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HCR-LCS + SFP Research thread

  • #401
  • Edited 10:56am Jul 24, 2013 10:07am | Edited 10:56am
Quoting Trader4567
Hi Please forgive me for asking a question before reading the entire thread first, if you have answered a similar question, and I have missed your answer, I apologise. I am not new to trading but am new to your system and find it very interesting. My question is regarding how you go about identifying and marking up your monthly, weekly and daily levels? In the pages I have read so far, you have described what you are looking for when price approaches these levels but I am still not totally clear on how you identify those levels in the first place....
Well, there are several related methodologies being discussed here.

One is the HCR-LCS another is the SFP.

You identify these levels on the M W & D tfs by using the close of price, sometimes the close and open of the next candle are not the same, in which case you use both levels. The deeper & taller ones. I am just using the weekly level in this example but, it should give you the idea.

So, I am not sure which it is you are asking about.
Personally, I am trying to combine the two, so it may be rather complicated to explain what I am doing.

So I will explain the Lowest close of support in simple terms.

If you are talking about identifying the HCR & LCS levels, these diagrams will explain the basics of LCS.

The entries are what is complicated to explain because, we are using the levels in different ways.

Hope this helps with your question.

The SFP is more complicated but, as I do not know which you are asking about, I explained the regular S&R & PA that occurred at this level.

See the next post for a simple explanation of the SFP, which is the order flow and the main topic of this thread.
HCR & LCS along with Price Action is also the order flow but, as PA is a different manifestation of order flow by its nature, we will leave that for another day.

All these methodologies are basically using the order flow, just the entries are different.

Hope I am not confusing you further.
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  • #402
  • Edited 10:50am Jul 24, 2013 10:39am | Edited 10:50am
Simple explanation of the SFP

NB: I am explaining the SFP on the Daily TF but, this pattern is usually traded on smaller time frames.
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  • #403
  • Jul 24, 2013 11:01am Jul 24, 2013 11:01am
Hey Ghous

It certainly filled in that wick quickly.
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  • #404
  • Jul 24, 2013 11:06am Jul 24, 2013 11:06am
Quoting tyler812
S&P 500 E-Mini looks interesting... {image}
Quoting Pinbar
Just scanned 60 something charts and there is not a lot around at the moment. Not even sure what these two are but they look interesting from a learning point of view. {image}
I like the look of the mini-sized dow better here...There's an SFP on D1; price has been unable to close above the HHR @ 15521. There's also macd divergence. Seems like we might get at least a correction down to ~15300, which could be a great place for a rounded retest....

Just demoing this one...let's see how it goes
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skype: ststroud. let's talk trading.
  • #405
  • Jul 24, 2013 2:44pm Jul 24, 2013 2:44pm
Quoting Helius
Putting too much emphasis on daily close might set you up for troubles... How do you chose the closing time of your daily candles? NYSE closing time? Then you are neglecting London, the Aussies and the asian sessions. Daily candles don't say anthing because every trader will have a completely different chart when it comes to daily candles. Therefore what might be a buy on one broker is a stand-aside on the other - or even a sell on the third broker. Trader in New York use 65-minutes charts to get 6 equal candles during the New York session. The...
I totally agree Helius,

That is particularly why a few pips here and there on the close doesn't normally set me off from the trade if the story is very good. Its all about the location anyways...

g.
I believe . . .
  • #406
  • Jul 24, 2013 2:46pm Jul 24, 2013 2:46pm
Quoting Pinbar
Hey Ghous It certainly filled in that wick quickly. {image}
Once price gave some indication that it was hesitant to go down, up was always going to be the easier path for price to follow. I mentioned earlier I liked that wick on the fake out bar

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g.
I believe . . .
  • #407
  • Jul 24, 2013 2:54pm Jul 24, 2013 2:54pm
Quoting tyler812
{quote} {quote} I like the look of the mini-sized dow better here...There's an SFP on D1; price has been unable to close above the HHR @ 15521. There's also macd divergence. Seems like we might get at least a correction down to ~15300, which could be a great place for a rounded retest.... Just demoing this one...let's see how it goes {image}
I like how it has developed so far, but this is once again very similar to the EJ setup we were discussing a few posts back. You are fighting an extremely strong up trend. Normally with these setups you've got to see some action straight away or they can reverse on you very quickly. Not the kind of setups I am comfortable around simply because I am not used to, and I don't like, to babysit the trickier setups.

But I am glad you're on demo which is the right way of going about it. Practicing with trickier setups on demo is the best source of hands on knowledge and understanding of the material that you can acquire.

g.
I believe . . .
  • #408
  • Jul 24, 2013 7:39pm Jul 24, 2013 7:39pm
I am watching EU as it approaches this HCR.
A bit too much of a zone between the SP and the level though.

Still, as we know, PBT&CA very often gives us a retest to the level, this SP and an SFP there, would be a great place for a retest of the HCR, if it breaks through and closes above.

Too many ifs though.
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  • #409
  • Jul 24, 2013 8:52pm Jul 24, 2013 8:52pm
Why we want to see price rally back quickly to these levels.
Read Ghous's post above, about EJ & the mini dow.
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  • #410
  • Jul 25, 2013 1:02am Jul 25, 2013 1:02am
Hi g!

Maybe im missing something again but why did you like the shape of the bar on the EURPLN trade? That was an inverted pinbar I guess... What is the order flow behind such a bar? I guess some buyers come in, they push up the price a bit, but then even more sellers come in and they push it simply deeper, which would tell us that during that day some guys were eager to buy, but they were might to early? Or can it be simply just the news? O.o

Cheers,
Stephen
It's all psychology...
  • #411
  • Jul 25, 2013 5:26am Jul 25, 2013 5:26am
Quoting LamerTrader
Hi g! Maybe im missing something again but why did you like the shape of the bar on the EURPLN trade? That was an inverted pinbar I guess... What is the order flow behind such a bar? I guess some buyers come in, they push up the price a bit, but then even more sellers come in and they push it simply deeper, which would tell us that during that day some guys were eager to buy, but they were might to early? Or can it be simply just the news? O.o Cheers, Stephen
Good question.

When in a dominant down trend, you like to see price make its way down comfortably. Nice big bodies and very little lower or upper wicks. When is it not comfortable? When you see small bars "trickling" down and/or see large wicks either side of the bars.

What information is a wick to the upper side telling you when price approaches a support zone? Its telling me that price is still trickling down but inertia has set in. price has hit some buy orders straight away (indicating that the support is legit) which has pushed price up. Because price is in a downtrend it is understandable that price goes back down leaving behind only a wick, but this is still valuable information for us because ideally we want to see buy orders coming in at support.

This is in fact the rationale behind the IPB.

g.
I believe . . .
  • #412
  • Jul 25, 2013 5:31am Jul 25, 2013 5:31am
There are stories strongly in favor of your bias. There are stories strongly against your bias. And then there are neutral stories.

Price oscillating in sideways swings not majorly representing one direction very obviously over another can sometime yield some nice short term trades.

Here's one I took today.

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Just a nice decent swing point coupled with space. Notice we don't have any aspects and factors that make up a bigger badder story but we also don't have anything big going against it either.

These can be good snacks to munch on while you wait for setups like the EUR/PLN.

g.
I believe . . .
  • #413
  • Jul 25, 2013 5:58am Jul 25, 2013 5:58am
Quoting ghous
There are stories strongly in favor of your bias. There are stories strongly against your bias. And then there are neutral stories. Price oscillating in sideways swings not majorly representing one direction very obviously over another can sometime yield some nice short term trades. Here's one I took today. {image} Just a nice decent swing point coupled with space. Notice we don't have any aspects and factors that make up a bigger badder story but we also don't have anything big going against it either. These can be good snacks to munch on while...
Hi g!

In the original SFP thread (Fail Better) Tom brings an example of money management. ("guys boxing and how much do you bet if the one of them just broke his nose/is blind etc)...
So my question is if you do the same then how? I guess the trade you just took Ghous was an average trade. Yesterdays EURPLN was far from perfect so you took only half. But if you would have seen that EURPLN with a huge pinbar then would you have entered with double/triple position?

Thanks
Have a nice day.
Stephen
It's all psychology...
  • #414
  • Jul 25, 2013 8:31am Jul 25, 2013 8:31am
Simple bread and butter trade. 1st target is already hit. The rest is running for the second target. No risk anymore.
Support turns into resistance
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Price is what you pay. Value is what you get.
  • #415
  • Jul 25, 2013 9:14am Jul 25, 2013 9:14am
Quoting LamerTrader
{quote} Hi g! In the original SFP thread (Fail Better) Tom brings an example of money management. ("guys boxing and how much do you bet if the one of them just broke his nose/is blind etc)... So my question is if you do the same then how? I guess the trade you just took Ghous was an average trade. Yesterdays EURPLN was far from perfect so you took only half. But if you would have seen that EURPLN with a huge pinbar then would you have entered with double/triple position? Thanks Have a nice day. Stephen
The SFP does not utilize PA quite the opposite in fact, they will often pass on a large PA bar.
On an SFP we want to get into the trade as close to the level as possible, with a small stop.
  • #416
  • Jul 25, 2013 9:28am Jul 25, 2013 9:28am
Quoting LamerTrader
{quote} Hi g! In the original SFP thread (Fail Better) Tom brings an example of money management. ("guys boxing and how much do you bet if the one of them just broke his nose/is blind etc)... So my question is if you do the same then how? I guess the trade you just took Ghous was an average trade. Yesterdays EURPLN was far from perfect so you took only half. But if you would have seen that EURPLN with a huge pinbar then would you have entered with double/triple position? Thanks Have a nice day. Stephen
That is basically statistics 101

Would you place more money on a bet that has a higher expected outcome?
So, you would enter a larger position on a trading setup that has a higher expected winrate than on a crappy that where you don't know what will happen?
Price is what you pay. Value is what you get.
  • #417
  • Jul 25, 2013 9:44am Jul 25, 2013 9:44am
True, however I would love to know more about your numbers. I mean what is the min/max risk, and how do you manage it accordingly to the trade (I mean A+ - x%, B trade x*0,7% etc.)

Cheers,
Stephen
It's all psychology...
  • #418
  • Jul 25, 2013 9:51am Jul 25, 2013 9:51am
That's pretty easy

You just have to go through your trading record. You look at all the trades you made, analyse the setups and give them a ranking. Then you can get your expected winrate.

However, you cannot get those numbers from someone else because everyone will trade differently. You might see something that I don't and therefore make trading decisions in an other way. Therefore you need to do it yourself. Just go through forextester and backtest a few months worth of history until you have decent samplesize. Then you can get your expected average return.

I got my figures over hundreds of trades. Expected winratio, max drawdown, riskzise, win/loss ratio. Those things are invalueable. You should really take the time to figure it out
Price is what you pay. Value is what you get.
  • #419
  • Jul 25, 2013 10:04am Jul 25, 2013 10:04am
Quoting LamerTrader
{quote} Hi g! In the original SFP thread (Fail Better) Tom brings an example of money management. ("guys boxing and how much do you bet if the one of them just broke his nose/is blind etc)... So my question is if you do the same then how? I guess the trade you just took Ghous was an average trade. Yesterdays EURPLN was far from perfect so you took only half. But if you would have seen that EURPLN with a huge pinbar then would you have entered with double/triple position? Thanks Have a nice day. Stephen
Hey Stephen,

The EUR/PLN was not far from perfect it actually was very very close to being perfect In fact it was only a few pips away from it.

It is rare for me to alter my risk percentage on a particular setup. When needed I will reduce it, but never go double/triple my normal risk parameters.

And no a pin bar would not have made me risk more. A nice favorable close on the fake out would have intrigued me into just taking the normal risk on the trade.

g.
I believe . . .
  • #420
  • Jul 25, 2013 10:05am Jul 25, 2013 10:05am
Quoting Pinbar
{quote} The SFP does not utilize PA quite the opposite in fact, they will often pass on a large PA bar. On an SFP we want to get into the trade as close to the level as possible, with a small stop.
Spot on Steve.

g.
I believe . . .
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