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  • #241
  • Jan 26, 2012 8:57pm Jan 26, 2012 8:57pm
Close.

Here's the process for an M formation:

1) Identify M formation on 15min chart - confirm with higher timeframes.

2) Enter short if price is <25 pips from the M high.

3) Set stop and reverse to trigger on first 15 minute closed candle 5-8 pips above the M high. This prevents me from being faked out on a spike above the high 95% of the time.

4) Set limit and wait for confirmation of position.

There are a couple of considerations for setting a stop and reverse - if the reverse position will not yield enough pips to cover a loss before stalling at a resistor then it requires babysitting for the duration of the trade.

This is a super calm way of trading. It's virtually a no-lose position. I know if I'm right about my entry then I can walk away and forget about it. If I'm wrong then the stop and reverse has me covered.

But for the most part I can set it and forget it. This morning I put on my EURUSD short, babysat it for 90mins, and went to the gym and did yoga and cardio for 2 hours, came back and the position was closed in profit. Right now I am short the GBPAUD and I'll be going to bed in about 1/2 hour and actually sleeping.

LAFF
  • #242
  • Jan 26, 2012 10:01pm Jan 26, 2012 10:01pm
what are everyone's bias for today?

EUR/USD -

GBP/USD -

AUD/USD -

EUR/JPY -

GBP/JPY -

AUD/JPY -

USD/CAD -

USD/CHF -

USD/JPY -
  • #243
  • Jan 27, 2012 1:26am Jan 27, 2012 1:26am
Quoting bstay2
what are everyone's bias for today?
Quick "vote" for London session bias, a bit late and not time for rationale now, perhaps later.

EUR/USD - up
GBP/USD -
AUD/USD - up
EUR/JPY - up
GBP/JPY - up
AUD/JPY -
USD/CAD - down
USD/CHF - down
USD/JPY -

GF - down
EG - up
GA - down
CJ - up
  • #244
  • Jan 29, 2012 7:07am Jan 29, 2012 7:07am
Thank you Femi -- Sounds like a nice, relaxed trading method. Noted, and will test that sometime soon. Regards and success!

Quoting femi94ce
Close.

Here's the process for an M formation:

1) Identify M formation on 15min chart - confirm with higher timeframes.

2) Enter short if price is <25 pips from the M high.

3) Set stop and reverse to trigger on first 15 minute closed candle 5-8 pips above the M high. This prevents me from being faked out on a spike above the high 95% of the time.

4) Set limit and wait for confirmation of position.

There are a couple of considerations for setting a stop and reverse - if the reverse position will not yield enough pips to cover a...
  • #245
  • Jan 29, 2012 9:28am Jan 29, 2012 9:28am
At this point, we all agreed that second leg entries (with TDI divergence) are "safer" with high odds and if you managed to get in within 25 pips from the top of M or bottom of W then you can try stop-and-reverse.

What are your rules or conditions for entering at first leg? Sometimes we don't get the second leg of M or W and the reversal move can come quick and furious .... we will miss the trade if waiting for second leg. At other times taking the first leg is like picking tops/bottoms and we get stopped out. But surely there must be reasons good enough to enter first leg.
  • #246
  • Jan 29, 2012 10:20am Jan 29, 2012 10:20am
Quoting bstay2
At this point, we all agreed that second leg entries (with TDI divergence) are "safer" with high odds and if you managed to get in within 25 pips from the top of M or bottom of W then you can try stop-and-reverse.

What are your rules or conditions for entering at first leg? Sometimes we don't get the second leg of M or W and the reversal move can come quick and furious .... we will miss the trade if waiting for second leg. At other times taking the first leg is like picking tops/bottoms and we get stopped out. But surely there must be reasons good enough to enter first leg.
My take as a safety-belt trader, example EU on 20 pips risk:

Only consider first leg entries if (1) the first leg already took out stops of considerable size (guesstimated, of course). The more confluence of signals the more volume. (2) The spike is best deep and short (either watch real-time on 15m or check on 1m charts). (3) The volume on the spike is extremely high (this is actually the best indicator that considerable liquidity was consumed).

Additionally, I need to see further confirmation, such as the following candle after the spike is still extremely high volume but fails to go beyond the first spike (VSA stopping volume), which indicates that big money has started to sell into the up move.

When I see this, I place an limit sell order 10 pips below the spike high. That way, the bid needs to go 10 pips above the high before my stop loss order is triggered.

If price doesn't come back to my entry level (that happens) I kiss the trade goodbye. I am not in the business of trying every opportunity in the market. Only excellent entries for me, please. With this, I usually get 2 to 3 successful 50 pippers per week by Wednesday afternoon plus the occasional 20 pip loser, of course.

And don't forget to practice this. After 10 weeks of backtest, I developed a pretty good feeling for the right setup. Once again, practice is really key. I assume that my subconscious mind has learned additional criteria that I can't clearly express in a mechanical rule. Only intensive practice develops this kind of clarity. Think martial arts.

Good success and ... be like water!

Inserted Video
  • #247
  • Edited 11:27am Jan 29, 2012 10:55am | Edited 11:27am
Considering last Friday EUR/USD, there was a sharp move down after 8:30amEST U.S. GDP data, and the best trade appears to be a first-leg entry at 9:15amEST when price touched the rising 200ema. Would you have entered long at the 1.3100 area? Confluence of strong uptrend, M2 pivot, and 00 round number.

However if you waited for second-leg, the setup came in the cross EUR/JPY where a W-pattern formed at 11amEST with TDI divergence. My entry was 100.793 and caught +60pips. But the better trade was that first-leg in EUR/USD which moved over 120pips into market close.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: EURUSD1.png Size: 35 KB
Click to Enlarge Name: EURJPY1.png Size: 40 KB
  • #248
  • Jan 29, 2012 3:08pm Jan 29, 2012 3:08pm
@hart3000 - Thanks for this:

Quote
Only consider first leg entries if (1) the first leg already took out stops of considerable size (guesstimated, of course). The more confluence of signals the more volume. (2) The spike is best deep and short (either watch real-time on 15m or check on 1m charts). (3) The volume on the spike is extremely high (this is actually the best indicator that considerable liquidity was consumed).


LAFF
  • #249
  • Jan 29, 2012 10:21pm Jan 29, 2012 10:21pm
Daily Pivots: (S1) 0.8335; (P) 0.8366; (R1) 0.8385

EUR/GBP's consolidation from 0.8221 is still in progress and further recovery cannot be ruled out. But upside is expected to be limited by 38.2% retracement of 0.8830 to 0.8221 at 0.8454 and bring fall resumption
  • #250
  • Jan 29, 2012 11:49pm Jan 29, 2012 11:49pm
Quoting bstay2
Would you have entered long at the 1.3100 area? Confluence of strong uptrend, M2 pivot, and 00 round number.
Looks like a high-probability entry for me. MMM-wise and VSA-wise.

http://photoupload.org/uploads/13279017561.png

Extremely high volume on the two bars down (white Climax Low on Better Volume indicator, following blue bar nearly as high), stopping right into previous area of high volume, not even attempting to break it => big money buying.

However, I would have missed this entry because my SL would have been at 1.3069 10 pips below the previous low 1.3079, therefore entry order at 1.3089, which wasn't reached by the second leg of the W.

Could have chased the up move after the very strong up move / shift bar (high volume, red volume bar) had confirmed big money intention. Entry order at 50% retracement of this shift bar with 20 pips SL.

http://photoupload.org/uploads/13279024931.png

That's how I would had traded this. Well ... in hindsight of course, which is always so nice and clean. (:
  • #251
  • Edited Jan 30, 2012 12:24am Jan 29, 2012 11:58pm | Edited Jan 30, 2012 12:24am
Have you studied if the volume indicator on MT4 are different on Demo accounts vs Live accounts? More importantly is "volume" on Demo accounts less reliable? Also some MT4 brokers claimed to be ECN straight-throughs to Commercial liquidity provider, so would their volume be more accurate?

I have various MT4 Demo accounts at Alpari UK, MBTrading, FXPro, FXDD, MIGBank, DFMarkets. I wonder which broker (demo or live) do you make use of that volume indicator.

Can you also post the same chart picture for EUR/JPY? I would like to see how the volume looks like at the W-pattern I took the trade at. Thanks!

Below is 4hrs view using linear regression channels. major pairs are still in strong uptrend vs USD.
Attached Image (click to enlarge)
Click to Enlarge Name: weekly 4hrs.jpg Size: 170 KB
  • #252
  • Jan 30, 2012 1:00am Jan 30, 2012 1:00am
I am using tick volume provided by FXCM (also for my Sierra Chart platform, BTW because the Interactive Brokers feed has backfill limits per time unit, sometimes gets stuck when updating 21 pairs after weekend). Works well for me. And no difference between demo and live.

Compared FXCM data with IB. IB data is supposed to represent 70%+ of transparent world wide interbank volume, perhaps only the monthly $50 forex subscription with eSignal is better for retailers. Result: FXCM tick volume is very similar to IB's.

I guess that the largest retails brokers publish better (more representative) volume data. That's why I stick with FXCM, which is still the largest one.

Here is the EJ chart:

http://photoupload.org/uploads/13279065581.png

I like VSA best on the high volume pairs, such as EU, UJ, GU, UF. Haven't looked in details yet, just a feeling that the volume data on low volume pairs is much less meaningful.

http://photoupload.org/uploads/13279067561.png

Addendum:

Great VSA thread here:
http://www.forexfactory.com/showthread.php?t=157629

MT4 Better Volume indicator here:
http://www.forexfactory.com/showpost.php?p=2680773&postcount=826

Quoting bstay2
Have you studied if the volume indicator on MT4 are different on Demo accounts vs Live accounts? More importantly is "volume" on Demo accounts less reliable? Also some MT4 brokers claimed to be ECN straight-throughs to Commercial liquidity provider, so would their volume be more accurate?

I have various MT4 Demo accounts at Alpari UK, MBTrading, FXPro, FXDD, MIGBank, DFMarkets. I wonder which broker (demo or live) do you make use of that volume indicator.

Can you also post the same chart picture for EUR/JPY? I would like to see how the volume looks like at the W-pattern I took the trade at. Thanks!

Below is 4hrs view using linear regression channels. major pairs are still in strong uptrend vs USD.
  • #253
  • Edited 1:45am Jan 30, 2012 1:11am | Edited 1:45am
Quoting hart3000
I like VSA best on the high volume pairs, such as EU, UJ, GU, UF. Haven't looked in details yet, just a feeling that the volume data on low volume pairs is much less meaningful.

http://photoupload.org/uploads/13279067561.png
I just want to caution those unfamiliar with this picture, that it is old data quoted by Currency Trader Magazine (article author Kristian Kerr) from the 2004 BIS Triennial Survey. The latest report for 2010 is here: http://www.bis.org/publ/rpfx10.pdf which reflected higher retail speculation volume and higher asian region volume (Shanghai, HongKong, Singapore, in addition to Tokyo).

MT4 was popularly released only after 2005.
  • #254
  • Jan 30, 2012 1:28am Jan 30, 2012 1:28am
Quoting bstay2
I just want to caution those unfamiliar with this picture, that it is old data quoted by Currency Magazine from the 2004 BIS Triennial Survey. The latest report for 2010 is here: http://www.bis.org/publ/rpfx10.pdf which reflected higher retail speculation volume and higher asian region volume (Shanghai, HongKong, Singapore, in addition to Tokyo).

MT4 was popularly released only after 2005.
Thanks for the update, Bstay. Better to have current data. Here is table 4 from the BIS document you referenced:

http://photoupload.org/uploads/13279084311.png
  • #255
  • Jan 30, 2012 2:08am Jan 30, 2012 2:08am
Anybody else short the AUDUSD last night on that M top that formed late Friday? I am +93 right now. Got in 20 pips from the high. Target 1.0525.

LAFF
  • #256
  • Jan 30, 2012 2:13am Jan 30, 2012 2:13am
Quoting femi94ce
Anybody else short the AUDUSD last night on that M top that formed late Friday? I am +93 right now. Got in 20 pips from the high.

LAFF
Would be nice if you mentioned it "last night". After +93pips, what else can we say .....
  • #257
  • Jan 30, 2012 2:16am Jan 30, 2012 2:16am
Sorry. Thought it was obvious. I'll try to be more timely next time.

Just FYI I find that the AUD and JPY pairs often have a rhythm that isn't necessarily hooked to the rest of the market - I don't take a position during the asian session on any other pairs.

LAFF
  • #258
  • Jan 30, 2012 2:16am Jan 30, 2012 2:16am
Quoting femi94ce
Anybody else short the AUDUSD last night on that M top that formed late Friday? I am +93 right now. Got in 20 pips from the high. Target 1.0525.

LAFF
Cos it is on it's way back up from 1.055(ish)
  • #259
  • Jan 30, 2012 2:21am Jan 30, 2012 2:21am
Quoting pah
Cos it is on it's way back up from 1.055(ish)
Yeah I see that but I think they are reaching for the 200MA on the 1hr chart @ 1.0517. If another candle or 2 closes north of 1.0569 I'll exit the position.

LAFF
  • #260
  • Jan 30, 2012 2:23am Jan 30, 2012 2:23am
Quoting femi94ce
Yeah I see that but I think they are reaching for the 200MA on the 1hr chart @ 1.0517. If another candle or 2 closes north of 1.0569 I'll exit the position.

LAFF
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