Just a word or to about having a clear trading strategy. I think it's important to have ONE clear strategy in your mind BEFORE you open your trading platform. The reason for this is simply because “in the heat of battle” it's so easy to lose your head! So many times I have (I'm sure you have too) opened a trade and after a short while thought – what on earth did I do that for!
It was about 2 or 3 months ago when I lost my six thousanth dollar in forex trading that I suddenly thought, Hey!! - maybe perhaps I'm doing something wrong?? I had about 20 buy/sell indicator based trading strategies that I had either purchased or picked up from various forex forums, but I was losing money hand over fist. So I made a big decision. I deleted every single one of them from my computer and started from scratch.
I then remembered what I had learned a couple of years ago about the DASR which is really the only forex trading strategy which ever made any sense to me. Why? Well because of what I have since learned about the way the market works and the way the “market movers” move the price. It's complicated but it takes a lot of big money to move price 50 or more pips. So eventually even a big move up or down will stutter and we'll see some retracement. The price can retrace a little or a lot depending on market sentiment. When price starts retracing it's very weak so it whipsaws around often re-testing the support or resistance level it had faltered at. Retracements eventually ALWAYS gets back to the DASR on the 1 hour, 4 hour and even daily chart (after a long time). It sometimes gathers enough steam to temporarily penetrate the central DASR area or “blue line” on the 4hr vegas daily tunnel. But invariably it then comes back again to the prevailing trend. That is when the “big boys” pile in again and that is when we have to enter our trade!
IMPORTANT
Very interestingly, there is a saying: “buy on Monday and sell on Friday” and amazingly enough very often one sees the Euro and Cable moving up Monday and Tuesday and reversing down by Wednesday and Thursday. Obviously this is not a rule but you'll see this happening more often then not. So, we could have bought today but in my view it's low probability – high risk. Why? Because we know that the price action is in “retracement mode” and that the main trend is still most definitely down BUT because we know that Monday and Tuesday are generally “up” days then we would more then likely expect price action to reach the 4hr DASR. We would then be careful to watch for “bear traps” on Mondays and Tuesdays.
TRADE SET-UPS
Well, I use the blue central line of my daily vegas tunnel as the “trigger” area. When price has retraced back to the 4 hr DASR it has often “picked up steam” so as I said it often breaks temporarily through the central area of our DASR (blue line). When that happens we can set a pending trade order back on the other side of our blue line with a stop loss placed just on the other side of the central area of our DASR. See example (GBPUSD 4hr) below – the yellow line would be more or less where we would set our pending trade order and the red line our stop loss. HIGH PROBABILITY – LOW RISK!!
TRADING PAIRS
I keep a watch on at least 6 or 7 trading pairs – just the ones that usually dont whipsaw or jerk around a lot!
TREND STRENGTH
I also watch the gap between the daily vegas tunnel and the 1 hr vegas tunnel (which I use for gauging trend strength and direction). If there is not much of a gap then the trend is weak (look at AUDUSD right now for instance) and price tends to swing up and down a lot more. Not good!! So we really want to only trade pairs where the gap is big. Then we know that the trend is strong!
More set-ups tomorrow (and how to track an open trade for max pips) - after that we can hopefully start doing some demo trades together.
jmtini--------thanks for doing this , always good to hear another perspective re supply/demand . A question re this chart and the trade you circled . Would there not be a cpl trades prior to that one ?
So obviously, what we are looking for is a FAIL of the area of DASR. Either on 1 hour chart (in strong trend) or 4 hour chart if price action has broken through DASR on the 1 hour chart, it's going to be heading for the DASR on the 4 hour chart. We are NOT going to trade until it reaches there! Then we are going to look for a fail of that area of DASR.
Here is another nice example on last Fridays GBPUSD 4 hour chart – notice how price action failed off the 4 hour DASR after briefly penetrating it (circled in yellow):[/quote]
Morning guys
Price has broken through the DASR overnight and stayed above the DASR on e/u, g/u and A/u pairs, on the 1hr and 4hr timeframes, do we now wait for a pullback to the blue DASR before deciding on a trade either up on a bounce or if price goes through back down to the long term down trend?
Just a word or to about having a clear trading strategy. ....
TRADE SET-UPS
Well, I use the blue central line of my daily vegas tunnel as the “trigger” area. When price has retraced back to the 4 hr DASR it has often “picked up steam” so as I said it often breaks temporarily through the central area of our DASR (blue line). When that happens we can set a pending trade order back on the other side of our blue line with a stop loss placed just on the other side of the central area of our DASR....
Ignored
Hi Jerry. Thank you very much by your thread.
In order to have total clarity of the strategy, I ask you please explain to me the following:
- In the example of Trade Setup for the stop loss which of all the red lines you mean?
- In a chart of 4 hours, the daily vegas tunnel is the one with the broad blue line and 1 hour vegas tunnel which contains the fine blue line?
hi jmtini intersting system could you post your demo account detail stament so we could understand and learn how you entry,stoploss and so to money management
Looks like the same pattern again this week! One thing we can always say - the market is always full of surprises. However better to be a surprise then a shock!!
That midnight bar on the EURUSD is quite amazing because EURUSD usually doesn't move a lot in the Asian session - I read that it's something to do with China buying bonds again?
Anyway did you notice - as far as our system is concerned - how it banged nicely against the DASR, took a breather then carried on up - (the 8.00am bar this morning) Of course we could have put a nice buy pending around 12735 as soon as the 4.00am bar closed this morning. (all times are CET - central european time) Only problem is that you have to be up early in the morning (if you're in the UK!)
I'm going to post a bit more about using BRN's and fibs to re-inforce trade entries - a bit later!
Well with our system we are NOT going to get caught in any "bull traps" - we wait until price gets back to OTHER SIDE of the DASR (we have our pending order set at that time!)
Thanks Jerry,
Great info, I was wondering that because the price had gone above DASR, and not returned back that we would be looking for a bounce now off of DASR or would that be considered a trend change, also because the Vegas lines and DASR are now pointing up?
many thanks
In post #29 you say we could set pending buy and in post #30 say we will Sell when price come down the DASR. So just tell me we will take that Long? if yes then why? Because trend is down?? Can you explain it clearly??
Well with our system we are NOT going to get caught in any "bull traps" - we wait until price gets back to OTHER SIDE of the DASR (we have our pending order set at that time!)
rgds
Ignored
Jerry, you mean that now we should have a sell stop near 1.2716? The stop loss should be about 1.2740? and the TP with a 2:1 ratio or more?
The only problem I see is the BRN (1.2700), correct?
In post #29 you say we could set pending buy and in post #30 say we will Sell when price come down the DASR. So just tell me we will take that Long? if yes then why? Because trend is down?? Can you explain it clearly??
Ignored
Hopefully this explains:
I think before we go on, I want to make clear the strategy here because any good trading system has GOT to have a CLEAR STRATEGY.
Hopefully you know what the DASR is now! Hopefully you can see it clearly on the charts. OUR STRATEGY is to only trade AWAY for the DASR. I repeat: OUR STRATEGY is to only trade AWAY for the DASR.
When price action hits the DASR it's going to do one of two things. Either it's going to penetrate or it's going to bounce off. In strong trending conditions it usually bounces off but if the counter-trend is strong enough, it will go through. Now it certainly is possible to trade the counter-trend and today we saw exactly that situation with EURUSD and GBPUSD. The way to trade a counter-trend is to ALWAYS WAIT for price to RE-TEST support! Here was a good example with GBPUSD this morning. Notice how the 12.00am bar re-tested support (circled in yellow). We could have taken a trade there with our SL of course BELOW the DASR.
We are in a counter-trend situation with regards to EURUSD and GBPUSD no doubt about it! However because we're trading a counter-trend - we just don't know how far it's going to go! We cannot be talking about a trend change yet until our daily vegas tunnel is ABOVE our 1 hour vegas tunnel (like AUDUSD or USDCHF for instance). So we have to be really careful. If we had taken that GBPUSD trade or even that EURUSD trade early this morning, we would be looking to set a tight TP like 30 pips maybe?
Jerry, you mean that now we should have a sell stop near 1.2716? The stop loss should be about 1.2740? and the TP with a 2:1 ratio or more?
The only problem I see is the BRN (1.2700), correct?
Thank you very much.
Ignored
Not a bad idea but I wouldn't set a trade up now unless we see a really big retreat this afternoon! Don't worry about 1.2700 BRN - price will actually accelerate through this level as people's SL's are taken out! Interesting situation right now on EURUSD which really illustrates the beauty of this system. It looks like a reversal but may just be a "bear trap" - we just don't know and we are certainly NOT going to lose money trying to GUESS which way price is going to go!
Hi Jerry
Just for reference, so would you say that Aus/us is now in a up trend because of the daily vegas being above the 1hr vegas, sorry if question seems stupid, just for clearence
many thanks
In post #29 you say we could set pending buy and in post #30 say we will Sell when price come down the DASR. So just tell me we will take that Long? if yes then why? Because trend is down?? Can you explain it clearly??
Ignored
Hi Kijkij
Early this morning EURUSD shot up and banged against our DASR. Obviously we could not be 100% sure what the 8.00am (CET) bar was going to do but looking at previous price action (0.00am bar) and knowing that Tuesday is usually an "up day" it was pretty obvious the 8.00am bar would be green (up) so we could set our pending buy trade just above the DASR central blue line. However perhaps price (theoretically) action was struggling to reach our DASR then we could have set a pending sell order 5 or 10 pips BELOW our DASR. Today really, you could have done both and not been wrong!!
Well everyone - as we speak, looks like a reversal!
How I would trade this possible reversal situation is to wait until 3.00pm. Why? Cause it's the start of a new candle! (if we are all looking at CET chart)
If by 3.00pm price has shot nicely though our DASR we could selling join in the selling fun!
On GBPUSD chart note that we have a BRN at 15350 plus fib support at 15347 so if price breaks through those by 3.00pm we could certainly get in. Or if you like you could certainly set a pending sell order right now below 15347. On EURUSD around 12710 maybe?
