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zoopy's trading journal

  • #1,101
  • Jun 8, 2008 8:01pm Jun 8, 2008 8:01pm
Since some trade audjpy, here's my 4 hour view. Wave broke to the upside, bias is up. No waves have collapsed yet.
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  • #1,102
  • Jun 9, 2008 12:29am Jun 9, 2008 12:29am
Quoting zoopy
Figured now would be a good opportunity to step back and look at my development as far as wave trading goes. This way I can see what may have been overlooked and what areas may need improvement or needs to be simplified further.

Direction of a trend (based on all timeframes)
When waves break up, only buy
When waves collapse, only sell

Entering into trades
Approach 1 (aggressive)
An entry on the wave break is the more aggressive approach. This entry also requires a larger stop so be mindful of that.

Approach 2 (conservative)
When you know the direction, enter on pullbacks. Wait for price to turn around first and close before entering.

I also use additional knowledge based on my round number analysis which can be found through the index in post#1.

Take profit
This is currently set at 100 pips. The reason for this is because big players have orders at round numbers so I'm using this as guidance.

Stops
* Still experimenting with this. Currently I'm using the previous wave's high/low as a reference point.

Something to clarify as well. I do not use trendlines, S/R lines (in the traditional sense), bars/candles, fib retracements (although sometimes I will refer to the 50.0%), PA, PPZ or indicators. The intent of wave trading is to "listen" to the market and to follow it.
Just another reminder before heading to bed.

Static has questioned me on a few things in his journal so I'm going to see if I can explain some of the concepts behind my trading in more detail and the reasoning behind my thinking.

Chances are the explanation will be pretty long and I'll try to cover all of the aspects. Some things may not make sense either so try to keep an open mind. If you still aren't sure, I suggest doing the wave experiment for a few weeks. Chances are everything will make sense then. The main problem I think with most traders trying to understand my method of trading is that they're unable to let go of using bars/candles/PA etc.

  • #1,103
  • Jun 9, 2008 7:21am Jun 9, 2008 7:21am
Why use a line chart?
The main reason why I use a line chart is because it has a big psychological advantage over candlesticks or bars. What do I mean by this? If you compare a bar/candlestick chart with a line chart, which chart are you able to determine the peaks/valleys the quickest and in some cases even the direction? The answer to this should be line chart no matter how experienced you are. The reason for this, is because there is only one level of information you are evaluating and that's the closing price. With a bar/candlestick chart, you are looking at volume (up/down motion relative to the bar/candlestick), the open, close, highs and lows. The more information your brain has to process, the more likely you're going to make a mistake. The line chart allows you to streamline through that process so that you can make a quick, confident decision when pulling the trigger.

Why do I determine direction of a trend through the use of waves?
Simple. The market is ALWAYS right. No matter how smart you may think you are or how cool you think your indicator looks, the market will ALWAYS be right. If our goal is to make money, wouldn't it make sense to follow the
market instead of trying to predict tops/bottoms? This is exactly what I'm doing through waves. If I'm in a long position but then the current wave collapses, I get out. Why? Because the market is clearly telling me it wants to go down and I better listen to it. At this point I do NOT need to decide whether the market will retrace up because I am CLEARLY wrong. What I often do in this case is to exit my trade and trade in the opposite direction or on a pullback.

Why are your stops so big yet your take profits are only 100 pips? That's ludicrous, it equates to negative expectancy and you're sure to lose!
While this is true in theory, my trading style often doesn't allow for the large stop to get hit. The large stop as MPP has put it is more of a "WTF emergency stop" lol. First before I get to the large stop/100 pip TP question, I'm going to explain the mechanics because you need to understand the basics.

If the market is to go up (doesn't matter what timeframe), the big players will start pouring in and create what I call a ripple effect where others will follow. Think of the big players as Tsunami waves and the smaller traders as the ripples. This is what creates waves going up/down. Even if we were in a ranging market this will happen and can clearly be seen on the smaller timeframes. In simplest terms... if a wave breaks up, there is a very high probability that there will be waves to follow especially when that wave does follow through. This also means that my win rate is far higher than 50% because the big players will always win and I'm following them ie. bigger waves.

Having gone through the wave analogy, I hope you can now understand where I'm going with this. If I'm trading in the direction that the Tsunami waves break, there is a far greater chance that my take profits will be hit before my stops. In order for my stops to get hit, there has to be a wave travelling in the opposite direction against me first. When this happens the waves are smaller so I'll be able to detect when I'm wrong before the large stop gets hit. Also keep in mind the waves are smaller and tend to range first at this point because massive amounts of money is being redirected. Once the money has been redirected, you'll start to notice the waves get larger in size.

If I know there is a high probability of waves going in the given direction, why not hold onto the trade and let it run instead of taking 100 pips all the time?
The main reason is because nothing is guaranteed in the markets. Learn to respect it and learn to protect your capital at all costs. Lets compare a scenario where we have trader A who lets his trade run vs trader B who takes 100 pips on pullbacks/retracements.

Trader A (lets profits run)
1. Enters market
2. Market goes 300 pips in his favour (at this point he's smiling because of looking at all those pips)
3. He's now thinking this is a great trade, it could go way up, lets hold it for longer. He has no idea how far the market could go, yes the market is going in his favour but he has no idea when things could turn around so he holds the trade hoping to get more.
4. Market starts to drop, and he's now at 250 pips. This is when he starts to think... hmmm we going down now? Probably not, I'm in a great trade lets hold it longer, this might be a retracement.
5. Few hours later... 230 pips.
6. Trader A closes the trade for 230 pips because he doesn't want to risk more.

Trader B.
1. Enters market
2. Trader B isn't greedy, he goes for 100 pips. 100 pips is hit, he's now banked it.
3. Retracement occurs, trader B enters again, another 100 pips banked.
4. Another retracement, enters market again, another 100 pips.
5. At this point trader B has collected 300 pips.
6. Market starts to drop and trader is out waiting for next trade.

Result:
Trader A makes 230 pips
Trader B makes 300 pips (without compounding)
  • #1,104
  • Edited 8:23am Jun 9, 2008 7:38am | Edited 8:23am
Quoting zoopy
Here's a revised usdjpy 4 hour wave chart. We did not get a confirmed collapse of the current 4 hour wave. Bias for this pair is currently still up. Will be checking up on this in 4 hours time to see what happens.
Here's an updated chart of the usdjpy. Right now I'm in this trade with +80 so trade will be coming off shortly. Stops are at breakeven so nothing at risk.

Edit: Profit taken. +100 pips
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  • #1,105
  • Jun 9, 2008 7:40am Jun 9, 2008 7:40am
Quoting zoopy
Interesting what's going on here after how gbpchf dropped on Friday. This pair the wave broke to the upside, we had a pullback and looks like we may be headed up. Bias for this pair is still up since we have waves breaking to the upside.

Edit: I'd wait another 4 hours to determine if this pair wants to drop more or not.
Here's a follow up of the gbpjpy 4 hour chart. This one I also placed a long overnight but the trade is out since 100 pips was hit. Mind you these waves are still breaking up and I definitely would NOT short unless we get waves collapsing.
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  • #1,106
  • Edited 8:40am Jun 9, 2008 7:45am | Edited 8:40am
Quoting zoopy
Just noticed cable has broken a wave to the upside. End of this hour it will be confirmed if we end up above the horizontal bar. I'd wait for a deep pullback and price to turn around then start buying. Bias for this pair will be long if we have a confirmed break.
The chart for this was posted last Friday I believe, when the wave broke to the upside and closed. Last night it looked like this pair wasn't going to pullback so I entered long with a large stop. This trade is also currently at around +80 pips so will be coming off shortly.

Edit: Momentum on this turning around so I exit trade +50 pips. If this continues going up I don't care, I'll catch it on the next wave

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  • #1,107
  • Edited 8:42am Jun 9, 2008 7:53am | Edited 8:42am
Took this trade this morning but am currently -26 pips. Looks like it's creating a new wave. I'll be keeping an eye on this current wave because if it collapses, I will be pulling the trade since I'm wrong. Might be a couple of hours before I know this though.

Edit: Trade not looking too good and may even have a wave collapse here. Currently -64 on this one. Will be watching this at 12:00pm NY when the 4 hour period ends for me.
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  • #1,108
  • Edited Jun 10, 2008 6:43am Jun 9, 2008 7:58am | Edited Jun 10, 2008 6:43am
Seem too high? Hell no, waves breaking up still so I keep buying lol. Small risk too. Will see what happens to this trade, +15 on this one.

Edit: Trade closed out this morning with +100 pips
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  • #1,109
  • Jun 9, 2008 8:04am Jun 9, 2008 8:04am
This might be why aussie is dropping a little. Gold broke a wave last week so my bias for this is definitely up. Would be interesting to see where this ends up but I do believe up, unless we create a wave and it collapses.
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  • #1,110
  • Jun 9, 2008 8:09am Jun 9, 2008 8:09am
Interesting what we have here. Just noticed we broke the weekly wave for this pair to the upside. Not sure if last week's close was a confirmed one so will probably wait until next week to make my decision. My bias for this pair is currently long based on what I'm seeing.
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  • #1,111
  • Jun 9, 2008 8:37am Jun 9, 2008 8:37am
Zoopy i have been following your journal for some time and what you have come up with is very interesting. i shorted gold this morning when it was rejected twice at 908 area with ref to 24hrs peaks and we have confirmed 4hrclose below 899 now i am waiting for a close above or below 896 which i think will determine its next wave. keep them coming bro and if you notice on usd /cad and euro/cad they are making higher high and lower lows on 4hr chart and i am 250+ on us/cad and 700+on euro cad. thanks a lot for coming up with this simple and very effective method. regards
Quoting zoopy
This might be why aussie is dropping a little. Gold broke a wave last week so my bias for this is definitely up. Would be interesting to see where this ends up but I do believe up, unless we create a wave and it collapses.

  • #1,112
  • Jun 9, 2008 8:47am Jun 9, 2008 8:47am
Quoting kenneith
Zoopy i have been following your journal for some time and what you have come up with is very interesting. i shorted gold this morning when it was rejected twice at 908 area with ref to 24hrs peaks and we have confirmed 4hrclose below 899 now i am waiting for a close above or below 896 which i think will determine its next wave. keep them coming bro and if you notice on usd /cad and euro/cad they are making higher high and lower lows on 4hr chart and i am 250+ on us/cad and 700+on euro cad. thanks a lot for coming up with this simple and very effective method. regards


That post right there made my day. Quite a few seem to think this method of trading isn't possible because you aren't seeing bars/candles or you're using a big stop. If that isn't proof enough I don't know what is LOL

btw. Nice trading and thanks for dropping by
  • #1,113
  • Jun 9, 2008 8:57am Jun 9, 2008 8:57am
hey bro what do you think about us/chf it looks like going up?
  • #1,114
  • Jun 9, 2008 8:57am Jun 9, 2008 8:57am
Zoopy

When market makes a wave up and your bias is long, you wait for retracemet, retracment occurs and market again starts to turn bullish. At what turning point do you enter the market? What do you have to see to decide to jump in? How much does it have to turn around for you to enter?

Market is always moving up and down so I'm just intrested in your method of determining when it is time to enter.

I hope you understand my question.

What your doing here is gold. I have a friend whos starting on forex, gave him couple of books to read to learn the basics, after that I'll direct your thread to him together with Jackos. They're equaly valuable.

I'm also live testing a trailing method wich seems to do its job so far, its going to take some time. If I find it valuable I'll share it here.
  • #1,115
  • Jun 9, 2008 9:03am Jun 9, 2008 9:03am
Quoting kenneith
hey bro what do you think about us/chf it looks like going up?
usdchf had waves that collapsed down. That means we only sell but wait for price to turn around first. Here's my chart.
Attached Image (click to enlarge)
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  • #1,116
  • Jun 9, 2008 9:08am Jun 9, 2008 9:08am
Quoting kaunasny
Zoopy

When market makes a wave up and your bias is long, you wait for retracemet, retracment occurs and market again starts to turn bullish. At what turning point do you enter the market? What do you have to see to decide to jump in? How much does it have to turn around for you to enter?
This part is the discretionary part. If you notice it looks like it's turning around and then it starts to speed up, that's when you enter. I don't have a rule where if the market moves "x" amounts of pips I enter. I do this based on how I see momentum building up. The other thing I also use is my round number analysis because this helps me gauge the strength based on where price is relative to the round number levels. Not sure if that makes sense?

Quoting kaunasny
What your doing here is gold. I have a friend whos starting on forex, gave him couple of books to read to learn the basics, after that I'll direct your thread to him together with Jackos. They're equaly valuable.

I'm also live testing a trailing method wich seems to do its job so far, its going to take some time. If I find it valuable I'll share it here.
Thanks kaunasny. Good luck with your testing and trades
  • #1,117
  • Jun 9, 2008 9:09am Jun 9, 2008 9:09am
thanks, actually i took small position at the break of that small peak at .0207 as it made higher low on the last valley. so far so good. you are rocking zoopy.
regards
Quoting zoopy
usdchf had waves that collapsed down. That means we only sell but wait for price to turn around first. Here's my chart.

  • #1,118
  • Jun 9, 2008 9:13am Jun 9, 2008 9:13am
Quoting kenneith
thanks, actually i took small position at the break of that small peak at .0207 as it made higher low on the last valley. so far so good. you are rocking zoopy.
regards
I trade the bigger, more defined waves. That peak that you pointed out I see as "noise". My bias for this pair will only change if we create a well defined wave and it breaks to the upside but that hasn't happened yet.
  • #1,119
  • Edited 11:02am Jun 9, 2008 9:19am | Edited 11:02am
There may be a possible wave collapse on the audusd pair. Still 2 hours left of my 4 hour period but if we end up below the horizontal line indicated, I'm getting out because I'm obviously wrong and the market is telling me it's time to go down.

Edit: Exit trade. -94 pips. Market told me I'm wrong and my bias for this pair is now down.
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  • #1,120
  • Jun 9, 2008 10:17am Jun 9, 2008 10:17am
Quoting zoopy
Not that I trade these but... you know it can't be good when you see this. Daily wave collapse on Dow Jones, S&P500 and NasDaq is still holding.
Thought I would bring this post up (posted May 29, 2008) to demonstrate how powerful waves are. We had a wave collapse on the Dow Jones and S&P500 back on May 29th. Here is an updated chart of just the Dow Jones. Remember... when the big Tsunami waves start moving and the market is telling you it wants to go down, it's best you listen lol.
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