily chart was used, that could improve this ) . Usualy when I feel the wave has to retrace to an "entry" area, it sometimes doesn't retrace but keeps on going with me missing the trade, or it does retrace, goes through to make a new high/low while in process triggering the trade to end up with a loss.

Also, if we use TP technique of 50-100 pips could change alot of those losses because alot of potential wins turned into a loss, but then again is it good idea to TP 50-100 pips, while stops sometimes range 150-250 pips being larger than a potential win.
Do we trail stops? Or just make them fixed at the bottom of the wave. So we end up with S/L or a fixed profit of 50-100 pips.
Also, sometimes price just goes way past those 50-100 pips to lets say 500 pips of potential profit, so how do we handle this? I see zoopys way of waiting for line chart to turn and then exit, but on H4 chart it does that alot and you would be out of the market way early.
I tried moving S/L below the bottom of new waves formed in bullish trend, but this way you usually end up with buntch of whipsaws and the few times it ends up going longer in your direction, last wave down just takes too much back and you end up with too little to compensate all these other whipsaws.

Sorry for the long post, I hope this mess will make sense.
  • #706
  • May 14, 2008 3:55pm May 14, 2008 3:55pm
Kaunasny

See below...

Quoting kaunasny
I've been trying to historically test these, but I encounter numerous problems and questions while doing so without any luck trading.
Instead of trying to backtest, try this instead. Imagine you were locked up in a room and told to trade. You are only given line charts and have no access whatsoever to bar/candles. You don't even have access to a simple moving average. All you have is a line chart. How would you trade? Trade this way for a month and see what you come up with.

What I'm doing with this exercise is deliberately forcing a trader into a corner and have them solve the problem. This exercise does a number of things.

1. It helps to teach you how the market moves. Yes it moves in waves but there's a certain rhythm the waves make especially when price decides to turn around.
2. It teaches you to trade with a minimum amount of information. Because of this, you are forced to apply strict money management.
3. It teaches you patience. Since you can't see the high/low of the bar... actually you can't even see the bar period lol, the only way you can tell if price is turning around is if you wait.
4. When and if you finally decide to switch back to a bar chart afterwards, you'll find that you won't need all the tools you used to use.
5. It will teach you to sort through information presented to you. Just because you have access to all the information in front of you, means you should use all of it.

Quoting kaunasny
So.. as I understand your are using Take profit as profit taking technique. Question #1. How do you take profit? If thats just take profit as a # of pips is reached (50 - 100 ) how do you decide how many pips TP ?

For now, I just use a fixed take profit based on what I know about the currency. I know euro can achieve 100 pips easily so I use that. If I was trading gbpjpy I may use 200 pips because that pair tends to be very volatile. The best way to figure this out in my opinion is to just trade the pair for a while and get use to it's movements. If it usually moves 100-150, then aim for 100.
Quoting kaunasny
While backtesting I get alot of difficulty on H4 charts to see any patern in the waves ( if daily chart was used, that could improve this ) . Usualy when I feel the wave has to retrace to an "entry" area, it sometimes doesn't retrace but keeps on going with me missing the trade, or it does retrace, goes through to make a new high/low while in process triggering the trade to end up with a loss.
You may have more of a problem because there's slightly more noise. However, if you look close enough those same patterns occur on all timeframes.

If you miss the trade, there's not much you can do. Just a missed opportunity in my opinion. The same goes with any other method. You just have to take it on the chin and move on.

If you are waiting for price to enter into an area on the retracement and it does... BUT it keeps going and sets a new high/low, that's a sign that your original analysis was right at the time but is wrong now. I made a similar move on eurjpy. Based on what I was seeing at the time, it said down, however if you look at the chart, it's going straight up so I was obviously wrong about it. The trade was good at the time, unfortunately the market proved me wrong.
Quoting kaunasny
Also, if we use TP technique of 50-100 pips could change alot of those losses because alot of potential wins turned into a loss, but then again is it good idea to TP 50-100 pips, while stops sometimes range 150-250 pips being larger than a potential win.
Do we trail stops? Or just make them fixed at the bottom of the wave. So we end up with S/L or a fixed profit of 50-100 pips.
Also, sometimes price just goes way past those 50-100 pips to lets say 500 pips of potential profit, so how do we handle this? I see zoopys way of waiting for line chart to turn and then exit, but on H4 chart it does that alot and you would be out of the market way early. I tried moving S/L below the bottom of new waves formed in bullish trend, but this way you usually end up with buntch of whipsaws and the few times it ends up going longer in your direction, last wave down just takes too much back and you end up with too little to compensate all these other whipsaws.
Do we trail stops? I haven't tried it yet and I'll find it hard since I can't see the highs/lows of the bars and I have to trail manually. What you could do with stops... if you are up so many pips, move your stops to breakeven instead. That way it either hits breakeven or your TP.

Price could go way past by 500 pips, maybe even more. My question to you though is... did you know how far price was going before you got into that trade? If I knew it was going to head down or up 500 pips, I would have targeted that. The problem is, I just don't know.

Sometimes I exit if I can see the trade may turn against me based on what the wave is doing and where it's doing it relative to the prior wave. However, I'm finding it's best to place the trade, and leave it.

Not to worry about the long post. You have some good questions and very valid ones too.
  • #707
  • May 14, 2008 4:02pm May 14, 2008 4:02pm
Quoting zoopy
Tomorrow Bernanke is speaking. Lets see if he'll make it 10 of 11.

Trying to keep track of this. From what I remember, the last time he spoke price didn't go up so we're sitting at 9 of 11. Tomorrow Bernanke is speaking again, maybe we'll hit 10 of 12 then.
  • #708
  • May 14, 2008 4:44pm May 14, 2008 4:44pm
  •  MPP
  • Joined Jun 2007 | Status: Be yourself, everyone else is taken | 2,734 Posts
Quoting zoopy
Trying to keep track of this. From what I remember, the last time he spoke price didn't go up so we're sitting at 9 of 11. Tomorrow Bernanke is speaking again, maybe we'll hit 10 of 12 then.
My broker won't let me trade it, but i think i wil try the bookies, what kind of odds will i get
  • #709
  • May 14, 2008 6:17pm May 14, 2008 6:17pm
Quoting MPP
My broker won't let me trade it, but i think i wil try the bookies, what kind of odds will i get
lol. Considering we're 9 of 11, I'd say your odds are pretty good!
  • #710
  • May 14, 2008 8:33pm May 14, 2008 8:33pm
Good Morning,

I was hoping we can see 1.52 by end this week or next week. Euro retracement has been real slow forming since mid April till now , hope our trend resumption starts from there again.

Looks like you're doing well on your other pair research as well, congrats.
Still waters run deep
  • #711
  • May 14, 2008 8:47pm May 14, 2008 8:47pm
Quoting barak
Good Morning,

I was hoping we can see 1.52 by end this week or next week. Euro retracement has been real slow forming since mid April till now , hope our trend resumption starts from there again.

Looks like you're doing well on your other pair research as well, congrats.
Hi Barak

I think if the current 4 hour wave collapses then we could very well see 1.5200. I know there may be buyers there because I think there's a weekly trendline and 50.0% fib retracement or something in that area. I remember doing an analysis way back and seeing that. Doesn't mean it will stop there though. Based on what I'm seeing on the daily waves, we could very well be headed much lower but I rather let the market do it's thing.

Currently I am a little biased to the downside because of how my long trade was taken out. If we were headed up, the wave up shouldn't have dropped that low. Best to sit on the sidelines and see what happens.
  • #712
  • May 15, 2008 1:03am May 15, 2008 1:03am
Thanks for your reply zoopy

I'll try that one month trading using just a line chart, we'll see what I'll come up with like you said.

So we don't have any real trailing stop method. How about if we are up 100 pips we put it at BE.

How can we increase wins without blindly using 100 pip TP ?
Often price just goes by 100 pips to 150, or sometimes even 500 without any major retracement. I find TP of 100 pips for pair like eur/usd ofcourse a valid one but it feels that more could be squeezed out of it.
I'm not a fan of TP yet .

If its intresting yesturday after reading your posts I went on and applied 100 pip TP to a test I used with 100 pip TSL earlier. That was just based on round numbers and dips. Overall before price hit 1.6018 I had a profit, but then it was all lost on this trend comming down to current day ending up with a small loss overall. This method could recoup those losses thought by catching the strong move up wich we invevitably going to have.
Applying 100 pip TP I increased profits by more than 100% , and more than half times when price moved 100 pips, it moved also to 150 pips.

That shows that 100 pip TP is really a valid approach. Now looking back at my trading:
how many trades did I close over 100 pips profit?
Very little
how many trades of those wins went beyond 100 pips.
Quite alot of them

Makes me want to explore that field more in depth as I get alot of questions.

Just sharing my ideas, sorry if they seem silly to you.
  • #713
  • May 15, 2008 6:42am May 15, 2008 6:42am
Quoting kaunasny
Thanks for your reply zoopy

I'll try that one month trading using just a line chart, we'll see what I'll come up with like you said.

So we don't have any real trailing stop method. How about if we are up 100 pips we put it at BE.
I think the one month exercise is a good one. The whole idea behind why I did this exercise in the first place was to get a feel for the market. But... the other thing I was curious about at the time also was how far could I push things. I wanted to see if I could get away with the absolute minimum. One can always add/introduce extra information into the equation but the hardest thing to achieve is simplicity.

When it comes to trailing stops and even profit, I deliberately left that open to the trader. I myself don't know how to approach it since I've only been going through this exercise recently. The 100 pips approach you mentioned is certainly something that could be explored. There is no hard fast rule.

Quoting kaunasny
How can we increase wins without blindly using 100 pip TP ? Often price just goes by 100 pips to 150, or sometimes even 500 without any major retracement. I find TP of 100 pips for pair like eur/usd ofcourse a valid one but it feels that more could be squeezed out of it. I'm not a fan of TP yet.
I have been looking into various ways to target more pips but again I'm going to leave this open for traders to explore. When it comes to retracement, I don't necessarily look for a "major" retracement. If it's a wave which I can recognize and see clearly I'll use it.

In the past I've received questions about the size of waves (dips/pullbacks) with regards to pips too. I wouldn't take that route because the market always changes. A 50 pip dip a year ago could be 100 pips today. If you're able to identify a dip based on surrounding waves then it makes you more flexible as a trader. You're also not trapping yourself in a corner by doing this, which to me is a far better approach.

I'm glad you're starting to question your trades. When you have questions and learn to solve them yourself, you learn more. It's human nature to be both inventive and innovative. Like I said before, if you were put in a room and locked up with only a line chart or even a bar chart and nothing else you'll find a way to trade it.
  • #714
  • May 15, 2008 6:51am May 15, 2008 6:51am
Quoting zoopy

Trying to keep track of this. From what I remember, the last time he spoke price didn't go up so we're sitting at 9 of 11. Tomorrow Bernanke is speaking again, maybe we'll hit 10 of 12 then.
I'm going to record this down as 10 of 12. The euro did go up overnight during euro/london session although it seems to be dropping now. Maybe it will skyrocket when Mr. B opens up his mouth lol.
  • #715
  • May 15, 2008 7:02am May 15, 2008 7:02am
Since the market is so boring right now... here's a cable 4 hour chart. Interesting what's going on here. Waves keep collapsing. There was a pullback but looks like price wants to take another dive.

On a side note...
The reason for the colour change in my charts is because I'm busy analyzing whether colours have an effect on how we recognize waves. Figured if I'm a designer and I was taught colour theory, may as well put it to good use lol.

If anyone is interested I'll post some of my studies.
Attached Image (click to enlarge)
Click to Enlarge Name: cable_4hour.gif Size: 10 KB
  • #716
  • May 15, 2008 7:07am May 15, 2008 7:07am
Here's a very good setup currently on aussie 4 hour. There was a wave collapse, a pullback and we're now in the hot zone to short. Price has also turned south, so possibly a good opportunity for this one to go down.
Attached Image (click to enlarge)
Click to Enlarge Name: aussie_4hour.gif Size: 12 KB
  • #717
  • May 15, 2008 7:28am May 15, 2008 7:28am
  •  MPP
  • Joined Jun 2007 | Status: Be yourself, everyone else is taken | 2,734 Posts
Quoting zoopy
Here's a very good setup currently on aussie 4 hour. There was a wave collapse, a pullback and we're now in the hot zone to short. Price has also turned south, so possibly a good opportunity for this one to go down.
My only concern with this trade is the number of failures at .93XX area, it would need to be a quick trade i think. or we wait for the break of support and then trade the next wave - this is my favoured option
  • #718
  • May 15, 2008 7:38am May 15, 2008 7:38am
Quoting MPP
My only concern with this trade is the number of failures at .93XX area, it would need to be a quick trade i think. or we wait for the break of support and then trade the next wave - this is my favoured option
That works too. I wasn't really paying much attention to all the waves on the left of my chart. Just noticed now after you mentioned it quite a few waves hitting 0.9300 area.
  • #719
  • May 15, 2008 8:31am May 15, 2008 8:31am
Zoopy,
I'd like to see your colour study info.
I'm continually playing with colours and often think I spend far too much time with that side of things....after all, who cares, the info is still the same isn't it????
Who knows if it makes a difference or not, but when the market is boring like it has been for a little while I'll mess around with this sort of thing rather than over trade - or at least I like to think that's what I do
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  • #720
  • May 15, 2008 8:43am May 15, 2008 8:43am
Hey MPP,

I certainly don't want to detract from this thread in any way but it's very interesting you might see 2.0340 as an entry point in TEB's 200 simple method.

If you look at the low wave of the GBPCHF in the attached chart it's at almost the exact same price you note as an entry using TEB's method - Confluence maybe??

Sorry for the distraction Zoopy.

Thanks
Colin.
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