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Sonic R. System

  • #8,521
  • Dec 13, 2009 12:53pm Dec 13, 2009 12:53pm
Some questions based on Muhammad chart , post #8439 .
Price is zigzagging above and bellow the dragon. I will not say price is within a t....., but this 2 TL, a+b ,are making IMHO , a "problematic" structure of LH & HL.
I have marked 3 possible entries that could have become fake breakouts .
M. trade , marked on blue hit tp.
My questions :
1. What comes 1st ? Big picture PA or dragon setups ?
2. Are we supposed to take those trades (1, 2, 3 + Muhammad's trade) if we take into consideration the PA structure that is making LH & HL .
3 .The trade on blue was triggered on news time (Retail Sales) ...
Do you recommend to trade news ? price can easilly go up/down 50-100 pips in seconds...
Tks for your comments
David
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  • #8,522
  • Edited 2:13pm Dec 13, 2009 2:00pm | Edited 2:13pm
Quoting david4u
Some questions based on Muhammad chart , post #8439
Your trade # 1: I would not have entered short there, as your EP is nearly 30 pips below the lower band of the dragon. A better short would have been the one you didn't mark. I show it on the pic below with a short entry at 1.6270.

Your trade #2: Even me, trading FXCM micro with tiny spreads, would not have been stopped into that trade. I show that the low on the set up bar is 1.62603, so with a 1.8 pip spread on the GU, I enter two pips below, so my sell stop would have been 1.62583. My broker shows a low of what you are identifying as a triggered bar of 1.62596, which is less than 1 pip below the set up bar low. Therefore, unless you were careless with your orders, or you were trading with a really unscrupulous broker, you should not have been stopped into that trade.

Your trade #3: Same as #1, you are entering at a point extended from the dragon.

News: A lot of SOnic entries come at news time. That is why we have a SL. Also, you need to know how your broker plays with the spreads at news time. Some brokers widen the spread to 20 pips or more, and thus your order will get filled even if in the real world, the news didn't even come out yet. So, I say, trade at news time if there is a Sonic set up, but make sure you know your broker so that you can adjust your orders so you do not get suckered in.

Lastly, I strongly recommend that you read and study this thread. You will learn far more discovering some of these answers for yourself.





EDIT: I changed the picture to show that entry on the GU short by Muhammad would have been 12 pips below the dragon rather than 11, and also, my entry point on trade #2 would have been 1.62583, not 1.62593 as I mistyped. As I said, on GU trades, my broker's spread is 1.8 pips (average) and so I usually enter about two pips below the low of the set up bar.
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  • #8,523
  • Dec 13, 2009 2:25pm Dec 13, 2009 2:25pm
Quoting david4u
Some questions based on Muhammad chart , post #8439
I went back to my trades this week. Here is a long GU that you didn't mention on your chart that I took for +50 TP1 and BE on the second half. What struck me when I saw this was that your trade #3 had an EP that was at my trades TP1. You see, you want to enter when price is above but close to the dragon for longs, and you wan tto enter when price is below but close to the dragon for shorts.

The only reason I sat through that massive pullback was that I was asleep. If I had been at my computer, this would have been a +0 trade instead of a +25 trade.
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  • #8,524
  • Dec 13, 2009 2:58pm Dec 13, 2009 2:58pm
DD Thanks for your answers .You said many times , you don't look at :
H4 , M5 , pin bars , Hang man (to mention some )
What about the 2 TL that M. draw in his chart ? Are those a concern OR If you see a Sonic setup you go for it .Don't you care about this structure that makes LH & LL ?
Some may say :"Do not trade till the price break one of these borders ".
Pls look at Sonic post #8416 .You can see an almost identical structure and he wrote :
"A see a tight ranging between boundaires and series of significant higher low..
Do not take many trade unnecceary"
How do you interpret that ? I may understand IMHO , don't take a trade if the price comes close to any of these TL ..wait for the price to clear that.
Tks
David
  • #8,525
  • Dec 13, 2009 3:25pm Dec 13, 2009 3:25pm
Quoting david4u
Some questions based on Muhammad chart , post #8439 .
[...]
Tks for your comments
David
I won't say anything different from ddaytrader, but your 1st marked
trade would have been re-entry.

I actually took long when your 1st marked trade went north, and my
TP was at the nearest resistance. As soon as TP1 was hit I moved SL to BE,
and the Price hit my SL. I was very cautious, because of the choppy Price Action.
You could do the same with your 1st marked trade, if you entered
not at the re-entry, but at the entry.
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cut losses short, let profits run.
  • #8,526
  • Edited 3:42pm Dec 13, 2009 3:32pm | Edited 3:42pm
Quoting david4u
DD Thanks for your answers .You said many times , you don't look at :
H4 , M5 , pin bars , Hang man (to mention some )
[...]
Pls look at Sonic post #8416 .You can see an almost identical structure and he wrote :
"A see a tight ranging between boundaires and series of significant higher low..
Do not take many trade unnecceary"
How do you interpret that ?[...]
Tks
David
1. Answer to your first statement. Ddaytrader looks for S&R on higher timeframes
and does not trade candle patterns, just price action.

2. Answer to your second question. SonicR is a trend following system.
Sonic meant that you do not have to force setups if the price is ranging.
Here is how sonic responded in one of the earliest posts.

Quoting Yaad
Looks good when the market is trending, but in a ranging market you will get murdered even if you are entering a few pips above/below the set up bar.
[...]
Quoting sonicdeejay
Absolutely agree on this one...I am glad that u asked.here are the solutions that I incorporated, to avoid possible whipsaw.

1. Trading Time Periods (that kill alot of whipsaw blunders)
2. Angle of the slope (Long 1 to 2 O clock, Short 4 to 5 O clock, avoid 3 O clock Ranging)
3. Muliple TF confirmations (By checking in 15M and 1H TF (for 5M TF trade) and 1H, D1H TF (for 15M TF trade) give u an edge on the sense of direction of Overall Trend)...
4. Not chasing after the trade. (that beats alot of single bar fake breakout, created by Big Boys)

Hope these helps. http://cdn.forexfactory.com/images/s...m/thumbsup.gif

Sonic
cut losses short, let profits run.
  • #8,527
  • Dec 13, 2009 4:55pm Dec 13, 2009 4:55pm
Quoting Domas4
1. Answer to your first statement. Ddaytrader looks for S&R on higher timeframes
and does not trade candle patterns, just price action.

2. Answer to your second question. SonicR is a trend following system.
Sonic meant that you do not have to force setups if the price is ranging.
I couldn't have said it better myself. I would only like to add a couple af things to make clear what I meant about the H4, M5, etc.

Quoting david4u
DD Thanks for your answers .You said many times , you don't look at :
H4 , M5 , pin bars , Hang man (to mention some )
I never said do not look at H4. I look at H4 to identify S/R. I said do not chase phantom trades on H4 like some others here do.

I said do not look at 5 minute. That may change of volatility like last year comes back. But right now, things are fairly tame, so 5 minute will tend to be whipsaw.

Candlestick patterns are random. They exist based upon chart time frame. Use them at your own risk. Just do not be surprised when you trade based upon them and the trade doesn;t work the way you expected it too.

Quoting david4u
What about the 2 TL that M. draw in his chart ? Are those a concern OR If you see a Sonic setup you go for it .Don't you care about this structure that makes LH & LL ?
First of all, why ask me about trend lines that were drawn by another trader? I love Muhammad. I thik he is a very good person and I think he is an excellent trader. But I don't care about his trendlines any more than he cares about my fib expansion tool. He has something that works for him, and I have something that works for me. You have to Ask Muhammad how he uses them.

Secondly, those "structures" do not make the L & LL, price does that through the mechanism of the market. The L and LL must exist before those "structures" can be drawn. In the same way, my fib expansions cannot be calculated before price has made a L-H-HL or a H-L-LH. Everything we do must be based upon what price has already done. We then read what it has done for clues as to what it is most likely to do next.

Quoting david4u
Some may say :"Do not trade till the price break one of these borders ".Pls look at Sonic post #8416 .You can see an almost identical structure and he wrote :
"A see a tight ranging between boundaires and series of significant higher low..
Do not take many trade unnecceary"
How do you interpret that ? I may understand IMHO , don't take a trade if the price comes close to any of these TL ..wait for the price to clear that.
Tks
David
I would interpret that as meaning one should wait for a clear classic SonicR on one side of the dragon or the other. As there were a series of HLs, one would expect that the break might come to the upside. However, we also know that based on higher TF S/R, the best trades should be to the short side. So, I took the long, I moved my stop loss quickly to break even as the higher time frames were bearish. I was stopped at break even as price collapsed in spectacular fashion.
  • #8,528
  • Dec 13, 2009 5:54pm Dec 13, 2009 5:54pm
Basic question, where would a good Sonicer enter given this situation? Price has not been able to break the Pivot 2 times even though it still created a LL. From this picture I would possibly enter below the Pivot if price breaks the pivot point which would create a LL. In these types of situations would it be to late to enter? What would you recommend we do when we see this set up?
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  • #8,529
  • Dec 13, 2009 6:16pm Dec 13, 2009 6:16pm
Quoting Pipdance
Basic question, where would a good Sonicer enter given this situation? Price has not been able to break the Pivot 2 times even though it still created a LL. From this picture I would possibly enter below the Pivot if price breaks the pivot point which would create a LL. In these types of situations would it be to late to enter? What would you recommend we do when we see this set up?
First, may I suggest we stick to the accepted Sonic shorthand and use blue lines for EP and green lines for TP's and red lines for SL's. I do not want to have to think about what I'm looking at when I open a chart.

Second, sometimes you need to flush all the artificial stuff and indicators away and get the naked perspective. I'd do nothing so long as price is between the two solid red lines, and if I did go short, I'd be watching carefully for what happens at the dotted red line.

I'd rather wait for a clear SonicR, and if I miss a move, so be it. This is like being a doctor - your account is your patient. You want to make the patient healthy (in our case, by growing capital). Like a doctor, we must first pledge "to do no harm." That is, do not take unnecessary risks associated with unclear price action. Be patient, and wait for the right medicine.
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  • #8,530
  • Dec 13, 2009 6:22pm Dec 13, 2009 6:22pm
Can do

Thank you DDT

Quoting ddaytrader
First, may I suggest we stick to the accepted Sonic shorthand and use blue lines for EP and green lines for TP's and red lines for SL's. I do not want to have to think about what I'm looking at when I open a chart.

Second, sometimes you need to flush all the artificial stuff and indicators away and get the naked perspective. I'd do nothing so long as price is between the two solid red lines, and if I did go short, I'd be watching carefully for what happens at the dotted red line.

I'd rather wait for a clear SonicR, and if I miss a move, so be...
  • #8,531
  • Dec 13, 2009 6:36pm Dec 13, 2009 6:36pm
Quoting Pipdance
Basic question, where would a good Sonicer enter given this situation? [....]
Also, after you see a potential setup in M15, take a look at where the
price is S&R wise. Is it at support, or is it at resistance?

GBP/JPY daily:
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cut losses short, let profits run.
  • #8,532
  • Dec 13, 2009 7:00pm Dec 13, 2009 7:00pm
Quoting ddaytrader
sometimes you need to flush all the artificial stuff and indicators away and get the naked perspective. I'd do nothing so long as price is between the two solid red lines, and if I did go short, I'd be watching carefully for what happens at the dotted red line.
Quoting ddaytrader
I'd rather wait for a clear SonicR, and if I miss a move, so be it. This is like being a doctor - your account is your patient. You want to make the patient healthy (in our case, by growing capital). Like a doctor, we must first pledge "to do no harm." That is, do not take unnecessary risks associated with unclear price action. Be patient, and wait for the right medicine.
Quoting Domas4
Also, after you see a potential setup in M15, take a look at where the price is S&R wise. Is it at support, or is it at resistance?
Are any of you new Sonikers starting to get the idea that there may be something to trading support & resistance?

Now, after this bounce off that dotted red line, if price comes back and breaks that level, then it is probably "Look out below!" time.
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  • #8,533
  • Dec 13, 2009 7:08pm Dec 13, 2009 7:08pm
Quoting ddaytrader
Are any of you new Sonikers starting to get the idea that there may be something to trading support & resistance?

Now, after this bounce off that dotted red line, if price comes back and breaks that level, then it is probably "Look out below!" time.

GJ is moving too fast for me to get my lines drawn and take screenshots.
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  • #8,534
  • Dec 13, 2009 7:31pm Dec 13, 2009 7:31pm
Concepts to take away:

1. DDT drew a range that needed to be broken. This would be the LL. If it is ranging wait for the break.
2. Watch out for resistance that is close. Get out if price does not break this level with strong movement and reverses.
3. Check to see where Daily or H4 Resistance or Support is sitting and which the price is near. Wait for price to tell you if it will break or respect this level.
4. If all lines up, enter on SonicR.

Do I need to change any of my thinking so far?
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  • #8,535
  • Edited 8:21pm Dec 13, 2009 7:34pm | Edited 8:21pm
Quoting ddaytrader
GJ is moving too fast for me to get my lines drawn and take screenshots.
Look how the 62% FE aligns with prior S&R. I would not be surprised if there is a pullback to that area before a big run down. A run down to the 162% FE level from there would be a nice 100+ pips.

Edit: Wrong again! I think I will just be silent for the whole week! This is not something I trade due to the outrageous spread.....and will never trade again.
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  • #8,536
  • Dec 13, 2009 8:19pm Dec 13, 2009 8:19pm
Quoting ddaytrader
Are any of you new Sonikers starting to get the idea that there may be something to trading support & resistance?

Now, after this bounce off that dotted red line, if price comes back and breaks that level, then it is probably "Look out below!" time.

Look out below!

Here is my take on the H4 GJ (keep in mind I do not typically trade the GJ, but a break below that blue line will likely open the door to about a 400 pip drop.
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  • #8,537
  • Dec 13, 2009 8:32pm Dec 13, 2009 8:32pm
I'm done.

Concluded +78 pips so far on GJ.

I'll go to sleep now as I have a lot to do tomorrow early.

Good trade to u all.



C
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  • #8,538
  • Dec 13, 2009 9:40pm Dec 13, 2009 9:40pm
Quoting ddaytrader
Look out below!

Here is my take on the H4 GJ (keep in mind I do not typically trade the GJ, but a break below that blue line will likely open the door to about a 400 pip drop.
Is anyone else watching the show the GJ is putting on for us tonight?

This is textbook S/R lesson.
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  • #8,539
  • Dec 13, 2009 9:49pm Dec 13, 2009 9:49pm
Quoting ddaytrader
Is anyone else watching the show the GJ is putting on for us tonight?

This is textbook S/R lesson.
If you folks don't find this exciting, then nothing will ... GJ is at the point of decision.
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  • #8,540
  • Dec 13, 2009 10:00pm Dec 13, 2009 10:00pm
GJ nailed support and what do you know ... found a bit of buying right there, which is what one expects to find at a support level. The question now is this: Is the buying interest enough to turn the trend from down to up, or if this just a pause before a break of that support and a drop to test lower levels of support?
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