High velocity trading

Hi guys! High velocity trading thread will be used to post my analysis and calls across FX / futures markets. My experience is 6 years with FX and 2 years doing commods futures/options for an oil company. I manage the funds and a side account for myself.

My primary areas of interest:

- Reversal trading
- Pattern recognition
- Trade Price Action using S/Rs
- Level trading
- Technical confluence

I use a variety of tools to gauge reversals and like to take counter trend trades, when secondary trend is established. However I do trade with momentum and never take trades against the primary strong trend.

What makes this thread different? I will try to post detailed and to the point analysis and forecasts for the new trading week with possible recommended trade setups. I seek confluence across variety of instruments, for instance to gauge potential upside/downside on GBPUSD I might analyse USDX, Silver and GBP crosses. If more than 2-3 instruments line up for a strong move, that where I move in and take a trade.

Previously I ran a thread on Moneytec for 4 years with live calls and good results. Currently I can't post as much as back then, so I will look to update this thread once during work week and over the weekend.

Please feel free to share your charts that have clean setups (pitchforks, pattern recognition). However if you do post charts please provide some clean explanation and mark up of the charts.

I will start by posting some of the charts that I prepared last weekend and during this trading week.

As I promised previously, here are the quarterly pivots for most FX pairs and commods that I follow.

The levels will be good from Oct 1st to 31 Dec 2011.

http://img137.imageshack.us/img137/2...ndpivot011.png


TUTORIAL NUMBER ONE OF THE METHOD (OCTOBER 2011)

http://img15.imageshack.us/img15/553...al04102011.png

Steve here's a good tutorial on USDCAD H1. THe setup was yesterday. Remember I tried to go LONG with 20 pips SL? I was stopped out. Well the setup was still good, since the TL held. But I was out of the office. Was a good entry @ 90 and TP + 100 at least or even more.

The logic is simple - above WP and above MP - only LONG. Broke Friday's high + support @ TL = you go LONG with tight SL (20-30 pips at most).

This is a typical HQ setup. Not all setups will be like this. Still the framework is pretty much the same.

You use pivots, S/Rs and tech confluence and yesterday's close to gauge price action for the day and look for direction based on your current layout.

TUTORIAL NUMBER TWO OF THE METHOD (OCTOBER 2011)

http://img593.imageshack.us/img593/4...ej04102011.png

Here's a quick one WP rejection on EUR GBP happened yesterday. Green long-wicked candle @ WP = rejection and short sell order. The channel is projected according to the chart comments.

WP rejection frequently happen early into the week (Mon-Wed). That's HQ setups worth taking.

Also TPs. How do you set TP? Easy enough, you use ADR to gauge how much more upside/downside PA has and add in to you entry price.

For instance EUR GBP ADR is 100 points. The low is 8520. You enter LONG @ 8535. Where would you put your TP? It's 8535 + 75 = 8610. That's as simple as that. YES, if you plan to buy and hold / sell and hold, TP can be 2 or three times the ADR. Still most frequently you want to take one ADR on the TP side.

TUTORIAL NUMBER THREE OF THE METHOD (OCTOBER 2011)

Here's EUR CAD H1 Tutorial. Pretty much explanation on the charts

http://img684.imageshack.us/img684/3...h104102011.png


BEST TRADE OF THE THREAD GOLD (OCTOBER 2011)

Ok guys a quick recap of probably what is my most success setup since August (I shorted DJI @ approx 12 250 points back then)

I was focused only on shorts since Monday. Sold around 1650 and made a small profit. Then price went up to 75 area. 75 is Quarterly Pivot. Very Strong level. Also 90 is Monthly.

Price action was denied upside @ Quarterly Pivot (posted a list over weekend, see post Number 1 of this thread).

Then we short sold 54-56 area, upon MidPivot + TL break = it was a very clear sign to go SHORT

TP 1 was set @ 1612 @ WP = which was reached shortly in US session. TP2 was too far off (1540) and was never reached. Stocks started to rebound. Oil started to form a DBL BOTT (BRENT). I took profit upon M15 DOJI @ 1600 area = this is a key psychological level and rev candles are stronger here.

All in all we covered yesterday a 50 dollar move almost completely (99%).. Hope you guys had a good run too.

Here' the chart recap anyway.

http://img265.imageshack.us/img265/3...de04102011.png

ALSO ADR (Average Daily Range) MT4 indicator attached within, feel free to use it!

Guys, here's the requested template, which I'm using myself.

just put tpl into templates of your MT4 and ex4 into indicators folder.

b-clock is candle timer
shi channel - is a shi channel - very flexible, check it out
floor pivots weekly - best weekly pivot indicator that I know of
pivot 4 custom timeframe - can display weekly, monthly, mid pivots, etc.
I use this to display monthly pivots.
Ind-TD-DeMark-3.mq4 - Used to identify entry points and TL breaks on LTF(M15 and M30).

http://img508.imageshack.us/img508/9...junem15.th.png
http://img687.imageshack.us/img687/9...4upside.th.png
http://img715.imageshack.us/img715/9...may2011.th.jpg
http://img573.imageshack.us/img573/9822/eurxday.th.png
http://img8.imageshack.us/img8/1563/...40chart.th.png

http://img853.imageshack.us/img853/2...usd4hhs.th.png
http://img585.imageshack.us/img585/1...may2011.th.png
http://img38.imageshack.us/img38/554...idinghs.th.png
http://img803.imageshack.us/img803/7...terlyd1.th.png
http://img823.imageshack.us/img823/7...harmony.th.png

http://img813.imageshack.us/img813/9485/ieurxd1.th.png
http://img221.imageshack.us/img221/962/ieurxew.th.png
http://img34.imageshack.us/img34/2168/ieurxh1.th.png
http://img862.imageshack.us/img862/7...16thmay.th.png
http://img860.imageshack.us/img860/9...dx1440g.th.png

http://img59.imageshack.us/img59/957...4retest.th.png
http://img29.imageshack.us/img29/6417/nzdusdd1.th.png
http://img198.imageshack.us/img198/4...lverm30.th.png
http://img809.imageshack.us/img809/4...adm30ew.th.png
http://img833.imageshack.us/img833/1...dxdaily.th.png

You might say, that's great stuff, but what about some real trade setups?

Fair enough, here's one for you guys. It's a chart of GBP CHF (H8).

I expect a retest of monthly pivot (reason: downside is limited because average monthly range is almost out and weekly range is out, we had a nice reversal at the last leg and also USD CHF is aiming higher with a potential break out of the upwards sloping channel ---> all in all should give GBP CHF a nice boost!).

From that point I will look for a reversal confirmation, now I'm not saying that we reach MP and reverse, however currently a retest of MP is in place on GBP CHF, so we need to wait for that PA to reach MP and gauge reversal potential once the PA is @ MP level.

http://img193.imageshack.us/img193/7021/gbpchfh8.png

Also, I posted an interesting chart on EUR JPY earlier this week @ another thread. Here it is. Price up almost 200 points since then. The deal was that EJ completed it's possible monthly range before 1/2 of the month was complete. Yes we did have some more downside potential, however confluence with upward sloping channel and some what delayed upside reaction on USD JPY were good boosters for a long entry.

http://img687.imageshack.us/img687/9427/ejh4upside.png

Also here's a brief description of systems I use:

Reversal - I aim for 200-400 points. Trade off H4/H6/H8 charts. Enter upon confluence, enter early before momentum starts to pickup. I use variety of tools to measure trend exhaustion and gauge price action.

Breakout trades - Aim for 60-120 points, depending on the currency. R:R is 2,5-3.0 to 1, so I risk 40 to get 120 points (pips). Breakout system is also based on early entry, before momentum picks up. Breakouts are great, however need to be properly filtered and result in frequent loosing streaks due to ranging PA - so filters need to be adjusted accordingly.

Making money consistently requires knowledge of underlying forces that move currencies. Also you need to be aware of seasonal patterns across currency markets. When does the currency tend to make important highs / lows? You also need to watch for range contraction / expansion and volatility. Lower ranges and lower volatility means you get trapped inside a range and produce losses, so that needs to be filtered out.

I'm 100% negative about any mumbojumbo EA's and indicataros. 99% of them lag behind and if they were making profits, they won't be sold online, so please do yourself a favor and don't waste money on any automated EA's, colorful indicators - they won't work really.

What does work well is options, option expiration, Commitment of traders reports and probably Bloomberg terminal. That can save you a bunch of money if you have a 5-6 digit account.

Also some of you might say - well here we go again, another system, looks good, but does that deliver? well I don't usually post statements in public, but here's interim result for april 2011 (posted here already anyway @ another thread), I din't get much trading done in may due to other outstanding business in the company, however it give you the idea.

I tend to look to return 20-30% on monthly basis, when Im trading actively. I also withdraw and top up my accounts whenever there is a need / opportunity to do so.

http://img856.imageshack.us/img856/3114/april2011a.png

http://img815.imageshack.us/img815/6341/usdxh122.png

USDX is running out of gas. Here's a 12 hour chart of USDX. Yes we did have a strong move from the recent bottom, however don't forget that for now primary trend is a downtrend, only a secondary could be called a downtrend.

Also we did not manage to reach quarterly pivot @ 77.56. Also currently R:R on downside exceeds upside almost five times, so the odds are favoring downside on the dollar near-term (3-5 days).

Hi ruffryders,

Thanks for sharing your system and experience.

Would you be posting actual trades as well?

-Venu

Here's the link to Moneytec thread for the reference. I posted live calls there for 3 years in total.
http://www.moneytec.com/forums/f228/...-trades-22423/

I will be posting pending setups over weekend for the Reversal system, I might post some breakout suggested trades during the week.

Hope that helps!

http://img163.imageshack.us/img163/3029/usdcadh8.png

Here's a chart I wanted you guys to check out to demostrate how I would take a reversal trade. It's an H8 USD/CAD chart. On the chart a clean uptrend is present.

Now I would like to see a reversal trade setup confirmed here. On the chart there are two drives to the upper band of the channel. I would look the PA to do one more drive and short sell upon confirmation of three drives to the top @ 9810-9825 area, I'd use a tight SL of say 20 points and target 80-120 points.

I would look for confirmation of reversal on lower time frames and scan candle formation on H1 through H8 timeframes. This is generally my way of handling the setup - I don't wait for a price level to be triggered I prepare for certain price reaction ahead of time when I'm doing reversal trading.

Also if you look at that chart there is another trading opportunity to go long right about now. Currently last H8 candle is forming a reversal pattern @ Weekly Pivot, weekly pivot is also a round psychological level (50), so it has double strenght. Now if the level holds and we do range and several more candles close above the body of the H8 candle - it's a good signal to go long with SL below WP (WP-20 pips). Take profit level would be recent high + 20 pips.

ruffryders,

Thanks for your quick response.

I have subscribed to your thread and looking forward to learning from your experience.

"confirmation of reversal on lower time frames and scan candle formation on H1 through H8 timeframes"

What kind of confirmation do you look for in lower time frames for reversal?

Pretty much the basics, which you can review right here: http://bonus.ino.com/downloads/17Candlestick.pdf

There is great detail in bulkowski's book on candlestick patterns with statistics and probabilities, so it's a pretty good book if you ask me.

You also would want confluence (for instance if pattern occurs and WP/MP and or round number level - that gives a stronger signal).

current recommended trade setup on USD CAD:

USD CAD LONG @ MARKET (9675) SL 9640 TP 9820 (risk 35 points to get 145)

reason for the trade: PA bounced off the WR1 came to WP and formed a reversal pattern in an uptrend. CAD undermined by weak oil price.

if you can get a better entry before hour closes by all means do so.

CAD trade expected to perform well. Oil melting down, light crude @ 98 now way below MP and below WP, I expect oil to drop to at least 94-96 very soon. Quarterly pivot on oil is 89

FYI here's light crude chart. The oil is going down, because we are selling our next month's volume @ a discount.

http://img38.imageshack.us/img38/2088/lightcrude.png