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My Market Beliefs and How I use them

  • #21
  • Oct 5, 2016 11:38am Oct 5, 2016 11:38am
Quoting stevepatt
{quote} Hi Don, It's good to see someone else using Jason's teachings. It was watching his videos that enlightened me to how the Markets really work. Once I understood what it truly meant that "For Every Buyer there has to be an equal and willing Seller" my Trading moved on a at deal. I haven't used his paid for service just the videos that I accessed for free. I hope the chart, below, explains what you want to know. {image}
Yes, Jason really opened my eyes about how my own mind was keeping me from developing winning behaviors. I have only recently really been able to understand fully what he taught in his classes. I did pay for the psychology of trading class and it was well worth it. I still have the recording of our sessions that I pull out every once in a while, when I have questions that I need to clarify.

I can see from your explanations that you and I look at the market in a very similar way, albeit using different terminology. The gaps you mention, I used to call them, "The flush". My other mentor-gspajon-called them "F*** You stops". Since redefining my belief structure I have found a way to utilize these as an entry strategy and reduce the risk in any given trade by about 30%. I've only recently done this, but found it is extremely accurate. Another example of the clarity one gains when you reorganize how YOU BELIEVE the market works. I no longer see these as something to be avoided, rather, something to be exploited.
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  • #22
  • Oct 5, 2016 1:54pm Oct 5, 2016 1:54pm
Quoting DonPato
{quote} Yes, Jason really opened my eyes about how my own mind was keeping me from developing winning behaviors. I have only recently really been able to understand fully what he taught in his classes. I did pay for the psychology of trading class and it was well worth it. I still have the recording of our sessions that I pull out every once in a while, when I have questions that I need to clarify. I can see from your explanations that you and I look at the market in a very similar way, albeit using different terminology. The gaps you mention, I...

Hi Don,

The chart, below, shows what I am looking for in regard to changes in Market Structure and how I Enter into a Trade.

Structure - PA - Gap to Trade into - My Target reached before the nearest Swing High/Low is reached, this is all I'm looking for

Would you mind sharing your Entry criteria?

You don't have to, of course, I'd just be interested to compare how you would enter into a Trade.
Attached Image (click to enlarge)
Click to Enlarge Name: 5th Oct 16 GBP:JPY M5 Observations 3.png Size: 164 KB
  • #23
  • Oct 5, 2016 5:59pm Oct 5, 2016 5:59pm
Quoting DonPato
{quote} I had two mentors that both told me the same thing...that is when I sat up and paid attention to it. The first was Jason Alan Jankowsky. He is a published author and even better a truly nice guy. The second was a guy who used to post here but I haven't seen him around...he goes by the handle, gspajon. Both of these people impressed on me the idea that when I look at the market I am only really seeing a reflection of what i believe the market to be. Thus, if I truly examine what I "believe" about the market and where those beliefs come from,...
It makes sense to me. May I ask a simple question, what is your average stop size, roughly?

I know gspajon. "failure creates disciple" he was a cool guy.
Time hides Nothing
  • #24
  • Oct 6, 2016 7:55am Oct 6, 2016 7:55am
Quoting stevepatt
...Would you mind sharing your Entry criteria? You don't have to, of course, I'd just be interested to compare how you would enter into a Trade.
My entries are pretty simple really. Again, to keep with the theme, I use my market beliefs to "see" the structure the buyers and sellers have created over the past few days. Then I watch what happens when price moves into those areas. I look for the "flush" and take a trade after it the flush fails. I then target the next area of "structure"...meaning the last visible area where the dominance changed hands.

That is to say if I am long, I try to target the last area where the buyers failed. And then manage the stops along the way. I have used your example of GBP/JPY to show how I would've traded this...while this is not my usual pair, my method would've produced this result on this example. (Yes, I know its easy to say in retrospect, that is why I posted the above example on the hard right edge). I will up date them next.

Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 48 KB

I use multiple time frames to view structure...in this example, 15 min chart shows clear consolidation...so I wait for price to move to the extreme and engage the "edges". On the execution time frame (5 min) I see the signal, which in this case is a clear bounce, then wait for the "flush", then take the entry as price moves above the "flush" and then pulls back to retest. In this instance, my entry would've occurred at the bottom of the long green candle that moved out of the "flush zone".
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  • #25
  • Edited 10:16am Oct 6, 2016 8:02am | Edited 10:16am
Quoting CindyXXXX
...May I ask a simple question, what is your average stop size, roughly? ....
The answer depends on which instrument I trade and what the goals are for the trade. When I am day trading (NOT Forex) the futures market does not have the same spread, so I can keep the stops between 11-15 pips. But over the last 3 months, my average drawdown on the winning entries is only about 4.5 points. My aim is 31 points per trade, so that is an average RRR of 1:6.8 (6.8xRisk).

On the Forex Side I trade much longer time frames, so as to keep out of the broker generated "mush". The goals on these trades are simply ride trend to get 2.5 or better. Forex is my "savings" account, so 50% annual returns is all I really want. I don't really try to be aggressive. Thus my stops on these trades can be anywhere from 100-150 pips

I just spoke to gspajon yesterday....he told me he was summarily dismissed from FF because he offered to mentor people (like me). I'm told he is still able to post but only the the "commercial" section, which means no one will really read his posts...so he stopped posting.
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  • #26
  • Oct 6, 2016 8:06am Oct 6, 2016 8:06am
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Update on AUD/USD short:
Sellers once again overwhelmed the buyers and are pushing price lower. I have cancelled my two pending orders, and lowered my stop down to reduce risk...oddly this stop is near where one of the pending orders once was. I have placed a pending scale out order at 2xR and will hold the remaining portion for 5xR. Until then it will just be managing the stops to keep them out of the way.
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  • #27
  • Oct 6, 2016 8:11am Oct 6, 2016 8:11am
Attached Image (click to enlarge)
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Update on USD/MXN short:

Order flow balance is showing up on trade which usually means the sellers are being matched with roughly equal buying. Buying is trying to dominate the price action. As this is a counter trend trade I will continue to keep my stop tight and watch for signs of reversal. Current stop locks in 200+ pips.
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  • #28
  • Oct 6, 2016 11:36am Oct 6, 2016 11:36am
Attached Image (click to enlarge)
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New Trade USD/CAD (looney) short:

Weekly chart shows price has been range for the better part of this year. While this range appears to want to move higher, I see it as a bearish flag formation...at any rate we are at the top of the range. I have taken a small short position at the retest of last week's high and have another position pending just above.

Intraday chart shows price has pulled back from the highs, but tomorrow being NFP friday, I fully expect a retest of these highs...I won't know if it's a "breakout" until next week. (thus the small position size).

We'll wait and see what tomorrow brings.
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  • #29
  • Oct 6, 2016 2:51pm Oct 6, 2016 2:51pm
I also shorted in the same area, but only scalped it for small gains and I'm out. I also look at longer time frames, but one of my errors had been in the anticipation of the LT pattern to form before it completes and I traded the short term too early. Now I trade the ST trend until it proves to have failed in favor of the LT, but I'll pass on every single trade that doesn't also have a correlation, so I stick with the commodity currencies and improving.
big money makes big moves and then hides during small money chasing.
  • #30
  • Oct 7, 2016 8:11am Oct 7, 2016 8:11am
Quoting corrman
I also shorted in the same area, but only scalped it for small gains and I'm out. I also look at longer time frames, but one of my errors had been in the anticipation of the LT pattern to form before it completes and I traded the short term too early. Now I trade the ST trend until it proves to have failed in favor of the LT, but I'll pass on every single trade that doesn't also have a correlation, so I stick with the commodity currencies and improving.
Looks like you got another shot at a short on this trade as well this morning with NFP. I was triggered on both positions and price came within a few pips of my stop, but then fell away. So now it remains to the rest of the market in the following weeks to decide if this was a good place to go short or not.
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  • #31
  • Oct 7, 2016 8:12am Oct 7, 2016 8:12am
Update on USD/MXN - I was stopped out with 230 pips. Still holding AUD/USD and USD/CAD
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  • #32
  • Oct 25, 2017 9:16pm Oct 25, 2017 9:16pm
Subscribed..... it's a very good thread, after 2 years studied technical analysis and still cannot consistent profit, i just read gspajon as you mention also... thanks don
  • #33
  • Last Post: Edited Apr 20, 2020 12:17am Apr 19, 2020 10:45pm | Edited Apr 20, 2020 12:17am
I just came across this thread and I have to say it got me thinking. Thanks DonPato for the thought-provoking content that you have provided here, you are truly an asset to the ff community. I can see that this thread is quite old but I wanted to comment anyway because I agree that having a defined way of viewing the markets is important. So, that being said, much(not all)of how I see the markets is based in Dow Theory. The following are my ideas that are based directly on said theory.

1. The market has three movements: The main movement that occurs anywhere from 6 months to several years, the medium term swing that occurs anywhere from 3 months to a year, and the short term swing that has a time horizon of anywhere from an hour or less to at most several days. I can use a higher time frame, like the daily, to find the "main move" and then use a lower time frame to catch the medium or short swing consistently.
2. The market discounts all news. News and information move markets but to what degree and how long is determined by the overall sentiment in the market.
3. Trends are confirmed by volume. Price movement that is accompanied by increasing volume provide much more favorable trade opportunities.

There are 6 tenets to Dow Theory but those are the three that I have found that help me view markets in a framework that works for me. Lastly, I also believe that as traders we live for volatility. Without it, we cant make a profit because the market wont move much if at all. However, volatility is also a double-edged sword because highly volatile markets can make for dangerous trading environments. So, for me having a viable way of determining volatility is a must. Anyway, thanks again if you read this. I look forward to reading more of your content and engaging with you. Cheers!
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