Support and Resistance Method - Pharley

Just thought I'd pop down what made me spend a lot of time investigating how to enter multiple times and gain some big pips. May be of interest.

A while back I was looking at forex competition results - you know, crazy high returns, crazy high leverage and risk. I could see returns of 1000% to 10,000% in a month and thought - well these guys must be nuts trading with max leverage, max risk etc. Turns out some of time they weren't taking massive risks.

I could see that some big returns were actually possible, but I wasn't really bothered about the $ returns - what really struck me was the amount of pips they could get. The more I looked at their trades, the more I realised that top 10 traders had a lot in common. They had a method that they stuck to. They help positions open for several weeks. They managed their trades actively across the time period. And yes they got a bit lucky - what I mean is, if they were going long on a pair, there was no terribly bad news affecting the currency pair during the several weeks they were trading. Plus - they entered many many times on a single pair.

So I went and analysed all their trades - firstly using indicators to see if I could find what made them enter when they did. For most of them I could never match up stochs, RSI, MCD etc with their entries. So I took off indies and went naked. Then things started lining up with SR areas, and mostly not 15m timeframes, but longer timeframes. (all this took me ages to do!).

What I realised was that many were looking at the big picture and seeing where major SR points were and trading inbetween them, riding resistance down to support or support all the way back to resistance areas. Note that it was Major SR areas.

Yes some of their risks were bigger than I would take, perhaps 20% or so. But when I'm trading for example and use a 5% risk, that's only 5% of my account. Not 5% of my total money available. So I'm not concerned too much with all the advice about only risking 1% to 3%, but I do keep it sensible at up to around 6% or so. (only a guideline as I use $ risk and not %).

So I just stopped focussing on the money side of things and looked at how they got the pips.

There is another website somewhere called Double in a Day - where they trade mostly 15m & 1hr charts, basically channel trading and try to double their account in a day with 100 pip run. Seems to work sometimes. However, what struck me again was that it was possible - and once again, they enter multiple times. They use auto entries at 40% of the run, 60% etc. I'm not keen on that - I prefer to use PA to guide me on where to enter.

So, what's the upshot? It made me look at how to gain maximum pips. The $ comes from risk mgt and can come later - but gaining the pips was an eye opener for me and I put the focus very much on to that goal - get as many pips as possible and how to manage the trades and stops to keep risk constant and sensible.

I remember one of the contest winners saying - if you can work out how to do this, you only need to do it once, then you will always know how to do it. Your life changes as you stop trading all the time. Trade every couple of months or so focussing on the big picture, but when you're trading a run, you're flat out doing it. Then have a break. Take your money out of your account and leave enough there for the next run. Go invest that money in something else - pay off debts, property etc. The next time you're trading, you're trading with money you didn't have in the first place.

Anyway, a bit boring I know but that's what made me focus on multiple entries.

Cheers

Hi mate,

Yes I'll take a look - got to go offline for a bit now though - I'll come back later.
No worries about comments - all are welcome!

Note that I only use the fib as a measuring tool - I don't use it as a fib should be used. I'm not interested in the normal levels 38.something%, 61.something% - it's just for measuring. I can live without it - it just makes measuring runs quicker and visually easier for me.

Cheers

Subsribed > Post 3 Where is 90% , is it from top yellow line or bottom yellow line , T12 m also old fart

Catching sequences with multiple entries lasting 1-3 weeks is something I came to a similar conclusion some time ago with FX but it presents a problem for me due to my timezone.

I live in New Zealand therefore much of the good intraday movement is outside my waking hours. Because of this, I find it very hard to get locations where I can add more and then this leads to the question of, OK now that I've added more, how do I manage with the increased exposure at worse prices.

Another issue is that of trade frequency. Trying to catch one sequence every month or two is not frequent enough for both my equity curve and my personality. I know I need to be participating at least 2-3 times a week minimum.

I know, these problems listed are my personal problems and everyone is different. I definitely see the benefits of playing a sequence, I find it hard to implement, manage, and work into my life and personality.

With kind regards,
MK

pharley , How to do on Fib , 0.0 to 400.00 Please show me on your parameter , will have to learn a long way . bit catch up . T12

Hi there,

I took a look at NZD USD - it's at a monthly support so I'd want to wait for a clear signal before trading it. The weekly chart shows it bouncing around that support without direction - in fact it tried go to up in the last 2 weeks and got pushed down again. The daily doesn't chow anything except it travelling along the support. The 4hr chart shows it in a range of just under 200 pips - but it keeps getting drawn back to the support. I wouldn't trade it until a good signal comes from it and for me to trade it it would have to break above 0.677.

Hi mate,

I've done the pic again - see below. I change the fib settings to get equidistant levels. You can see there are 11 lines which separate the run into 10 equal parts. I put the fib from the bottom of the run to the top - 1 line down from the top is the 90% line I use for targets.

Hi MK,

Yes time zones are always a problem for some - it just comes down to where you're located.

Perhaps trade off a shorter time frame, or stay with the longer timeframe and look across a dozen pairs - there's normally something going on.

One of the things to keep in mind is that there's not just one way to trade. Sure you can do this longer term trading, but if you want some more action in the week, look at playing 4hr candles with PA set ups. I'd look at 4hr charts for the trend and SR, then 1 hr charts to find an entry - here's a good example below in the usdchf. If you pick say 6 pairs to look at you should see something happening a couple of time per week at least. Then there are the PA candles such and Pin bars and inside bar that can be played - open any chart on the 4hr and look for them - there are heaps.

This could be interesting coming up to resistance:

Hi Pharley,

Bless you for for sharing the system, I am still trying to understand a few points before trying, one of the points you mentioned below.

3) 4hr for entries on 50% retraces, confirmed higher breaks, or retraces back to break points

a. Is this 50% retracement after it has moved 1 level between 00 and 1R or 1R to 2R fib level and then retraces 50%, we enter immediately or wait for the candle close?

b. The trailing stop loss, do you have a pip level below the 4hr swing lows or highs that you use in your trading.


c. If trade moves in one swoop three levels like 3R to 6R, and swing stop is at 4R and retraces back to close position, and then starts moving up again from 1R, do you start adding positions again?

thankyou

and another one - seems to be on it's way. Rats, I missed a 50% retrace on this - I've only just seen it as I didn't have the chart open. Never mind, I'll continue to watch to see where I can enter. Pic of day and same time frame on 4hr with fib showing a potential retrace entry. Major resistance turned to support at 1.2985:

Hi Alamhakim,

Thanks for your questions. I'll try to answer them:

1. It's the move on the fib between 0% and 100%, then moves back to the 50% level. I place a pending order to buy (or sell) immediately with SL at the 0% and TP at an identified target.

2. There is no set pip level below for example a swing low (for longs). I would normally move stops up to the swing low point - I might give it a couple of pips breathing room, but not much.

3. I might do - It depends on the price action on the charts. It may be that if it retraces a large amount that is hits all stops and closes them out. At that point I reassess the charts and decide what I'll do. Each situation can be different so you have to stop and take another look. If it's come back a long way and hit my stops, I look if I'm wrong with the trade, or conditions have changed - market news or something. If I've entered several times by that point, I should have moved stops up enough so that most of them except the last one would have locked in profit. Ooo - just to qualify something - I really don't like adding to any losing position - if it's going to hit a SL and I"m to take a loss, that's fine - I ensure any loss is within my risk tolerance.

Hope that helps - I know it's a bit uncertain, but that's the nature of trading. If it was clear cut what to do, we'd all be doing very well ! But it's part art and part science. If ever I'm unsure, I stop and reassess and don't blindly enter.

Cheers

Thanks so much, I thought I understood how you drew the fib, but I have not, as for example the usdcad, we use the 1D to draw the recent swing levels and use the extensions 1R, 2R...9R to mark the levels? So those levels might not be recent for a long time as in USDCAD.

This stuff fascinates me:

http://news.forexlive.com/!/how-geor...hours-20130507

The thing is, I have no idea what made Soros enter these trades, but that analyst has a fair idea where he entered some shorts. Yes, Soros and Quantum fund have access to all the latest fundamental data, but even with that, you have to look for an entry once you've decided on a direction - everyone does. The funny thing is, when I look at 50% retracements at the time he took the trades, guess what? Is that coincidence or not? I have no idea, but very interesting: -

pharley , Please show me how to do on parameter of 0.0 to 400.00 on Fib , Please T12

Hi T12,

What platform are you using?

I use both MT4 and cTrader. With either you can right click on the fib - in ctrader the levels will be shown. In MT4 select Fibo properties, select Fibo Levels tab and you can alter the levels from there.

MT4 i did try Does nt work ?? can u show me on your parameter MT4 or u dont have MT4

Hi - see pic below. I can't show them all in one pic, but they start at 0 and go up in 0.5 steps (0, 0.5, 1, 1.5, 2 etc)

Is it right