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Quoting tennisguy
Hello DRT,

Your analysis is much appreciated. please keep up the good work. I wanted to ask you about the price distribution on this cable chart. there are 4 bell curves from the left to the right. does each one represent a time frame? like, monthly, weekly, daily until the hourly. I like to know what they represent.

Thanks in advance, ( if I get tradestation would I get the same chart. I know I wont get the deviation and I am not asking for it. this is your code, I understand that. just the price distribution, would I get it with TS?)

tennisguy
If you notice at the top of all my charts in the status line is the time frame. In this case, it is a month chart with price distribution which updated every 30 minutes. Not in real time like real market profile, but after each 30 minutes. This is adjustable. The number of months (bars) shown on the chart is not important, it is random according to how I scale the charts.

The answer to your question about TS is yes. I will be glad to post the indicator but it comes standard with TS.
DRT,

Thank you very much for your detailed analysis and explanation for eurusd move.
Expected the unexpected
A trader must have a disciplined risk management plan. With that said, it is important to understand that risk thresholds and tolerance for losses are different for everyone. My participation in the currency markets has taught me some very expensive lessons. I do not use hard stops or stops that are fixed at a certain level. This may sound strange and may contradict what you have heard from others who give guidance on risk management. How many times have you picked a stop location only to see the market take out this stop and move in the direction you originally intended? Early in my career I found this to happen very often. At first I did not understand it, but with a little experience under my belt it was obvious what I was doing wrong. I was picking the same "obvious" stop levels that every other retail trader was seeing. The bigger players and dealers who have access to order books know where these levels are and they always seem to run the stops when you are least expecting it. As you become more proficient at understanding price distribution, you will see the value it brings to managing risk. Understanding where supply and demand are clustered will give you a valuable edge.
Here's my approach to managing risk. I like to let the market "prove me wrong" before I abandon a trading idea. Let's say I have identified a level of 1.0000 as a key area. The market has been trading and building value above this level for a few sessions and suddenly the market moves down and I enter long at 1.0000. Initially the trade begins to move up as I intended, but then it reverses and moves through my entry level and I am in a losing position. I will not immediately exit at this point if it is a demand level. If I have done a good job of identifying the 1.000 level as a good entry point and demand level then I can do this with confidence. I will wait and see if the market builds value or settles significantly below the 1.000 level at the end of a key session. Let's say the European markets have closed for the day and we are now trading 50 ticks below my entry at .9950. At this point, I would likely look to cover my position heading into the North American afternoon. The market proved me wrong. What if most of the session we traded 50 points below and then as the day progressed we moved back up to 15 ticks below 1.000? I would not consider my idea wrong at this point. I would wait to see what happens in the next session. My decision to exit a position for a loss is not based on any specific amount of points, rather price action surrounding "areas" I have identified. So I think in terms of areas instead of fixed stops.
You will find that often larger market participants lie well below your identified levels. Price may move below an area and auction up or down to find sellers or buyers quickly. Buying and Selling tails are a good sign that you were right, but maybe the market has not moved up as aggressively as you hoped.
There is no "fixed" answer. You must accept this.Handling risk this way will sometimes result in more loss than if you had just set your stop at "x" level and got out. My experience tells me that I will benefit from this approach more than the few times I would have benefited from a fixed stop.
Always let the market prove you wrong before abandoning your trading idea. Be willing to take the loss. You can always re-enter if the market starts to prove you right. Above all else, have a risk management plan that suits your tolerance for loss because losses you will have.
Hi Teach. Since you taught me, so far I have manage to understand about supply and demand levels, and able to use it in trading. I'm on live account now, and manage to stays on profit. Thank you.

But I still have a problem on my mental. I still not be able to feel calm when I open a contradictory dollar position even if both position have their own trade setup. Like long eur/usd and short aud/usd at the same time. It feels like I'm just doing a long on eur/aud with double exposures. And I still use hard stops under/over value curves where the price is rejected hehe. I still dont have the guts to open the flood gate.

What kind of mental exercise do you suggest for me to do?
What is your opinion on EUR/JPY?
Quoting PipSnatcher
What is your opinion on EUR/JPY?
pipsnatcher,

EURJPY is trading just above Value[+1] at 163.61. It has made a nice advance through up from ADV. You can see on the chart that this was a good level to set longs. The zone 1 distribution is well developed, but I think this pair favors range trading between163.61 back to ADV at 161.19.

Look to set shorts into 163.61. Target ADV at 161.19. I would look to set longs at this level again for a move back up to 163.61.

If we stay above 163.61, then look to set longs for the next level of 166.04. Exit here and observe.

http://www.morrisfunds.com/storage/a...05.27.2008.PNG
Quoting dito
Hi Teach. Since you taught me, so far I have manage to understand about supply and demand levels, and able to use it in trading. I'm on live account now, and manage to stays on profit. Thank you.

But I still have a problem on my mental. I still not be able to feel calm when I open a contradictory dollar position even if both position have their own trade setup. Like long eur/usd and short aud/usd at the same time. It feels like I'm just doing a long on eur/aud with double exposures. And I still use hard stops under/over value curves where the price is rejected hehe. I still dont have the guts to open the flood gate.

What kind of mental exercise do you suggest for me to do?
Hi dito. Nice to hear from you again!!

The mental part of trading is tough. It is 90% of the business. The market is designed to make you think your wrong. Feeling calm comes with experience. As long as I have a trade plan, I am calm. Set up a check list with your daily disciplines. Make sure these are done everyday. Think positively at all times and have faith in your ability to take from the market.

When I have issues like you (and I do) ... I like to focus on one pair and trade it only until I get in the groove. This keeps you from having information overload. Keep it as simple as possible. Clear your workspace of everything except what you need to trade one pair. Anyone can focus on one product and make it a huge success. When you diversify, you need more skill sets, more time and things get out of control. You can make all the money you will ever need off one commodity. One pair. Maybe it should be a major instead of a cross. I like trading the swiss franc when I feel confused. It is usually not as volatile and gives you time to focus.

I hope you are well.
Hello DRT,

talking about the USD/CHF. Do you think it would be asking too much to post the daily and the hourly charts, and your thoughts on the pair.

as always, much appreciated.

TG




Quoting DownRiverTrader
Hi dito. Nice to hear from you again!!

The mental part of trading is tough. It is 90% of the business. The market is designed to make you think your wrong. Feeling calm comes with experience. As long as I have a trade plan, I am calm. Set up a check list with your daily disciplines. Make sure these are done everyday. Think positively at all times and have faith in your ability to take from the market.

When I have issues like you (and I do) ... I like to focus on one pair and trade it only until I get in the groove. This keeps you from having information overload. Keep it as simple as possible. Clear your workspace of everything except what you need to trade one pair. Anyone can focus on one product and make it a huge success. When you diversify, you need more skill sets, more time and things get out of control. You can make all the money you will ever need off one commodity. One pair. Maybe it should be a major instead of a cross. I like trading the swiss franc when I feel confused. It is usually not as volatile and gives you time to focus.

I hope you are well.
Quoting tennisguy
Hello DRT,

talking about the USD/CHF. Do you think it would be asking too much to post the daily and the hourly charts, and your thoughts on the pair.

as always, much appreciated.

TG

The USDCHF is at an ideal level to establish a position. We have been developing value above ADV at 1.0224 and are pulling back to this level. My bias is up.

Look to set longs on a push into 1.0224. Target 1.0393. Exit here and observe. I would look to set up shorts at this level and range back down to ADV at 1.0224.

My view is wrong if price settles below 1.0224 in which case you would want to look at setting shorts down to 1.0115.

http://www.morrisfunds.com/storage/a...05.27.2008.PNG
TXS DRT,

TG
looks like wwe are getting just a little bullish on this pair. is this a test of the 104.39 level before we head back to 102.79, or are we going past to the 105 area???
Right now there are wonderful values being presented. Will you act.

The Euro has dropped through ADV. Will you buy on the surge down. Etc. I think the EURO will reverse at 5670 or so. Scoop it up if you dare.

Look for a reversal.
Quoting mtrmth
looks like wwe are getting just a little bullish on this pair. is this a test of the 104.39 level before we head back to 102.79, or are we going past to the 105 area???
I would say yes. We will test 104.39. I expect it to reverse direction.
Hello DRT,Are you still holding onto your long position? It has broken below 1.5717. Do you think the trend has turned downward?Thanks.scyang
Expected the unexpected
I will try to post when I think the change in direction may occur. Not yet though.
Quoting scyang
Hello DRT,Are you still holding onto your long position? It has broken below 1.5717. Do you think the trend has turned downward?Thanks.scyang
I have the EURO making a daily low around 5673. I expect price MAY reverse at this level. If we reach this level (or very close) then I will add to my longs.

Not sure if you saw my post on risk but it is back a few spaces. I do not consider my view wrong yet. It is too early. Let's see how the day settles before we make a decision to abandon longs.

MAKE A NOTE TO KEEP AN EYE ON THIS

Here's what you may see. As the European markets draw towards close. Use 11:00 AM EST... then I expect a push toward the session direction so the movers and shakers can take their profit. This is certainly not a rule, but will happen frequently. Remember, the European session holds the bulk of Forex volume. Always keep you eye on the European closing hours. Right now all the intraday traders are shorting on the pullback and will try to push it on down.


By the way....if you feel like you are going to throw up then that means it is NOT time to exit yet. Whenever you feel like you are going to throw up then these are the best trades. Add to your longs.
Thanks DRT for the heads up on the eur/usd. I took the long, when the opportunity presented itself.

TG
Quoting DownRiverTrader
I have the EURO making a daily low around 5673. I expect price MAY reverse at this level. If we reach this level (or very close) then I will add to my longs.

Not sure if you saw my post on risk but it is back a few spaces. I do not consider my view wrong yet. It is too early. Let's see how the day settles before we make a decision to abandon longs.

MAKE A NOTE TO KEEP AN EYE ON THIS

Here's what you may see. As the European markets draw towards close. Use 11:00 AM EST... then I expect a push toward the session direction so the movers and shakers can take their profit. This is certainly not a rule, but will happen frequently. Remember, the European session holds the bulk of Forex volume. Always keep you eye on the European closing hours. Right now all the intraday traders are shorting on the pullback and will try to push it on down.


By the way....if you feel like you are going to throw up then that means it is NOT time to exit yet. Whenever you feel like you are going to throw up then these are the best trades. Add to your longs.
Thank you so much for your explanations and tips. You are most helpful, and funny.
Expected the unexpected
Although this trade is working out great!! , I did get a reversal signal in the Swiss Franc futures, so just keep your eye on it.




Quoting DownRiverTrader
The USDCHF is at an ideal level to establish a position. We have been developing value above ADV at 1.0224 and are pulling back to this level. My bias is up.

Look to set longs on a push into 1.0224. Target 1.0393. Exit here and observe. I would look to set up shorts at this level and range back down to ADV at 1.0224.

My view is wrong if price settles below 1.0224 in which case you would want to look at setting shorts down to 1.0115.

http://www.morrisfunds.com/storage/a...05.27.2008.PNG
Hi DRT, Do you mind to comment on current EURJPY position? appreciate it buddy
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