Using the DASR for successful trading

Hi everyone

It's true that most of us retail traders (including me sometimes!) have fairly low tolerance levels when it comes to trading the higher time frames. So what we're going to do is RADICALLY adjust our entry procedure so that we will be able to CONFIDENTLY enter a trade. We're still using the 4 hr chart as our main guide. But we are going to trade off the 5min chart. So we're going to have them both open at the same time. We need to trade during the usual most volatile trading periods because we want the LONGEST 4 hr bars. How does this work in practice? Well I'm going to show you's all some nice examples over the next few days!!

Hello Jmtini,can u post the template u use on the above chart-AUDCHF.Ayour2a

Hi Ayour

Here's all my templates for the various time charts:

1/ Daily chart
2/ 4hr chart
3/ 15min (I use it for 30 min too)
4/ 5min chart

As I mentioned above, I am going to use the 5 min chart and 4 hr together from now on - we're going to isolate good trading opportunities!!

rgds

Thanks

Hi everyone

Just to let you know that I've started "trade explorer" but it's on my demo account until I sort out with my broker why I've got no investor password. They say it's the same as my trading password which sounds a bit strange? So I'll try to sort it out with them and switch the trade explorer to my live account. In any case the demo is showing exactly the same trades as on my live account.

OK - so back to using the 4hr chart and 5 min chart for safer results.

Let's have a look at the USDJPY 4 hr chart and you'll see that I've boxed 4 or 5 bars going back to a couple of days ago - 4th April. Specifically the 12.00pm, 4.00pm, 8.00pm, 0.00am

Now what we want to do is this. When the bar opens, we want to see it develop to maybe 10 pips (as a rule of thumb). Obviously, we are looking at the general chart situation (up or down trend) and previous bar so we know that the bar has a good chance of continuing and developing into a hopefully 40 pips+ bar!

So it looks good but we're once-bitten, twice-shy, ultra wary type of trader so we want to be even surer that when we enter our trade, it's not going to suddenly reverse and we're staring at a 10, 15 pip draw-down already! So ONCE WE SEE A GOOD LOOKING 4 hr BAR we are going to drop down to the 5 min chart. We'll do that next!!

Hi guys
I'm in. thinking that will be up on eu in new week

Hi FxThug,

Could be , after the 300 pip drop last week (started with that USD friendly news after 7.00pm Tuesday evening), I think that some retracement is more then likely - at least up to the 3150 area. That will be the key area to watch!

What we are trying to do here though is take it one 4hr bar bar at at time. Of course if we check out the daily (or even 4hr) chart and see that there could be a lot more movement in the direction of our trade, then obviously we need to try and keep our trade open, either locking in profit by moving up our SL or taking some profit and letting the rest of our trade run as far as possible.

I quite certain that pro traders probably opened a short (or had a pending short) around the 3300 area and kept it open because price action did not break above the 55 ema on even the 5 MIN CHART for 24 hours (netting them nearly 200pips)!

The point is that most of us small RT's have GOT to wise up!!! It's not 5% of small traders that succeed in this game. The true figure is nearer 2% which really does tell us how difficult it is to succeed. So here's what we have got to do:

1/ We got to enter a trade not only in the right direction, but just as importantly, also AT THE RIGHT MOMENT(have you noticed how often we are correct direction-wise, but get knocked out more often then not by having our SL taken out just before the trade goes in our direction!)
2/ Once we are in profit we've got to be able to NICELY track our trade WITHOUT giving in to the often very strong temptation to "take profits while you're ahead"
3/ On the other hand, we don't want to let our winning trade to EVER turn into a losing trade. Again with EFFECTIVE tracking, that should not happen.

rgds
Jerry

OK so let's go a bit further on our example above. We are looking at a bar on the 4hr chart USDJPY. 12.00pm bar

Have a look at the 5 min chart attached

Hi everyone

What I have been doing is looking at the whole darn system from a whole new angle.

I have not left off using the DASR , nor any of the other indicators - in fact I have included them all now into a whole new strategy and chart system. We are going to do THREE things:

1/ We are going to "step back" each time we switch on our platform and really learn to READ the chart. THIS IS ABSOLUTELY VITAL AS YOU WILL SEE

2/ We are going to change the way we look for and take trades. Instead of NOT trading tops and bottoms. We are are ONLY going to trade tops and bottoms , well almost!

3/ We're NOT interested in taking multiple trades each day. We are looking for the BEST set-ups (using this new strategy) of which we may only get 4 or 5 (across the trading pairs) a week. But they are minimum 60/70 pips so we only need 4 or 5 a week

OK let's go - tomorrow we are open the window to a whole new trading experience - it's called WINNING!!!


Rgds

Jerry

Hi everyone

Sorry it's going to be one more week because I am testing the strategy live for a week before sharing it.

Hi everyone

Well I've been tinkering around for 2 weeks now and I can say that we are just about there.

basically the same system but tweaked a bit - we're bouncing off dynamic support/resistance levels - that never changes- but I'm using another template which not only helps to identify the underlying trend but also other factors which lead to a successful trade.

Will post it all over the long weekend!

OK HERE WE GO!!

I think that the first lesson that I and many other small traders HAVE to get into our thick heads is simply NOT WASTE TIME AND MONEY trading something which is going to lead to tears! With forex we have a wide choice of pairs and instruments so why on earth do small traders spend copious amounts time trying to analyse what might be going on with EURUSD or maybe GBPUSD??
This last Friday afternoon for instance, a lot of small traders probably got hit by the volatility following the NFP but really, stop hunting is prolific especially when it comes to EURUSD. Why? Well because the MM's and banks know that most small retail traders are trading the euro, that's why!

To illustrate my point, have a look at the two charts below. One is 15 min EURUSD and the other 15 min AUDUSD. Both show a downtrend but there is huge difference in their patterns, not so? EURUSD jerks around terribly - this is more often then not the "normal" pattern for EURUSD whereas if we look around we could have got a much smoother ride on AUDUSD which has fallen 200 pips nice and steadily!

OK we switch on our MT4 for the day and what do we do?

Well what we DON'T do is zoom in on our favourite pair (probably EURUSD) and start looking at hourly,30 min (or maybe less) price action. Why?? Because that's how we are going to get "sucked in" to possibly making a fatal trade decision !!

What we HAVE to do first is go through our 8 - 10 major trading pairs looking for trends. How? Well I have come up with a simple template to help do this. Have a look at the charts above. The template is simply a "zoomed out" chart with the 1 hour vegas tunnel and 200 SMA. Note that it's the 15 min chart. Well what I do is fIrstly look at the 1 hour chart using this template, and if a trading pair looks "trendy", I go down the time frames until price action fits nicely (as it does when we for instance look at the AUDUSD pair).Then we simply look for a bit of a retracement to enter out trade! next post I 'll show you how we can do that with a bit more accuracy!

OK

So what I have done is come up with a simple but effective template to help in finding nice spots to enter a trade.

Using the example above of AUDUSD which was by far the best pair (IMHO) that we SHOULD have been trading last week, have a look at the template below:

You will see circled in white some great entry points over the last 3 trading days. Note that because the down-trend got stronger, price action did not come back to the 1 hr vegas DASR again from 3rd May. Also on 4th May, note how PA bounced beautifully off the daily pivot point area!

Coming back to the trading method I've detailed above, the 2 templates and indicators you need I've attached below:

We have covered this strategy before, but it only "struck home" to me this last Friday after NFP on the EURUSD pair.

Use the 4 hr DASR to find great set-ups and avoid loss!!

Have a look at the EURUSD chart below. Note how price action briefly pierced the 4 hr dropping resistance (DASR) and hit the daily DASR. It was rejected and shot down. Having a well placed pending SELL order would have resulted in a lot of pips and no loss!

Have a look at the USDJPY 4 hr chart. In black circle we could have used our first "trend finder" strategy and yellow circles highlight our "rejection of 4 hr DASR" strategy

Another great example of our 4hr rejection of support/resistance strategy is GBPUSD - over the last 2 weeks of April was in a firm uptrend - easy to spot that from our 4 hr chart!

When price came down to test support (as it often does in a trending situation) it gave 3 excellent opportunitys to enter winning trades!

OK - taking our previous example, let's say it's 8.00am in the morning (GMT) on the 20th April and we look at GBPUSD 4hr chart and see that price action is so bullish, it's way above our 4hr support (DASR). So we switch to our first strategy and we check the trend (see chart 1) then we look for a nice set-up (see chart 2) and "Bobs your uncle" a great candle exactly at 8.00am gets us going for 60 pips+