Sonic R. System

EU Comment:

Sonicers, the Daily chart H&S looks about ready to come into play. It is impossible to know if the MMs will hike prices now to load up more shorts first, or if they will just ram the price thru any local support to begin a nice Mark Down phase. This is really a critical time to keep an eye on how the MMs play this.

I had an EU short trade running which closed at my TP. I figured at the time of the trade, and still do, that the MMs will re-hike price and reload shorts. That can only be a guess, though. I am looking to re-enter short and I just hope the MMs do hike prices for me to get a better re-entry price than the closing price of that trade. We will see.

-tah

Thanks for responding. English is not my mother league, but I get it without too much difficulty. I continually read your SL almost always mental, and already knew everything you told me, thanks to you and others, but mainly because of you.

The purpose of my comment was just to know a little more your concept of "mental SL". And I have been more clear. Thank you again.

Major Head & Shoulders Events? AU, GU, EU and EG Comments:

Sonicers, speaking of H&S formations, again I bring your attention to the one on AU. And now, note the very bullish hammer Daily candle. Does that look like the MMs drove prices down to accumulate more longs before they start the Mark Up? You bet it does! The latter part of this week could be the breakout time.

BTW, whenever this breakout comes, I bet it will be accompanied by a break up in GU also. On H4, GU now also shows the potential for an inverted H&S formation. Whatever might be the catalyst to start AU up might also start GU up to complete the formation, and then to break it out.

Now, with EU looking like it might break down out of it's own H&S formation, if it does and if GU goes up then you have to know EG will plummet. BTW, EG also has its own potential Daily H&S formation!

With all of these having H&S formations, or potential H&S formation, you might want to put them all on your watchlist for appropriate Sonic R. setups.

-tah

thank you very much

EU: Entered short. This is a SonicR re-entry trade based on much that has just been discussed (H&S on Daily), as well as the fact that the MMs of the late US session have maniulated the price back up to a local SR level on declining volume, which means they want a high price but they want to "invest" little to get it there, which means they are shorting. If the MMs are loading up with shorts then the price might be manipulated even higher as time goes on by the next Asian session MMs, and then the next FO MMs, etc. For me, the bottom line is if the MMs manipulate the price far enough higher then I might put on another short, perhaps a Scout short if they spike up the price on relative high trading.

At this point, I have no TP set and whatever SL I might consider is mental.

-tah

UCad Comment:

In the last London session the MMs took the price below the half number where there was increased trading at the lows and on the rebound from the lows, sure signs the MMs were accumulating. Then the late US session saw the MMs work the price back down on decreasing volume, showing a desire for low prices without the need to "invest" a lot to get them, also a sign the MMs are accumulating. And finally, just before the day ended, the MMs heavily traded as they swung the price down, up and down again, taking the price nowhere but accumulating more in the process.

My take is the MMs are extremely bullish on this pair. I am wondering if I should go long here (higher HLs waves exist), or wait and see if the bullish MMs later drive the price down for additional longs at lower prices, which could present a lower entry, a Scout maybe, if not another Sonic R. long setup with a lower EP than the current price.

Maybe the thing to do is to compromise, to wait and see if the Asian session MMs seek lower prices and make entry if they do. And to be prepared to make another lower entry (SonicR or Scout) if the LS MMs "out do" the Asian session MMs and manipulate the price much lower. Yes.

-tah

Hi Sonic,

A question for you though regarding the indicator you posted Zz-Fractal. This indicator is used to identify the H,HH,L,LH with lines linking those each candles right? If I am gonna do it manually, how many candles sticks is needed in between to consider a LH from the previous H. Looking at your charts, your high may be at Point A but just the next candle is another LH but looking at your charts your LH might be 10 candles away. Actually how to determine this if I don't rely on your indicator (Zz-Fractal)?

Thanks.

Regards
Singapore Guy

I'm not sure what Sonic would say, but man, you gotta be like a surfer, knowing good looking waves from crappy ones, and knowing when the good looking waves should be coming and therefore should amount to something, and when they shouldn't, and likely won't. You are trying to be too detailed, too specific. The market isn't like that. Hell, the MMs might wake up on the wrong side of the bed and cast a monkey wrench into things for no other reason than they are pissed off! At least, that is how you need to framework it all.

-tah

UCad: Entered long as a Scout, based on previous discussion on this. Am prepared to do so again if LS MMs really wack it, maybe to half number area/below! But for that, I'd want to see high relative volume on the wacking, with most of it at the lower prices, which can only be determined by dropping down to M1 to study the situation better.

No TP nor SL at this time.

BTW, if you apply a FR study to the last run up, you will see the current pullback down has been to the 62% retrace area, and my entry long is close to that, so as a Scout it might not be all that risky. But it really depends on whether or not I have the MMs pegged correctly as bulls. If not, then this will cost me. We will see.

-tah

Regarding AU, Bingo!

H&S breakout.........told cha! And there is this whole group involved. And the week isn't over yet.

Morning all!
New day, new setups, as I see.
GU EP 1.4947 SL 1.4924 TP 1.4995
EG EP 0.8666 SL 0.8691 TP 0.8615

GU Comment:

Might make a 150+ bull swing this time.

AU Comment:

LO MMs didn't like it that the Asian session MMs hiked the price, broke out the H&S formation (see previous posts on this) ahead of them coming to the table. So, their response is to simply wack the price back lower again so they too can add some cheap longs for the eventual run higher. Between the LO MMs and the US Open MMs wanting cheap longs, there could be a good Scout long opportunity on this. Note the previous highs off to the left on the chart, which is best entry area, if possible. The MMs might eventually get price down to those levels.

Note the USD high impacts coming. Obviously the Asian session MMs forced the hand of the LO MMs, who are not waiting things out. It means one of three things: they all expect those releases to not favor the USD in the first place, or at least they weren't planning to move prices in favor of the USD when the releases hit, or they were (and then back up) but the move up by the Asian session MMs has ruined that opportunity for them to easily re-hit really low lows. So now the LO MMs have to make the move down to clean out the cheque before the US MMs come to the table, because that much later there will be too much competition between the two of them for whatever they all can grab for.

There is always the possibility, therefore with the LO MM cleaning out the cheque beforehand, that the US Open MMs might themselves manipulate the prices to lower levels for their own grab at cheap longs. Maybe in conjunction with the USD releases.

Hence, a possible Scout long opportunity.

My Take,
-tah

EU Comment:

H&S breakout!

Thanks for all efforts, this Thread is very informative and simply the best, ...

I'm looking for an MT4 script for Buy Stop / Sell Stop Order, ...

Thanks again

1. Possible Stopping Vol..
2. Restest in a making..?

But it is way below dragon.. no Buy .. no Sell.. unless sending scout (aka small lot)




Sonic

I have read a very good and true account from a forummer.. It goes like this,,,




I will continue with what works for me: raw price action using price, volume, S&R, momentum, exhaustion, cycles, time, harmonic analysis, market sentiment with a splash of funny mentals thrown in.

With regard to my transition from having indicators up the ying yang on my charts to now with just volume and the 20ema and the 50sma, I need to share my experience with an old time trader, Dr. Joe, which will also show how stubborn I was.

Back in the early 90s when I was getting really serious with my trading, I was buying signals via fax. In those days there was no email and no computer trading and we had to either plot our own charts or buy them from a charting service. We then had to calculate our own indicators and then hand draw them on our charts. This really helped in understanding what indicators did (take the data from “n” days ago) and how they worked.

One time I faxed my questions back to the signal service and the reply I got back was that I had sent it to the wrong number. Also written on my fax was that I was wasting my money on signals and to contact Dr. Joe. After a few fax exchanges, he sent a handwritten fax saying something like “trading is easy, you don’t need nuthin fancy (he was a good old Texas boy) just buy when it’s going up and sell when it’s going down, that’s all there is to it”.

Dr. Joe used to work for NASA as a nuclear physicist on the Space Program and was a Professor, PhD with just about every physics and maths qualifications there are or you could think of. He got fed up of the bureaucracy and politics at NASA and as a part time investor in stocks , decided to go full time as, in his own words, “the price cycles are just some sort of fancy sine waves with decay and acceleration distorting them and should be real easy to plot and forecast.”

Well after over 5 years doing triple integrated, double differentiated Fourier transforms, harmonic frequency analysis, fractal filters and theorems and goodness knows what else that, although I have a PhD, just ran circles around me. He said he got so frustrated that although he could plan and predict space craft trajectories, orbits, landings etc, he could not forecast even one bar of prices into the future. Not one to quit, he decided that there was some external force that he was not taking into consideration and the only place it could be was on the trading floor where the action took place.

Through his connections, he eventually got an invitation to the Chicago Mercantile Exchange (CME) and was shown the futures or commodities pit (can’t remember which). His sole purpose of going there was as a spy or detective to find out exactly how things worked so that he could write it into his software. He told me he was “amazed and dumbfounded” at what he saw and heard which forever changed his life. (I had all this written up in my trading notes in my files but I can’t find them so I’m using this post to “replenish my notes”).

He arrived at the pit before opening time and saw all the floor traders congregated together in a meeting. He saw this as strange as he thought they were out and out competitors with each other.

What he saw in the first 15 to 30 minutes he would never have believed even if his best friend had told him. At the open, the overnight trades, which were long positions, were put through but he detected the traders entering them were giving signals to the other traders. After the orders were put through there was “nothing” – they just waited to see how the market reacted to those orders.

He then observed what he thought were illegal practices but later learned it to be what actually goes on each and every day. During this “dead” time, the floor traders were reviewing their orders in the pipeline and then on a given signal, a group started selling followed by another group. Then when a certain lower price had been reached, another signal was given and the same groups then bought back amongst themselves. He later learned this was called “Running the Stops” and what they had done was found out where all the orders were, which were below lows, swing lows and elsewhere, and just driven the price down to fill them and take them out so that they had a clean order sheet! Not satisfied with that, they then collectively took the price back to where it opened!

After this and now with the market moving, orders started to come in and when a large order came in from a bank, fund or other large institution, the trader with the order gave a signal before entering it. After entering it, the traders went quiet again. They were looking to see how the market reacted to that order. When they saw more buy orders coming in, they just bought more and more and kept on buying until a signal from a trader that he had a large sell order. Again the sell order was entered and the traders went quiet as they waited for a reaction from the market. He learned that the floor traders were waiting to see whether the sell order was going to be accepted as profit taking or full blown shorting. He said this went on all day long with the floor traders just “piggy-backing” on which ever way the market moved. He said he could see no skills or qualifications (other than being a whore – a very rich whore, he said) whatsoever in what the floor traders did.

On his way back to Houston, he thought about how to use what he witnessed to HIS advantage.

His first action was to throw out all his indicators, forecasts and technical analysis. He told me that there is no analysis, indicator or other program now or in the future, that can analyse or predict human behaviour and specifically, human emotions. He had seen for himself that there was nothing technical or logical in how the floor traders (now better known as Market Movers) traded and therefore any analysis or thinking from “off the floor” was an absolute waste of time.

His second action was how to beat “those whores” on the floor as he called them. He said he thought over just about every scenario imaginable and just as he was running out of ideas, it came to him. If you can’t beat, them join them although as a very devout and God fearing Christian, he didn’t think it was ethical. Unable to find another alternative, he decided he had no options left but to try and do, “off the floor” what they did on the floor.

From this came his very simple method:

Buy when it goes up and sell when it goes down.

He went on to make $millions doing this and I subsequently learned he passed away a very rich and contented man knowing that he had beaten the “whores” at their own game.

I learned all this in a few telephone conversations with him but he lost his patience with me when I still questioned his method. He wouldn’t answer my calls so I reverted back to faxes. Again, I can’t remember it word for word but I sent a simple fax saying:

“How do you know when to stop buying?”

On the same fax was his handwritten reply, “When it stops going up.”

So I wrote on it, “How do you know when it stops going up?”

His handwritten reply, “When it starts going down.”

So I wrote on it, “How do you know when it stops going up and starts going down?”

His handwritten reply, “When people start selling.”

After going round like this in riddles, I pleaded with him to “just give it to me straight”.

He sent a fax saying this would be his last communication with me and that if I didn’t understand how to buy when it goes up and sell when it goes down, I had no business trading.

His final paragraph was one which I ignored, like everything else he told me, until a couple of years ago when I realized what a dumb, stupid, arrogant, stubborn idiot I had been:

He said I would only be wrong twice using his simple method:

“Once when you buy at the top and once when you sell at the bottom.”

I just ignored this as a smart – ass answer but still tried to do what he said. Unfortunately, and as Sod’s law dictates, I tried to do it in a consolidation and lost on every trade which had me buying when I should have been selling etc.

I tried and lost again and then eventually lost my way in the quest for the Holy Grail in Indicator Land.

Now, with all my experience and thousands of lost $ behind me, the light came on!

My understanding of what he was telling me is this:

Buy when prices are moving up. Buy each retrace/dip. Keep buying until the last retrace becomes a trend change which is the one trade you lose on.

Sell when prices are moving down. Sell each retrace/rally. Keep selling until the last retrace becomes a trend change which is the second trade you lose on.

I have not traded like this as I have my own method/style now but on the look backs I have done it works very well. Obviously, the trendier the price, the better it works.

In my later communications with other floor traders, I told them about Dr. Joe and what he told me, and asked them if it was true. As you would expect, each and everyone vehemently rejected it as absolute rubbish.

Sometimes I wonder if old Dr. Joe was smoking something but then when I see those long legged neutral dojis before a significant move, I know he was right.

Thank you, Dr. Joe

The Trend is your Friend.

The info in Sonicdeejay's latest post makes perfect sense. We all try to complicate
things as much as we possibly can! However, I do believe some indicators tell us
something useful about what the majority of the non-bb traders are thinking. And,
it's this info that the bb's use against us to make their bucks.

The bb's know "our" every planned move. They have the advantage of seeing
what is likely to happen before it happens. Taking out stops and "allowing" trade
targets to be hit is what they do, and what they will always do. Our only weapon
of defense is knowledge of how they operate. Someone posted a link to Mastering
the Markets recently, and that ebook changed things dramatically for me. For the
first time since I've been trying to get a handle on Forex trading, I actually had
an understanding of how things work. Also, much of what is in the ebook mirrors
what sonicdeejay's message spoke to.

I opened my live account in March 2012 ($150 account - 10 cents a pip) and had
some moderate success with the Sonic R Method. Unfortunately, my biggest problem
was getting out of the bad trades. Getting out of a bad trade quickly is CRUCIAL
to the Sonic R Method. Limiting the effects of a bad trade and maximizing the effects of
a good trade is magnified by the 15M time frame. My account dropped to $18 by
October 2012, mainly because I couldn't accept the fact that a trade was going bad.
After reading that ebook, I've managed to make some adjustments in my approach,
and I've got the account back over $40 now (trading at 5 cents a pip). I attribute this
entirely to what I learned in that book. Is it a guarantee of further success? No, but
it did give me something logical to base my trades upon. Will the account continue
to build? Who knows, only time will tell.

My point is, learning how to trade Forex is a continual process. I grab bits and pieces
here and there, and try to apply the knowledge as best I can.

Will it fly??


Sonic