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  • #621
  • Sep 29, 2011 10:05am Sep 29, 2011 10:05am
Hi LJ...
jus a question...
would u consider feasible taking "non-Fib" retracement touch trades for a pure technical trader?
i see ur charts u take trades where PPZ coincides with 50/61.8 levels..
wat abt taking TTs having decent(but non fib) retracements n price meeting some strong PPZ level..will it be fine?
  • #622
  • Sep 29, 2011 12:06pm Sep 29, 2011 12:06pm
Those charts are wonderful and the way you explain it is more than wonderful. Every time I see your charts, I learn something new. Whenever, I have time I stare at your charts for hours and it helped me being a better trader.

Thanks from the bottom of my heart.

Alifari
The purpose of knowledge is action, not knowledge
  • #623
  • Sep 29, 2011 12:58pm Sep 29, 2011 12:58pm
Quoting AvanishDemo
Hi LJ...
jus a question...
would u consider feasible taking "non-Fib" retracement touch trades for a pure technical trader?
i see ur charts u take trades where PPZ coincides with 50/61.8 levels..
wat abt taking TTs having decent(but non fib) retracements n price meeting some strong PPZ level..will it be fine?
Yes I definitely would - fib is not a requirement for me to want to take a touch trade.

I will take TT's when there is only an S/R level (i.e. not other technical confluence) if:

a) It's a clear FTB, or
b) It's a retracement on a PA bar, or
c) there is confluence from correlated pairs.
  • #624
  • Sep 29, 2011 2:04pm Sep 29, 2011 2:04pm
Quoting alifari
Those charts are wonderful and the way you explain it is more than wonderful. Every time I see your charts, I learn something new. Whenever, I have time I stare at your charts for hours and it helped me being a better trader.

Thanks from the bottom of my heart.

Alifari
Glad you find them useful
  • #625
  • Oct 3, 2011 9:48am Oct 3, 2011 9:48am
Hi LJ,

Thank you for this wonderful thread. It is so enlightening, insightful, etc., etc. Just can't say enough good things about it.

Getting to the point: I am basically sold on your bread & butter trades - the FTB TT.

Earlier today I have identified an FTB set-up on the GBP/CAD but I hesitated in placing a buy limit order because of the upcoming PMI. Looking at hindsight, I should have taken the trade and exit at the FTA .

Please kindly shed some light on how you would approach such situation, whereby you have a set-up but at the same time you have an important data coming up, particularly on this one. Also, for this set-up the PPZ is slightly above the 50% fib, would you pass because of this?

Along with the GBP/CAD chart I have attached other similar potential intraday set-ups (as long as the fib swing points remain valid). I am still learning to identify them so please bear with me and I would appreciate any inputs/pointers.

Thank you.
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  • #626
  • Oct 3, 2011 9:49am Oct 3, 2011 9:49am
More charts...
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  • #627
  • Oct 3, 2011 5:26pm Oct 3, 2011 5:26pm
Quoting supra
More charts...
Personally I think you should always be aware of scheduled economics news when taking touch trade.

It would be unlikely that I would have taken the GCAD trade with such important news about to be released, the main reasons being slippage/fills and spread - spreads will likely increase at news times, especially on a pair which is less liquid than the majors and a pair that already has a material spread of around 5+. This coupled with potential slippage means that IMO it's just not worth the risk.

By their nature TT's have relatively small SL's so if something goes wrong due to spreads/slippage it doesn't take much for your trade to have caused your account some serious damage.

Whilst talking about GCAD - I personally wouldn't have liked that trade, the better trade setup IMO occurred later - look at the daily and 4HR chart.

You definitely seem to have gotten the gist of the standard TT setup - one thing to note, just make sure you know whether a setup is based on a daily S/R (or higher TF) or on a lower TF S/R. You should find that the best setups occur when they are based on higher TF S/R's

Of course identifying tradable setups is one thing, the next step is to identify where you would place your entry, SL and how you would manage the trade. Identifying firm rules on SL placement and developing efficient trade management techniques is more important than identifying entries.
  • #628
  • Oct 4, 2011 6:33pm Oct 4, 2011 6:33pm
Quoting lovejoy80
Personally I think you should always be aware of scheduled economics news when taking touch trade.

It would be unlikely that I would have taken the GCAD trade with such important news about to be released, the main reasons being slippage/fills and spread - spreads will likely increase at news times, especially on a pair which is less liquid than the majors and a pair that already has a material spread of around 5+. This coupled with potential slippage means that IMO it's just not worth the risk.

By their nature TT's have relatively small...
This was the GCAD setup I was referring too.
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  • #629
  • Oct 4, 2011 6:36pm Oct 4, 2011 6:36pm
Great locations on AU, NU, UC combined with USDX confluence too. I opted for NU and AU only.
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  • #630
  • Oct 5, 2011 9:23am Oct 5, 2011 9:23am
Quoting lovejoy80
This was the GCAD setup I was referring too.
Yes, I can see why. It's on weekly support and after a bullish data for GBP.

... and I could not agree more that there's a whole lot more than just entry. Thank you for pointing me to the right direction. I look forward to learning more from you.
  • #631
  • Oct 6, 2011 5:23am Oct 6, 2011 5:23am
Took an FTB TT on USD/CAD, had a supporting correlation on the USDX.

Planning to exit before the unemployment claims data, SL now at BE+2.
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  • #632
  • Oct 6, 2011 7:09am Oct 6, 2011 7:09am
Quoting supra
Took an FTB TT on USD/CAD, had a supporting correlation on the USDX.

Planning to exit before the unemployment claims data, SL now at BE+2.
Nice one

I spoke about the exact same trade yesterday in the Skype group (wasn't around this morning to trade it). The first line of resistance has been hit so definitely wouldn't be taking a loss now.

Like you said, US data release in 30mins which can produce some volatility so you'd be foolish to not be at BE at least - I wouldn't necessarily be taking profit because of it myself (I would have had half off the table at the FLR and to BE on the remainder) because price is far enough away from the entry.

Notice how price closed above forming a 3HR BUOB in the process.

Don't forget the equity confluence too - but yes the USDX was good confluence as this area has proven tough to close below (and now we have a 4HR BUOB).
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  • #633
  • Oct 6, 2011 7:13am Oct 6, 2011 7:13am
The other FTB setup was NU.

I've said it before, when the market is broadly driven by risk sentiment, correlations are typically very strong, thus watching US equities, USDX+EURX and the USD / JPY pairs together is very wise right now.
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  • #634
  • Oct 6, 2011 7:55am Oct 6, 2011 7:55am
Quoting lovejoy80
Nice one
Thank you, LJ. It's what one gets at staring at your charts .

However, like you said earlier it's the trade management that matters. I moved my SL to 1.0402 (5 min S/R levels) as I had to run for a while and got stopped out. Indeed I had placed an order to exit half at 1.0430 and the remainder at 1.0460, but... Anyway, I am grateful on the 1.10% banked on it.

FLR is a new term for me, it's first line of resistance, right? Is yours at around 1.0435? So you only move SL to BE when FLR is reached?

Very happy to see the other examples as this means that there are plenty of opportunities but I do need to make sure that I don't get ahead of myself. Continue studying...
  • #635
  • Edited 9:30am Oct 6, 2011 8:58am | Edited 9:30am
Quoting supra
Thank you, LJ. It's what one gets at staring at your charts .

However, like you said earlier it's the trade management that matters. I moved my SL to 1.0402 (5 min S/R levels) as I had to run for a while and got stopped out. Indeed I had placed an order to exit half at 1.0430 and the remainder at 1.0460, but... Anyway, I am grateful on the 1.10% banked on it.

FLR is a new term for me, it's first line of resistance, right? Is yours at around 1.0435? So you only move SL to BE when FLR is reached?

Very happy to see the other examples as...
5min S/R levels on a trade based off the daily/4hr/1hr TF's - I wouldn't encourage that myself - you'll always find a reason to exit if using S/R based on that TF!

Yes, 'First Line of Resistance' - mine was at the same area 1.0430 area which is daily S/R (scroll back to May-August - it also acted as support very recently)

I would have used 1.0475 area as the 2nd target - again a daily S/R area which can be seen very recently on the 4HR TF.

This is how I recommend beginners manage trades. Identify your FLR/FLS take some profit and move to BE then practice managing the trade from thereon based on what price is telling you.

For example after the FLR was hit price closed above it on the 1HR TF and in the process forms a 3HR BUOB - this is a sign that price is more likely to head further up towards the next resistance area than back down.

Now we have new information as to what price is more likely to do next we can move the SL on the remaining portion up to below the more minor 1HR support area marked. Then, as expected the 2nd target is hit - take profit on the remaining position or scale out some more and see how price reacts at this are - i.e. can it close above it. Keep repeating this process - locking in profit / scaling out as price provides you with new information - until you get stopped out or price tells you that there is a higher probability of a reversal.
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  • #636
  • Oct 6, 2011 9:04am Oct 6, 2011 9:04am
Quoting lovejoy80
5min S/R levels on a trade based off the daily/4hr/1hr TF's - I wouldn't encourage that myself - you'll always find a reason to exit if using S/R based on that TF!

Yes, 'First Line of Resistance' - mine was at the same area 1.0430 area which is daily S/R (scroll back to May-August - it also acted as support very recently)

I would have used 1.0475 area as the 2nd target - again a daily S/R area which can be seen very recently on the 4HR TF.

This is how I recommend beginners manage trades.[u][i][b] Identify your FLR/FLR take some profit and...
Where is FLR coming from,if you don't mind me asking?
  • #637
  • Oct 6, 2011 10:03am Oct 6, 2011 10:03am
Quoting madboy
Where is FLR coming from,if you don't mind me asking?
Just a term I like to use - personal preference.
  • #638
  • Oct 6, 2011 10:25am Oct 6, 2011 10:25am
Quoting lovejoy80
5min S/R levels on a trade based off the daily/4hr/1hr TF's - I wouldn't encourage that myself - you'll always find a reason to exit if using S/R based on that TF!
I concur, going down to the 5 minute chart was just total ignorance on my part given the trade context. It's a good lesson learned now.

I appreciate the detail trade management strategy. It makes a lot of sense. Just one question, please: So you don't move your SL at all until price reaches the FTA or FLR (FTA & FLR - interchangeable terms?)?

Quoting lovejoy80
... until you get stopped out or price tells you that there is a higher probability of a reversal.
Please advise how to tell that there is a higher probability of a reversal?

Thank you.
  • #639
  • Oct 6, 2011 1:31pm Oct 6, 2011 1:31pm
Quote
I concur, going down to the 5 minute chart was just total ignorance on my part given the trade context. It's a good lesson learned now.



Quote
I appreciate the detail trade management strategy. It makes a lot of sense. Just one question, please: So you don't move your SL at all until price reaches the FTA or FLR (FTA & FLR - interchangeable terms?)?

Yes, most of the time (unless something happens to change my view of the setup) I wont implement my trade management strategy until the FLR/FLS has been hit (yes - interchangeable terms).

Quote
Please advise how to tell that there is a higher probability of a reversal?

A setup you would take in the opposite direction of your trade.

On UC when it hit 1.0475 area was there a reason to short there, if there was then of course that's a reason to cut your trade and take profit. If not then we have know way of knowing what price will do there it's 50:50 hence why I would scale out of my remaining position and watch what happens.

But taking full profit at the FLR/FLS should rarely be done IMO - (unless you have 'information' that price will reverse from it) as it's not efficient trade management and doesn't allow you to catch runners.
  • #640
  • Oct 7, 2011 2:18am Oct 7, 2011 2:18am
Here is an example of trade management (and how I recommend managing trades) from a setup we discussed yesterday.

The points I want to get across are that:

Exits are more important than entries.

How you manage a trade makes a huge difference to how quickly your account will grow. I see so many traders pick good probability entries but manage the trade so poorly - often cutting trades too soon based on P/L reasons - cutting a trade due to emotional response to the size of the P/L is poor trade management - it doesn't matter on the size of your account, you should never manage a trade based on it's P/L.

Taking full profit at FLR/FLS every time is not efficient trade management

You do not grow an account efficiently by doing this. By efficiently I mean growing it as fast as possible without increasing the chance of suffering a loss.

Most people want smooth account growth - i.e. a relatively high win rate, steady gains and the odd bigger gain. This profile suits a lot of traders personality. To achieve this in the most efficient manner you need to give yourself a chance of catching a runner without exposing your capital to unnecessary risk.

Taking full profit at FLR/FLS is NOT the way to achieve this, reducing your risk exposure to zero and banking SOME profit is (unless you have a setup in the opposite direction) a better way to achieve this. Learning to manage trades by what price is telling you is important and will help you immensely in the long term.



But if you are serious about trading you will go and investigate trade management techniques for yourself. How do you think I concluded what an efficient trade management strategy was - I didn't read it somewhere and think it's gospel - I went and spent hours of looking over past setups. I then forward tested and noted in a journal different outcomes using different strategies. Once you've got a decent sample it all becomes very clear. The big added bonus of doing this yourself is that you then have complete confidence in your strategy because you've reached the conclusion yourself based on factual research.


To start out with I would recommend keeping trade management simple, you will then pick up things as you gain more experience. So, for example 50% off at the FLR/FLS, move SL to BE and then scale out / take full profit at the next target etc.

Thus, for the ECAD trade I would recommend 50% off at the FLS, SL to BE then full profit at the 2nd target - because it's actually a reason to go long.

Let's see what this would have yielded.

Short @ 1.3995, [email protected].
Exit 50% @1.3970
Exit 50% @1.3935

Result +1.52R
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