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Lusan's trade Journal

  • #281
  • Edited 7:39pm Nov 24, 2008 5:41pm | Edited 7:39pm
Quoting rapaduski1
Hi luSan,
I take it you are trying to work through an approach to determine trend changes to help you with trading flips. Is that correct? Are you interested in a discussion on this topic? I do not want to add something here that is not what you are looking for. I also try to make a distinction between reversals and retracements, but that may not be what you are interested in either.
Correct. Both flip and surrender. I want to remove the emotion and the gut reaction away from both events.

So far my best idea:

Setup
1) Draw 2 touch TL from last minors in 4H - Main trend
2) Draw 2 touch TL from last 2 minors in 1H - Secondary trend
3) Draw 2 touch TL from last 2 minor in 15M - Trade chart
4) Time entry with 5M when PA moves in in harmony with 1, 2, and 3. On 15M and 5M reversals. This is wave watching.

Never against the 4H, 1H and 15M trends above.
Trade always away from the 1H TL

Pull-the-plug: When 15M and 1H trends are broken. Eye on 15M and 1H. First sign of trouble observed in 15M, then 1H. Inmediate exit if current 1H bars break previous 1H high/low. (As shown in the previous post.)

Flip - When I mis-read #1, #2 and #3. Flip only for 1st entry. A flip means that PA made a sudden change or I screwed up initial trend analysis.

Note: I choose not to trade against 4H, 1H and 15M anymore. Too risky.

why all these analysis? I hate to flip and I hate not having a plan in place to pull the plug as well. The general needs to have plan B in place before going into war. Also note that this topic affects profit taken. Profit could be taken at the 15M reversals into the current trend. This would maximize profit: scaling into 15M and exiting all trades when 15M and 5M agree on reversal.

Welcome to your views. However I would appreciate to stay away from indicators. Note that the way I use TL is not as a trading indicator but as way to decide/monitor the trading bias.

Regards,
Empty as water and soft as a facing wind mountain
  • #282
  • Edited 9:31pm Nov 24, 2008 6:06pm | Edited 9:31pm
For example, in the chart, we have the 4H-1H combination and the reversal candle.

In this case, I would not trade but wait..If I wanted to trade I must short but it would be risky..because the 4H and 1H are north and 15M might just be either in consolidation mode or short term retracement...So stay out and wait is the best bet.

|I think this concept could be also implemented with 1H and 15M...it will give more dances however we need to be quicker on our feet. That is something that I need to look into. I think that is more similar to my normal way of dance. I will look into it.

So we have 4 interesting cases:

1) 4H-1H -->less riskier but fewer events lasting longer
2) 1H-15M and 4H reversal --> risky? TBD --this is happening right now...100 pips from the top in E?u
3) 1H-15M-5M --> risky but several times a day.
4) 15M-5M--> very risky if against 1H, but always in the market.
Attached Image
Empty as water and soft as a facing wind mountain
  • #283
  • Nov 25, 2008 6:27pm Nov 25, 2008 6:27pm
What a mess! I would not know how to dance it.
Bias? What is the bias? You could dance in any direction and you would be wrong as well as right...Pure roulette insane gambling.

The best?....Stay out...the 1H is totally insane. Look at this chart. Is 1H going up or down? I bet people got killed. No me. I learned my lessons. I am out. No trades until next week and then very careful: 1/2 normal size and ready to walk out and quit for the day.

Crazy!
Attached Image
Empty as water and soft as a facing wind mountain
  • #284
  • Nov 25, 2008 7:16pm Nov 25, 2008 7:16pm
Lusan,

Something to think about:

Price can always do what ever it wants and that "what ever" will always be right, but when looking at reversals, it's important to me to have a reason for price to reverse at any given point.

When reversal (candle) pattern and overall view coincide then i start taking notice.

fwiw,

a
  • #285
  • Nov 25, 2008 7:25pm Nov 25, 2008 7:25pm
Hi luSan,
What is the bias? The previous bias was up, so the current bias is up until the market proves otherwise, right? Notice the the E/$ has formed a double top of sorts and is currently forming a flag (go to a lower compression for that). I agree that the sidelines is the best place right now, but a break above 1.3075 might prove to be a nice pre-Thanksgiving trade. Just something to watch for. If it does not develop, I will stay put (I do not send out scouts in live trading because they are of no use to me -- I can see the PA playing out without risking even small money).

Quoting luSan
What a mess! I would not know how to dance it.
Bias? What is the bias? You could dance in any direction and you would be wrong as well as right...Pure roulette insane gambling.

The best?....Stay out...the 1H is totally insane. Look at this chart. Is 1H going up or down? I bet people got killed. No me. I learned my lessons. I am out. No trades until next week and then very careful: 1/2 normal size and ready to walk out and quit for the day.

Crazy!
  • #286
  • Nov 25, 2008 7:44pm Nov 25, 2008 7:44pm
Quoting auxesis
Lusan,

Something to think about:

Price can always do what ever it wants and that "what ever" will always be right, but when looking at reversals, it's important to me to have a reason for price to reverse at any given point.

When reversal (candle) pattern and overall view coincide then i start taking notice.

fwiw,

a
Agree. Reversal alone is not enough! I already checked this idea out. A reversal is not enough. I need more.
Empty as water and soft as a facing wind mountain
  • #287
  • Edited 8:46pm Nov 25, 2008 7:49pm | Edited 8:46pm
Quoting rapaduski1
Hi luSan,
What is the bias? The previous bias was up, so the current bias is up until the market proves otherwise, right?
Agree.
Quote
Notice the the E/$ has formed a double top of sorts and is currently forming a flag (go to a lower compression for that). I agree that the sidelines is the best place right now, but a break above 1.3075 might prove to be a nice pre-Thanksgiving trade. Just something to watch for. If it does not develop, I will stay put (I do not send out scouts in live trading because they are of no use to me -- I can see the PA playing out without risking even small money).

However, I will stay out. I'd wish not to gamble. I do not like tha alternating 1H bars. 100 pips up and down. At the second reversal I would be just watching the show.

Remember I pay attention to every single 1H bar. Color alternation? Not my kind of trades. It is not good for my developing mindset. There will be another trading days.

Edit: probably 15M-5M bias and scalping mode is doable.

Regards,
Empty as water and soft as a facing wind mountain
  • #288
  • Nov 25, 2008 9:07pm Nov 25, 2008 9:07pm
Quoting luSan
Agree. Reversal alone is not enough! I already checked this idea out. A reversal is not enough. I need more.
You have your choice, one of three options, played out on two axis, price or time or combo.

a
  • #289
  • Edited Nov 27, 2008 7:32am Nov 26, 2008 8:24pm | Edited Nov 27, 2008 7:32am
As part of my quest for a consistent way to access the trading bias, I just finished a quick analysis of 4H reversals. I marked in a 4H charts all the minor highs and lows for periods of uptrend as downtrends. It is not a zigzag indictor. These are handdrawn lines from minors to minors.

An event is a transition from a high to a lower or higher bar. In other words, it is a reversal 4H bar.

Finding: For 104 short reversals, we have that:
85 % will revert AGAIN further than 1 bar,
63 % will revert AGAIN further than 2 bars,
52 % will revert AGAIN further than 3 bars,
34 % will revert AGAIN further than 4 bars,
and
22 % will revert AGAIN further than 5 bars.

Because we are dealing with currency pairs, I assume that long reversals would be likewise.

Why is this more than a curiosity? Because it clearly not a gaussian distribution but skew one. If we find 4H reversal, we might be confortable with the idea that the trend reverted (85 %) at least for 1 bar or 2 -8 hours-. After 2 4H bars, we are just gambling....Even more the further way is the 4H reversion the more likely will end. Watch out with 4H reversion. As I said before, a reversion is not enough, in particular after 2 4H bars.

In other words, I have 85 % probability that when I see a reversal in 4H the reversal will be valid for more than 1 bar. If you are trading and a 4H reversal just happen, it might be a good idea to take as valid.

The chart shows that right NOW there is 63 % probability that the next bars will not be a reversal.

Enjoy.

Note: No recommendation is given here. I am not making any prediction here either, but calculating the probably of a 4H reversion. Remember that probability is not certainty. I am just playing with statistics, and trying to access the validity of 4H reversals; to answer the question, is it just a random event? When I trade I MUST manage the position, react to the NOW action.

I think that I wil do something similar for 1H and 15M.
Attached Image
Empty as water and soft as a facing wind mountain
  • #290
  • Edited Nov 27, 2008 7:37am Nov 26, 2008 10:39pm | Edited Nov 27, 2008 7:37am
|Now a similar study for 15M reversal

N= 54 (A little lazy because it is late)

94 % that PA will revert AGAIN further than 1 bar
70 % that PA will revert AGAIN further than 2 bars
35 % that PA will revert AGAIN further than 3 bars
23 % that PA will revert AGAIN further than 4 bars

Note: for example, after a long reversal, there is 94 % probability that the next bar will not revert, and 70 that the next to the next bar will not do it either. So if you see 15M reversion and, it is against you, get ready for painful rescues. In another case, after 4 15M bars, be carefull entering since a reversal is statistically near: PA might near the wave crest.

I will explore 1H reversal next.
Attached Image
Empty as water and soft as a facing wind mountain
  • #291
  • Edited 4:16pm Nov 28, 2008 1:42pm | Edited 4:16pm
In terms of the 1H reversal...I am really surprised...I expected that they would tell me more..the volatility is so large that a reversal after the 2nd bar is almost random. So if I see 1H reversal I should take that warning with 2 pounds of salt.

Out of these reversal studies, I conclude that a combination of 4H reversal and 15M reversal might help with the bias.

Note: I am not recommending nor teaching anything. These are just thoughts and explorations about trading biases.
Attached Image (click to enlarge)
Click to Enlarge Name: 1H reve1.jpg Size: 32 KB
Empty as water and soft as a facing wind mountain
  • #292
  • Edited 9:43pm Nov 29, 2008 10:12am | Edited 9:43pm
As a continuation of my reversal studies, I identified 15 cases of sudden 1H changes. I graphed the 1H, 15M and 5M and I checked on their reversal and trend when the event occurred.

The 15 cases are similar to the one shown in this post. The results and final conclusion are noted in the next post.
Attached Image
Empty as water and soft as a facing wind mountain
  • #293
  • Edited 10:47am Nov 29, 2008 10:22am | Edited 10:47am
The 15 cases, or flip moments, are tabulated below...

The conclusions:

(1) if the 15M TL is broken and confirmed by a new bar, then a new trend is confirmed. If found against that trend, leverage flip and fast to avoid the bus to run you over. Have clarity on 15M, never trade against that trend.
(2) If the range is tight, stay out and wait for the breakout. The edge is as per the last 15M reversal.

Strategy:
(1) Draw 15M TLs and use it for either (1) pull-the-plug if late in the trading session or (2) Leverage reversal if early in the trading session. (3) Never trade against 15M, NEVER.

Note: No teaching nor recommendations are given here. I do this analysis for my own learning and I share it for, maybe, the benefits of others.
Enjoy it.
Attached Image
Empty as water and soft as a facing wind mountain
  • #294
  • Nov 30, 2008 11:52am Nov 30, 2008 11:52am
After my latest studies, I modified AGAIN my strategy plans. Not too many changes, but a return to 15M and addressing flip and surrender, This is almost identical to my first journal posts. The difference? A more flexible skew, more trust on 15M and, I think, more flexibility to accept that when I took the wrong turn. I mean: no more 15M trend fighting. As they say in Spanish, "Mejor que digan "aqui corrio", que digan "aqui murio.""
Attached Image
Empty as water and soft as a facing wind mountain
  • #295
  • Dec 1, 2008 1:06am Dec 1, 2008 1:06am
Hey Lusan, very nice studys i enjoy them
  • #296
  • Dec 1, 2008 1:48pm Dec 1, 2008 1:48pm
Quoting M-H Trader
Hey Lusan, very nice studys i enjoy them
thanks
Empty as water and soft as a facing wind mountain
  • #297
  • Dec 2, 2008 4:03pm Dec 2, 2008 4:03pm
Hi, Lusan!
This is a nice research you made on 15m, 1h and 4h. We mostly trade with 5m, are you planning to make similar research on 5m? I think that would be useful.
Regards
  • #298
  • Dec 2, 2008 5:00pm Dec 2, 2008 5:00pm
Quoting alexfot
Hi, Lusan!
This is a nice research you made on 15m, 1h and 4h. We mostly trade with 5m, are you planning to make similar research on 5m? I think that would be useful.
Regards
Yes, I will look into 5M and 1M...However I am taking a short break to learn metatrader to make easier my studies.

Regards,
Empty as water and soft as a facing wind mountain
  • #299
  • Edited 2:31pm Dec 3, 2008 2:15pm | Edited 2:31pm
After long reflections, I am taking the following position about surrendering the day.

I will end the trading session, pull-the-plug, if any of these 3 conditions occur:

1) Emotional trading...lost mindset...take a day off
2) A complete bar against 15M trend..Broken trend...Flip only once!
3) 2 % losses of the book...Surprised!...Feed the dragon...Walk out.

That is final...even though defeat is a pit.

The point? There is no way of preventing losses in this business...damage is unavoidable ..there is no precise way of knowing in which direction will PA dance...the only thing that I can do is survive to fight another day...specially in this high volatil trading days...
Empty as water and soft as a facing wind mountain
  • #300
  • Edited Dec 7, 2008 10:31am Dec 6, 2008 7:26pm | Edited Dec 7, 2008 10:31am
For the last weeks, I have passed considerable amount of time analysing reversals in multiple time frames. Conclusion: They are totally unreliable unless several TF are simultaneouly considered. (Together with S/R-which I have in my todo list.)

Since it would be nice to have a tool to remind me, fool of me, of the trends within the multiple time frames, I developed a tool that labels each time frame as either "Bearish, Very Bearish, Bulllish, Very Bullish", or "Unclear." It should help choosing my trading bias and further Forex studies.

It is logical that, if several TF's are in-sync, then the trend is probably sustainable -or as fti said, "The Newton Law: Inertia."

How does it work? As the quote are comings into Metatrader, the tools compares the current bar to the previous one and classifies the new arriving bar as per their "Bullishness" or "Bearishness." For example, if a new bar is black and its high and a lower high then it is "Very Bearish." The table below shows the different labels.

Current PA state - Label
White bar......."Bullish"
Higher lower and White...."Very Bullish"
Higher lower, White and PA> previous close..."Xtra Bullish"
Black bar...."Bearish"
Lower high and Black..."Very Bearish"
Lower High, Black, and PA< previous open..."Xtra Bearish"
Doji...."Unclear"
Low volatility..."Unclear"

In the indicator frame, the tool assigns a value to the current PA of either (-1), (0), or (+1) if Bearish, Unclear or Bullish. It is possible to see the extend of the PA state by noticing the length of time that tool remain at a particular value.

I placed the tool in the 1D,4H,1H,15M time frames. (See attached chart and drop the tool within your metatrader platform if you desire.) It gives a panoramic view of the general NOW PA state. I believe that the tool might be good for something. That need to be explored further. (...Hey...at least, I learned how to create Metatrader codes!)

Enjoy.

Declaimer: No recomendation nor teaching is given here. I do not trade with indicators but I careful observe the 15M and 5M time frames during my trades. I take no responsibility for the use of this tool and any others that I might create in my leisure. I am open to suggestions.
Attached Image (click to enlarge)
Click to Enlarge Name: Trend direction.jpg Size: 69 KB
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File Type: mq4 Direction_lu.mq4   4 KB | 304 downloads
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