Replies to post #135894 on Simple's Green Room

[pennies2007]

Afternoon SG. Glad to see you back. We're trying to light the board back up and get folks moving again. So far, it seems to be going well. I like folks to be able to rack up the pips using all the great input folks on the board have.

Absolutely great advice there Simple. That's something I've been trying to encourage is really good money management. It sure does keep you from sweating over an entry...LOL!

I remember you saying a long time ago that if you take a trade and you find yourself on edge about it, then you're probably in way too heavy. But if you take trades and you're bored, then you're probably just right on the amount of margin used.

[pennies2007]

AUD/JPY 4 Hour Chart

Hey SG, you mentioned an AUD/JPY trade and I thought I'd put the TDI mapping to a test and see how it looked.

I can see why it tanked on you. What the TDI mapping does for us is break everything down into 5 wave moves within a given channel, whether it be a parallel channel or some type of wedge pattern. Once 5 waves is complete, then price will move into another 5 wave channel.

The key to the channels is the movement from Wave 4 to Wave 5...that's what we target because it produces the biggest moves.

The crash you mentioned took place during a Wave 3 to Wave 4 movement. Many times during a trend, I've found that price won't find a decent bottom until Wave 4 is hit on a secondary channel.

The wedge prior to the current shows the primary downside move. After 5 waves there, we have to wait until Wave 4 in a secondary channel to find a decent entry for the move back up...basically Wave 4 gives us the best possible entry for a feasible bottom.

There's a mathematical relationship that occurs between the movement of Wave 2 to 3 and Wave 4 to 5 in any channel. The minimum relationship is 1:1...in other words, Wave 4 to 5 will move at least as far as the price action did from Waves 2 to 3. More often, we see 1:1.2 and 1:1.5. Basically, Wave 4 to 5 turns out to be the money maker whether we're playing with the larger trend or playing counter trend.

Playing a Wave 4 to Wave 5 on the TDI WITH the larger trend produces much larger movements.

Right now on A/J, it shows we're hitting a Wave 5 peak in a counter trend move. I'd say it's found a near term bottom but the lows need to be retested first so I'd look for a move back down next week.

AJ 4 Hour Chart...

[pennies2007]

Here's a 4 hour GJ chart that I already have mapped out SG. Same principle. The best possible entries for big gains are made during the Wave 4 to Wave 5 movement inside the TDI channel.

GJ has yet to come back down for a Wave 4 test so I shorted it late in the day Friday. Once we get a viable Wave 4 test, I'll definitely be long for a nice move back up.

[pennies2007]

And one more...here's the GJ hourly chart with the TDI wave mapping. Once again, the Wave 4 to Wave 5 movements produced the big gains.

Notice that after the primary move down inside the falling wedge, it took until Wave 4 inside the secondary parallel channel before we finally got a good, solid long entry. This happens on pretty much every pair out there.

Even if price does manage to find a bottom on Wave 2 in the secondary channel, the move back down to Wave 4 does, at the very least, give us the retest of the lows that's needed to form a base to rally from in the next Wave 4 to Wave 5 movement.

Right now, GJ topped out at the 5th wave movement here on the hourly as it hit the Wave 3 peak on the 4 hour. So, just like AJ, we're headed back down for at least a test near the lows next.

[KIRBY]

thanks SG appreciate the information / trading wisdom .its amazing how if on wrong end of trade it lets you know quick !!lol As a newbie I was trying trade Forex like stocks and trade after hours getting stopped out right and left . trying to figure out ebb and flow . This board with seasoned Forex traders helped me not crash and burn !have a lot to learn but will enjoy the process :)