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Mastering the Art of Trading

  • #1,241
  • Feb 26, 2014 11:38am Feb 26, 2014 11:38am
Quoting forexpiet
{quote} You made me think of making up an "order flow" story. I do not consider myself to be an expert, but I will try anyway. Suppose in the gold rectangle area traders are waiting to go short on a retrace alongside allready traders being short. They got "captured" by the sudden strong bullish move. A pullback starts (see blue rectangle). Not as strong and fast as the bull move but decent enough I think to make a lot of traders think the downmove resumes which make the early bulls close their positions. The trapped bears are hoping they can get...
Yes it does.

Think of your large strong bullish / bearish bars as representing a period of "vacuum". Most trading will occur in the times that price is sideways, i.e consolidating. Large sudden moves, represent thin volumes where price is spiking to find the next point of equilibrium where the traders can interact. When printed on the chart they will leave their impact, meaning that when price pulls back to these, the participants are very aware of how that could prove to be an area of "least resistance" and if price ends up pushing into the vacuum it will likely just fall through.

So if any buyers were serious about buying USD/CAD on a pull back the best price they could get, without attracting danger, was just above the high range bar.

This also explains why most of the popular demand and supply zones tend to get drawn right off the edge of these large range bars.

This can be advanced stuff for most, and I totally understand that. Do ask if anything is unclear.

g.
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I believe . . .
  • #1,242
  • Feb 26, 2014 11:43am Feb 26, 2014 11:43am
Quoting Neytiri
Ghous, In fakeout trades, do you place a limit buy order at the lls waiting for the retest to take place? Or is it like you wait for the retest price action bar to completely form on lower time scales (say 1 hr) and then make the entry. Also, do you keep the stop loss below the low of the initial fakeout bar or below the low of the retest bar? Thanks, Neytiri
When waiting for a pull back, I will either place a pending order slightly above the LLS (If the setup really is that good. An example would be the EJ 4H from 20th FEB where price pulled back to the LLS in confluence with the 140.00 RN after creating the fake out) or simply wait for a bar confirmation on that very time frame. In this case I will mostly use that pull back bar as the trigger bar and hence place my stop underneath that bar instead of tucking it way under the fake out bar. But again its not something set in stone. For example an exceptional case would be, where the trigger bar itself is a small range bar where I feel using a stop underneath that small bar makes the trade too tight for comfort. I will then drag it arbitrarily a little further, or who knows maybe beyond the fake out bar itself.

g.
I believe . . .
  • #1,243
  • Feb 26, 2014 1:42pm Feb 26, 2014 1:42pm
Off topic of this thread but I saw Pinbar using a tool in his video to draw on a Metatrader (?) screen and I wonder how Ghous makes his anotations on the chart(s). Please point me to these tools.
I am on page 32 reading this thread and Ghous (but also Pinbar, LamerTrader, Neytiri) , thanks for promptly answering and reacting to (all) the posts. Definitely thums up for you !!!
Posting Demo charts, mirroring some of them live.
  • #1,244
  • Feb 26, 2014 4:34pm Feb 26, 2014 4:34pm
Hi Ghous,

I watched your video on implicit divergence. Would this be an example?
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Bars making new highs but closing inside the previous bars. I see it is not at a for SP level, but I ask this just for the concept of implicit divergence.

Thanks,

FP
Posting Demo charts, mirroring some of them live.
  • #1,245
  • Feb 26, 2014 7:53pm Feb 26, 2014 7:53pm
Quoting forexpiet
Off topic of this thread but I saw Pinbar using a tool in his video to draw on a Metatrader (?) screen and I wonder how Ghous makes his anotations on the chart(s). Please point me to these tools. I am on page 32 reading this thread and Ghous (but also Pinbar, LamerTrader, Neytiri) , thanks for promptly answering and reacting to (all) the posts. Definitely thums up for you !!!
I use Snag it (Google the software).

g.
I believe . . .
  • #1,246
  • Feb 26, 2014 7:55pm Feb 26, 2014 7:55pm
Quoting forexpiet
Hi Ghous, I watched your video on implicit divergence. Would this be an example? {image} Bars making new highs but closing inside the previous bars. I see it is not at a for SP level, but I ask this just for the concept of implicit divergence. Thanks, FP
Yup that's a good example. Spotted another on your chart:

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g.
I believe . . .
  • #1,247
  • Feb 27, 2014 9:45am Feb 27, 2014 9:45am
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  • #1,248
  • Feb 27, 2014 11:14am Feb 27, 2014 11:14am
Quoting Neytiri
. {image} {image}
Wow you were flirting with danger there IMO. Going short straight into that consolidation box and that too at a pull back that came right off that box is taking on some serious risk. I personally feel you're better off reducing the frequency down to taking only the setups with strong stories. I believe you're trading on demo. Once you're live, sticking with a strategy that puts your hard earned capital on the line for peanuts off mediocre situations can be a huge challenge. In any case your capital really deserves a safe level of exposure.

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g.
I believe . . .
  • #1,249
  • Feb 27, 2014 1:17pm Feb 27, 2014 1:17pm
Hi guys, would like to here your thoughts on this 4H e/u fake out.
Price was ranging in the magenta box, broke to the downside but returned above closing above LLS, PPZ and 1.37 RN bouncing off the 150 EMA. Green line would be the entry and the red one the SL. TP areas middel or the top of the box depending on what price does. I know that trading inside a box is hard because of the many trouble areas but I like the size of the set up.
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  • #1,250
  • Feb 27, 2014 1:50pm Feb 27, 2014 1:50pm
I was looking at some charts to study fakeouts and implicit divergence. Switching from H4 to Daily to Weekly and come up with a 'story'. I thought I might as well post one them. It is on AUDCAD. Though the week is not yet over you can see implicit divergence formed in the last 2 weeks and (maybe) this week. I know implicit divergence does not mean the end of the move but it could be a sign of the end of the move coming. Looking at the Daily I see some wicks to the downside in the red rectangle. Today could end as an inverted pin bar. These wicks could pick up long orders to "clear the way for an upcoming downmove" as I tend to think about them. There is a fake out on the Daily but a FTA was near. Maybe it is 'cleared' by these wicks.
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Of course this is not be read as a prediction of which way the price is/should be moving. But it sure is interesting to follow price in its move to the equilibrium and the HHR on the Daily and see what it does in this area. Hope this is of some use.
Posting Demo charts, mirroring some of them live.
  • #1,251
  • Feb 27, 2014 2:04pm Feb 27, 2014 2:04pm
Quoting lenrod
Hi guys, would like to here your thoughts on this 4H e/u fake out. Price was ranging in the magenta box, broke to the downside but returned above closing above LLS, PPZ and 1.37 RN bouncing off the 150 EMA. Green line would be the entry and the red one the SL. TP areas middel or the top of the box depending on what price does. I know that trading inside a box is hard because of the many trouble areas but I like the size of the set up. {image}
Knowing trading inside the box is hard and seeing many trouble areas why "take the trouble trade"? Your risk would be about 30 pips and to gain 60 price would have to reach the "top of the box" (nice title for a song). That would mean travelling through all the trouble areas. I would not trade this.
Posting Demo charts, mirroring some of them live.
  • #1,252
  • Feb 27, 2014 8:08pm Feb 27, 2014 8:08pm
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  • #1,253
  • Edited 9:00pm Feb 27, 2014 8:48pm | Edited 9:00pm
Quoting Neytiri
. {image}


p.s. i got stopped out ... i had kept the stop loss too close
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  • #1,254
  • Feb 27, 2014 9:16pm Feb 27, 2014 9:16pm
Quoting ghous
{quote} Wow you were flirting with danger there IMO. Going short straight into thatG consolidation box and that too at a pull back that came right off that box is taking on some serious risk. I personally feel you're better off reducing the frequency down to taking only the setups with strong stories. I believe you're trading on demo. Once you're live, sticking with a strategy that puts your hard earned capital on the line for peanuts off mediocre situations can be a huge challenge. In any case your capital really deserves a safe level of exposure....
Ghous,

I would love to go for trades with a high risk reward ratio. Its just that at this stage of my trading career I have not developed the patience to wait for them. I am working towards developing that patience

Neytiri
  • #1,255
  • Feb 27, 2014 9:54pm Feb 27, 2014 9:54pm
Quoting ghous
{quote} Wow you were flirting with danger there IMO. Going short straight into that consolidation box and that too at a pull back that came right off that box is taking on some serious risk. I personally feel you're better off reducing the frequency down to taking only the setups with strong stories. I believe you're trading on demo. Once you're live, sticking with a strategy that puts your hard earned capital on the line for peanuts off mediocre situations can be a huge challenge. In any case your capital really deserves a safe level of exposure....
Ghous,

I am trading demo.
I failed to analyze the chart as you did and should have been more careful.
I would love to go for high RR trades in the future. I know trading more might become an impediment to my success in trading forex in the long run. But right now mentally, I have not been able to do stop taking low RR trades. Can you please tell me how you eliminated the urge to place low RR trades?

Neytiri
  • #1,256
  • Feb 27, 2014 10:58pm Feb 27, 2014 10:58pm
Quoting lenrod
Hi guys, would like to here your thoughts on this 4H e/u fake out. Price was ranging in the magenta box, broke to the downside but returned above closing above LLS, PPZ and 1.37 RN bouncing off the 150 EMA. Green line would be the entry and the red one the SL. TP areas middel or the top of the box depending on what price does. I know that trading inside a box is hard because of the many trouble areas but I like the size of the set up. {image}
Totally agree with forexpiet,

Just not worth it buying into all those lows and other mess.

g.
I believe . . .
  • #1,257
  • Feb 27, 2014 11:02pm Feb 27, 2014 11:02pm
Quoting forexpiet
I was looking at some charts to study fakeouts and implicit divergence. Switching from H4 to Daily to Weekly and come up with a 'story'. I thought I might as well post one them. It is on AUDCAD. Though the week is not yet over you can see implicit divergence formed in the last 2 weeks and (maybe) this week. I know implicit divergence does not mean the end of the move but it could be a sign of the end of the move coming. Looking at the Daily I see some wicks to the downside in the red rectangle. Today could end as an inverted pin bar. These wicks...
We've had the fake out, and we and have done what you would expect of it, which is for price to hit the 9900 RN. Anything from here is really up to the markets as the 9900 is a HUGE PPZ.

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g.
I believe . . .
  • #1,258
  • Feb 27, 2014 11:08pm Feb 27, 2014 11:08pm
Quoting Neytiri
. {image}
My response is a question:

Would it be a surprise to see price climb higher from here given the messy chop we're in and given the PPZ + RN combo?

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g.
I believe . . .
  • #1,259
  • Feb 27, 2014 11:21pm Feb 27, 2014 11:21pm
Quoting Neytiri
{quote} Ghous, I am trading demo. I failed to analyze the chart as you did and should have been more careful. I would love to go for high RR trades in the future. I know trading more might become an impediment to my success in trading forex in the long run. But right now mentally, I have not been able to do stop taking low RR trades. Can you please tell me how you eliminated the urge to place low RR trades? Neytiri
Every decision that hurts and every tendency that keeps you tied down in your opinion, can somehow be traced back to the inclusion of emotions. And these emotions for the most part can be traced back to the two fundamental, instinctive, innate categories of "FEAR" and "GREED".

The way I see it, a major reason for all these "intuitive" trades you are taking could possibly be because of the urge to be in the market. The obvious connection that people tend to make is that you're only making money when you're in the market. The time that you're in a trade is the time that counts for account growth. Although apparent its far from the truth. The bulk of the time for a trader is spent passing trades and waiting for the right ones. Not trading is a trading decision and can be extremely lucrative. Conserving capital is ultra important. This is irrespective of the time frame you're on. For a swing trader, this could be waiting several days and for a day trader this could mean waiting several hours (which can be quite grueling when you consider the fact that one needs to be glued to the monitor for day trading - minutes of waiting can seem like hours, and hours - well ) In any case, finding some genuine means to filter out trades is very very important.

This is strictly my own perspective, but I think it just makes sense to look for a high quality setup, with higher potential than taking several small scalps with little to no stories attached to them. Its a better way to ensure long term consistency.

To answer your question, to be able to shoot for higher reward trades you need confidence in the setup and that is a direct product of picking the higher probability setups with decent space and a great story around them. Doesn't guarantee you a runner every time, but a strong story is normally where the large moves come from anyway so you're naturally better positioned to take advantage of the larger moves.

The last thing you want to do though, is try and hold the "no-story" trades you're currently taking in order to boost your R:R. Note that I emphasizing (and can't do it enough) on building a strong story around your trades.

g.
I believe . . .
  • #1,260
  • Feb 28, 2014 2:54am Feb 28, 2014 2:54am
Quoting ghous
{quote} Every decision that hurts and every tendency that keeps you tied down in your opinion, can somehow be traced back to the inclusion of emotions. And these emotions for the most part can be traced back to the two fundamental, instinctive, innate categories of "FEAR" and "GREED". The way I see it, a major reason for all these "intuitive" trades you are taking could possibly be because of the urge to be in the market. The obvious connection that people tend to make is that you're only making money when you're in the market. The time that you're...

and the story is ...
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