EUR/USD 5min - Trendlines and Pivots

Would have been pretty good

http://i288.photobucket.com/albums/l...g?t=1288599843

Went short at 60 and got stopped out -12. Something caused a spike up.

http://i288.photobucket.com/albums/l...f?t=1288603134

http://i288.photobucket.com/albums/l...g?t=1288603997

Currently short on the break of that wedge and will move stop to breakeven if we get to 70.

This is slooow. It would be nice to ride this down to 48ish. Could be wishful thinking!

Stop now at break even and as I said, I'm going to take a risk and try and ride this down to 48.

1.3959 would be a smart exit (200 EMA) but I am continuing to hold short. Why? My bias is short as shown by the 4 h chart, and 1.3948 is the next support area.

hi mysterio,

i would appreciate your help and guidance on eurusd, i have tons of indicators thanks to my friend who introduced me to forex a few months ago BUT i feel uneasy with so much indicators even though it works for him bcoz he has made alot of money right in front of my eyes. his combined many indicators to form a "system" and it works for him very nicely.

what i tend to do is draw trend lines and try calculate what would the next move will be.

my problem is entry and exit, so i would be grateful if u can some how assist me here.

thank u in advance

sami

Hi, my advice would be to ditch the indicators, they lag price and aren't terribly useful, however keep one of your indicators to look out for divergence as I am convinced this is a powerful tool. Read up on divergence and only use that concept in relation to your indicators. I keep the attached image open while I am trading. Indicators are intuitively attractive to new traders (I count myself here), as they give clear cut entries and exits. I have bought more than my fair share of indicator based systems and they are all junk! MACD is just what I happen to use, as far as I know CCI, stochastics or RSI may work just as well.

I will try and give you my approach when it comes to entries and exits, although I am still trying to refine these myself. It is important to note that these principles work on all time frames but entries, exits and stops will all need to be modified. I personally don't care what is happening on the higher time frames although I do keep half an eye on it.

1) Only trade breaks of trendlines, don't 'expect' a bounce from one. Why? A break is a far more reliable signal on a 5 minute chart.

2) A break must be a close above or below a trend line. Often times a candle will pierce through a trendline only bounce away from it instead of breaking. So you must wait for that close (by my rules).

3) IF the break has occured, but the candle has pulled away too far from the trend line, then you may have missed the move and wait for your next signal. Too far on the 5 minute charts? Around 8 - 10 pips I would say. You can wait for a retrace to the trend line before entry in this occasion and often this will give you a fantastic entry. However, it is not guaranteed to retrace, and it may come frustratingly close to your entry then pull away.

4) Stop losses are vital, I tend to enter between 12 pips as standard, sometimes a little less or a little more. It should be a few pips behind the trend line that you have broken, or alternatively just behind a pivot point that you expect to provide support/resistance. Once you get to a stop loss of between 15 - 20, then I would think twice about taking the trade. I will move stops to break even after around 7 - 9 pips profit, sometimes sooner if I consider the trade to be risky (a bit of experience required).

5) Targets are pivot points, I tend to take profit at the nearest one. I have an indicator on metatrader which plots them for me, let me know if you need it. Powerful ones are Open, S1 & R1, price will often stop and reverse at these points to the pip. I take the lines from metatrader and plot them on my spread betting platform (spread betting is tax free in the UK).

6) Divergence is only used to add weight to to trades, I wont trade it on its own. If you have strong divergence and a trend line break (ideally the trend line will have been tested 3+ times) then you have near guaranteed positive trade. Combine with a wedge, pennant, flag, triangle (learn these patterns) and you are laughing. These patterns occur every day, you just need to train your eye to spot them.

Entries are pretty clear cut under this method, stop losses slightly less so and require more discretion, exits are pivots. Once you have broken one pivot the next natural target is the next pivot. That is why on this trade I moved my stop to break even at the open price (as it could have reversed here), and the next pivot is MR1 (midpoint between daily pivot and R1). If you need any more clarification on pivot points let me know. Best thing is to practice on a demo account or with small amounts of money.

Feel free to post charts with set ups you find and where you think entries, exits and stops should be and I will happily chip in.

Of course it starts reversing two pips from my exit, always the way when you get greedy.

TP now at 1.3950, going out and will check on it later.

thank u mysterio,

i'll have that pivot points indicator if u dont mind, i use mt4. like u said use limited indicators, i'll probably use stochs, wcci. i definitley would start reading on divergence. i have been practicing on demos, but with demos u dont the blood rushing and psychology, and all the excitement so i probably open a micro account so i get actual feel of the trades.

thanks

sami

Here it is, full credit to the original coder, I got this from the THV system thread. One is the Daily pivots, the other is the monthly & weekly pivots. Keep a close eye on where there is a confluence. Also the open, yesterday high and low count as pivot points for me. Note that price will sometimes smash through them nearly as often as they act as rubber bands so I personally only use them as exits (occasionally entries if combined with other signals). Study how price reacts to these points in real time. We are currently between MR1 and the pivot so the next stop is 'probably' the daily pivot, and I bet you could scalp 10 pips when/if it bounces (I won't as that's not my strategy).

Oh yes we hit our target for +29 ! The trade was open for longer than I like, I went for a walk there and I couldn't relax not knowing if I had been stopped out or not. This is why the 5 minute charts suit me, trades are typically over in a couple of minutes.

Good idea with the micro account Sami, you need the blood pumping. Start off risking maybe only 0.5% or less of your account. Set yourself modest targets - an average 10 pips a day is more than enough when you have a tight stop loss.

Definitely no more trades today, +17 is fine. Could have done without that -12 first thing but it's easy to find reasons why you shouldn't have entered a trade after it has been stopped out.

http://i288.photobucket.com/albums/l...g?t=1288613860

thank u mysterio, i'll experment with it later, right now my car has given problems (gasket gone), so car is a scrap, had it for 5 years. need a new car.

i'll install it on my mt4 and go from there.

thank u again

sami

That is a bummer, I wouldn't be without my car - I recommend going Japanese, I've had a Toyota for about 6 years (second hand) and it has never once given me problems. Of course if you can afford a nice BMW, then that's the way to go Maybe next year...

funny thing is a toyata lucida (excellent car), had it since 2005 import, first registration but hey good things dont last, i'm looking for a another japanese car. so wish me luck

sami

Yeah good luck, let us know what you come up with.

Currently have the break of a bearish pennant on 5 mins like I said though no more trades for me today.

.. And i'm glad I didn't take it as it decided to test the support area around 1.3948.

Now obviously tomorrow is the US elections but I will still see what's happening tomorrow in the markets and trade what I see, hopefully able to finish nice and early in the London session.