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Fail Better

  • #2,341
  • Jan 19, 2012 11:48am Jan 19, 2012 11:48am
Quoting surferking
I now have my screens setup to ALWAYS have SP500 as the first panel. (See attached)

I now only look for what the S&P is doing before picking the best pair to find an edge on. Worked out really well doing this last week on Cable and I was hoping to pull off the same result on EURUSD today but as you'll see I'm stuck in a drawdown on the SP itself and EU.
I see. I do watch the SnP as well although I always watch $index chart esp. when trading EURUSD. E.g. when $ is about to hit what looks to me like a strong resistance level on a daily chart I would expect EUR go up (risk on). The SnP - EUR correlation (or Oil - EUR) didn't work very well recently - i.e. Crude, stocks up, EUR down..
  • #2,342
  • Jan 19, 2012 11:56am Jan 19, 2012 11:56am
Quoting 96flavors
I noticed quite a few failed SFPs this week incl. DAX weekly SFP. However, if you have a look at D1 chart of US$ index you'll see it is bouncing off a resistance (previous support + 1st time back) & printed a D1 SFP couple days ago - hence it's not the best idea to be shorting stocks when $ is falling. Imho.

Attachment
So that's more of a spider pattern really. So maybe we should ignore the SFPs when the higher timeframes range is narrowing.

I also notices that the H1 'spider' pattern...

(which looks like another name for the Ascending and Descending triangle patterns to me: http://www.babypips.com/school/triangles.html )

..also seem to be simply inside bars on the higher (D1/H4) timeframe.

http://www.babypips.com/school/doubl...-patterns.html

Hence my question on what to look for with Inside Bars. (and of course Outside Bars).
  • #2,343
  • Jan 19, 2012 11:58am Jan 19, 2012 11:58am
Quoting 96flavors
I see. I do watch the SnP as well although I always watch $index chart esp. when trading EURUSD. E.g. when $ is about to hit what looks to me like a strong resistance level on a daily chart I would expect EUR go up (risk on). The SnP - EUR correlation (or Oil - EUR) didn't work very well recently - i.e. Crude, stocks up, EUR down..
Anyone know if $Dollar Index available on FXPro MT4? If so, what symbol?
  • #2,344
  • Jan 19, 2012 12:09pm Jan 19, 2012 12:09pm
Is anyone looking at Eur/Aud for a TT at 2446 if we get there? The pink line is the 20 ATR.

Attached Image (click to enlarge)
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  • #2,345
  • Jan 19, 2012 12:55pm Jan 19, 2012 12:55pm
Quoting JimN
Hello All,

Does this one qualify as a valid swing failure point
(ignoring the hindsight glasses)

thanks,
JimAttachment
Hi Jim,

No, it is not.

It has to break the first high and close below (on the time frame of your choice).
  • #2,346
  • Jan 19, 2012 12:57pm Jan 19, 2012 12:57pm
Quoting trader8080
looking for the reaction on top red line. (will see when the price gets there.)
also the break and retest of the 61% Fib.

PLAN | WAIT | ATTACK

Had my best day of 2012 today.

Thanks Tom Wizard you have really transformed my trading.
You've just made my day!
  • #2,347
  • Jan 19, 2012 1:02pm Jan 19, 2012 1:02pm
Quoting surferking
Anyone know if $Dollar Index available on FXPro MT4? If so, what symbol?
I trade futures and the symbol is DX for $index in Sierra charts - I don't use MT4.
As for SFPs - the way I understand these - to me it's basically a pro traders play known as stops hunt. Now as we know price will go where the orders are and people place orders above&below ranges/pivots. These spikes might be caused by liquidity seeking algorithms, not necessarily by traders pushing buttons. You can see this happening all the time. Here are some of today's mini SFPs in DAX visible on smaller TFs.

Attached Image (click to enlarge)
Click to Enlarge Name: dax play.jpg Size: 64 KB


Once the buy stops above recent highs are hit you'll get a spike up (in the case above) followed by a move in the opposite direction as the MM is selling and the trapped traders (false breakout) are getting out adding more selling pressure. The way I play these on a small TF is a bit different to what Tom teaches, I don't want to spam his thread. Market is a series of plays, imho. It's up to you to find them.
  • #2,348
  • Jan 19, 2012 1:02pm Jan 19, 2012 1:02pm
Quoting surferking
Looks like I've been stitched up on taking the SFP on the SP500 today.

Is it my imagination is is none posting their trades that don't work out as well?
Hi SK,

Just my take on these, but they all hit their FTAs (First Trouble Areas). See the highlighted charts for what I would have been watching/targeting. I would agree that none of these went to the moon, or were big runners, but most of the time that's how trading goes.

Then it all comes down to trade management. Do you move to break even at the FTA (jk), take partial/full profits? This can come down to how strong the level is. Zoom out to the H4, D1 and W1 chart and see if it's a significant level. If it is, then you might be more inclined to just take partial profits. Otherwise I'd be taking full profits at the FTA and move on to the next opportunity. The strike rate with these getting to the FTA is extremely high, from what I've observed so far.

As far as how to spot these trouble areas goes, look for bar highs/lows that you'd be trading back into. Any of these can act as a barrier to a trade. Especially look for flips of s/r or multiple highs or lows lining up.

I'd also be interested to hear Tom's thoughts on them.

Best,
Chris
Attached Images
  • #2,349
  • Jan 19, 2012 1:03pm Jan 19, 2012 1:03pm
retest maybe....?
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  • #2,350
  • Jan 19, 2012 1:04pm Jan 19, 2012 1:04pm
Quoting JimN
Hello All,

Does this one qualify as a valid swing failure point
(ignoring the hindsight glasses)

thanks,
JimAttachment
I don't see any levels drawn on your chart at all either. Strongly recommend you zoom out, look back and at higher timeframes and draw in the highs and lows for the pair you are looking at.

Forget about candle patterns alone, they happen everywhere if you look for them. The point is to trade from and to the strongest levels and they are the past highs and lows - not just the last high or low. You'd may as well spin a coin if that's all your looking for.

Remember, people see patterns in clouds but the action all happens at the weather front where high pressure and low pressure meet!

Hope that's not too harsh, just couldn't help but notice the lack of levels, which I guess is the whole point of this way of trading. Where are ALL the recent highs and lows, not just the last one or two. I think Tom looks of 5 'touches' for a level to be good enough, although if you look enough I'm sure you'll find some accidentally without drawing them on.
  • #2,351
  • Jan 19, 2012 1:08pm Jan 19, 2012 1:08pm
Complete tangent but I love this programme. I know it's old but goes to show how the pros trade actual numbers (levels):

Billion Dollar Day
  • #2,352
  • Jan 19, 2012 1:19pm Jan 19, 2012 1:19pm
Quoting Chris P
Hi SK,

Just my take on these, but they all hit their FTAs (First Trouble Areas). See the highlighted charts for what I would have been watching/targeting. I would agree that none of these went to the moon, or were big runners, but most of the time that's how trading goes.

Then it all comes down to trade management. Do you move to break even at the FTA (jk), take partial/full profits? This can come down to how strong the level is. Zoom out to the H4, D1 and W1 chart and see if it's a significant level. If it is, then you might be more inclined...
Cheers Chris, I appreciate your time looking at them, ta.

I don't watch the charts all day so probably better off waiting for the break/bounce and rounded retest so that the First Trouble area is clearer then.

I agree, no magic bullets but if I've learned anything from this thread is that I only now place 'Limit' orders and never order at market or candle closes as that's too discretionary.

I've been placing trades at exact levels with TP at the next obvious FTA and SL the other side of the thrust candles and had 12 winners and 1 loser so far this year. Until today that is, but that was just from trig to be greedy and take any old pin bar.
  • #2,353
  • Jan 19, 2012 1:26pm Jan 19, 2012 1:26pm
Quoting surferking
Cheers Chris, I appreciate your time looking at them, ta.

I don't watch the charts all day so probably better off waiting for the break/bounce and rounded retest so that the First Trouble area is clearer then.

I agree, no magic bullets but if I've learned anything from this thread is that I only now place 'Limit' orders and never order at market or candle closes as that's too discretionary.

I've been placing trades at exact levels with TP at the next obvious FTA and SL the other side of the thrust candles and had 12 winners and 1 loser so far...
They're some great stats!!

I'd keep going for that method for now. Get consistently good at it for a few months, and then start looking at what else you can build into your arsenal. The SFP pattern does require entry at market on the bar close, so if you can't watch the charts on each hourly close it would be best to stay clear of that for now.

I'm keen to point out the FTa thing though, as for me, missing them is what caused my accounts financial pain, but also psychological stress. Now I'm more than happy TP'ing at them, and the accounts are a lot healthier

Seriously though, good going so far for January.
  • #2,354
  • Edited 1:44pm Jan 19, 2012 1:32pm | Edited 1:44pm
Quoting surferking
Same thing on Silver today as well, although luckily I missed it otherwise I'd have been completely done over.

Wizard Tom - can you review my levels and go over drawing stronger levels (how many touches o each side etc) on here or in the webinars? I think I'm missing something. Ta.
Hi surferking,

I see you are getting busy on the thread :-)

Let's consider SFP's since you mention them frequently.

A bearish SFP provides no more than an indication that supply has overwhelmed demand and that selling pressure has dominated.

Note the past term that I am using with the word "has". I didn't use the word "is" or "will". That is how you need to think about PRICE ACTION.

In the way it is popularly taught, it is a lagging indicator in my opinion.

That's not going to make me popular but that is the way I see it.

So that means that bars and candlesticks are significant because they show how buyers and sellers reacted but we have no assurances that buyers and sellers will keep reacting that way.

As a result of that thinking I like to use LEVELS in my trading way more than anything like SFP's...

Why?

Because price WILL react to a significant level (the majority of the time)

But an SFP shows price HAS reacted.

Do you see the difference? It is a subtle one but very important.

For that reason, it is important to me that I pick them very carefully.

SFP's are no different to any other setup ; it is all about context because if you want to get a profitable trade you need to find an area where pressure from one group will overhwhelm the other.

And if you are going to enter AWAY FROM THE SOURCE e.g. after a pin bar, bearish outside bar or, yes, an SFP, you must know that more traders will execute in your direction AFTER YOU.

The stronger the area you enter at then the more chance of this.

One of the best areas to find SFP's for me personally is at significant levels of support or resistance. The reason for this is is that if an SFP occurs at a key support, for example, sellers get trapped as they place their stops below the lows and get filled on a spike down.

If price then closes above those support lows, some of those short termers will bail and their buying will push price higher. The higher it goes, the more the shorts will be feeling pain and forced to pay up to get out.

However, SFP's at single swing points don't particularly interest me. In fact, most of the SFP's I see, don't interest me.
  • #2,355
  • Jan 19, 2012 1:38pm Jan 19, 2012 1:38pm
Quoting surferking
Hope that's not too harsh,

Of course it isn't. I'm here to learn!
I think I will have to go back to the beginning of the thread and read it all again.


Best, Jim
  • #2,356
  • Edited 3:56pm Jan 19, 2012 1:47pm | Edited 3:56pm
  • #2,357
  • Edited 2:08pm Jan 19, 2012 1:49pm | Edited 2:08pm
Now don't get me wrong ; SFP's are hugely powerful but just bear in mind that you are entering AFTER the source with them.

Go back to the first few posts in this thread ; what we do here is try to enter AT THE SOURCE.

Now let me show you what I mean from the latest trade that I took.

I called this on Twitter too.

(As an aside ; Forex Factory removed my Twitter link from my signature because my web address is in my Twitter profile and on my site I mention mentoring...clearly the person that removed it didn't bother to check the tweet stream because all I do is call out value areas and setups all day long to support this thread but still guidelines and all that..)

Anyway : onto the trade which I will illustrate in the next post.
  • #2,358
  • Jan 19, 2012 1:59pm Jan 19, 2012 1:59pm
USD/JPY D1 chart.

Price trades into the double bottom and breaks it intraday, catching the stops from traders that ;

- sell the breakout
- bought the "double bottom" and held for a longer move with stops below support

Now ; price creates a D1 SFP (also a pin bar one can note).

Shorts are now on the back foot.

I'm coming down to the H1 to find my entry.

Remember : I want in at THE SOURCE.

I'm not buying the break of a pin with a stop on the other side.

Why???

The pin bar / SFP high is not a turning point.

That's called paying up.
Attached Image (click to enlarge)
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  • #2,359
  • Jan 19, 2012 2:05pm Jan 19, 2012 2:05pm
USD/JPY H1 chart.

Check the circled area.

That was my entry.

So ; D1 for bias.

H1 for entry at the PULLBACK into S/R (note the resistance last too) and 61% fib level.

Target was the 77.03's (upper orange line)

Now here is the million dollar question.

Why did I not get out at the blue FTA?

The answer is simple ; we had D1 bias. So we run it.

You don't exit at an H1 FTA when you have D1 bias, you exit at a D1 FTA.

Now, if you don't have D1 bias and you just enter off an excellent H1 area, then you DO use the H1 FTA.

I hope this clears things up :-)
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  • #2,360
  • Jan 19, 2012 2:06pm Jan 19, 2012 2:06pm
Oh and one final thing ; if I hear another trader say "I don't trade USDJPY because it doesn't move much" I will bang my head against my desk until I knock myself unconscious.

If you are still counting in pips rather than R multip-les you have a LONG way to go in this game.
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