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Price failure trading

  • #21
  • Aug 16, 2010 12:16am Aug 16, 2010 12:16am
Quoting medici
Let test my understanding with Aussie as well. No trade because of trend-line break before price failure?
Hey Medici,

Thanks for your interest. Some day I hope to have your experience and expertise as a trader. You see I have taken a look at your thread.

The case of the Aussie is the second case of the 123-pattern in post 6. If the price failure occurs after the trend line break the trade become a classic 123-pattern. That is, entry is made after the aspect no.2 gives way.

If however price has gone too far from the trend line I may not take the trade.

A similar situation holds for the cable trade, although it seemed to be triggered much later that the EURO.

As for my intelligent money benefit comment, I was trying to make the point clear that I am trading with the large "money" guys that drives the market. That is, I am trading the same exact reversal patterns. Only now my belief system helps me to trade it freely and without reservation.
  • #22
  • Edited 4:55am Aug 16, 2010 4:31am | Edited 4:55am
Quoting inkuumba
Hey Medici,

Thanks for your interest. Some day I hope to have your experience and expertise as a trader. You see I have taken a look at your thread.

The case of the Aussie is the second case of the 123-pattern in post 6. If the price failure occurs after the trend line break the trade become a classic 123-pattern. That is, entry is made after the aspect no.2 gives way.

If however price has gone too far from the trend line I may not take the trade.

A similar situation holds for the cable trade, although it seemed to be triggered...
Thank you for your answer. That clarifies the points I was uncertain about.

And no deference needed. I am here to share and learn for mutual benefit.

If I may comment, it seems like your trend-line based approach kept you out of the cable trade, or at least gave you a late entry. But the 7am noise in cable was just the typical thing that happens around those times. Have you considered ways of filtering out such noise? After all, the market doesn't always paint pretty trend-lines.
  • #23
  • Aug 16, 2010 5:37am Aug 16, 2010 5:37am
A quick late entry. I was asleep. Please do not trade this!
Attached Image (click to enlarge)
Click to Enlarge Name: 123-pattern_usdjpy.jpg Size: 78 KB
  • #24
  • Edited 4:24pm Aug 16, 2010 3:13pm | Edited 4:24pm
Quoting medici
If I may comment, it seems like your trend-line based approach kept you out of the cable trade, or at least gave you a late entry. But the 7am noise in cable was just the typical thing that happens around those times. Have you considered ways of filtering out such noise? After all, the market doesn't always paint pretty trend-lines.
Hey Medici, I have often find that when the chart is nice and pretty things are generally good with the set ups.

I don't really try to filter noise form the price failure strategy, I just find other nice pretty set ups on other pairs or wait for other opportunities.

I do trade other set ups as well so there are generally plenty of opportunities.
  • #25
  • Aug 16, 2010 3:54pm Aug 16, 2010 3:54pm
Quoting inkuumba
Hey Medici, I have often find that when the chart is nice and pretty things are generally good with the set ups.

I don't really try to filter noise form the price failure strategy, I just find other nice pretty set ups on other pairs or wait for other opportunities.

I do trade other set ups as well so there are generally plenty of opportunities.
Ok, I see. As long as you're kept busy and profitable, that's good. Very sensible and robust approach it seems. Thank you for sharing.
  • #26
  • Aug 16, 2010 4:10pm Aug 16, 2010 4:10pm
In post #14 I spoke about the most crucial benefit that price failure provides. It gives us a probable new trend (line) that price may respect in the direction of our trade. This new trend line gives structure and early warnings to a failing trade

By connecting aspect no. 1 and aspect no. 3 we get this trend line. In this post I want to discuss how this new trend line may be used to agressively manage the trade especially in the early part when there are many non believers still against the trade.

In the attached chart of the USDCHF M5 there are two price failure opportunities, the first one although not failing fizzled and one could exit the trade to save some pips.

The initial trade went into profit some 14pips and price rally. The trade is in jeopardy once broke through our proposed new trend line. In case one must consider exiting the trade at a small loss or breakeven at the cross and red-orangeline.

Remember that a failed 123-pattern create a new trend line and sets up a new opportunity, see post #7. In the above case the set up returns soon and provide another opportunity to trade.

I must confess that I do not always exit my trade there since the original stop is above aspect no. 3. Some times I let the stop gets hit. Some times the trade turns in our favor. I am still working on getting out with a small loss.

Again, I did not profit from this trade. We took two other trades today and trader-god was on our side
Attached Image (click to enlarge)
Click to Enlarge Name: 123-pattern_usdchf.jpg Size: 61 KB
  • #27
  • Edited 6:03pm Aug 16, 2010 5:51pm | Edited 6:03pm
Quoting inkuumba
In post #14 I spoke about the most crucial benefit that price failure provides. It gives us a probable new trend (line) that price may respect in the direction of our trade. This new trend line gives structure and early warnings to a failing trade

By connecting aspect no. 1 and aspect no. 3 we get this trend line. In this post I want to discuss how this new trend line may be used to agressively manage the trade especially in the early part when there are many non believers still against the trade.

In the attached chart of the...
Great thread!
I'm learning from your method.

My philosophy about patterns is that they're all temporary; if one sticks and repeats, then it may keep repeating until something else takes over. Traditional patterns' geometry serves the price-time line, not the other way around.

Thus, I disobeyed your 1-3 rule by using a midline below 1, created a sense of 2-3 lines (in black), and found an extra 1-2-3 pattern (which also breaks the rules) on the right. The black lines and the rectangle-highlighted flat areas provide the overall flow of the area, and I guess the 1-3 and other lines give a little jump that fades away.

Of course, this is all after the fact and ruleless. I just wanted to show you what I thought the underlying structure was, described from the point of view of your method.

(The dotted lines are an experiment. I was going for a midline that the latter two flat areas surrounded, only it didn't work.)

Attached Image (click to enlarge)
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  • #28
  • Aug 16, 2010 6:17pm Aug 16, 2010 6:17pm
GOOD thread

i also became so "rational-minded" when trading, i even stopped dreaming at night.


In the end its all about probabilities. This is the only edge you will get.


Triple Tops, Pivots, Candlestick Patterns, and so on.







Quoting inkuumba
The head and shoulder pattern, although touted a lot, is one of the most difficult to trade. It is a complex pattern that unless you stumbled upon it after it is formed you may have taken several hits to your account before seeing the pattern. Moreover the pattern looks different each time and "VIEWER DISCRETION IS ADVISED". With PRICE FAILURE TRADING we view the head and should pattern as several failed attempts at "price failure" of the 123-pattern.
The first failed attempt at the 123-pattern is at the red trend...
Follow the Trend, thats all
  • #29
  • Aug 17, 2010 3:05pm Aug 17, 2010 3:05pm
Here is a late day price failure trade on the EurJpy. So far price is playing around. Will manage this with the break of the new trend line.
Attached Image (click to enlarge)
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  • #30
  • Aug 17, 2010 7:35pm Aug 17, 2010 7:35pm
Quoting ha-pattern
Great thread!
I'm learning from your method.

Welcome ha-pattern.

Glad I could help
  • #31
  • Aug 18, 2010 5:14am Aug 18, 2010 5:14am
Quoting inkuumba
Here is a late day price failure trade on the EurJpy. So far price is playing around. Will manage this with the break of the new trend line.
Hi

What time frame do you normally use for your trades?

I have seen in your charts that sometimes you use 5m, 15m and 1h.
Regards
  • #32
  • Aug 18, 2010 9:34am Aug 18, 2010 9:34am
interesting inkuumba, keep the good work
  • #33
  • Last Post: Edited 3:25pm Aug 18, 2010 2:52pm | Edited 3:25pm
Quoting howard
Hi

What time frame do you normally use for your trades?

I have seen in your charts that sometimes you use 5m, 15m and 1h.

Hi Howard,

Welcome. I mainly look for trades on the M5 and M15 chart. Better risk. However, the set up occurs on all time frames. The USDJPY is good because even one hour candles can be only 10 pips on a regular basis.

Hope this helps
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