Drawing TLs is VERY subjective, you can draw them any which way to suit your purpose (even conjure up a trade that isn't there - NOT RECOMMENDED!)
My use of TLs is multi purpose, the most of which is to identify long term support, immediate support and dynamic support and a visible way to SEE accurate momentum (as opposed to wiggly lines) and identify exits.
I use THE CLOSE (and OPEN) in everything I do, I don't care about the broker over runs or the MM games that give tails and wicks - I am in to BODIES - beautiful, shapely, curved bodies with big .........sorry, wandered off a bit! The body of the candle gives ME more information than the extremes. I can only think others are into wicks and tails because they can fine tune their entries and exits to within a couple of pips. Not me, haven't a clue how to do that. An entry within 30 pips or so works for me - everytime.
Anyway, for those Negative Nancies out there who want to show me that wicks and tails work - forget it, I don't give a rat's ass what works for anyone else, I DO what WORKS FOR ME.
Now on to Sid's GBPCHF chart see attached (Everything omitted from chart except TL for clarity):
TL 1 - 2:
Price starts out at "1" and then when we get to "2" ,we have now produced a HL swing low. We then draw our TL from the the close or open at "1" that provides the "support" for higher prices to the open or close at "2" that provides "support" again for higher prices and then extend this forward into the future.
We have now drawn our "line in the sand" that prices must hold if they are to continue up with the same momentum. Prices duly oblige and keep going up until we run out of buyers (a) and then the sellers jump in. The sellers can only take prices down to the Bond hammer (b) on Feb 12, which is above our TL so we are still motivated long. The guys who bought earlier feel they have missed their chance to get out at the high so they have another go at driving price higher to get their chance at a high price.
On Feb 24, (c) the sellers say "enough, pal, you're done" and start selling again until on Feb 27 (d) they hit......our TL..........our TL which was drawn from Dec 31 to Jan 25. The sellers get bounced back by our TL on Feb 27 but on March 2, (e) have enough pressure to break through our TL AND close below the TL. At this point we know our ride on this momentum is well and truly over and if we are not out already then this is the time to do it.
On March 3 & 4, (f) the sellers are not sure they want to go any further which surprised the buyers so they (buyers) made an anemic move higher only to hit the level where they found the sellers resting which was at.......our TL. Wait a minute our astute trader says, this is something I should recognise, isn't this PASR? Well blow me down with a feather it sure is - better watch what happens here!
On March 5, (g) after gathering their Clans, the sellers come back in force after another feeble attempt by our weak kneed buyers to drive price back up to where? Oh yes our TL! I wonder could this confirm PASR our knowledgeable trader asks? Damn right says another Go For It trader and sells at (h).
Our Go For It trader expects price to find support at the "2" level so holds on. (The white TL does NOT exist at this point). At "3", he encounters a couple of dojis which are just above where he expected price to go, so taking no risks he is out. He looks in his wallet and finds 300 pips - wow he says to himself, this TL PASR stuff is great!
March 12 confirms our swing low at "3" so we now draw our white TL from point 1 to 3 - this is our long term momentum trend line.
At "3", some people will draw a TL parallel to 1 - 2 but that's not my style.
We watch and see what prices do (no reason or PASR to trade)
At "4", we have 4 bars providing support just slightly above our LT TL AND with a couple of Bond hammers. Mr Procrastinator trader is asleep at the switch and doesn't see this but our Go For It trader recognises TL PASR and buys above the last Bond hammer (i). He follows price up and sees it make a minor swing low at (k). Our savy trader thinks he should draw another TL here so that he can follow this particular momentum. He still follows price
until it hits previous resistance, sees his Sunday bar (m) and puts his sell stop just below the Sunday bar (just in case price blows through resistance).
Next day, our trader gets stopped out (puts 750 pips in his wallet) BUT he sees the next bar crash through and close BELOW his TL. Wait a minute he says, I wonder if this will do what it did at the other TL? If I get TL PASR, I'm in and he was, and put another 220 pips in his wallet.
Hopefully you get the hang of this and know HOW to draw TLs that MEAN something to YOU.
I have shown you my TLs before and left you to THINK - this time you got SPOON FEEDING but don't expect it all the time - unless YOU learn, YOU will never DO.
My use of TLs is multi purpose, the most of which is to identify long term support, immediate support and dynamic support and a visible way to SEE accurate momentum (as opposed to wiggly lines) and identify exits.
I use THE CLOSE (and OPEN) in everything I do, I don't care about the broker over runs or the MM games that give tails and wicks - I am in to BODIES - beautiful, shapely, curved bodies with big .........sorry, wandered off a bit! The body of the candle gives ME more information than the extremes. I can only think others are into wicks and tails because they can fine tune their entries and exits to within a couple of pips. Not me, haven't a clue how to do that. An entry within 30 pips or so works for me - everytime.
Anyway, for those Negative Nancies out there who want to show me that wicks and tails work - forget it, I don't give a rat's ass what works for anyone else, I DO what WORKS FOR ME.
Now on to Sid's GBPCHF chart see attached (Everything omitted from chart except TL for clarity):
TL 1 - 2:
Price starts out at "1" and then when we get to "2" ,we have now produced a HL swing low. We then draw our TL from the the close or open at "1" that provides the "support" for higher prices to the open or close at "2" that provides "support" again for higher prices and then extend this forward into the future.
We have now drawn our "line in the sand" that prices must hold if they are to continue up with the same momentum. Prices duly oblige and keep going up until we run out of buyers (a) and then the sellers jump in. The sellers can only take prices down to the Bond hammer (b) on Feb 12, which is above our TL so we are still motivated long. The guys who bought earlier feel they have missed their chance to get out at the high so they have another go at driving price higher to get their chance at a high price.
On Feb 24, (c) the sellers say "enough, pal, you're done" and start selling again until on Feb 27 (d) they hit......our TL..........our TL which was drawn from Dec 31 to Jan 25. The sellers get bounced back by our TL on Feb 27 but on March 2, (e) have enough pressure to break through our TL AND close below the TL. At this point we know our ride on this momentum is well and truly over and if we are not out already then this is the time to do it.
On March 3 & 4, (f) the sellers are not sure they want to go any further which surprised the buyers so they (buyers) made an anemic move higher only to hit the level where they found the sellers resting which was at.......our TL. Wait a minute our astute trader says, this is something I should recognise, isn't this PASR? Well blow me down with a feather it sure is - better watch what happens here!
On March 5, (g) after gathering their Clans, the sellers come back in force after another feeble attempt by our weak kneed buyers to drive price back up to where? Oh yes our TL! I wonder could this confirm PASR our knowledgeable trader asks? Damn right says another Go For It trader and sells at (h).
Our Go For It trader expects price to find support at the "2" level so holds on. (The white TL does NOT exist at this point). At "3", he encounters a couple of dojis which are just above where he expected price to go, so taking no risks he is out. He looks in his wallet and finds 300 pips - wow he says to himself, this TL PASR stuff is great!
March 12 confirms our swing low at "3" so we now draw our white TL from point 1 to 3 - this is our long term momentum trend line.
At "3", some people will draw a TL parallel to 1 - 2 but that's not my style.
We watch and see what prices do (no reason or PASR to trade)
At "4", we have 4 bars providing support just slightly above our LT TL AND with a couple of Bond hammers. Mr Procrastinator trader is asleep at the switch and doesn't see this but our Go For It trader recognises TL PASR and buys above the last Bond hammer (i). He follows price up and sees it make a minor swing low at (k). Our savy trader thinks he should draw another TL here so that he can follow this particular momentum. He still follows price
until it hits previous resistance, sees his Sunday bar (m) and puts his sell stop just below the Sunday bar (just in case price blows through resistance).
Next day, our trader gets stopped out (puts 750 pips in his wallet) BUT he sees the next bar crash through and close BELOW his TL. Wait a minute he says, I wonder if this will do what it did at the other TL? If I get TL PASR, I'm in and he was, and put another 220 pips in his wallet.
Hopefully you get the hang of this and know HOW to draw TLs that MEAN something to YOU.
I have shown you my TLs before and left you to THINK - this time you got SPOON FEEDING but don't expect it all the time - unless YOU learn, YOU will never DO.
Attached Image (click to enlarge)
15 YEARS OF PASR ON FOREX FACTORY!
4
Brilliant Strat, thanks for the (continued) education.
how lucky that the guy didn't stick the hose down the other side.
