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DanUK's Advanced Trend Trading Strategy

  • #161
  • Sep 16, 2010 5:36am Sep 16, 2010 5:36am
Quote
The next thing I do is to look for a target - an area that could cause price to stop and reverse; once identified this is where I want to get my stop to breakeven.

The first thing I look for is a significant support/resistance level and when price gets there and it looks like it is stalling or forming an opposing signal - this would be a good sign to move stop to breakeven.


This makes a lot of sense dan re stop loss
The charts really help with the explanation also
Hanging out for the next peril
thanks for taking the time to share this
  • #162
  • Sep 16, 2010 8:16am Sep 16, 2010 8:16am
Hi Guys,

Normally I do not trade 4 hr charts but i wanted to post a pin bar that looked good to me. Some good things about this pin bar is that its at a

swing high in space
long nose protruding upwards
strong close near to the open

the only thing on my mind is if the bar breaks and becomes valid where does price find its first trouble area. I think it will be at the top or middle of the consolidation area it just broke out of.

i do think the EUR uptrend has resumed so technically this would be a counter trend trade. Just be aware of that


Dan if you do not want me to post counter trend trades just say the word and I wont. I just thought it would be nice to get some other thoughts on this pin bar
Attached Image (click to enlarge)
Click to Enlarge Name: $EURUSD (240 Min) 9_16_2010.jpg Size: 87 KB
  • #163
  • Sep 16, 2010 8:34am Sep 16, 2010 8:34am
Hello Dan,

Thank you for your thread. I got couple of questions:

1) When you start your trading day which pairs do you observe mostly?
Which pairs would you recommend?

2) Stop loss about 100pips is a bit high for me. I would rather use 30 pips max. Is it possible to use such tight SL on H4 timeframe?

3) What was your biggest loss and why? Of course only if you willing to share with that

Thank you!
Sooner or later, those who win are those who think they can.
  • #164
  • Sep 16, 2010 10:02am Sep 16, 2010 10:02am
Why have you got the CFTC hypothetical results disclaimer?
  • #165
  • Sep 16, 2010 10:41am Sep 16, 2010 10:41am
Quoting eurotrash
Why have you got the CFTC hypothetical results disclaimer?
Why not?
  • #166
  • Sep 16, 2010 2:12pm Sep 16, 2010 2:12pm
Quoting DanUK
Hi gododdin,

This is a great chart. I like it a lot - you've highlighted the important areas without over cluttering the chart.

The next step is to widen these levels just a touch - think of them as zones more than to the pip lines. Think of them as being drawn with crayons rather than a fine tip pen!

Here is a chart highlighting what I mean...
Hi Dan - thanks for that. How are you placing those broad lines - are you using 'Insert Shape>Rectangle' in MT4 or 5? Also, and I know this is getting down to the real nuts and bolts, how do you decide on the width of the rectangle - I note that some are wider than others - is that accidental? I just wondered if you were encompassing tops and bottoms or something? And finally, is the centre of the rectangle over the round number or is it the top (or the bottom)? It's not easy to tell from your screenshot.

Thanks for your patience!
When in doubt, sit on your hands...
  • #167
  • Sep 16, 2010 2:28pm Sep 16, 2010 2:28pm
Quoting bboyomega83
Hi Guys,

Normally I do not trade 4 hr charts but i wanted to post a pin bar that looked good to me. Some good things about this pin bar is that its at a

swing high in space
long nose protruding upwards
strong close near to the open

the only thing on my mind is if the bar breaks and becomes valid where does price find its first trouble area. I think it will be at the top or middle of the consolidation area it just broke out of.

i do think the EUR uptrend has resumed so technically this would be a counter trend trade. Just be aware of that...
Hi bboyomega83,

I have been known to take a good looking counter trend pin but the big problem with this pin in my opinion is the location... to me it's in no mans land. What I mean to say is that it is not at a key s/r level and therefore not of interest to me as a counter trend trigger.

I would appreciate it though if we could avoid posting any counter trend stuff for the time being.

Regards,

Dan
  • #168
  • Sep 16, 2010 2:38pm Sep 16, 2010 2:38pm
Quoting pug123
Hello Dan,

Thank you for your thread. I got couple of questions:

1) When you start your trading day which pairs do you observe mostly?
Which pairs would you recommend?

2) Stop loss about 100pips is a bit high for me. I would rather use 30 pips max. Is it possible to use such tight SL on H4 timeframe?

3) What was your biggest loss and why? Of course only if you willing to share with that

Thank you!
Hi pug123,

I would start off following the big ones... USD/CHF, EUR/USD, GBP/USD, USD/JPY, AUD/USD and USD/CAD also EUR/CAD and EUR/AUD are quite nice ones to trade. I would also recommend sticking to the daily time frame.

With regards to stop loss... why would the size of the stop matter? What you should be doing is adjusting your position size so that whether your stop is 10 pips or 200 pips the risk % of your account should always be the same. If your broker is unable to offer this consider using Oanda - although I don't like their charting and slippage seems to be a little bit of an issue with them (nothing major just a couple of pips here and there) but you can adjust your position size easily so that your % risk stays exactly the same on every trade.

I'm not sure what my biggest loss was in pip size... I assume you mean whilst trading this way (i.e. not before I found my trading legs!) - I can't actually remember loosing a trade from a daily setup. In fact, I've just been going over some charts and my journal and I can't seem to find a failed trade from the daily setups... I'm not saying there wasn't one; I just haven't found it yet (most failures are from the H4 setups)! Your question has solidified my thinking though that everyone should stick with daily charts until they are consistently profitable with this method! But, regardless of how many pips it was my loss of account would have only been 2% as my risk remains the same regardless of time frame. I will keep scanning and update you once I've found a big failed trade!

Regards,

Dan
  • #169
  • Sep 16, 2010 2:45pm Sep 16, 2010 2:45pm
Quoting gododdin
Hi Dan - thanks for that. How are you placing those broad lines - are you using 'Insert Shape>Rectangle' in MT4 or 5? Also, and I know this is getting down to the real nuts and bolts, how do you decide on the width of the rectangle - I note that some are wider than others - is that accidental? I just wondered if you were encompassing tops and bottoms or something? And finally, is the centre of the rectangle over the round number or is it the top (or the bottom)? It's not easy to tell from your screenshot.
Quoting gododdin
...


Hi gododdin,

Yes that is how I draw the rectangles.

I generally put up a single line first on the round number (this is when the chart is as zoomed out as I can get) and I then zoom in a touch and place the rectangle over the line and adjust the top and bottom to get the best fit. Generally the centre of the rectangle will be over the round number and the top/bottom are adjusted to fit the area with most touches... it's a little bit of an art - takes a while to get it right (the more you practice looking for s/r levels in this way the easier it becomes to identify them - I remember when I first started I agonized over the charts for hours trying to get them perfect; since then I have trained my eye and find the levels much easier to identify - I have also realized that I do not need to get them perfectly right!) but I have noticed that on average the range will be about 100 pips (approx 50 over the top and 50 below the line). But again I should stress - it's not an exact science, it needs to be considered as a general area rather than a strict one pip line!

Regards,

Dan
  • #170
  • Sep 16, 2010 2:47pm Sep 16, 2010 2:47pm
Hi Dan - Okay, I had a go and the result is below. I found out that you can specify an exact value for the high and low of the rectangle so for now I just added 50 above and 50 below the line.
Attached Image (click to enlarge)
Click to Enlarge Name: screenshot.2.jpg Size: 199 KB
When in doubt, sit on your hands...
  • #171
  • Sep 16, 2010 3:02pm Sep 16, 2010 3:02pm
Quoting gododdin
Hi Dan - Okay, I had a go and the result is below. I found out that you can specify an exact value for the high and low of the rectangle so for now I just added 50 above and 50 below the line.
Hi gododdin,

Yep that's a bit better - although please note the 50/50 is not a solid rule; sometimes it will be more and sometimes it might be less - but as I mentioned earlier, this will develop the more you do it!

Good work so far... no doubt your first 1000 pip win is just around the corner!

Regards,

Dan
  • #172
  • Sep 16, 2010 3:28pm Sep 16, 2010 3:28pm
Ok I think the final part of the strategy that I need to explain (with the exception of counter trend trades) is how to get out.

The easiest way for me to explain exits is to use a chart... so lets take a nice easy one from earlier this year... the EUR/USD. I started selling this from the green line in the attached chart and exited all trades at the red line. Now if I had placed just this one trade I could have been up almost 1900 pips (which would have been about 25% for 2% risk). As it happens I placed a few more entries and made substantially more but we won't get into that just yet (it might be fun later to try and identify the trades).

I exited all my trades at the point that I felt the downtrend had been technically invalidated. I use a simple combination of trendlines, higher highs/lows, lower highs/lows and the support and resistance levels to help me analyze the trend.

In this instance price had bounced off of the s/r level around 1.1900 and moved up to 1.2466 before retracing a little (making 1.2466 the most recent swing high in our series of lower highs). Several days later price blasted up and closed above 1.2466 - I then placed my stops above the daily candle and got taken out as price continued up the next day. In my opinion that is where the down trend changed and that means it is time to get out and start looking for places to get long!

Of course I could have been wrong and the down trend could have continued. If that happened I would just have to wait for a signal to get back in short. As it happens price did continue up and I currently have two long term buys in place and will be looking to add again if the Euro continues to push up.

Regards,

Dan

PS... I think we are almost at the point where we can start to post a few more charts and discuss potential setups but before we do that is there anything else (except counter trend trades) that needs to be clarified?
Attached Image (click to enlarge)
Click to Enlarge Name: eu.png Size: 49 KB
  • #173
  • Sep 16, 2010 6:32pm Sep 16, 2010 6:32pm
Cheers Dan, very interesting. Do you scale in and out of your trades? At the moment I just take the one trade until it's conclusion. I must admit some recent trades have made a considerable amount of pips only to come back and take me out at B/E. I am starting to think about maybe taking 50% out of a trade in future, at least that way I would have something to show for my trade. Interested in your thoughts Dan.

Good trading.
GJP.
  • #174
  • Sep 16, 2010 6:46pm Sep 16, 2010 6:46pm
Quoting DanUK
Hi bboyomega83,

I have been known to take a good looking counter trend pin but the big problem with this pin in my opinion is the location... to me it's in no mans land. What I mean to say is that it is not at a key s/r level and therefore not of interest to me as a counter trend trigger.

I would appreciate it though if we could avoid posting any counter trend stuff for the time being.

Regards,

Dan

understood sir
  • #175
  • Sep 16, 2010 7:06pm Sep 16, 2010 7:06pm
Quoting DanUK
Ok I think the final part of the strategy that I need to explain (with the exception of counter trend trades) is how to get out.

[color=black][font=Verdana]The easiest way for me to explain exits is to use a chart... so lets take a nice easy one from earlier this year... the EUR/USD. I started selling this from the green line in the attached chart and exited all trades at the red line. Now if I had placed just this one trade I could have been up almost 1900 pips (which would have been about 25% for 2%...

EXCELLENT! I was a little late on the trigger and started selling at 1.3750. Now where did you tend to add along the way? You closed all out at the same spot you said so you didnt take some profit along the way?

I tend to add along the way but i like to move to BE quickly at the FTA and/or around 50 pips profit. Also i tend to cut the losses quickly around -50 to 100 pips. I found that if it goes against me by 50 or more it might not be ready to resume the trend. Do you let it go against you by much? and i think you said you move to BE at the FTA.
  • #176
  • Sep 16, 2010 7:30pm Sep 16, 2010 7:30pm
HEY, DANuk,

Given your technique, i am wondering if you enter short at 1.2245 area on the 17th of june. I have tried highlighting it in blue.

Or does this not fit with your criteria?
Attached Image (click to enlarge)
Click to Enlarge Name: Screenhunter_12 Sep. 15 11.18.jpg Size: 67 KB
  • #177
  • Sep 16, 2010 8:12pm Sep 16, 2010 8:12pm
Quoting DanUK
Ok I think the final part of the strategy that I need to explain (with the exception of counter trend trades) is how to get out.

[color=black][font=Verdana]The easiest way for me to explain exits is to use a chart... so lets take a nice easy one from earlier this year... the EUR/USD. I started selling this from the green line in the attached chart and exited all trades at the red line. Now if I had placed just this one trade I could have been up almost 1900 pips (which would have been about 25% for 2%...

I have a question. Given what you just wrote above, why didnt you get out at the blue box in the chart.

chart attached below.
Attached Image (click to enlarge)
Click to Enlarge Name: Screenhunter_14 Sep. 15 12.13.jpg Size: 83 KB
  • #178
  • Sep 16, 2010 11:25pm Sep 16, 2010 11:25pm
Quoting .Entropy
I have a question. Given what you just wrote above, why didnt you get out at the blue box in the chart.

chart attached below.
I'm sure Dan will have an answer but I'd give a few:
- it shows the value of a channel vs a trendline
(often trendlines break but the containing parallels contain)
- it shows the value of the 50ma
- often the first break of a trendline generates liquidity and continuation
( but what about the second one)
- a solid gap at the beginning of the week really invite filling ... failure after the fill would be much more convincing of trend failure.

I note that my hindsight trading is superior to my real-time.


.
Attached Image (click to enlarge)
Click to Enlarge Name: eu ch.jpg Size: 109 KB
  • #179
  • Sep 17, 2010 1:19am Sep 17, 2010 1:19am
Quoting DanUK
Ok I think the final part of the strategy that I need to explain (with the exception of counter trend trades) is how to get out.

[color=black][font=Verdana]The easiest way for me to explain exits is to use a chart... so lets take a nice easy one from earlier this year... the EUR/USD. I started selling this from the green line in the attached chart and exited all trades at the red line. Now if I had placed just this one trade I could have been up almost 1900 pips (which would have been about 25% for...
Looks like the 'dragon' pattern, the exit...
  • #180
  • Sep 17, 2010 1:48am Sep 17, 2010 1:48am
Dan have a look at this CHF/JPY chart would this be the sort of trades you look for?
Or would you prefer to focus on the longer term trend and larger swing highs and lows for the fibs?
because the longer term trend with this pair is down and that fib only uses a few days data.

Im still going to keep my eye on this because the yen may fall further with hints of more BOJ intervention. I don't want to be on the wrong side of that if it happens again.
Attached Image (click to enlarge)
Click to Enlarge Name: chfjpy.gif Size: 23 KB
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