Trend Trading All Pairs

i have a buy in NZDCHF 4 Hrs time frame

Buy @ 0.7691 Sl @ 0.7540

TP 1 : 0.7677 ( i will be closing 80% of my trade there if the price reaches this point)

TP 2 : 0.7813


http://optimus-forex-trader.blogspot.in

That's a lot of data. I frankly would not be able to absorb and make decision based upon it.
How are you managing to trade with so much information considered?

S/R acts as far as I understand it like this. when this s/r level is against the trend it might give some reaction but price keeps coming to this level again and again until all orders taken out and level broken if it is not broken outright which also happens, if the level is along the trend it might be touched just once or price might even not reach it at all if market is hot, whatever orders were triggered price moves away and might not come back for quite a while.

Certain levels might cause trend to reverse but I think it is only if it is in tune and timing with fundamental situation.

Well I read it and replying to your PM in this thread.

Interesting but only useful for an academic journal and to get some credit for research. Completely useless for trading (outside of stating the obvious) .

IMO, the whole thing can be summarized in 3 (well they are 1 million examples to choose) stocks weekly charts with S and R areas highlighting the main FA changes/news related to the stock ...

sisse

As humans we learn from our mistakes. I bet you'll be eyes glued on news from now on Sometimes when I see price coming close to TP I manually exit about 10p above that. Like 10p above the FIBexpansion levels. You lose some pips, but you get out safely banking a bunch.
Anyways, that huge retrace was due to the EU summit news. I cashed oout early. Don't forget the Hector rules sbout news events. You should have been out of those trades already. No biggy, now you've experienced the lesson of not being in a trade when a major nrws event occurs. Be proud you survived, and now are just that little bit more battle hardened. We learn from our mistakes. I bet you'll be glued to the news from now on. You won't be caught flat footed again.

IT BETTER NOT SOLDIER!!! (said in an army drill sargeant voice) LOL

NZDCHF first target at 0.7677 has been reached and my second target is 0.7813


http://optimus-forex-trader.blogspot.in

Here you go again........
All I can say is my account is 1000's of pips up this year so far, and only growing.
I don't have to worry about drawdown because I know what I'm doing. I don't make a trade because some engulfing bar says I have to etc. I trade reality. There is no drawdown when you trade reality, only minor setbacks.
Thanks for sharing what we already know. That's what we do. Again if you have some trades or insights, share, don't waste my time with loser talk, and elementary lessons on trading.

Wow.
You said it so correctly that my brain now finally has a way to say what I've always known. AWESOME. EXACTLY. When you trade an h1 tf short when you zoom in VOILA !! like magic, the classic pattern apears and it's just a matter of trading it correctly in the direction of the main trend, with, of course supporting fundamental analysis backing up your play.

This is a post EVERYONE SHOULD READ.
This method has been tested to death, it uses, all the classic patterns, and overall formula for success. Ie..the trend is your friend, etc.

SKYNET, YOU SAID IT PERFECTLY !!!

If I may, in laymans terms, (please correct me, if I'm wrong), Backtesting technical chart patterns is a waste of time. It's been done.

Now if you want to backtest, say, what happens whenever a countries yield on bonds goes above, say, 6%, and how that affects the currency, wel now, THAT is a valid and interesting topic to backtest.

example from contemporary scenarios:

When people are fearful they buy JPY and USD to buy their bonds, hece they strengthen. Interesting backtest, and now a valid trading sort of "common knowledge",in the forex world, that's why we have the term (I know I've said it a milion times, but bare with me) RORO, RISK ON, and RISK OFF. Those terms come from backtesting the recet flows of money over just the past 10 years, and will probaby be valid for a while.
That, fundamental bactesting is valid..but the patterns you use, to actually profit from thiose moves IS WELL KNOW ALREADY.
This is why CUSTOS I can have a MILION valid trades if I want to. As long as the fundamentals are "good", and the technicals are inline with market sentiment, IT'S GAME ON !!
LOOK AT MY CHARTS OVER THE PAST 2 MONTHS. IF IT'S A VALID TRADE, TAKE IT !! DON'T ARBITRARILY LIMIT YOUR PROFITS!!

For instance, the e/n trade from last week. You said it wouldn't go through, because you only looked at the technicals on the charts. What you failed to do was to take into account REALITY. The REALITY that the EUR has never been under such chaotic leadership and that Eurozoe leaders are in a huge pickle as to what to do to solve all these bailouts and such.
You see CUSTOS, you must trade REALITY. AS I'VE SAID A HUNDRED AND ONE TIMES, TRADE LIFE!!!!
The fact that you're so concerned with drawdown, is because you don't TRADE LIFE. YOU DON'T TRADE REALITY, ONLY WHAT YOU SEE ON SOME CHART. YOU MUST FOLLOW BOND PRICES, POITICAL NEWS, CREDIT DEFAULT SWAP PRICES, DAILY FOREX NEWS, AND OF COURSE, ANALYZE THE WEEKLY COT STATEMENT (COMMITMENT OF TRADERS STATEMENT.)

There's more to this than just trading off a chart. The chart is only there to tell you WHEN to enter. But you must know the WHY of entering a trade. Only THEN, are you TRADING LIFE, REALITY !! AND MAKING KICKASS PROFITS CONSISTENTLY.

I don't know. They say they have these plans but when it comes to EU leaders, the devil is in the details.
They said they'll recapitalize Italian and Spanish baks directly instead of going through the government, but it still kind of doesn't help (in the case of Spain) because they are making the banks buy their bonds.
I'll be following Eurozone bond prices and CDS prices like a hawk this week. Because really, in the end, it doesn't matter what I think, it matters what the big players think, and wherethey take us. One thing s for sure though SKY, I'll be riding the trends right along beside them.

Giddy up !!! Ride em cowboy !! LOL

But seriously, we have to see the finer points. They gave us the rough draft, now we need the final product.
How bout you, any thoughts ? Or anyone else, Any thoughts on the big EU summit ?

Nice.
I'm familiar with the US index, but to tell you the truth, I didn't even know they did it for all currencies.
Yeah, you totally get me. I love to see the WHOLE picture first (macro view), THEN poke around in the charts to find entries based on my macro analysis. I SUGGEST EVERYONE DO THE SAME !!
GOOGLE: "bonds and forex market", "CDS and forex market", "COT charts and forex market", and the stuff from SKYNETS post.

THESE INDICATORS WILL GIVE YOU A "BIRDS EYE VIEW" MACRO VIEW OF THE FINACIAL WORLD, AND A GREAT BASIS FOR MAKING YOUR FOREX TRADES.

Great thanks, I'l spend the next week or two getting familiar with this and tuck it into my forex toolkit.

Hey SKYNET, if you could, sort of break it down for me how you personally use this data. Like, walk me through your typical thoughts as you analyze these.
Is it week to week, what do you look for etc. ?
Speak to me like I'm a 5th grader. Thanks

OH NICE LOL. Diregard the last post of mine (unless you have anythinng to add).
I just start at the top, and read and repy to posts as I read down the page. I didn't know you posted this one.

[quote=Skynet;5805018]HOLY COW,

I like the fact that you brought up that point. Below you will see my take on S/R and market turning points.

ON S/R

Like every other technical tool...s/r needs to be traded properly to be effective.

I trade S/R two ways:

#1. I trade s/r in the direction of the trend--in this specific case, i dont take my s/r lower than h4.

#2. I trade the s/r in an anti-trend direction...this is a special case and certain particular conditions need to be met....in this case, my s/r is usually weekly, monthly, sometimes, daily.

(b)Of course, i want a linear regression confluence at the point of entry too.

(c)This specific s/r has to be at previous market turning point and very fresh(never been tested). Why? S/R that happened as a result of market turning point are created through the fractionation of orders by fundamental big trading entities. They bleed into their position over days, sometimes, weeks in many cases, months. Thereby turning that region into a nice consolidation/market turning point. THERE ARE STILL FRESH ORDERS RESTING IN THAT AREA WAITING TO BE TRIGGERED. This will provide subsequent boost. Big players with long time horizon don't jam pack their orders in within seconds or hours. (Not just my trading experience, but yes, i do have analytical papers backing everything i just wrote.)

which leads to point #d.: The time range from when that s/r level was created to when it is now being tested should preferably not be more than 1 year at most and 1 month at least; 6 months for maximum efficacy. Why? Market Memory. One market trade have at least a memory of 2 weeks.(i have analytical papers for this too...yes, s/r can work up to 20 years, no doubt(i have analytical studies for this too)..but their efficacy diminished after a number of years.

If the time window is too narrow, you have a fake breakout reversing....if the time window is too large, then the fundamental factors that indicated to large fundamental traders that entering the market at that point is good value could have disappeared or rendered immaterial--which defeats the purpose of entering the market again at that level. Thereby rendering that spot less than optimal entering point again. If the fundamental reasons for entering AUD/USD at 0.9859 is no longer there, why then should fundamental trader that entered at 0.9859 before, thereby causing market turning point...why should they re-enter again at 0.9859? No reason at all. NZD/SGD at 58.00 with NZD good wool production is not the same as NZD/SGD at 58.00 with bad wool production.

this is one of the reasons why a S/R levels that look good may not work, because the fundamental reality of the market has changed. However, a pure technician may not be aware of that. Hence, it is highly recommended to pure technician: trade with the trend. Trend trading baked in fundamental info for the most part.

This issue of fundamental spoiling the show then leads us to the next question, which is: how do we avoid this apart from using trend trading?
Well, read up on fundamentals or use a proxy analysis. e.g. the indexes.
If the basket of NZD indices is at similar/same level where it was before when NZD/SGD was at 58.00, then, the relative fundamental strength is assume to the same with regards to other countries.

Market turning points? that leads us to point #E:
The market turning point needs to be at least 7 trading days of market action zone. In fact, the more trading days it takes to form the reversal == the more money it takes to bleed into the market to form that s/r zone== The better that s/r zone will be.

Which leads us to: how do we determine a good s/r zone apart from the usual suspects of requiring larger time range, requiring higher time frames formation, and requiring fundamental this or that? Are there technical formations that might tip us to a good S/R level? Yes.
(a)If your weekly s/r level that price is coming back to test look like a 1,2,3 formation on the H4. that is a good sign. (yes, i have statistical studies backing this up) Note that a 1,2,3 formation can look like a inside bar or a pinbar. Yes, candles = technical chart patterns too.
(b) If that 1,2,3 formation fits well into the concept of momentum ratio As succintly explained by entropylad. William O'Neil analyze this concept in his book although he didnt give it such a fancy name as "momentum ratio".
(c)If that 1,2,3 formation was followed by a breakout and pullback but the pullback was forced pushed away before touching the breakout point As beautifully explained by dazzdude and WMD. . That is golden.


HERE A FEW ERRORS WIDELY ATTRIBUTED TO GOOD S/R

That there are large block of orders at s/r levels. No. Point to me one serious analytical paper backing this claim up. Are there multiple orders residing there? yes. But they are fractionated. And if fundamental condition is plauribus ceteris, fundamental trader will keep their orders there still...however, their orders are fractionalized.

You dont want levels that has been tested from both sides. This will have eroded supply of orders clustering around it. The only thing that may still offer a bounce off that level is market memory. (just google market memory)

You preferably do not want that level to be proven as support or resistance previously. I know this is dogma:make sure that level was proven to be good support and resistance in the past. I am of the contrarian view. You dont want that. All that will do is eat into the cluster of orders residing there. And keep eating into it until the new direction of market orders overwhelm the ones at s/r level leading to price smashing through s/r. So, only go for untested levels for maximum efficacy.

IN A NUTSHELL:GOOD S/R LEVELS CONSIST OFF:

-- Higher time frames market turning points(not breakouts). Turning points.
-- Make sure the fundamental situation at the time of the turning point is similar to what it is now. or use proxy analysis if your fundies are weak. If the fundamentalists with enough market firepower to cause the market turning point, now see price retrace to their previous level....some of them will see that as a bargain to enter again. (that is assuming fundamental condition remains unchanged). They have much longer trading time frame horizon.
-- Which is why i prefer that S/R zone gets retested within 1month to a year. Not more or less.
-- Of course, i want the S/R zone to last at least a week in length.
-- Use confluence. I prefer linear regression analysis coinciding with the S/R
-- Make sure your WEEKLY s/r zone turns into 1,2,3 formation on H4.
-- Make sure your 1,2,3 formation has a momentum ratio to it.
-- Make sure your hook line is untested. check WMD thread.


***APART FROM MY TRADING EXPERIENCE, I CAN PRETTY MUCH BACK UP EVERYTHING WRITTEN HERE WITH ANALYTICAL STUDIES***

regards,

skynet

P.S. i like to google academic papers on financial trading(not just economics and finance; but FINANCIAL TRADING) as it pertains to areas that interest me. It could be how does triangle perform or how does sma14 perform or how does german bunds rate help trade the s and p 500. I found this to be much better than doing any backtesting myself. why? because these researchers would have attacked the problems with rigorous tools than i care to. I just read to see if it disproves my beliefs or introduce new things into my thought process. there are insane amount of research papers on technical and fundamental trading. You want to backtest anything? first, do a google search for academic papers on it...most likely it has been analyzed to death before.[/quot

SKY, you have taken me to the next level dude !!!! WOW. I have nothing to really say yet because this is alot of good stuff and I'm going to have to absorb it over some time but dude ..... NUFF SAID. ENLIGHTENING STUFF !!!

Yeah, same here, or I go to markit sites that post prices, but I basicaly just follow the same thing, or I'll just google "Italian CDS" etc and see if anyones reporting on that.

I know you guys might think I'm nuts, but as far as I can see AUD, NZD, and CAD seem to be strengthening, while USD and JPY are weakening as well as GBP and EUR. So for me I'm ( I know CUSTOS w're at support). taking e/n, e/a, g/n and g/a short, and I might try the a/u, a/j, n/u and n/j long. That's mostly based on the fundamentals. I'm going to start sarching for entries now.

I'll post charts later.

tell me what you guys think.

Normally I don't care to much about s/r if the fundamntals are in my favor, and while the nzd is strengthening, I don't think the macro data supports an nzd breakout to the upside past the w1 resistance. the reason I say that is that manufacturing is slowinng in China (the worlds manufacturer) and the US #'s on manuf. sucked as well. I think the recent rally in comm doll prices against the chf is just due to the fact that they were beaten down so badly in the last months. But I just can't see a reason for price to go much higher. Good trade though (any profitable trade is a good trade). But keep those stops tight !! Any bad news, could send the chf through the roof.

Good work.

Honestly guys, I think after last weeks Eu summit, and with the big data coming out thurs and friday, I think this could be apivotal week. I thik by the end of this week, we'll see which direction prices will be going for the next little while.
Next week, we should be pulling in pips hand over fist. (of course, I could be totally wrong).

hy Shomary , why don't u make a mini course about fundamental analysys? to help the other trades for me personally is hard ,what i personally do is look at the previous day if the news is good or bad