Price is everything

Thanks for clarifying, Warren. When you say "just like that," are you referring just to the chart I posted about gold, as or the M5 one of EU as well? From the looks of it, EU should also be relevant, given the levels it took out.

One thing I was wondering was about the M1 on that EU setup I posted. My musings are in the image below:

Apologies for the onslaught of charts (Although that does kinda seem like the main aim), but here is another flag limit area that played out in a similar way.

Excuse the messy chart. Follow the numbers for some kind of order amongst the chaos!

My view.


First retrace


Second retrace

i understood more from your charts than from rtm site ...keep them coming

So I decided to act on this one, but it didn't really go as hoped. Maybe Warren can chime in and point out where I went wrong, or if this is just one of those trades that wasn't meant to be.

Before the retrace while price was surging lower there is a flag limit that got engulfed, I can see the flag limit in your chart. When price retrace, There was an engulf in the 5M TF at the turning point.

Any chance you could put that into a chart? I'm terrible when it comes to visualising things like that!

Tor2114,

This is where i feel that 1 minute chart can be a bit to sensitive and why i use 5 min chart. At the low point 1, what did that really break, was it something important or did it play out exactly the way it should and found the buyers. Would the 5 minute chart just show a pullback to an important area.

I am out now and wil not be able to produce a chart till later. I promise i will.

Warren

Hi Warren,

Many thanks for getting back to me. I think I get what you mean, but a chart would certainly be very much appreciated!

Looking at it now, there seems to be a far nicer level to break on M5, but we'll have to wait and see.

Ashiki,

Great charts. I like the fact you are aware of compression, this is something i would like to discuss in more detail and introduce some conversation and charts regarding TARGETS

This is great to see

One from earlier that I was watching, but missed by the tiniest of margins!

bulish flag on AUDUSD?

Clearly it doesn't work every time and very far from working everytime, expectancy is the same as many other systems, no holy grail involved. Finding an edge with this type of setup is not as simple as some say. Actually it is very complicated and there are no guarantees anyway (even in the perfect picture).

Matt,

The zone you've drawn is a bit in the middle of nowhere, but the thing that's really kicked it in the nuts is that the "source" you've drawn is in the wrong place. It should be as the image below (The red lines), and it would give you plenty of time to take some profit, or move to BE.

Hi By_Tor2114,

I see you're from the UK and are also a boxer. All I ask is that you don't come hunting me out in real life and box my ears in for what I'm about to say
I'm not here to preach or offend or anything like that but this "flag limit" business is RTM stuff and in IMHO, really does cloud this thread that Red gave everyone and built on simplicity.

The problem with any chart pattern including flags is that they are a time-factored analysis of how price behaved. The time itself has no bearing at all on the most important thing - price. Price really is everything - if we removed the time element from our charts would price still go up and down?

Once we factor time (and by definition the patterns it will generate) in to our charts, then just like the definition of the word "trend" it's extremely difficult in my experience to ever agree on what does and doesn't constitute a valid pattern because these patterns change whenever a trader adjusts the timeframe settings. This quirk alone is enough to confound the life out of a trader - I know because I've been there.

What I love about the first 200 or so pages of this thread is that in Red I've witnessed perhaps the only trader who ever really did "keep it simple" - not just in his trading but in the way he marked up his charts and explained things. And while he appeared to not try and influence how others traded, he certainly seemed to try his best to encourage traders to just focus on price - the buying and the selling on the chart.

My interpretation of what he taught is that the key to understanding who controls the market and therefore enabling us to profit (to the best of any statistically significant probability) from it, lies in identifying the simple and clear/clean price patterns, which show us that the money that can actually move the market is indeed active in the market. The retest of the original demand or supply level and any resultant signal candles give us the most information possible that the will and interest on the part of the market movers to continue moving in the original direction to target is still there.

Sure, in time based charts this behaviour will still manifest as patterns, it has no choice but to do so, however, Red made sure to point out that these particular patterns can and should be approached with the underlying principle of simplicity. In my view, he was bang on the nail with this, and any patterns and/or fancy terms above and beyond what he initially presented are, well, I don't know how to describe them without causing offence to be honest, but hopefully I've made the point.

This is an "after-the-fact" trade but I hope it illustrates much more clearly and concisely what I'm attempting to say. This trade only earned me a few pips because I made the mistake of aiming for a higher (M30 in this case) target rather than taking profits at the swing point (white coloured circle) in the timeframe that the original move set up. This is something I'm working on. I've left all of my marking on the chart just as it was traded (BRL is my own acronym and simply refers to a Breakout Reference Line).

Well, I'll go to lunch and hope not to return to a pair of boxing gloves

All the best

That's another question. Many times the "source" is not a well defined spot. Some like to take the extreme of the pivot or the trading range, others like to take some sort of supply or demand or sr around that zone. Sometimes you have multiple zones you can take as the source. Sometimes the nearest does work well, sometimes the extreme of the pivot, sometimes none of them.

btw I wanted to highlight all that zone in the blue circle till the top of the trading range where you marked that pivot (some call it supply but i disagree) but then forgot to do it while drawing and only marked that little kind of supply in the middle.

Hi Simon,

I completely understand wanting to keep the thread as per Red's original way of trading. Regarding flag limits, I agree that they can appear in different places, depending on the time frame you are looking at, but then the exact same thing could be said for Red's engulfing whipsaw pattern. The engulfing pattern he used might appear on M5, but not on M15. Any time anything is identified on a chart, it will be subject to the time frame it is view on. for instance, consider the chart you just posted.



And then....



I am paraphrasing, but did Red say something like "It's not what you see, it's what you recognise?" Actually, it might have been the other way around... I blame the boxing related brain damage if I have it backwards.

Here a few things redsword used to do as entry signals at supply and demand:

Whipsaw engulfing pattern. A tight trading range and a big candle that breaks it. Enter at candle close or after range broken or at retest.







Minor supply turned demand or viceversa. Minor support turned resistance or viceversa.






Wicks at zone as rejection. Sometimes followed by large bull/bear candles.



Other times he mentioned simple engulfing candles at zone (can't find a picture). And correlations. (+ other things you can add if you want)




Personally I don't find those price configurations very reliable, and stop loss placement can be a problem too (too wide, not much RR). He used to exit 2/3 position at first opposite trouble zone, sometimes not even 1:1 reach. High win% but not too much RR I guess, but this is up to trader risk appetite and comfort.

Exactly - just as you/red said it's not what we look at, it's what we see.

As a trader what I'm trying to see is, profit. Can I see a clear/clean setup? Is there a clear/clean (let's even say, "obvious") profit target in the timeframe that I see the setup? If I think that I can see it, my aim is to take it.

I can't even begin to tell you how many conversations I've had with traders who, having assessed the previous M5 setup from this morning would have said, "You can't buy that, it's contra-trend" (to the H1). The beauty of supply/demand is that even in what can quite fairly be termed a H1 down move, there was still the opportunity to go long on a lower timeframe, as long as one plans one's exit correctly, which I obviously didn't do on this occasion.

This is how I see the H1. I still don't have a signal for selling on the H1 although I would agree that with this morning's reaction at the Inversion and subsequent fresh supply coming in (with the additional breakout as you've marked on your chart) things are now looking quite interesting.