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4H Box Breakout

  • #1,361
  • Jul 27, 2009 1:54pm Jul 27, 2009 1:54pm
Quoting Razor_trader
By shifting your SL to BE at this point is serverly limiting the room that the trade has to run, and essentially mature. If you are locking in BE just because you dont want to loose then you need to do a few things and the first thing is to look at your plan.

IF you dont have a PLAN then you need to create one and incorporate the risk that you are prepared to place and loose, and understand that you need to accept the loose part. There are no easy ways to trade but by letting your emotions lock in BEs, especially when this system is based on...
Razor is absolutely correct here.

There are two basic adages that I beleive in:

1. Plan your Trade and Trade your Plan.
2. Cut your loses and let the Profits run.

If you jump in at the middle of a planned trade and make changes, that is just letting emotion (principally fear and greed) get in the mix. Not good. Trade your plan to the end. Evaluate and make adjustments after the Trade to modify your next Trade but be disciplined.

I love Ace's concept as it gives me a very good framework to start the week. I also don't have to be in front of the computer all the time. But based on my second adage, I will not do the following:

Let's assume the box plus buffer etc is 150 pips. Assume my goal is TP3 or 450 pips profit. Assume a Long is entered and runs to 425 pips and turns south by Wednesday. I simply cannot beleive anyone would walk from lets say at least 300 pips profit (using a 125 pip Trailing SL) and let the trade reverse all the way down past the box and get stopped out for 150 pips LOSS. In other words, you let it run from a 425 profit to a 150 pip loss. That's 575 pips. That to me is simply not logical.

At least move the SL to BE by TP1. I like the 125 pip trailing SL (this number to be fine tuned with back testing). I can always re-enter if the Long trade again moves up strongly and take advantage of maybe another couple of hundred or more pips but I have already banked 300 pips. There is very little downside on this method and a huge upside potential as I really don't set it at TP3. I will let it run until Friday or it just runs of steam, reverses and my trailing SL bumps me out. This maximizes my plan or Number 2 adage of cutting the loses and maximizing the profits. Yes I may miss couple of re-entries because I am asleep or whatever but I cannot be at the computer 24/7 but I am very comfortable with this plan and I can sleep at night.

Also, we are heading into the worst month for trading so I would be very careful of more weeks like last week. I hit BE which is fine with me. If I had re-entered on Thursday, I would have made money but that's OK. Trade the Plan.

Dave R.
  • #1,362
  • Jul 27, 2009 2:18pm Jul 27, 2009 2:18pm
I have to be honest in saying that I took profit when price retraced from the initial move. I then set my original order and got back in. That was not my original plan so I failed in a way-I just wanted to collect some profit.

The size of the stop loss is mitigated after you have a good week. It is a lot easier for me to lose 100 pips after I make a few hundred on a good week. What would be ideal is for every "new" trader to have a good week before they have a bad one.

I trade full lots and this is my income, it is way different than trading demo or micro. Psychology is huge.

Thanks to everyone that answered my questions last night.
  • #1,363
  • Jul 27, 2009 4:09pm Jul 27, 2009 4:09pm
Quoting calderone
I have to be honest in saying that I took profit when price retraced from the initial move. I then set my original order and got back in. That was not my original plan so I failed in a way-I just wanted to collect some profit.

The size of the stop loss is mitigated after you have a good week. It is a lot easier for me to lose 100 pips after I make a few hundred on a good week. What would be ideal is for every "new" trader to have a good week before they have a bad one.

I trade full lots and this is my income, it is way different than trading...
I also took profit on the reverse and I haven't re entered. The only reason I didn't was what felt like tentative and confused price action. The fact that I didn't re enter is good news for all who are still in because the price is guaranteed to go up now (My pending short is still open)

My other comment is about profit. My plan is to make a certain number of pips each week with this system. I'm trading half lots now and I do find the psychology is different. If I see a $ profit that I'm happy with I take it even if I haven't completely hit my desired TP level. Since I also have some time now to do some quick scalping it's taken the pressure off to maximize every last pip from the weekly system.

Sandy
  • #1,364
  • Jul 27, 2009 4:16pm Jul 27, 2009 4:16pm
if your gonna take profits whenever price gets hung up at s&r right after the entry then honestly your trading method has very little to do with this system. I mean, all your doing is trading the momentum move at the london open with a huge stop and when momentum trails off exiting the trade. I am not telling what to do I am just saying thats not this system.
  • #1,365
  • Jul 27, 2009 4:39pm Jul 27, 2009 4:39pm
Quoting 11andy11
if your gonna take profits whenever price gets hung up at s&r right after the entry then honestly your trading method has very little to do with this system. I mean, all your doing is trading the momentum move at the london open with a huge stop and when momentum trails off exiting the trade. I am not telling what to do I am just saying thats not this system.
You're very correct. This system says to stay in the trade until you hit TP2 or TP3. I think I made it to TP2 in one early trade. When it works it'sclear that those who stay in to the end make very nice pips. But today I traded what I saw. I have no problem in holding through a reversal. But today's reversal and price action suggested the little bull run we've had might be at a turning point. So should I stay in the trade to prove a point and adhere to the system? I chose to preserve profits and sit back to watch the PA. I may be right or wrong about the reversal but I did make my target with all trading today.
  • #1,366
  • Edited 5:19pm Jul 27, 2009 4:50pm | Edited 5:19pm
Quoting nubchai
You're very correct. This system says to stay in the trade until you hit TP2 or TP3. I think I made it to TP2 in one early trade. When it works it'sclear that those who stay in to the end make very nice pips. But today I traded what I saw. I have no problem in holding through a reversal. But today's reversal and price action suggested the little bull run we've had might be at a turning point. So should I stay in the trade to prove a point and adhere to the system? I chose to preserve profits and sit back to watch the PA. I may be right or wrong...
Im curious, what reversal price action did you see. Can you post a chart.
* I ask this because I see a lot of reversal patterns all the time on the 30 min, 1H and even on the 4H. Just, I don't find them too reliable in the long run. But i'd like to know what you're looking at, not to close my long orders, but like I said for curiosity.
  • #1,367
  • Jul 27, 2009 6:20pm Jul 27, 2009 6:20pm
Quoting Ace284
Im curious, what reversal price action did you see. Can you post a chart.
* I ask this because I see a lot of reversal patterns all the time on the 30 min, 1H and even on the 4H. Just, I don't find them too reliable in the long run. But i'd like to know what you're looking at, not to close my long orders, but like I said for curiosity.

Ace,

No problem. Here is what I saw. I highlighted the bar with a yellow vertical bar. What I saw was the price begin to retreat after several bounces against R1. Trix was arcing down. Relative strength showed GBP crossing down below JPY which indicates a short trend...although this can be short term, Williams was also starting to arc down. After reviewing this I closed my long trade. I must admit that my overall profit for the day was pretty good at that point and that was also a factor.

Sandy
Attached Image (click to enlarge)
Click to Enlarge Name: gbpjpy.gif Size: 25 KB
  • #1,368
  • Jul 27, 2009 7:11pm Jul 27, 2009 7:11pm
Nubchai, I am not telling you what to do, all I am saying is the way your trading it really has very little to do with the original system. Your using an indicator based breakout and when they tell you momentum is dying you exit the trade. I traded the master candle break last night on gbpjpy and when the move slowed down I exited my position for some nice profits. I basically got in long about the time my order got filled using Aces system. I think the intergral part of Ace's method is the risk v reward. 1:1 will not be profitable in the long run. Regarding this being the slowest month, the last two months have been far from trending on higher timeframes and was very profitable. As long as gbpjpy retails a high degree of liquidity and volume things should play out nicely.
  • #1,369
  • Jul 27, 2009 7:42pm Jul 27, 2009 7:42pm
Quoting nubchai
Ace,

No problem. Here is what I saw. I highlighted the bar with a yellow vertical bar. What I saw was the price begin to retreat after several bounces against R1. Trix was arcing down. Relative strength showed GBP crossing down below JPY which indicates a short trend...although this can be short term, Williams was also starting to arc down. After reviewing this I closed my long trade. I must admit that my overall profit for the day was pretty good at that point and that was also a factor.

Sandy
Hi Nubchai,

What indicator are u using for Realtive Strength GBP/JPY in your chart ? The one in the middle with Yellow and Green line.

Cheers
Garfield
Trading is SIMPLE not EASY.
  • #1,370
  • Jul 27, 2009 7:46pm Jul 27, 2009 7:46pm
Here we go again, the pattern looks just like last week now =(
  • #1,371
  • Jul 27, 2009 8:13pm Jul 27, 2009 8:13pm
Quoting garfield75
Hi Nubchai,

What indicator are u using for Realtive Strength GBP/JPY in your chart ? The one in the middle with Yellow and Green line.

Cheers
Garfield
Hi Garfield. I use the RS indicators and like them a lot. I can't remember where I found them. They're attached for you and anyone else who might like them. I apologize for not zipping or archiving but my archiving tool doesn't seem to be working.

For EU just open the Eur indicator and format it the way you'd like it. Then drag the USD indicator on top of the EUR and it will overlay. You can then format the second indicator the way you want it.

Sandy

P.S. I have to upload 1 more to complete the set. Please see my next post.
Attached File(s)
File Type: ex4 RS_GROUP_AUD V1.2.ex4   5 KB | 469 downloads
File Type: ex4 RS_GROUP_CAD V1.2.ex4   5 KB | 463 downloads
File Type: ex4 RS_GROUP_CHF V1.2.ex4   5 KB | 450 downloads
File Type: ex4 RS_GROUP_EUR V1.2.ex4   5 KB | 487 downloads
File Type: ex4 RS_GROUP_GBP V1.2.ex4   5 KB | 517 downloads
File Type: ex4 RS_GROUP_JPY V1.2.ex4   5 KB | 497 downloads
File Type: ex4 RS_GROUP_NZD V1.2.ex4   5 KB | 438 downloads
  • #1,372
  • Jul 27, 2009 8:14pm Jul 27, 2009 8:14pm
And here is the last Relative strength indicator for the USD.

Sandy
Attached File(s)
File Type: ex4 RS_GROUP_USD V1.2.ex4   5 KB | 519 downloads
  • #1,373
  • Jul 27, 2009 8:25pm Jul 27, 2009 8:25pm
Quoting 11andy11
Nubchai, I am not telling you what to do, all I am saying is the way your trading it really has very little to do with the original system. Your using an indicator based breakout and when they tell you momentum is dying you exit the trade. I traded the master candle break last night on gbpjpy and when the move slowed down I exited my position for some nice profits. I basically got in long about the time my order got filled using Aces system. I think the intergral part of Ace's method is the risk v reward. 1:1 will not be profitable in the long run....
Andy,

I want to make sure I understand one point you made. Did you trade the breakout last night using Ace's set up. And then when momentum slowed you exited? If so it sounds like we're doing the same thing. But maybe I'm misunderstanding your point there.

I don't want to sidetrack Ace's thread. But I do use his set up which almost always puts you in the money. And I have traded this through TP2- once I think it was. But PA and other elements today just made me feel the long was not going to keep going.

Sandy
  • #1,374
  • Jul 27, 2009 8:38pm Jul 27, 2009 8:38pm
no I traded a master candle pattern that triggered an entry long right about the same entry price as Ace's system. Essentially I doubled down but my entry was based on an entirely different system and I exited for profit slightly before the double top. My position with entry based on Ace's system is still open.
  • #1,375
  • Jul 27, 2009 9:06pm Jul 27, 2009 9:06pm
Quoting GenTarkin
Here we go again, the pattern looks just like last week now =(
The pair, GJ seem hanging around 135.48, it would back to BE any time.
  • #1,376
  • Jul 27, 2009 9:06pm Jul 27, 2009 9:06pm
Quoting 11andy11
no I traded a master candle pattern that triggered an entry long right about the same entry price as Ace's system. Essentially I doubled down but my entry was based on an entirely different system and I exited for profit slightly before the double top. My position with entry based on Ace's system is still open.
O.k. I see. Separate systems. O.k. thanks.

Sandy
  • #1,377
  • Jul 27, 2009 9:46pm Jul 27, 2009 9:46pm
Timeframes and the information that a candle produces on them becomes more significant as you move up. By this I mean that a 4 hours candle holds more significant information than a 1 hours candle, daily more so than a 4 hours and far more than an hourly and so on. What this means for your areas of Support and Resistance is that on higher TFs you are more likely going to see stronger reactions to these areas.

When you are trading a weekly setup such as this method, the weekly part is your goal, you want to hold on for as long as possible for if the market continues to rally you will still be there. You are taking your orders based off a 4 hour chart. What this means is simple, you should not be looking at areas of S/R on anything less than a 4 hour chart. Ideally you would be looking at your weekly and daily areas as a minimum as these are the areas that the big players look at.

Very few big wig traders care about hourly, minute S/Rs because they are noise. The areas they watch with great care and diligence are the dailys at minimum and the weeklys. These areas offer the strongest battle and in most cases you will see immediatly how strong it will be. PA bars off these areas hold water, they tend to be the points of major swings where the greatest rewards are held, and usually are the targets for taking profits and entering new orders.

So for new traders, once you are in your trade based on a 4 hourly candle, walk away. There is NO reason to monitor your trade on a TF less than 4 hours so once you are in, take a 4 hour break at minimum. Set some alarms at these higher points (S/R) that will tell you when you are nearing them. By walking away you remove the emotional attachment of the trade, you are accepting that your trade is now active and your worst case scenario is being stopped out.

Once you can do this then you can trade. I set my trades and walk away for most of the day, it is why I still have a day job (im self employeed and wouldnt have it any other way).

The other thing you can do to remove yourself from an emotional attachment is take some set profit at a point where it leaves the rest of your trade as BE without moving your SL (gives you more room to move for the same outcome). By doing so you can move forward to you next trade and forget about the previous one/s.

A small exercise to do it to look back on history and point out the start of rallys, look for setups that match yours and see how they would fair if you just setup and traded from a higher timeframe. The other side is to measure how far that trade would have gone. History is stored with examples of trades that if held can yield far greater rewards with less stress. Joel Rensink is a great example and on this thread he posted under the alias 'therealthing'.

Day trading does not have to be about trading for 9 hours in front of your screen, it is about taking note of areas that are going to provide the strongest barrier and being ready to execute trades when PA gives you the confirm. Holding your trades for longer will teach you more about yourself than taking minor pips here and there, I know because in the past 6 months I have enjoyed greater success (and even I am no angel to the rules, but they are tough to swallow and will take most traders years to fully master) by allowing trades to mature well beyond a 1:1 or even 4:1 ratio. On a 4 hourly candle the risk may be higher, but in most cases the signals you get are stronger, especially against those of lower TFs.

Im not expecting many of you to understand or follow what I have written, like I said take it or leave it. Trading allows one to make there own descisions, what I have mentioned above is what I have learnt from people who have been in this game for more than a decade, meaning that they have worn the scars of booms and bust and are still here.

Being able to mentally move away from a trade to give it time may mean in some cases giving up a few hundred pips, to outline this I mention a few weeks back that I had trades that where at one stage up 1600 pips. We hit a weekly support zone and after PA confirmed that area was going to hold I took close to 900pips. Sure I gave up 700 pips, but had I traded the hourly or something like that I would probably have taken my trade off well before 400 (i remember coming home and seeing 400+ pips and thinking wow, I went to bed and woke up with 700+ staring at me). The end result was still absolutly great and far more than I would have taken before learning a little bit more about the above.

I hope this helps some people.

Razor
  • #1,378
  • Jul 27, 2009 9:51pm Jul 27, 2009 9:51pm
Consolidation, gbp has some major news coming. Should give it a push.
  • #1,379
  • Jul 27, 2009 9:54pm Jul 27, 2009 9:54pm
Good info!!

Quoting Razor_trader
Timeframes and the information that a candle produces on them becomes more significant as you move up. By this I mean that a 4 hours candle holds more significant information than a 1 hours candle, daily more so than a 4 hours and far more than an hourly and so on. What this means for your areas of Support and Resistance is that on higher TFs you are more likely going to see stronger reactions to these areas.

When you are trading a weekly setup such as this method, the weekly part is your goal, you want to hold on for as long as possible for...
  • #1,380
  • Jul 27, 2009 11:03pm Jul 27, 2009 11:03pm
Quoting Ace284
O yeah, keep in mind that its BOX high and low. Not candle high and low.
You lost me. I thought we box the candle high and low. Please explain the difference between the box high and low versus the candle high and low.

Thanks,
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