Exit strategy: Timing and aiming

Recently I was working on exits, and I had a few interesting findings, and wish to share here - expecting others to share their views too.

If you are in this industry for some time, you can notice, there is nothing about forex you can't find on the net being repeated many times here and there.
This thread is not different. Most of my ideas I have found recently in 80 years old W.D. Gann works on timing and waves' sizes. Some of my ideas are based on Fibonacci S/R and pivot lines. For some this may be new stuff, for some this may just put things in order.

I am waiting for your comments, questions and ideas [don't ask me my entry methods, there are other threads for it ]. Hope one day this thread will become famous and busy, I will post pictures as soon as new trades will pop-up, for now I will post some historical charts to show my idea in practise.


P.S.
You may have noticed that English is not my mother tongue, if you find some of my mistakes nasty or irritating, pm me I'm working on it - thanks.

First example is based on wave length.
If I got myself in second wave of this GU up-move I would measure first wave [grey rectangles are all the same sizes], it happened that second wave was exactly the same as first one, [don't take it as a rule!]. Third wave is shorter. You can see also that corrective moves [maroon] are very similar, that is nice thing to see. You can also expect reversal when third wave is shorter then previous [as here], but it needs more confirmation.

Second picture is a continuation of the very same pair. It shows first falling wave length [maroon square] compared to the second - 50 pips longer.

These two shows example where second wave length can be estimated by the first one length.
This is how you can estimate point, where you'd like to close at least some part of your long term trade. by measuring length of corrective move you can also estimate level where you want to re-enter your position.

The second example includes both size and timing.
When I took trade like breakout trade marked on chart I do the following:
I am looking for other plunges like this, to measure their length and timing.
Here we can see on previous day plunge of 174pips in 8.5 h [17 bars]
on 16 NOV there was 194 plunge in 4.5h
on 12 NOV - 202 pips rise in 7h
on 4 NOV - 150 in 3h

In this particular example I would give most attention to previous day, as both plunges start same time, and both were related to Irish bailout, therefore I would close some part after 8 hours.

Many times I set my daily target by measuring size of daily move [from low to high] of a few previous days, and expect this day to be similar. [In this case I try to pick regular days for comparison rather than one with long spikes, or more quiet than usual].
Let's take 6 DEC as an example. If I was short there I would measure previous days and took some kind of average to place partial TP order.
I ignore 3DEC as it is day when Non-farm payroll was released, 24 and 25 of November were very tight so I ignore them too. Apart of that previous days had the following ranges:
186, 214, 183, 235, 162

from that I would say 180 is average.

I marked those distances measured from the top, and I marked level at 180 points away from daily high with thicker white line.
The price range for that particular day was 176 pips - I would call it pretty nice estimation

Thanks for sharing. I am looking forward to learning more about your system

AUDUSD
I took first wave length [grey square - 430 pips], you can see second wave shorter - 278 pips [what was indication of reversal] however third wave is same length as the first one. In other hand it took over twice as much time to form the third wave - that's not good.
It is likely, that if AU will move up, it will do it from bottom of pinbar you can see marked with arrow, as length of corrective move is similar to one after the second wave, and not much shorter than the first one in current trend.

In terms of target - 200 pips is the length of retracing move and 215 pips is a 50% of first and third wave length. next key level is 400 pips above low of the marked pinbar. This move can take week or two, and than we can expect another correction of 200 pips for re-entry.

it looks good , I will wait for your entry strategy thread

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gann trade

this particular entry is rather weak one. I show it as an example how I look at waves, however I would not trade it on demo [maybe with just a half or third of my regular size]

You've opened a worthy discussion here and demonstrated a valuable technique.

The box projections are an application of the harmonic ab=cd concept, but i suspect you've probably become aware of the nuances involved in terms of the price points from where you begin and end your measurement.

The vouch is for making a serious attempt at understanding the world in which we live.

I don't make an entry without a defined target. The market is fueled by orders. This took me a while to translate mentally. Many traders I know who trade daily still don't understand what moves a market. And after some time with this idea, I realized that market turns (more often than not) take place at former areas of meaning. My entries are irrelevant without targets. And cutting trades short is statistical suicide.

Thank you for appreciation
indeed it is not a new concept, I didn't thought about ab=cd in particular. I rather decided to start the thread after the lecture of WD Gann on market timing.

It is vital here to be focused both on wave lenght in pips as well as in time.

At the moment I have no trades to analyse [AU went bad] but Possibly I will short Euro soon in case of another bail-out there.

@Eric:
I like statistics too, and indeed setting targets is a point of this thread. I use S/R and fibs as I mentioned, however timing idea is not that popular, and that's the reason for thread.

Chris

Gann and timing fascinate me as well, and I'd like to take my trading to that level, but the issue I have with timing and the market is that, particularly on smaller time frames (30m) the ebb and flow of intraday dynamics seems to threaten the application of Gann. I guess the same can be said of any system.... White noise at the lower time frames, along with the intraday nonsense that OTC markets are ripe with, both make for shaky applications of time trading, or so I feel. Honestly, it took me forever, or what feels like forever, to understand the machine behind the market, and realize that the technicals are of serious importance and value if a trader can discriminate their application. I'd like to see a thorough study of your charts on a larger time frame.

On a day trading scale I found that useful to predict daily range by checking range of few previous days. I am not saying that distance from high to low is the same every day, but they are usually very similar...

Move I was analysing on AU about a week ago turned out to be trend reversal - that's how I see it. Aussie rallied for quite a long, but flood up there may be a trigger for bit more depreciation.

On a picture I compare corrective moves of recent up-trend with current move up on 4H chart. It seems that area between current monthly pivot and weekly pivot is where price is going to reverse [20 pips difference between them].

Please note that I also marked 50% fib retracement and recent important support line, as they both overlay weekly pivot up to the pip. Therefore timing is not a key element but is a very important confirmation, and I will be trading AU short somewhere there. I am not setting any entry order, I'd rather wait for proper reverse signal on 4H or daily chart.

Post #14 [one above this one] explains how timing confirmed 50% ret. and pivot point. As you can see AU did not touched 50% ret, however I have jumped in relatively early based on what did I said.

Now let's look at the timing of the wave down - hopefully forming at th moment.
I draw four rectangles, all has the exact height of second rising wave from second half of December. As you can see, wave from beginning of December was a bit longer, same as first falling wave, so price again may go a bit further than my projection.

In this particular case it would be rational [correct me if I'm wrong] to set a target where 161% fib overlay with Key resistance I marked on a chart [low from 1DEC2010]. I however noticed that very near to level projected by putting wave lengths on the chart is a round number, that is 0.96 [marked on the chart as well], there is where I would be looking for at least partial closure.

Target of 0.9534 is very likely, bounce there would still qualify as a trade within a range [what seems to me the most possible scenario for AU a the moment]. There are bad floods in Australia, however this is not enough for currency to plunge forever, rather to breath a bit deeper.

This is not a perfect setup. just to show you that for me way for EU to rise is not that wide open.

Yet another chart, EU for this time.

It's quite interesting pair, which I gave a go right now.

Firstly [week or two ago] I was expecting it to plunge even deeper on Italy, Spain Portugal and so on [in spite of Chinese bond buying].

Then I saw a rise, I thought temporary, but at the moment for me both options are possible.

I see clearly lower lows on 4H, but still it's not enough in terms of proving something.

In other hand please note how first leg down was 350pips long and took 21 bars to form, on the second we've got 315 pips created within 16 bars.

all in all I marked with grey square how far first correction reached, and you can see how may it play with a trendline.

Yet again it's still counter-trend trading...