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  • #6,561
  • May 19, 2010 4:37am May 19, 2010 4:37am
I was supposed to post a daily chart of EUR/AUD but was called for a meeting. I placed an shorty entry order at 1.4420 with SL of just above the round number 1.4450. When I got back it just got hit. Anyone here looking at shorting the pair?
  • #6,562
  • May 19, 2010 4:43am May 19, 2010 4:43am
Quoting piyeree
I was supposed to post a daily chart of EUR/AUD but was called for a meeting. I placed an shorty entry order at 1.4420 with SL of just above the round number 1.4450. When I got back it just got hit. Anyone here looking at shorting the pair?
interesting pair in the moment. It has a lot of confluence. No matter how I draw my fibs, one fib definitely hits that level. Also there is an obvious S/R level. Now to the BUT. I don't like the PA here. It accelerated towards that S/R level. Could be that price breaches it.
Here I wanna see a reaction and then enter on lower time-frames. But that's just me.

Having said that, it can definitely work out.
  • #6,563
  • May 19, 2010 4:49am May 19, 2010 4:49am
Quoting Custos
interesting pair in the moment. It has a lot of confluence. No matter how I draw my fibs, one fib definitely hits that level. Also there is an obvious S/R level. Now to the BUT. I don't like the PA here. It accelerated towards that S/R level. Could be that price breaches it.
Here I wanna see a reaction and then enter on lower time-frames. But that's just me.

Having said that, it can definitely work out.
I agree on the speedy PA towards that S/R level - I like the PA to be speeding in the direction of the trend and the corrections/retraces to be slower... No point in risking against speedy PA - hence my limit order "constraint", if I cannot see the PA, it makes me uneasy for now...
  • #6,564
  • May 19, 2010 5:06am May 19, 2010 5:06am
Just looking at some levels and doing a bit of back testing

I base my entries on confluence of:
Fibo - 61, 50, 38
RN
S/R Level
TL
sometimes, depending I attempt a more aggressive entry other times, when in doubt, I will still stick with CTL

GJ
yesterday:
shows 1hr chart - you can clearly see the confluence of the Fibo's 61, RN (134.08) & S/R level - depending on your style I added the CTL too...

today:
shows 1hr chart - again confluence of the Fibo's 38, RN (132.0) & S/R level - depending on your style, on 15mins you can find the CTL too with slower PA...

Note: these charts are off a demo account - so it might differ from your life data, mine are pretty close;

Trade Safe
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  • #6,565
  • May 19, 2010 5:29am May 19, 2010 5:29am
Quoting Paulette
Just looking at some levels and doing a bit of back testing

I base my entries on confluence of:
Fibo - 61, 50, 38
RN
S/R Level
TL
sometimes, depending I attempt a more aggressive entry other times, when in doubt, I will still stick with CTL

GJ
yesterday:
shows 1hr chart - you can clearly see the confluence of the Fibo's 61, RN (134.08) & S/R level - depending on your style I added the CTL too......
looks good. Very good explanation. By the way, the gbp/jpy requires larger than usual stops. The volatility is just so damn high. Gbp/jpy is still a pair I have to master in terms of setting the right stop. So if anybody attempts trading gbp/jpy make sure you widen your stop.
  • #6,566
  • May 19, 2010 5:31am May 19, 2010 5:31am
Also I just got into a trade on eur/gbp. 50% fib, S/R level, ... but it already bounced off that level recently, thus probability is lower on that holding this time. Anyways, I give it a shot.
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  • #6,567
  • May 19, 2010 7:45am May 19, 2010 7:45am
Hola,

lets start a discussion on stop loss (SL) - something that I find a challenge too.

Firstly money management: never more than X% of account at any time in the market, if risk is off on trade 1, then may enter a 2nd trade OR will put 2 trades on but at 50% of the value of X%. (In my case X is either 2-3%, depends if it stands out like a sore thumb, 3%) Always cautions on over-exposure. (NM will give you a good lecture on over-exposure, he is the O-E Guardian!)

Nowadays I try to find the Confluences (TL, Fibo, S/R, RN) wait on the market to repel off and then just go with a dynamic SL placed on the last candle against the trend (see chart markings). Incidently this trade first time round would have stopped out, on take 2 it would pay.

TP1 = #pips in SL - once trade is at BE, I monitor the trade intermittently to adjust SL according to last S/R level (new lower high created since entered into trade);

Sometimes I wonder if a set stop of say 35-45pips paired with a Trailing SL of 100-150 should not be used, but I am still in limbo - back testing shows depending on trend strength you can hang around a lot longer in your trades this way... If you would go with the 45SL, it will give the market more flex - question to myself (as I type this): What would the impact be of giving the market a little more flexibility? Controlling it ain't all that profitable... (I'll ponder on this and let you know if I get a worth while answer)

Maybe for me it is just a growth curve, your perspectives please.

As always - trade safe
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  • #6,568
  • May 19, 2010 7:57am May 19, 2010 7:57am
Quoting Custos
Attached is the m5 eur/gbp chart. Okay, first of all, you need to find a good level on higher time-frames. The m5 is just for refining the entry. The attached chart is just showing how I refine my entries. Now let's go to the orange rectangle area. It marks the last time price bounced at that area. The high of the bar testing the resistance from below is my entry level (blue dotted line). The red dotted line is the stop level, which I put a few pips above the last time price took a little bit of a breather (it formed a doji of some kind).
Now the...
Thanks for the explanation Custos, as always your posts are very informative!

I was looking back at the chart for the G/U trade I took yesterday and wanted to ask you about a touch trade entry. I haven't tried these yet so I wanted to get your opinion.

On the attached chart I have an arrow drawn at a point where several things came together. The 1.4500 RN, 61.8% retracement, Down Trend Line, prior Support turned Resistance. Is this the type of setup you look for? What would your Entry & SL be on that point if so?

BTW - I closed out this trade at 131 pips last nite just above the prior low.

Thanks as always,

pipnut
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Even a blind squirrel finds a nut sometime.
  • #6,569
  • May 19, 2010 8:01am May 19, 2010 8:01am
Quoting Paulette
Hola,

lets start a discussion on stop loss (SL) - something that I find a challenge too.

Firstly money management: never more than X% of account at any time in the market, if risk is off on trade 1, then may enter a 2nd trade OR will put 2 trades on but at 50% of the value of X%....
well, fixed things are never good. I have to say I do like trailing stops. But I trail them manually. In a downtrend above the highs and in an uptrend below the lows. That way I give it enough breathing room.
Now I am aslo still in the limbo for profit targets. My take for now is to take out half of my position at a certain target and let the rest run by trailing my stop. However, not totally sure yet about that, just psychologically if I cashed out some, I feel more at ease, than seeing the market turn all the way back and possibly stopping me out.
  • #6,570
  • May 19, 2010 8:02am May 19, 2010 8:02am
Quoting Custos
Attached is the m5 eur/gbp chart. Okay, first of all, you need to find a good level on higher time-frames. The m5 is just for refining the entry. The attached chart is just showing how I refine my entries. Now let's go to the orange rectangle area. It marks the last time price bounced at that area. The high of the bar testing the resistance from below is my entry level (blue dotted line). The red dotted line is the stop level, which I put a few pips above the last time price took a little bit of a breather (it formed a doji of some kind).
Now the...
Quoting Custos
Attached is the m5 eur/gbp chart. Okay, first of all, you need to find a good level on higher time-frames. The m5 is just for refining the entry. The attached chart is just showing how I refine my entries. Now let's go to the orange rectangle area. It marks the last time price bounced at that area. The high of the bar testing the resistance from below is my entry level (blue dotted line). The red dotted line is the stop level, which I put a few pips above the last time price took a little bit of a breather (it formed a doji of some kind).
Now the...
Great explanation Custos,
Many thanks for taking time and explaining on entry methodology. Now I have a few follow-up questions:
1-would you always use the 5M chart for your entries or can use a higher TF chart
2-Do you get entry in most of your trades via up-thrust bars …. I observed that upthrust bars happen so often and these bar would always stop me out of the trades however if you are able to use these bars for entry that’s great and I’ll work toward implementing.
3-From the 3 confluence levels would you prefer to place the SL above the fib #?
4-The tight SL methodology you use is prevalent actually better as it produces small loss as opposed to entering via Sell stop which produces a large stop loss in which case one would have to reduce the position size to meet the risk profile
5-If you get stopped out the I believe you would try to ride the horse again …. Would you give it one more shot or more?
6-With respect to my second entry using the Sell Stop … I was wondering that can I still enter the trade via Sell Limit order given the price is already at resistance level ?
7-You are correct about the fact that banks and other large trader would always use limit order and tight stop loss. Some may differ however I believe that the case most of the time.

By the way have you read about incorporating VSA in your trading approach mainly in trading the smaller TFs … I did a lot of reasrach and I feel that if er can incorporate this into the S/R trading that we are smiling(so to speak).

Heck …. I reached my last station …. I gotta run. Catch you all later.
  • #6,571
  • May 19, 2010 8:04am May 19, 2010 8:04am
Quoting Paulette
Hola,

lets start a discussion on stop loss (SL) - something that I find a challenge too...

As always - trade safe
I think it's best if you understand what price does at s/r first. S/R levels have various scenarios: they can bounce exactly, bend, flip, fake flip. I would say an exact bounce would be the least common one, and it seems like many here are trying for that scenario.
There are 100 ways you can plan your stop (can write a book on exit), but knowing the above can help you prepare entries for specific scenarios or find you may prefer scaling. Many traders I know will scale multiple pivots *with* the trend, and get out of the pivot flips against them. This gives small losses, small wins, big wins, medium losses; all with good accuracy, assuming your pivot identification isn't poor.
Anyways, just my thoughts...
  • #6,572
  • May 19, 2010 8:17am May 19, 2010 8:17am
Quoting pipnut
Thanks for the explanation Custos, as always your posts are very informative!

I was looking back at the chart for the G/U trade I took yesterday and wanted to ask you about a touch trade entry. I haven't tried these yet so I wanted to get your opinion.

On the attached chart I have an arrow drawn at a point where several things came together. The 1.4500 RN, 61.8% retracement, Down Trend Line, prior Support turned Resistance. Is this the type of setup you look for? What would your Entry & SL be on that point if so?

BTW - I closed out this trade...
I entered at the blue arrow. we already had 61.8% and S/R level and RN there.
Now to your entry with the trendline. That one I wouldn't have taken. And here is the reason. Price was bouncing around that 61.8% so many times already, I was thinking that this area will eventually breach. The market psychology behind that is that with each time price tries to breach the 61.8% and fails more and more orders get triggered. This means that on the next touch, there won't be a lot of orders left to push price down again. Now the more often it tries to breach that level, the less orders will hold it back and it is more likely to break through to the upside. I think the market was just waiting for some kind of news or something like that. But if price is sitting at a level, I am not trading it (I am not that advanced yet). haha

hope that answered your question
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  • #6,573
  • May 19, 2010 8:31am May 19, 2010 8:31am
1- It depends, for h1 and h4 setups I use m5 to m15. Anything above h4 I have to judge according to the situation
2- Yes, I only trade up-thrus bars... Thing is, don't take 2nd class levels, only the best of the best. Also if I see a bar being very very fast, I might cancel the order. I want the retrace to be slower than the impulse wave. (If you can't observe that due to work or sleep, you can still make profits. At least I do. My R:R is around 1:20 or higher for each trade. Meaning I can make 20 mistakes before it gets unprofitable for me. Never happened to me yet.
3- Well, I like to place it above a breather on the smaller time-frames, as described before. A kind of lower-timeframe S/R level.
4- Yeah, tight stop loss allows me to risk less percentage of my account and still increase my lot-size to a very high degree.
5- If I get stopped out I clear my charts from all lines and redraw my levels, and if I have legitimate reasons to believe that another level will hold I will enter at that level again. But I will not take revenge trades (at least most of the time, sometimes I will revenge trade, but that is very unprofitable)
6- You could have entered on smaller waves instead of the stop order. If I miss a trade on h4 for example, I will go down to h1 and look for a small retrace there, which allows me to still get on board.
Hm, yeah, the VSA - let's say I am not sure yet about this. It sometimes is correct and sometimes not. But I have to admit, I haven't tested it thoroughly.

Quoting MktScape
Great explanation Custos,
Many thanks for taking time and explaining on entry methodology. Now I have a few follow-up questions:
1-...
  • #6,574
  • May 19, 2010 8:32am May 19, 2010 8:32am
Quoting randomperson
I think it's best if you understand what price does at s/r first....
would be glad if you could post a chart with explanations to understand that better.

Thanks in advance.
  • #6,575
  • May 19, 2010 11:35am May 19, 2010 11:35am
[quote=Paulette;3737617]Hola,

Nowadays I try to find the Confluences (TL, Fib, S/R, RN) wait on the market to repel off and then just go with a dynamic SL placed on the last candle against the trend (see chart markings). Incidentally this trade first time round would have stopped out, on take 2 it would pay.

So looks like you would wait for the up-thrust bar to form first before deciding where to out the SL?

Sometimes I wonder if a set stop of say 35-45pips paired with a Trailing SL of 100-150 should not be used, but I am still in limbo - back testing shows depending on trend strength you can hang around a lot longer in your trades this way... If you would go with the 45SL, it will give the market more flex - question to myself (as I type this): What would the impact be of giving the market a little more flexibility? Controlling it ain't all that profitable... (I'll ponder on this and let you know if I get a worth while answer)

With respect to trailing the SL after trade goes in the intended direction. Once we close say half of the position after X pip then as per Hector’s approach SL should be trailed at logical swing highs/lows in a relatively shorter time frame. For H4 setup chart it would be H1 TF to trail the SL and if price goes beyond the last swing High/Low then the reminder of the position will be closed.


You must have read how Custos would enter the trades via up thrust/ Pin bars. I found it quite appealing and would practive doing it asap would most likely use the ForexTesting software I am planning to buy to cut the learning time short.

  • #6,576
  • May 19, 2010 12:14pm May 19, 2010 12:14pm
Quoting Custos
would be glad if you could post a chart with explanations to understand that better.

Thanks in advance.
No worries, as it has slowed down some here. The reason I posted the paragraph above is to show newer traders that sometimes being too mechanical will hurt your entries, even if your pivot is right. Sometimes you need to adapt, and screentime helps you figure out when is best. It really depends on the trader and their psych. deficiencies when trading cash.
I'm assuming you want examples of how price reacts around pivots. Here are some recent examples, all of which I did trade:

The eurgbp example shows how price reacted on a first touch of s/r, how it bent to our predicted TL, and then attempted to flip the s/r on the small time-frame, and was rejected a 2nd time by our predicted TL, thus faking the flip of the s/r.
The usdjpy example shows price blowing through R on high volatility, then coming back and re-testing R multiple times before finally breaking. R was never flipped.
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  • #6,577
  • May 19, 2010 12:29pm May 19, 2010 12:29pm
[quote=MktScape;3738595]
Quoting Paulette
Hola,
Quoting Paulette

So looks like you would wait for the up-thrust bar to form first before deciding where to out the SL?
Exactly, I like to watch the PA approach the "Area of Confluence" - if too fast, its an opportunity that I will pass by. I don't want the PA to rush onto these levels, it creates another element of risk. I found that most of the time when it does rush onto S/R, it will overshoot. Alla Hector, I allow the overshoot, will wait on the continuation of the trend, but not necessarily on the full formation of the B-P-C, see the breakout, wait for the pullback to touch and get in on the start of the continuation, i.e. I go to 15min and get in on the start of the C not wait on the full completion of the b-p-c formation - see attached chart, not best b-p-c (unfortunately no overshoot in this example) but will give you an idea.


With respect to trailing the SL after trade goes in the intended direction. Once we close say half of the position after X pip then as per Hector’s approach SL should be trailed at logical swing highs/lows in a relatively shorter time frame. For H4 setup chart it would be H1 TF to trail the SL and if price goes beyond the last swing High/Low then the reminder of the position will be closed.

Yes, I am aware of Hector's SL usage, and apply it and my own variation of it - SL for me is still in flux.

Custos - yes, I think he is an excellent S/R sniper - I am working to get into that frame of mind - screen time...
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  • #6,578
  • May 19, 2010 12:35pm May 19, 2010 12:35pm
awesome post, this is also something I am looking at, but which has less to do with trend trading, thus I didn't post that. But one can also find such levels and see it reacting then breaching the level then coming to the level from another side and going to a new level and so on. But this i look more at on intra-day. The big money I am staking at my identified levels with the trend. I just found them to be the easiest money.
I agree, there is always some discretion involved in identifying the right levels and only long hours in front of the screen can help getting the right feel.
Anyways, everybody has a different personality, thus everybody needs to make their own system, which comes after experimenting with the market. S/R levels are definitely the way to go.

thanks for your post
Quoting randomperson
No worries, as it has slowed down some here....
  • #6,579
  • May 19, 2010 2:58pm May 19, 2010 2:58pm
since we had a runner today, my previously posted eur/usd level got obviously breached. Now, it's a matter of finding the next obvious level.
Attached is eur/usd h1. There you can see the S/R level very good. I marked the touches of the S/R level in orange and the entry area as well in orange. Big S/R level + 50% fib + probably a trendline + 1.26 RN.
Price will probably not ignore that level (except if there are news).

Any other views out there?
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  • #6,580
  • May 19, 2010 3:58pm May 19, 2010 3:58pm
The jpy all have a good level to watch out for. Representative for all jpy crosses I post the cad/jpy (the fib number might be different on the other jpy pairs, but the S/R level looks very similar).

50% fib + S/R level

what do you guys think?
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