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  • #1,921
  • Jun 5, 2012 5:06am Jun 5, 2012 5:06am
Quoting xmzhang
I don't get it, these trapped buyers, they would've closed their longs as soon as price drops below the cluster and thereby accelarating the downmove with their sell orders, they wouldn't wait until price comes all the way down and then returns all the away back to their original entry point. So the supply isn't coming from the sell orders of the trapped buyers ?
It depends on the 'class' of buyer. Some will have SL's below that range and at BE - thus they help to cause the breakout 'rush' as do the pure breakout sell orders etc.

BUT, not all traders will be willing to get out when price breaks that consolidation, you'd be surprised how many traders will be holding onto their long waiting for price to come back it's these traders bailing on their long trades that CONTRIBUTE (they are not solely responsible) to the sell orders
  • #1,922
  • Jun 5, 2012 5:10am Jun 5, 2012 5:10am
Quoting xmzhang
Yes, a few examples would be nice, one chart says more than a 1000 words
Firstly an example of an impulsive move.

For me an Impulsive move means extreme price movements from a distance into the FTB entry area - i.e. movements that are not common in the normal course of a trading day on the pair in question.

This doesn't mean price won't react but it increases the uncertainty...thus the trade is now a lower probability trade which means it's a reason to either reduce risk or not take the trade - this will depend on a traders risk tolerance.
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  • #1,923
  • Jun 5, 2012 5:17am Jun 5, 2012 5:17am
Quoting lovejoy80
Firstly an example of an impulsive move.

For me an Impulsive move means extreme price movements from a distance into the FTB entry area - i.e. movements that are not common in the normal course of a trading day on the pair in question.
An example of the type of acceleration we want to ideally see.
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  • #1,924
  • Jun 5, 2012 5:18am Jun 5, 2012 5:18am
Quoting xmzhang
I don't get it, these trapped buyers, they would've closed their longs as soon as price drops below the cluster and thereby accelarating the downmove with their sell orders, they wouldn't wait until price comes all the way down and then returns all the away back to their original entry point. So the supply isn't coming from the sell orders of the trapped buyers ?
Smart buyers like you would've closed their longs as soon as price drops below the cluster, but there are still many buyers who are not smart enough....

One thing we should know about this pattern. When the cluster resolved north, it should be clear bull candle and engulfed quickly south. If it is compressed up and engulfed quickly south, I wouldn't take it. Think about why.
  • #1,925
  • Jun 5, 2012 5:19am Jun 5, 2012 5:19am
Shorted EA at 1.2775 for scalp.
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  • #1,926
  • Jun 5, 2012 5:35am Jun 5, 2012 5:35am
Quoting Balhana
Shorted EA at 1.2775 for scalp.
Top of CP.....
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  • #1,927
  • Jun 5, 2012 5:39am Jun 5, 2012 5:39am
Hi LJ and fellow members,

This is my first post!

I am new to forex and learned mainly through reading J16 and this thread. I like your stlye of trading and hope to contribute more in future; given the time. My work is based from home so am available for trading most of the day.

Excuse me if this is off topic. LJ, can I ask which brokers you use. Being based in the UK do you use spreadbetting firms for your trades (no tax on profits) or is this no go for you due to other reasons. I will be using a demo account until I am consistently profitable, but am looking for a broker.
  • #1,928
  • Jun 5, 2012 5:58am Jun 5, 2012 5:58am
For those who don't follow me on twitter, I posted these chart this morning.

Someone went long on the retrace to the SR after the breakout - it was a classic example of a trap for retail traders.

Traders that are jumping in on a long because of the breakout of the SR thinking price is going to head straight up without thinking about what is sitting above. All they are doing is providing liquidity to the big money that is sitting there are the supply. Traders also get involved on the retest which is more of an immediate retest than a good FTB - again these traders are merely providing liquidity to the big money that has come into the market.

Now how do we visually look for a buyers trap like this, we look for price to close below the SR on a given TF - this visually tells us that both the pure breakout traders and the immediate retest traders are stuck on the wrong side of the market - this is the footprint left behind by the professional money that tells us that price is very likely to move further down.

I time shifted the chart to show this visually - it's something silly like a 7HR 10min chart, but it's just to show the buyers trap visually.

This is the basic way we can look for obvious traps...but the advanced trader doesn't just look for the visual setup they look at how price is moving to determine what is happening...
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  • #1,929
  • Jun 5, 2012 6:07am Jun 5, 2012 6:07am
Quoting lovejoy80
For those who don't follow me on twitter, I posted these chart this morning.

Someone went long on the retrace to the SR after the breakout - it was a classic example of a trap for retail traders.

Traders that are jumping in on a long because of the breakout of the SR thinking price is going to head straight up without thinking about what is sitting above. All they are doing is providing liquidity to the big money that is sitting there are the supply. Traders also get involved on the retest which is more of an immediate retest than a good...
Why does this happen?

It's because the professional trader is constantly asking the following questions at any given area:

1. Who is participating in the market?
2. What orders do they have?

If you think about that you'll understand how the professional takes advantage of the retail trader - the retail trader generally being a novice trader who is predictable in how they trade and where they place their orders.

The BIG problem with retail price action traders is they are herd like and want to trade mechanically. People need to learn that mechanical trading is not an efficient way of trading price action, there is no short-cut to success in price action trading, learn to think like a professional and not how 90%+ of others on forums like FF think and you'll not look back.
  • #1,930
  • Jun 5, 2012 6:37am Jun 5, 2012 6:37am
Quoting lovejoy80
For those who don't follow me on twitter, I posted these chart this morning.

Someone went long on the retrace to the SR after the breakout - it was a classic example of a trap for retail traders.

Traders that are jumping in on a long because of the breakout of the SR thinking price is going to head straight up without thinking about what is sitting above. All they are doing is providing liquidity to the big money that is sitting there are the supply. Traders also get involved on the retest which is more of an immediate retest than a good FTB...
Great stuff as usual...........yes institutional money is big old and fat
Pipcrawler
  • #1,931
  • Jun 5, 2012 6:39am Jun 5, 2012 6:39am
Quoting ak45
Hi LJ and fellow members,

This is my first post!

I am new to forex and learned mainly through reading J16 and this thread. I like your stlye of trading and hope to contribute more in future; given the time. My work is based from home so am available for trading most of the day.

Excuse me if this is off topic. LJ, can I ask which brokers you use. Being based in the UK do you use spreadbetting firms for your trades (no tax on profits) or is this no go for you due to other reasons. I will be using a demo account until I am consistently...
I use a mixture of spread-betting and non-spread-betting brokers. Though the majority of my trading is not with SB firms.

It's an easy calculation to do IMO. Just work out how many trades you take per month on average across which main pairs and your average SL and your win rate

Then note down the average spread from SB and non-SB (SB will always have worse spreads).

You can then work out your approximate net wining R per year from each and compare that to your account size and the tax you'd have to pay with non-SB firms.

Of course you have to be profitable first for this to matter!

Obviously the tighter the SL the more the spread is a factor in your total trading costs and the more likely a non-SB broker will be more efficient.

I use GKFX as my main SB broker, from my experience they offer the best FX spreads and have an MT4 platform which makes it much easier for me to copy my trades across various accounts (that is of course not a recommendation though ;-) ).
  • #1,932
  • Jun 5, 2012 6:47am Jun 5, 2012 6:47am
Quoting lovejoy80
I won't comment on the others for the moment but you identified what I was looking for in Chart 2.

Very few people would have thought about that...give someone a chart like that, tell them it's an FB setup and to tell me whether that is one they would trade and they immediately go into a mode of evaluating it against a series of rules for FB setups.

This is the WRONG approach, I don't believe in 'rules' I believe in guidelines in evaluating setups for starters, but the bigger point is the ability to think laterally when looking at a chart,...
This setup pretty much summarises how a retail trader thinks compared to a professional.

Balhana got it spot on with his analysis ... that is TRUE price action. A professional price action trader can objectively look at that chart and understand 1. the compression leading into the support, 2. the supply consumption that occurred through the BUOB bar high and 3. The sellers trap that was the spike below the support.

Because they understand this price action they know the order-flow that is very likely to occur after and thus where price will go.

How will the vast majority of retail price action traders view this setup. They'll see it as a BUOB off a minor support level and nothing more, the vast majority don't understand what compression is and what supply and demand consumption is nor what a sellers trap is and the order flow that results from it. They'll view it as a BUOB with a poor close with a lack of space and probably not tradable - i.e. their thought process is mechanical and they have only basic knowledge of price action techniques - a BUOB isn't price action it's what's going in in forming it that is.

If you want to learn how to be a professional price action trader you NEED to think differently to the vast majority...the vast majority of retail traders lose money and the professionals take money off them everyday so it comes to reason that you need to think differently to how these traders think.
  • #1,933
  • Jun 5, 2012 7:08am Jun 5, 2012 7:08am
Quoting lovejoy80
I use a mixture of spread-betting and non-spread-betting brokers. Though the majority of my trading is not with SB firms.

It's an easy calculation to do IMO. Just work out how many trades you take per month on average across which main pairs and your average SL and your win rate

Then note down the average spread from SB and non-SB (SB will always have worse spreads).

You can then work out your approximate net wining R per year from each and compare that to your account size and the tax you'd have to pay with non-SB firms.

Of course you have...
I use IG-index (uk), their spreads are quite competitive I should say, fiber 0.8 pip, cable 1.0 pip, E/J 1.7 pip and ozzie 0.8 pip
Pipcrawler
  • #1,934
  • Jun 5, 2012 7:15am Jun 5, 2012 7:15am
Quoting Balhana
Top of CP.....
Closed 2/2 at 1.2760 for +30 pips. Poor entry but good SL placement. It was a winner but not a trade....
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  • #1,935
  • Jun 5, 2012 7:46am Jun 5, 2012 7:46am
Placed stop buy orders at 1.5350 on GU, which was triggered while having dinner. Hit TP1 at 1.5370 and moved SL to BE+1. TP2 @ 1.5390
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  • #1,936
  • Jun 5, 2012 8:12am Jun 5, 2012 8:12am
Took a long at 0.9732 on AU, SL at 0.9720
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  • #1,937
  • Jun 5, 2012 8:38am Jun 5, 2012 8:38am
Quoting Balhana
Took a long at 0.9732 on AU, SL at 0.9720
Update on AU long
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  • #1,938
  • Jun 5, 2012 8:41am Jun 5, 2012 8:41am
Quoting Balhana
Took a long at 0.9732 on AU, SL at 0.9720
Nice trade , one question though, that demand below the QM, is that a higher TF demand, I don't see any clear demand on my charts
Pipcrawler
  • #1,939
  • Jun 5, 2012 8:48am Jun 5, 2012 8:48am
Quoting xmzhang
Nice trade , one question though, that demand below the QM, is that a higher TF demand, I don't see any clear demand on my charts
I don't know yet if it will be a winner or not. Look at the AU 15M chart.


EDIT: demand (not "supply" on the chart)
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  • #1,940
  • Jun 5, 2012 8:57am Jun 5, 2012 8:57am
Quoting xmzhang
I use IG-index (uk), their spreads are quite competitive I should say, fiber 0.8 pip, cable 1.0 pip, E/J 1.7 pip and ozzie 0.8 pip
Been a long time since I checked out IG, those spreads sound good, might have to check them out again.
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