Discovering An Edge

Can't remember how many scalps on DAX I made yesterday, all small pippage to recover the big loss I made early morning.
Current view post manufacturing news is 50/50. There could be a big push north to 11000's but the conditions have to be favourable for stocks and bad for EUR so this could be sideways until ECB on Wed.

For DAX to go north, it would probably need to go sub 9700 to build up long positions. Daily suggests even going for a doubl swing bottom. So the bias is starting to swing short for the next week or two but the long term monthly is bullish.

I will remain flat unless some scalping opportunities present themselves at London open.

Today the currency strength dash board shows strong GBP. The move against AUD overnight is already firm so I've longed GBPUSD @ 14262

long EURUSD @ 11028
Long EURAUD @ 14877
Hopefully more steam in AUD trade

Closed +9

hi vlady are u still using ur similarity knowledge for those trades or are using other trading method for ur entries? cheers mate..

Hi Fantasy,

I'm using a variety of sources and techniques because of my circumstances. Since I'm not a full time trader, I can't be in front of the screen all the time (especially at work) so I rely on

1. paid services for outlook, views, calls (I have 3 of these but 2 are excellent and I will get rid of the 3rd). My account size doesn't permit me to do all their trade calls so it's still up to me to filter what I want - this is not as easy as it sounds as it's like filtering through news. Eg. I don't trade commodities very often so calls against CAD, AUD and NZD against majors does require homework and not just blindly following the calls.
2. To filter above, I use MADASH which is an indicator you can search here in FF. I use this to filter currency strength against weakness. My preferred currencies are EUR, USD, GBP, JPY as standard. Lately, been dabling in AUD. Completely f*&$ up on GBPNZD so won't be doing that any time soon.
3. Once I get down to a filtered set of strong vs weak, I take fundamental news..... I'm no expert but I'm trying. So I look at Economic Calendar, announcements/news and such.

So those are my "background" sources that give me a landscape picture. But the triggers that get me to short or long will be my basket of preferred Strong/Weak currencies that are usually the majors.

 

1. I then look at a chart and do a Top Down analysis: Month, Week, Day... I usually do this at the start of the week (Sunday).
2. Then I flip between Day and 4H, 1H and 15M. I use a specific technique that is a trendline break method for projecting future prices as targets. (important).
3. This means, I have calculated my bias and then I set targets against risk.
4. I don't always get it right - I still screw things up badly - but I've found that my calls are pretty good but my execution is 60% at best. So I'm working on this at the moment. For example, I called the DAX short before the move but did nothing about it - I know this comes to emotional preparation rather than just mechanical so I've got some challenges to take care of.

Intra Day still uses everything above, but I use

1. Pivot Points for S/R breaks as a trading technique. I think this is easier to implement and execute but compliments every other strategy.
2. On my charts I have MACD, Volume and AWESOME oscilators. They help but are not necessary.
3. ZZBB.... I think I have internalised this as I don't even think about it anymore. Eg. I know that tops and bottoms are always outside of a Bollinger Band and I can also see when a price has been mismatched and will return. I can't explain it.... just lots of hours on charts. I've probably described it on many of my posts.
4. For example, on DAX, the 1H and 15M have low Close Outside BB so a safe entry would be to wait if the BB mid is broken... if you follow an instrument long enough, it's personality can tell you something of its vibration behaviour.... DAX loves to retrace...so when it breaks, you don't jump in, because it's likely to retrace 3 times before taking off - and so I can place an entry at Bollinger Mid. With GBPUSD, that sucker doesn't respect lines etc as it over runs them.... so with Similarity, I look for tails or Uneven Zones when tops/bottoms are formed.... I then wait on a reaction then get in.... same with EURUSD in fact, that formation is better on the EUR. USDJPY is also good but I find that it's like a snake and waits a long time
5. The Similarity Return principle, well I guess I have internalised this as well..... I always view a 1H chart against a 15M and know that if Pivots enable me to define the playing field, then the 15M is likely to revisit a price point based on the swing.
6. However, alot of my similarity templates are on MT4 and I don't have access to that during work hours as they are on a Virtual Machine and I will get fired if I have my iPad on and I'm trading during work hours! LOL. So I rely on the ZZBB rather than the Kprsa indicators which were really good "counter-trend" or retracement trade triggers.

One thing I didn't mention but I think has been critical to my improvement, is timetabling my trading against the 3 global sessions. Before I did this, I was all over the place and losing lots of money. But when you align your actual execution time to Market Opens and Closes, then you will always have an opportunity to make money.

The volume/magnitude of these trades are different, eg. I risk more in London than in Asia. And given the above, I know which basket to trade and when.... eg. you wouldn't trade EURUSD during Asia unless there was specific news.... you're more likely to get action on EURAUD or EURJPY.

So overall, I would say that the "similarity" studies back in 2013-2014 have allowed me to be more mindful of the bigger picture. It helped trigger better questions for me to ask. Most importantly, I think, it's enabled me to NOT be confined to ONE TECHNIQUE but have a general ability to participate in markets and be able to look at a chart and read it.... sometimes a naked chart too.

Sorry for the long post, but it made me reflect and I thought it deserved a good answer. Hope some of it helps.

Okay, managed to get +230 pips on that DAX move up. I was a bit late, but I really expected another surge lower to 9600.
Entry was made after it crossed the Bollinger Mid on the 15M.

Since I was asked the question, and I can remember, I've realised that I also look at the 2M chart.
The 15M , 5M and 2M are obviously going to give different pictures.

On the 2M, since price was rising, I look for bounces on the BB mid. Also notice that it made a close outside the Bollinger but didn't cross the mid, so it was definitly going to break. But where to enter? The safest place was the break of the 200EMA (arrow)

Current 1H view of DAX



The London session has brought up the price from the 9630 level. The US guys will want in on that action, so I expect a deep retrace until London Close and then New York can decide whether to go for the 9910 barrier.

My gut feel though is that 9771 day open will pose a fight between bears and bulls..... there's a short-term drive to reduce price lower for a bigger push up. Also, other indices are preforming lower against Mining and Iron Ore prices.

USDCAD
Looking like 13360 could be the price trigger for longs but will depend if BOC wants a higher CAD or not... I would expect not.
I have a previous price projection target hit at 13335. Will wait after a reaction for potential longs.... may go sideways with slight slant.

DAX.... 2MIN view...

It wouldn't surprise me if DAX revisited the level where it took off.

Trying a Long on EURAUD as it's returned to Daily PP.
Long @ 14796

Shorting EURUSD off the Monthly Pivot.
Hmmm this actually means I should close that EURAUD.... ponker!

Hi. You mean on high level...... I meant that some currencies are gently leaking information, so as good friends can profit before news release.... And we honest traders suffer. GL.

@ vlady

mate thanks for ur big reply ...

No problem. BTW, here's a one entry I'm in that uses the ZZBB method developed from the early Similarity discussions.

Looks like the scenario I sensed yesterday with DAX played out. US took it back to point of breakout before closing higher.

This morning managed to get in low on under 9700 for a total of 230 pips.
Got a EU short in play which hasn't really moved.

Overnight I tried and failed at shorts against YEN on EUR and GBP for -100

Waiting for DAX to retrace for a reload. Looking for 9720-9730 range.

Dammit. I was underground when the retrace happened.

Long DAX @ 9757 which isn't the best price and has downside retrace risk.
Short EURUSD still in play from 10962 also not the best entry cos it retraced even after DAX went off.

Looking at USDCAD for a long at Daily PP @ 13380, starting to be biased long on the medium term.

Took another Dax Long @ 9733, SL to BE+

Closed the DAX for +68 pips as it seems to be stalling at 9770.
It's possible that this enthusiasm may feed into USA who'll want a revisit to 9720 so price will be capped at these new highs unless some kind of news breaks it out.