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B.S. Trading with Kenneth Lee

  • #5,801
  • Jun 25, 2013 11:15am Jun 25, 2013 11:15am
Quoting mosah
Hi, How can i read all posts for only one poster in this thread? Regards
add everyone to your ignore list....manually.i think forexfactory should add a post filter option.
  • #5,802
  • Jun 25, 2013 11:28am Jun 25, 2013 11:28am
Quoting 200km
{quote} add everyone to your ignore list....manually.i think forexfactory should add a post filter option.
Thanks
  • #5,803
  • Edited 9:48pm Jun 25, 2013 9:18pm | Edited 9:48pm
Hi Kenneth,

First of all thank you for this great thread. I've learned a lot from it and am currently trying to complete the thread. If you don't mind can I ask a question that has been bothering me? Suppose price has just rejected say a H4 Supply zone and is coming down towards a M30 fresh and nice demand zone, is it ok to take a long at this zone? I see many people doing it, but this kinda confuses me because I had the impression from Seiden's webinars that we shouldn't go against the higher time frame zones. The images below illustrate my question, thanks a lot!

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  • #5,804
  • Jun 26, 2013 4:06am Jun 26, 2013 4:06am
Quoting Myst1z
Hi Kenneth, First of all thank you for this great thread. I've learned a lot from it and am currently trying to complete the thread. If you don't mind can I ask a question that has been bothering me? Suppose price has just rejected say a H4 Supply zone and is coming down towards a M30 fresh and nice demand zone, is it ok to take a long at this zone? I see many people doing it, but this kinda confuses me because I had the impression from Seiden's webinars that we shouldn't go against the higher time frame zones. The images below illustrate my question,...
O f course all trading is a lone idea. we all do what we feel is best. That being said . every level will break on any time frame. I trade mainly off a 30 min chart , I respect 100% the trend off the higher charts 4 hr being the best. But with time we learn to see price flattening and turning and in time breaking the higher levels.

In the beginning it is prudent to try and trade with the bigger picture . If you can find trades where all the time frames agree they are normally bullet proof trades.

When price reaches a high time frame level 4 hr or daily. It can hang around this levels for a bit depending on how long price has been away. The less time away the greater the chance it will break on through. This is why the odds enhancers are important if you don't read PA well.

But we see all the time that price will test major levels a good deal until the opposing force turns it back. If you can read this you can trade each try it makes to push thru. I use old style patterns a lot for this. Ascending triangles and Descending triangles, Flags and Pendants. Any basic idea that a large group of trades may jump on board can give you results.

A good example was OZ ( A/U) Yesterday I was doing some work on the boat and had gone for more parts. When I came Home I noticed OZ had just left a level , but the over all view was that it was trying to form a ascending triangle. A long continuation pattern. So I joined the run a bit late.
I knew others would see this as well and the trade would be safe. I actually bailed on it with just a few 12 hrs later as it took SSSssooo Long to develop but it did.

But that would be a instance where trading back into a major level could be ok. O r at least to re-test the top. Many times a retest of a major level is a signal that major players are interested which is what we want. WE have to understand that the way the trade is far different from us.The amount of their trades are at times so large a single entry is not possible or wanted.

If they threw on a huge order at once it could send price dropping so fast that part of their order might get filled a lot lower at a unwanted price . So they knowing the math enter enough To start price back but not enough to break any major reversing signals . ( Like the previous swing) The retailers will get on long and push it back up. Then the big guys will add to the first order sending price on down at the point of no return they will add on this time to send it lower thus getting others to go short and building their gains.

This is how double tops and head and shoulder patterns are created. Also why the double top or Shampoo profit taking rule is equal distance below the neck line to the top.

http://www.chartpatterns.com/images/wbghas%7E1.gif

http://www.chartpatterns.com/images/head2t%7E1.gif
The head and shoulders pattern is generally regarded as a reversal pattern and it is most often seen in uptrends. It is also most reliable when found in an uptrend as well. Eventually, the market begins to slow down and the forces of supply and demand are generally considered in balance. Sellers come in at the highs (left shoulder) and the downside is probed (beginning neckline.) Buyers soon return to the market and ultimately push through to new highs (head.) However, the new highs are quickly turned back and the downside is tested again (continuing neckline.) Tentative buying re-emerges and the market rallies once more, but fails to take out the previous high. (This last top is considered the right shoulder.) Buying dries up and the market tests the downside yet again. Your trendline for this pattern should be drawn from the beginning neckline to the continuing neckline. (Volume has a greater importance in the head and shoulders pattern in comparison to other patterns. Volume generally follows the price higher on the left shoulder. However, the head is formed on diminished volume indicating the buyers aren't as aggressive as they once were. And on the last rallying attempt-the left shoulder-volume is even lighter than on the head, signaling that the buyers may have exhausted themselves.) New selling comes in and previous buyers get out. The pattern is complete when the market breaks the neckline. (Volume should increase on the breakout.) (Chart examples of head and shoulders patterns using commodity charts.) (Stock charts.)

http://www.chartpatterns.com/images/trspth%7E1.gif
The head and shoulders pattern can sometimes be inverted. The inverted head and shoulders is typically seen in downtrends. (What's noteworthy about the inverted head and shoulders is the volume aspect. The inverted left shoulder should be accompanied by an increase in volume. The inverted head should be made on lighter volume. The rally from the head however, should show greater volume than the rally from the left shoulder. Ultimately, the inverted right shoulder should register the lightest volume of all. When the market then rallies through the neckline, a big increase in volume should be seen.)
Good Trading To All ; Ken Lee
  • #5,805
  • Jun 26, 2013 4:24am Jun 26, 2013 4:24am
Here is that OZ trade I was talking about..Each of our trading ideologies , will become a accumulation of our assorted pieces of learning. You may find things not even related to trading find a way into your minds eye when deciphering the charts. I have a way of seeing a Pressure Gauge at times;
http://p.globalsources.com/IMAGES/PD...sure-gauge.jpg




seeing pressure build to go higher or dropping lower . The swings of the needle. Same as Higher lows means up and lower highs means down.

It is why I always say all I am trying to do is help you to see. Not try and force you to see it my way. I see what I do because of thousands of hrs rotting away in this chair..
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Good Trading To All ; Ken Lee
  • #5,806
  • Jun 26, 2013 4:54am Jun 26, 2013 4:54am
Planning a Long on CADCHF D1 chart.

It's not normal to see a narrow D1 level, normally they are too wide. This one is only 20 pips wide. We need to add wiggle room + padding and so on, but still it's like 30 pips risk, so good for a D1 demand level that might hold for a nice swing trade.

The same type of analysis applies to lower timeframes areas, since price is fractal.

D1 ENTRY AREA
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D1 DEMAND LEVEL AT THE ORIGIN
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ODDS ENHANCERS:
1. STRENGTH OF DEPARTURE. Really good, no pauses
2. NUMBER OF PULLBACKS. None, it's fresh and original
3. PROFIT MARGIN. 3:1 or more? Yes. More than 10:1
4. BIGGER PICTURE. How high or low are we in the curve? We'll be very low, time for a nice correction
5. TIME AT LEVEL. Too little time at level, the shorter the time at the level, the stronger the supply and demand imbalance is


6. ARRIVAL. In a situation like this, arrival is not important, since all other odds enhancers are really good.

This is just how I see the charts, level might not hold, but all odds enhancers and rules I use say to go long at that area for a possible swing trade.
Set and Forget supply and demand trading community
  • #5,807
  • Jun 26, 2013 5:15am Jun 26, 2013 5:15am
Hi Kenneth, thanks for the long and detailed reply, read it a few times and really appreciate it

I gather then that when price is bouncing between zones, be it HTF or LTF zones, it is hard to tell whether those zones will hold or break. Each scenario is different, and there are many nuances (chart patterns, how deep a zone has been penetrated, how many times it has been tested, arrival towards a zone etc) that will clue us in to the strength or weakness of a setup. All that comes with time and experience and there is no hard and fast rule.

Once again thanks for all the effort and time to answer my question
  • #5,808
  • Jun 26, 2013 7:05am Jun 26, 2013 7:05am
Quoting Myst1z
Hi Kenneth, thanks for the long and detailed reply, read it a few times and really appreciate it I gather then that when price is bouncing between zones, be it HTF or LTF zones, it is hard to tell whether those zones will hold or break. Each scenario is different, and there are many nuances (chart patterns, how deep a zone has been penetrated, how many times it has been tested, arrival towards a zone etc) that will clue us in to the strength or weakness of a setup. All that comes with time and experience and there is no hard and fast rule. Once...

Yes and these are the spots where good traders find themselves making their few errors , then not believing it and giving back to much . If you can stay focused on the overall plan and especially the bigger picture trend wise . You can do very well but when you get tunnel vision and ignore important yet simple signs it will cost you and can even keep you from becoming a successful trader.

You can take the counter trend trades even against the bigger picture But always have in the back of your mind that you are fighting the current as those trade are the ones that catch you off guard and go against you fast.

A wrong trade with the bigger picture will normally stall and bounce around a bit giving you signs and time to bail with a bit of dignity and less loss.

Cheers Ken

P.S. I shorted OZ when it failed to really fly above 9300. Plus Fading oo with the big picture is one of my trades I like to take almost anytime . Tho this time I missed the entry as sleeping gets in the way.
Good Trading To All ; Ken Lee
  • #5,809
  • Jun 26, 2013 9:23am Jun 26, 2013 9:23am
Quoting Myst1z
Hi Kenneth, First of all thank you for this great thread. I've learned a lot from it and am currently trying to complete the thread. If you don't mind can I ask a question that has been bothering me? Suppose price has just rejected say a H4 Supply zone and is coming down towards a M30 fresh and nice demand zone, is it ok to take a long at this zone? I see many people doing it, but this kinda confuses me because I had the impression from Seiden's webinars that we shouldn't go against the higher time frame zones. The images below illustrate my question,...
Three rules to consider around this issue of counter trend trades:

1. to only take a counter trend trade beyond the 50% level of the higher time frame swing distance i.e in this case between the H4 Demand and H4 Supply.

In doing so you are guaranteed to be at the lower half of the higher time frame curve for counter trend longs, or the upper half of the higher time frame curve for shorts.

2. Another way to tackle the issue is to only take counter trend trades once you have confirmation on the lower time frames.

So if you hit M30 counter trend demand, go to M5 or M1 and look for a pull back demand level to enter. If the pull back level looks weak or does not give you the RR that you want, wait until a suitable set up comes along, but set a max level of pips away from the original M30 level to trade within otherwise you might end up too far from the original level to take advantage of the M30 momentum.

3. Another rule could be to only take set and forget levels but reduce the risk by setting your trade size based on the M30 entry-to-stop pip value, but enter off a tighter level by zooming into an M5 chart.

This way you are still entering off the higher time frame but with reduced risk should it fail, but gaining the same profit should it hit your M30 target. I use all 3 rules (No.2 for confirmation level trades), but on different time frames.

PP
  • #5,810
  • Jun 26, 2013 10:04pm Jun 26, 2013 10:04pm
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Update on the 10 Million $$ short by Morgan Stanley

Previous posts # 5783 and # 5790

Morgan Stanley added a new short EUR/USD position to its macro portfolio via selling $10 million in cash from 1.3310, with a stop at 1.3440, and a target at 1.2800.

http://www.efxnews.com/story/19311/a...-targeting-128

TSD
  • #5,811
  • Jun 26, 2013 11:06pm Jun 26, 2013 11:06pm
Hi all, I just had some failed trades and would really appreciate it if someone could provide some critique on them, thanks!

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  • #5,812
  • Jun 27, 2013 1:04am Jun 27, 2013 1:04am
Quoting Myst1z
Hi all, I just had some failed trades and would really appreciate it if someone could provide some critique on them, thanks! {image} {image}
That is the trouble with stacked zones and exotic pairs. Also cross pairs. EURAUD is affected by the EURUSD and AUDUSD. So at times it is helpful to watch these as well. If I may make a suggestion. Stick with the majors until you get a grip on the S/D concept as a whole. Do to time constraints and simplifying things, right now the only pairs I am watching are EU,GU, and UJ. You will still have plenty of opportunities to get into the market, and besides the spread should be smaller. So maybe this is of some help. Keep things simple

Rufus
Illegitimi non carborundum - Noli pati a scelestis opprimi.
  • #5,813
  • Edited 9:28am Jun 27, 2013 1:18am | Edited 9:28am
Anatomy of a Trade...This is how I look at the what " MIGHT " be available to trade. I tend to start up in the larger TF and drill down till I see something that may present opportunity. In this particular case the 1M ended up being the TF for the trades both short and long.

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What I am doing is defining levels to determine where price should move to. Looking for the pressure and ultimately the Pattern within the Pattern. More to follow.

TSD
  • #5,814
  • Jun 27, 2013 1:24am Jun 27, 2013 1:24am
Myst... in my humble opinion...

On your first trade USDSGD short, it's a level on top of level, higher odds is the upper one. Besides, on the upper one u didn't cover the highs (level is not correctly painted and secure).

On exotic pairs and many cross pairs, the wiggle room (number of pips you need to add as padding above/below the distal line of your SD rectangle, is much bigger. On a short we need to add that wiggle room + spread, so on USDSGD I normally add spread + 15 pips spread. Less liquidity and levels are sometimes overshot before going in your direction.

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On your second trade, EURAUD long, trend has changed on this H1 timeframe. it's making lower lows and higher highs, market sentiment has changed on this pair, so if anything I would wait for price action confirmation on that strong demand zone. You tried to buy on a speedbump (rally-base-rally), which is a continuation pattern. But now H1 had changed dynamics and was no longer a clear uptrend, so leaning on a continuation pattern to continue a trend which is no longer there is not the best idea. Speedbumps as good as continuation, it's better to lean on swings (valleys and peaks) instead, or wait for PA confirmation within a higher timeframe zone (D1), an engulf or whatever you use as PA

That demand zone is a reaction to previous demand zone on the left, it's not the "original zone", so it's not correctly painted, at least as I see it. See how I had painted it on my charts. Even the red zone was already non fresh. I will not take a non-fresh area in such a such a situation where market dynamics have changed.

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This is my H4 chart on EURAUD:
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Quoting Myst1z
Hi all, I just had some failed trades and would really appreciate it if someone could provide some critique on them, thanks! {image} {image}
Set and Forget supply and demand trading community
  • #5,815
  • Edited 9:27am Jun 27, 2013 1:38am | Edited 9:27am
Here we got short a 2 lot on 1 position. We are entering close to the extreme of the range. When looking at this type of trade we do not need to be at the exact extreme ( ideally it would be nice ) but more important we are close and have the right set up for ( what I call ) SD Range Trade. We got short with a 2 pip stop on the 2 lot. Got a little dicey but we ended up getting 13 pips as price eventually moved short and got a bit shaky right on top of the Demand. The plan was to take price short, exit and trade long off the Demand.

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Exited the short..Price moving aggressively in the area with good volume. We took 2 positions, each a 2 lot. As you may have seen in some of my previous trades I am OK not getting the exact entry as long as the risk is correct and the level support the trade. We also trading the 1M so slippage can be a bit challenging..

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We took our first TP #1 on the long at 15 pips..SL's were 5 pips each position..Actually took TP #1 a bit early..Mental error..We took our second TP #2 at 43 pips.


Total pipage for all trades 70 plus


TSD
  • #5,816
  • Jun 28, 2013 7:30am Jun 28, 2013 7:30am
Hi Rufus and Alfonso, thanks a lot for both of your inputs. Learned a lot from your posts, its really a good learning experience when more seasoned traders see and point things out which I don't. Appreciate it!
  • #5,817
  • Jun 30, 2013 10:40pm Jun 30, 2013 10:40pm
sorta chart
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Good Trading To All ; Ken Lee
  • #5,818
  • Jun 30, 2013 10:45pm Jun 30, 2013 10:45pm
Cleaner version ,, good night Ken
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Good Trading To All ; Ken Lee
  • #5,819
  • Jul 1, 2013 2:30am Jul 1, 2013 2:30am
Kenneth Lee,Alfonso and co .you guys are all legends.

Thank you for the great explanation and materials provided.

so far I will say I have 80% understanding,I think I can pick level well .

BUT,BUT,BUT I have a problem, can anyone please explain how to find the trend for the day or the right direction to trade?
Do I just need to draw the D1/WK S/D levels and then trade the level?

Some one please help.

Many Thanks
  • #5,820
  • Jul 1, 2013 2:42am Jul 1, 2013 2:42am
Quoting neziah
Kenneth Lee,Alfonso and co .you guys are all legends. Thank you for the great explanation and materials provided. so far I will say I have 80% understanding,I think I can pick level well . BUT,BUT,BUT I have a problem, can anyone please explain how to find the trend for the day or the right direction to trade? Do I just need to draw the D1/WK S/D levels and then trade the level? Some one please help. Many Thanks
Hi Neziah,

the simplest answer that i can give you is "screen time". Unfortunately, it's simply impossible to teach one how to trade by typing few words, showing few charts to drill it into those that're learning. What you need to do, is to practice them by doing demo trades, over and over again. and with enough screen time, you'll start to develop a feel for the trend, and a feel of price. Then you'll be good to go.

With time & practice, anyone can be profitable in trading. The question is, HOW BAD do you want it.

Good luck.
Knowing is not enough; we must apply. Willing is not enough; we must do.
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