cowpip

Maybe as time permits, I'll throw up a few more. I wouldn't have taken the first opp, as I like to watch price action to see how it reacts at these important levels. It is not likely to reverse quickly on the first attempt. Most reversals have some structure to them, and it takes time to build that structure. PATIENCE is key, even at these small time-frames. If you jump the gun, you'll likely regret it as you sit and watch the structure form into something that would have given you a better opportunity sometime later. A lot of people place their stops tighter - like a few pips above the highs or below the lows, when they really need to be placing them above (or toward) the upper ends of resistance zones or the lower ends of support zones. Those who don't often get taken out on stop-hunts. The euro/yen pair often sees stop-hunts that run about 10 pips higher than the last high. I thrive on those, as they almost always end up as beautiful reversal bars when they close. The longer time frames (hourly to 4 hourly) provide the best signals, of course. Again, it pays to be patient. Why above 165? As Anna-Maria pointed out earlier, that level was the next logical S/R zone (actually anywhere up to about 165.10 or so, I believe?). It's clear if you look at the daily charts back through late 2007. I don't pay any attention to option barriers. Sure, they have a role to play and can assist volatility, but again price action always holds the trump card. Here's a follow-on to the trades I initiated earlier this week. I was looking to build a series of positions that I hoped would end up near 161.50 near the end of the week. That target wasn't met, but it did still provide some nice opps to get short on this train. Note that I am again utilizing the short time frames on an intra-day basis. These are 15-min charts to help show more of the underlying structure. My entries again were based largely on price-action and not much more. Fibs and price action played a role in my third entry. Have a great weekend everyone. Next week looks to be like quite a busy one. Be careful out there! Sentiment can swing on a dime during weeks like this one coming up.

And all it takes to more or less master that is time. It would certainly help to have access to some of the tools that Milliard, Anna, Art, Buk and the others have access to for better analyzing the rigidity of the various zones, but we can more or less determine that ourselves through a close examination of the candles that print at those levels, and more particularly how price reacts when it reaches those levels. Here's a good example of a drill-down for an early entry at that zone that Anna-Maria noted back in this thread. It's a near-real-time example of how I've played it today. The trend for the day was up following a big bounce during the European session. When the U.S. came on-line, poor news combined with a dropping dollar and increasing oil prices applied pressure to equities which played out in the euro/yen as a failed attempt of the highs. When price reached the 164.80ish zone, I zoomed in, watched and waited for a signal. Price attempted multiple times to break the high, but ultimately failed. After I saw my signal (the third attempt higher, candle prints gave the go-ahead), I went short at 164.86 with a tight stop above 165. I scaled out at the zone indicated on the 5-min chart (+50 pips) and have now fully paid for this entry in case it retraces back toward the next hot-zone near 161.50. The trend remains up on the hourly, so caution is advised for shorts. A long entry near the scale-out zone certainly doesn't hurt either (and may end up being the wiser action), in case this move is part of a larger break-out play higher. Otherwise, the initial short is in a good position to profit from a move lower. Obviously, the way you'd play this on the longer time-frames might differ from the way I initiated this trade on the shorter frames, but it shows how I utilized the shorter time frames to select focused entries.

Unfortunately, most people who start are so fixated on making a quick buck that they enter the arena without the two most important qualities of a successful trader: patience and discipline. In fact, without these two qualities, failure is almost assured. It's a sad fact that the longer the time-frame you play, the greater your patience and discipline has to be. I suppose this helps explain why most become disillusioned with forex early on. The longer time frames absolutely provide the cleaner signals and the easier paths to profits. I think you're bang on!

These are all great recommendations and mark good sound money-management. Wise money-management is as crucial as having a good trading plan. For me, watching price action is absolutely key, as Milliard, Art, Anna, et. al. have already indicated. I like to zoom into the smaller time-frames (zooming in even to the 5-min charts) at particularly key levels. When you get enough screen time (for me, it took loads of screen-time), you'll start to pick out entry's without too much trouble based on the candle patterns you see. Entries on the small time-frames at key levels will provide you with an unusually good position when price reverses on the larger time-frames. But it takes nimble fingers with no hesitation. Price action very seldom lies. My point is to emphasize the importance of watching price action (in real-time) and discern the formation of continuation and reversal patterns from it. It's a powerful tool when you finally start to get it, and will allow you to significantly fine-tune your entries at key levels.

Sledge, I believe it's just a simple visual study of the playground. Look where there were previous "vibration" zones. These zones very often line up (as you now know - horizontally) across the charts. There's nothing special about it. Just scan across the charts and look for good reaction zones (price reversals during swing-type moves, or consolidation zones followed by a continuation move). You want to enter after price has confirmed a move away from one of those zones.

G'day, Anna! Yep, he's still rolling FX. He hasn't been able to roll full-time though, until now. He just arrived (this week, in fact) and has picked out a nice place to stay with an ocean view while he rolls his coins. I'm not sure of the other details you've asked about. He's quite excited about it all. I'd be packing up and choosing a shack somewhere warmer too, but my kids would mutiny! I won't trade family sanity for scenery (at least, not yet). :doh:

Sorry to hear that, Torero. The saving grace is the small size, which was wise (imo) considering the whippy nature of price at those levels. Price is quite "springy" down there, isn't it?

G'day Torero... support on GBPCHF support below 9620 is pretty sparse given it's multi-year lows. I'd start basing my support levels off of daily ranges and pivot-based levels (daily and weekly pivot S/R levels). Otherwise, you have to go WAAAAY back in time to find charts that will give you references to support zones. I think the more important news (CPI) coming out tomorrow is containing price action today on the yen crosses. I suspect if CPI increases in accordance with consensus, there may be some yen selling going on (if only temporarily). A response similar to what happened with PPI today wouldn't surprise me. But ultimately, unless the Fed starts to talk up the dollar with stiffer hawkishness, I can't see a dollar rally taking away too much from yen strength. BTW, I won't trade this idea unless the bigger dogs do so first. Have two plans of action, and follow the one that best matches reality. Profitability in this game is all about being a reasonably good (and aggressive) sheep. You want to be as close to the leader sheep as possible. Too close or too far from the leader, and the wolves will gladly pick you off.

Almost every broker has a free demo version of their forex platform that will provide charting for you. Do a google search for MetaTrader. If you don't want to install anything and are only interested in the daily data, a place as simple as finance.yahoo.com will provide currency charts for you. The difference is that the platforms will let you demo (paper) trade, while the yahoo stuff will just display static charts.

It's 11:40 am right now EDT, and spreads on eur/jpy just doubled to 6 with an accompanying large increase in spot price ranges. I don't know what's caused that (yet), but this is typical for days like this when every little piece of news spooks the market one way or the other. Be careful out there, everyone! This is not a terribly well-behaved system right now.

Hi Torero. I don't know if you recall, but during the August crunch, eur/jpy spreads increased quite substantially and held throughout the day. It was a result of increased risk. I think the same thing is happening now. The Bear Stearns death and abnormal Fed actions have increased uncertainty and very likely reduced liquidity, requiring brokers to increase spreads. Right now, Oanda is showing eur/jpy spreads of 3, which typically aren't seen except during the Asian session. Entries in these conditions require careful placement to be sure.

Ok, thanks for the clarification. The only problem with your method is that people will get an incorrect idea of how much money they can make, especially if the people who are interested are new to forex. For example, many newbies will simply multiply the 500 pip total by the dollar amount per pip that they are trading to derive a possible income. But as you and I both know, that's not the way it works in reality, because anyone worth their salt will employ money-management techniques that involve removing portions of the entry from the table (scaling out), to protect the entry and ensure profitability. That's why I prefer the method I explained earlier. It gives a realistic indication of how much profit you have actually made and doesn't inflate reality. Your system seems to have some merit, but everyone should convince themselves with a good prolonged period of testing on their own before they commit any cash to it. Kudo's to you for your willingness to share.

I still need a little clarification, if you don't mind. Let's take this as an example: You trade 3 lots and close one lot at each of the following profit targets: First lot: +100 2nd lot: +150 3rd lot: +500 How would you calculate your total profit? Would it be +500? Thanks.

OzFx, congratulations on finding something that works for you. You apparently have the edge that so many seek. Way to go! If I may make one suggestion - it would be more realistic to people reading your thread if you converted your "total pips" earned into pips equivalent to the full size you are using. For example, if you are trading 7 lots and booked profits as follows: +50 on first lot, +100 on second lot +150 on third lot +200 on fourth lot +300 on fifth lot +400 on sixth lot +500 on seventh lot Since you are using 1/7th of your entire position in each scaleout: size = 1/7 The actual total amount earned as if you held the full 7 lots to the very end would be: (50*size) + (100*size) + (150*size) + (200 * size) + (300 * size) + (400 * size) + (500 * size) which equals 242.8 pips of profit on 7 full lots. Please correct me if I'm wrong, but the method you are using simply adds up all of the pip sizes of the various scale-outs (in this case, it would be: 50+100+150+200+300+400+500 = 1700 pips). Stating that your total pip profits is 1700 pips sounds a lot more impressive than 242.8 pips, but it is misleading (particularly to people new to forex). I personally have always preferred people who have computed the total pip profit or loss that is translated into equivalent full-size positions (if we know the size used). It's far more realistic. Just a thought...

Unfortunately, I think everyone has to run through that gambit of experimenting with different indicators that look promising, but prove to be less than worthwhile. Some indicators are useful as guides, but none that I have encountered have any predictive ability. Only price action tells the truth - although even price action can contain fake-outs. Only experience and lots of real-time screen-time will give you the power to discern the fake-outs from the real thing. And no matter what anyone says, even the pro's get conned now and then. It's an inevitable cost of running this business - you'll get burned once in a while. But the more you work this business and the longer you stick with it and really try hard to understand it, the less frequently you'll get burned until a point is reached that most of your trades work out. Most of the pro's out there believe that simplicity works. And it does. Simple trading strats, strictly adhered to, are often the most successful and are the easiest to adapt to changing market conditions. Thus, uncluttered screens are often of greater worth than screens filled with indicators. A screen full of indicators promotes confusion. Simple strats and uncluttered simple screens are the way to go. Isn't that the truth? The market is heartless. If you want to maximize your profits and minimize your losses, the two most important factors that will yield success is: patience and discipline. There is nothing more important. Without patience, you'll suffer losses left right and center for exactly the same reasons as you stated above. Without discipline, you will deviate from your edge that is your strategy and will take entries that are not Grade-A. As a result, you will expose yourself to unnecessary losses or trades that do not last as long or run as far as they might otherwise do. Without discipline, you will also hesitate when that Grade-A opportunity presents itself and will either fail to push the order button in time (exposing yourself to unnecessary risk by entering too late) or miss the boat entirely. Time and experience have an interesting consequence. A time comes when your heart stops beating irregularly when you enter a trade and you trade only what you see, and not what you feel. You become more mechanical and better tuned to the rhythm of the market. In addition, losses do not bother you as much, which makes it easier for you to identify quality entries even if you've recently suffered a loss. Losses, unfortunately, are just a part of life in trading. But the more time you spend studying, practicing and (most importantly) reading the charts (preferably in real-time), the more immune you will become to losses. Excellent observation, Sledge! Yes, it is (for many) the hardest road they will ever travel in their entire life. But the rewards are even more lucrative and welcoming than the difficulties encountered during the travel down that road. The single most important reason why people fail in forex is simply due to their lack of perseverance (or patience). When I first started trading forex, I can't tell you how many times I told myself, "Forget it - this is impossible to do! I'm losing too much money and every strat I try fails to work consistently enough to make this business profitable." Similarly, I can't begin to estimate how many different types of strategies on a myriad of different time-frames I have tried. Even with mentoring from true-professionals, I deviated from what they told me to concentrate on and tried a multitude of failing ideas. As time passed, I began discovering on my own that what these true-professionals had been telling me all along were true. Patience and discipline really are key. Everything hinges on those two words. But in order to make them work, profitably, you must find your own "edge." And almost everyone has a different opinion on what defines their "edge." When you're first learning forex, what you conceive as your edge will change with every new appearance of the moon. That's normal because learning to trade forex is difficult (perhaps more difficult than anything else people will try to learn) and it takes a lot of time and experimentation to find the edges that really work. You'll trade one particular strat and see success a few times and receive positive reinforcement in that strat. But then you'll suffer several losses and lose confidence. That lost confidence will open you up to ideas you hear from other traders or will outright cause you to search for a different strat. When found, you'll try that strat for a while and discover the things that work and don't work with it. For many, it takes years of time of flip-flopping from one strat to another. But for those with sufficient patience and are careful enough with their capital to avoid exhausting it, the payoff almost invariably comes. A time is finally reached when, somehow (and for many, an almost inexplicable "something" you just can't put your finger on to define), you find something (a particular way of trading) that just seems to resonate and work well with your personality. And when that time comes, it is the most sweet feeling you can imagine! When you achieve that realization, you have matured as a trader and have graduated from the rank and file of "newbies" to a more level playing field with the pro's. I personally believe anyone can achieve this. But it really does take someone with the patience, perseverance and guts to stick it out to the end. Someone with an attitude of, "I'm going to keep getting back on this horse regardless of how many times I get bucked off, until I learn how to stay on it no matter what," is liable to make it in this business. If you don't have that resolve, you probably won't last through the training period. The cost is emotional (and for some) financial turmoil. But as I said, the rewards (which include a renewed and entirely different look on life) are far sweeter than the cost.

Yep, I'm afraid so. There's no way to compute true volume. At least, none that I'm aware of. Sure, price action can provide you with an indication of momentum. But for me, reading price action gives you clues as to what price will do in the immediate moments before it actually occurs. For example, a candlestick inverse-hammer at the top of a resistance zone on the longer time-frame charts (hourly+) is generally a good indicator of a reversal. But if you drill down to the faster time frames, you can pick off similar great reversal patterns at these significant S/R zones that will bring in the goods regularly enough to make you quite happy - and long before an hourly candle closes to reveal an inverted hammer at resistance. There are many different types and nuances to reversal patterns. Continuation patterns are also extremely important, for they can help you determine whether momentum will rule and continue to push price in your direction or not. Unfortunately, I don't know of any way to learn price patterns without actually spending googles of time at the screen, watching. Screen-time is incredibly important, as is familiarity with the currency pair you're trading (they all have more-or-less, their own personalities). A lot of people rely on black-box algorithms to earn their bread, but just as the quant-funds performed horribly when the market went askew during the credit crunch last fall, black-box algorithm's will likely consistently fail to return profits when the market gets moody. But price action doesn't (usually) lie. If you can learn to read the market through price action, you'll be able to adjust as the mood changes. As sophisticated as computer algorithms have become to trade forex, I still believe the 'ol trained human brain is better equipped to navigate the markets than a machine will ever be. I should add that the S/R zones are used as take-profit / scale-out zones and/or add-in zones. So yes, we basically just look left of the chart (but on the longer-time frames, as shorter time frames don't usually represent reliable S/R zones) and find those zones where prices have had a hard time getting through. If they are confluent with some major fib levels, that will add further bias towards trading off of those levels, provided price action gives the nod.

That is unproven and is subject to considerable debate. That argument presumes that each broker's trading occurs in volume waves that are comparable to the waves of other brokers (and in particular, the volumes injected by the big dogs). I don't think that is necessarily true. It may be (I can't deny that it is possible), but it seems unlikely. That would be similar to saying that the volume of shopping at Target will be similar to the volume of shopping at Walmart, J.C. Penny or Bon-Ton Stores. I don't think you can say that. Volume in forex varies from broker to broker. Brokers that handle smart money might see volumes that peak at times that are opposite to volumes that occur in the dumber-money retail markets. So the way I see it, assuming there is a correlation in volumes is very possibly an incorrect assumption.

Yep, use the tools that are best suited to the product you are working. The decentralized nature of forex prevents the computation of a true level of volume. Even price comparison's between brokers vary (and with some, they can vary quite substantially - I've seen variations of over 10 pips in some cases). But those are usually associated with less reliable retail shops. We probably shouldn't be too quick to dismiss Sledge's strategy of using a volume indicator on forex if it's working for him. You use what works, and if you can find an edge using a volume indicator, then good for you! I consider many (if not most) of the indicators out there lagging in nature and therefore they don't fit in well with my own personal strategy. But for others, they form a fundamental basis and have led to success. In forex, as in any other trading activity, you won't be successful until you can find your own "edge." If mastering VSA accomplishes that for some people, so be it. VSA can be correlated to enhanced volume in forex, although it can also give false signals. If someone can differentiate between the two, then that may formulate the basis of an edge. And that's all it takes to be profitable.

That's right. I wouldn't trust volume indicators further than I could throw them, particularly if you're a user of retail forex. Good point, Torero.

For a few years, particularly when I first started trading forex, I used to trade it exclusively as well. But I have learned that it's wise to keep your eye on more than just one pair (if you're able to). If your strat can handle the behavior of other pairs, you'll see far more signals if you monitor other pairs. I trade almost entirely on price patterns and very simple indicators such as fibs and known prior support and resistance points, so my strat is easily transferable between pairs. Cable is a reliable old friend, but there are other pairs almost equally reliable. I have found that most of the yen cross-pairs are reliable as well and adhere to the technicals quite well. My personal favorite is eur/jpy (I call it the "yuppy"). It returns the goods day in and day out, on an intraday basis as well as on a longer-term basis. And as Torero noted, so does geppy (gbp/jpy) - although your risk tolerance needs to be a tad higher for that pair given the higher spreads and the larger moves.

I was away from the screens when the news hit as well. No biggie... I hadn't planned on trading anything until after the news hit the wires anyway. There's always a pull-back of some sort to hitch your wagon to on these intraday frames. I was hoping for a slightly deeper pull-back post-ISM, but it doesn't look like it's going to work out that way this time. It was a pretty ugly report.

Slightly off-topic, but since this seems to be where the chit-chat currently is... eur/jpy has broken the triangle that formed over the last week with today's dismal ISM non-manufacturing number. Wish I would have been privy to the leaked news, but I wasn't watching their web site like a hawk. I hope you're able to catch a ride on the next pull-back, Torero... I'll certainly be watching closely.

There should be some pre-ECB / MPC positioning over the next day or two which should influence this cross pair (and eur/jpy), if it hasn't already happened. But generally, I wouldn't expect any serious breakout activity having stronger momentum until after the rate decisions come out. I'm therefore still happily playing the range. A good sign is the contracting range. Eur/jpy has a nice triangle formation on the daily charts that should be playable in the not-too-distant future. Happy hunting, Torero!

Torero... I'm not sure what your strat is... but last week wasn't bad for me. Made a tidy little profit, but nothing really to "write home about." Yep, this is a new week and a new month. I've made more storage space available in the coffers for the greenback... just have to wait for the delivery trucks.

Yep, Torero... this week was a washout for me too. The two best ops I had to enter this week were washed out by internet outages (thank you, Murphy). So I ended up being essentially flat for the whole week. I never would have thought... Oh well... it's all part of being patient, I guess. I don't suppose you folks at the big desks have any technical issues like unexpected outages, do you? ... given the cash you guys are pushing through the system, you probably have multiple layers of backup. I'll tell ya... being left in limbo on executed trades with no easily accessible control due to an ISP blackout is an "interesting" psychological test (which emphasizes the importance of NOT running stopless).