Trade what you see NOT what you expect | Page 1819 | Forex Factory

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Trade what you see NOT what you expect

  • #36,361
  • Jun 24, 2012 5:47pm Jun 24, 2012 5:47pm
Can somebody please explain to me, the reasoning behind taking a trade in the opposite direction when a candle spikes through the 35sma and 50sma? Why specifically these 2? why not ema? what is the psychology behind why that would prove succesful?

Thanks
  • #36,362
  • Jun 24, 2012 9:47pm Jun 24, 2012 9:47pm
Potential reverse shampoo shaping up on the AU 1H... I'll have to wait until morning to see whether it forms or if we break through. If we get the shampoo, the 1.0060 level will be key, as it was on Friday.

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  • #36,363
  • Jun 24, 2012 10:04pm Jun 24, 2012 10:04pm
Quoting chiba_san
Can somebody please explain to me, the reasoning behind taking a trade in the opposite direction when a candle spikes through the 35sma and 50sma? Why specifically these 2? why not ema? what is the psychology behind why that would prove succesful?

Thanks
I'll take a stab at this although please bear in mind that I'm a fairly new trader and have only been trading this method for a couple months...

First, it is a cross through the 35 SMA and 50 EMA which are 2 of the MAs listed as being on the 15M chart. The idea behind this trade is that a strong move through both of these "major" MAs will likely result in at least a retrace of the move. The example in the PDF (starting at page 40) also indicates that one should be aware of the Fib levels when considering this trade. The idea is that price has moved and is now strongly on one side of the MAs and then in a SINGLE candle retraces the previous move quickly and blows through these MAs. If we are still above the 50% / 61.8% Fib then the likely outcome is at least a retracement back up to the MAs and possibly a continuation of the trend. This can get you into a trade at a great price and covered at B/E for the next leg of the trend. Then, watch closely if these MAs prevent price from returning where it came from and based on PA at this area decide whether to stay in or exit (and possibly reverse).

I would highly recommend reading the PDF and looking at the description and examples if you haven't already done so.
  • #36,364
  • Jun 24, 2012 11:08pm Jun 24, 2012 11:08pm
Quoting DharmaTrader
I'll take a stab at this although please bear in mind that I'm a fairly new trader and have only been trading this method for a couple months...

First, it is a cross through the 35 SMA and 50 EMA which are 2 of the MAs listed as being on the 15M chart. The idea behind this trade is that a strong move through both of these "major" MAs will likely result in at least a retrace of the move. The example in the PDF (starting at page 40) also indicates that one should be aware of the Fib levels when considering this trade. The idea is that price...
thank you for your reply! i have read the pdf.
  • #36,365
  • Jun 24, 2012 11:15pm Jun 24, 2012 11:15pm
Quoting DharmaTrader
I would highly recommend reading the PDF and looking at the description and examples if you haven't already done so.
I'm new to this thread, so all the pdfs are on Page 1 right? Are there other helpful links among these thousands of pages?

Thanks.
  • #36,366
  • Jun 24, 2012 11:49pm Jun 24, 2012 11:49pm
Quoting DharmaTrader
I'll take a stab at this although please bear in mind that I'm a fairly new trader and have only been trading this method for a couple months...

First, it is a cross through the 35 SMA and 50 EMA which are 2 of the MAs listed as being on the 15M chart. The idea behind this trade is that a strong move through both of these "major" MAs will likely result in at least a retrace of the move. The example in the PDF (starting at page 40) also indicates that one should be aware of the Fib levels when considering this trade. The idea is that price...
Decent explanation Dharma. This trade was something of a diversion from his usual approach to trading for EO. He was a VERY technical trader and had a great feel for where markets were headed and really understood when to take note of a candle formation and when to let it slide. This trade was a departure from that as it seemed more based on observation of price action in relation to the mas rather than having too much solid technical reasoning behind it.

This is why i've never traded it and never had a great deal of faith in it. If I can't say why something may happen, I can't trade it. This seems to be more based on coincidence than it does sound technical reasoning. However, i do believe that he would be a little picky with taking them and would ideally prefer the spike candle to be bumping up against some S+R before he considers taking it.

Very, very tough trade to take for a newbie I feel.
  • #36,367
  • Jun 25, 2012 12:56am Jun 25, 2012 12:56am
Morning all,


Good replies about the 35/50 trade, guys. Trotty's right though it's probably better if your a newb to stay away from this one. Although on the other hand, EO took it very seriously when a long candle passed through those ma's. He would often exit say a short if there was a long red candle through the 35/50, so not one to be ignored either. The best thing you can do is go back through the charts and make your own mind up about it.

bstay2, yes, unfortunately there are only the two pdf's and the miscellaneous posts that have been collated. The rest you have to do yourself going through the thread.
There is no top. There are always further heights to reach. Jascha Heifetz
  • #36,368
  • Jun 25, 2012 1:00am Jun 25, 2012 1:00am
Quoting Trader131
Morning all,


Good replies about the 35/50 trade, guys. Trotty's right though it's probably better if your a newb to stay away from this one. Although on the other hand, EO took it very seriously when a long candle passed through those ma's. He would often exit say a short if there was a long red candle through the 35/50, so not one to be ignored either. The best thing you can do is go back through the charts and make your own mind up about it.

bstay2, yes, unfortunately there are only the two pdf's and the miscellaneous posts that have been...
Morning 131.

Bang on as well, trading should always be about what you can see, understand and then ultimately grow to trust. If a setup doesn't make sense to you or you can't wrap your head around it when looking through the charts, you should never trade it. All you do then is throw your hard earned money at somebost elses idea.

Good luck this week
  • #36,369
  • Jun 25, 2012 1:19am Jun 25, 2012 1:19am
Quoting Trotty
Morning 131.

Bang on as well, trading should always be about what you can see, understand and then ultimately grow to trust. If a setup doesn't make sense to you or you can't wrap your head around it when looking through the charts, you should never trade it. All you do then is throw your hard earned money at somebost elses idea.

Good luck this week
Thanks, Trotty, you too!

Now thinking about the reasons that I see for it:

I would say that EO had the 15min 50ema as a key ma, so we take notice of price in relation to it. He often talked about if one ma broke, price would move through and test the next one, bounce a bit and then may break through to test the next ma and so on. In the 35/50 trade, I suppose price has broken straight through two ma's without even testing them, and the chances are that then it will at least return to the ma's from the other side to test them. Combine that with the fact that a long red (or green) candle with little to no wick may often reverse or at least retrace on the next candle (particularly if there is support or resistance around), then you have enough reasons for a solid trade.
There is no top. There are always further heights to reach. Jascha Heifetz
  • #36,370
  • Jun 25, 2012 1:46am Jun 25, 2012 1:46am
Quoting Trader131
Thanks, Trotty, you too!

Now thinking about the reasons that I see for it:

I would say that EO had the 15min 50ema as a key ma, so we take notice of price in relation to it. He often talked about if one ma broke, price would move through and test the next one, bounce a bit and then may break through to test the next ma and so on. In the 35/50 trade, I suppose price has broken straight through two ma's without even testing them, and the chances are that then it will at least return to the ma's from the other side to test them. Combine that...
Yep, think that pretty much nails it.

I do wish he'd bob in every so often so we could pick his brains over some of this stuff.
  • #36,371
  • Jun 25, 2012 1:46am Jun 25, 2012 1:46am
Talking of long red candles with little to no wick Look at the last monthly candle close and more importantly look left from where it closed
There is no top. There are always further heights to reach. Jascha Heifetz
  • #36,372
  • Jun 25, 2012 1:47am Jun 25, 2012 1:47am
Quoting Trotty
Yep, think that pretty much nails it.

I do wish he'd bob in every so often so we could pick his brains over some of this stuff.
Yes, now that would be something!
There is no top. There are always further heights to reach. Jascha Heifetz
  • #36,373
  • Jun 25, 2012 2:08am Jun 25, 2012 2:08am
Quoting Trader131
Talking of long red candles with little to no wick Look at the last monthly candle close and more importantly look left from where it closed
Hmm, good point!
  • #36,374
  • Jun 25, 2012 3:39am Jun 25, 2012 3:39am
This mornings trades- all good so far, the second one ended up net BE, in hindsight I reversed my short too early, but it was a valid signal to me (triple tweezers) but I managed to get positive pips on the others. The most recent long just put on is based on support on the 4 hr chart
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There is no top. There are always further heights to reach. Jascha Heifetz
  • #36,375
  • Jun 25, 2012 5:43am Jun 25, 2012 5:43am
Took a sell on eur usd 15m @ 2495

30pip tp, 30pip sl
50k

Previously took a sell since Friday on 1h chart @ 2545 for 70 pip tp/sl for 20k.
So using that as house money to double or nothing
  • #36,376
  • Jun 25, 2012 5:59am Jun 25, 2012 5:59am
EU looking to close the 4H in 5 min (on my feed) as a hammerish candle. The 4H support looks strong at 1.2450 so another push down is certainly a possibility. There may be an opportunity to buy the wick.

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  • #36,377
  • Jun 25, 2012 6:06am Jun 25, 2012 6:06am
Dharma,

Have you ever tried trading the weekend gap? I read over the net that weekend gaps fill 88% of the time in the last decade on the Gbp/cad

Might be a good way to start the week if a trader had a winning week the week b4
  • #36,378
  • Jun 25, 2012 6:20am Jun 25, 2012 6:20am
Yeah, I pretty much always trade the weekly open, or at least take a look and see if there's movement. Depending on what's happened over the weekend, the weekly trend is sometimes set right away and you can get a nice entry.
  • #36,379
  • Jun 25, 2012 6:43am Jun 25, 2012 6:43am
U reckon hangman reversals and pins are accurate on a 4h? I see clusters of successful ones and then clusters of failed ones. Never trade them personally...
  • #36,380
  • Jun 25, 2012 6:59am Jun 25, 2012 6:59am
Quoting chiba_san
U reckon hangman reversals and pins are accurate on a 4h? I see clusters of successful ones and then clusters of failed ones. Never trade them personally...
I definitely don't take them without confirmation on any TF. But, these type of candles, especially when they form at PPA areas, indicate that a change may be in the cards. So, in this case, a hammer on the 4H and then some nice PA on the 15M could provide a good entry point.
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