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Part 2 EURUSD Trend magic System

  • #121
  • Oct 15, 2010 2:06pm Oct 15, 2010 2:06pm
Quoting dicsdob
Hi Bug!

What is your Money Managemant?
Um...I'm not sure what you expect me to answer, really. Money management is a huge topic. In the interest of my time (and others'), could you please specify what exactly do you wish to know so that I don't have to write down everything I know about MM?
If you don't risk, you don't ever have to lose.
  • #122
  • Oct 15, 2010 2:30pm Oct 15, 2010 2:30pm
Quoting KumoDragon
Well, tried it today and I lost -151 pips on GU today, over 5 trades, trading the 5M.

Probably not the greatest day to start being friday.

One trade could have been +50 but got stopped out at BE, should have just taken 50 as it was really a news reaction at 7:30.

Looking back my entries could have been better. It seems that the best entry is with the color change, you can't just jump in because the colors agree and hope it continues.

Also I noticed that the BB changes color right along with the TM, so what is the point of even bothering...
Probably not the greatest day...that's for sure. Now, here's a real shocker for you: you absolutely have to keep an eye on the calendar here at FF and make necessary adjustments to your trading times or lot sizes.

Maybe it's a bit too much to ask, but it would also help your account if you were to check financial news every day to get the big picture (at least once a day, before trading perhaps). You don't have to be a Wall Street analyst to interpret the news that has been hitting financial pages these last few weeks. The big news right now is that Bernanke has been suggesting starting another round of quantitative easing (ie. printing money thereby driving down the dollar). This afternoon Bernanke gave a speech where he touched this matter. About 15 minutes later some important data came out which rocked the USD boat. This is a killer combination of RED impact events all marked in the FF calendar. I'm not mister smartypants so I'm not going to tell you that I knew this was going to happen. But volatility does pick up during these events:

Central banks shape monetary policy
United States (still) has the largest economy on the planet
The US dollar is (still) the predominant reserve currency of the world
Thus: anything that the chairman of the Federal Reserve says or does can have a large impact. The same applies for regional Fed presidents, Fed governors, the SOMO chief and a number of vice-chairmen and vice-presidents. This is especially evident in times of change - when economic growth, inflation and/or unemployment stay at a level that is deemed undesirable by the monetary authority.

If this is too much to ask, then trading for profit is perhaps not your thing. Please don't think I'm saying this because I'm trying to outsmart you on a public forum. This is a kill or be killed business and you have to protect your account - reading a bit of financial news and keeping an eye on the FREE calendar at FF is a very simple task and will most likely help you immensely.

When it comes to trading this system, I personally prefer using it with EU rather than GU. GU has higher spread and way lower liquidity. This lower liquidity results in stops being taken out all of the time, which, in chart-speak means that cable doesn't respect S&R levels nearly as much as EU does (GU whips past important S&R levels just to take the stops out and then goes back to where it was).
If you don't risk, you don't ever have to lose.
  • #123
  • Oct 15, 2010 2:42pm Oct 15, 2010 2:42pm
Coming back to my previous post, here's how I start my day(s):

 

  1. I get up. I eat something and make coffee.
  2. I check the news and blogs I follow for important developments.
  3. I check fx talk for overnight developments and order flow.
  4. I write down news release times on a separate sheet I keep by my PC while I trade.
  5. I check high time-frames for R&S.
  6. I check lower TFs for R&S.
  7. I mark off round numbers (you could do this with an indicator).
  8. I start trading with minimal size.
  9. If I feel everything is going alright, I switch to bigger lot sizes. If I don't feel confident enough or something is bugging me OR there is a huge red impact news coming, I wait.
  10. Once I have reached my daily goal, I pretty much quit trading for the day (not always). Some people don't operate with daily goals in mind because they feel it puts too much pressure on them. I feel that this is a personal choice type of issue (kind of like whether you prefer higher or lower TFs).

If you don't risk, you don't ever have to lose.
  • #124
  • Oct 16, 2010 2:52am Oct 16, 2010 2:52am
Quoting KumoDragon
Well, tried it today and I lost -151 pips on GU today, over 5 trades, trading the 5M.

Probably not the greatest day to start being friday.

One trade could have been +50 but got stopped out at BE, should have just taken 50 as it was really a news reaction at 7:30.

Looking back my entries could have been better. It seems that the best entry is with the color change, you can't just jump in because the colors agree and hope it continues.

Also I noticed that the BB changes color right along with the TM, so what is the point of even bothering...
I know it will hurt a little but put up your charts and show where you got in etc etc, then comments will be a little more helpful.

Have a look here, http://www.forexfactory.com/showthread.php?t=108544 this kind of concept may help you with entries on right side of trend.
  • #125
  • Oct 16, 2010 2:55am Oct 16, 2010 2:55am
Quoting KumoDragon
It seems that the best entry is with the color change, you can't just jump in because the colors agree and hope it continues.

Also I noticed that the BB changes color right along with the TM, so what is the point of even bothering with the BB? Is there a better way to use it instead of just reading only the color?
Definitely cannot just jump in with a colour change.

No BB and TM do not always change colour at the same time. Not with the settings as set out by Paulus.
  • #126
  • Oct 16, 2010 3:01am Oct 16, 2010 3:01am
This will show what I'm looking for. The lines show the colour changes, the arrow up and down show the next higher low and lower high for the trades.
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  • #127
  • Oct 16, 2010 8:36am Oct 16, 2010 8:36am
Vantage,
Great teaching concepts in your last few posts. Both you and Bug have a gift for explaining these PA concepts so clearly.
I've been trading Forex for over 5 years now. Always appreciate it when I encounter teaching on this level.
Thanks much.
Cliff

Quoting Vantage
This will show what I'm looking for. The lines show the colour changes, the arrow up and down show the next higher low and lower high for the trades.
I get exercise just pushing my luck
  • #128
  • Oct 16, 2010 9:57am Oct 16, 2010 9:57am
Quoting Vantage
This will show what I'm looking for. The lines show the colour changes, the arrow up and down show the next higher low and lower high for the trades.
I'm familiar with looking for H/L/H sequence through using sonic. ( Stopped using that because there were some good trade because of it, but also a lot of fakeouts)

My questions would be when do you enter using trendmagic and H/L/H, do you wait for it to pass to the other side of TM or just when it looks like a continuation from a lower high (short) or higher low (long).

Also when it hits the lower high, how do you know its not just going to continue upward? Or are you just using the direction of the TM + the higher low as your bias?
  • #129
  • Oct 16, 2010 10:22am Oct 16, 2010 10:22am
Quoting KumoDragon
I'm familiar with looking for H/L/H sequence through using sonic. ( Stopped using that because there were some good trade because of it, but also a lot of fakeouts)

My questions would be when do you enter using trendmagic and H/L/H, do you wait for it to pass to the other side of TM or just when it looks like a continuation from a lower high (short) or higher low (long).

Also when it hits the lower high, how do you know its not just going to continue upward? Or are you just using the direction of the TM + the higher low as your bias?
Look at the chart again 3 posts or so up. Right side, last arrow, the green candle before is the lower high. It wouldn't have been a lower high if it had continued.... enter the other side of TM line.

cheers
  • #130
  • Oct 16, 2010 10:32am Oct 16, 2010 10:32am
Quoting goldsurfer
Look at the chart again 3 posts or so up. Right side, last arrow, the green candle before is the lower high. It wouldn't have been a lower high if it had continued.... enter the other side of TM line.

cheers
in other words its only a lower high AFTER the candle closed, so you wait to see.
  • #131
  • Oct 16, 2010 10:37am Oct 16, 2010 10:37am
Here are my stupid stupid trades from friday, Oct. 16th. Any comments of how I could have done better, using this threads method, are welcome.

Trade are marked with a green or red dot for long or short. The trades are all taken on the 5M on GU. I only trade GU.

My breakout box is set to 11:00 -13:00

1. Short loss: Had just got up TM and BB were red and price was close to it, so I got in short. Almost as soon as I got in both turned blue so I got out.

2. Long BE: Got in right after both tm and bb turned blue. Waited for the news. Could have taken +50 but instead I put trade at BE and was stopped out.

3. Long loss: The hammer before my entry made it look like it was just a higher low to me, so I got back in after my stop out at BE. It of course then tottally reversed.

4. short loss: TM & BB turned red and had a big candle going through TM. Price of course then reversed on me then TM and BB turned blue so I got out

5. Long Loss: Because of TM and BB turning blue I got in long again, and of course price reversed on me again and BB and TM turn red. This time I just wait for my stop and am stopped.

6. Short Loss: Got in after I was stopped out thinking that since everything is the right color for short it will continue and since price made it a point to go so far to stop me out. But, no I picked a bottom again and price reverses. I get out in disgust and quit for the day. And of course if I'd held on this one could have been a winnner.

P.S. Please note that everytime the TM had a color change so did the BB, which is why I asked what is even the point of the using the BB, or is there a better way to use it.
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  • #132
  • Edited 5:29pm Oct 16, 2010 11:16am | Edited 5:29pm
Quoting KumoDragon
Here are my stupid stupid trades from friday, Oct. 16th. Any comments of how I could have done better, using this threads method, are welcome.

Trade are marked with a green or red dot for long or short. The trades are all taken on the 5M on GU. I only trade GU.

My breakout box is set to 11:00 -13:00

1. Short loss: Had just got up TM and BB were red and price was close to it, so I got in short. Almost as soon as I got in both turned blue so I got out.

2. Long BE: Got in right after both tm and bb turned blue. Waited for the news. Could have...
if i were going to trade gbpusd, i'd limit it to 2-6 am est--just before london opens at 3 am est. your charts gmt+0, correct? so that would be 6-10 on your box. they match my broker charts.
the spread is just under 4 pips then which still isnt great, not sure what it was when you traded.

I also might have considered taking your 2nd and 5th longs except that that they were right at daily R1 so I wouldnt, and that 4th short bar had just dropped 36 pips --something vantage had pointed out to stay away from, although he might have said that to me in a pm.
  • #133
  • Oct 16, 2010 11:34am Oct 16, 2010 11:34am
Quoting KumoDragon
Here are my stupid stupid trades from friday, Oct. 16th. Any comments of how I could have done better, using this threads method, are welcome.

Trade are marked with a green or red dot for long or short. The trades are all taken on the 5M on GU. I only trade GU.

My breakout box is set to 11:00 -13:00

1. Short loss: Had just got up TM and BB were red and price was close to it, so I got in short. Almost as soon as I got in both turned blue so I got out.

2. Long BE: Got in right after both tm and bb turned blue. Waited for the news. Could have...
It seems to me that you exit your potentially winning trades with a loss, instead of being patient.
Use hard stop that is initially under/above last low/high. If it is too far away then better do not take the trade but wait for the next opportunity.
Anyway, do not jump out only because the line changes color. Supertrend (TM) is tradeable even without paying any attention to its color. Just above or under is the information you need, and the break of the line is the strongest signal.
  • #134
  • Oct 16, 2010 11:47am Oct 16, 2010 11:47am
Quoting Indrek
It seems to me that you exit your potentially winning trades with a loss, instead of being patient.
Use hard stop that is initially under/above last low/high. If it is too far away then better do not take the trade but wait for the next opportunity.
Anyway, do not jump out only because the line changes color. Supertrend (TM) is tradeable even without paying any attention to its color. Just above or under is the information you need, and the break of the line is the strongest signal.
Hi Indrek,
First of all, thank you for contributing to the thread. It seems he did the right thing. While the BB MACD switches direction, he changes along too. Any reason why you said he's being impatient? Perhaps you can share with us?
  • #135
  • Oct 16, 2010 12:12pm Oct 16, 2010 12:12pm
Quoting kedridder
Hi Indrek,
First of all, thank you for contributing to the thread. It seems he did the right thing. While the BB MACD switches direction, he changes along too. Any reason why you said he's being impatient? Perhaps you can share with us?
I just suggest to use hard stop instead of manual exits based on instincts. Any indicator can change its color back and forth, we have to trust our entries.
Of course, the first thing is to pick the correct entries. In this case, there were false entries, too. But at least two short ones would be winners if the trader did not exit too early.
Again: initial SL (hard stop) is under/above last low/high. Another option with this system is the previous flat level of TM. If these are too far away - no trade.
I do not take trades from M5 timeframe if the SL would be more than 25-30 pips.
  • #136
  • Oct 16, 2010 12:29pm Oct 16, 2010 12:29pm
Quoting Indrek
I just suggest to use hard stop instead of manual exits based on instincts. Any indicator can change its color back and forth, we have to trust our entries.
Of course, the first thing is to pick the correct entries. In this case, there were false entries, too. But at least two short ones would be winners if the trader did not exit too early.
Again: initial SL (hard stop) is under/above last low/high. Another option with this system is the previous flat level of TM. If these are too far away - no trade.
I do not take trades from M5 timeframe if...

i see. thank you! this clears up my noobish mind.
  • #137
  • Oct 16, 2010 1:06pm Oct 16, 2010 1:06pm
Quoting simpletrades
if i were going to trade gbpusd, i'd limit it to 2-6 am est--just before london opens at 3 am est. your charts gmt+0, correct? so that would be 6-10 on your box. they match my broker charts.
the spread is just under 4 pips then which still isnt great, not sure what it was when you traded.

I also might have considered taking your 2nd and 6th longs except that that they were right at daily R1 so I wouldnt, and that 5th short bar, assuming you entered at its close, had just dropped 36 pips--something vantage had pointed out to stay away from, although...
Why do you say only trade GU then, it has plenty of movement in the US session? Also, Im in US central time so that is about 1 AM for me I think, so thats not going to happen.

My charts are +0 and the spread was about 4 when I was trading for GU.
  • #138
  • Oct 16, 2010 1:13pm Oct 16, 2010 1:13pm
Quoting bug
Probably not the greatest day...that's for sure. Now, here's a real shocker for you: you absolutely have to keep an eye on the calendar here at FF and make necessary adjustments to your trading times or lot sizes.

Maybe it's a bit too much to ask, but it would also help your account if you were to check financial news every day to get the big picture (at least once a day, before trading perhaps). You don't have to be a Wall Street analyst to interpret the news that has been hitting financial pages these last few weeks. The big news right now...
Yes, I check FF religiously for news before trading. I guess I'll go back to EU for trying out this method then. Though I tend to like GU better as it has bigger moves when it takes off.

Do you trade EU during the US session?

P.S. mmmmm looking back the same friday I got boned in GU, EU would have had a great day with this method compared to GU.
  • #139
  • Oct 16, 2010 1:35pm Oct 16, 2010 1:35pm
Quoting KumoDragon
Though I tend to like GU better as it has bigger moves when it takes off.

Do you trade EU during the US session?

P.S. mmmmm looking back the same friday I got boned in GU, EU would have had a great day with this method compared to GU.
Pardon my language, but that's a really uneducated approach. You could just as well trade fiber with bigger lots to compensate for the smaller pip runs. Cable is like an untrained horse, as it were - it runs as fast as hell but it knocks you off if you don't know what you're doing. Fiber is a much more tame animal - it moves slower and the moves are in clear bounds, making it psychologically and monetarily easier to stay on the saddle. All of this goes back to what I wrote earlier about the liquidity of those two pairs. So, if you want to make more money, why don't you consider trading fiber with lots sizes big enough to compensate for the opportunity cost of cable's appealing pip runs?

I do trade the US session but not as often as I used to. Since I live in Europe, I find it most convenient to trade the European open and late morning session. A few days a week I might trade the EU-US overlap session, but that depends on the amount of macro work I have on hand at any specific time. To be honest, I'm not a big fan of the US session as I tend to have difficulties understanding the way price behaves on a minute by minute basis during that time. I still trade it, but with more care.
If you don't risk, you don't ever have to lose.
  • #140
  • Oct 16, 2010 3:27pm Oct 16, 2010 3:27pm
Quoting bug
Pardon my language, but that's a really uneducated approach. You could just as well trade fiber with bigger lots to compensate for the smaller pip runs. Cable is like an untrained horse, as it were - it runs as fast as hell but it knocks you off if you don't know what you're doing. Fiber is a much more tame animal - it moves slower and the moves are in clear bounds, making it psychologically and monetarily easier to stay on the saddle. All of this goes back to what I wrote earlier about the liquidity of those two pairs. So, if you want to make more...
fiber is eurusd?
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