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  • #901
  • May 27, 2008 11:11am May 27, 2008 11:11am
Quoting kaunasny
Maybe higher stop loss should have been considered here as price usually makes higher highs than closin price in this selling scenario.
Or in situation like we had here where price of 1.5800 was visited already we could look at what highs the market made, and if its in proportion we could put stop/loss a little higher than that. By doing so you would have avoided this trade close.
Yeah I know it's easy to speak now when all is done, but maybe that stop/loss strategy would help in future. And also maybe we should avoid placing stops at round numbers, as price tends to pull toward them. I would say placing stop loss 20 pips away from round number would be safe in most cases.
What I should have done was to wait for a convincing close above 1.5800 before collapsing my trade. The reason why I picked 1.5800 was because that was the closest round number (If I was following previous rules to how I was treating my stops it should have really been at 1.5788). I figured if it hit that round number I'm in danger anyways so may as well close it for a loss.You are right about the stop hunting at those levels though.

We'll see what happens next time. It's a work in progress. Only been trading this way for a little over a month now.
  • #902
  • May 27, 2008 11:28am May 27, 2008 11:28am
yes, but waiting for the close is dangerous, what if there is some news release and market jumps 100 pips, so now if thats at 1.5900 and it's not where you want to be. I'd say just move stop/loss away from round number.
  • #903
  • May 27, 2008 11:39am May 27, 2008 11:39am
Quoting kaunasny
yes, but waiting for the close is dangerous, what if there is some news release and market jumps 100 pips, so now if thats at 1.5900 and it's not where you want to be. I'd say just move stop/loss away from round number.
You also have to be very careful of sometimes over reacting to news like that. Just to give you an example, more than a year ago, everyone was expecting the UK to hold rates but instead they raised it unexpectedly. I think I saw cable go up over 150 pips within a 2 hour period. Within another 2 hours, the pair had made a HUGE drop retracing back 60% or so of that move before NY open.

Also, if the market were to close at 1.5900 as you suggested, it's still within 1.6000 so I don't have a problem with holding the short, just that I'd prefer not having such a big stop but it's also accounted for by taking the smaller position.
  • #904
  • May 27, 2008 11:43am May 27, 2008 11:43am
  •  MPP
  • Joined Jun 2007 | Status: Be yourself, everyone else is taken | 2,734 Posts
1.5800 and 1.5700 hit, will be interesting to see the next move and the close of this 4h candle.
  • #905
  • May 27, 2008 11:53am May 27, 2008 11:53am
Quoting zoopy
You also have to be very careful of sometimes over reacting to news like that. Just to give you an example, more than a year ago, everyone was expecting the UK to hold rates but instead they raised it unexpectedly. I think I saw cable go up over 150 pips within a 2 hour period. Within another 2 hours, the pair had made a HUGE drop retracing back 60% or so of that move before NY open.

Also, if the market were to close at 1.5900 as you suggested, it's still within 1.6000 so I don't have a problem with holding the short, just that I'd prefer not having such a big stop but it's also accounted for by taking the smaller position.
Not 100% sure but I believe this is the move that surprised everyone on cable. All I remember is what the candlestick/bar looked like at the time and I think this is the one.

Cable opened at 1.9381, news of the interest rates came out and it shot straight up to 1.9535 (154 pips). But... before it closed, it closed right back down at 1.9415 which is 120 pips lower than the high so really... more like close to 80% drop.

There's something that I go by in trading. If price shoots up/drops very, very quickly, be VERY cautious of a retracement just as aggressive. The above scenario is a good example of this as it happened all within a 4 hour period.
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  • #906
  • May 27, 2008 1:10pm May 27, 2008 1:10pm
WoW Zoop.....hmmm what did that .886 Fib do we were talking about last night....hmm...I'm thinking, DOWN for 83 pips..

MG
  • #907
  • May 27, 2008 2:11pm May 27, 2008 2:11pm
Quoting Matrixxdg
WoW Zoop.....hmmm what did that .886 Fib do we were talking about last night....hmm...I'm thinking, DOWN for 83 pips..

MG
lol, you had so many lines on that chart, one of them had to hit

Right now I'm waiting for the current wave to collapse, when and if it does, I'm going to wait for the retracement then short again using a small position with stops at 1.6000 again. Something tells me we may be following that daily wave collapse that I pointed out a while back. Will have to wait and see.
  • #908
  • May 27, 2008 2:41pm May 27, 2008 2:41pm
Something interesting is happening on gbpchf 4 hour. Looks like we're about to break the wave to the upside (I'll have a clearer idea at the end of this hour). I have mapped out a "buy" area, provided we break and close above the previous wave's high. If it's too much of a close call, we'll have to wait for another 4 hours to see where things are.
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  • #909
  • May 27, 2008 5:34pm May 27, 2008 5:34pm
Seems like I keep revisiting this scenario not because I think this is going to happen but because price is suggesting it. AGAIN I'm going to post the daily chart with the wave collapse which happened a while back. I'm now revisiting the 4 hour chart once again and I do see a collapse. However... I would like to see a more convincing one so I'll wait for another 4 hours to make sure (4 hour period for me ends at 8:00pm NY). If we are still below, I will be placing orders to sell around 1.5750 if price can get that high which will also help to limit risk should the current wave decide to break to the upside again. The size of the position again will be a small one to see if I can find where the top is and if I happen to find it I'll add the rest.
Attached Image(s) (click to enlarge)
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  • #910
  • May 27, 2008 6:52pm May 27, 2008 6:52pm
and your target should be..........
sorry for my english
  • #911
  • May 27, 2008 7:05pm May 27, 2008 7:05pm
Quoting fanias
and your target should be..........
sorry for my english
I prefer not to use targets because that's like trying to predict where the market is going and we all know no one is capable of doing that. What I do know is that price is suggesting currently that it wants to drop. We had a wave collapse on the daily (lower highs/lows), we had a pullback and it looks like it's turning south.

It is now 8:00pm NY and the eurusd has now given me enough evidence that the current 4 hour wave has collapsed. I'm now going to wait for a retracement up (hopefully I can get as high as 1.5750) then short using a small position to find the top. Once I'm in with a small position, I will wait to see further signs of a move down where I will add another small position. When momentum picks up I will add the rest of the position and start riding the waves down.

As for the gbpchf 4 hour, I am NOT convinced yet that it has broken to the upside. It's currently borderline and I'll probably wait another 4-8 hours to see where that is headed. Besides, even if it did break to the upside, we'd be waiting for a pullback first before entering so it'll be quite some time before that happens.
  • #912
  • May 27, 2008 7:26pm May 27, 2008 7:26pm
Quoting zoopy
I prefer not to use targets because that's like trying to predict where the market is going and we all know no one is capable of doing that. What I do know is that price is suggesting currently that it wants to drop. We had a wave collapse on the daily (lower highs/lows), we had a pullback and it looks like it's turning south.

It is now 8:00pm NY and the eurusd has now given me enough evidence that the current 4 hour wave has collapsed. I'm now going to wait for a retracement up (hopefully I can get as high as 1.5750) then short using a small position to find the top. Once I'm in with a small position, I will wait to see further signs of a move down where I will add another small position. When momentum picks up I will add the rest of the position and start riding the waves down.

I like your thought and the way for this kind of trading but which is your benefit in pips?
  • #913
  • May 27, 2008 7:36pm May 27, 2008 7:36pm
Quoting fanias
I like your thought and the way for this kind of trading but which is your benefit in pips?
The idea behind the wave analysis is to see which direction the market is going. This is very important because you want to be trading in the right direction. Once I think I'm in the right direction I will enter in with a small position. I let the market prove to me more money can be made first before adding more to the trade. Think of it this way, if you were given $100 000 and asked to invest it, I'm pretty sure you wouldn't give the full 100k to an investor, you'd give them maybe 20k first to see if they can make a profit and if they can prove themselves to you, you'll give them another 20k. This is what I'm doing in my trading.

Some like to target "x" amount of pips and there's nothing wrong with that, however, the way I see it... you're trying to predict what price the market is going to hit and that's pretty much guessing. So instead of guessing, I'm leaving this open and going to let the trade run until a wave breaks to the upside. When this happens, that's the market's way of telling me it's time to get out and we're now going up.
  • #914
  • May 27, 2008 7:44pm May 27, 2008 7:44pm
I don't trade oil but here's my 4 hour charts. The current wave collapsed indicating we may be moving lower in the near future (we're getting lower highs). In order for this setup to negate, oil will have to break the current wave's high and close above it.
Attached Image (click to enlarge)
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  • #915
  • May 27, 2008 7:48pm May 27, 2008 7:48pm
Took a look at the gold 4 hour. We have a 4 hour wave collapse on gold as well. By the looks of it, gold is starting to show signs of a retracement. Will be interesting to see where this one lands up tomorrow.
Attached Image (click to enlarge)
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  • #916
  • May 27, 2008 8:01pm May 27, 2008 8:01pm
zoopy,
thanks a lot for your quick answer and analysis but you need 2 waves collapses at least in your trend direction to be in profitable trade without targets and trailing stop losses.
right?
  • #917
  • May 27, 2008 8:15pm May 27, 2008 8:15pm
Quoting fanias
zoopy,
thanks a lot for your quick answer and analysis but you need 2 waves collapses at least in your trend direction to be in profitable trade without targets and trailing stop losses.
right?
Fanias

You only need one wave collapse but the wave has to be a well defined one or atleast recognizable. Keep in mind when it collapses, the market will be making a lower low. This is the first sign that a reversal may be in the works. The only way for the setup to be negated then is if many buyers come in and drive the price way up breaking the wave to the upside.

Since I've been trading this way only recently, I'm holding back on defining where to exit or place stops. I prefer to leave this open to the trader because everyone has a different risk tolerance.

Another way to see this concept... if you knew the direction of the market was up, you could basically enter anywhere as long as the price doesn't drop below the recent low. Obviously the closer to the recent low you can enter in at, the smaller the risk. If price continues up, it will do so in waves so you can use the waves to trail or what I call wave trailing.

Hope this answers your question.
  • #918
  • May 27, 2008 8:21pm May 27, 2008 8:21pm
Zoopy, isn't shorting E/U against turtle principles? Do you see more downside?
Money & Pain Respect the market, protect your capital, be patient
  • #919
  • May 27, 2008 8:36pm May 27, 2008 8:36pm
Quoting toyboy tramp
Zoopy, isn't shorting E/U against turtle principles? Do you see more downside?
Yes but this is a separate study I'm doing. If I'm right about my assumptions on wave analysis, I will be able to spot a major trend reversal on the euro (or any other market for that matter) using the weekly chart. This to me is important because if I was to trade Jacko's method, I need to know how to spot when a trend reverses. This can be done using a number of ways but I find this easier. Trading this way also gives me more insight into why his method works so well so when market conditions do change, I will know my boundaries and can adjust the method accordingly.

Do I see more downside? If the daily wave collapses, yes. I'd be very cautious to take longs then because the waves going down will be larger in size but even the moves up will probably still be around 300 pips or so.
  • #920
  • May 27, 2008 8:49pm May 27, 2008 8:49pm
How will I be able to spot a long term reversal? Lets take a look at the weekly cable chart. We had a wave collapse, price pulled back (notice the highs are getting lower) and dropped again (if I was trading Jacko's method, I would only be taking shorts at this point, using the 50.0% retracement as guidance). If the current weekly wave collapses and falls through, we will continue to drop until cable finds it's footing and starts breaking waves to the upside (this is when I will start to take only long positions).
Attached Image (click to enlarge)
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