Looking for my next Forex trade
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It's finally starting to move...took it long enough...LOL!
Yeah, with Easter coming up and the end of the quarter, things have slowed down considerably.
I felt confident enough in this one to load the boat a bit in the public account. Might regret it but this looks like one of those "Captain Obvious" trade setups. It's working on the hourly 5th wave of a larger 5 wave movement in the 4 hour consolidation channel. It will likely move a good bit higher than my target but I don't want to take any chances.
There's also a bearish key candle level at just above 112 that may give it some trouble on the way back up so I'm just taking the safe bet here.
Lack of volume in the market is ridiculous. Hard to make money with no volume.
Should have held my GU short after all. It's tanking nicely now. Oh well..it was Friday so closing was the better option. No regrets.
Long on UJ this morning at 111.69. TP set for 112.30.
RBA Governor Stephens coming online in a few minutes. If he does anything other than sound VERY dovish, then he's a total fool. Every country is dropping rates except the US and he doesn't want to be a hawk right now and risk the Aussie rising in this market. If I were him, I'd do my best to talk down the currency. The language in the previous minutes was dovish so he would do well to follow through with that.
One thing that might help Qui is to try and work with a smaller time frame where you can actually see results a lot faster. That way, you can develop a system that works for you on a regular basis. After that, all you have to do is apply the same system to the larger time frames. The TDI wave counting, for example, works just as well on the 5 minute time frame as it does on the daily or weekly chart. The only thing you have to do is still keep an eye on the larger time frames so things don't get lost in the shuffle.
The system that SG showed the other day for the 5 minute time frame is excellent in my opinion. It's pretty straight forward and simple to trade. I know SG has recommended though that we set fib levels using the 4 hour chart first before dropping to lower time frames and I would still highly recommend that. It's always good to know when you might be coming up on a key 61.8 or 38.2 on a larger time frame and not try to take trades too far in that direction when it's getting close.
I also like to watch the 15 minute and hourly time frame if I'm trading the 5 minute chart just to keep things in perspective.
The lower time frames should theoretically give you a much cleaner entry without a large drawdown from a pip perspective and it's a great time frame to learn on.
If I had to pick one component of trading and label it as the hardest, patience is right near the top of the list if not at the very top. It's a tough one to overcome.
It's right here. Remember, I have a higher risk tolerance than most so you can't necessarily go by the percentage of risk per trade I use. The public account is my play money so I'll go in as much as 10% or more depending on the circumstances surrounding each trade. And I have experience on my side so I don't mind risking more.
The one thing I try to always ask myself before I take a trade is...how much am I willing to lose at most? Then, I'll divide out that risk accordingly depending on how many entries I think I might have to take on a given time frame. Once I exceed my risk tolerance, I'm out, even if it means I draw the account back down and lose profits.
The trades I usually wind up regretting are the ones where I get too big for my britches and go in way too heavy...like the AU short I took in the public account that was far too large. It literally took the account from 20% in the green to over 7% in the red. I had to make all of that back and I still haven't gotten it all yet. But the account is back in the green again.
https://www.myfxbook.com/members/nettechs/waves/1539708
Yep, I'll do the same as an add on to current positions.
Yep, I like getting whacked a bit. But I don't budge nearly as easily as I used to on these things.
I'm still hanging in longer term to see if they can smack me around some more...LOL!
You misunderstand me on the few hundred pips on the daily, Qui...it is nothing if you keep the relative PERSPECTIVE in mind at all times.
Keep in mind, I never said enter 2% every time you add to a trade every 200 to 300 pips...I said 2% risk on a trade TOTAL. One thing you have to keep in mind is that if you plan on trading the larger time frames, you need to take that 2% risk and divide it up. If you anticipate the possibility of taking as many as 4 trades total on an add-on, then that 2% has to be divided by 4, which means you only take 0.5% per trade at most.
You have to keep the total risk factor in mind per time frame that you're trading. It's different for every pair and for every time frame.
I forgot about another angle that I should mention here, Qui...
Let's say you had gone long on AU at just the right time. Would you have held the position long term not knowing how far up it was going to go or would you have cut and run with some profit and started looking for short positions again a bit higher up? I can almost guarantee it wouldn't have made any real difference in where you are now on the trade...that's human nature and is the downfall of most retail traders.
Hindsight is 20/20 and it's easy to say what we would have done or should have done. But being in the trade in real time not knowing for sure which way it's going to go is very different both in terms of risk and the "itchy trigger finger syndrome" angle.
I doubt that many of us have the fortitude to take a trade and have it run in our favor for days or weeks when we're in the green on a good trade, myself included. I may have long term targets on certain trades but, unfortunately, I seldom hold for the actual target on the longer time frames because I get seduced by the profits on the screen at the moment. That's one of the weaknesses I still struggle with.
If AU starts dropping hard for folks that are short and they get out with good profits, I can almost guarantee you they're going to start looking for positions to go long instead, which would be contrary to the larger trend. That's the way most folks are wired. Once they book profits on a trade, they're automatically looking to go the other way on the same pair.
On pairs like USD/DKK, there really isn't an ideal entry unless you're a rare phenomenon at picking out tops and bottoms. If you want a trade to run in your favor for days or weeks, you're going to have to play the large time frames and expect to be underwater for a while before it runs in your favor. And right now, the large time frames are giving you fits, most likely because it's not a good fit for your trading personality. So your expectation is unrealistic.
Find what works for you and is comfortable for you both in terms of risk and wait time....that's the only real solution. Until you do, frustration will continue to haunt you.
Moving averages, trendlines, fibs, support and resistance...they're all useless without the discipline required that typically takes a long time to develop.
Food for thought...
Here's the best "rule of thumb" trading practice you could ever have Qui...
If you take trades and you're bored and don't really worry about watching the charts much afterwards while you're trade is running, then you're probably in at about the right percentage of risk level for you as an individual.
But if the trade makes your butt pucker enough to bite holes in your seat when the trade runs against you, then you're in too heavy.
Same with time frame selection preference...if you take the trade and you're willing to let it run to completion regardless of how long it takes, then you're comfortable with the time frame you're trading.
If you get exasperated and impatient with the trade and you're tired of waiting on it to get to your target, then you're trading the wrong time frame.
Simple as that...the easy solution is to find the risk factor and patience factor that is comfortable for you as an individual. It's different for everybody.
Yep, shifting blame is normal. But the guy who's actually in office by that time really doesn't contribute to it at all...he just happens to be the obvious scapegoat who is in front of everybody when the axe falls.
We tend to yell at the salesperson who is convenient for problems, not the one who's actually at fault.
Every bit of that is included in the public account, Qui. It has every detail...trade entry price, trade exit price, how many units were used, etc.
When you click on the public account link, there are tabs that can be accessed all over the place. Just start clicking on them and you can get all of that information and more. The History tab under the Trading Activity section near the bottom is more than likely what you want.
Also, when you're looking through the trade history using that tab, pay close attention to the small charts on the right hand side. If you hover over each chart, it gives you detailed information such as entry accuracy, exit accuracy, how much profit you left on the table, the risk vs. reward ratio and so on.
Absolutely everything about that account is public with the exception of the account number only. All other details are fully revealed with nothing hidden.
Yep, he's absolutely right. But again, you have to define what "early" is on a relative scale. Being off a few hundred pips or so using a daily or weekly chart is nothing. If you look at where we are on AU now from the absolute daily lows, it's a very minor blip on a very big downtrend from the overall high near 1.11.
If a 5 minute chart went against you 10 or 15 pips before it turned in your direction and made you money, you probably wouldn't think much of it. But if you apply the same relative relationship to a daily or weekly or even a monthly chart, people freak out because they're focused on only the number of pips, which is actually totally irrelevant. Pips don't make you money...percentages make you money...or lose money for that matter.
Trade 10,000 units of AU in any given direction and lose 100 pips and you lose $100. Then, take another AU trade at 100,000 units in any given direction and gain 20 pips and you win $200.
So you're $100 to the good in profit but you're pip count is negative 80 pips. So the number of pips have nothing to do with it. If I score big on USD/DKK, the number of pips gained for the day looks impressive but on a relative scale, you have to divide the pip count by 5 to get a more realistic view.
And what if instead of 2% entries I were to use only 0.02% entries on my trades? That would basically be 2 cents per 100 dollars instead of 2 dollars per hundred dollars risked on each trade. Man, I could rack up many thousands of pips playing pairs all over the place but the percentage gained with each win would be very little so it would take tons more pips to amount to anything.
And what if I were to tell you that I average $1000 a day in profits from trading? Would you be impressed? If so, why? Because if you don't know what size account I'm trading with, you can't get a percentage comparison. If I'm making $1000 a day on a $100,000 account, that's 1% a day and that's pretty good. But if I make only $1000 a day on a 10 million dollar account balance, then I'm making only 0.01% a day and that pretty much stinks on a percentage basis. So even the dollar amount means nothing.
Going in too big and adding too close together without accounting for the time frame adjustment is what kills traders....not how many pips early you get in on the trade. Everything boils down to percentages, not pips or even dollars.
I've never seen the schiff video but I don't pay much attention to the sponsored videos anyway because they always have an angle of some kind...trying to get you to buy something, like gold or some such thing.
My take on it stems from a purely technical point of view on charting and on psychology from my EW training in the past. The initial components of the breakdown appear just like they do on any standard price chart...weakening in certain areas, trend shifts, etc. But it happens on such a large scale that it doesn't register with the average Joe until it's too late...kinda of like the "forest for the trees" analogy applied to something remaining unseen.
I've got a feeling that whoever does win the 2016 presidential election is going to be the world's biggest scapegoat and will carry the blame for the US depression that's coming. Of course, each president as an individual really isn't to blame, no matter how good or bad they are. They're just a small fish in the sea. It's the establishment as a whole.
We live in a society driven by debt rather than manufacturing. When societies build up based on debt, it finally crashes and settles into a depression era or a "deflation" era. To get out of it, it takes a mass overhaul to get the country back to self-reliance and internal manufacturing rather than relying on imports from other countries. Each historical depression has been followed by some kind of great war...that's usually the only thing that galvanizes people and countries out of their hazy, rose-colored glasses approach and gets them moving in the right direction.
Unfortunately, I don't see anything different about the coming depression...the cause, results, and fix are going to be the same.
I forgot all about that...yeah, could be a light volume week after all.
Yep, another paint drying session so far Heavy...boring.
Long EA at 1.48662 for the longer term move back up later.
Commodities like oil and gold are dropping along with Asian market sell offs today and the US dollar is beginning to rise again...that's why AU is dropping a bit here tonight so far.
Just the beginning...I still expect a move back to near the highs on AU before larger selling can occur but sometimes the moves back up can be minor and the selling can continue and accelerate. Hard to say for sure how much of a bounce we get.
http://www.bloomberg.com/news/articles/2016-03-20/asia-stock-futures-point-to-gains-after-s-p-500-erases-2016-drop
Hey Simple, I still have the same lock-up problem even with the paid account. I've gotten now to where I have to be sure to highlight everything I type in every post and copy it so I have it available in the clipboard memory. Usually, what happens is I hit the Submit Post button and it just pulls up a blank page. When I refresh it, it comes back to my entry box for posting my text which is, of course, totally blank. At that point, I can simply right click and then paste my info right back again without having to type it all over.
It actually did it on this post by the way...
I wanted to post this for folks who look for "chinks in the armor", so to speak. If you do enough research and start digging deeply enough, it's easy to see how artificially inflated our own US stock market really is, not just now but for many, many years. And it's all based on huge amounts of debt.
Eventually of course, all of that comes back full circle and bites you in the rear end as many nations, including ours, have found out in the past. Unfortunately, massive debt multiplied by decades of monetary easing = depression.
This one article and others I have found like it show that many countries are dumping their holdings of US debt and are loathe to acquire more at this point. The reason is simple...they have debt problems of their own and they are finally turning inward to address the issue and take care of themselves because they are now forced to do so. Those countries, like the US, have grown comfortable with a bloated, debt-ridden lifestyle that has been decades in the making and are now finally having to pay the piper.
When China and other major US debt purchasers no longer want US debt at low interest rates, the interest rates guaranteeing the debt purchases have to go up to entice buyers, just like going to the bank with poor credit and having to pay a much higher interest rate on any personal loan for an individual.
This is the Fed's worst nightmare. Of course, they will try to fight such events with more liquidation by buying their own debt back, which is foolishness of course. That, too, is a death cycle.
Ultimately, such events will crush not only the US economy but the world economy and we will see, in our lifetimes (and probably much sooner than we expect), the next Great Worldwide Depression.
Cracks in the armor...
http://www.bloomberg.com/news/articles/2015-08-09/china-slashes-u-s-debt-stake-by-180-billion-and-bonds-shrug
It's completely up to you Qui. Nobody knows your risk tolerance better than you and don't let me or anyone else tell you different. I have my own risk tolerance on trades and I will cut and run when those limits are hit.
Larger time frame trading may not be suitable for you but that's not a problem at all. Many traders have to find their comfort zone when trading and that includes not only risk and style but time frame preference. Simple just made a great post on using 5 minute charts to trade with. Check it out and see if it might work better for you.
Keep in mind though that, as with any system, it's imperative that you take the setup and run it through the strategy tester many, many times until you are completely comfortable using it. All systems need time for the user to train and get completely familiar with it inside and out before hopping in with a live account.
That's some interesting selection on MA's, Simple. Longer term MA's like those may very well help dictate trend shift as opposed to some of the faster MA's I've seen used before.
I have used the 5 minute chart in the past successfully to detect larger trend shifts and I've seen them followed for a very long time using the lower time frames as guides.
I've shifted primarily to larger time frames and shifted my "slack" expectations accordingly a long time ago so I can build positions ahead of major trend shifts without getting in trouble on the account. I think what's happened with some folks is that they're getting in far too deep and/or adding too close together on the larger time frames expecting shifts that may not come for extended periods of time.
Consolidation is definitely a key component in any potential shift in trend and should be watched closely since, as you say, consolidation can simply be a pause in trend before continuation or a genuine pause before a shift in trend. The market seems to delight in taking a good long time to shift trends as they always have.
Excellent post Simple and some great suggestions and guidelines to use in determining price action and to help whittle down drawdown on entries.
Here's a US dollar article that reflects what I'm seeing in the charts in other places, Qui.
The dollar is due for a bounce. It's come down too far too fast just like the stock market and oil has gone up too far too fast.
Think of it like a rubber band. It was stretched hard to the downside so we got a relief rally "snap back" effect.
Now it's been stretched too far to the topside, which will produce a downside snap back effect.
I don't think the dollar will make new highs necessarily but it is very likely to move back up into the channel again a good distance.
http://www.bloomberg.com/news/articles/2016-03-19/signs-are-flashing-that-dollar-plunge-has-gone-too-far-too-fast
No no...we want the market to pull back and drop because AU has been going up as the market has gone up as commodities have gone up.
We want the market DOWN because commodities like oil and gold will fall and AU will fall with them.
The only thing that goes up when the stock market in general goes down is the US dollar...everything else drops.
Yes, there's always a relationship somewhere. Commodities move inversely with the US dollar so, when you think about it, it adds up that the risk pairs like AU and EU are also inverse to the US dollar. Commodities range from oil and gold to orange juice and pork bellies.
The stock market historically moves inversely to the US dollar as well for the most part.
Here's a gold chart to go by in relation to AU. I found this chart today while browsing around on Daneric's blog site. He's one of my favorite EW guys.
It shows a falling wedge breakout, same as the AU weekly chart I posted. The breakout though has pretty much run the length of the wedge up to the previous Wave 2 peak so it's due to fall back and retest the wedge breakout area before it can move higher. This and the sharp move up on other commodities is what's been driving AU higher.
Finding Nemo
Or, in this case, NYMO...The New York Stock Exchange McLellan Oscillator. I used to watch this thing in the past quite a bit to help determine overbought or oversold market conditions.
The basic premise is simple...when the oscillator reaches +100, markets have reached an overbought saturation point. When it reaches -100, markets have reached an oversold saturation point.
In real time, what actually happens is that when the oscillator reaches either of the 100 marks, it will begin moving back the other direction as the market continues in it's current trend up or down. But after a pullback to the moving average cluster, which is always in the middle, it will then begin moving back toward whatever peak it came from, plus or minus. That's when the markets form tops or bottoms.
The times when the oscillator is more or less stuck in between the ranges is when volatility is low and the market is pretty much stuck in a particular trend up or down.
But when volatility spikes, the oscillator goes nuts and starts swinging back and forth between the +100 and -100 levels.
So, in this case, the oscillator actually peaked right after the beginning of March. In other words, that was the REAL market high based on levels of buying. When the oscillator began dropping, that's when the big money started selling positions. But the actual market price always lags behind the oscillator and follows through later.
What we have now is a simple bearish head and shoulders with a neckline breakdown and now a final retest. This move back towards the top after the +100 level has already been hit is the ideal condition for a market sell off to begin.
Look back over the NYMO chart and then pull up the S&P charts. You'll see how the markets react after the +100 or -100 levels are reached, move away, and then come back later to retest. Basically, the higher highs now in the market vs. the lower highs on the NYMO set up the negative divergence we like to see before market drops.
Just more info to add to your toolbox.
AU is directly tied to commodities like oil and gold. If those two are moving up, chances are good that AU will move up with them. They're actually a stronger indicator of AU direction than the market is overall.
The other item that drives AU is news from China and New Zealand. Those 2 countries are their top trade partners. So if China is doing badly, for example, AU will typically drop in response to that also.
Nah, the current wave count shows it's just about done, at least near term. The market filled a gap on the S&P chart so anywhere in this area can be near term resistance for the market as a whole.
One thing that's shifted back to normal is the US dollar compared to equities. For a long time now, the dollar rose with the stock market but that's not normal. The normal situation is an inversion, where the US dollar rises with stock market sell offs and falls with stock market rallies.
The relationship has finally been restored so in the near term, the risk pairs like EU, AU, and GU are due for pullbacks. So the market, by virtue of that, is testing significant resistance levels and is also due for a pullback.
Closed out the GU short for a few pips profit. I'll wait till Sunday or Monday to nail it again. Looks like it might have room for one more high before it rolls over.
Very true, Heavy. Better to regret the trade you missed rather than regret a bad entry.
Early in and early out...that's definitely me...LOL! But as long as I have a good time at the party, I'm happy.
AU Weekly Chart
I'm going to go ahead and err on the side of safety here and say that we've seen a Wave 3 push up on the weekly TDI. This area represents a key test of prior resistance and the daily wave count says we need 5 waves back down total. I'm looking for a test of that key candle level at 0.7138. I'm setting TP on all my AU shorts to close at 0.7165 which is above the 61.8 retrace of the entire move up off of the lows. That's the typical minimum movement back down that we see on Wave 4 setups.
After the next pullback, we'll possibly look for long positions.
Shorting GU here at 1.4487. TP set for 1.41.
Adding to a position doesn't always have to be at a key spot. I always look for good spots to add of course, but I typically have evenly spaced markers in mind. If you're trading small positions on a daily chart, then ideally you should only add every 200 to 250 pips or so at most, depending on the pair. Some pairs you have to space out more depending on the ADR. USD/DKK is one, for example, that I only add about every 1000 pips or so.
Large time frame trading isn't for everyone by any means. It takes a ton of patience waiting for these things to set up and then run to your targets. What normally happens is we get focused on the smaller time frames and we expect results too quickly so we wind up adding too much too soon on trade entries.
I remember trading with Strongtower on the board here. All he traded was EU. He had a standard setup on the 4 hour chart using an I-Reg and an SMA200. He had very simple rules set up for trading the pair, too. And he had specific points at which he would add to a trade.
At the time, I thought it was much too long term for my taste. I used to literally see him wait for weeks to even take a trade, let alone waiting for a trade to finally close out in his favor. But the rascal made money on a regular basis year in and year out doing it so he didn't have to hover over the charts all the time. It's actually a much more relaxing way to trade. But it takes a great deal of patience.
When price starts slowing down near a key level like AU has, I normally expect 2 to 3 days of pretty much non-existent movement, especially after a sharp surge. So this would be the 2nd day and Sunday might be the 3rd day at best.
The first of the week is going to make the market crap or get off the pot because it's out of room in the current pattern for the most part other than an arbitrary spike back to the trendline.
That being said, I have seen them ride the trendline for a bit before breaking down also, so we could see a couple of trips back and forth at the edge before it occurs.
Either way, it's running out of time.