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Analyse my trade (GBPJPY Short) - was my logic good?

  • #21
  • Mar 11, 2016 3:37pm Mar 11, 2016 3:37pm
Quoting Ponzi Jr
{quote} My sentiment exactly. I had to google him 😁. As someone who bases trades almost entirely on technicals, I rarely pay attention to things like that. Perhaps I should though, to avoid trading around such events, in the interest of avoiding being stopped out in the shorter run.
different rules may apply, but there are some nice opportunities on those days
Invincibility lies in the defence, the possibility of victory in the attack
  • #22
  • Mar 13, 2016 6:02am Mar 13, 2016 6:02am
Quoting silverheat
{quote} different rules may apply, but there are some nice opportunities on those days
There certainly are Is always fun to listen to Super Mario

And yes it does pay off to keep an ear in the ground!
  • #23
  • Mar 13, 2016 6:26am Mar 13, 2016 6:26am
On a technical basis you sold into an extended down trend, the gbpjpy has two clear cycles running at the moment, these are a 10 week cycle and a 5 week cycle

You would not have been able to anticipate the shorter 5 week cycle coming into play, but 154.73 was a demand area, if you want to ride the gbpjpy to the downside then look for weakness in the end of March/first week of April, you should also plot the cycles in the markets you are trading and use the weekly time frame to do this, then look for the daily to confirm, 169.42 would be a great level to short from.
Attached Image (click to enlarge)
Click to Enlarge Name: GBPJPY_March_2016.png Size: 57 KB
  • #24
  • Mar 13, 2016 10:31pm Mar 13, 2016 10:31pm
Quoting Ponzi Jr
My current approach to trading involves initially identifying a trend in market on a higher (D1 and H4) timeframe, and then dropping down to the H1 chart to find an entry point for a trade in the direction of the main trend... Yesterday (at 19 : 21 : 00 GMT) I entered a short order on the GBPJPY pair for the following reasons: 1. The market was trending downwards on the D1 and H1 charts, as you can see below {image}{image} 2. On the hourly chart, we can observe that there was a shorter term up trend (retracement) between the 1st and 4th of March....
I like it that you go for top-down strategy and follow the trend. That's the right way to analyze the charts firsthand. I'd suggest you mark swing levels to guide you where price may go in the future.

I have to point out the doji you used as a signal for a trade and the thick long candle (marubozu). I'll give you constructive criticism.

1. As you may already know, doji candles and spinning tops are 'indecision candles'. They have no bias. They have to be confirmed by the next candle if you want to determine a possible entry point. I guess that's why you relied on the thick long bear candle to support your case.

2. Since you looked at a Daily candle for a signal, you might have planned to make the trade last for days. The problem is the doji, despite being a daily candle, is a weak signal for a reversal. A doji with a long lower shadow is not something you would want to base your bearish swing trade on. There's a way to determine a strong reversal signal by just determining how it looks and how it stands out on the chart. I really think it'll help you if you study them.
  • #25
  • Mar 16, 2016 7:17am Mar 16, 2016 7:17am
Quoting AlbertoC
Hey there Ponzi JR, Well, the reading of the chart is quite ok, however, there are a few factors that could have worked against you. 1.- The move from that double top was quite extended, and it certainly needed a little bit of a rest, so the retracement that took you out should be considered as something normal. 2.- There is a very steep trendline from your double top formation that has actually been broken, retested and sustained, that could have been a clue for your to be cautious about the position. 3.- There is a 159.80 level on your daily chart...
Apologies for bringing up an old post, but would you mind explaining why sentiment is a more important consideration when trading Yen pairs? It's rarely a factor that I pay much attention to - I usually keep my analysis strictly technical.
  • #26
  • Mar 17, 2016 4:09am Mar 17, 2016 4:09am
Quoting Ponzi Jr
{quote} Apologies for bringing up an old post, but would you mind explaining why sentiment is a more important consideration when trading Yen pairs? It's rarely a factor that I pay much attention to - I usually keep my analysis strictly technical.
No need to apologize!

Sentiment is not "The" most important factor to take into consideration, but it does play a part in Yen pairs and makes them quite volatile. What generally happens whenever there's some major event is that the Yen is going to be bought heavily as it is a safe haven currency. The issue is that once the effect of the news wears off, be that momentarily or for good you get some really wild swings.

Basically it pays to have some caution and have your ear in the ground, so to speak, whenever there's some major news going around, cause that could have an effect on your Yen trades.

I hope that makes sense, if not, let me know and I'll try to explain it a bit better

Good trading!

A.
  • #27
  • Mar 17, 2016 7:35am Mar 17, 2016 7:35am
Quoting DemoAntares
A few words of wisdom - marubozus are huge bodied candles without shadows whatsoever - their bodies being large, try to wait for next candle's retracement of that marubozu. I understand you were afraid the price would have gone away from you and you would be late for the short (as it would me) - but in time and experience you will realize marubozus will require special attention and in more than 50% cases you can wait for a retrace of the marubozu in the next trading session.
Thanks for your input. Regarding your advice on Marubozu candles - why do you believe that the candle following a Marubozu is likely to be a retracement of it? I completely understand the logic that 'the market may be overextended after a Marubozu, and will correct itself if this is the case (giving a retracement)'. However, we could also argue that a Marubozu 'is a strong indicator of supply/demand at that level, and momentum in that direction, which makes it more likely that the successing candle is likely to follow the trend of the Marubozu'. Also, with candlesticks such as this, it bothers me that you can alter the period to see whatever kind of candlestick you want to. For example, suppose you had a Marubozu followed by a retracement candle. If you combined these 2 candles, you may see a doji - which might act as a very different signal. Does it not bother you that, to some extent, you can see what you want to by altering settings/periods?

Thanks again for your contribution.
  • #28
  • Mar 17, 2016 7:55am Mar 17, 2016 7:55am
Quoting AlbertoC
{quote} No need to apologize! Sentiment is not "The" most important factor to take into consideration, but it does play a part in Yen pairs and makes them quite volatile. What generally happens whenever there's some major event is that the Yen is going to be bought heavily as it is a safe haven currency. The issue is that once the effect of the news wears off, be that momentarily or for good you get some really wild swings. Basically it pays to have some caution and have your ear in the ground, so to speak, whenever there's some major news going...
Thanks again for your help - I never realised that the Yen was considered a safe haven currency . As a final question, how do you try to avoid going against sentiment, in this way? Do you simply check an economic calendar, check certain forums/threads?
  • #29
  • Mar 17, 2016 9:37am Mar 17, 2016 9:37am
Quoting Ponzi Jr
{quote} Thanks again for your help - I never realised that the Yen was considered a safe haven currency . As a final question, how do you try to avoid going against sentiment, in this way? Do you simply check an economic calendar, check certain forums/threads?
You're most welcome Ponzi,

It is indeed considered as such, and so is the Swiss Franc, but let's not talk about that one

Basically just being a bit on top of things. You don't really need to do a lot. Many times is a matter of hours, some others last longer, but you will certainly see the reason why in the news. For instance, the latest one was the Chinese stock market crashing. Big things like that will create a risk avoidance environment and Yen will be bought. You just have to be careful that when the dust settles you don't get caught with your pants down!

Have a good one!
  • #30
  • Mar 17, 2016 1:21pm Mar 17, 2016 1:21pm
Quoting Ponzi Jr
{quote} Thanks for your input. Regarding your advice on Marubozu candles - why do you believe that the candle following a Marubozu is likely to be a retracement of it? I completely understand the logic that 'the market may be overextended after a Marubozu, and will correct itself if this is the case (giving a retracement)'. However, we could also argue that a Marubozu 'is a strong indicator of supply/demand at that level, and momentum in that direction, which makes it more likely that the successing candle is likely to follow the trend of the Marubozu'....
First of all - you will be having a lot of problems trading solely on candle patterns. That being said, that signal you took (traded) is fine by me, but I asked you a question before and you still haven't answered. (Regarding your SL placement according to your trading signal).
I just want to say, if you're analyzing daily setups, entering at the bottom of that marubozu is just trading blindly. One should look at the bigger picture as to where did marubozu occur - long story short - it is just one candle.
Regarding retracements - they are bound to happen sooner or later, and a retracement on a marubozu is more likely than a retracement for instance on a long candle with a long lower shadow.
Long candles in forex represent an area where orders are sparse (long candles happen after accumulation) and price tends to cover those sparse order areas - as soon as possible. That's why entering after a long candle is tricky and fundamentally incorrect - BUT - that's why SL has to be larger in order to get the chance to exploit the trade.
As I saw it, IF I traded like you, my SL would have also been triggered. Just a negative trade that's all
  • #31
  • Mar 22, 2016 11:58am Mar 22, 2016 11:58am
Quoting DemoAntares
{quote} First of all - you will be having a lot of problems trading solely on candle patterns. That being said, that signal you took (traded) is fine by me, but I asked you a question before and you still haven't answered. (Regarding your SL placement according to your trading signal). I just want to say, if you're analyzing daily setups, entering at the bottom of that marubozu is just trading blindly. One should look at the bigger picture as to where did marubozu occur - long story short - it is just one candle. Regarding retracements - they are...
Terribly sorry for the belated reply with regards to your question about my S/L placement. Effectively, I saw it as a level at which I would no longer sell into the market, since it broke a resistance level that I had expected to hold. In hindsight, it's easy for me to admit that this was a poor judgement call on my part.
  • #32
  • Last Post: May 18, 2016 10:40am May 18, 2016 10:40am
Quoting GEfx
{quote} My suggestion: stop trading candles and start trading structure. Good luck.
GEfx, from your comments it seems like you are a professional trader who really understands the forex market and how to trade it. To me, it seems like, just as water follows the path of least resistance over the terrain, similarly the price must flow over the underlying market structure by following that structure. There will be many waves created as the price flows and with TA we may mistake those waves as the structure. The problem is, how to clearly see that structure? Can you advise us on the best source of information on understanding market structure? Will a study of Market Profile give us the complete picture of the underlying market structure? If not, then what will? Thanks for your always positive and realistic comments.
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