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CHOROS System

  • #3,921
  • Feb 11, 2011 7:07am Feb 11, 2011 7:07am
Quoting kostas1
+14p because it looked like an "almost touch". But it may really touch in a while. In any case, got my quota for today, signing out. Careful, now since it's Friday and we got news in an hour.
The almost touch missed by three pips. I had a limit order that would have taken it 2.5 pips higher. Instead, I took it at the actual touch two bars later, and got stopped. Oh well.
  • #3,922
  • Feb 11, 2011 7:29am Feb 11, 2011 7:29am
In my attempt to trade more "mechanically" and to understand the rationale of succesful traders, the recent EURUSD activity presents a nice opportunity for a question I've been wanting to ask. We see that the euro is in a continued downward path, however I wonder what would you consider to be a "worn-out" trend and what would you consider as a "fresh" and tradable trend. I have marked with numbers all the points where the 5 SMA crossed from above the 10 SMA with a good slope, and it seems to me that these points would indeed be good candidates for renewed interest in the potential of the trend. I would be interested in finding out whether you would indeed start looking for a trade at those points I have marked, or whether you woul first wait for things to calm down or some time to pass before looking for new touches.
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  • #3,923
  • Feb 11, 2011 8:40am Feb 11, 2011 8:40am
Thanks for the tip on GU kostas...I didn't manage to take it but got in this trade that was inspired by that one...also a 10+RN touch...but only scalped about +8 to escape the news coming in 20 mins. The two combined are a kickass combo...kind of like the ol' gerrard and torres for football fans out there(even tho I hate that spanish twat now)

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  • #3,924
  • Feb 11, 2011 8:40am Feb 11, 2011 8:40am
Quoting micmic
In my attempt to trade more "mechanically" and to understand the rationale of succesful traders, the recent EURUSD activity presents a nice opportunity for a question I've been wanting to ask. We see that the euro is in a continued downward path, however I wonder what would you consider to be a "worn-out" trend and what would you consider as a "fresh" and tradable trend. I have marked with numbers all the points where the 5 SMA crossed from above the 10 SMA with a good slope, and it seems to me that these points would indeed be good candidates...
I'm not the best one to answer, but I'd say 4 is definitely, because price crossed above the 35/50 MAs.

I'm not 100% sure I follow Kostas' answer above regarding "resets". Surely it must "reset" somewhere or you'd only make one of each trade, and that'd be a very brief career, indeed!

Clay originally said in the Dance to keep going and re-enter on the next touch when your trail is stopped. Later that was changed to two, now in this thread, it has evolved to one.

But remember, when considering hard and fast rules, it is not a "system" but a strategy. Clay made it very clear that the Dance was never meant to be mechanical and we should make it our own. So it is also about acquiring experience, and a feel for the market and then being able to act with discretion.

Kostas is a great example of this, and he reads the market very well, making pips in areas where I'd never see an opportunity in a month of Sundays. I'm sure that it was not always so, but that the Dance was a tool to developing this ability.
  • #3,925
  • Feb 11, 2011 10:47am Feb 11, 2011 10:47am
Quoting kostas1
I got to learn how to do this. Good job Dr. Constrainment!
That from you means a lot Kostas. Why you need to anyway you are too good with touches

Ok As promised here is my only trade today that gave me a hassle free +45 with zero draw down - price never went against me even for 1 pip. Only spread was lowest drawdown. And complete peace of mind. I wont recommend this to anyone learning but i actually entered the trade, placed my SL and profit orders and forgot about it. Was reading reading some nice trading stuff when i realized i was +45 and took it without waiting for a higher profit level. Such is my confidence with these trades. I urge all of you to try and learn it. It's like free money out there if any exists in world.

So i will repeat everything here again so more of us can see these trades.

1. Every morning before major markets open scan all major currencies all TF- 15M 1H 4h Daily etc. Special attention to 1h in slow movers like USDCAD, USDCHF USDJPY AUDUSD etc. And attention to 15M in fast movers like GU and EU. 4h and d1 wont give direct constrainments but you will get wonderful trading ideas similar to constrainments once you get a feel.

2. Look for a nice clear trend- steep 35/50. this is first requirement

3. Now look for price being constrained from one side only. ignore if you see mas on both sides of price. then you dont knwo which ma is constrainig price.

4. Watch lows for a long constrainement and highs of candles for a short constarnment. Where is price being rejected? that will help you in correct entry at low or hi. Most of the time price will be constrained by one of the mas but Sometimes the price will be constrained by some level rather than ma. enter at the constraining ma/ level and keep 5-6 pip SL.

5. candles will be all touching the ma and ma will itself be rising for long or falling for short. Flat mas are risky especially flat weak mas like 10.

6. Verify that no HTF ma can act against your trade. I call it clear sky in chart posted. basically if you going long check that no HTF ma is just above price. reverse for short.

7. Wait for your your take profit to be hit.
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Making money is easy- Just dont take losing trades
  • #3,926
  • Feb 11, 2011 10:49am Feb 11, 2011 10:49am
Quoting bigtent
But remember, when considering hard and fast rules, it is not a "system" but a strategy. Clay made it very clear that the Dance was never meant to be mechanical and we should make it our own. So it is also about acquiring experience, and a feel for the market and then being able to act with discretion.
Indeed, I don't think that we are yet at a point where we can do without discretion. But I just want to find some measurable indicators on which trades people take.

Something else I've been trying to do is to develop a consistent system for taking trades where the price does not touch the 10 EMA. Many times I have witnessed this: Let's say that EUR falls rapidly, and we have steep downard EMAs in both EURUSD and EURJPY. But suppose that at the moment USD is stronger than JPY. So the retracements in EURUSD are much smaller than in EURJPY. EURUSD never touches the 10 EMA, while EURJPY does. If we go strictly by the rules, we only take the EURJPY trade while we don't enter the much stronger EURUSD trade.

Ok, so this is not official Dance so I'll leave it at this.
  • #3,927
  • Feb 11, 2011 11:38am Feb 11, 2011 11:38am
Quoting bigtent
But remember, when considering hard and fast rules, it is not a "system" but a strategy. Clay made it very clear that the Dance was never meant to be mechanical and we should make it our own. So it is also about acquiring experience, and a feel for the market and then being able to act with discretion.

Kostas is a great example of this, and he reads the market very well, making pips in areas where I'd never see an opportunity in a month of Sundays. I'm sure that it was not always so, but that the Dance was a tool to developing this ability....
Yes, that's pretty much what happened with the 10 Touch trade last night. I traded it mechanically and lost. Kostas took the "almost touch" a little earlier and got 14 pips out of it. He also knew how to get out of a trade he took that was not quite by the rules. I would like to think that I was unlucky on that trade, and maybe I was. But I'm also pretty confident that Kostas' entrance was the result of superior skill and experience. Maybe it's possible that that sort of thing can be reduced to math, but I wouldn't be that optimistic.

Let me put it this way: a very powerful brute force computer can now beat the best chess player in the world. But no one has come close to programming a computer that can beat really good Go players. Personally, I think reading the markets is much more like learning Go. It seems like it should be simply and fairly easily to express with math, when in fact it is extraordinarily complex and probably involves a different sort of thinking than computers are now good at.
  • #3,928
  • Feb 11, 2011 12:10pm Feb 11, 2011 12:10pm
Quoting micmic
Indeed, I don't think that we are yet at a point where we can do without discretion. But I just want to find some measurable indicators on which trades people take.

Something else I've been trying to do is to develop a consistent system for taking trades where the price does not touch the 10 EMA. Many times I have witnessed this: Let's say that EUR falls rapidly, and we have steep downard EMAs in both EURUSD and EURJPY. But suppose that at the moment USD is stronger than JPY. So the retracements in EURUSD are much smaller than in EURJPY. EURUSD...
Search for Endroute in this thread. He has a post that talks about an M5 entry he's been taking. Also, the latest version of Clay's manual (look in the attachments), takes signals off the M1. Either of those approaches might use ideas that will help you.

About your example: we have been trading more pairs on this thread than the Dance originally contemplated. The original idea was to get familiar with what goes on with one or a couple of pairs. Clay traded two pairs. Kostas started with just the GU, and I think he would still recommend a beginner to stick with one pair.

I also think you are missing one of the main points about the Dance (or if you aren't missing it, you are ignoring it). This strategy is not necessarily looking to make lots of pips across a broad number of pairs. Instead, the idea is to make small returns regularly, and compound them. 100-150 pips/week is more than enough to meet the needs of probably everyone here. That can be done with a single pair using just a single method. (I say that as if I'm already doing it, which I am not. But I've seen that it can be done, and that it can be learned by someone willing to put in the work.)
  • #3,929
  • Feb 11, 2011 12:24pm Feb 11, 2011 12:24pm
Quoting Survivor
That from you means a lot Kostas. Why you need to anyway you are too good with touches

Ok As promised here is my only trade today that gave me a hassle free +45 with zero draw down - price never went against me even for 1 pip. Only spread was lowest drawdown. And complete peace of mind. I wont recommend this to anyone learning but i actually entered the trade, placed my SL and profit orders and forgot about it. Was reading reading some nice trading stuff when i realized i was +45 and took it without waiting for a higher profit level. Such...
Great stuff. Thanks so much.

Clay says three candles or more for a constrainment. With the two bar rule, the current bar is the second bar. But what about constrainments? Do you need to have three closed candles before you identify a constrainment?

On this trade, it looks like there were two chances to milk the trade before it took off, and from what you have here, it also looks like you didn't take those chances. Do you have any new thoughts about your milking idea?

It's not fair, but in this example, it looks like you broke your own 7. You didn't wait for your TP. I know TP is really hard to define, but do you have any thoughts about how much to look for when starting out? Does it differ from M15 to H1?

I'm going to be creating some more profiles this weekend. I know that you complained before that you get frustrated when waiting for the next constrainment. But try thinking of it like this: just two of these trades per week would probably get you to the goal that you are after. Two of these trades a week, with a 6 pip stop loss, could be getting you 15-30% returns every week. That would sure frustrate me.
  • #3,930
  • Feb 11, 2011 12:38pm Feb 11, 2011 12:38pm
Quoting duffypratt
Great stuff....

No millking chances here. candles were two small. unless i see some wide jumps from MA i avoid milking. Its a risk reward game remeber that. I mean if i sell half of my lot to milk and price just shoots up then i am losing money. Today i saw too small candles towards end and decided no milking here.


Yes 3 bar rules applies but remember that with HTF bars will be fewer. You may get 10 bars in 15m but thats very rare in HTF. so generally 3 bars is good enough but sometimes i take even two in HTF.

In 1H i look for 40-50 pips in slow movers and 80-100 pips in fast movers but it really depends on how far the sky is clear in 4H in 1D. I dont want any big resistances ahead.

Yeah i broke the rule but i had achived my target and i didnt like that hanging man there. price actually came down after my exit and gave another very good opportunity to go long at 10 EMA if you will notice. So wasn't a bad exit i think.

Of course i am happy doing only constrainment. only reason i must master touches is because i think depending on one trade will be too muh of risk every day. they may not come every day and maybe wont come for weeks. If i remeber correctly some seniors point out that initially when dance started constrainments were very common later they died and nobody was actually trading constrainments here. I just happen to observe slow movers and find these trades.
Making money is easy- Just dont take losing trades
  • #3,931
  • Feb 11, 2011 1:05pm Feb 11, 2011 1:05pm
Quoting Survivor
No millking chances here. candles were two small. unless i see some wide jumps from MA i avoid milking. Its a risk reward game remeber that. I mean if i sell half of my lot to milk and price just shoots up then i am losing money. Today i saw too small candles towards end and decided no milking here.


Yes 3 bar rules applies but remember that with HTF bars will be fewer. You may get 10 bars in 15m but thats very rare in HTF. so generally 3 bars is good enough but sometimes i take even two in HTF.

In 1H i look for 40-50 pips in slow movers...
Thanks for the answers. I didn't measure the candles before. The big ones are only 13-14 pips.

The original manual definitely sees constrainments as the primary kind of trade for the Dance, followed by 35/50 Bounces, and then 10 Touches. It seems that, over time, that has basically reversed. I also suspect that the constrainment trades "dried up", as you said, because of the focus on a the M15 and a couple of fast moving currencies. I don't have any evidence for this, but it's at least possible that all that time there were enough H1 trades over the pairs you scan.

One last question: you say you do your initial scans in the morning. Can you be more precise about the time? I know you said before that it was before London open. How many hours beforehand? (That's a time that I can actually deal with).
  • #3,932
  • Feb 11, 2011 1:20pm Feb 11, 2011 1:20pm
Quoting duffypratt
Thanks for the answers....

Good point " I also suspect that the constrainment trades "dried up", as you said, because of the focus on a the M15 and a couple of fast moving currencies. " So looks like my crazy habbit of looking at all currencies has been useful for everyone

Time is not very relevant in my experience. if somene woke me up from deep slumber at midnight and showed me that chart i will shout buy. So what i am trying to say is time is not relevant- the setup is. I mentioned "before major market open" is because that's when i find them developing often - i have no hard evidence for it. The truth is that's when i wake up and look at charts. So thats when i find them!!

Sure enough do trade whenever you find time but remember to watch out for constrainments during any of "slow" times even when London/NY is in full swing


Hope that clears things. Hope your prophecy about slow movers is true and hope everyone here makes money trading constrainments! My happiest day will be the one when i dont have to post my constrainment in the evening because one of you have already posted it!
Making money is easy- Just dont take losing trades
  • #3,933
  • Feb 11, 2011 2:56pm Feb 11, 2011 2:56pm
Quoting iero4
What is the factor that you count the FIRTS touches? You mean that you trade the FIRST touch of 10 when it has started a strong downward or upward trend, right?

Then you trade the FIRST touch of 35/50 when they are on a strong trend (steep), right? Do I get it?
Yes on all questions.
  • #3,934
  • Feb 11, 2011 3:11pm Feb 11, 2011 3:11pm
Very good discussion in the thread tonight!
I like this a lot. You guys are good contributors and dedicated to learn. I can safely guess that you will succeed in this trip.
Survivor, I think the expertise you have developed with constrainments will be an excellent contribution to the thread. We have spend a lot of time on touches and bounces and most of you understand them correctly. But we have not spend as much time on constrainments which are a significant part of the strategy. Actually, the fact that I am usually trading from London open to early US sessions with EU and GU, means that I don't see many constrainments happening. But is seems that in other currencies that may be the way to go.
So my suggestion is to try and get more of those trades to appear here and discuss them. Survivor, you got the lead on this part, so feel free to present your experience and ideas.:nerd: A small summary (which currencies are good for this, what is the GMT time to look for these trades, how you apply the rules, etc.) would be a good start.
  • #3,935
  • Feb 11, 2011 3:33pm Feb 11, 2011 3:33pm
Quoting micmic
Hello everybody

I don't know whether this has been discussed before, but in any case here it is: As part of several systems I'm looking into, I've been trying to "quantify" some parameters of the dance as well. I have read the original manual and saw that the idea was creating a system as "mechanical" as possible. I don't know if we are yet to the point where we can build a purely mechanical trading system, but it seems to me that systems like the dance show a great promise for this.

Anyway, I was considering -among others- how could...
micmic,
These are areas of interest to us too. Feel free to present your ideas here, so we can discuss.
  • #3,936
  • Feb 11, 2011 3:38pm Feb 11, 2011 3:38pm
Quoting duffypratt
Search for Endroute in this thread. He has a post that talks about an M5 entry he's been taking. Also, the latest version of Clay's manual (look in the attachments), takes signals off the M1. Either of those approaches might use ideas that will help you.
Thanks, I'll check these out.

Quoting duffypratt
About your example: we have been trading more pairs on this thread than the Dance originally contemplated. The original idea was to get familiar with what goes on with one or a couple of pairs. Clay traded two pairs. Kostas started with just the GU, and I think he would still recommend a beginner to stick with one pair.

I also think you are missing one of the main points about the Dance (or if you aren't missing it, you are ignoring it). This strategy is not necessarily looking to make lots of pips across a broad number of pairs. Instead, the...
I certainly know what you mean. Changing frantically from one currency to the next while looking for signals all the time... been there, done that and it's frustrating. But my idea is not to make huge pips from lots of currencies (if that was as straightforward as the dance is, it would of course be desirable... but it isn't). My idea is to have a supplementary system for taking advantage of those times when you are watching a single pair and it suddenly moves rapidly in one direction and you keep waiting for a touch in order to ride the wave and before you know it the move is over.

Although I do think that one could also benefit from taking extra confirmation signals from other currencies... not too many of course. If you are watching EURUSD and are thinking about entering long, a look at a couple of relevant pairs like EURGBP and EURJPY would tell you whether EURUSD goes up because EUR is getting stronger or because USD is getting weaker (somehow I think that movements where one currency weakens against all others are more powerful than movements where one currency strengthens against all others, ie fear is more powerful than greed). If you are expecting a breakout from a constrainment you may see it happening a little earlier in the relevant currencies, etc.
  • #3,937
  • Feb 12, 2011 4:58am Feb 12, 2011 4:58am
Guys,
Clay brought my attention to an EA/script that follows a trade with the candles or the fractals. If we can make a small modification to it, we will have a tool that follows price by the rules.
So, to the programmers of our thread, please have a look at:
http://www.forexfactory.com/showthre...50#post4390050

Kostas
  • #3,938
  • Feb 13, 2011 9:04am Feb 13, 2011 9:04am
Quoting Survivor
but Sometimes the price will be constrained by some level rather than ma.
This is the most important thing that survivor said I think! Although I am new to the "Dance" strategy,I have spent several hours observing how the market acts (basically in GBP/USD, EUR/USD) in accordance to the Dance rules.

As you all probably know, these nice moves of the steep 10 EMA that most times give 70-100 pips occur very often and I call them constrainments although many times there is only one touch of the 10 EMA. From my observation I have found that at these moves, candles DO respect the 10 but they get constrained at some level as survivor said.

To find this level I rather use a 5 EMA or I draw a kind of trend line as you will see in the graph below:

Attached Image (click to enlarge)
Click to Enlarge Name: 10 EMA CONSTRAINMENT.JPG Size: 116 KB


I look forward to your comments!
You are allowed to fall but you are imposed to get up!
  • #3,939
  • Feb 13, 2011 11:08am Feb 13, 2011 11:08am
Quoting iero4
This is the most important thing that survivor said I think! Although I am new to the "Dance" strategy,I have spent several hours observing how the market acts (basically in GBP/USD, EUR/USD) in accordance to the Dance rules.

As you all probably know, these nice moves of the steep 10 EMA that most...

Thats new insight. Awsome! Thanks.

I have used them for actual constrainments but your charts make me wonder. I have never taken these trades but if they actually work then we are looking at touches in a whole new light. Will watch for them more carefully next time.
Making money is easy- Just dont take losing trades
  • #3,940
  • Feb 13, 2011 1:37pm Feb 13, 2011 1:37pm
Quoting Survivor
Thats new insight. Awsome! Thanks.

I have used them for actual constrainments but your charts make me wonder. I have never taken these trades but if they actually work then we are looking at touches in a whole new light. Will watch for them more carefully next time.
Oh, please look for them. I' ll be very happy if you could try this approach to these specific moves and share your experience with us! I think you will have 70% success.
You are allowed to fall but you are imposed to get up!
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