The Art of Using "Touch trade" !? | Forex Factory

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The Art of Using "Touch trade" !?

  • #1
  • First Post: Mar 5, 2013 10:11am Mar 5, 2013 10:11am
Defintion:

I have encountered the concept of "touch trading", which is a method of entering a position simply when price reach a level, expecting the price with reverse at the level without piercing through the level.

Some criteria:

Touch trading is used when the trader has very good confidence at the level. One reason for such a confidence may be that a lot of key moving averages, support-resistence, pivots, Fibo level, Round number, etc. are overlapping at the level.

Questions:

May I ask what else constitute a good touch trade setup? Why this entering method seems to work well some time? Under what situation this entering method would not work well? How many pips would you prepare as the stop loss?

Please share your view if you have relevant experience!
  • #2
  • Edited 11:30am Mar 5, 2013 10:51am | Edited 11:30am
everything that works in forex is directly as a result of the s/r cycle....

if you can read the higher tf s/r cycle then you can determine the higher tf trend, then you can make anything work...

why is it important to know the higher tf? because the higher the tf the stronger the force.

It is as simple as that, no if's, no buts, period!
tradewith60
  • #3
  • Mar 5, 2013 11:29am Mar 5, 2013 11:29am
Quoting kk007
Defintion:

I have encountered the concept of "touch trading", which is a method of entering a position simply when price reach a level, expecting the price with reverse at the level without piercing through the level.

Some criteria:

Touch trading is used when the trader has very good confidence at the level. One reason for such a confidence may be that a lot of key moving averages, support-resistence, pivots, Fibo level, Round number, etc. are overlapping at the level.

Questions:

May I ask what else constitute a good touch trade setup? Why...
Another dimension is fundamentals / sentiment. If price is shooting up, but through your analysis you think this is just hysteria and not a prolongued move based on fundamentals, then it very likely will stop at such a level. Then watch how market participants react. What events will be in the future and which scenario will be the most likely and what the impact will be. If you think the future events will most likely result in a bearish move and you confirm that by bearish price action, then the likelihood is high that you got a good trade.

I am talking about medium to long-term.
  • #4
  • Mar 5, 2013 12:50pm Mar 5, 2013 12:50pm
Quoting Custos
Another dimension is fundamentals / sentiment. If price is shooting up, but through your analysis you think this is just hysteria and not a prolongued move based on fundamentals, then it very likely will stop at such a level. Then watch how market participants react. What events will be in the future and which scenario will be the most likely and what the impact will be. If you think the future events will most likely result in a bearish move and you confirm that by bearish price action, then the likelihood is high that you got a good trade.

I...
And on the shorter term, if you have a level you think should hold and during a fundamental announcement it shoots to the level, and it's a contrary move to the news, it's a good place to enter for the reversal.
  • #5
  • Mar 5, 2013 1:00pm Mar 5, 2013 1:00pm
KK007,

I too have been looking into touch trades based on experience. I have been exploring other methods, but always come back to the touch trades as these work. I have been backtesting a lot with this system based strictly on the M15 and fibs. I have been researching Fibs as well and have become fairly comfortable on the various fib levels. I have noticed when the MA's line up with the 61% fib and the 10EMA is not reversing that this is a solid entry and very predictable. I was using and testing various Stop Losses and kept getting stopped out around 12 pips, so I moved my SL to 20 and that usually will put you below the next fib level and most likely a smaller S/R level. It is amazing that the fibs line up for the most part with S/R levels.

This is excellent thread, I look forward to responses and ways I can improve my trading.

FXVegas
  • #6
  • Mar 5, 2013 4:33pm Mar 5, 2013 4:33pm
I am a touch trader. It requires two things to be used successfully. You must have complete confidence in the levels you choose to trade as you will often be stepping in front of a fast moving train. You must also fearlessly take losses without remorse as you will often be stepping in front of a fast moving train. The levels I trade are detailed in the thread I started so I won't clutter this thread with them. This is the lowest risk highest reward style of trading and if you can learn it it can be very rewarding.
  • #7
  • Mar 6, 2013 7:04am Mar 6, 2013 7:04am
Quoting 60minuteman
everything that works in forex is directly as a result of the s/r cycle....

if you can read the higher tf s/r cycle then you can determine the higher tf trend, then you can make anything work...

why is it important to know the higher tf? because the higher the tf the stronger the force.

It is as simple as that, no if's, no buts, period!
Thanks, yes, HTF is another thing to look at.. but I think it is more to do with profit expectation in my experience.
  • #8
  • Mar 6, 2013 7:05am Mar 6, 2013 7:05am
Quoting Dopey
And on the shorter term, if you have a level you think should hold and during a fundamental announcement it shoots to the level, and it's a contrary move to the news, it's a good place to enter for the reversal.
Thanks Custos and Dopey, you may perhaps right, but I am not good at reading fundamental and news...
  • #9
  • Mar 6, 2013 7:07am Mar 6, 2013 7:07am
Quoting FXVegas
KK007,

I too have been looking into touch trades based on experience. I have been exploring other methods, but always come back to the touch trades as these work. I have been backtesting a lot with this system based strictly on the M15 and fibs. I have been researching Fibs as well and have become fairly comfortable on the various fib levels. I have noticed when the MA's line up with the 61% fib and the 10EMA is not reversing that this is a solid entry and very predictable. I was using and testing various Stop Losses and kept getting stopped out...
I used to use Fibo, but there are too many lines on my chart, and so I give up put it on my chart. I have there is a upper limit of items that I can put on my chart, .
  • #10
  • Mar 6, 2013 7:07am Mar 6, 2013 7:07am
Quoting Seneca pilot
I am a touch trader. It requires two things to be used successfully. You must have complete confidence in the levels you choose to trade as you will often be stepping in front of a fast moving train. You must also fearlessly take losses without remorse as you will often be stepping in front of a fast moving train. The levels I trade are detailed in the thread I started so I won't clutter this thread with them. This is the lowest risk highest reward style of trading and if you can learn it it can be very rewarding.
Thanks for your thread. I will spend time on it later!
  • #11
  • Mar 6, 2013 7:08am Mar 6, 2013 7:08am
I just remember some people emphasis "First" touch. So, perhaps, it is another criteria to consider when using touch trade.
  • #12
  • Mar 6, 2013 8:30am Mar 6, 2013 8:30am
Some people use the 3 touch.

Attached Image
Just ignore me. Thanks.
  • #13
  • Mar 6, 2013 8:46am Mar 6, 2013 8:46am
Quoting pipcorn
Some people use the 3 touch.

Attachment
Trade the third touch on a trendline?
No way...sorry.... I have failure after failure by trading this way...

P.S. I think people need to have price action confirmation to trade the third visit of a trendline.
  • #14
  • Mar 6, 2013 9:12am Mar 6, 2013 9:12am
After a while.

Attached Image (click to enlarge)
Click to Enlarge Name: 3.png Size: 5 KB
Just ignore me. Thanks.
  • #15
  • Mar 6, 2013 10:18am Mar 6, 2013 10:18am
Quoting kk007
Defintion:


Questions:

May I ask what else constitute a good touch trade setup? Why this entering method seems to work well some time? Under what situation this entering method would not work well? How many pips would you prepare as the stop loss?

KK007, if you need to ask this question, I can only suggest you are not ready for this method of trading.
It requires that you can "see" you market very clearly, have great confidence in your ability to execute trades without any remorse or recrimination if they go wrong etc....
Develop a simpler, safer, low risk and possibly low reward method to trade first.
When you are ready for trading intuitively, it will come to you automatically.
  • #16
  • Mar 6, 2013 7:27pm Mar 6, 2013 7:27pm
Quoting Aich
KK007, if you need to ask this question, I can only suggest you are not ready for this method of trading.
I am learning and that is why I am asking.

Quoting Aich
Develop a simpler, safer, low risk and possibly low reward method to trade first.
What other method would you like to suggest?
Someone instead says touch trade is a simple, safe and low risk high reward method to trade.
  • #17
  • Last Post: Mar 6, 2013 8:04pm Mar 6, 2013 8:04pm
I've put great effort trying to trade consistently this way. Didn't work out for me. I only get the exact price right on rare occasions. It was not lost time though. This exercise helped me greatly in recognizing good R:R areas.
"To hold, you must first open your hand. Let go." - Lao Tzu
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