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Trading "The Constrictor"

  • #21
  • Aug 11, 2010 4:23am Aug 11, 2010 4:23am
Quoting ghous
.
stop moved to BE.

8260 region seems to be holding up, and we have pin bar off it on the 4H.

g.
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I believe . . .
  • #22
  • Aug 11, 2010 8:11am Aug 11, 2010 8:11am
Quoting ghous
stop moved to BE.

8260 region seems to be holding up, and we have pin bar off it on the 4H.

g.
Stopped out at BE.
I believe . . .
  • #23
  • Aug 11, 2010 8:21am Aug 11, 2010 8:21am
Hi ghous,
I hope you don't mind it when I ask a question. Can you tell me why the IB set up was no entry?
Attached Image
  • #24
  • Aug 11, 2010 8:30am Aug 11, 2010 8:30am
Quoting ghous
Eu.

Have no idea how I missed this.

I have got to organize my time more efficiently.

g.
I obviously did not take this trade but still sharing the unfolding of this one for educational purposes.

We have price hitting the first major target. The 1.3, it's still early to confirm if it's holding or not but so far the momentum seems far from disturbed.

g.
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I believe . . .
  • #25
  • Aug 11, 2010 8:45am Aug 11, 2010 8:45am
Quoting MCFly
Hi ghous,
I hope you don't mind it when I ask a question. Can you tell me why the IB set up was no entry?
Hey MC,

Thanks for stopping by,

If you read through the requirements for entry type 3 you'll see I've stated that a close below the 21 EMA is imperative, unless the trigger bar is an exceptional one and there are other things going with the trade.

I like IBs when they take up that cute little doji formation (look at the Eu setup I am talking about for example) and the bar you highlighted is more just an IB by definition to me it looks like a small bearish bar that closed a little higher.

Thing is even if we did have the shape of the IB perfect here it might still not qualify for a trade in my book, considering the traffic (whippy moves) it was stuck in...in a situation like this a trade is setup is at it's best when it's taking price away from the traffic (kind of breakout) in either way, such as the beob I labelled as an ET3 trade.

hope it clears things up, let me know if you have more questions.

g.
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I believe . . .
  • #26
  • Aug 11, 2010 8:52am Aug 11, 2010 8:52am
Hey Ghous,

Your method caught my attention because I am using those EMAs (well 20 instead of 21) in a similar fashion, but on longer TFs only mainly Daily.

I saw your H4 EURGBP trade, how about this one? It looks to me like a possible continuation setup. TL break + retest.

Cheers.
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Trading = a mirror to your human flaws. Fix them or be fixed.
  • #27
  • Aug 11, 2010 9:05am Aug 11, 2010 9:05am
update on the Usd/Cad setup.

Do you see what the trick here was?

This is in my opinion the most challenging part of the system - following the rules.

Had the IB been taken at the close of the bar with the stop a few pips below the low of the bar the risk on the trade would be 15 pips (1R) using that as my guide I see that the first trouble area was sitting at 2R, price blew through it and touched 6R. Notice how up till this point it actually hasn't pulled back to allow me to move my stop. What do I do?

This is the big dilemma and what differentiates between a runner and a trade closed too early. Was it ok to keep your stop at BE or rather just below the first trouble area which price blew through (at 1R roughly) hoping that when price pulls back it holds at this level (even though that would be against the rules a bit but then obviously you can't let a >3R runner take you out for a loss)?

By the rules of the system you won't take a second to nod your head, but behold! Price actually made it to +6R before it pulled back! This is the real test. A lot of traders criticize this strategy of trade management because of it's reluctance to move the stop close to a trade (hence locking in more profit) that is materializing. Do you see how a stop tightened up and placed anywhere between the 2 marked S/R flips would have taken you out for anything between 2R and 6R? Whereas being a little brave (yet sensible because you are not allowing a reversal take you out for a loss on the trade) would still have kept you in and as I type the monster's crossing the 9R mark!!

I haven't had a lot of trading experience with this system but one thing I've understood so far is that stops that move too quickly get you out of the trade too early and and is not the best way to manage trades in a system that is designed to catch running moves.

g.
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I believe . . .
  • #28
  • Aug 11, 2010 9:11am Aug 11, 2010 9:11am
Quoting soso
Hey Ghous,

Your method caught my attention because I am using those EMAs (well 20 instead of 21) in a similar fashion, but on longer TFs only mainly Daily.

I saw your H4 EURGBP trade, how about this one? It looks to me like a possible continuation setup. TL break + retest.

Cheers.
hey Soso,

I see the merit in that trade but I won't take this trade, reason being the holding of the 8260 region as support. It actually held better than I thought, and although the trade isn't exactly a poor one, the fact that it is heading into this price flip would be a big concern for me.

Again that's just me and my thought process on the setup.



g.
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I believe . . .
  • #29
  • Aug 11, 2010 10:23am Aug 11, 2010 10:23am
Talk about why trading is such a personal thingy...

Great job ghous, please keep it updated.
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Trading = a mirror to your human flaws. Fix them or be fixed.
  • #30
  • Aug 11, 2010 11:06am Aug 11, 2010 11:06am
Quoting soso
Talk about why trading is such a personal thingy...

Great job ghous, please keep it updated.
Wow man! That really worked out for you,

Another day the pull back would have stayed away from my stop at 0 and taken me along with this tide, lol

Congrats!

g.
I believe . . .
  • #31
  • Aug 11, 2010 11:56am Aug 11, 2010 11:56am
Quoting ghous
Hey MC,

Thanks for stopping by,

If you read through the requirements for entry type 3 you'll see I've stated that a close below the 21 EMA is imperative, unless the trigger bar is an exceptional one and there are other things going with the trade.

I like IBs when they take up that cute little doji formation (look at the Eu setup I am talking about for example) and the bar you highlighted is more just an IB by definition to me it looks like a small bearish bar that closed a little higher.

Thing is even if we did have the shape of the IB perfect...
thx for the answer. This seperates a good trader from someone like me
  • #32
  • Aug 11, 2010 12:16pm Aug 11, 2010 12:16pm
Quoting MCFly
thx for the answer. This seperates a good trader from someone like me
jeez, don't say that.

It was a great question that had to come from a thinking observant mind.

Thanks for dropping by Mc.

g.
I believe . . .
  • #33
  • Aug 11, 2010 1:40pm Aug 11, 2010 1:40pm
Ghous,

The more I look over this, the more it seems to fit with me, I love it. I read lots of different things here on Forex Factory and get lots of great help, but your system seems to ring home the most.

I have always struggled with getting in trends unless the set-up is beyond obvious and those occur very infrequently. I believe this will help me pull the trigger more often, and still keep nearly the same win rate and with the stop loss movement, get a better R:R.

Thank you for this, and please keep us up to date!

T.J.
  • #34
  • Aug 11, 2010 7:34pm Aug 11, 2010 7:34pm
So Eu blows through the 1.3 and is sitting at about 8R at the moment. The wonderful drop has meant that we have absolutely no pull back what so ever to move our stops behind as was the case with Usd/Cad IB at first.

However just like we dealt with the Usd/Cad setup where we moved our stop logically below an S/R flip that we expected would hold (and it did), the stop on Eu will need to be pulled into the green for sure, but where to place it?

A pretty good bet would be a little above the 1.3, in an anticipation that once blown through it should now act as resistance should price decide to retest it.

Another thing you could do is jump down a time frame to see if instead of blindly placing the stop "X" pips above the 1.3 you could safely tuck it above a minor price flip on that time frame which may have been caused by some temporary holding up of price which obviously didn't show up on the 4H. We didn't have such an obvious flip on the Usd/Cad but we sure do have one on the Eu!

(notice once again that I am allowing my stop to lag behind the actual price movement because I am that much interested in not getting stopped out on a pull back and ride the trend as far as I possibly can - the flip side being I may get stopped out for about 3R if the 1.3 does not hold while the trade is currently sitting at about 8R)

Also bear in mind that I am not in this trade - I missed it but still taking it along for educational purposes - such setups don't come by every month.

g.
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I believe . . .
  • #35
  • Aug 11, 2010 7:37pm Aug 11, 2010 7:37pm
Quoting unlv_tj
Ghous,

The more I look over this, the more it seems to fit with me, I love it. I read lots of different things here on Forex Factory and get lots of great help, but your system seems to ring home the most.

I have always struggled with getting in trends unless the set-up is beyond obvious and those occur very infrequently. I believe this will help me pull the trigger more often, and still keep nearly the same win rate and with the stop loss movement, get a better R:R.

Thank you for this, and please keep us up to date!

T.J.
Hey T.J.

Glad you're liking it.

g.
I believe . . .
  • #36
  • Aug 11, 2010 8:51pm Aug 11, 2010 8:51pm
Ghous,

Why did you take the second BUOB as opposed to the first BUOB/DBLHC? Looking at this in hindsight of I would of probably taken the first setup so

I want to know your thought process, in order to prevent me from taking what would have been a losing trade.

Thanks for sharing your journal for all of us to learn and prosper from your method.
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  • #37
  • Aug 12, 2010 1:00am Aug 12, 2010 1:00am
Quoting BWise
Ghous,

Why did you take the second BUOB as opposed to the first BUOB/DBLHC? Looking at this in hindsight of I would of probably taken the first setup so

I want to know your thought process, in order to prevent me from taking what would have been a losing trade.

Thanks for sharing your journal for all of us to learn and prosper from your method.
Constriction would be an issue Bwise,

Notice that price pulled back quite a bit from that last high it made but the 21 EMA sort of stands it's ground, and that happens because during the entire pull back price was often found sitting at the EMAs catching breath, which destroys the steam of the pull back that normally allows the EMAs to constrict. Notice how the constriction of the CZ is much more obvious in the bar I highlighted versus the bar you're talking about, again that happens because the pull back eventually drags a bit more to create a low lower than the previous one and we then get a BUOB at a more constricted CZ and EMAs that is a better trigger bar.

ET4's and ET5's (also labeled on the chart) are best taken at obviously constricted zones that really jump out at you.

g.
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I believe . . .
  • #38
  • Aug 12, 2010 1:03am Aug 12, 2010 1:03am
I got you ghous. Pay attention to the magnitude of the constriction. Check.

Thanks and keep up the sharp observations and insight.
  • #39
  • Aug 12, 2010 1:35am Aug 12, 2010 1:35am
This is what I am currently looking at,

The momentum is still somewhat "under construction" but the bears rolling in here with a nice trigger bar would be sweet.

g.
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I believe . . .
  • #40
  • Aug 12, 2010 2:25am Aug 12, 2010 2:25am
Ghous,

With ET2, do the 21 and 50 EMA need to be constricted when a trigger bar is formed?

The reason I am asking is b/c there is a nice PB on the EUR/NZD H4 but I am not sure if it is a valid ET2 because the MA's are not constricted. Could you shed some light on this for me?

Thanks
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