The Confession & The Secret

Yep Sounds like Jet is back in da house. Hope you stick around this time...

As the 4040 level spoken about earlier gets taken out, we can see that the Harmonic structure has fulfilled its promise as being one of the best V-Triggers available once understood. From the previous Harmonic B V-Trigger, a potential 133+ pips were available, without the need for a single Swap trade:

http://www.freeimagehosting.net/t/d740a.jpg

Given this move, the previous recovery trade would have provided far more payback than the +32 pips recorded last night. Of course, I'm just stress testing, so holding positions beyond BE is not necessary. But, that would have been more than a 160+ pip recovery, on a failure of 75'ish pips. Plenty of room for recovery and forward looking profit.

I'm waiting for the next V-Trigger to emerge, so I can simulate another failed trade to set up the next recovery stress test. It looks like the EURUSD is coming through the 127/144/161.8 "D" region, off a very nice M15 CD Harmonic run. That region should provide a V-Trigger to play with.

When I wrote that, the Weekly range fuel tank was roughly 65% full. That same Weekly range tank is now 36% full, which means about 64% has been consumed, with virtually all of that to the upside. This is what was relied upon on the previous recovery trade. Had I not padded that trade with too many simulated (unnecessary) Swaps, the recovery would have worked out very well indeed.

I expect the rest of the Weekly range fuel to be spent to the upside - if the Week continues to expand its high.

Current Weekly Range is now: 375 to 398 pips.
Current Weekly Range consumed: 276 pips
Weekly Range Fuel On-Board: 99 to 122 pips (if expansion continues)

V-Trigger, 4065 at Close of 1230 GMT -1 M15 bar. (I missed the entry because I was typing).

I'll take the entry now, at 4094 Long and use the difference back to the V-Trigger level of 4065, as my built-in padding to simulate a loss today.

http://www.freeimagehosting.net/t/91ec8.jpg

You can check out the trade journal for confirmation of the actual entry: http://www.forexfactory.com/showthre...89#post5078089.

NOTE

Link to Trade Journal with pics from Trading Platform showing Closed Positions can be found in post #1 in this thread. (go back to the first page of this thread and see post number one)

If I don't get a pull back to the original V-Trigger line, I'll just start making random swaps to pad some losses into this initial trade. I am trying to lose money here, so I can mount a recovery strategy - that's the point of this week, recall.

As I mentioned earlier, some of these V-Triggers are very hard to lose money with.

As I wait for a swap trade to develop, I was thinking about the bout I had with myself last night while going to sleep. As I got comfortable in bed, I started thinking about what the EU finance ministers would eventually come up with. As I did, I fell back into Directional thinking habits. I realized how powerful Directional thought patterns were and how much control they had over my overall trading.

I also realized how hard it is to rid yourself of Directional thinking, when you've been a Directional trader for so many years. By definition, Directional thinking must build-in a bias on the market's behavior. That kind of thinking leads to self-fulfilling prophecies about what the market will do next. And, when the mind gets down to that level of lock-down, it becomes really hard to think rationally about price behavior.

I never understood how narrow my thinking was about real price action, until I began trading the line. Nor, did I have a clue about how powerful, Directional thinking can be over your trading. You won't fully understand this, until you break-out of the mental cage that is Directional Bias on the Market.

When you free your mind, the profits will follow naturally. In a normally aspirated engine, if you keep fuel on-board and maintain oil levels properly, that engine will run for a very long time. Likewise, in a Normally Aspirated Market, one exhibiting volatility that is historically nominal, that market will eventually move. It has to - or there ceases to be any market at all.

Therefore, pick instruments that have vary large liquidity and very normalized volatility, find its Swing and Momentum trigger points, draw a line in the sand and then defend that line. Eventually, you can't help but end up on the right side of the market.

Never underestimate the power of Directional thinking and the freedom found in Non-Directional bias on the market. Simply develop an "I don't care" attitude about which direction the market goes. As long as it moves, you can profit from it.

http://www.forexfactory.com/showthre...10#post3394110

http://www.forexfactory.com/showthre...68#post4211068

http://www.forexfactory.com/showthre...58#post4207758

Line, Are you going to sim trade this next week or further stress test?

CrucialPoint, has a crucial point.

What most line traders don't realize, is that the line that is drawn must also include high probability for Swing and/or Momentum (Magnitude/Continuation).

In addition, most line traders forget the other side of the equation for the line, and that is the Swap Method deployed to place your capital on the right side of the market. How one swaps can be just as important as where one places the line.

So, while physically drawing a horizontal line on a chart requires no inherent analysis - the process that derives the reason for drawing the line does require analysis to locate market periods that contain good Swing and/or Momentum probability.

These are two of the things that I have noticed most line traders ignore.

Take any line trader and introduce him or her to Harmonics (as just one example for locating good lines) and they will never look back at random lines again. The Harmonic structure has tons of built-in psychological fuel for Swing and Momentum. A virtual cash machine.

Take any pure Harmonic trader and introduce them to the line, and that trader will never look back - realizing that whether the Harmonic Pattern completes or not, is completely 100% moot - because at some point, the built-in psychology of the Harmonic structure, forces movement in price.

This is why I like to hunt for the 'XA' leg with a 'B' of at least 38.2%. Once that partial Harmonic structure is complete, the rest is academic. Either 'C' will allow 'B' to hold, or 'C' will convert 'B' to a different level (Momentum). Or, 'C' will move beyond 'A', setting up a region of 'AB' 127/144/161.8 (Swing). Or, 'C' will hold and provide a natural path for the Harmonic Pattern to complete itself.

Everything a Line Trader needs, can be found within the structure of the Harmonic Pattern - whether it completes or not. But, the Line Trade has to be willing to study Harmonics and learn how they work - before the lights come on.

Harmonic Line Trader? Yeah, I'll accept responsibility for coining that term for the first time, here on ForexFactory. As it joins two types of trading together in a way that I've never seen anyone do it before - unless you can post a link that one!

The trades are live, as seen in the trade journal's pics of the trading platform. Yes, I am trying to lose money on the current trade. If it does not come back down to the V-Trigger, I'll start padding in some unnecessary swaps to generate a loss.

-70 to -85 pips is reasonable for a day's worth of Swap Cycle. Although, I have recovered from -150 pips in a single Swap Cycle session before. Losses that big are very difficult to recover from in a single 24 hour period, but I like it when the V-Trigger tries hard to make it happen.

As I said early in the thread, some of these V-Triggers are just difficult to lose with.

This one is getting a bit out of hand - I'll start simulating some swaps now to pull the profit down a bit.

This is what things looked like before I began the simulated swaps:

http://www.freeimagehosting.net/t/0f709.jpg

This is what it looks like after doing some simulated line swaps:

http://www.freeimagehosting.net/t/e7b3a.jpg

*** Ignore the previous 77 pip net gain at the bottom. That was the previous recovery trade and it not applicable on this cycle ***

It took 23 unnecessary swap trades to simulate a break even! Now, I have to do some more sim swaps to simulate a loss on the day. (I love lines!)

I've added more sim swaps to produce a loss on the day of about -70 pips. I'll use this hole as the recovery requirement over the next 24 hrs.

I'll wait for the next V-Trigger to re-enter the market. Here's the hole. (some of the negative swaps got cut-off in the screen capture - the bottom line total is what's important)

http://www.freeimagehosting.net/t/a681b.jpg

Checking the EURUSD volatility status at this point, I can see that the Daily Range has been blown-out. Current Daily Range was between 154 and 163 pips. Today's range was a whopping 295 pips, which is more than 190% of normal range.

Basically, the Daily Range fuel tank is bone dry. Any more movement in the range is purely ballistics at this point. This kind of blow-out of historical range, typically produces a lot of congestion near the end of the trading cycle, with H1 volatility dropping-off very sharply, several hours before the end of the trading day. Whether that happens today, remains to be seen.

Today's move comes (as I mentioned earlier in a previous recovery analysis) as the direct result of the Weekly Range being extremely compressed this week and needing to spread its wings and fly. It flew to the upside today and ran through nearly 60% of its range fuel on-board in today's single trading session. Current Weekly Range fuel gauge is now 95% empty. With only 5% range fuel on-board the Weekly bar, the probability for continued expansion to the upside is high.

However, at some point this week, I would expect the naturally occurring top-to-bottom weekly retracement to initiate back to the downside. Currently, the Weekly top-to-bottom fuel tank is 100% full and contains approximately 80 to 156 pips in retracement to the downside. This retracement range on the Weekly top-to-bottom retracement will change dynamically as the week progresses and I'll try to remember to keep that updated.

This technically explains the blow-out movement on the Daily bar today in the EURUSD.

For clarification purposes on today's activity:

1) The journal and this thread shows today's V-Trigger set at 4065, that I was late entering at 4094 and that the current close is 4172, for a total net profit of +78 pips realized and +107 unrealized (this is without simulating any losses).

2) I am now flat after having engaged some sim swaps to produce a loss for the day of -70'ish pips (that's what this week is all about - losing money and then recovering from a loss).

3) I am now awaiting the next V-Trigger to run the recovery scenario on a -70 pip simulated day.

Haha, nah, thats yours for the taking. Heres another one for ya, all this leads me to one straight forward conclusion...:

http://www.forexfactory.com/showthre...52#post4211852

Im quietly reading your comments and taking in what your saying, because a lot goes in line (no pun intended) with how i personally think at my current learning stages. A random line isnt 'enough', it requires certain elements....for example: