CHOROS System

Done for the day. See my last message about how and why I traded (EU, 1.3650 long).

hello m80, just wondering how wide (pipswise) are you prepared to count confluences?
i suppose it has to do with the TF each element falls into but i would like to hear whats your view.

say for me, seeing S1 and RN at 10 pips apart i'm not too sure i would call it a confluence.
also seeing the spike (at 10:15) to pierce through the RN for 11 pips and breaking the lows on the left ... would make me sweat.
still the general trend is up so i guess it was a good opportunity to get back on the trend in the best possible place.
anyway, great trade (another one)

of course you were very lucky as our broker had a technical problem at around that period, my graph has a gap for 30mins as the price shoot up.

Good point asos. Here is how I deal with confluence:
1. When I take signals from M15 then the points of interest should be within 4-5 pips. You probably have noticed in my posts when I repeat that price likes to touch all points of interest if they are close together. So, assume I have a RN and then 4-5 pips away the SMA 35 and another 4-5pips away the EMA 50. I wait using M1 to see the price touching all of them and then I get in. This is absolutely confluence.
2. When I take signals from H1, H4 then I am even more generous with confluence. I can wait 15 or 20pips for the price to check the points of interest and then I get in. Today EU was a good example. The price rushed through the MAs, then EMA62/Daily S1 were within a pip, and then through the RN 13 pips lower. I got in exactly on the RN at 8:17GMT with 15p SL. My target was just below daily pivot.

P.S. FxPro sucked today. I lost service at GMT 9:58 and came back almost 2hrs later!!! I actually had a small trade (0.3lots) running short from Daily Pivot which hit the SL when I couldn't log on..... One more scare like that and I will move to FinFX.

for whatever silly reason if the price is to bounce off a RN last, it pierces it for about 10 pips to maybe take out the stops before rushing back again...

just watching it now in M1, it wasnt that hard to catch after it broke the 1-2-3, still it was 36 pips from 1 to 2.

and your RN entry must have been nerve breaking, if it had gone down 1 more pip you would be burned.

thanks a lot for the analysis on confluence.

Glad you were able to see that. Keep in your mind, not all RN are strong. Best to wait for something else close-by such as MA, pivot, etc.
Now there is no nerve breaking. If my SL is taken out, off to the next opportunity. Sometimes, if I think that my judgment was correct, I may re-enter as soon as my SL is taken out.

I’m doing this exercise on a daily basis mostly to help build my confidence, and also in the hope that it will help me to spot these trades in real time. One of the surprising things that I’ve discovered in the last few days is how many opportunities appear, and also, how few of the decent opportunities turn out badly.

1) 35 Bounce. Winner. This is a bad trade. The MA’s are dead flat. It’s not quite yet to either the Frankfurt or London open. Even so, it would have been good for 25 pips with no drawdown.

2) 35 Bounce. Loser. Another bad trade. If anything, this one is worse than the last one, since the MAs are now diverging, and its now a second touch of the 35. (I’m noting these trades here mostly because these are exactly the kinds of trades that I seem to take and end up either losing or breaking even on. I’m pointing them out partially in an effort to cure me from taking them.)

3) 50 Bounce. Loser. This may be as bad as the last trade. It’s now a first touch. But it’s also going against the higher time frame directions, which are all bullish.

4) 35/50 Bounce. Winner. This is the first good trade, and probably the trade of the day. The 10 EMA has really steepened, and this could also be a 10 touch trade. The 35 and 50 now have converged and have some steepness to them. Also, there is almost perfect confluence of the S1. (There was a similar, first retrace to the 50 three bars earlier, but it didn’t make it to the 10 or the 35, so it was probably a missed trade, and I didn’t include it here.) This is another day in a row (I think this is four) where, after price crossed both the 35 and 50, the first retracement trade was worth big pips -- here 60+ with zero drawdown.

5) 10EMA Touch. Winner or Break Even. This is another example of a first touch of the 10 being good for a few pips after a big move, even when the retrace back to the 10 was a bit of a struggle. Here, price stalled out for 5 bars before the 10 finally caught up with it. And even then, it was still good for 13+ pips, if you got out early. Otherwise, it was a BE trade.

6) 10 EMA Touch. The 10 got steep enough again on what amounts to a new move. The retrace is two bars but didn’t quite make it to the 10. This is probably a trade that I would miss, even though it appears that these near touches are generally a decent bet. This one is worth 20-25 pips. If you waited three bars for the first real touch of the 10, you would probably either skip it because this wasn’t a big move, and price has stalled for 5 bars again. Or you would get a break even trade, if you were lucky.

7) 35 Bounce. Winner. The 35 is in confluence with the pivot and also with a strong S/R line. Without the confluence, I would think this trade should be passed on, mostly because of the width between the 35 and the 50. As it turns out, after moving 7 pips against the trade, and a wait of almost an hour, price shot up out of nowhere, and this would be good for about 30 pips at the RN above. I have a hard time, however, believing that I would take this trade.

8) 50 Bounce. Winner. This is another trade that I think I would have a hard time taking. After shooting up 35 pips like a rocket, price drops just faster to hit the 50. Here’s what Clay might say about this trade in the manual. You should watch the price come down to the 50 and then blow through it. When price then starts moving back up from the RN, you would keep watching. The close is almost exactly at the 50, moving up, and this is where he would say to enter, at the open of the new bar. (There are at least two examples of this kind of trade, either in the manual itself or in the Dance thread. I don’t know if I could do it, though it obviously turned into a really good trade.) By the way, even if you took this one as a touch trade on the way down, it still would have been a by the rules trade, and worth lots of pips, but with a medium scary 8 pip drawdown.

9) 10 EMA Touch, Winner. Another example of a first touch that doesn’t strictly follow the rules, but comes after a pretty big move. Here there are 5 full bars to get to the touch. I don’t think I could take this trade for exactly that reason. But it turns out to be worth 20+ pips after a full bar of drawdown of just over 8 pips.

10) 35 Touch. Winner. This one is late in the day and should probably be passed. I don’t know whether you count this as a first touch of the 35 or a fourth touch. The main thing this trade has in its favor is the confluence of the 35 with a RN. That combined with the steepness, and the overall trends of the higher time frames, may make this a worthwhile trade, despite the time of day, and despite the distance between the 35 and the 50. Overall, I guess this is an OK trade, but I would be on the fence about it, and probably pass it. (As a general rule of thumb, if its an iffy trade, and it became a winner, that means I would have passed on it. Conversely, iffy trades that lose are the ones that I jump on in a flash.)

So look at that overall. If you just traded this mechanically for the full day, you would end up with 6-7 winners, 2 losers, and one or two break even trades. That’s pretty amazing stuff. I’m going to try to catch up with today’s chart later on.

Yes, I agree. I've mostly stayed out and watched for a couple of days this week.

As I said in a previous post, rather than a dance, it's been more like mosh pit.

Hmmm, mosh pits are associated with heavy metal ...... does that mean the FX market has been trading a lot of coins instead of notes lately?

I agree, not so easy these days. I was able to take this one though on the EURCHF:
Enter: by the rule touch of 10EMA, good angle, 35/50 good angle, H1 bullish, 2 bars retrace.
Exit: +31pips

I could (should?) have been afraid of RN, but I kind of felt it had been tested and was ready to give up. In fact, retrospectively the breackout of RN, entering on rebounce on it would have been a much safer trade, if not for the fact it was news time.
After taking my profit I did not enter the bounce on RN as my daily objective was pocketed.

Have fun dancing today!
k-trdr

Hello Dancers,

I caught this one today on GBPAUD:
Enter: Confluence of 10EMA & daily Pivot, good angle, 35/55 parallel. H1 was turning but not yet bearish: this could have cost me that trade.
Exit: daily objective.

I may re-enter on a rebound on the RN

Have a nice day dancing,
k-trdr

While several of us knew to stay out, yet others with more experience could see places to get in, but that's the beauty of the Dance/CHOROS thing!

It's not a "system", but rather a simple framework to learn to "read" the market on an individual level, growing and developing at your own pace.

It becomes personal, as Clay said, you "own" it and "make it your own".

In many ways it appears very unique and more valuable from all the various things, paid and unpaid, that I have looked at over the last few years.

had one trade on GU today,
this few days being a whipsawy few days and today being friday,
i entered at half my normal lot size, so i allowed myself some spaces to add trades when prices moved against me, but only allowed entries at test of HTF MAs.

1st trade of the day- GU Short at M15 10 EMA, H10 EMA at
1.58902, 1.58820,1.58725

Entered a Short off M15 10 EMA,

Reason for Entry

1) Touch off M15 10 EMA,
2) 35/50 EMA as resistance
3) H1 10 EMa as resistance
4) H4 50 EMA as resistance
5) H4 10 EMA as resistance

Entry and Exit

Entered at 1.58725 and keeping my SL loose Cos i told myself i would enter
again at test of 35/50 EMA and H1 10 EMA if prices were to move up to test that area. This would be a batch of trades for me with final SL at RN 1.59000

Target was 15 pips around 1.5860 area just below S1

price continued to move higher. Managed to get one more short at 1.58798
price moved down to test 75ish area, moved SL for 2nd trade to BE+1

Price then bounced up and I was taken out on the 2nd trade at +1

Entered another position at 1.58820 (3rd trade) and final positon at 1.58902(4th) at touch of H1 10 EMA and test of M15 35/50 EMA.
Price finally moved down and closed the trade at 1.5876 average price. (1st , 3rd and 4th closed together.)

Average pips for the day = 16.2 pips.

Hi all,

I had 2 more repeats of the first trade on the GBPAUD with a total of 3*30 pips on a 10EMA bounce to objective.
It really had downtrend momentum which is why I favored 30 pips moves to shorter ones I usually make.
Just wanted to share my 1st 3 times my daily objective with you guys, and my love of the Dance

Cheers,
k-trdr

Your approach for scaling in is very interesting. How far apart would the 50 have to be from the 10 for you to decide that they belonged in separate trades, instead of the same series of trades. I'm thinking that you must be looking it along these lines. I'm going to enter if price hits A, B, C, and D. If my reasonable take profit for D is higher than where I would put the stop for A, then all four are part of the same series of trades, and I will scale into all of them. Is that right?

Hi Duffypratt,
hmm i think u're right in a sense.. but i was looking more like,
My thoughts: M15 10 EMA doesnt bounce down then at 35/50 MA it will bounce down.
my last and final barrier was H1 10 EMA cos i looked at H1 chart and was expected at least a bounce from that area.

what you conclude in your words could be quite the same as what i was thinking
Points A B C and D though At pt B i was stopped out at +1 then the chance for Pt occured.

i was able to take profits with just Pt A and B but then price freeze on MT4
so i had to take up Pt C and D for an scaled in trade

some day's ago i found an indicator that opens new chart and draws in it a tick chart, so i think now, is there an indicator that get's data from 1m chart and draws a 15M chart, that i can use in the backtester...

I think it will help us to make good backtesting using 15m chart like this with a 1h and daily chart ....

This was a perfect illustration of how higher time frames prevail over short ones. If you traded this day with an eye to the H1 charts, you would do quite well and spare yourself much confusion and heartache.

1) This rectangle is a total mess. The 35 and 50 are flat and wobbly. The first touch of the 50, going with the prevailing uptrend, breaks even. If you took the touch after that (and I don't know what the reason would be for taking it), you would do pretty well. After that, everything is either a loser or a pure guess.

But take a look at what's going on at the 100. (My black line) This same area makes perfect sense on the one hour chart.

2) 10 Touch. Winner. This is the first touch after a strong move. It hits right at an S/R line. The 10 is very steep, and its a very good trade, worth 20-40 pips, with a 4 pip drawdown.

3) 35/50 Bounce. Loser. To me this looks like an almost perfect bounce trade. The MAs are both steep. Maybe they have started diverging a little, but if this is enough to disqualify the trade, then a real bounce entry would be very rare indeed. It would have been better if there had been some real confluence with something else. Anyway, its a good trade and a loser. These things happen.

4) 10 EMA Touch. Winner or BE. This is only an OK trade. The 10 is steep, but the trade is counter the higher time frames. Also, there still has not been a retrace to the 35 or 50 since they crossed, so there's a decent possibility that the price would blow through here and test the 50 or 35. If you took this trade, you would have to either get out with 10 pips, or you would probably break even.

(The first touches of the 35 and 50 after this are not trades because the MAs are flat, wide and diverging).

5) 10 Touch. Winner. 10 is steep. The 35 and 50 are right above it, within 9 pips. Trade is good for 15 pips at the RN, and up to 30 after that.

Now for the H1 chart, and look how pretty it is compared to the M15.

6) The rectangular mess noted in (1) above turns out to be a constrainment on the 50 and 62 in the H1. I probably wouldn't have caught this one, but I think Survivor might have salivated over it.

7) The first touch of the 10 on the H1 after the big move. It ends up being good for 25+ pips, with zero drawdown.

8) Retest of the 50, 62, and 35 MAs, with a nearly perfect RN confluence. Even at the worst entrance, this would have a drawdown of only 11 pips, and is good for 25-30. (EDIT: This is the arrow on the second chart that doesn't have a number. Sorry.)

9) A 5 bar constrainment. It looks like this is floating in mid air. But look to the left. It turns out that this constrainment level is the previous daily high, to the pip. By the third bar, this might be noticeable. Without any milking, this constrainment could be worth 40+ pips.


Conclusion for the day is that when things are not making sense at the M15 level, take a look at the bigger picture.

I think most people agreed that this was a pretty terrible dance day. And yet, looking back, I cant find a by the rules trade that was a complete loser.

1) 35/50 Bounce. Winner. Going into today, it looks like the higher time frames have switched either into a downtrend or a retracement in a longer uptrend. It's hard now to say which. Here, the angles on both MAs are pretty steep. They have started to diverge some, but I think this is a good trade. I would be a little worried about taking this between Frankfort and London opens, and might pass for that reason. Good for 35 to 50 pips.

2 - 3) This is Willkoh's series of trades we talked about earlier. (2) is a 10 touch trade. If you took it on its own, and just off the touch, it would be a BE trade.

(3) The first arrow is off the touch of the 35. It's a second touch, and the MAs are now diverging. I would wait for a touch on the 50, but this trade I think is still within the rules. If you shot for 15 pips on this trade, you would break even. Anything less than 15 pip target on this one, for me, would be too little reward for the risk.

The second arrow is the better trade in my view. It would still only be good for either 15-19 pips, or break even.

4) 10 Touch. The 10 is still pretty steep, and this is the first touch after a pretty big move. This one has no drawdown and is good for maybe 20 pips. The real question on this one is where would you actually get in. On the first bar, there is no touch. The second bar is a pretty clear touch, but it probably happened so fast that there's a chance that you would get a break even trade on the third bar. This one might do well, but I think there's just as much chance that a bad entry would get a break even.

5) 50 or 35 Bounce. At the 50, there's a really nice confluence with a RN. The MAs are pretty steep here with about 9 pips between them. It would be a matter of luck to pass on the 50 here, and to take the trade on the 35. From the 50, you might take a few more than 10 pips, but its unlikely. More likely, the trade would break even. From the 35, it's probably a 15-20 pip trade.

6) 10 Touch. Another first touch of the 10 after a big move. Here its taken 9 bars for the 10 to catch up to price, and the trade is still good. This one is good for 15-18 pips with no drawdown. (Thanks for Kostas here for pointing out the reminder about taking the first 10 touch after a big move, even when it doesn't otherwise follow the "2 bar" rule.)

7) 35/50 Bounce. This one comes too late in the day, and almost at the week's end. So there's almost no way its a real trade, but it still is a great example, following dance rules. A good confluence of the 50 with an S/R line. Price bounced off it and headed down slowly, but that's how it moves on NY afternoons. Trade is good for 10 pips.

G'day mate,

I could see what was happening on the H1 in real time at point 1, but I didn't trade it because, in the Dance, Clay made a point of only trading on signals on the M15 and using the higher time frames as a guide and looking for confluence, etc.

To trade what you have pointed out would (long on the H1 constraint) would have been against the M15 direction, as price was below the 35/50, meaning take only shorts on that time frame, .

So, do you forget the M15 and trade the H1? Do you switch between them? This is where I get confused sometimes.

Also, in my opinion, on the next day's charts, 2 and 3 were in an area I consider to porcupine-ish to enter on the M15.

I didn't trade 4 because it of the huge evening star pattern 2 bars before it, and there is a touch in between 3 and the evening star that would have been a great trade, but at that very time I took one on the EURO for a loser. I was actually trying to choose between the two pairs and took the wrong one, so I'll have to work on my eeny, meeny, miney moe, as that has happened a few times recently.

There is also a loser 5 or 6 bars after trade 6, where the bar blasts through the 10 EMA in confluence with the Weekly pivot.

Thanks for the comments Bigtent.

I think the first question is a great one, but I don't think I'm all that qualified to give an answer. It's pretty clear that the higher time frames can influence what you do on the M15. If they are against the direction, then sometimes you should be careful and look for a scalp, and other times you should stay out entirely, depending on the strength of the M15 signal. It's also clear that there are times when it's OK to take a signal off the higher time frames. Does anyone have any more considered opinion about whether and when it's OK to take a signal off the H1, if its in conflict with the general direction of the M15?

For me, the bar after (6) that blows through the 10 would count as a third touch on the 10. The first touch is at the arrow at (6), and there's another on the bar immediately after. As a result I wouldn't take it, and I don't think it would be a by the rules trade.

Long GU EU AU at touch of M15 10 EMA...

I think this is not a by the rules Dance trade.. just wan to update the progress here..

1st trade Long EURUSD at 1.36158, 1.36111, 1.36055

2nd trade Long GBPUSD at 1.58777, 1.58430, 1.58733, 1.58619

3rd trade Long AUDUSD at 0.99480

Reason for Entries

1) All 3 pairs touch M15 10 EMA.
2) M15 10 EMA angle more than 40 degrees on all 3 pairs.
3) M15 35/50 MAs pointing upwards indicating a strong uptrend and act as support.
4) Higher Timeframe MAs act as support for bounce UP


Entry and Exit

Entered Long EURUSD at 1.36158 at touch of M15 10 EMA, added 2 more positions when price moved down to test 35/50 MA on M15 chart.

Entered GBPUSD , 1st trade was executed by error, subsequently price tested M15 10 EMA and proceeded to go long.
Entered 2 more positions for a total of 4 positions when price moved down below RN 1.5850 and tested Daily Pivot at 1.5833 before a bounce up

Entered AUDUSD at 0.9948 for a touch trade on M15 10 EMA. Price did not managed to move back up,closed it along with GU trades for net profit.


Exit Strategy
Exit EURUSD if it breaks below 1.6000 levels (strong resistance) without retrace
Exit AUDUSD if it breaks below 0.9915 levels ( below weekly pivot)
Exit GBPUSD if it breaks below daily pivot 1.5830 to 1.5835 level ( final barrier) without retrace i'll cut my losses


Exits

Closed GBPUSD Trades 1st at 1.5875 for 44 pips profit
Closed AUDUSD trade at 0.9925 for -23 pips loss
Closed EURUSD trades at 1.3635 and 1.3650 levels for 112 pips profit.

Net pips 133.4 pips