My path to financial freedom

OMG where have you been? long time buddy?

I begin to worry about you, hope everything is ok by your side

all the best!

Well J16 gives you a very BASIC, SIMPLE and Very SOLID foundation to learn to trade the markets profitably. But it does't mean that it ends there (rather a start to find what really suits you) you can always stick with the basics but some people like to go further and add in their own variations to the basic METHOD which is suitable to their personalty and needs,.. etc. May it be touch trading or IPB's etc.

Anyway that's just my thoughts,.... not LJ's.
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hey Trigger,

Just dont have much to say these days.
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Nasir summed things up very well in terms of what J16 gives you (IMO) and how basic correlations work.

The whole area of intermarket analysis is a very deep subject and I personally only use some very basic correlations...mainly because that's all I need to know at the moment. For me equity markets are the best single guage of current risk appetite and I use S&P e-mini futures (EPxx on Fxpro) and Dow mini-futures (Ymxx on Fxpro).

Like Nasir said a basic correlation is that the USD is pretty well correlated with YM and S&P i.e. when YM and S&P rise this means risk appetite is increasing and people are more willing to buy 'riskier' assets i.e. in terms of FX this means moving money out of the so called safe haven currencies like USD, JPY and CHF into higher yielding currencies like AUD, CAD, NZD, EUR and and GBP. The opposite is of course true when YM and EP are falling...money will flow into the safe haven currencies (USD, JPY and CHF) as risk aversion is rising / risk appetite falling.

This is where the correlation between EP / YM (risk appettite) and (in particular) the USD and JPY come from.

I also watch US Light Crude Oil (CLG1 on Fxpro at the moment) as again this is a broad measure of risk appetite...although it does have it's own supply/demand (plus geopolitical) drivers and this IMO is not as good a measure of risk appetite as EP and YM.

I don't really follow gold too much from a correlation perspective...broadly gold rises when risk appetite is decreasing as in the most severe cases of risk aversion money flows out of all currencies into gold as the ultimate safe haven play....if you think about it gold offers no returns apart from an increase in value...no interest yield, nothing so money will flow there when things are really bad (i.e. the financial crisis!) and investors are so nervous they dont want to take any risk at all...but gold is also a hedge against inflation risks (not really relevant at the moment) and moves for other reasons which are not off interest to me.

you can also follow other correlations like CAD / Oil - Canada is a big exporter of oil, who to...the US! Personally I dont really follow these types of correlations as I feel they hold more weight for longer term trading...but they can be good additional confluence on a setup. Personally I look at US+Canada+Oil together...signs of a weakening US economy = less demand for oil = a significant affect on Canada's economy and GDP etc.

Other things I look at are the USDX and also FX amongst each other...I lookat mainly the main USD pairs, JPY pairs and CHF pairs all together and over time with lots and lots and lots of chart watching you pick up things...not always things you can explain with a hard and fast rule but little things that just stick out as being odd that can tip you off on what might happen next on another pair or across similar pairs (i.e. all USD majors etc).

A recent example was last week when I shorted EU...EU was at a good well defined daily PPZ (which for me was not enough to take a short as I dont generally take trades on FX pairs based on a PPZ alone there HAS to be additional confluence), USDX was a a good daily support area...YM and Oil were at double tops this was telling me that the path of least resistance was a stronger USD and EU (having had a big rise so far up to the point...a move that to me looked over extended and artificial) was the best technical setup in my eyes due to how clear the EU daily PPZ was....now this didnt really work out for me as there was no real momentum on Friday which was what I was looking for and thus I closed mine for a small win...but today EU so far has fallen about 160pips from where I shorted it on Friday.

There was another good example last week which Rac exploited well, but I won't go into that.

Lastly, another well known correlation between FX pairs is UCHF and EU.

Intermarket analysis, like I said is a very deep subject and Ashraf Laidi (like Nasir said) is certainly a very current well know IM analyst (I follow his intraday reports and his 'tweets')...though I did find his book a bit dull (but I'm no good at reading books to be honest) and history based, but his intraday reports are quite interesting and he clearly knows his stuff - it's certainly something I'm learning more and more about (though I don't incorporate any of it into my trading apart from what I mentioned above).

excellent explanation

Also, going back to J16...as Nasir said J16 teaches you about PPZ, confluence and certainy type of PA...you can expand on that how you will...for me I've expanded on that (with the help of others) to use basic correlations (as mentioned in previous post), to 'touch trades' at great confluenced locations (i.e. not waiting for the PA to form) and to take trades based on pure price action (not price action bars but just knowing something because of amount of time I've watched charts over the years).

For me my favourite type of trades are touch trades i.e. taking a trade at a touch of a location where there is so much confluence that IMO it will act as a barrier to price and force it back in the opposite direction. The most recent example I can think of was the one I missed last week EUR/GBP. I always prefer my touch trades to be at a daily PPZ and this one had confluence of a round number, 61% fib retracement and it was also first time back to a previous support area (which is a whole setup within itself for some people)...so for me I would pretty much take that setup all the time and as you can see it went and hit the obvious target area. A great touch trade setup will more often than not be a high momentum setup offering a great risk/reward ratio.

I've found another example I had lieing around on GU....which was a no brainer setup for me and look how, on both, price reacted at these areas...if I had to take one type of trade all year it would be these type of setups...touch trsades at daily PPZ + lots of confluence, they are generally very high probability trades, offering fast winners with great risk/reward.

Anyway that's just a brief summary...there are better places to learn more about this type of trading that my journal that's for sure.

Last thing to add...correlations etc. like any form of technical analysis is never 100% right...they are all probabilities based on what's happened in the past.

I really apreciate you for taking the time to explain this to me, how kind of you. Thanks to you also Nasir khan

Hi lovejoy,

what MT4 broker you use for Gold, Oil, YM, etc...?

I have been wondering about what the touch trade is, you just explained it on the post above. If anything you can add to it on your following trades, can you please do so?

Thanks

Great thread!

Keep it up.

I use Fxpro for my charts...the only MT4 broker I actively use is Smart Live Markets who are a spreadbetting broker in the UK.

I don't think fxpro provides Oil, Ym, it does have Gold, Silver though. Am I wrong?

Fxpro has oil-CLG1 and YMH1 as well.

FX

I know for sure MB trading has Gold, can bet they have Oil.

hey guys, anyone watching gbp pairs ..... gj, gchf, gaud, cable and some others. something is telling me gbp is up to something.
just thinking out loud, i see big drops soon esp gj & gchf

I think for GCHF was nice touch short opurtunity from yesterday.

I dont see anything concrete at the moment but I prefer ECHF, EU and EJ at the moment for some upcoming opportunities. GU is approaching some key areas, GAUD is showing signs of turning and GCHF reacted at 61% fib + PPZ yesterday. GBP CPI news out in 30mins could cause some volatility...I'm out for a couple hours so no positions for me.

I have to concur FULLY and whole heartedly. I think the only thing I can add is to not be limited by what other people say is "reasonable" to achieve. 4% a month isn't a great return unless you have $1,000,000 or more to begin with... and that's a different game altogether.

yup, and the way price is acting now...some may call it stop hunting or whatever, im stubborn, have to be proven wrong ...till then

dnt really follow news, but if u ask me on gchf & gj (gopher & beast) .... u cld call this moves bulls trap or something, have price attraction pts i bliv price must visit. i might be wrong but its either yes or no, up or down etc...im just going to go with the rythym here
ill be back, need to dash out
cheers

That's exactly what it is and I can tell you I am a case of this standing point.
And imho that is the best way to use it and other learning avenues.
Cheers!

migration huh? heheh.
not really.
i visit several threads since i joined FF. & that hasnt changed, only the threads i visit. & im omnipresent.

what can i say, Mark's thread is awesome.
birds of the same feather, fly like birds.

Well I had the same idea about Gchf and GJ so really got busted on my GJ shorts.
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