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Davit's Confluence Trading

  • #1,021
  • Jun 4, 2014 8:29am Jun 4, 2014 8:29am
Quoting Davit
{quote} just scalping closed at 52 +20pips 10pips each on 2positions Morning Lalu I am going to bed again.Very tired See you guys later
You? Scalping? ... Yeah get some rest brother. This range isn't going anywhere today.
Ghost Rider - WWTBMD?
  • #1,022
  • Edited 12:29pm Jun 4, 2014 9:06am | Edited 12:29pm
Quoting Davit
{quote} Just an idea {image}
I'm still not back to full trading functionality and I'm only making longer-term plays now, not intraday scalping, but I'd like to back up this chart with a fundamental observation to support the technical move up you've illustrated. I believe (and this is anything but a unique observation) there are three possible outcomes from the ECB tomorrow:

  1. Easing/rate cut as expected as announced in May (which the market has already priced in, particularly the EUR/USD pair you've illustrated).
  2. Easing/rate cut as expected plus exceptional measures such as negative rates which roughly half the banks say is strong possibility.
  3. Anything less than expected easing/rate cut or perhaps even as expected but with hawkish commentary, or perhaps no action at all, though the latter of which I think is so unlikely as to discount it when considering probable outcomes.

Scenario one is the most likely, favoured by myself and most banks, and returns the Euro to move in the prior upwards direction because the ECB's action was fully accounted for in the move down which should place the Euro within the upper-half of the recent consolidation zones. My initial targets for EUR/USD here would be 1.375 and 1.385, the latter having confluence with Fibonacci on longer-term charts as well as the 23.6% in your daily chart.

I expect scenario three the least, as do the banks, but should that be the case it means the market oversold and the Euro not only moves higher but targets the recent EUR/USD highs near 1.40, and barring significant developments continues upwards (at least versus USD).

The degree of scenario two could either leave the Euro in very recent consolidation zones (between 1.365 and 1.3585 for EUR/USD) or it could turn the Euro immediately bearish targeting EUR/USD at least 1.3475 then 1.335/1.3325 and barring significant developments in the Euro or the other majors continues downwards.

I prefer not to trade on decision days (or at least not until an hour after all that sessions data releases to let the majority of market volatility play out), but with textbook technical support for a move up and, as I see it, a 2/3rds fundamental probability of the Euro moving upwards, 1/6th probability of it staying put, and only 1/6th probability of it moving down tomorrow, that's enough for me to risk opening/leaving at least small Euro long positions open.

My longer-term analysis (sans tomorrow ECB announcement) includes seasonal Euro strength and USD weakness, but this will depend more on the FOMC on the 18th than what happens tomorrow which I expect will be digested and reacted to relatively quickly.

You can always make money tomorrow provided you don't lose it today.
  • #1,023
  • Jun 4, 2014 9:54am Jun 4, 2014 9:54am
Quoting KADC
{quote} I'm still not back to full trading functionality and I'm only making longer-term plays now, not intraday scalping, but I'd like to back up this chart with a fundamental observation to support the technical move up you've illustrated. I believe (and this is anything but a unique observation) there are three possible outcomes from the ECB tomorrow: Easing as expected which the market has already priced in with this most recent Euro moves down since it was announced in May, particularly the EUR/USD pair you've illustrated. Easing as expected...
... I think that's probably the most clearly explained fundamental view I've ever seen. Even a guy like me who doesn't really understand the depth of fundies can make sense of this. Thank you KADC.
Ghost Rider - WWTBMD?
  • #1,024
  • Jun 4, 2014 12:20pm Jun 4, 2014 12:20pm
Quoting KADC
{quote} I'm still not back to full trading functionality and I'm only making longer-term plays now, not intraday scalping, but I'd like to back up this chart with a fundamental observation to support the technical move up you've illustrated. I believe (and this is anything but a unique observation) there are three possible outcomes from the ECB tomorrow: Easing as expected which the market has already priced in with this most recent Euro moves down since it was announced in May, particularly the EUR/USD pair you've illustrated. Easing as expected...
Hi KADC
Glad to see you post again.Yes I am counting price correction and I will sell again since EZ has not solved under inflation issue.
My sells start from fib 38 618 786 levels but I don't think we will go past 3790
Feel free to post your RSI charts whenever you like
Regards
In trading, you have to be defensive and aggressive at the same time
  • #1,025
  • Jun 4, 2014 12:21pm Jun 4, 2014 12:21pm
Quoting albchr
{quote} You? Scalping? ... Yeah get some rest brother. This range isn't going anywhere today.
got bored a little....
In trading, you have to be defensive and aggressive at the same time
  • #1,026
  • Jun 4, 2014 12:49pm Jun 4, 2014 12:49pm
Quoting KADC
{quote} I'm still not back to full trading functionality and I'm only making longer-term plays now, not intraday scalping, but I'd like to back up this chart with a fundamental observation to support the technical move up you've illustrated. I believe (and this is anything but a unique observation) there are three possible outcomes from the ECB tomorrow.
Nicely put. I am hoping for option 1 and think this is the most likely outcome. However possibility of option 2 is making me cover some risk. I believe last time an interest rate drop was expected and announced in shot down 350 or so pips on expectation, held and then another short spike down on the announcement followed by a big retrace.

Chris and Davit have to say I'm preferring the discussions in your journal threads much more than the normal threads. Hope you guys don't mind me gate crashing
  • #1,027
  • Jun 4, 2014 12:58pm Jun 4, 2014 12:58pm
Quoting squawk
{quote} Nicely put. I am hoping for option 1 and think this is the most likely outcome. However possibility of option 2 is making me cover some risk. I believe last time an interest rate drop was expected and announced in shot down 350 or so pips on expectation, held and then another short spike down on the announcement followed by a big retrace. Chris and Davit have to say I'm preferring the discussions in your journal threads much more than the normal threads. Hope you guys don't mind me gate crashing
You are welcome.I like to cultivate healthy thread where everyone elevate their game
In trading, you have to be defensive and aggressive at the same time
  • #1,028
  • Jun 4, 2014 1:21pm Jun 4, 2014 1:21pm
Quoting Davit
{quote} got bored a little....
Happens to me too. I've found for me, boredom can be dangerous and costly at times. lol

Quoting squawk
{quote} Chris and Davit have to say I'm preferring the discussions in your journal threads much more than the normal threads. Hope you guys don't mind me gate crashing
I'm a gate crasher here as well squawk. Davit's home here is a very nice one. Mines a little more strictly social. Here, one can actually learn with Davit's shared knowledge.
Ghost Rider - WWTBMD?
  • #1,029
  • Jun 4, 2014 1:27pm Jun 4, 2014 1:27pm
Quoting albchr
{quote} Happens to me too. I've found for me, boredom can be dangerous and costly at times. lol {quote} I'm a gate crasher here as well squawk. Davit's home here is a very nice one. Mines a little more strictly social. Here, one can actually learn with Davit's shared knowledge.
Chris don't undersell yourself.I could learn few things from you as well like letting my winners run longer
I calculated had I let my GU and EU shorts run another 100pips I would of gained over 30% in MAY
Its area I need to work on.
Regards
In trading, you have to be defensive and aggressive at the same time
  • #1,030
  • Jun 4, 2014 1:30pm Jun 4, 2014 1:30pm
I really love the way you trade Davit.
I would like to learn more about trading and think this is a perfect place to do it.
Thanks for sharing your tradings and thoughts, are really appreciate...
When I grow, I want to be like you bro.

Regards.
  • #1,031
  • Jun 4, 2014 1:39pm Jun 4, 2014 1:39pm
Quoting Davit
{quote} You are welcome.I like to cultivate healthy thread where everyone elevate their game
Thanks Davit. The journal discussion threads for what ever reason have a much healthier discussions on them and yours is no exception. I trade similar but a little differently to you, so normally watching similar areas. I enjoy your style of discussion and will try and contribute something of value as I think we all learn different aspects from each other.

Keep it up Davit

Cheers buddy
  • #1,032
  • Jun 4, 2014 1:41pm Jun 4, 2014 1:41pm
Quoting albchr
{quote} Happens to me too. I've found for me, boredom can be dangerous and costly at times. lol {quote} I'm a gate crasher here as well squawk. Davit's home here is a very nice one. Mines a little more strictly social. Here, one can actually learn with Davit's shared knowledge.

Chris I love your humbleness but you always seem to be undervaluing yourself. Your thread has a lot to offer and love the social chat.

Cheers
  • #1,033
  • Jun 4, 2014 1:44pm Jun 4, 2014 1:44pm
Quoting wind.rpha
I really love the way you trade Davit. I would like to learn more about trading and think this is a perfect place to do it. Thanks for sharing your tradings and thoughts, are really appreciate... When I grow, I want to be like you bro. Regards.
Trading books
1.All Market Wizards books by JACK D. SCHWAGER
2.REMINISCENCES OF A STOCK OPERATOR (Read it twice 2nd time got lot more out of it)
3.Harmonic Trader by Scott Carney (anything by him)
4.Bird watching in Lion Country by Dirk du Toit (implemented lots of ideas from him)
5.Trading in the Zone (classic on psychology of trading)

Enough for now.Get busy
In trading, you have to be defensive and aggressive at the same time
  • #1,034
  • Jun 4, 2014 1:46pm Jun 4, 2014 1:46pm
Quoting albchr
{quote} ... I think that's probably the most clearly explained fundamental view I've ever seen. Even a guy like me who doesn't really understand the depth of fundies can make sense of this. Thank you KADC.
Thank you. I used to be very confused why the market would move in the opposite direction from market data and announcements but now I have a better understanding of why that happens. If the Euro moves lower overnight that's another indicator (to me) that it will reverse tomorrow. One of my rules of thumb is to be wary of continuing trades with significant price action moves leading up to high risk events. If I have a strong conviction there will be continuation, I believe it's often wiser to get out and re-enter at a better position or wait until after continuation of the move is confirmed.

I don't know your trading style, but in my opinion it's far better to protect your money and wait for things to settle. Trading during expected market volatility is little different from gambling which is one of the reasons I prefer to trade during the less volatile Asian and European sessions and avoid trading during the US session as much as possible. Statistically, retail traders who avoid the US session are 33% more successful (66%) than those who only trade when the US markets are open; though most retail US session losses take place within the 8:30 a.m. to 10 a.m. window when the markets are most volatile, but the study didn't indicate outcomes for those who just avoided that hour-and-a-half window.

Non-USD Euro pairs should be somewhat safer for longer term trading shortly after US open tomorrow, but I'll wait until after Friday's US open (or at least get out on a change of trend after the European or London open) or even wait until Monday before making long term USD trades. No-one ever lost money from waiting to make a trade.

That said, if I were to initiate an EUR/USD scalp trade tomorrow based on the ECB rate decision and press conference, I'd use recent consolidation breakout strategy (breakout strategies are generally low-risk provided you place a stop just below the breakout point), going long on a break above 1.365 and short below 1.3585 after volatility subsides (probably after US market open) with a stop attached to the entry order (i.e. the stop is placed at the same time as the entry order) to account for surprise whipsawing volatility (or Internet or power failure before you can place your stop, all of which have happened to me when scalping) and either book profit on any subsequent extreme move (the second push up/down usually ends up being the daily high/low) or use a trailing stop. For longer-term trades I believe you should always wait for the pullback/bounce, preferable one that retests a technical indicator.

I used to be not too bad at this sort of thing until family and health issues took me away from regular trading last fall. After making good gains in January, I've done nothing of significance since (wow, I can hardly believe it's June already), so you're better off listening to an active trader like Davit than an early retiree like myself.
You can always make money tomorrow provided you don't lose it today.
  • #1,035
  • Jun 4, 2014 1:51pm Jun 4, 2014 1:51pm
Quoting Davit
{quote} Chris don't undersell yourself.I could learn few things from you as well like letting my winners run longer I calculated had I let my GU and EU shorts run another 100pips I would of gained over 30% in MAY Its area I need to work on. Regards
Ok.. I won't hehe.

The reason I've been saying that so much lately is I am also working on letting them run longer. Of course the flipside is more exposure. It could turn as well and eat away at floating gains. In all honesty Davit, I'm torn personally. I "want" to be a position trader but don't have the account to make such trades pay well enough over a long time. So I always felt I "need" to be a day trader/scalper. But you've brought swing trading to light for me and I find this a most pleasant compromise.

In that new light, there is wisdom behind not holding too long and facing the afore mentioned hazard of price turning against us in it's normal day to day waves. I really like the idea of placing several, slightly larger positions in the swing and getting out without waiting too long. What I'm working on now is a compromise there too. I've always been one to take partial profits and let the rest run covered with a stop loss. But I normally did so like this... place let's say a single .05, close out .03 at first bump and let .02 run covered. Now after watching you, I'd rather place several let's say .02 or .03, close some of them at first bump and allow the rest to run covered.

I'll have wait until the market resumes normal activity to see but I think (from a logical side anyway), it should help increase my profits without increasing "time based" exposure.
Ghost Rider - WWTBMD?
  • #1,036
  • Jun 4, 2014 2:02pm Jun 4, 2014 2:02pm
Quoting albchr
{quote} Ok.. I won't hehe. The reason I've been saying that so much lately is I am also working on letting them run longer. Of course the flipside is more exposure. It could turn as well and eat away at floating gains. In all honesty Davit, I'm torn personally. I "want" to be a position trader but don't have the account to make such trades pay well enough over a long time. So I always felt I "need" to be a day trader/scalper. But you've brought swing trading to light for me and I find this a most pleasant compromise. In that new light,...

Wow albchr its almost as is that post came right out of my mind.....I was the same, daytrading and scalping, but since seeing the calmness and calculation of Davits trading it makes me want to do the same and I am also waiting for next week to give this a shot, but of course like you said it will require discipline and a change of mindset. Having full faith in the trade set out will also help to feel more relaxed and let the market do its thing.
  • #1,037
  • Jun 4, 2014 2:10pm Jun 4, 2014 2:10pm
Quoting KADC
{quote} I used to be not too bad at this sort of thing until family and health issues took me away from regular trading last fall. After making good gains in January, I've done nothing of significance since (wow, I can hardly believe it's June already), so you're better off listening to an active trader like Davit than an early retiree like myself.
Hello KADC, I agree with everything you said. I know understanding fundamentals is very important and I work at it over time. When I started to learn trading, it was due to becoming disabled and having to give up my 32 year business. Prior to that, I never even heard of the FOREX. A little quick investigation showed me I had a choice to make. FA or TA. Knowing that FA would take years of market exposure and experience to really grasp well, I chose to learn TA first as I saw it as a way in quickly to hopefully keep my families heads above water. I'm a technical type guy as well so it seemed the logical approach to me.

To your last point above sir. I will listen to both you and Davit as well as others like CNT and Mr. Pip here. You see, retired or not, you have a vast wealth of experience to share. After all, I'm technically "retired" from my custom home building and woodworking business but, at the risk of sounding a touch conceded, you'd be hard pressed to find a better source of information on the subject than me.

I also face a family situation that makes all of this very difficult. But, as they say, that is life I guess. I hope the best for you in yours.
Ghost Rider - WWTBMD?
  • #1,038
  • Jun 4, 2014 2:17pm Jun 4, 2014 2:17pm
Great posts guys!! Love it

One of my favorite sites to get Euro related news

http://topics.bloomberg.com/euro-zone/

articles like this
http://www.bloomberg.com/news/2014-0...sures-ecb.html
Slowing Euro Inflation Puts Pressure on Central Bank

I have posted over dozen posts about Euro low inflation when EU was 39 and most just ignored it.Now we are at 1.36 in one month.
So trends are fine but understanding some fundamentals helps gauging if the trend is truly overbought based on ground level fundamentals.In Euro case it was and could be still high.
In trading, you have to be defensive and aggressive at the same time
  • #1,039
  • Jun 4, 2014 2:25pm Jun 4, 2014 2:25pm
For New Zealand dollar I like realistic
http://www.nzherald.co.nz/economy/ne...es.cfm?c_id=34
Great newspaper

Articles like
NZ dollar falls to 3-month low after dairy price fall
http://www.nzherald.co.nz/economy/ne...ectid=11267364
In trading, you have to be defensive and aggressive at the same time
  • #1,040
  • Jun 4, 2014 2:26pm Jun 4, 2014 2:26pm
Quoting Davit
Great posts guys!! Love it One of my favorite sites to get Euro related news http://topics.bloomberg.com/euro-zone/ articles like this http://www.bloomberg.com/news/2014-0...sures-ecb.html Slowing Euro Inflation Puts Pressure on Central Bank I have posted over dozen posts about Euro low inflation when EU was 39 and most just ignored it.Now we are at 1.36 in one month. So trends are fine but understanding some fundamentals helps gauging if the trend is truly overbought based on...
Love Reuters to


Interest article -
http://uk.reuters.com/article/2014/0...0EF1A720140604
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