Trading for tramps

Here is a technique I am developing to a) preserve capital and b) catch the big moves with large position sizes when they occur. Price Action (PA) is at the centre of the technique, and there are many abbreviations in the outline that come from other threads on this forum, if you don't know ask

I'd like to offer a discussion on the pros/cons and effectiveness of this technique, which I am using to great success, and the ingredients that make it.
The aim as always is to refine/improve the techniques used in my/your trading. Anybody else trading in a similar fashion? I will post some charts shortly.

Thanks for stopping by.

TOYBOY’s TAKE ON TRADING

BACKGROUND CHECK
- CHECK MONTHLY/WEEKLY CHARTS FOR TREND, PRICE ACTION & MAJOR S/R
- CHECK DAILY FOR PRICE ACTION & S/R CONFLUENCE WITH WEEKLY/MONTHLY DIRECTION
- STAY INFORMED FUNDAMENTALLY: NEWS, ECONOMIC PERCEPTION
- STAY INFORMED TECHNICALLY, PA, PPZ, OB/OS, DIVERGENCE

ENTRY
- SCOUT (SMALL EXPENDABLE POSITIONS) VALID SET UPS AND DO NOT ADD TO THESE POSITIONS UNTIL PRICE MOVES AS ANTICIPATED & EXPECTED MOVE CONFIRMS WITH PA.
- SET SCOUT LIMIT ORDERS AT TREND/CHANNEL BREAKOUT POSITIONS
- IDEAL ENTRY IS WHEN PRICE HAS MOMENTUM IN ANTICIPATED DIRECTION AND MULTIPLE TIMEFRAME PA AND TREND AGREE
- PLACE STOPS ABOVE/BELOW MAJOR PPZ/PBs/PA, OUTSIDE OF DAILY RANGE i.e LET THE TRADE BREATHE, YOUR STOP IS NOT THERE TO CUT YOU OUT THE TRADE, ITS THERE TO PRESERVE YOUR CAPITAL FROM THE UNEXPECTED
- AGAIN, ONLY LOAD UP IF PRICE MOVES IN ANTICIPATED DIRECTION AND BACKGROUND CHECK STILL SUPPORTS TRADE
- USE LOWER TIMEFRAMES FOR PRECISION ENTRY

IN THE TRADE
LET IT BREATHE, BUT USE STOPS TO PROTECT FROM ANYTHING UNEXPECTED
BACKGROUND CHECK REGULARLY, DOES PA, S/R, PPZ, STILL SUPPORT THE TRADE?
MOVE STOP TO B/E AT THE EARLIEST OPPORTUNITY, BUT LET IT BREATHE.
TRAIL STOP, BUT LET IT BREATHE

EXIT
USE SAME TIMEFRAME YOU ENTERED ON
TARGET IS REACHED, GET OUT & DON”T BE GREEDY
PRICE ACTION CLEARLY INDICATES A REVERSAL (REVERSE YOUR POSITION)
S/R, PPZ, HALTS PRICE MOVEMENT
BACKGROUND CHECK NO LONGER SUPPORTS TRADE
IF YOU ARE NO LONGER SURE, GET OUT

Background check - Bearish

Monthly: DBHLC broke to the downside
S/R/PPZ: 1.96 was a multi-year low and price is now retesting this area
Weekly & Daily: 6 month range broke to the downside at the end of August

Fundamental: GBP is taking a beating across all pairs, UK economic data anticipates 2nd quarter of zero/negative growth = recession. The background check supports selling.

Entry - Small scout position confirmed entry for larger trade position on continuation of downtrend from breakout.
In the trade - looking for a reversal indication at 1.96, or a clear break of 1.96 will add to the position.
Exit - Long term resistance at 1.97 -1.96 = take profit/reduce position size. PA reversal at 1.96 or below, a change in background check and will exit.

The Beast is in a really interesting place right now, and is one of my favorite pairs.

Background Check - Bearish (unless this is a double bottom!)
Monthly: Price is in the middle of the Beast's greatest PPZ, and spent 3 years ranging between 180 & 206 with central pivot at 194, where we are now. Monthly uptrend is down at 176, a clear break of 192.4 is a strong sell signal and I'll be adding a large position if this happens.
Weekly: You can see a clear sell on breakout of the bear flag on 18th August if you entered here you are no doubt in the green You can also see what could be a double bottom, the next few days will be really interesting for this pair
Daily: Gap Down on Sunday yet to be filled, pin bar forming on daily PA, a 38% retrace to 197 could play out if pin bar breaks to the upside, gap would fill and downside can continue...
Fundy: GBP sux right now, no bottom in sight, Darling talking things down, alot of US banks 'hid' debt in UK subsidiaries, see previous post.

Entry: on break of 192.4 (short) or break of daily pin (long to 197 then seriously short)

Expectation: Retrace and more downside, however this scenario is invalid if PA clearly identifies a bottom = double bottom...the thing is with forex you never know, you can be prepared tho

A daily close at current levels is a strong sell signal imvho

great thread, great info. definitely in my bookmarks keep it up

Background Check - Charts growl bear, but watch out

U/J is one of the few majors not to have undergone a 2000 point drop in recent weeks, as one might expect from a dollar positive pair. Nor has it risen to last year's highs on the back of the dollar rally. Instead we've had some great range trading opportunities in August on the 4 hr timeframe which will continue until a break out from the 6 month up channel occurs.

Monthly: August's unconfirmed pin bar is small but well positioned at long term PPZ, confirmation would also break the steep uptrend channel, combining to form a strong sell signal.
Weekly: a clear view of the up channel/bear flag, sell on clean break out to the downside
Daily: Lower highs and lows since mid-august bodes well for the expected drop
Fundy: The dollar index is still on the ascent, and the expectation is for dollar strength to continue until the election and beyond.

One of the few times I'll trade lower than the daily is when you've got a beautiful range like this on the 4 hr...sweet!

Thanks Gagiul

My limit orders for large positions are a good 30 pips below March lows on both pairs, look at price action on cable, euro and gold: a daily pin bar. IF this closes AND breaks to the upside, then we could be looking at a short term bottom, and a double bottom on these two, meaning a retracement (overdue) against the dollar increasingly likely, and certainly some half assed ranging for a few days before any more freefall fun .

Scout entry
GBP/JPY 192.4
GBP/CHF 1.961

"If you buy every correction in a bull market, you'll only be wrong once--the top. If you sell every rally in a bear market, you'll only be wrong once--the bottom."

Green light for large position entry on the beast, strong possibility we'll be going down into the 180's in the next few days, if you're not in use the lower timeframes for optimal entry, and don't put your stop loss too tight on this pair let it breathe

Might be wise to wait for daily close...look for reversal signals in price on lower timeframes, if you're seeing them, stay out. I haven't entered, mainly because a retracement is overdue, there's an unfilled gap, and 190 is a serious long term PPZ, a good place for a bounce up to 197, fill that gap, and reload...stay tuned.

Your thoughts welcome.

Wow, the last our has been off the charts on the beast. Entered large position at 189.6, exit 186.8. 250+ green pips.

Has just broken out of its 6 month up trend in a big way, large short position entered at 106. Now it is dollar positive, so I'm watching this like a hawk.

I posted this on the Auslanco thread too. Monthly target and position reverse is 177 - 178.

Hi toyboy_tramp;
Thanks a lot for this great strategy (it seems too),
Really I have not understand perfectly this strategy, can you explain more. please

Hi mourad,

The essence of the strategy is testing the market with small expendable positions until 'the set-up' appears, i.e price action, support/resistance, techs + fundies TELL you something you are CONFIDENT about trading, and then loading up large positions.

The first post says it all really, but there's alot of info there to think about, what in particular do you not understand?

Oil @ 101-102
Gold @ 750
USD index has touched 80
Dow futures -130...

G/J has bounced off of 4hr channel now ranging between 186-189
U/J is sitting on daily 200 SMA @ 106.4
What do you think about 1.75 as a bottom for cable?

I'm pro-dollar until Mctwat wins the election.

Morning Star on the U/J hourly...

I use:

5 SMA
55 EMA
150 EMA
200 SMA

Reliable S/R on any timeframe

Evening Star on G/J hourly