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  • #761
  • Aug 10, 2010 10:12pm Aug 10, 2010 10:12pm
Quoting Chorlton
Hi Everyone,

Apologies for the slightly off-topic question but I'd welcome comments from others on here.

I would like to practise my entries as per Graeme's exercise but given current constraints I do not get home til very late which means I am unable to demo trade in the evenings. Although FX is a 24hr market, the weekend period as we know is relatively flat so trying to demo trade during this period seems to some degree to be rather useless.

Consequently, has anyone got any ideas as to how I could gain the practise? The options I can think...
Forget all that. Seriously, I think you are making it far more complicated than you need to.

I think you should just go with #2. Graeme gave you all you need. If the daily is below the open then sell, if it is above then buy. That could be your one thing and believe me it can and does work.
  • #762
  • Aug 10, 2010 10:18pm Aug 10, 2010 10:18pm
Quoting Chorlton
Graeme,

Quick topic-related question:

How many of the previous bars are important to take into account when analysing the current action? At what point do the previous bars become unimportant?
Good question.

Its all relative. It could be just one candle before or 10 candles before. Usually its between 1-4 candles.

To prove its all relative.

http://img299.imageshack.us/img299/3340/aa1f.png

4 candles. Whats the story? Buyers are winning but only slightly. They are taking baby steps upwards. No momentum. They look tired. Sellers look at this sign of weakness and pile on pushing the price well below most of the buyers effort in the first 3 candles. Huge power down by sellers.

http://img717.imageshack.us/img717/1876/aa1b.png

Or you can just look at that last 2 candles (this is same chart, candles). Buyers tried hard to make a new high but failed on the way. It couldnt make it to the top of the wick but I would notice the bounce when the price is coming down towards open of the red candle and then I would enter there at the open.

What happens after?

http://img245.imageshack.us/img245/5306/aa1d.png

Look for long sized wicks. They are not common but definitely worth the wait.
  • #763
  • Aug 10, 2010 10:27pm Aug 10, 2010 10:27pm
Quoting pip_daddy
Forget all that. Seriously, I think you are making it far more complicated than you need to.

I think you should just go with #2. Graeme gave you all you need. If the daily is below the open then sell, if it is above then buy. That could be your one thing and believe me it can and does work.
PipDaddy,

Appreciate your comments and I agree that you can use that one piece of information to good effect.

However, for my own personal development I want to be able to improve my current skills in being able to read & anticipate price action in realtime.

Kind Regards.....
  • #764
  • Aug 10, 2010 10:38pm Aug 10, 2010 10:38pm
Quoting Chorlton
PipDaddy,

Appreciate your comments and I agree that you can use that one piece of information to good effect.

However, for my own personal development I want to be able to improve my current skills in being able to read & anticipate price action in realtime.

Kind Regards.....
Nothing can substitute for real time trading with real money. Nothing! The truth is that a lot of things work. It's the psychology that kills most people and you cannot simulate it.

It's like playing a video game of yourself jogging. Do you feel the pain when you go up hill? Do your muscles hurt afterward? Does your stamina improve over time? The simulated jogging cannot replace actual jogging.
  • #765
  • Aug 11, 2010 12:56am Aug 11, 2010 12:56am
Quoting pip_daddy
Nothing can substitute for real time trading with real money. Nothing!
I totally agree.

In my particular case, as I am unable to watch price in real-time during normal hours, I just want the ability to replicate this scenario as best as I can, at a time which is more convenient.

The purpose of doing this is not to replace actual real-time trading experience, but rather to use it as another tool to help me develop.
  • #766
  • Edited 4:46am Aug 11, 2010 2:05am | Edited 4:46am
Most important aspect of price action is that it gives a 'reliable' hindsight to which way the market might move.

When I mention 'reliable' it means not all the time but enough times.

It is very imporatant to interpret price action without any biased views.

It is also traders ability to control risk and prefer to use smaller hard stop loss but sensibly. Just above/below the next s/r is the most sensible. This is why inside bars are so attractive. Cause the price range of inside bar are usually small, traders can blindly enter on breakout and place stop loss at the opposite end of the whole inside bar and it will still be a relatively small loss.

On the other hand, pin bars have potentially a bigger range. I would never enter just cause I see a pin bar but I would prefer to see the price retrace to either open of the pin bar, 50% fib of pin bar, top of the wick of pin bar before bouncing down again. However I can enter if there is a big momentum without any retrace after the pin bar.

Now I say something very very important.

Interpretation of price action will never be 100% accurate. It will be a reliable hindsight 'when' it happens.

It is your job to 'ensure' when your interpretation of price action does happen to your 'forecast' to MILK IT AS MUCH AS POSSIBLE without increasing your risk.

When a pin bar happens on 4hr chart and you know its going as planned, please do not sit there and rub your hand in glee. You should USE THIS INSIDE INFORMATION TO YOUR ADVANTAGE. Jump into 1hr, 15min, 5min charts and enter as many positions towards the intended direction. Sensibly and as planned. This is where your razor sharp entry methods are required.

And after few stacks of position, monitor the strength of the move. If the movement is dying down and we have 5 positions alive what do we do?

Diversify. We close out smaller 3 positions for a small profit and keep the larger 2.

Mini diversification on mini timeframe is same as doing diversification on bigger timeframe after bigger growth.

Other systems/method on this forum limits its potential growth/profit. And it is very disheartening to watch it happen as there is so much more than the 80 pips they just extracted.

If there is a well known method to enter on s/r break on higher timeframe. Trader must not stop there they must use this inside information to the traders advatange and milk it as much as possible.

Below is a true story and very important for all traders to understand this story fully.

I remember few years back on gbpy/jpy, there was an inside bar with a tremendous momentum breakout going down after it.

This breakout lasted 3 weeks, and it started with that inside bar on the 4hr timeframe. I could have been the 'average' trader and just enter on breakout with 1:3 and bank about 90 pips. Be very happy and move on and look for another one.

That is seriously limiting your potential.

For the next 3 weeks, price moved 900 pips. I based my first interpretation on the 4hr inside bar and then zoomed into smaller timeframe and comfortably stacked positions continuously. I diversified near the end of 3rd week and closed half of the smaller legs for a very large growth/profit into trade balance and kept larger half of the legs.

Most of the larger legs died however 3 remained to fight for me further 8 more months when I finally closed them out for thousands of pips each.

How did this all start??

From that single 4hr inside bar.

Look inside the inside of the inside.

Sincerely,

Graeme
  • #767
  • Aug 11, 2010 2:53am Aug 11, 2010 2:53am
Quoting pipEASY
Most important aspect of price action is that it gives a 'reliable' hindsight to which way the market might move.

When I mention 'reliable' it means not all the time but enough times.

It is very imporatant to interpret price action without any unbiased views.

It is also traders ability to control risk and prefer to use smaller hard stop loss but sensibly. Just above/below the next s/r is the most sensible. This is why inside bars are so attractive. Cause the price range of inside bar are usually small,...
hi Pipeasy,

Hope you can show examples of how you stack positions based on 4hrs setup. I like the idea of high probability setup and bet larger...
  • #768
  • Aug 11, 2010 3:15am Aug 11, 2010 3:15am
Hi Graeme,

Your thread just keeps getting better & better!!! Awesome!

I don't think this has been asked before and my apologies if it has.

When you enter off a wick/previous bar open/50% retrace do you:

a) Use a limit order

b) Wait for price to retrace past your proposed entry level and then use a stop order when price starts to flow in your anticipated direction

c) Use manual discretionary entry

Thank you

Michael
  • #769
  • Aug 11, 2010 3:31am Aug 11, 2010 3:31am
Quoting songbo
hi Pipeasy,

Hope you can show examples of how you stack positions based on 4hrs setup. I like the idea of high probability setup and bet larger...
Good question.

What is your '1 thing?'

To see a pin bar on 4hr chart and to know which direction price is going is already knowing more than half of the information.

My '1 thing' is judging momentum on lower timeframe. I request that you look for your own '1 thing'

It could be trendline break, s/r break, .00 breakout, mini pennant breakout, order flow breakout, but we would know which direction to enter. This is putting the advatange on our side.

If we know our opponent is a left handed boxer, then we can anticipate heavier punches and more frequent punches than kicks and from his left flank. Not all the time but most of the time. Make sure when he does reach out to punch with his left, you are ready to intercept and pummel him in anticipation. However when he does use an occasional right handed punches make sure your defense is tight.

Sincerely,

Graeme
  • #770
  • Edited 4:27am Aug 11, 2010 3:42am | Edited 4:27am
Quoting wooli
Hi Graeme,

Your thread just keeps getting better & better!!! Awesome!

I don't think this has been asked before and my apologies if it has.

When you enter off a wick/previous bar open/50% retrace do you:

a) Use a limit order

b) Wait for price to retrace past your proposed entry level and then use a stop order when price starts to flow in your anticipated direction

c) Use manual discretionary entry

Thank you

Michael
Good question, Michael

More B and C than A.

I will only use A when Im stepping out of office and the setup is very tempting.

For example, after a long wicked candle. I watch the next 'formation' of candle closely. I want to see a retrace.

Does everyone know what retrace is? It is the the last attempt of buyer/seller trying to push it back to their direction. The last gasp of breath before dying.

Retrace could be very short or could be quiet long. I prefer to focus when retrace suddenly 'stalls' at opening price of the previous candle, or at 50% fib of previous candle, or 'near' the price at top of the wick.

You need to look at smaller timeframes to see it stall, preferably use 5min. Sometimes the bounce is very clear and violent. Price reaches 50% fib of previous candle and then an opposite long bodied candle suddenly appears on 5min chart. That is order flow and anticipation of other traders. We dont care about x1 single 5min long bodied candle but the momentum after it. If there is momentum I will enter.

I prefer price to reach near the top of the long wick on the candle before and suddenly lose power and start dropping. You can set a very small stop loss above the top of the wick and enter. Very small risk for potential big returns. Not successful 100% of the time, but enough times to create a very large profit everytime it does happen.

Sincerely,

Graeme
  • #771
  • Edited 5:12am Aug 11, 2010 4:40am | Edited 5:12am
Quoting luqmanz
Welcome back sir .. thank you for your guidance ...
I've started practising your method since yesterday .. I just managed to deploy 11 positions with SL at BE in 12 currencies ...

I improved my entry with the golden rule that you taught "Long above Daily Open, short below Daily Open".

One question. How do u use the EMA to decide when to diversify .. ? Im planning to diversify when the price is between blue and red since it could be the turning point of the current trend.

Thank you sir.
Good evening, luqmanz

I almost missed your question.

11 positions with SL at BE is impressive. Good work.

May I ask the following for your benefit:

1. How much did you lose (realized) to establish 11? Hopefully less than 100 but no more than 300. If its larger then please look into tighter entries and practice. And try to partcipate less aggressively. We need to space it out.

2. How would you feel when one week later only 1 is alive?

3. How would you feel when one month later none of the legs from this group is alive?

I use ema just to see the direction of the trend (the angle/steepness). Although I personally see 5ema on daily/weekly chart as the 'real retail' price however I would choose not to base decisions on when to diversify/exit from what ema line is showing.

I diversify when I feel uneasy and there is nothing more than that, a gut feeling. The only thing you need to guarantee before diversification is ample time (weeks/months) for growth on the group and that you are diversifying for 3 golden things.

1. Replenish trade balance
2. Add realized profit into your trade balance, increasing your equity
3. Keeping few of the larger legs

This will clear the whole scoreboard to zero which definitely helps with your emotion.

When price reaches between blue/red could be a turning point for a new direction or could be a very cheap price to add position in the current trend.

But you are correct to diversify when price does enter between the 2 lines. I would most likely do the same or sometimes I risk little more and let it play out by not diversifying.

Lesser number of diversification = Greater growth/profit in the long term
More number of diversification = Smaller 'guaranteed' growth but also retaining a smaller interest for infinity growth.

Its give or take with pros and cons on both side.

Very good question

Sincerely,

Graeme
  • #772
  • Aug 11, 2010 9:55am Aug 11, 2010 9:55am
Today I have explained to all what wick really is. Im sure alot of traders already know what a wick is and what it represents but unfortunately it does not get mentioned enough.

I witness RSI divergence, macd, ADX being talked more frequently than the actual wicks or candles.

Did you know that after the wick, candle has formed and then this data is calculated into the indicator?

Price action -> wick (candle) -> indicator -> your action?

or

Price action -> your action

You will always arrive first on the buffet table by correctly interpreting price action. Indicators should only be used as a reference/confirmation of your beliefs.

Wicks are a great indication of exhaustion/weakness of current movement.

Question: If you are planning to attack on counter trend when do you think is the best time to execute an attack?

Answer: The best time to attack will be ofcourse when the opposition is slowing/stalling/losing strength. But never hit alone first, always hit together with other groups of attackers

Wick entries do not result in 100% success however more than enough.

If I were to place a hard figure I would say out of 100 wick entries I do,

20 would be losers with small losses
30 will breakeven on first attempt and I will never reattempt 2nd on same wick or same setup
35 will produce a good short term profit captured in my mini diversification a few hours or few days later
10 will capture very large medium growth few weeks later
5 will remain growing as my infinity growth legs

These stats are very close to what I have achieved over the course of last 2 years.

Let me show you some failed wicks so I can lower any readers 'bloated' expectations.

http://img444.imageshack.us/img444/9836/aa1w.png

Look at above candles. Long bold up candles. The excellent thing about these candles is there are no wicks on the bottom. What does this mean?

No selling pressure. Everyone is buy for now.

Look at second candle. Look at that huge wick. What does this mean?

Its a sign of weakness for buyers. And I have a feeling sellers are going to pounce at this opportunity.
  • #773
  • Aug 11, 2010 10:03am Aug 11, 2010 10:03am
I will now focus on what happens on the next candle. Im looking for a safe place to enter sell; open price of previous candle, 50% fib of previous candle, retrace near/same price as top of the wick.

http://img822.imageshack.us/img822/8601/aa1u.png

Interesting. What does the new candle try to tell us? Whats its story?

http://img442.imageshack.us/img442/9643/aa1i.png

Open price is already 50% of fib of previous candle so im looking for something else. It starts to retrace upwards. Good I want to see buyers gasping for their last breath so I know they are dying. I was hoping a nice clean 'bounce' at/near the top of the wick but it fails to get there. Ok perhaps buyers didnt even get a chance for a last gasp. I would watch the bounce happen on lower timeframe (5min) and see the price coming down towards open of the candle again. I would enter and place a stop loss at top of the new lower wick. Why? Cause if price somehow finds enough strength to get back up again then it has a strong purpose and would most likely be a breakout upwards.

Good momentum with alot of power going down. BUT. Buyers start to gather force again and start to push back hard. Price closed lower than open but you must now look at lower wick of the new candle!
  • #774
  • Aug 11, 2010 10:17am Aug 11, 2010 10:17am
http://img841.imageshack.us/img841/7070/aa1.png

The table has now turned. Now we know the weakness is on the sellers side! I was hoping that candle would be a bold down candle but you cant expect anything to happen in forex. You just have to follow.

I would most likely move my stop loss to breakeven for that position cause as we all know when momentum dies I will move on to different pair.

What if I stayed? I now know many buyers have gathered their force and is not willing to lose this fight. What happens next? I would watch..

http://img148.imageshack.us/img148/7070/aa1.png

Sellers want to win this fight and they are fighting very hard but there is almost even number of buyers also fighting very hard not to lose. Price is not moving much but the wicks are crazy. It moves + into buy territory and then + into sell territory only to have the close price very close to open price. Its almost a draw but sellers are winning slightly.

What do you think I have noticed??? Something very very important just happened. What is it?

http://img440.imageshack.us/img440/7070/aa1.png

The new candle lower wick went to the same/near price of the previous wick and 'bounced'!!

But, unfortunately, I was away at dinner when that happens. But what does this tell us? That is two attempts by sellers to try push it harder but failed to make any new lows or close lower than before. Sellers are losing their grip here. Next candle I would look for buy entries now as I know sellers cannot continue pushing as hard as this, they will soon tire out.
  • #775
  • Aug 11, 2010 10:35am Aug 11, 2010 10:35am
Hi Graeme,

Thanks for todays details on your entries. Looks like some good advice.
  • #776
  • Edited 11:01am Aug 11, 2010 10:41am | Edited 11:01am
Im hoping for a big push up with new buyers noticing this weakness of sellers. Sellers cannot continue pushing hard as this. They need other sellers to jump on but other sellers are not happy with those wicks too. Infact other sellers are now thinking of becoming buyers. Sellers are in real trouble here. Something big is coming.

http://img717.imageshack.us/img717/5286/aa1o.png

???

That is just embarassing. What a pitiful attempt by buyers. No short wicks and its telling me buyers only managed to push the price to open of candle just 2 candles before? There was no retrace so I would try and base my entries with momentum and Im sure there was no momentum in that midget candle. Something to notice here is that buyers did take back the control of the situation and pushed the price above the opening price. I dont know why but sellers are taking a rest at the moment.

http://img62.imageshack.us/img62/7607/aa1e.png

What does that tell us? Buyers and sellers now dont know what to do. They are baffled. Both tried so hard in the last 4-5 candles and now is almost same as 5 candles ago. They dont what to do.

In situations like this, you need to expect the unexpected but one thing for sure it will burst out of that pitiful range. Can you see the situation has now turned into a breakout setup?

http://img541.imageshack.us/img541/9643/aa1i.png

Price cannot stay in a range bound too long and it will breakout. I will only look for breakouts with great momentum. I will be poised to take buy or sell that breaks out from that last candle range.

http://img713.imageshack.us/img713/3340/aa1f.png

Amazing momentum. No short wick. Sellers stayed quiet and buyers pushed the price clearly out of range. Fantastic! I would definitely have a position on the breakout and easily have SL moved to breakeven.

But in the markets, expect the unexpect to happen.

http://img825.imageshack.us/img825/1583/aa1m.png

That was a surprise. Sellers had groups of friends waiting and the new buyers who pushed the price out of range decided to close out and go home. No warnings from the wicks.

2 attempts and 2 breakevens. No happy ending but Im content.

Can all readers see how I might interpret price action and minimize my risk to bare minimum but shooting for extra large rewards?

And this is just wicks....

I will try continue with candle bodies another day.

P.S You can be a successful trader by just using wick interpretation. It could be someones '1 thing'

Sincerely,

Graeme
  • #777
  • Aug 11, 2010 10:49am Aug 11, 2010 10:49am
Could someone kindly explain why some of my pics are broken?

It is disheatening to see my efforts dwindle away into a void.

Is it an imageshack issue?

Edit: Apologies, Im too tired tonight to continue. Please think about wicks for me. It can be used to a traders great advantage. Thank you all kindly. Good night

Edit2: Please disregard this message. The broken pictures came back and its showing correctly. Good night all.

Sincerely,

Graeme
  • #778
  • Aug 11, 2010 2:09pm Aug 11, 2010 2:09pm
Thank you very much for taking the time to pass on your trading knowledge like this Graeme. It really is very much appreciated.
  • #779
  • Aug 11, 2010 5:49pm Aug 11, 2010 5:49pm
Morning Graeme,
You say that you sometimes enter after 50 fib retrace of previous candle. If you did this and got stopped out but then you saw the price stall on or near the end of the wick of the previous candle would you attempt again? I realise you previously stated that you would never enter twice on the same wick I just wondered if the price stall was followed by great momentum would you make an exception to that rule? Also is there any reason you prefer the 50 fib level.(I have stayed away from fibs so far that's why i'm curious to know your views).
Thank you for your time and efforts.
Regards,
Ben
  • #780
  • Aug 11, 2010 7:13pm Aug 11, 2010 7:13pm
Hi Graeme,
I have had the same trouble with your pictures on and off for a few weeks myself, but thought it was just my computer.

cheers
geoff


Quoting pipEASY
Could someone kindly explain why some of my pics are broken?

It is disheatening to see my efforts dwindle away into a void.

Is it an imageshack issue?

Edit: Apologies, Im too tired tonight to continue. Please think about wicks for me. It can be used to a traders great advantage. Thank you all kindly. Good night

Edit2: Please disregard this message. The broken pictures came back and its showing correctly. Good night all.

Sincerely,

Graeme
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