Strat's Long Term Stress Free Trading

I did take note of that on my initail analysis but gave it less weight in my descision because of the consolidation period we were in. was i wrong in doing so or is this just not to your likings of a true stress free trade?

You really want to enter a trade with most of the variables on your side especially when we are in these consolidation periods. If you give something a chance to go wrong, it probably will go wrong!

Just in case you hadn't spotted it, notice where we are at on USDJPY Weekly which is also reflected in most JPY pairs.

Hello Robert, and many thanks for your willing donation of your precious time. To make a long story short (for me anyway), The Banks screwed up my retirement fund around the time that Nortel crashed, - I went totally to cash and have stayed out of the market since then. I have spent the last ~ 3 years attempting to learn to trade. Many false starts later, I stumbled across price action. Eventually I found you.

I was particularly attracted to your story of Dr. Joe it struck a chord with me. I decided to stick around a while longer. I'm so pleased that I did.

My Hypothetical trades (thanks for the warning - I appreciate it) are really paper trades in an FXDD account, blew me away. I was watching price action on GBP/USD and decided to try your approach.

I started the first trade on July 7th, based on my interpretation of Monthly support zones. As it looked like we were bumping up against a resistance zone, I set up a trade (3 contracts) if price reached 1.6478 - it did and we were off. I didn't set any stops, but did set up some take profits - 1st 1.6175 - next 1.6027 both were hit. Just before going to bed for the night, I set a trailing stop -50 pips on the last contract and was stopped out at 1.5978.
The next day (July 9th) - another trade (also short for similar reasons) also worked out.
As I have been reading Al Brooks (really tough read!) I am interested enough in intraday price action to need to see what was going on within each of the intraday bars. Typical price action - some bars obviously ranging action (the spiky ones) others trending. One major concern with my trades using your approach - some of the ranges and trends were counter directional to my trade - sometimes to > 400 pips. Is this consistent with your experience? Do you have any advice (in your thread or elsewhere) on how to deal with it. I am no spring chicken (69); a slow, but determined learner. My recent heart surgery has affected my memory somewhat, so I tend towards a more prescriptive approach to my trading. Create a plan and stick to it.

Sorry for the verbosity - I guess I am asking for you to point me to where I can learn enough to formulate my own rules for setting "reasonable" stops using your method of trading. Given also that I have never learned how to back-test a strategy....anything you can suggest will be very much appreciated. If the details are already in your thread - please forgive my waste of your time - I will , in any event read it again, (and again until all becomes clear) - I'm just looking for confirmation that there is sufficient detail to create a detailed trade plan is all contained in your thread.

In any case, Thank you so very much for the nudge in this direction - it certainly appeals to me as a method that would suit my 'emerging trading personality' more than anything else I have tried!

Hoping that this note finds you Healthy, Happy and Prosperous!

generally there are 3 rules.
1. trade daily and weekly time/frame, trade good setup only

2. don't over-leverage, or position size <=acc size till you're proven by tons of trades
additionally can diversify by trading a few (for example 5) uncorrelated pairs, and 1/5 of acc on each one, this further lowers risk

3. always attach a stop/loss, calc your stop/loss so that for every deal the loss is within 2% of acc

this money management calc will help you calc what Pips stop/position size/acc size means 2% of acc loss
http://www.forexfactory.com/showthread.php?t=180628

4. last thing is you may want to trade demo or micro (1k$) position till proven... that is to limit the learning tuition.

... playing these rules will make you survive the learning months I guess...

after a few tens trade by fixing at one style you'll have some number of your win ratio,
put win ratio numbers into calc then you'll be able to tell what position size to use, what t/p and s/l will help you trade at least break-even & w/o risk of blow up...

Michael,

Unless you have a sixth sense, I think you may have done this more by luck than good management. There was no PA on GBPUSD BIG BOSS for you to initiate a trade. While setting a limit order below price sometimes works, many times the volatility and/or stop runs will pick you up and take you in the wrong direction. Trading without a stop will bust your account and these are habits you MUST avoid if you intend doing it with real money.

I really recommend you read the whole thread again making sure you understand each post. Ask any questions on anything you can't grasp.

There are posts on different trading styles but if these don't answer your questions, ask again.

I do like the look of gbpyen. Two hammers off the weekly SR at 148.75 ish. This counts as a nice 123 long too, and what better PASR than two hammers?
I know it's on the H4 but it looks like a good indication?
Oil looks like it's being held by the Boss 20ma at 60.35 ish.

audusd also sports a great H4 hammer showing similar action to gbpyen. My mate in the 'large' bank said this weekend that most of his traders have almost given up lately as whatever happens in the UK morning session seems to be faded by the US in the afternoon. Everyone is just waiting for the trends to resume!

Looking at the DJI futures I can't help thinking that the move down is more like a bull flag than a move down to old lows. So, this week we could see the resumption of oil and index strength that should be $ negative again. Wait for PASR to reveal all!

Strat, i hope you don't mind me posting a link to another thread, it's the Silent Service Method, started by Clockwork, one of the teachers on the J16 thread. If you object, then please arrange to delete this, i thought it might help some of the newer members.
Personally, i have recently been studying Martin Pring's book " Price Patterns", and for anyone who hasn't read it, i reccommend it thoroughly. It showed me how ill prepared i was to start trading, how much more i had to learn, and i have found it highly useful. I'm not trading as such at the moment, but instead studying, reading and researching. That old cliche, treat trading as a business, has finally sunk in, and as Strat so eloquently put it, at the end of the day, you are learning a skill which will benefit you for the rest of your life, so i have no probs waiting another 6 mnths or a year till i am ready.
On the above mentioned thread, page 203, someone has very kindly scanned and posted most of the price patterns contained in the book.
However, i would reccommend you still but the book itself, and really study it, as the pictures don't give you the whole story, as the book explains the human pyschology behind the price action.
Hope this may be of help.

Regards
Gary

I don't mind at all, Gary. I am not in a competition to win readers or number of posts, only to help people achieve their goals of becoming successful and profitable, stress free traders.

If you're feeling down that there's nothing to trade or that you've made very little lately, just be glad you are not this Professional Forex and Futures trader!

Can someone please point me in the direction of a trader, any trader who doesnt make a loss. This is an important doc Strat and im glad you posted it. It really outlines the truth that so many new traders do not see and that some experienced traders refuse to acknowledge. The last couple of months and even still so this month have been pretty brutal. Last 2 months have been quite nasty with the choppy waves, the start of last week was brialliant before the mid to end started showing choppy signs. The only thing you can do is to trade your plan and weather the bad times. Just because this trader has seen some bad months will not stop him/her from trading there plan.

Thanks Strat

Razor

Interesting results!

It's always best to be flexible as a trader. Flexibility doesn't mean abandoning your trading plan but realizing when ones strategy isn't working and possibly re-evaluating the market condition(s) one is in.

Am always amazed when i read about people trying to impose their plan on the market they are trading!

Z

Whilst I do agree in part it would be dependable on the trader and the system and how long the system has been profitable (and how systematic the trader is).

For example a professional trader who has traded certain methods over the period of 10 + years would argue against the above statement because his/her method, with periods of drawdown and consolidation have always proven themselves over the long haul. A system that has only been developed in the past 5 years that doesnt allow for a 'black swan event' or the ability to change/mold the new climate will probably leave a trader scratching his/her head, eventually.

Provided a trader has at least a system that allows for the changing events before it destroy the account AND THE TRADER can admit that the climate has changed then they stand a far better chance. The only injustice the doc has is its only based on this year, but this year has also not been entirely easy, looking at the EUR shows that. It has been greatly changing with no real great definable trend after the crash. This is comparitive with the past 6-7 years where it trended beautifully giving traders a great chance to hold trades for long periods.

Take care

Razor

Both very good posts from zuret9 and Razor.

What it really comes down to is why you are trading.

If you are still trading for the "game" thrill, the "adrenalin rush" or the "wannabe a trader" ego, then you will be blindly trading whatever the market presents to satisfy your desires. Undoubtedly, this is a losing scenario destined to drain your account.

However, if you are trading for your living, you will have a totally different approach. You will have recognised the market is in stagnation and you will have moved into an ultra - defensive mode to protect your capital. You will be exercising PATIENCE and DISCIPLINE and ignoring those around you and on other threads who still "claim" to be making money in this market. Funny how these thrill seekers that post winning trades never post their losing trades.

The point is that you recognise and react to market conditions. A simple analogy is a sailboat. When there is no wind, do you take your sailboat out? No, of course not. It's the same with the markets. If there is no energy (wind) in the markets, then why trade?

These times are a test of a trader's WILL, PATIENCE and DISCIPLINE. I cannot stress this enough. You have to outlast the market. If there is no safe, low risk PASR opportunity in the markets, STAY OUT. The markets can go on like this for a long time BUT they cannot do this forever, they HAVE to reach some point where there is an out of balance; where there is more demand than supply or vice versa and it will come. The question is, "Will you still be around (funds in your trading account) to take advantage of the moves that will be made after the stagnation?".

I suppose there are others who think they can outsmart the market by trading shorter time frames. Good luck! Unless you are proven and experienced with a growing equity curve on the longer time frames, you have no chance on the shorter time frames. Never forget that the shorter time frames are dictated by the immediate higher time frame. If the daily is stuck in a trading range then the shorter time frames are automatically stuck in the same trading range although they may look bigger. I know of people who were successful trading H4 who are "suddenly" not successful and are now questioning their strategy.

What you must remember is that in these times, there is no direction in the market. The big boys are not playing. The big boys make the market move. The big boys make money when the market moves. Why do you think YOU can outsmart the big boys and make money when these guys know THEY can't? Get into the habit of watching what the big boys do. Get into the habit of thinking like the big boys. Get into the minds of the big boys. Remember Dr. Joe? We want to piggy back on the big boys. If the big boys are out then so are we.

What you see now is market manipulation by brokers and larger traders. They have the resources and ability to make very quick "kills" with low pip moves but with high $/pip contracts. We don't stand a chance against these tactics so best recognise it and find something else to occupy your mind.

As an example of market conditions, my week end analysis of 16 pairs took me less than 5 minutes!

Just like you can't make a snowball without snow, you cannot make trades without PASR!

So if you have been, or still are, trading this market, then ask yourself "Why?".

Thanks Strat - another great post. I traded that gbpyen on my demo account and was stopped out as I had the stop below the 2nd hammer. I was deliberating between that and euryen, which if i'd used the same stop strategy, I'd still be in? Seems that the stops were run on gbpyen - she really is a beast and I may ditch her from my watchlist and concentrate on euryen and usdyen.

What points you to the big money not being involved? Low volumes?
I see that on the hrly charts those intraday guys must be having a ball. It seems the trends flip around 1000-1200 and then the US fades the Asian/early European moves. See-Sawing about - glad I'm not in that pond being gobbled up by the bigger fish!

Yes, Danny, the low volumes on futures contracts are a sign but really just looking at the forex charts (no direction/movement) is the clue.

Watch the Yen pairs for some action - we finally got the BOSS short and long term cycles in agreement only for the Worker short term cycles to go out of whack! Once they come back into line - watch out!

Found this on a blog:

Risk and price action catalyst -- USD/JPY:

Last Wednesday the Japanese yen made a massive move against the dollar, euro, and pound sterling, gaining several hundred points in a handful of hours. I felt some of the brunt of the move as I had to close net-short yen positions for a loss and while it's never fun to take a loss or to go through the process of recovery, I learned a few valuable trading lessons I want to share.

Market correlations and repeated price patterns play a big role in how I determine entry and exit points on my trades, as most of you probably know. One reason I have grown to love trading the yen crosses is because I have found them to be some of the most pattern-like pairs in the market and I like how they maintain a very close relationship with the S&P 500 and Dow Jones equity indices.

It's no secret the overall strength or weakness of the US equity markets drive currency valuations among the majors and crosses but what I came to learn and understand is that the USD/JPY holds an important place that can act as a driver of the EUR/JPY and GBP/JPY. The Forex market uses the US equity markets to gauge risk appetites and to determine price valuations, and while the EUR/JPY is the pair most correlated to the S&P 500, from my perspective what I see is that the USD/JPY can be the pair most correlated to the overall equity markets, as a whole.

Price action impact ratios--

In the past I paid little attention to the price action and price pattern behavior of the USD/JPY but now I see that the overall strength/weakness of the USD/JPY directly impacts that of the EUR/JPY and GBP/JPY. Even more importantly, the impact ratio of an extended move on the USD/JPY is magnified anywhere from two to three times on the EUR/JPY and GBP/JPY. In other words, a 200-point extended move on the dollar-yen can translate into a 500 to 600-point extended move on a pair like the GBP/JPY and a 400-point extended move on the EUR/JPY.

This becomes especially true if those respective yen crosses have spent a greater period of time either moving or ranging to upside or downside price levels. For example, the last time the EUR/JPY spent time at or below the 130.00 level was almost 2-months ago (18-May) and in these last 2-months the EUR/JPY has moved or ranged at elevated levels, going as high as the 138.60 level during the first week of June.

The last time the GBP/JPY spent any time below the 147.00 level was just three days after the EUR/JPY bottomed out below the 130.00 level. Back on 21-May the GBP/JPY reached a bottom just below 147.00 and over the course of the proceeding few months it moved to a high over 162.50. So in this case we see both the GBP/JPY and EUR/JPY spent an elevated period of time gaining and moving to the upside which correlates perfectly to how the S&P 500 and Dow Jones gained during that exact same time frame.

Stop loss factors--

What helped fuel the type of moves we saw last Wednesday on the yen crosses is squarely on stop losses and stop loss triggering. The relationship between stop loss triggering, price action, and price behavior is very clear and the basis of this relationship goes back to the length of time a currency pair spends at either an appreciated or depreciated level.

Take the GBP/JPY for example... between 21-May and 12-June it moved a staggering 1,500-points+ to the upside. Although the GBP/JPY moved off it's best upside levels, it still maintained upside gains of over 1,000-points all the way until 3-July. What that means is the market was given a very reasonable amount of time to set stops on untold dozens of key psychological and technical levels at least all the way down to the price level where the market first turned up back on 21-May.

On 21-May the GBP/JPY bottomed and turned up at the 146.84 level and guess where it moved to last Wednesday? Exactly 10-points below the original upturn level... it hit 146.74, stopped and bounced back. That is no random fluke of the markets at all but shows how the extended downside move was very much fueled by stops being triggered. When stops are triggered and stop loss orders are hit, that process exacerbates a move to a large degree.

From a price pattern standpoint it also shows there is currently some fairly strong support around the 146.70-80 price zone. If you go back and look at the price action and price patterns of the EUR/JPY you would see almost a mirror image of the GBP/JPY in terms of its upside extension and then it's rapid fall back to old support price levels.

Hopefully this makes sense. At least for me it was a good exercise to go through as a refresher on the core principles of what makes these markets move, why they move, and how we can better capitalize on the markets.

Hi All, thought i'd tell you how important the above mantra is, i know it's an old cliche, but bugger me it's true.
Last night i placed 3 orders:
E/ Aud sell @ 1.7851
E/ Gbp sell @ 0.8595
Gbp/ Chf buy @ 1.7595 All 3 trades placed on gd looking pinbars with confluence.
Well i got home from work early today, and guess what, i thought i'll take a peek at the charts, instead of waiting till the end of the day.
All 3 trades showing a profit.
EAud, was struggling around 1.77, so i closed it. As i type, UK 8.30 it's gone another 55 pips, now only 50 pips awat from my TP1 target. So in reality, i've just given up an extra 33% profit on this trade.
Gbp/ Chf a similar story. I closed at 1.77 round figure, giving up a potential extra 65% profit on this trade.
E/ Gbp a similar story again, price was stalling around daily 20ma, convinced myself it had stopped, so closed out. This one hasn't moved as far, but it's still gone another 20 pips.
While i'm happy that i'm developing the patience to wait for the trades, this just shows, if you're happy with the risk, why interfere?? Let the trade play out as it wants to.
Anyway, another lesson learned.

Regards

Good trades Golfer....but.....you know it's coming.....you didn't trade your plan!

If you closed your trades early it means you have not fully accepted the risk and adhered to your plan. Trust me, it sounds anal, but I have been there and lost money in the past by doing exactly that. It only takes a few deviations from your plan before you start becoming 'cocky' and then the account blow up is just around the corner!

They could have a lot more to go yet? You've only given it a small chance of working out and you could be kicking yourself for missing a 200-500 pip move - been there too - If you were happy with the risk at execution then you accepted the risk. Maybe it would have been better to close out half a position - that way it's a free trade!

Trading is less about entry and 90% about you beating you! Glad to see that you have the ball$ to mention it here though and realise it for yourself mate!

[quote=Grimweasel;2873589]Good trades Golfer....but.....you know it's coming.....you didn't trade your plan!


Absolutely, i'd planned the trade, but when i opened the charts, 3fig pip profits turned my head!
Agreed, they do have good potential, which i'd identified, and the R:R is always the first thing i look at, which makes it even more annoying!
Still, i'm just happy i'm not jumping into iffy trades, i actually haven't traded for a couple of weeks, due to the chop, and any PA signals generated being in a crap location, which for me personally, were not worth the risk.
Still, i suppose a profit is a profit, strange it doesn't feel like it, seems more like a loss.?
Loads more to learn obviously!!

Regards