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Trading setups around SR Zones

  • #121
  • Mar 15, 2009 5:06pm Mar 15, 2009 5:06pm
Quoting mathematician
Have you every heard about using the average daily range to project targets?
Yes. There are at least a couple of threads and people that have used it. Seems like a good idea. I think Bemac was one guy who talked about it.

The method in this current thread uses ATR for exiting:
http://www.forexfactory.com/showthread.php?t=155544

I haven't really checked it out too closely but, it seems to make sense.
  • #122
  • Mar 15, 2009 6:53pm Mar 15, 2009 6:53pm
Quoting mathematician
Currently, I'm against any type of scaling except scaling into winning positions. Scaling into a losing position (averaging your losses) can be very dangerous
One of the logical problems I have with scaling in against your initial position is that if you are 'correct' in your entry placement you only have 1 unit running into profit, whereas, every time you are wrong you will have 3 unit losses. To be honest I have not researched this method enough to make a statement as to its effectiveness but it 'seems' like its another one of those methods that gives you many small wins then slaps you with major losses. If you are trading with high leverage these types of methods really hurt.

I like the analogy H.Reardon used in another thread, where you have a number of dials to a safe and a number of combinations that will open the safe, but you must align the dials in the right way for the right strategy. So all of these trade management methods work, however, you must use the appropriate strategy to apply them.

---

Quoting mathematician
My goal is to have a few setups that, by the very nature of their patterns, tell a certain story of what is happening in the market at that time
I believe I have found a few of these and I have verified them through back testing and trading them in real time, the problem is having the patience to wait for the easy ones and not take trades out of boredom, fear or greed.

If you want a good robust setup that works, check out H. Reardons method, he is only trading at strong multi day pivot points which are excellent strategic areas to trade from. I used my own entry methods at the locations identified using his setup and found very consistent results. Its like a predator stalking a waterhole, you know that something interesting will come along at these locations. waiting...watching... pounce for the jugular!


Cam
  • #123
  • Mar 16, 2009 1:01am Mar 16, 2009 1:01am
Quoting ProbaBill
One of the logical problems I have with scaling in against your initial position is that if you are 'correct' in your entry placement you only have 1 unit running into profit, whereas, every time you are wrong you will have 3 unit losses. To be honest I have not researched this method enough to make a statement as to its effectiveness but it 'seems' like its another one of those methods that gives you many small wins then slaps you with major losses. If you are trading with high leverage these types of methods really hurt.

I like the analogy H.Reardon...
Yes, that's why I don't like it. But it's true, not all MM strategies will work with all trading sytems. According to that article, the dealers scale into losing positions, but they are also mostly doing fades in trading ranges. Not my style.
Quoting ProbaBill
I believe I have found a few of these and I have verified them through back testing and trading them in real time, the problem is having the patience to wait for the easy ones and not take trades out of boredom, fear or greed.

If you want a good robust setup that works, check out H. Reardons method, he is only trading at strong multi day pivot points which are excellent strategic areas to trade from. I used my own entry methods at the locations identified using his setup and found very consistent results. Its like a predator stalking a waterhole,...
I just briefly checked it out. From what I saw it looks like waiting for overbought/oversold signals to line up on 3 time frames athough I haven't read the thread carefully yet.

I know that I am impatient, so trading that way exclusively might not be suitable for me. Maybe I could keep an eye on those signals and have an open mind about a big move occuring on those days where "all the dials line up." Then on other days, I'd try to grind out a few pips with short term swing points.

I've always been interested in trading with a small daily goal...gives you something to work towards. I think that's a good idea for us impatient types. Make your pips, then relax. Of course you also have to know when to quit on those days when it's just not working for you.
  • #124
  • Mar 17, 2009 5:02am Mar 17, 2009 5:02am
Yesterday I made a slight profit, but only after a long, arduous trading day. After a string of losses, I took a break. Then I came back and stuck to my system. Eventually, I caught a large move that put me in the black.

Some traders like to select prime setups. They wait for their basic setup to form based on their system rules, but then they consider other factors and exercise their discretion. Other traders "grind it out." They don't attempt the, often fruitless, endeavor of predicting the market. They follow every signal from their system faithfully.

If there are some external factors that you are using to determine if you should pull the trigger, shouldn't those factors be part of your system? Is it even possible to really predict when a big move is coming? Is grinding it out just part of the cost of doing business because it gives you the opportunity to be there when a big move occurs? Or is there some better way, some way to make your trades more efficient?
  • #125
  • Mar 17, 2009 6:27am Mar 17, 2009 6:27am
Quoting mathematician
Yesterday I made a slight profit, but only after a long, arduous trading day. After a string of losses, I took a break. Then I came back and stuck to my system. Eventually, I caught a large move that put me in the black.

Some traders like to select prime setups. They wait for their basic setup to form based on their system rules, but then they consider other factors and exercise their discretion. Other traders "grind it out." They don't attempt the, often fruitless, endeavor of predicting the market. They follow every signal from their system...
Hey M!

Sounds like you're making some hard fought progress. May not seem like it but, I'll bet you are.

Seems like your questions are being asked in an almost rhetorical way; like thinking out load -which IMO is awesome. That way you'll get the correct answers, i.e the answers that will work for you, through experience.

Keep hammering away - it's a new week!
  • #126
  • Mar 17, 2009 6:47am Mar 17, 2009 6:47am
Quoting FXSurfer
Hey M!

Sounds like you're making some hard fought progress. May not seem like it but, I'll bet you are.

Seems like your questions are being asked in an almost rhetorical way; like thinking out load -which IMO is awesome. That way you'll get the correct answers, i.e the answers that will work for you, through experience.

Keep hammering away - it's a new week!
Hey FX!

Yes, my questions were somewhat rhetorical because I'm actually expressing my opinion with those questions. Nevertheless, they are still open questions and I'd love to hear anyone's take on them.

In a way I feel like I've sort of made it. I have a technique that has produced profit and has not let all that profit evaporate after a good number of trades. So maybe I'm done and I just have to stick with it and trade it with discipline. On the other hand, my profits have not made a new high in a while, so I feel like there is something very inefficient about my technique. For this reason, I'm still tinkering a bit, although I'm not changing the core basis of my technique, which is swing point breaks. Maybe I'll discover a good filter or confirmation rule that improves the overall results, or maybe I won't.
  • #127
  • Mar 18, 2009 12:51am Mar 18, 2009 12:51am
Mathematician,
we are opposites, your trading the breaks and I am trading the reversals.

Regarding your interest in efficient entries. It is possible that your entries are fine but you may need a more dynamic method to exiting the trades. I remember reading about a trader who was taking break outs from decent pivots, he said that he would scratch 3 out of 4 trades based on the way price was behaving at the break out, he would get out at BE +- a few ticks (futures) but when he got a good BO the reward Vs risk was huge.

If your interested, I could dig up a file on his methods as it seems relevant to your own?

--

Here is a random chart depicting the predictive value of pivots, there is almost always some kind of reaction at these points. I am looking into different trade management plans and scaling options inspired by some of the recent posts in this thread.

Thanks
Cam
Attached Image (click to enlarge)
Click to Enlarge Name: predicting pivots.jpg Size: 100 KB
  • #128
  • Mar 18, 2009 1:05am Mar 18, 2009 1:05am
Well, after about 50 trades, I'm back at break-even. My profits never did make that new high. Back to the drawing board now.

Quoting mathematician
Or is there some better way, some way to make your trades more efficient?
I hope so!

Quoting mathematician
In a way I feel like I've sort of made it.
That feeling is gone.

Ok, it's official. I've started talking to myself online.
  • #129
  • Mar 18, 2009 1:08am Mar 18, 2009 1:08am
Quoting ProbaBill
Mathematician,
we are opposites, your trading the breaks and I am trading the reversals.

Regarding your interest in efficient entries. It is possible that your entries are fine but you may need a more dynamic method to exiting the trades. I remember reading about a trader who was taking break outs from decent pivots, he said that he would scratch 3 out of 4 trades based on the way price was behaving at the break out, he would get out at BE +- a few ticks (futures) but when he got a good BO the reward Vs risk was huge.

If your interested, I...
I've recently stared thinking I should join you and trade the reversals. The breaks weren't working. But maybe that trader's file would be usefull. Maybe I just have to change my trade management to get that edge...
  • #130
  • Edited 1:48am Mar 18, 2009 1:32am | Edited 1:48am
Quoting mathematician
Ok, it's official. I've started talking to myself online.
IMO, it's the only way to do it ...

Quoting mathematician
I've recently stared thinking I should join you and trade the reversals. The breaks weren't working. But maybe that trader's file would be usefull. Maybe I just have to change my trade management to get that edge...
or ... you might find yourself spinning in circles ... ? just food for thought ...

Quoting Toddfx
Now, 2 patterns of market behaviour happen on a regular basis:

1) the price breaks to new high's (or low's)

2) the price reverses from new high's (or low's)
"Believe nothing you hear and half of what you see." Proverb
  • #131
  • Mar 18, 2009 2:04am Mar 18, 2009 2:04am
Quoting mathematician
I've recently stared thinking I should join you and trade the reversals. The breaks weren't working. But maybe that trader's file would be usefull. Maybe I just have to change my trade management to get that edge...
OK here it is.
Attached File(s)
File Type: doc Rockets.doc   249 KB | 654 downloads
  • #132
  • Mar 18, 2009 2:10am Mar 18, 2009 2:10am
Quoting ProbaBill
OK here it is.
thank you so much for this ... is there anyway that you could convert this to a PDF? i am limited in my ability to open this file (i can download, but only without the charts ...) ...
"Believe nothing you hear and half of what you see." Proverb
  • #133
  • Mar 18, 2009 2:23am Mar 18, 2009 2:23am
Quoting fxgrinder
thank you so much for this ... is there anyway that you could convert this to a PDF? i am limited in my ability to open this file (i can download, but only without the charts ...) ...
OK here it is.

--

and some recent pivot reversals.

Cam
Attached Image (click to enlarge)
Click to Enlarge Name: Pivot Reversals.jpg Size: 62 KB
Attached File(s)
File Type: pdf Rockets.pdf   215 KB | 474 downloads
  • #134
  • Mar 18, 2009 2:32am Mar 18, 2009 2:32am
Quoting ProbaBill
Mathematician,
we are opposites, your trading the breaks and I am trading the reversals.

Regarding your interest in efficient entries. It is possible that your entries are fine but you may need a more dynamic method to exiting the trades. I remember reading about a trader who was taking break outs from decent pivots, he said that he would scratch 3 out of 4 trades based on the way price was behaving at the break out, he would get out at BE +- a few ticks (futures) but when he got a good BO the reward Vs risk was huge.

If your interested, I could...
Probabbills,

Please do dig out that file.

Both you and Mathematicians are doing a good discussion on money management. Where and how the scaled positions should be applied is something I am not trying to learn it. Attached is a pdf which shows how to apply scaled positions at fibo points.

Some food for thought. In Asia, where I live, some old-time traders do hedging in same currency so that the margin calls are avoided and the positions are offloaded at probable favourable turning/retracement points. So there is hardly any loss. A loss once locked up can anytime be cut and it's only a matter of watching your account. There is no drawdown involved here. They have been doing this since years.

None of the old-school traders is able to explain clearly if do as per some system. Ofcourse it gets them more commissions. They do mostly by hunch and without any loss. A method can be built around. Islamic accounts are offered on no rollover interest basis because Islamd forbids interest. In any case existing rollover interest cost is not a major factor. Neither are the spreads. Old-school traders charge 10 pips commission single side and still the customer gets out of the trade without a loss. With low spreads and rollover interest cost, hedging in same currency really makes sense. Again need to evolve some method around it.


PJ
Attached File(s)
File Type: pdf ScaledEquation.pdf   171 KB | 1,708 downloads
  • #135
  • Mar 18, 2009 2:53am Mar 18, 2009 2:53am
Thank you PJ for your contribution,

The PDF appears to be a grid style strategy and I know many traders have tried various approaches to this unsuccessfully. 95% win rate with 5% losses that can eradicate a weeks worth of profits by the skew in risk/reward. I am not saying it is not possible but I don't think it would suit my personal profile.

Thanks again
Cam
  • #136
  • Edited 3:36am Mar 18, 2009 3:31am | Edited 3:36am
More pivot reversals.

I am using the 5M to locate them and entering on the 1M.

I have looked back over a few months and believe the entry is accurate enough and provides a low risk opportunity to develop a trading method from. Selecting the best pivots to use in real time is also fairly easy. The entry setup appears robust as it works on several markets and time frames. To aid identification, the stochastics OB, OS, indicator can be used on the entry time frame to make sure you are trading at an extreme (this is not necessary but can keep you out of mid range trades). Now for the hard part, developing a trade plan that is appropriate for the method and fits my profile.

update soon...
Attached Image (click to enlarge)
Click to Enlarge Name: Pivot Reversals 1.jpg Size: 60 KB
  • #137
  • Mar 18, 2009 4:27am Mar 18, 2009 4:27am
Quoting mathematician
is there some better way, some way to make your trades more efficient?
I think that a key factor that isn't being talked about is Market Conditions.

Breakout trading works fine when the market is active and on fire.

If you try that same style of trading when things are dull it just doesn't work. During those conditions, when most of the trading is taking place within a range, then you have a good chance to fade - if the swings are big enough to make it worth it and you can keep your bearings. I can't really do it well though. In my mind that's more advanced trading.

IMO for beginners the best way is probably to:

* Learn through experience to spot active, directional, umbalanced Market Conditions and trade with that flow.

* Try to get as good a value on your entries and exits as you can, keeping in mind that your skills will improve with experience. As beginners our timing will not be that great entering or exiting - we have to work on it.

* Don't trade other than the times (they won't be often) that are optimal for what you're trying to achieve. Learning to identify optimal Market Conditions and being disciplined to only trade when they are present is key I think.



(After >1k posts - I finally wrote one that doesn't deserve to go in the garbage. LOL.)
  • #138
  • Mar 18, 2009 9:01am Mar 18, 2009 9:01am
Quoting fxgrinder
or ... you might find yourself spinning in circles ... ? just food for thought ...
You're right. I might continue a problem that I've had for a long time: Always changing my system when things go sour. Never sticking with it and learning all the nuances so that I can trade it profitably.

With my strategy, I made a lot of pips, then I lost almost all of them. In the end, I broke even. Most systems don't even break even, they lose money. Perhaps I was on the right track. Maybe I just need to stick with it and master my system.
  • #139
  • Mar 18, 2009 9:19am Mar 18, 2009 9:19am
Quoting ProbaBill
OK here it is.
--
and some recent pivot reversals.

Cam
A very interesting file. I liked these parts a lot:

Quote
I truly believe you can take any classic "setup" out there and make money with it. Flags, ascending, descending triangles, head and shoulders, whatever. Just pick one and trade it until you work out the kinks. The emotional hangups are the ones that need to be worked through but if you keep changing what you are doing you are able to transfer the blame for failure to your current "system" instead of dealing with the real problem.


I've thought so too. I mean, even if they don't work as nicely as they did in the past (because everyone knows about them now), they still are great indications that something will happen soon.

Quote
I hate to sound like a broken record by repeating these things but I am trying to save you guys a lot of time. There are a lot of things that work but hardly anybody makes it to profitability. Constant experimentation leads to constant losses and constant losses to a negative state of mind that is very hard to overcome. You are going to take a lot of losses whichever strategy you pick but how do you slow them down and eventually get them down to a managable level unless you stick with one thing long enough for you to......

Yes, I think it's too soon to throw in the towel. I must take another look at it. There was potential.

Quote
I do washes all the time. When your entries give you the opportunity to wash [break even] then you are doing something right. What I mean is if the trade goes immediately against you there is something wrong with your analysis of the situation. When almost every entry gives you a chance to wash you are getting down with the game.

Just looking at some of my past screenshots, I almost always had a chance to move my stop to break-even. So maybe I'll have 60% break-even trades. That doesn't bother me. The rest will be small losers and large winners.

Quote
It was not my intention to make it sound easy. You already know how tricky it can be. Once you enter you start seeing and feeling all sorts of things that werent there before. However I do think most of the easy money is made around the highs and lows of the day, when youre making new highs or lows or testing the highs and lows. You get a flag and then you get the test and it either breaks into new ground or fails. Taking the flag you are already in when the test arrives and can decide whether to lock in profits or......

I like this idea about trading around the high and low of the day. The CURRENT high/low of the day as it's being drawn out (maybe define the end/start of the day at 5:00 PM New York time). That will usually be a key area of S/R, plus it will focus your attention on important zones and reduce the number of trades..
  • #140
  • Mar 18, 2009 9:25am Mar 18, 2009 9:25am
Quoting ProbaBill
More pivot reversals.

I am using the 5M to locate them and entering on the 1M.

I have looked back over a few months and believe the entry is accurate enough and provides a low risk opportunity to develop a trading method from. Selecting the best pivots to use in real time is also fairly easy. The entry setup appears robust as it works on several markets and time frames. To aid identification, the stochastics OB, OS, indicator can be used on the entry time frame to make sure you are trading at an extreme (this is not necessary but can keep you...
I see nothing wrong with using a couple indicators. Sure, some people use way too many and don't put enough emphasis on price action, but indicators still are very useful. I think that an oscillator could be particularly helpful for trading swing reversals (i.e. in the direction of the swing, not a break of the swing high/low), as you are.

Playing the swingpoint reversal is certainly intriguing. I might check it out, but I will also work on my breakout strategy some more. Thanks for that file!
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