Trading the lines

Well i thought about it for a long time. And i want to do what i said i was going to do. So here it is.








Thats it. Happy trading folks.

Thanks for the thread.

I guess it is ok to trade on the breakup of the previous low and high too? Buy or sell stop.

Well its OK with me what ever you do, you are the trader. But maybe you should check the charts if what you are about to do seem like a good idea or not?

I dont really know if thats a question or a proposition or something else so i guess i will write something to it in general.

I monitor my trades. Preferably 24 hours a day. For TPs i try to go safe and have a look at previous lows and highs. I never expect the trend to actually continue, meaning i dont trade on price breaking new lows and highs. As long as i am in the right way in general, stoplosses are not that much of a worry. A novice trader could use say... 50 pip SL maybe. Or 5-10 pip SL might also be a very good idea. Like i said: You are the trader. Meaning you have to make your own decisions based on those things that seem important to you. I dont believe in authority. So i dont want to make those decisions for you.

If i approach your statement from a different view:

You can sell when it breaks through an old low and buy when it breaks through an old buy high, but those trades dont have as good probability as the kind of entries i was talking about earlier. A lot of people with a lot of money still do this, but they might have a lot more information then i do. A recent example of this is:



In general this kind of sell can go 10 pips down, 50 pips or like this roughly 95 pips until my broker closed down for the weekend.
Im not saying this is something new or anything. I did not "invent" this. It is simply me intrepreting where the money is going.
To me this kind of approach and i mean the whole thing i have been talking about here, is the best way to trade. It is exact, non subjective and does not take big effort or hard to get information.

Happy trading folks!

Thanks for your help. Thanks

IMHO, learning about levels is the one of the most important trading principles. Even when they don't hold up, they give you clues as to trend strength.

Keep up the good work Yaed.

Following along.

subscribed but make sure you post frequently with more set ups.

Why im shorting

I will post as soon as a make a trade and again to show where i closed. Most probably on tuesday, i doubt monday will be enough to get up far enough as is needed for a sell. While i am at it i will give you the reason why i will only short and not place any longs:



So pretty much, if you sold and just sort of kept it for a bit, no matter WHERE or how ever since the beginning of May, you are doing a smart thing.

It wont last forever but the way i see it there is no reason it cant go to 0.8 and drop even further.

Way back in the days, and why it matters (to me)



We broke down the 2012 and 2008 levels, next week we might very well reach unprecedented lows of 2006.

The situation tells me there is a good chance we are going to get a pretty big upmove, since we have had it at a bout these levels before. But if we go through the 2010 level as well that chance decreases. Thats why i am sort of apprehensive at selling at 1.2096 area. So i will not take that trade blindly, putting a limit there and just go blindly there. Instead i will watch the PA and MAKE SURE it stops at my line, BEFORE i enter the trade.

But statistics says there is not so big a chance we will get to 1.2096 on monday. ATR on D1 is roughly 100 pip.



But if we zoom in for a bit the view changes somewhat.



But still, we could get a intraday take profit out of a sell position at 1.2096. Preferably and very possibly i would have my take profit at 1.201, which is a take profit that does NOT assume a trend continuation, in that way that the TP is ABOVE the low. But still, that assumes there is a H4 defined low at where price was at fridays close. But if lets suppose i sold at 1.2096 area and it drops to 1.201 and it seems to KEEP ON dropping, preferably i would not close it there as we might well see a further 100 pip drop down to 1.19 area in say thursday.

If i now myself right, if i am looking at a 90 pip win and market takes 15 of those i WILL close that thing down at 75 pip win. Its not very realistic to suppose i would NOT close a 75 pip win. I think the biggest stuff i have closed on is a double 100 pip trade.

Its quite difficult to try to do math on your own psychology. However and apparently its needed. And i think this is something a lot of people missunderstand. What i mean is that we have a preprogrammed stuff in the consiousness. Its not IMPOSSIBLE to try to understand some of that programming. The words we use for this content is "fear", "greed", "emotion" and weird stuff like that.



The blue line is where i WOULD have sold if i did what i was talking about. 23 pips wrong is nothing really though. So apparently there is conflict in my consiousness: One idea is that i should be more correct then to make a 23 pip wrong trade, and the other idea says 23 pip wrong is no problem at all. I cant really seem to quickly decide which idea is correct.

The third idea that springs to mind is that there WHERE some smart money entering at the blue line, although they didnt win and change the tide. However at the red line that is a line from december the 23rd and 24th, some MORE smart money went short and THAT was enough to turn the tide for a quick 37 pip take profit and the smart money that held on to or shorted again got off even better. But still its quite easy to see the SMARTEST money was shorting at the december 23rd and 24th line. Now the interesting thing becomes: What are they thinking? Are they acting totally systematic or did they have some kind of information that i dont? This becomes a challenge to try to backwards engineer the sell position of these people, the ultra smart money people.

Hi yaed, interesting thread. I am a swing/ continuation trader.. So your thread interests me. Do you trade off higher time frames are mostly lower? When I have traded of short time frames I have found I have been caught by fake outs. I have tried failed re tests of support/resistance after break outs, but again on lower time frames I have been caught in bear/bull traps. What kind of win rate do you have with this style of trading?


regards

Subscribed.



Thankx

Backwardsengineering the logic of the smart money

So lets for the sake of argument call the shorters at 1.21864 "The Smart Money Position" (TSMP) Ok so, my initial ideas about this is:

1) I have heard lots of arguments and discussions here on FF that says the the people moving price is NOT so smart and dont do it to win, they have theyre targets and whatnot and they operate on ANOTHER logic then trying to close on winning profits. This argument may seem to have some merit, but i dont have any good empirical evidence to back up this claim. There are rational evidence to falsify this idea though, and i will get to that below. It does not much matter exactly WHAT logic they have perhaps, sufficed to say for these reasons, lets suppose IF price is driven by a logic that does NOT operate on closing on profits, then that means the trader must assume the same logic. The trader must assume the same logic and use it in action to trade, to place positions and to close. This logic falsfies the TSMP. This argument means that position is not "smart" but instead "other".

2) If the first idea is not correct, and instead there are smart people moving the money smartly, they might still not do it ALL the time. Meaning sometimes stupid or semi stupid people might be moving the market and sometimes the smart people might be moving the market. Actually there are some empirical evidence that falsifies this view, but none that upholds it: It is well known and easy to prove that most investors in currency loose money. From what i have seen maybe 35-20% of accounts does NOT loose money. 35-20% is a lot less then half. Which means that the people who are making profits is much less. Meaning there are LESS smart people then there are dumb people. The dumb people who loose most of the time are knocked out after a while, its not very strange to assume that, theyre funds run out and they are forced to quit. But here comes the thing that falsifies this partly and the above idea 1) in a greater way: If it was NOT the smart money that moved the market at least some of the time, smart money with winning account histories would not exist and would not persist over time. To me its almost impossible to try to imagine the owners of these account operate on a logic that is NOT systematic. And this leads us to idea number 3)

3) The TSMP is what moves the money at some chosen or most often time. There ARE very smart investors that DOES operate on trying to close on profits. They might not always succeed and so on, but the logic of WHEN they do must be derived from the charts, since they are looking at the same charts. However many of them probably rely on tick data and pretty complex EAs that does complex operations on the numbers. But thats ALSO only a hypothesis. There might STILL be some smart money that DONT rely on fancy hardware and software like that. Its quite possible that the TSMP is a product of added reasons to trade. Such as:
General D1 downtrend + selling at or above an important recent low + selling at an important recent high = enter the TSMP, at exactly where it happend. TP = 37.
So then, in that case its only a matter of figuring out the defenitions of "important recent low" and "important recent high". Of course this is just an example of how i RIGHT NOW seem to have the evidence to assume this.

If i truly believed 1) there would be no meaning in trading. 2) does not seem very probable. 3) seem like the only alternative that would truly justify trading for profit.
So then, this is pretty much what i do, i try to find the logic behind the POSSIBLE good trades. In this quest i have gone through almost insurmountable mountains of garbage that other people have deluded themselves with for no apparent reason. In a way, and its very easy to prove this empirically: Smart money has it easy. I mean as long as you sold, when ever since the beginning of May, you are doing fine! You could sell here or there during all these 8 months and ALL and each and every of your positions would be NICE and green.

I hope you guys are following my logic here. If not just holler and i will try to clarify. Its very possible i have missed something important in all this, something we could all benefit from understanding so help me out here if you think of something. However some possible remarks and some possible questions might not fit this setting, int that case i will say so if i think so.

Happy trading folks!

Today is the first REAL bank day in 2 weeks or so. Though i wont have the opurtunity to trade much until late this month, our son i starting Kindergarden the 19th.




So then, the question is firstly where to buy/sell? At or near the lines or not at all. Which ones? Well the above line at 1.1968 is very possibly going to produce a quick rush upwards if we break that one. This range is getting QUITE obvious, meaning its to easy to trade, meaning market HAS to break through it pretty quickly.

If i was to trade, i would only place shorts, what ever happens.

14:06 Swedish time
My son is asleep so i probably have time for a 10-15 minute scalp. If i see something like that i will sell.

14:35 update
Actually i think i would want to get some distance from this area before i make any trades. I dont like what it looks like in the long term, i think there is TOO much money in around these parts.

Yaed,

I like the thought process your threads display as they are thought provoking to me. With this
thread you are it seems to some degree looking at supply & demand zones with the lines. Anyway
thank you for again sharing your views along with chart examples. I will be following along & learning
as you go.

Subscribed as I like your way of thinking and your bio
What is your avatar? It sort of reminds me of an abstract vagina...

Well i dont care much for semantics in this context, so who ever can call it what ever they want. I would not use the words "supply" and "demand", but if you want to i am not bothered. I am happy that you are interested though. Gimme some input if you have any. Happy trading!