james16 Chart Thread

Ghous

Thanks for the reply,was a soccer player but not a very good one otherwise i wouldn,t need the FX.Happy trading.

Gerard

Yes i trade real already. Demo is great but there are no emotions, i dont need to fight on demo with greed,excitement,patience.I think i need to learn in real and fight with myself. It's little step to be better trader i think.

good one ?

Hi,

That is 4hrly USDCAD as I'm in the trade for this one.

Regards,
Kim

It sounds like you are adding these elements on top of learning a trading style. I understand the need for this mental transition, but do not agree it is in our best interest to blind fold ourselves before crossing a highway only to add the element of fear, uncertainty, and risk. I am not trying to insult you, and obviously it is your choice. I am just trying to look out for fellow traders.

Thx for your opinion, but tell me, what to do ? I'm good on demo. But real is hard fight yet

Hi again guys,

so here is my theory of momentum,

note however that i am not going to go too much into detail as it may become irrelavant to the overall thread theme. Later as i develop it further i may start a new thread with details so for now i'll just give you the basic idea.

My theory abt momentum comes from my peculiar way of interpretation of the markets and what's goin on behind the scenes.

THE BASICS:

We are all aware of the fact that at any given time any pair any tf any situation the pair may be in there are only 2 kinds of parties invloved, BULLS and the BEARS. I have rather catogarized their existance in the markets as measures of their domination strenghth. i.e when i analyse a pair, all i have to see is where the trend is if any which makes me conclude what each of these are up to, in some way it helps my trading a lot, importantly it helped me come to this great understanding of momentum which obviosuly is nothing new but something i totally ignored or lets say didn't know the significance it may carry.

THE MOODS OF THE MARKET:


so what exactly are these moods that the two parties appear to be in.

1) Inactive:, this is a state where either party (or both) is inactive in terms of carrying price along. this party is enjoying a break from the markets. (or have been made to flee from the battle ground)

2) Present:, this is a state where one or both the parties are in the markets yet have no dominance over price, i.e they wish to take price their way but either because of the strenghth of the opposing party or due to low impact from the main party can cause this situation. ranging with no tails and medium to small sized bars may also be a valid case for this kind of a mood setup

3) Active:, this is the case where one or both parties are trying to prove who the boss is. i.e they have significant control over price and are pushing the price infornt rather than dragging it along.

COMBINATIONS:

A combination of each of the above mentioned moods can cause a market to move in particular patterns, again because i am not going in too much detail i'll only give a few examples.

let's take the case of both the parties in the same mood and see how they show this on the charts.

case 1) both inactive: a valid explanation could be a tight range as traders wait for the range to break, since the direction is uncertain neither the bulls nor the bears are too invloved untill the breakout occurs, it may also occur during low vlume periods during year ends or major worldwide holidays or other events.

case 2) both present: this may be the case of market tops and bottoms as one party seems short of gas and the other still unsure if it is capable enough to reverse price in it's direction.

case 3) both active: this is often the case when markets decide upon important news release like the NFP before the actual release or when price is caught up between a tight range with high volume. (i will generally call the markets to be in high volume when i see crzy spikes in all direction poking out of ranges or previous highs/lows and/or ppzs) High volume alone may also bring abt such a situation.

COMING BACK TO MOMENTUM...

in general terms momentum is when one party seems to be dominating the other, i however take special note of strong momentum situations, this is when one party is active while the other is inactive. one the charts it is visible as good sized candles with the same color carrying price steeply up/down as the case maybe. my definition of strong momentum (to which i frequently refer to as just momentum) is a combination of active and inactive which provides nice steep price movment in a direction.

here is EU daily just to give you an example:

(refer to attatched chart)

the greend tirangle refers to the case where bulls are active while the bears are inactive, a case of bullish momentum. as we can see one candle easily closes well above the last candle high/close without any real retracments, the only point when the bears did let us know they are in the world is around that red ppz line,

the grey rectangle refers to a case which can be described as a combination of "present present". while none of them (bulls and bears) are dominant it is clearly visible that they are not asleep or being silent.

the red rectangle shows nice bearish moemntum as one bear candle follows the other and closes well below it, with little green in between this was just abt perfect bearish momentum, with the bears active as hell the little that the bulls wanted to say (the pin bar that was so much debated upon) was clearly thrown aside by pure bear muscle. the pin bars many of us took failed for one obvious reason...we were all hoping that that one green pin should well destroy the image of the bears they had worked upon so hard to set up right from 1.597. Foolish eh?

*****_____________________________________*****

right so here it just a brief explanation of my understanding of momentum and how i interpret it, and how i often eliminate and filter some of the bad trades.

Regards,
Ghous.

in my opinion it is a good idea to blindfold yourself to cross a highway that barely gets any traffic than to play around with a toy car bumping in it each time without even bruising your skin.

to Jankone,

i personally feel no harm in going live if you atleast are sure abt your trading system, and how you want to trade, i agree that no matter how hard you try you will not able to come along with the intensity on demo that you seem to have on live! however you need to cross a highway that barelly gets any traffic, i.e play around with little sums of real money again the fun is not as great as crossing the highway with 10 cars running at more than 100km/h but it's better than bumping into your child's sports car to get a similar feeling...

EUR usd should continue to edge down as for now.

Hey gyus, how does your trading plan looks like? Give me a shot - inspiration. I want to go to the top of the hills,step by step, i dont want to get frozen
1)play d1 pinbars
2)risk max 2% of acc is not complete plan for me

Jim,

Thanks A LOT for such a detailed explanation!

Ghous, interesting thoughts. But...

If you look at some part of your grey box, some of the "steps" looks like a good beginning of a strong movement/trend. Yet, that movement soon reversed.

How would one know whether a particular "movement" is a short rally or a beginning of strong long trend or a false breakout?

To me that means that when one can say for sure that there is a good momentum in place, it's too late to jump on board (depending on the timeframe). In my view, price action is a more reliable way to interpet the market's "mind"...

Go to this post by James16, it pretty much lays it out. http://www.forexfactory.com/showpost...ostcount=12414

Thank you for sharing how you view the markets... so I take it you do not like to jump on the tracks when a train is coming?

Scott

Hi Forex007, i don't why you get this impression. i don't trade momentum alone, that is if i see that strong momentum i never take a trade in that direction untill a PA signal arrives, infact i use momentum only to stay out of low probability trades, i.e not taking pins during such a strong case for biased momentum. yes if i go for momentum trades it will be way to long before i realize i need to jump on the train, go back and examine carefully how and where i use the concept.

abt your second qs...

even when we see an overall ranging going on it's obvious that there are mini trends within, and that's the advanced use of this interpretation i use, even when the overall mood is still "present present" many a times within the range the scenario becomes "active present" which is a trend forming combination. it thus allowes me to trade within the range too, i.e i know that if i find a pin bar on an exterme end of a pin like the one around 13 may and there is enough space for a trade to breath i can take it and ride it to see if this "present active" mood on the smaller scale is good enough to change the overall mood of "present present" which can only be conclused if the range is broken by this mini trend which then forms into an overall trend just like that red rectangle shown. in the case of a false breakout you should see signs of "active present" weakning through tails or other PA indications that should give you a alarm, or if the price makes a low/high aginst the overall definition of a trend.

Rehards,
Ghous.

Nice post on the momentum ghous.

I would like to add something here.

When the market is in a particular momentum, it does not mean that buyers or sellers are dormant. Contrary to certain beliefs, for every buyer there must be a seller for a transaction to occur and thus move the market. The same goes for sellers (shorts), they are actually buying from a seller as well. The EU for example, a short position here means you are buying dollars and selling euros. So for every buyer, there still must be a seller.

Just remember that for every person's win, is another person's loss. The money does not come out of thin air so-to-speak. Out of one pocket and into another.

Like most other businesses, supply and demand is what it's all about.

Darkstar covers some of this in detail in this thread about brokers:

http://www.forexfactory.com/showthread.php?t=7484

Forex007, you said "How would one know whether a particular "movement" is a short rally or a beginning of strong long trend or a false breakout?"

In short, you don't. You also do not know when a trend is coming to an end either. PA certainly helps you gauge when this may occur. Like I've mentioned in a previous post, at times you just have to bite the bullet. Exercising proper MM limits your loss and allows you to fight another day if it goes pair shaped. As Seeking mentioned, you can also take the no loss/no win approach by not entering the market at all.

This is why PPZ is so important, if we're signalled with a PB in a strong PPZ area, it is fresh meat and fair game. Sure it may fail, but it also may not either and you'll reap the benefits.

Exactly! besdies the methid used above is onyl an analytical tool to help you grasp what the market is doing, it is not a system by any means, note that above in the main post i do not mention any entry/exit strategies ofcaorse because there are none. my primary basis of taking trades is still J16 stuff of confluence PA setups and trendline bounces/breaks. however when i first throw in a chart this concept helps me analyse where the market was and is goin and obviously not where it may go.

There's a pinbar on the daily on the Nzd/Jpy, least it appears to be.

There are many threads on here that debate demo versus live. I personally 100% agree with Jim and others who promote the same path. Demo trade first for at least 3 consecutive profitable months before going live. You must exercise strict MM, get your system clearly defined and, become confident and proficient with it BEFORE committing any real money. You'll only be donating your hard earned cash otherwise.

I also agree with demo trading not providing the true emotions you experience with real money. To me, demo trading was like Monopoly. I paid the price a number of years ago by cooking my first live account (only $200) in around 6 months. I exercised good MM, but just had an over trading problem. The market was moving and I viewed it as money I could be making. I also had problems with my exits, cutting the gains short and not getting into the "free trade" position.

Sure some people can treat the demo in the same way as a live account, but some people can also act and others (like myself) can't.

I then went back to the demo for almost 7 months to fine tune what I learnt by trading live. I still had the Monopoly blues, but I did not forget what it was like to lose. Like most people, I loved winning and despised losing. One thing I quickly learnt was that losing is just part of the game/business, thus the utmost importance of strict MM.

If I had my time again, I would take this approach:

1) Demo trade for at least 3 consecutive profitable months. The main objective here is confidence and proficiency in your strategy/system and keeping to strict MM. It's an added bonus if you can grasp the psychological aspects too.

2) Live trade with a very small amount (an amount you can afford to kiss goodbye). The objective here is to get in-touch with your true emotions. Learn to cut losses short and take them on the chin. You'll also want to learn how to ride out gains to maximize your profits.

3) Is dependant on the outcome of step 2. If you cook your live account, then it's back to the demo and step 1 for you. If you consistently profit month after month, then you can slowly add more funds and start blowing out the emotions again. Trading a cent per pip is MUCH easier than trading $100, $1000 and beyond per pip.

One more thing I forgot to mention about ghous' great momentum post.

If anyone has not yet looked into the Vegas Wealth Builder, I strongly suggest you do so:

http://www.forexfactory.com/showthread.php?t=4113
http://www.forexfactory.com/showthread.php?t=4261
http://www.forexfactory.com/showthread.php?t=4573

If you apply this to your charts at present, you'll notice the daily price on many USD pairs (Euro, Cable, Aussie) has breached the lower side of the fib levels. Vegas states this means the pairs are trending very strongly and one should wait for the price to move back into the bands before counter trend trading.

You'll also notice (only the daily), that the price very rarely breaches these bands, thus the recommendation to wait until they fall/rise back into line.