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Failure to Click

  • #1
  • First Post: Mar 17, 2009 2:07pm Mar 17, 2009 2:07pm
One enduring question I have that I can't seem to wrap my mind around is in reference to S/R zones. I completely understand them, but what I don't get is setting up trades with them. HOW can you foretell if there's going to be a bounce or a breakthrough? Ya, maybe if there's a pinbar or something you can have a good idea. But a lot of the time there's no specific indication of what's going to happen, or is there? Am I missing something, or are we left with a 50/50 on this? If it's 50/50, should one just set up a buy stop maybe 25%-30% into the level to minimize any spikes in the PA setting off the trade in error, and simultaneously setting a sell stop or sell limit for the anticipation of a bounce? This would cover all bases, but obviously you'd need to be mindful of any spikes setting off the trades, when they shouldn't have been. I really look forward to an explanation!!
  • #2
  • Edited 5:37pm Mar 17, 2009 5:33pm | Edited 5:37pm
Forget "Foretell"
You don't know until it happens, then go with it.
Lower timeframes help you see it better. 25-30% might be too much:
http://www.forexfactory.com/showthre...60#post2546260
ps: Ok, just a word on "foretell"ing: If the move is old and momentum is tiring, you might expect a pause, but it could be a pause that refreshes or a complete turnaround. Bet that helped! ;=)
  • #3
  • Mar 17, 2009 5:55pm Mar 17, 2009 5:55pm
Alyehoud.
You must decide how strong the move is when it gets to the decision point or moves through it. What is the price telling you.Look at the length/size of the moves up. Say the price had been trapped in a range of 30 points up and down for 2 hours. Then the indicators had come back from overbought and the price broke out long. It arrives at a large res line after a move of 20points above the range high. The indis(whichever you like) are saying overbought also. You are then looking for that price to consolidate and pull back a little , indis settle down and then off again. Set your order just above the level. The 20 point move up plus the range it covered of 20ish leaves it tired, but expect another wave/leg up and trade that one if strength returns. If not you have a defined entry and can keep a tight stop below the small pullback. Its hard to explain, but the price needs to just hang there waiting to leg it when you're not watching. The indis on the otherhand need to pull back faster and farther. After 3 years I'm just getting it as second nature but its still hard to explain.
Good luck
Andy
  • #4
  • Mar 18, 2009 12:22am Mar 18, 2009 12:22am
Take a look at this thread. It shows how to use the lower time frames when dealing with S/R. Keep in mind that price doesn't always behave this way. Sometimes it just bounces off immediately, other times it'll blow right through it. It's a matter of finding quality set-ups to take, not taking everything that looks like something might happen.

http://www.forexfactory.com/showthre...42#post2539342
  • #5
  • Mar 18, 2009 9:35am Mar 18, 2009 9:35am
the ONLY problem i have with "naked trading" is that one can easily see when a run has started, but one does not know when it ends, until after it ends.

using "barrys support and resistance" chart overlay, you have a very decent idea of WHERE the price is going, by simply comparing what is LEFT TO MOVE on your indicator, and where the next resistance point lays.

Barry's is one help, but there are a few others of note which include moving averages (the 14ema is remarkably strong, and a trading system unto itself) and NOTHING beats the bollinger bands for a FINAL tp point on any timeframe.

I use indicators to "predict" and have repeatedly proven that 350 pips a day by "predicting" tp points is possible and witnessed by many ---- so to think of indicators as something to show x-overs and entry points is a little shallow, as they are capable, with the addition of the chart s+r overlays, of tremendous assistance in any timeframe trading.

What it really comes down to is LEARNING what they do and show --- simply reading a bit about them and then not being able to use them is NOT the way to go.

or you can depend on candle formations only, but ive found MANY a reversal or move happens in forex and there is NO visible or identifiable candle formation that would have told you whats happening, although many indicators will show you easily, ONCE you learn what they are saying.

enjoy and trade well

mp
  • #6
  • Mar 18, 2009 10:11am Mar 18, 2009 10:11am
Kenz, Andy, Dopey, MP - thank you all for your explanations. I'm still getting my feel for what exactly my trading style is but I'm trying to keep it as indicator free as possible. Currently, I'm only using the S/R's and Fib retracement lines. In that, I'm trying my damnedest to trade ONLY in the longer term direction of a pair.

A problem you all have helped with is that I was in fact checking lower TF's but I wasn't going low enough. I was previous charting on W1 and D1, and using H4 as my "base", but watching the H1 for entries and exits. NOW, I'm looking at M15 for the entries and exits.

I will try our a few indicators (seperately) and see if they help with determining if it will be a breakout or bounce and see how that goes.

Dopey - when you say taking quality setups, which I've heard time and time again, are you referring to specifically when there's a bar pattern emerging (i.e. ascending triangle)?

Kenz - yes, your PS did help!

Andy and MP - as you have both said/implied, an indicator may be a good tool to use for this, which I will test out and see how it goes.

Thanks!
  • #7
  • Mar 18, 2009 10:24am Mar 18, 2009 10:24am
Quoting alyehoud

Dopey - when you say taking quality setups, which I've heard time and time again, are you referring to specifically when there's a bar pattern emerging (i.e. ascending triangle)?
Actually I'm referring to the trades within a system. For example, I have a system that uses the 4 hr as a trigger, but I move down to the 5 or 15 minute to enter. The system is not mechanical in that each trade looks exactly the same, such as a Moving Average crossover system. I incorporate some discretion. However, I try to keep that to a minimum.

My trades all look very similar as they share the same characteristics because I have a set of rules that defines them. Because there is some discretion involved, it's easy to loosen the parameters of what I would consider an A+ setup. This is the tricky part of discretion in trading. It's where the discipline is needed.

So, I know when I see an A+ setup and I know when I see an A or B setup. Sometimes I take the A or B, for some reason or another. As you can imagine, a B setup won't win as often or as much. In addition, my confidence isn't as strong with a B setup as it is with an A+ setup. When your confidence is weakened, you'll find that it's easier to continue to deviate from your trading plan. It's a cascade effect.

Whatever way you decide to trade, using whatever system(s), you should be able to define quality vs. lesser quality trades. It's been said many times that people overtrade and that leads to serious losses. If they were overtrading nothing but A+ setups it wouldn't be a problem. But that's not what happens. Having patience is probably one of the most important traits needed in trading.

I hope that helps.
  • #8
  • Mar 18, 2009 10:49am Mar 18, 2009 10:49am
Quoting Dopey
Actually I'm referring to the trades within a system....
It definitely does help. My system/method, as is, is playing Fib and S/R levels in general. I guess I just need to play only certain lines that look the most promising (i.e. A+ trades). I think what I'm really trying to do is totally remove the discretionary aspect of my method, that way I can minimize the emotional aspect of trades. I have no problem only playing strong trades, but I just need more practice finding them in the first place I guess.
  • #9
  • Mar 18, 2009 2:42pm Mar 18, 2009 2:42pm
im going to have to admit to being a touch different than most in that i simply look at the chart, and if i see something going up or down, i enter as long as i see that the next support or resistance is far enough away to clear the spread AND make a profit.

One finds often that a trade taken on the one minute spills over into the 5 and then the 15, and while those are a bit "short" timeframes from what i am reading here, i wait untill the evening here in EDST area and take what i refer to as an "overnite" trade, which is an H4 trade based on present movement and resistance (or support for a short) indicators and use the bols as my tp point.

invariably (unless some news is coming, in which case the market may "stall" overnite) this trade returns in excess of 100 pips while i sleep, and if its waiting for news, it will return the same, once the news is announced.

combining fibs and s+r gives you a "better" idea, although fibs as such are not being used very much these days, because of the influx of commodities and equities traders (especially equities) who have nothing to do in their normal trading venues, so have come over to forex.

remember though, if one is trading the high timeframes as you do, you MUST allow for the steep drawdowns that occur during that much time elapsing, and i will bet dollars to doughnuts that MOST losing trades are simply those that have been stopped out, and then continue on, with much gnashing of teeth, to hit their proper tp point.

now to answer your real question, it simply takes TIME and EXPERIENCE to KNOW where a price will go in 8 hours ----- it can be learned by most, but it simply takes time, and if im correct youre journey has only just begun !

AND if you want to be really kewl, go all the way down to the one minute to get your entries which will gain you the largest bragging rights --- of course, on an H4 trade, 5 pips may not be worth it (LOL)

enjoy and trade well

mp
  • #10
  • Mar 23, 2009 12:50pm Mar 23, 2009 12:50pm
Quoting mparker

...if one is trading the high timeframes as you do, you MUST allow for the steep drawdowns that occur during that much time elapsing, and i will bet dollars to doughnuts that MOST losing trades are simply those that have been stopped out, and then continue on, with much gnashing of teeth, to hit their proper tp point.
So basically this is exactly correct. Whether it's pure newbie luck or I simply "got it", the vast majority of my trades (nearly all) END UP going to or past my t/p's. I've actually had 2 or 3 recently that actually were within 2 pips. My PROBLEM is that 75% (or more) of the time, I'm getting prematurely stopped out (and turning winning trades into losers). I'm not even setting conservative s/l's IMO. Generally around 50 pips, but my T/p's near the next resistance level are usually around 150-250pips. I've been trying to keep my risk:reward @ >3.0, which would mean @ a 50pip s/l, I'd need at least 150pips profit potential. That's how I've been doing it.

Are you essentially saying that I need to even further loosen my s/l's, maybe to 100, and then sacrifice my risk:reward ratio, OR only take those larger trades (i.e.with maybe 400pip profit potential) and forgo/sacrifice the other potential winners?
  • #11
  • Mar 23, 2009 1:08pm Mar 23, 2009 1:08pm
Since so many equity and futures traders have hit forex like the barbarian hordes, the candle RANGES have increased tremendously --- what this means, in simple language, is that the OLD ideas of where to place stops is no longer valid.

as an aside, because my experience allows me to know where prices are going, i DO NOT USE STOP LOSSES, so never worry about being stopped out. This is a technique used by many good traders, simply because they rely on their experience.

While this works for experienced traders with a decent account to cushion their margins, IT IS NOT SOMETHING I WOULD EVER ADVISE A NEWBY TO ADOPT --- not for a very very long time or never, if that be the case !

for you, if in truth your trades are doing as well as you say, OPENING UP your stop losses will obviously eliminate the problems you have.

There is NOTHING else i can say --- its obvious a simple problem that you should test out on a demo before adopting, but I will bet dollars to a cops doughnuts that you will increase your profits dramatically !

enjoy and trade well

mp





Quoting alyehoud
So basically this is exactly correct....
  • #12
  • Mar 23, 2009 1:13pm Mar 23, 2009 1:13pm
Quoting mparker
Since so many equity and futures traders have hit forex like the barbarian hordes, the candle RANGES have increased tremendously --- what this means, in simple language, is that the OLD ideas of where to place stops is no longer valid.

as an aside, because my experience allows me to know where prices are going, i DO NOT USE STOP LOSSES, so never worry about being stopped out....
Sounds like a plan. I'll test it in increments of 25, beginning at 100pips, to see what S/L's work for me. I'm not experienced enough, nor have the nerves to trade without S/L's.

Best regards
  • #13
  • Mar 23, 2009 1:36pm Mar 23, 2009 1:36pm
trading w/o stoplosses is for the VERY experienced --- I WILL NEVER advise a newb to do that, only offering it up as WHAT i do !

gl

mp



Quoting alyehoud
Sounds like a plan. I'll test it in increments of 25, beginning at 100pips, to see what S/L's work for me. I'm not experienced enough, nor have the nerves to trade without S/L's.

Best regards
  • #14
  • Mar 23, 2009 1:40pm Mar 23, 2009 1:40pm
Quoting mparker
trading w/o stoplosses is for the VERY experienced --- I WILL NEVER advise a newb to do that, only offering it up as WHAT i do !

gl

mp
Looks like youve had your lower 2 ribs removed.
Living the adventure in my head.
  • #15
  • Mar 23, 2009 1:54pm Mar 23, 2009 1:54pm
VERY CORRECT --- wait till you see the OTHER rib

the McGiver sisters are my companions thru spaceship earth, and they make the trip beyond wonderful !

mp




Quoting Leonlorenzo
Looks like youve had your lower 2 ribs removed.
  • #16
  • Mar 24, 2009 7:26pm Mar 24, 2009 7:26pm
Quoting alyehoud
One enduring question I have that I can't seem to wrap my mind around is in reference to S/R zones. I completely understand them, but what I don't get is setting up trades with them. HOW can you foretell if there's going to be a bounce or a breakthrough? Ya, maybe if there's a pinbar or something you can have a good idea. But a lot of the time there's no specific indication of what's going to happen, or is there? Am I missing something, or are we left with a 50/50 on this? If it's 50/50, should one just set up a buy stop maybe 25%-30% into the level...
You can look at on how many chart time periods price is making a new high or new low. That gives a clue. If price is breaking on M1, M5, M15, M30 and H1 all at the same time, it's probably going to explode through. Caution at the begining of the hour. When they are all the same. If breaking D1, W1 and/or MN1, it's usually going to run a while.

Price usually breaks on the odd number tries for some odd reason. Try #3 seems to be the breaker more times than not especially if it happens a while after try #1 and try #2.

There's no crystal ball.
  • #17
  • Last Post: Mar 24, 2009 10:57pm Mar 24, 2009 10:57pm
HEY SNALE

youre posting the same thing on all these threads --- got anything NEW to say, or are you a record stuck in a grove ?

mp
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