The Confession & The Secret

It was actually 3925, but it is very hard to be that precise with an online trading account over the internet - so I get as close as I can at the start. Of course, the line shifts as the Swap Sequence begins, but the line is draw based on a Double Stochastic arrangement coupled with one of my custom indicators.

I'm still working out some details about precisely how I want to finally approach the V-Trigger. I think I might have a way to forecast a sideways market on the M15, which the the V-Trigger time-frame. But, I'll work out those details later.

About 40 pips or so to go before the trade goes terminal and becomes unrecoverable, given the EU walk-out that just occurred. Leave it up to the politicians, and everything will eventually fall apart one way or another.

At the very same time, there was a nice V-Trigger at 1145 hrs GMT (close) on the 3956 level. It had one negative Swap and then turned down to the current close of 3883, for a quick 73 pips or so. Could not trade that one, as I'm locked into recovery of yesterday's trade.

Here's what it looked like:


http://www.freeimagehosting.net/t/0c12b.jpg

Clearly, the key to this is wrapped up in the V-Trigger logic. When the market is this sensitive to politicians, anything can happen at any time. In times like this, Directional trading becomes very hard and Swap style trading becomes easier. Unfortunately, yesterday, the market congestion was really gross.

Recovery analysis follow-up.

Recall that the Weekly range is non-directional, so the remaining 75% of fuel in its tank that I wrote about yesterday, can expand either the Weekly high, or the Weekly low (as stated previously). The recovery requires an expansion of the Weekly high. Right now, they are walking out of meetings in Europe, causing the market to react negatively on the EURO dollar. There has also been word of putting off the final decision until November. So, the Week could expand its low because of this news.

However, because I have already switched to using the Weekly open as the recover Swap line, I've made a strategic decision that won't allow me to engage any Daily Swaps, unless they occur around the Weekly open, which has just happened. So, I have Swapped to Short using the Weekly open as the new line.

The problem with that, is that it pushes the loss to a level that in production trading, I would never accept as being recoverable at -187 pips. So, obviously, this is not realistic at this point.

Trade is now terminal and closed.

In total, I've got 180+ pips to go to work on.

In hindsight, by missing today's V-Trigger (see pic above), I missed out on a 127 pip trade thus far (minus one negative Swap for -9 pips). It was 73 pips just a few minutes ago as it just put on an additional 54 pips profit. But, I can only do one thing at a time.

At this point, I'm waiting for the next V-Trigger and I am back to the M15 chart with two and a half trading days remaining before the end of the week.

The market profile revealed that there were very few buyers above 1.3950. What are you using for exits?

As a side note - it may be time for a United States of Europe. Just maybe.

The Weekly high is 3974 and the Weekly low is 3798. That's 176 pips deep. The Weekly range is now 361 to 391 pips deep. If you get a late week break near 3974, then a flood of buyer will come out of the woodwork to push price to near the Weekly range, which would build 361 to 391 pips on a floor of 3974. The inverse is true for building a ceiling from 3974 and adding a staircase down for 361 to 391 pips from there.

In my experience, buyer and sellers end up going where they need to, in order to fulfill history. Else, there would be no viable historical data to analyze and that data would be completely variable and without range structure.

The Weekly range has been on a three week compression cycle, since the end of 10/9. The Weekly SMA8 and SMA21 have been converging against price since the end of 10/2. Compression on price plus compression on Weekly range = very volatile cycles on all smaller time-frames, which is what we are witnessing right now.

That's the technical explanation for the 1000 hrs of silence, followed by 1 hour of thunder and lightening in the EURUSD. Buyers and sellers will conform to that as they attempt to adapt. But, when price moves, they will tend jump on the gravy train. Most of these people are Fundamental Traders. In fact, the fast majority of the market fits that profile.

That's why we get periods like this, that defies most technical analysis for Directional trades. It also explains why I've been making the shift away from Directional trading, to Non-Directional Swapping - trying to meet Fundamental buyers and sellers wherever I find them lurking.

My exits are determined by historical range data across several dimensions of price action. When I get a confluence of range limitations in the dimensions that I track for targeting, I exit the trade. If my Swap Sequence gets blown out of proportion, I enter Recovery Mode by using Weekly data, in the exact same dimensions. If the recover gets blown, I close the trade and look for the next V-Trigger.

I Swap until I am profitable, or until recovery is not soluble in the remaining Weekly range data.

If you have noted the trade journal, you will see that a V-Trigger came at 3837. My entry was slight late due to typing at 3825 Short. Please see pic in Journal.

Initial trade now underway. Initiating Swap Sequence.

I just got an idea.

I'm wondering if I can improve the swapping and minimize initial loss, by working in data from the dollar index into the swap decision. Hmmmm. I think I'll follow-up on that idea.

I'm going to go ahead and use the V-Trigger Swap line at 3837. So, if my Short gets swapped, it will have a larger loss than normal. The initial trade off the Swap line, typically has a larger loss if it gets swapped, because I have to enter that position in real-time, which is often at a period when the market is on the move. Just some FYI.

I'm also going to use the "Swap on Close" method today. (see post above in this thread that describes the three (3) methods I use for swapping)

If this does not start moving, I'll start padding trades again to make certain that I get a loss for the trade, so I can try to design another recovery attempt. Remember, this week is all about recovery from failure. So, far, that's not worked out well, but the remainder of the week should be a bit better. So, I'm trying to force failures this week to practice real-time recoveries. Recovering during back-testing is one thing - doing it in real-time is another.

3837 is just about the POC again. I wonder if you just applied your swapping method to a market profile chart. I noticed that you remained long this morning when the MP showed that there were no buyers accumulating up there. You can see that on the MP.

I'm close enough to the V-Trigger now that I'll start to bake-in some losses with unnecessary swaps.

Todays move was down to the VAL of monday. Next stop is 3778, then 3725 then 3689.

So, let's review what's happening thus far.

When I entered the market yesterday, I thought I would need to pad some losses in order to guarantee a loss on the day. So, I began making a lot of unnecessary swaps, such that I was over 100 pips down on the day - an attempt to simulate a flat/horizontal trading range - a failure of the V-Trigger to locate a point in the market with good Swing/Momentum potential.

Well, as it turns out, I really did not need to simulate losses yesterday, because the market went flat and remained flat. So, much so that I ended up with over 180 pips in losses. That's not a very realistic simulation, but I did not know that I would not need to pad losses.

If you take away the padded losses (unnecessary swaps to secure a loss for the day), I would have ended the day with about 87 pips in actual losses due to the flat market and failed swap trades. That would have been much more realistic.

Fast forward the first V-Trigger for today. It contained only (1) Swap, which is consistent with the 1-10 Swaps seen in normal conditions. And, it went on to capture a move from 3956 down to the current close of 1.3831, for a recovery of 125 pips net positive, which totals a 38 pips net positive gain on the full recovery.

But, of course, 20/20 is always perfect vision. Had I known that I did not need to pad losses yesterday, the recovery from today's V-Trigger would have been spot on precise and very timely.

Anyway, that's just to keep things in clear focus, so you understand what's going on here.

Thus far, I've padded some losses with unnecessary swaps of -11.8, -14.6 and -12.8. I'll do one more swap now, which should result in -7.9 pips loss.

Because I over did it yesterday, I'll stop padding losses at this point and simply use the 3837 V-Trigger Swap line as I normally would from this point forward.

So, now I'm Short from 3827, which will give me about a 10 pips loss, should I need to swap Long upon a close above the 3837 V-Trigger. That will get my swap entries and exits balanced around the V-Trigger where they should be.

Ranger, may I ask where you get Market Profile info?

The chart I use is posted in the journal. It has one horizontal line drawn for the V-Trigger. The rest is a simple SMA8/SMA21 line plot that I only use to reference where the market is relative to its closing averages. No POC on any chart posted. I use a horizontal line that comes from my V-Trigger. That's it.

If you follow the thread, you will note that the hold was in play because I shifted into recovery mode using Weekly data and the Weekly open as the new Swap Line. That forced the hold. You will also note that had I not padded losses yesterday to force a recovery trade, the V-Trigger from today would have been enough to cover all of yesterday's normal losses, plus a smaller profit of greater than 38 pips.

So, in fact, today's V-Trigger (see pic in this thread) was spot on with the terminal fall down to the current close level and a very good recovery scenario. I padded losses yesterday because I thought I had to, given Monday's failure to produce a losing Swap Cycle.

I tried to pad losses on Monday, but no matter what I did, I could not lose money fast enough before the end of the V-Trigger cycle and its recovery. In recover, V-Triggers typically recover very fast. Monday's recovery happened in the same trading session - extremely fast.

So, I'm trying to strike the right balance of forced losing trades, so I end up at the end of the day with a plausible recover scenario - that's what this week is all about - recovery.

I don't normally attempt to force bad trades. This week is stress testing the V-Trigger and to force it to have to recover, so I can see what it is capable of doing in real-time.

Next week, there will bee no forced/unnecessary swaps.