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Support and Resistance Trading Simplified

  • #81
  • Mar 26, 2010 12:25pm Mar 26, 2010 12:25pm
Domino,

Regarding your reply :


1) Failed lower high is a wave definition of price not being able to trade above the last high I will attach a chart in a bit. all these yellow lines are failed lower highs.. because the fail to trade or break the last high
===> it's okay for that


2) take the break as it occurs as price breaks all the orders are triggered if you do not want to get in after orderclusters begin to trigger because the movement can be quite fast and you will get a bad average trade you can also draw these by hand and attach them to extremes on wicks if you wish .. but maybe what your worried about is taking a trade where the break doesnt stick.. and close as a break.. but price must create a high then break for the trade to occur and completely switch direction which isnt a small thing so no worries.
===> I should take the break as it occurs, I mean no need to wait the price close.


3) I do not understand this question but I will speculate what you mean is where do you put your entry limit order if your taking the close of the breakout bar? well it is worse if you take the breakout bar because your getting in after the order clusters are triggered youll get a bad price and will suffer a larger risk you wanna take the break limit is at the break you align with the order clusters to help price move. stop is at the high also to help price move.
===> Perfect, I have to put my entry trigger 1 pip + spread above/below the close price or high/low using a line chart and not at the bar breakout, is that right ?


Last question for putting my stop loss : For example with a buy order, should I put my stop loss at LOW of the last wave less 1 pip less spread ?


Thanks a lot,

  • #82
  • Mar 26, 2010 12:40pm Mar 26, 2010 12:40pm
Quoting Angel65
Domino,

Regarding your reply :


1) Failed lower high is a wave definition of price not being able to trade above the last high I will attach a chart in a bit. all these yellow lines are failed lower highs.. because the fail to trade or break the last high
===> it's okay for that


2) [i]take the break as it occurs as price breaks all the orders are triggered if you do not want to get in after orderclusters begin to trigger because the movement can be quite fast and you will get a bad average trade you can also draw these by...
yes

Quote
Last question for putting my stop loss : For example with a buy order, should I put my stop loss at LOW of the last wave less 1 pip less spread ?


Thanks a lot,


yeah
  • #83
  • Edited 12:57pm Mar 26, 2010 12:42pm | Edited 12:57pm
we are talking about true orderflow in another thread also not mine but in an effort not to type more im gonna post this about central market microstructure
http://www.forexfactory.com/showpost...postcount=1251

and another about institutional order books
http://www.forexfactory.com/showpost...postcount=1256

price discovery and market orders and limit order flow.
http://www.forexfactory.com/showpost...postcount=1258
  • #84
  • Mar 26, 2010 1:25pm Mar 26, 2010 1:25pm
btw please dont go out and start buying or selling every break because we havent covered enough to understand the large imbalance places yet this is work in progress..
  • #85
  • Mar 26, 2010 2:37pm Mar 26, 2010 2:37pm
Quote
Domino quoted : btw please dont go out and start buying or selling every break because we havent covered enough to understand the large imbalance places yet this is work in progress..
It's true that we are only at the first stage of our trip.................but before doing my homework during the weekend by studying all the material you have been giving us so kindly, let me ask you some more questions :


1) Did you avoid to trade during big news release because of the price spike ?
2) How many currency pairs do you follow at the same time, just majors ?
3) Do you advice me to ONLY start trading 4 hour line chart and not 1 hour ?
4) As a breakout system, do you use STOP LIMIT order for your entry orders ?
5) Regarding a safe position sizing ratio, does a 0.5% risk for each trade make sense for you ?


Okay now, I stop to bother you

Merci beaucoup,

Cheers

  • #86
  • Mar 26, 2010 2:56pm Mar 26, 2010 2:56pm
Quoting Angel65
It's true that we are only at the first stage of our trip.................but before doing my homework during the weekend by studying all the material you have been giving us so kindly, let me ask you some more questions :


1) Did you avoid to trade during big news release because of the price spike ?
news its best to know what news is coming out most is BS and you never know how it will be taken but you will no when the spread widens and the order flow changes.. so unless its news that is Extremely important.. then continue to trade the flow it will tell you.

Quote
2) How many currency pairs do you follow at the same time, just majors ?
I run a trading firm.. we do not train for money and we do not accept outside capital I have 4 traders that work with me.. I dont like to say for me cause really they could just leave and make there own money lol.. but we trade everything from treasury bonds to commodities to spot FX. We talk to each other 24/7 and yell out things to watch but its hard to say at any one time what we are viewing.
Quote
3) Do you advice me to ONLY start trading 4 hour line chart and not 1 hour ?
Id advise trading something that matches your patience level.. and the spread and cost on the item your trading.. gbp/jpy id stay with a higher frame cause of cost eur/usd you could move down.. generally watch a faster time frame to find a change in the flow and exit. like enter on a 3hour exit on the fail of the 1hour
Quote
4) As a breakout system, do you use STOP LIMIT order for your entry orders ?
no not really depends if ive had time to set up limit sometimes ill be late and watch it as its breaking and scramble to put on an order.. and I hate that... with a passion if you can do your pre-market analysis and then do limit based trades.
Quote
5) Regarding a safe position sizing ratio, does a 0.5% risk for each trade make sense for you ?
honestly its what your comfortable with and it will vary on how much your trading if you have 5M dollars does risking 50K seem ok? if 50k seems large well it will impact your psych and you shouldnt do it.. and thats 1%.. if you have a 100dollar accoutn does a 1$ loss feel big? well it should lol but no.. you will be more comfortable but hold down the risk on the initial entrance you risk will vary as you help the flow.. because you are buying or selling as it continues to move.. Ive amped up 20:1 before selling breakouts that just kept breaking out.. and had one trade up ove 50% of total account. but it will depend on your psych and I can advise what that will be.

Quote
Okay now, I stop to bother you

Merci beaucoup,

Cheers


edit: lol tu parle le francias?
bienvenue
lol not good at the spelling.. im bad at spelling in japanese to lol

o-a-no-shi-to-wa the world will never know how thats actually spell.. well maybe the world but not me
  • #87
  • Mar 27, 2010 4:12am Mar 27, 2010 4:12am
Bonjour Domino,

Quote
edit: lol tu parle le francias?
bienvenue http://cdn.forexfactory.com/images/s.../yim/happy.gif
lol not good at the spelling........
hey, it's not bad at all but if I may.....it would be better : c'est à mourir de rire, tu parles/parles-tu le Français ?


Quote
o-a-no-shi-to-wa the world will never know how thats actually spell.. well maybe the world but not me
Not good at all at the spelling in Japanese too lol

Thanks

  • #88
  • Mar 27, 2010 4:21am Mar 27, 2010 4:21am
Do we really need yet another thread on S/R? How can you simplify it, its pretty simple to understand.
Economists have forecast 9 out of the last 5 recessions
  • #89
  • Mar 27, 2010 4:35am Mar 27, 2010 4:35am
Domino,

Back to trading now,


Breakout is your first wave pattern, do you trade other wave patterns like Pullback formation ?
I mean : we enter long at a 50% retrace of a leg that has broken the previous waves high and we enter short at a 50% retrace of a leg that has broken the previous waves low.


Quote
btw please dont go out and start buying or selling every break because we havent covered enough to understand the large imbalance places yet this is work in progress..
By imbalance places, do you mean congestion/consolidation clusters or accumulation/distribution zones ?


merci beaucoup,

best regards

Angel
  • #90
  • Mar 27, 2010 11:40am Mar 27, 2010 11:40am
Quoting Angel65
Domino,

Back to trading now,


Breakout is your first wave pattern, do you trade other wave patterns like Pullback formation ?
I mean : we enter long at a 50% retrace of a leg that has broken the previous waves high and we enter short at a 50% retrace of a leg that has broken the previous waves low.
well breakout traders and orderflow traders are much in the same one just doesnt understand exactly why I guess.

sure you can youll just need to make sure its at a S&R zone watch the orderbook and wait for the break.

Quote
By imbalance places, do you mean congestion/consolidation clusters or accumulation/distribution zones ?
merci beaucoup,

best regards

Angel
areas of imbalance is where the markets supply and demand forces are shifting. for example in a sell off the main orderflow is short..so if price is retracing and creating many candles versus a few you are not with the imbalance as it retraces up and pushes against major s&R people know it will go short they look at what would classify as order flow moving back in the direction at this area.. and they align there orders there these pockets of cluster are going to be much more dense than the breakouts in the retracement.. these are areas of imbalance not all breakout areas carry high imbalance and are useless to trade unless your maybe a scalper with a low spread but even then I think the costs are to high. but these areas where massive orders are building up will be triggered and will run price into new small pockets of clusters as price was trying to retrace..
  • #91
  • Mar 27, 2010 12:07pm Mar 27, 2010 12:07pm
i am agree with domino so far .he is a real value of this trading comunity.thanks to him.well done domino
but he said j16 is not price action thats where i am not agree with him.
i am not a j16 fan.
i have my own methood of trading.and i am successfull.
i will call j16 methood is a price action trading.eventhough i do take complete opposite side of trading from j16 .but there apporoch of trading market is price action methood.they just dont trade the candle stick.they trade with support resistant and some other factor as well.and i know they trade higher time frames.
diffrent people use diffrent type of stratagy with price.may be they will include indicator may be not.but as long as they understand what current price is telling them what is heppening and most propbably will heppen next that is price action trading for me.it does not gurantee it will happen next.we just guess and trade them.if future orders comes in our direction it will heppen if not it will go other way.

i am a scalper. i do trade swing trade sometimes .i trade nasdaq stock and futures .i trade forex as well.
my understanding of price action.

order flow creates price action
price action is blue print of order flow.orders flow moves the market.
it could be fundamental or technical reason.
price would not move unless orderflow comes in the market.

with the support resistant ,what is the curent market psychology or what the price is telling u and trade acoordingly with this action. that is price action trading.
or easily explain what you feel at the moment or what you are watching through to the chart and you trade them that is price action trading.(what market is telling u)

candle stick,bar ,renko,helkinashi or line chart they are just grapic of past movement.
they are just grapic they are not price action trading.
but they represent the past data.
they does creates some patterns and they repeat those patterns .we are trader we trades those patterns because we belive it will success again.we allso belive sometimes it will fail as well but overall we belive we will success thats why we trade those patterns.

there is certain way to play those patterns.you must have to know when to play or when not to play.thats when methood comes.

this is real trading talk.i read someone didnot like this sort of stuff.all the best to them who doesnot like this sort of think and i am sure they have to go long way before the success.

give a big thank to domino what he said so far.
suppy demand order flow price action this is what real trading is all about.learn those guys this will shorten ur learning curve.

hey domino
if any one belive or not but i belive u r trader.let them find their holly grail

that was my 2cent
all the best guys
sho
  • #92
  • Mar 27, 2010 12:57pm Mar 27, 2010 12:57pm
Quote
i am agree with domino so far .he is a real value of this trading comunity.thanks to him.well done dominohttp://cdn.forexfactory.com/images/s...m/thumbsup.gif
Bonsoir trade price,

I feel better to notice that I'm not alone trading a true live FX account, thank god !

A very big thank to domino for what he said so far and please, keep up your very good job !!

Merci de ton attention,

Happy weekend all

Angel
  • #93
  • Mar 27, 2010 2:15pm Mar 27, 2010 2:15pm
as far as the whole pin bar thing i was refering too was the m5 chart on post #74 where the lowest point was a pin bar triggering buys.

interestingly enough the pin bar im refering to did signal a good buy that was then rejected by support (now acting as resistance) signaling to lose the trade and resell (that is ofourse if you ended your sell to make the buy, alternativly you could have just held the longer term sell and caught the small buy up).
  • #94
  • Mar 27, 2010 3:22pm Mar 27, 2010 3:22pm
Quoting Ted1983
That's absolutely false.
So you are saying in order to succeed in trading, we don't seek out high probability trades ?
  • #95
  • Mar 28, 2010 12:30pm Mar 28, 2010 12:30pm
high probability searhing is a vast backseat to proper MM
  • #96
  • Mar 28, 2010 12:31pm Mar 28, 2010 12:31pm
Quoting domino
btw please dont go out and start buying or selling every break because we havent covered enough to understand the large imbalance places yet this is work in progress..
an we explore this more in your next set of charts?
  • #97
  • Mar 28, 2010 5:31pm Mar 28, 2010 5:31pm
Quoting perfectgrim
as far as the whole pin bar thing i was refering too was the m5 chart on post #74 where the lowest point was a pin bar triggering buys.

interestingly enough the pin bar im refering to did signal a good buy that was then rejected by support (now acting as resistance) signaling to lose the trade and resell (that is ofourse if you ended your sell to make the buy, alternativly you could have just held the longer term sell and caught the small buy up).
I see what you mean but the pin forms against the orderflow and since we are trading the orderflow we dont stop and reverse stop and reverse .. we simply read the order flow and help the flow when we realize order flow is triggering and help it. stack our orders with the flow.. the difference between trading the pin bar and trading the orderflow is we are trading the rules of the market the market microstructure..
  • #98
  • Mar 28, 2010 5:32pm Mar 28, 2010 5:32pm
Quoting FX Compass
So you are saying in order to succeed in trading, we don't seek out high probability trades ?
Well I dont think well this has a high probability of doing X .. I just realize it is doing X and trade it.
  • #99
  • Mar 28, 2010 5:32pm Mar 28, 2010 5:32pm
Quoting perfectgrim
an we explore this more in your next set of charts?
yeah Ill try to
  • #100
  • Mar 28, 2010 8:36pm Mar 28, 2010 8:36pm
Resistance zone 6F break on 1hour.

Order flow Idea watching resistance zone with 6 touches switched from support to resistance first touch with 6-7 order clusters below short break.
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