Trading is as simple as ABCD

Gotta go to work shortly but if I was to hang around I'd be looking to sell around this 175.25 level , last low and probably going to meet 100lwma on its way down...

But bottom line its got to setup right on the price action when it gets there..

Ahhh GBP news due in 25 mins maybe its better to wait till after that before anymore trading wouldn't want to give my hard earned pips back to a pre-news spike???

OK I would of sold this here under normal conditions but 15 mins before news, no I don't think so. Shame as it looks great now!!!



Anyway gotta go to work so a 40 pip profit works out about 21% on account so a nice mornings work, starting to get very comfortable with my strategy right now so give me another week or so making money everyday on demo and controlling my bad days, then I'll give it a go for real.

Yep feels like this babys nearly ready to rock and roll with some real doe

Catch yu alls later...

Well things have moved on a pace since I started this thread in memory of my lovely Father. As you all know I've been constantly revising and modifying my strategy searching for some consistency and something that I can start trading fulltime in the near future...

Well here it is, now I would like to say "Final version" but i don't believe I will ever have a "final version" as the markets are constantly changing so I'm sure it will need constant tweaking as I go along but if I do then I will always come back here to modify this post to the current version.

I will be re-directing the first post to here so I will be starting from the beginning , explaining it right from the basics copying and pasting some of my older posts for those traders that haven't been here before. But for those that have sorry but maybe the recap won't do any harm for any of us, including me.

Trading Is as Simple as ABCD Trading System...

Now I have said on here until I'm blue in the face price can only go up or down, there's nothing complicated about that is there? Up or down??? So the first thing I'm going to do is establish what we mean by up and what we mean by down. So here's a couple of charts one going up and one going down.








Now as long as you know which ones which that's all you need to trade forex succesfully, buy the dips(C) when price is going up , sell the peaks(C) when price is going down. Doesn't sound too complicated now does it?? As hopefully I will demonstrate over the coming days, weeks and months.

As you can see this is the very simple ABCD pattern and its all we need to trade forex successfully as it is the building block of all the charts we ever look at.

It starts on the tick chart and goes right through all our charts 1min, 5 min etc right through to the weekly charts. Master trading this pattern and you have mastered Forex.

But before we start trading this pattern lets look into why it appears all over our charts with such astonishing regularity, once we understand just what is going on then maybe we have half a chance of trading it successfully.

First of all our trader, Fred, decides to buy at price “A” price then moves nicely up the page say 10 pips to point “B”.

Now, here’s a question for you? Has our trader Fred made any money when price reaches point “B” ? Well the simple answer is, no he hasn't. So what has he got to do to make his money?? That’s right he has to bank his money and to do that he has to sell.

Now Gladys also bought at “A” and she too is looking to bank her profits and just like Fred wants to sell too at “B”.

Now this sudden selling pressure results in the price dropping back to point “C” a typical retracement of about 50% of the initial move up.

Now Fred and Gladys have made a nice little profit on the first move and have some money in the bank ready to buy back in when the price is right and lo and behold when price reaches point “C” they decide to buy back in and price promptly flys back up the page past the old high at point “B” all the way up to a new high at point “D” where Fred and Gladys promptly sell again banking some more profits and the whole cycle starts again.

Now that my friends in a nutshell is how the market works and why there's ABCD moves all over our charts, its the constant buying and selling, no matter what timeframe you trade.

So the burning question is how do we make use of this information and how do we trade the ABCD moves??

Well before I answer that question one thing I should of mentioned before is that Fred is the head trader at the Bank of Japan and Gladys is the head trader at the European central Bank. So one thing is for sure you don't want to be the other side of their trades.

In fact you want to be trading with them not against them. So how do we do that?

How do we trade the ABCD move? Well all you have to do is buy and sell at the same time as them , so you have 2 choices you either buy at point “C” as price pulls back to it ,my preferred method, or you buy as price breaks above point “B” , the breakout entry.


Attached Images (click to enlarge)
http://www.forexfactory.com/attachme...1&d=1401201207


My New Exit Strategy.

Now the one big change I've made to my strategy is my exit. The entry is virtually unchanged from the beginning but the exit?? well thats a different story all together. The biggest problem I've had with this strategy is trying to trade the trend in a typical Turtle Trader sense of trading. Eg take an entry and hold it then add at each new pullback and hold again and again until the trend ends.

Looks great in hindsight when you look back at the end of the day those 100 plus pip trends with entry after entry but to catch one going forward?? Well thats a whole new ball game. Trouble is when you're holding every entry imagining you've caught the start of the next big mover and eveery time it comes back to you and knocks you off at BE then you work hard all session for nothing.

Also many guys have come onto my thread and said you need to have a strategy that copes with rangy days as well as trending days and they're right. That s why I've listened to the likes of Mr V. , capstone, nightstocher and Martin, my mentor, who have all said the same thing in many different ways. Take your profit when you're up stop holding for that mystical trend that never appears.

So I've made one major change to my strategy and thats the exit. From now on I will just get as much as I can from each entry and as soon as it wavers, close it out for whatever the markets given me. Basically I'm trading the ABCD move and targeting D as my exit. Thing is I will still trade the trends just in one step at a time ABCD move by ABCD move. In fact I might even get more pips out of it that way but more importantly if its a typical rangy day then I will still bank some profits.

Its all about trading the highest probability setups and not the once in a lifetime trends that are rare and so hard to catch. So with that said here is my latest strategy just trading each ABCD move as it sets up and exiting as close to D as possible.

The Perfect ABCD Trade from entry to exit.

Here's an example of a perfect ABCD move to trade from entry to exit on an actual chart...



This is the basic entry and exit that the whole strategy is based on,

 

1. Market open in this case London Open.
2. Strong trend denoted by steep sloping 100lwma (more on identifying strong trenders later)
3. Price under the 100lwma so sell ABCD's only , above for buy ABCD's only
4. Strong AB move, really important that the AB move clearly takes out the previous drive down as in this example.
5. BC move identified by CCI going overbought +100
6. Only take CCI signals at a key level this pulls back to the 175.50 level. Key levels are, previous support and resistance, 25 levels, 100lwma, yesterdays high ,low or close.
7. When CCI green candle shorter than previous then wait for a red candle this is our signal candle, slide pending sell stop 2 pips under signal candle.
8. If sell stop not hit wait for next CCI signal and drag Sell stop up under red signal candle.
9. Once in trade watch for price to falter especially at key levels then exit at D. This example falters at BRN 175.00 and yesterdays close (green line).
10. Best Exit is to wait for the reverse signal to entry then trail stop above last candle until stopped out.
11. Buy ABCD trade is exact opposite of sell ABCD trade.

Now that is all we are looking for from now on, no more trying to trade the trend and hold through pullbacks, just trade the ABCD move closing out at point D. The key is to exit as close to D as possible. Its said that AB=CD so that should be your minmium target but sometimes they go further sometimes they falter at Point B.


Ok so thats what we will be trading but as I've stated earlier there are hundreds of ABCD moves all over our charts so how do we decide which ones to trade but more importantly which ones to leave well alone??

Qualifying the ABCD moves to trade..

Ok now this is the really important bit of the strategy, how do we know which ABCD moves to trade?? How do we qualify the best ones to take but more importantly the ones to leave well alone... Well we're going to introduce some filters to filter out the rubbish and to leave us with the best or highest probability trades to take.

So what is the first filter???

Well this strategy is built around one fundamental objective, to follow the money as it comes to the table, which happens as we all know around market opens. Therefore the first filter is:

The Time Of Day....

We need to see the money so market opens are the best time for this strategy in particular from Frankfurt open through London Open from about 06.00hrs to 10.30hrs British summertime. (GMT+1) .Then there's a slight pause until the New York open starts to kick in about 12.00hrs to 16.00hrs. This I think is about the best time as there is the overlap of Frankfurt, London and New York when we can expect the highest volatility and when the vast majority of money comes to the market. Theres also the Sydney and Tokyo opens and sessions which quite often gives some very nice little runs but thats when I'm sleeping so I'm not around to trade.

One thing to be very careful about is the news releases, I generally trade around the Red news releases on FF stopping and closing out trades 15 mins before and leaving a 20 to 30 min space after for price to settle down.

Strongest Trending Pairs only...

Now I cannot over emphasise the importance of this filter. Only trade strong trending pairs and it goes without saying in the direction of the trend. No counter trend trades here, well not for me anyway...

I just want to spend a minute here talking about trading with the trend. Nope I will change that. Trading with STRONG TRENDS. No matter what timeframe you trade , do yourself a favour trade only strong trending pairs on that timeframe or if you have a favourite pair to trade then only trade it when its trending strongly. You see the thing is all our price action trading strategies, indicators, fib levels, break and retests etc etc work really well on strong trending pairs. I'd say about 70% accuracy which to me is an edge worth trading with.

Hows the saying go? "The trend is your friend", well change that to "the strong trend is your best friend".

So how do we identify the strongest trenders? We use the 100LWMA and we want to see it sloping as steeply as possible, the steeper the better as this denotes a strong trend. But we don't want to go searching from chart to chart looking for the steepest 100lwma do we?? No of course not, let me introduce you to my favourite little indicator known to man. The Top Trending Indicator. Known to us all as the TTindy.

This little indicator does all the hard work for you listing in order the top 8 trenders on any 2 timeframes of your choice. It sits on the top left corner of my screen and I have it set on 1 min and 5 min top trenders , all I do is keep the top 4 trenders charts open on tiled windows and watch out for the ABCD moves to setup with the trend. Keep an eye on it because it does tend to change fairly rapidly so try to keep the top 4 open at all times. I use the 5 min as a sort of master which means when a pair is top of both it could be running or the London breakout trade.

Quick word of warning when using the TTindy don't just go to the top 4 trenders and start taking entries, have a look at the chart and try to assess whether or not the trend is still in motion or not. Is it clearly driving lower or higher on every new AB leg??? If not be careful remember" the trend is your friend until it ends!!!"

There's another setup to look out for when the same pair is in the top 4 on both the 1 min and the 5 min but opposite colours as this very often is a great reversal setup and well worth trading.But more on the reversal setup later.

Ok so we've got our first two filters in place so lets say we've got the top 4 trenders charts up on our screen, whats next??

Simple just look for an ABCD move to trade...

Ok clivepackham, I see your strategy is good and how about the Ttindy indicator you said, will you post it in this tread for us to download. Thank you

If you read the thread this post wouldn't be necessary.

Hi ngoanhoang3

Handy148 has got a point but as this threads been around the houses a bit before ending up here. Have a look at page 79 posts 1580 to 1582 inclusive. Don't know how to get the link up properly but try this link http://www.forexfactory.com/showthre...29#post7756129 .

Ok now whats happening today????

GBP and EUR weakness across the TTindy so thought I'd give this a quick try , might hold might not but can't lose now...

Nope it pipped me out but then its not looking very strong now is it?? All looking a bit questionable to the downside. Need a good solid pullback to a nice resistance level and back away from the face a bit...before taking another entry 1.8325 looking good...

Could try a breakout entry below last low but not a keen breakout man usually cost me money...

GBPAUD is top of my TTindy but that doesn't mean just go for it, well not for me as this is looking a bit like its struggling so too risky. Need it to pull away a bit from the face and back towards its MA also its come a long way today already.

Just have a look at the last 3 drives just nudging their noses below the last ones, not a good sign what I'd call failed drives. Just a note here too if I'd gone for breakout trades last 3 would have me sweating... Breakouts to me are sells at support or bottom of the wave and not a good idea usually ends in heart ache...

A better entry for me is pulling back to resistance and get to BE quickly like that 1.8325 level but looks like I've missed it now.

Oh well never mind another one along soon....

Strong AB move nice pullback to 100lwma so give it another go...

Ok lets try this EURNZD then...not the best entries today getting inpatient and not waiting for my pullbacks keep buying at the top and selling at the bottom of waves so BE's aren't sticking very well...

Nope another BE trade, Hmmm its all about waiting for a pullback and entering there at the bottom of a wave for buys at the top of waves for sells. Just gotta develop the discipline to stick to it especially on lack lustre days like today with no real direction even on these little old 1 minute charts.

Better timed entry on this GBPAUD but still looking like a breakout even though I entered on the pullback, but a top trender so hopefully will keep moving up...

Got two choices I guess..

well its got away and my BE stop is better placed this time below the 25 level so maybe, who knows???

Look how that 25 level protected my BE stop... Much better entry so its got a chance of holding, another reason I prefer pullbacks to breakouts...

And it holds again see how just a few pips better entry can survive its just a few pips earlier than a breakout but thats all the difference between a good entry and a bad one... Just a few pips. Got to time these entries spot on,it makes all the difference...

Mind you I'm up against the 5 minute boys selling still as I'm under the 5 min 100lwma if we break that it could be good news.

Its struggling to go so I think the 5 min boys will win out at the end of the day so grabbed a quick handful...

Of course it might still go but in line with my new exit philosophy I decided to grab what I could and fight another day...

Mind you its bound to go flying now isn't it without me on it....

If it does I will re enter on break and retest of the 100lwma

Interesting how well these 25 levels hold isn't it???

If you can't beat em then join em, I say.

Not exactly a system trade in that its not yet in TTiny 1 min table but it soon will be if this carrys on down but it is top of the 5 min TTindy and I always keep an eye on that and if I see a reversal on the 1 min back with the 5 min TT then its worth a shot in my book.

Expect a bit of grief as the fights not over yet but if I'm knocked out at BE will have a look for another entry depending on the price action at the time..

If at first you don't succeed try and try again....

Notice its top of both 1 and 5 min TTindy so this could be nice...

Got two chances I guess...