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Jacko's Forex House of Pleasure and Pain

  • #7,641
  • May 19, 2009 11:50am May 19, 2009 11:50am
Quoting c49ermoose
Dan,

Thanks for the quick and informative response! I think my problem is more related to when the market is heading in my direction. Rather than pullbacks, what happens when you want to get in at a price that is above you (for longs) or when a price is below you (for shorts).

For example, if you feel you're in a consolidating market and you're waiting for the volitility to die down (as many seem to be doing now on the EURUSD), I want to see a strong break above 3750 region (where there is strong resistance) for entry long. Now if I want round...
Hi Moose,

Sorry I misunderstood your question. I may be wwwwrong (as Jacko would say!) but in my opinion that wouldn't quite fit this strategy - that would be more of a breakout strategy as opposed to a trending strategy.

However, I would think that the best way to play such a move would be to wait for price to break the level and then retest it. If the level holds and is rejected on the retest then I would consider a position. Also the price action should be seen occurring on a one hour or above timeframe to hold any weight. However, as I don't trade that way myself I can't offer any real insight into it I'm afraid! I prefer to enter at a discount (retracement)! Sorry I can't be of any more use on this one!

Regards,
Dan
  • #7,642
  • Edited 12:31pm May 19, 2009 12:11pm | Edited 12:31pm
Quoting RickyRudy
These are just my thoughts. If anyone believes my thinking is faulty please don’t hesitate to inform. I welcome a discussion from others.
Hi RickyRudy,

your thinking is not faulty at all: you must trade uncorrelated pairs if you are to avoid adding risk to your account ie pairs with a coefficient of correlation next to zero. In fact there's no difference between strong positive and strong negative correlation: in either case, strong correlation causes the risks to add up.
And yes, the least correlated pair to the Eur/Usd is the Yen.

LJ
1st step stop loss in the green 2nd step play with the free money
  • #7,643
  • May 19, 2009 12:28pm May 19, 2009 12:28pm
Quoting TheCyberCore
Since a month I am trying hard to follow jackos' method. I found there are some different psychological things that come into play when trading his style.

Personally, the biggest test is to sit and wait. To wait for an opportunity to get into the market. As this long term style does not provide so much signals to get into the game.
Hi TheCyberCore,

one idea to help you sit and wait for Jacko setups is to trade some intraday method in the meantime.
For instance, I trade BillyRay's method: http://www.forexfactory.com/showthread.php?t=86429
This helps me a lot to sit and wait because I get some intraday action and, since BillyRay focuses on S/R, I get better and better at reading charts which is very useful for trading Jacko's method.

If you don't like BillyRay's method, find another one but make sure that the one you choose is no-nonsense and based on price action.

LJ
1st step stop loss in the green 2nd step play with the free money
  • #7,644
  • May 19, 2009 12:37pm May 19, 2009 12:37pm
Quoting DanUK
Hi Moose,

Sorry I misunderstood your question. I may be wwwwrong (as Jacko would say!) but in my opinion that wouldn't quite fit this strategy - that would be more of a breakout strategy as opposed to a trending strategy.

[color=black][font=Verdana]However, I would think that the best way to play such a move would be to wait for price to break the level and then retest it. If the level holds and is rejected on the retest then I would consider a position. Also...
Thanks again Dan...

I think I must've been confusing some posts I've read on this thread that would lead me to believe entering as you past round numbers is OK.

So to clarify...

Right now I'm looking for longs around 1.3300 (major confluence of S/R and 50% from daily swing high/low). If price never moves back to that region, I should allow the current upswing to run to exhaustion, draw a new fib, and hope for a pullback to it? Is this more in line?

Thanks,

Moose

P.S. I'm not trying to make this automatic, as I understand it can't work that way. I'm just trying to get a sound base from which to work from.
  • #7,645
  • May 19, 2009 1:25pm May 19, 2009 1:25pm
Quoting LeveragedJoe
Hi TheCyberCore,

one idea to help you sit and wait for Jacko setups is to trade some intraday method in the meantime.
For instance, I trade BillyRay's method: http://www.forexfactory.com/showthread.php?t=86429
This helps me a lot to sit and wait because I get some intraday action and, since BillyRay focuses on S/R, I get better and better at reading charts which is very useful for trading Jacko's method.

If you don't like BillyRay's method, find another one but make sure that the one you choose is no-nonsense and based on price action.

LJ...
Hi LJ,

thank you for your kind advice. I also thought about this and found a pure technical method at http://forex-fxtrader.com/blog/

But I decided to follow Jacko for a while now. I just wanted to extend my mind a bit and test the possibilities with jackos method on other pairs, too. I am still a very newbee on trading FX, I hope I dont confuse you experts.
  • #7,646
  • May 19, 2009 3:06pm May 19, 2009 3:06pm
Quoting c49ermoose
Right now I'm looking for longs around 1.3300 (major confluence of S/R and 50% from daily swing high/low). If price never moves back to that region, I should allow the current upswing to run to exhaustion, draw a new fib, and hope for a pullback to it? Is this more in line?
Hi Moose,

That's pretty much how I see it at the moment. Draw in a trendline connecting the highs and one connecting the lows on your chart and when you get that confluence you mentioned, you know where to look for some action!

Regards,

Dan

PS I've sent you a PM with a bit of info about the round numbers!
  • #7,647
  • May 19, 2009 5:52pm May 19, 2009 5:52pm
I'm really not good at trendlines. These are the two I currently have on my daily chart. Anyone see any problems with these? Would be very greatful for any commments.
Attached Image
  • #7,648
  • May 19, 2009 7:56pm May 19, 2009 7:56pm
Quoting jcalow
I'm really not good at trendlines. These are the two I currently have on my daily chart. Anyone see any problems with these? Would be very greatful for any commments.
With Jacko's method set your daily chart to 300 bars and then draw the trendlines on ALL viewable bars.

Your TL's are only on about 40 bars.
  • #7,649
  • May 20, 2009 6:42am May 20, 2009 6:42am
Quoting TheCyberCore
Since a month I am trying hard to follow jackos' method. I found there are some different psychological things that come into play when trading his style.

Personally, the biggest test is to sit and wait. To wait for an opportunity to get into the market. As this long term style does not provide so much signals to get into the game.
Hi CyberCore,

You have raised a really important issue here. Most people when they start out trading have this compulsive "need" to trade.

I think mostly it has to do with the common (but false) characterisation in the movies that traders are trading every 20 seconds and screaming at each other.

The other reason is that most people think that if they are not trading every day, then they are being lazy.

The reality is that the more trade you take, the more you are moving from only the AAA+ trades down into the realms of BBB- trades and then down to CCC- trades until you eventually are trading the equivalent of "junk" or sub-prime trades.
The question that arises is.... why do you want to trade all the sub-optimal trades? Forex trading is a thinking mans business. Patience is paid for in dollars....Impatience will cost you dollars almost every time.

Rather than trading more often, it is better to have a good win rate and use the benefit of leverage.

.
Jacko
  • #7,650
  • May 20, 2009 6:54am May 20, 2009 6:54am
Following on from the previous post....

The novice traders do not understand that the key benefits of this business are the leverage, the liquidity (ease of getting in and out of a osition) and the rapid compounding of profits.

Let look at the most important which is leverage. Take a look at what traders are trading. Lets assume that you are a young guy 19 year old trading 2 standard lots. (That is quite easy for most traders to be able to afford. Throw down $10-15 thousand and you can easily trade 2 standard lots). However with 2 standard lots you are instantly controlling $200,000. Thats how easy it is to do.

Now compare that with any other business venture.
Try going to the bank and saying "I have $10 thousand ...and I want you to give me the money to buy a business for $200,000 tomorrow" They will laugh you out of the office.
However a forex broker will say "What the hell, drop $10k on the table and you can trade $200,000 RIGHT NOW !!"

The benefit of Forex trading is not that you have to trade and trade and trade to make a lot of money.
What a good trader does is pick AAA+ trades only, uses the leverage to control more money than he would normally be able to access.... and has a good win rate on leveraged funds. That is how to make serious money.

.
Jacko
  • #7,651
  • May 20, 2009 6:57am May 20, 2009 6:57am
Quoting DanUK
Hi TCC,

I would say that my experience has been pretty similar to you. It took me a long time to get round to the idea of only taking a small number of trades. My biggest concern with only taking a small number of trades was missing out on the opportunities... just like in your example; missed a good move so now you have to sit back and wait for the next opportunity to present itself. You did well not to get in and hunt it though!

But the wait is well worth it. By sitting back and only taking the best setups you will keep your losses small....
Hi Dan,

An excellent answer.

By sitting back and only taking the best setups you will keep your losses small.


Also you gain more freedom by trading less often which is the ultimate goal for most people.


Jacko
  • #7,652
  • May 20, 2009 7:13am May 20, 2009 7:13am
Quoting TheCyberCore
Yes - as all the major currencies are related to each other. Jacko trades EURUSD only, because it is the most trendy pair and as well the biggest market (the "supertanker") of all pairs.

.

Hi CyberCore

LOL...This is my fourth post in a row.!!...I must have verbal diarhorrea today.

I trade the EUR/USD because as you say it is the supertanker of all pairs. However, I can also understand that most traders also like to trade their home currencies. The Brits like to trade the GBP, the Australians like to trade the AUD and the Europeans like to trade the EUR or the CHF.

I like the EUR/USD because I like to trade the biggest pair. The principles of the method outlined on the first page can be used on any pair, but the varying volatility of each currency pair requires different pip size parameters.

.
Jacko
  • #7,653
  • May 20, 2009 7:32am May 20, 2009 7:32am
Quoting RickyRudy
I am new to Jacko's Trading. I just finished drawing a Fib line on my closing chart for the past week. I don't know if this is where Jacko would draw his fib but mine is drawn from 1.3252 on May 7th to 1.3722 on May 13th. As my attached chart shows, EU retraced to 1.3487, which is EXACTLY at my 50% fib line. That was IBFX's 4:00 PM NY time close on Friday. Bloomberg has it closing a mere 8 points higher at 1.3495. This would signal a possible continuation of the bull move but with it closing below the descending daily trendline in red this leaves...
Hi Ricky Rudy

You have drawn your Fib lines correctly.
What you need to remember is that there is not just one fib line.... they are a set of targets.

I only use 50% fib lines because they are the most used parameter for Fibs. The 62% and 38% are not as commonly used and therefore not as "self-perpetuating".

Lets assume that you have identified a short term 50% fib. When your trade moves to that point, you have to make a decision: Will it bounce off the Fib or go through it. (They are the only two possible outcomes)
If you are in a trade and it bounces back you can close it asap.
If it goes through it you stay in and then look for the next (longer) time frame 50% fib and use that as your trading target.
When your trade gets to the longer term fib target, you repeat the process above

.
Jacko
  • #7,654
  • May 20, 2009 8:07am May 20, 2009 8:07am
Hi Jacko,

Some great pearls of wisdom handed out today! I particularly like this:

Forex trading is a thinking mans business. Patience is paid for in dollars....Impatience will cost you dollars almost every time.

I think I will print that out in a big bold font and stick it next to my screen!

Regards,

Dan
  • #7,655
  • May 20, 2009 8:50am May 20, 2009 8:50am
Quoting jacko
Hi Ricky Rudy

You have drawn your Fib lines correctly.
What you need to remember is that there is not just one fib line.... they are a set of targets.
Jacko
Thanks sensei.

EUR is on a bull run at this very moment.
  • #7,656
  • May 20, 2009 9:25am May 20, 2009 9:25am
Quoting jacko
Hi Ricky Rudy

You have drawn your Fib lines correctly.
What you need to remember is that there is not just one fib line.... they are a set of targets.

I only use 50% fib lines because they are the most used parameter for Fibs. The 62% and 38% are not as commonly used and therefore not as "self-perpetuating".

Lets assume that you have identified a short term 50% fib. When your trade moves to that point, you have to make a decision: Will it bounce off the Fib or go through it. (They are the only two possible outcomes)
If you are in a trade...
Think I've just had a 'eureka' moment. Thanks Jacko
  • #7,657
  • May 20, 2009 10:24am May 20, 2009 10:24am
wow - not sure if anyone else picked this up in Geitners speech.....

Geithner said the Treasury “shortly” will finish details of a plan aimed at helping small businesses by making as much as $15 billion of TARP funds available to unlock the secondary market for the government-guaranteed part of Small Business Administration Loans.

....think he just "super-sized" tarp .....

'cos once you open that box....$15billion is just the tip of the ice-berg!
  • #7,658
  • Edited 11:01am May 20, 2009 10:47am | Edited 11:01am
Quoting jacko
What a good trader does is pick AAA+ trades only, uses the leverage to control more money than he would normally be able to access.... and has a good win rate on leveraged funds. That is how to make serious money.
Jacko
Thank you very much Jacko,

all your post are full of wisdom, but this paragraph beat even my highest expectations as it is the real no-BS formula for making hugh returns on your trading capital.
In short: AAA Setups + Leverage = REAL MONEY

I am going to stick this to my desktop so that I can read it every time I look at my computer.

By the way, Jacko, you should really post more on this forum. Everytime you do I learn something valuable

LJ
1st step stop loss in the green 2nd step play with the free money
  • #7,659
  • Edited 1:39pm May 20, 2009 1:36pm | Edited 1:39pm
Quoting jacko
Following on from the previous post....

The novice traders do not understand that the key benefits of this business are the leverage, the liquidity (ease of getting in and out of a position) and the rapid compounding of profits.

Let look at the most important which is leverage. Take a look at what traders are trading. Lets assume that you are a young guy 19 year old trading 2 standard lots. (That is quite easy for most traders to be able to afford. Throw down $10-15 thousand and you can easily trade 2 standard lots). However with 2 standard lots you are instantly controlling $200,000. Thats how easy it is to do.

Now compare that with any other business venture.
Try going to the bank and saying "I have $10 thousand ...and I want you to give me the money to buy a business for $200,000 tomorrow" They will laugh you out of the office.
However a forex broker will say "What the hell, drop $10k on the table and you can trade $200,000 RIGHT NOW !!"

The benefit of Forex trading is not that you have to trade and trade and trade to make a lot of money.
What a good trader does is pick AAA+ trades only, uses the leverage to control more money than he would normally be able to access.... and has a good win rate on leveraged funds. That is how to make serious money.

.
Jacko
Dear Jacko,

Don't you think by trading 2 standard lots on a $10-15 thousand account is a quite risky in term of good money management?

With a 100 pip stop-loss, there is a POTENTIAL loss of $2,000 which is 20% of the equity. I know a good trader will only pick AAA+ trades, but there is still a possibility that even a AAA+ trade could fail.

Appreciate your further clarification.

Thank you.
  • #7,660
  • May 20, 2009 2:50pm May 20, 2009 2:50pm
hi mko

if you'll allow me, i think i know jacko's answer to this......

he's not advocating a 20% risk per trade....that would be suicide. 2% is more like the number you should grow into. By grow into, I mean start on demo, then trade the smallest size allowable on your broker, then maybe 1%, etc. What he is saying is that a young, 19 year old could do this - implying that this would be irresponsible and reckless (like most 19 year olds )

This, over a period of time as your skill and confidence grows....probably a few months as you will not be getting lots of trades on this method, so practice will come slowly. Maybe a trade or 2 a week has been my experience over the last month.

Of course, if you are a very experienced trader or just have a lot of cash to blow (read gamble), then your mileage may vary....

The truth is (with greatest respect to Jacko) is that there are lots of valid, profitable trading strategies on all sorts of time frames, on all sorts of instruments..... some are trend followng, some are counter-trend, some are breakout systems...whatever.. The real question is....can you trade the system? Can you keep your emotions in check, avoid mental mistakes, stay patient, not close your winners too early, etc, etc.....that takes practice and from what i can see is the real thing that differentiates jacko from most of us average joes who have generally lost money....
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