The System II (Yes with irony)

I think you should a bit more of Feb posts.
You are trading noise, it's not about what caused that move, when and why, but more about: trade the set-up, if it works, take some pips; if it doesn't, get out. If the market changes direction, you change with it, without being emotional about what happened.

Thanks for answer.

I thought I have respected Feb described setup:
I have waited to the price some pips in a trend direction, waited for retrenchment too.

Usually when an up trends ends, there are signs to see that:
The higher highs diff in pips are 0-10 pips, some bigger higher lows.
Or a news release time.
In the above situation I didn't see any of that.
The single sign could be the 5th up wave from 16 dec, 16:00, but before this day it was heavy news releases, so I wouldn't analyse the chart with Elliot wave for that part.
It was Friday and the Dec 16, 13:00 long should be closed, that cause the massive short move? 210 pip move in 5h on Eur/Usd should have a reason, this not a noise.

I went to Eur/Usd tread for fing my answer for my question.
Between so much spam I found a very descriptive info from Orbital:
http://www.forexfactory.com/showthre...372&page=23175

http://www.forexfactory.com/showthre...372&page=23204

Dec 17, 2010 14:54 (25 hr ago)

T@rantula
Full PA trader

Member Since Feb 2010
3,172 Posts

Quote:
Originally Posted by SkullCandy
i missed something, can you say one more time about friday trading plz?
huh...I have written a long article about Friday trading about 2 months ago



Basically....friday trading is all about profit taking. Big players, hedge fund managers and other institutional traders tend to PREPARE for the next week by PROFIT TAKING.

London noon close is the key. Big players dont want to risk any UNEXPECTED events during the weekend so prior to London noon they tend to close their trades ( profit taking). Market makers then run stops of retailers SPIKING charts violently.

Why? Because there is no one to defend market. All of the technicals get screwed up.
__________________

Thanks i just received your PM, ill try to answer your questions as detailed as possible. I'm currently looking to distance myself from the EURUSD thread since i lost a vouch there and its generally just become mayham in there. This is a very interessting thread and i will subscribe to it, so expect me to post in here from time to time

Read the "Jesse Livermore -Reminiscences Of A Stock Operator" book
This setup (described at the tread beginning) is very compatible what he want to teach in that book.
Personally I don't belive X pip should be the TP if you are going with trend.
I believe you should stay with trend until is a sign to get out.

"And I saw my stock go
kiting up ten points more and I sitting there with my four-point profit safe in my
conservative pocket. They say you never grow poor taking profits. No, you don't. But
neither do you grow rich taking a four-point profit in a bull market.
Where I should have made twenty thousand dollars I made two thousand. That was what
my conservatism did for me." -from the book

I wanted to know why the hell turned that trend without any sign in other direction.
It took me like 8h to read the full spam thread : Eur/Usd, horrible. -and I found the answer: because of the hedge found taking profits on Friday. - somewhere else I have read about this a few years ago...forgot that.

Find another trick:
Go back in time, in a thread
Find a post which has some descriptive analysis. Must contain fundamental too. Follow that users post and watch the chart at posting time.
Don't bother with those who post attachment in a trading tread pictures with womens, videos, or the post is "HI" and that all they post.

Like: http://www.forexfactory.com/forexpro30 or http://www.forexfactory.com/orbital
Go to user profile and see his friends, try to see another descriptive posts.

You must find YOUR style, else you will trade other style, and what if they are not online?

EDIT: Pictures attached at the bottom of the post

I promised i would respond in deeper detail so here i am responding.

You will need to look at the following things that happened; this will be an explanation in terms of technical and fundamental analysis.

Trend underwent a Major change in October/november forming with those extreme pin bar fluctuations as you can see in Picture1. From there on all you needed was to draw a simple fork/channel lines S/R zones to understand its movement down is imminent.

Now if you look at the second picture you will see the pinbar formations and insidebar corrective movements. The important thing to notice here is that while the Big downmovement came as a natural/impulsive movement based on the failure of Europes Financial stability, the waves upward on the daily charts were merely corrective movements up as you can see because none of the upmovements were able to take out critical resistance levels.
The selling pressure became intense enough to bring the euro down.

The past couple of corrective movements can be interpreted as hedgefunds defending their positions or taking profit/swiping out the buyers and doubling down on their short positions. This happens a lot especially on smaller timeframes.
The important thing to notice here is that the last pinbar which peaked at 3500 (chart 2 last yellow marked bar) already said everything you would have needed to know in order to short for massive amounts of profit.

The third chart is where you will see the fundamentals play out.

In the beginning we had a HUGE upward movement, this was caused by 2 things:

Investor confidence in the euro because of the

1. german finance ministers announcement to defend the Euro at any cost ( this was very important and significant)
2. the fact that the ECB decided to extend its bond purchasing program (extent unknown and spekulative at this point)
3. Ireland Bailout approval speculation

That move lasted quite a bit and was strong enough to flush out positions, ideally for funds and big players to setup their shorts. What came after that can only be described as a shitstorm of news for the eurozone in an unprecedented magnitude

Technically that bar marked in yellow with the long shadows both way is always a sign to me of a "fake breakout" or otherwise interpretable as a sign that the wave was artificially created by big buyers/funds.
Such bars always show to me clearly that the move is about to be reversed.
You need to study priceaction and market depth to understand why here.

So we resumed our longterm downtrend (monthly/weekly) and hit a bottom, which is where the Philly announcement came that i blogged about. The issue here was the following:

While the numbers itself exceeded expectations, the important numbers ( actual price increase/ increase in cost and the unemployment drop) signaled that something was severely screwed up which is why we had a fake breakout, now unfortunately i lost money on that trade because i didnt expect the inflated movement upwards to be this strong,but it was clear at this point that since its the last trading day most funds will begin to just rip and tear (in collaboration) through the retailtraders.
Reasons for this are the fact that the funds saw that the US Bonds are improving in terms of yield (dollar demand) and the announcement about the ECB capital hike was confusing as fuck to so many people.

Factors:

 

1. Spanish bond auction failed miserably
2. ECB announces Capital hike (doubling from 4.9 to 10.6 billion)
3. Ireland 5 Notch downgrade
4. Spanish bonds rumord to be under risk from downgrade (credit worthiness)
5. Pin bar Indicated massive manipulation by funds and retail confidence in the Euros valuation above 1.30
6. US Dollar Demand as seen by soaring bond yields (check treasury data)

Now its important to understand these news especially the Capital hike, capital hike (even though they have a reserve fund for bailouts and bond purchases) signals that ECB wants more capital in reserve for a multitude of reasons. Could these reasons be the messed up situation in Spain and Portugal? Add Irelands situation and you have an explosive cocktail.
Irlands downgrade by 5 notches and Spanish bond auction failure shows low demand in the euro and a devaluation of the currency as a whole by many investors.
The Pin bar made it pretty clear that this was a take profit setup on the last trading day for funds since the upmove failed to take out any critical S/R levels.

So you really ought to look at news from a different angle, what moves the valuation of a currency is not some news announcement but the perceived values investors have in the currency. Announcements like core durable goods, cpi etc etc may move the market 20-40 pips and thats even to much since its mostly retail traders going in full blown enrage modus when they see those announcements. But watch for real important news announcements, read some books on the valuation of a currency (wikipedia is a good place to start and then look at the book citations)

I hope this post will answer some of the questions you might have had. If you need more detailed answers please do not hesitate to ask.
But i need to remind you that this is just an informed oppinion, at the end of the day a mult billion dollar fund can move the euro a couple of hundred pips if it chooses to do so, you need to look at supply and demand levels more intensely and understand how it works and what the chart tells you about the valuation of the euro or dollar
My analysis is subject to human error obviously and im not claiming to be some kind of genius or god or anything, i just watch the news S/R levels and my forks very carefully and place speculative bets based on what i perceive the announcements effect to be on the currency.

I also use 1-2 Indicators in my analysis though i try to refrain from doing so unless im looking for exit points or good longterm entry points.

Best regards,
Alexander

Thanks for answers.
I hope everybody learnt something.
I forgot why I have traded on m5 chart: because it was to late / risky to enter at h4/daily chart. And I wanted to trade.
This setup met the situation except is wans't a new trend. I have entered in position after a pullback reach again the highest high price. That was good.
I knew I that moment is countertrend so I have set the TP. I saw I have right I have entered agan, again with TP, any I forgot the main dowtrend lol
Forgot the Friday trading. On Eur/Usd tread somebody told is a head and shoulders pattern, and the resistance lvl became support lvl. That is the only thing what is shows there will be the reversal.

I do believe the fundamental moves the market, not the technical indicators make the politicians, bank governors decisions, but inverse. I am using indicators / chart determine when to enter in position and exit.

Somebody on Eur/usd tread at one moment asked Up or Down. I was in the same situation a few years ago too. If is not crystal clear if is up or down than do not trade. If if not clear why there is up a movement why there is a down movement, do a research. Maybe it will take a few minutes, maybe 8h reading spams maybe more, but you will fing your answer. Hopefully next time you remember.

I'd like to know if somebody in the forum can recommend a broker to open a live account ?

Matheszabi and Orbital....

Please leave your fundamentals and indicators at the door. This is a 1 2 3 system thread and fundamentals and indicators really don't apply here.

If it gives you fake outs ... get rid of it.... this system does not need indicators or fundamentals.

We don't care who did what to make the price do this or that, we just trade the price with MM.

IMP

I have found Oanda to be a reliable one, I have been with them for some months now and they are pretty good during volitility. Also they have a 5second chart which comes in very handy when you put it alongside an mt4 one that I use for charting. On a 5second chart you start to get a feel for the momentum / price action and are made immediately aware of unexpected spikes, these sudden price jerks can be a 45 pip candle in seconds, this tells me to close my position if against me. The really good thing I find with 5second charts is you begin slowly to recognise where price is actually going despite evidence to the contrary once you get used to it. Also, I recall sometime ago I read about a guy who was semi-retired trying to go back to trading for an institution but they required him to read straight off a 1/5sec chart and not tape reading as was his way in his day, if you will.

I'm new here, well, new to this topic. I couldn't go through 1000+ pages but I did went through the first 10-12 pages and I must thank Feb for explaining everything so nicely. So, thank you.

Trading setup.

Thanks to Feb. Learnt a few more tricks reading the first few pages of this thread.

Setup.

hi there,
been reading this a lot, and trying the system for a few months now, and made some money with it. Only in the last few pages I'm seeing graphs and terminology I don't recognize in febs rules, like 123 things or fractal reversal, and a indicator that comes with that? Can someone link me to some details please because a thousand pages is a lot to be honest

Ignore them. If you are making money with basic TS II why do you need them

well it looks very interesting, because I hate it when a setup developes, and the trend goes the other way, and I'm not playing. There also seems like a certain point where the reversal gets confirmed. If I watch the latest graphs, it looks like people can recognize that point. Is it maybe the 50% fibo line?

hey I am right now at page 400 or so. It´s really interesting.

Here I found a summary about some later posts you can read to understand that terminology:
http://www.forexfactory.com/showthre...19#post3347279