ForexTraderX

Closed out the final portion of the EUR/AUD long I had. Wanted to take profits on it primarily to reduce my exposure right now. If the U/C and the G/U both stop out, I would like to have part of that loss offset by the profits in EUR/AUD. Best way to make sure I have profits to offset a potential loss is to take them. Maybe a bit shortsighted, but I hate ending friday with any significant loss... and htis will help reduce that possibility.

One more comment on that GBP/USD short trade... it's likely the weakest trade I have on currently. I think it's worth taking, and has a good risk:reward ratio, but it would be the worst of the 4 opportunities i'm looking at for this friday.

Well, I also took a short in the GBP/USD. My view on this is that price is very likely to hit 1.5060ish before we have any chance of a significant rebound. we have prior support at 1.6067, from around oct 3rd, and price finally pushed up right into it, only to start dropping back pretty quickly. my short is around 1.6062ish The problems are we have spent a fair amount of time consolidating around the 1.6050-1.5980 price range, and this COULD be a breakout in the GBP/USD up towards higher levels around 6100 or even 6175-6200... but I am having a difficult time seeing that a move above 6100 is very likely. More likely IMO is that we retest 1.6000, or lower. The only other market I'll consider really taking a trade in this week is the EUR/USD, if it drops down far enough to justify an entry. Otheerwise, I'm pretty much done for the week, and will just wait to see how the current trades resolve. At this point, I'm really betting on a strong USD for friday, consideirng i've already closed 3/4 of the EUR/AUD long, and moved stops well over break even on that trade. So, my exposure is that a bearish USD will hurt both my U/C and G/U trades. I suppose time will tell. FTX

Well, the EUR/AUD long is up about 30 pip from my entry price... took half off, moved stops to BE. Will consider reloading if it drops back down, but for now, being friday and all, i'm happy to just take a small profit and eliminate risk as quickly as possible.

Also, the USD/CAD looks like a decent long, particularly if the risk off theme takes the day, considering the recent 1hr and 4hr price action of the USD/CAD, and the lack of any significant new levels being reached recently on the long side of things. I think we're going to need to retest 9870+ before we retest 9700 or lower. right now we are at 9780. But overall, I'm thinking EUR/USD or EUR/AUD long will be the better trades, so long as no new catalyst comes out that creates renewed bearish sentiment for the euro.

Also, the EUR/USD looks to be setting up for a nice potential long as well, in about a 55 pip range, between 1.2890 and 1.2835. I'll be looking for a potential long based on price action and volume as it develops when price is in that range. Bottom line, euro is probably gonna see some support today across the other major currencies.

Here is a chart with a further breakdown of the EUR/AUD long opportunity presenting itself today. I would also consider 1.2570ish for a long, in addition to what I spell out on the chart pic here, because that's just about the low of the U.S. session from yesterday. If that doen'st hold, 1.2550ish would be solid...probably the best level besides 1.2510-1.2520

I'm actually already long the EUR/AUD, around 1.2580ish. Will trade around the position if price drops further, if it moves up, will likley hold for 40-50 pips for a 1st target

EUR/AUD today looks like it's setting up for a move to the upside. Daily chart is pretty clear with a nice bullish reversal candle (pinbar) Nice entry levels are 1.2570, 1.2535, 1.2520, and 1.2510. The best levels are probably 1.2570, and 1.2510. easy target should be 1.2620, but we could see this push up towards 1.2692-1.2703 before any significant stalling. I will be looking to hold something up towards 1.2700 unless I get a pretty clear price action signal that we won't make it that high. FTX

I won't be trading tonight at very much at all. I have a few orders in, but don't be placing any new orders. This week, everything unfolded just about how I figured it would. I really need to work on a few different things to make sure I can get paid better on my trading analysis. AUD/USD, AUD/CAD, both making new highs, over 100 pips off their lows. GBP/USD fell apart, as did GBP/AUD and EUR/AUD, USD/CAD is making new highs for the week, and AUD/NZD is doing the same. All of which are markets I had direction figured out, and trades in. Should have double or triple what I have, but I've always been more of a day trader, and holding positions for longer periods of time is a bit of a problem for me. ANyway, just goes to show one of the many aspects of trading that makes it difficult. Hope everyone reading has found this helpful so far. Will address the trend question I was asked in a little bit here.

Also, let me know if these pictures are able to be understood. if not, i'll explain it further. (pics from the previous post)

Hey man, thanks for the questions! I have been wondering in recent days if the page views I see here are just bots or something, lol! As far as recent data... hmm, not really. I put more value in levels and patterns and such that I see on longer term charts. A level that shows it acted as support for a monthly chart, I take it very seriously. One that shows up on an hourly chart, but not on a daily chart, no so much so. A 5 min chart level that doens't appear on a 1hr chart? I don't really care much about this type (though it does create a reaction most of the time, for sure. just not one big enough to do much with usually) And, I actually prefer levels that have not been tested. Even years back. HOWEVER, if we specifically talk about trend... that DOES change things. To answer your question quickly, YES, I DO put much more emphasis on recent data. (trendlines are by far my favorite tools, and a broken trendline is a new trend for me) I was just telling someone that I STILL don't know exactly how I define a "trend", but I always feel I know it when I see it. Of course there are some basics that I'll try to explain. I don't have time to do it right now, however, I'll post some charts before next week (probably today or tomorrow), that will give kind of a "step by step" of my trend analysis. For daily candlesticks... my favorite things are pinbars and engulfing candles, when the occur at a previous market turning point. Here are some examplesIf you just take situtations like this and trade them, you'll probably do pretty well.

Well. That was just pretty gosh darn sexy trading of mine in the GBP/USD if I do say so myself. every once in a while, a situation will arise that a trader can see perfectly clearly. As if the future can be seen. Fairly rarely, but it does happen from time to time. Trading today, in the GBP/USD, was just such a day for me. Only problem was my last order I misplaced (!!!) by 2 pips (just sloppy order placement on my part), so when price hit 1.6040, I didn't get filled for the short. Sigh. Waste of a crystal ball today in that respect. Otherwise though, wow. All sortsa cool trading. Not to mention doing it while I wasn't at the computer... and the USD/CAD long couldn't have worked out better, either. If only I could do this every day... But, no. It doesn't work that way. In fact, after today, I personally will trade the rest of the week EXTREMELY CAUTIOUSLY. My biggest losses have always followed my best trading... In the past, such situations would get to my head, I'd get cocky, and then I'd spew cash like it was the water I was using to put out a burning house. I won't risk more than 0.5% on any given trading opportunity, and I'll be very selective about which opportunities I take. Nothing sloppy, nothing too risky. And nothing that I have to struggle with to figure out. After so many years of this, I find the best trades feel like they leap off the charts at me. This is what i'll be looking at for the remainder of this week. Will be looking around more later for another good trade...

actually, based on some back of the envelope math, i closed out my entire GBP/USD short position, and am now long with about a 15 pip stop, 20ish pip target. I have an order to get short again slightly above that target. This is not a trade I take often. However, based on what the evidence is showing me, whoever is defending this level probably has a considerable amount more they are willing (needing?) to buy, in order to create a profitable long trade to the degree that they will actually make money defending and then later attacking their own barrier option. based on this, I'm going to take only a very small position at 1.0640 for a short, because from what im' seeing, we may very well push higher before we resume our drop. Maybe not much higher (1.6060-80?), but the odds are increasing towards a higher pullback before the continued drop. Pretty exotic trade really. not the type of thing i do normally. but, if the shoe fits... and today it does. I'm taking off now, won't be taking any new trades except what i've already set orders for. Will find out sometime tomorrow how everything turns out.. EDIT: of course, this could completely lose, in which case, I made less than I would have otherwise, but I will still end up with a net profit on the GBP/USD trading for today.

Well, I covered just over half of the GBP/USD short trade.... was away from the keyboard as we stalled out near 1.6005 after the drop from 1.6045ish. Was a good entry tho for a short. Now, price action shows a pretty clear bias back to the upside, which is no surprise given the barrier option located at 1.6000. Long story short, this is a very large option (as in, usually $50 million - $500 million) that loses a significant portion of that value if price reaches the strike price (which is 1.6000). In other words, it has more than just a time component, it has a price component for expiration. So, the large finanancial institution that sold the option to whoever, usually will try to push price into that level once it gets close enough (40 pips is often close enough). Then, the institution who wants price to stay above that strike price of 1.6000 will start aggressive buying just a bit before that option is reached. Of course, with the trend being what it is, the institution who is defending (buying, and creating support above 1.6000) is probably very aware of the fact that their option will get touched very soon (today, tomorrow, this week very likely), so they are more concerned with buying up "at the low" now (they are likley creating the low)... then, as they run stops back up above the london session highs (1.6045), even as high as 1.6060, they will close their long trade, and get short themselves... thus, they push price back into their own option, but the idea is they made enough defending it (buying GBP/USD ahead of 1.6005), and then selling that out for a profit at or above 1.6040, and then actually getting net short and making profit again by joining in the trend. I know, it sounds like i'm pulling all this totally out of my ass. And, i'll admit its my own personal speculation of what will happen. HOWEVER, there IS a large option barrier at 1.6000 on the GBP/USD, and it clearly is being defended, because very large volume occured as buying started between 1.6010-1.6003. How did i find out about the option barrier? well, I pay for a newsfeed. They give lots of good stuff away. How did i figure out how/why price acts as it does when it comes into an option barrier? I read some forum postings by some very informed individuals, and I watched a heck of a lot of price action when I would learn of a barrier option in play. FTX P.S. the defense may not be able to overcome the attack right now, since the attack is with such a strong trend to it's back..but if it does, i'm looking at 1.6040-50, or 1.6060ish for a reversal, and a test of 1.6000

Well, as I posted earlier, I wanted 9755 in the USD/CAD for a long, and 1.6035-40 in the GBP/USD for a short, and i've got something in both now. neither is looking particularly grand at the moment, but, neither looks like it is likely to move against me either. Both look like price action is slightly in my favor... so, maybe they work out. Hope so anyway!

As a follow up to my previous post, at least one person has spent a good deal of time doing studies of technical analysis of stocks that trade in the U.S. exchanges (NASDAQ, NYSE, other non OTC exchanges, etc) He found a bearish engulfing candlestick pattern has a 79% chance to produce a further drop in price (he defines the conditions as well as what a "further drop" in price is, etc). He made this determination after studying 20,000 different examples of this candlestick pattern, in over 500 different stocks, over the course of a 10 year period. He does give some qualifying conditions, but he also has very strict quantifiable definitions for those, so I believe nothing at all is left to discretion. It's kinda his style. He does this for many other classical technical patterns, etc. here is the bearish engulfing example i speak of: http://www.thepatternsite.com/BearEngulfing.html I know this may not speak to price having a memory per se, but it does speak to price having statistically valid repeating patterns... call that what you will.

ok, well, USD/CAD is in the "buy zone" for me, and it will be from here, down to about 0.9695, with stops a bit below that. Not saying I'm holding for the entire 55+ pip range that I will look to get long in... in fact, i got a small order long already. However, I'll say this. I would love to see some significant pinbar or bullish engulfing candle form on a 1 hr chart, with high volume compared to orher 1hr candles of the session and the day. This is kinda a tricky one now... I was more sure about it yesterday, but price action has developed that I feel i'm trading more against a movement than with a turning point. With this, I will need to see either some clear indication of impending supply exhaustion, or I will need to get an incredible reward:risk ratio (like, risking 12 pips to make 60, etc) Ideally, BOTH of these things At any rate, 9755, and 9736 are my higher entry points that I'm considering, and then 9705-9700 would be next. After that, i'd be done looking for a trade. a good target would be anywhere 9800+, but it may not get there, so I'd manage it based on developing price action.

Well, there it goes, the AUD/USD and AUD/JPY broke up strong. AUD/CAD not bad either. Should have held them of course. I will have to work on a few things in terms of psychology, and deconstruct the various reasons why I tend to get shaken out of these types of opportunities much earlier that I should, considering I was almost perfectly correct in what could happen and how it would work. This will take some time... and finding an answer will not make it able for me to act on it now, but it happens all the time, and it's something I think i'll commit to working on as we start the new year in january. P.S. GBP/USD just hit the price that I want to sell it at 1.6040, so I did just that. we'll see if it keeps moving up to my 2nd order, or if it just dropps from here. Time, as always, will tell.

That's good dude... i'll take it a step further if you don't mind: different types of orders tend to congregate en mass in specific price points on a chart. Particularly daily, weekly, monthly, and yearly highs and lows. If price is approaching a level that was a low for a previous day/week/month, etc... you tend to have a disproportionatly large amount of buy orders at or slightly above that low. And, there tends to be a disproportionately large amount of sell orders at or just a bit below that particular "previous daily/weekly/monthly low", etc. Why does this occur? many reasons. I know a bank that adjusts it's capital currency balance by hedging a certain amount based on where price is now compared to where it was at the high or low of the previous month. In other words, a currency they need to get rid of is at the high of last month? sell it. That's one of so many reasons why a large amount of orders are not randomly dispersed across the many points of price change measured over any particular time span. I posted some charts up on my thread the last few days actually showing opportunities to exploit these large numbers of order in concentrated areas. Here's a few examples of things I posted up from last thursday/friday. http://www.traderslaboratory.com/forums/attachments/2/31834d1349455614-watch-typical-day-real-day-trader-aud-cad-long-opportunity.jpg And, on this page, read post #250 http://www.traderslaboratory.com/forums/market-analysis/13737-watch-typical-day-real-day-trader-32.html Of course, these two examples do by no means validate the "price has a memory" side of the debate. What they do show is that it is possible to pick tops and bottoms with better than random results, if other criteria are also correct, based on non-fundamental data. Furthermore, the reason that it works is because these areas are such that they provide such a high concentration of orders in such a relatively tight price zone (compared to say, an order placed neither at a previous weekly or monthly high or low), that it provides large institutions the NECESSARY LIQUIDITY to be able to readjust or establish large positions with minimal slippage. Define this type of analysis as you will, but it is clearly not fundamental analysis that works with intrinsic underlying economic or financial conditions of the market, and it happens to create a situation where price has a greater chance of turning at a price point at which it turned at previously, all things being equal. I think memory would be a terrible word to describe such a phenomenon, but it is also far from random. FTX

GBP/USD short looks good from 1.6135-1.6140, maybe with a 35-45 pip stop, 55 pip target, and then 1.6155-1.6160, with a 45 pip stop, and an 80 pip target. I'll be looking for those areas today to take a trade. EDIT: Whoops! I mean 1.6035-6040, and 6055-6060.

Unfortunatly, i'm not so sure i'm going to get the great move in the AUD/XXX I was originally expecting. It still could happen, sure, but as of now i'm not really willing to take the risk, particularly considering the longer term charts of the weekly and monthly AUD/XXX, AUD/USD and AUD/JPY, look bearish, and the COT data as I interpret it are not showing extreme readings or divergence or some other larger picture data that would help convince me that a bigger move was really likely. This being said, the bounce pretty much occured as I figured it would. This is something that is good to keep in mind when coming into levels of very significant, long running, support/resistance. yearly highs and lows, quarterly highs and lows... stuff like that. An overextended market heading into a significant high usually will turn around for a retracement, if not a full blown reversal. Just check the high of the GBP/USD this last month or so, and compare that with the high it made back in april...and then look at what happened after the 1.6300 high was broken by a few pips. These are the types of setups that I REALLY look for. Unfortunatly, I was too early with my GBP/USD analysis by about 2 weeks. After last week, I wasn't confident enough to take it and hold it due to getting chopped around the last 2 weeks. However, the analysis was right on, just my head got in the way. This is why trading can really be hard... It's quite a task to learn how to really understand and correctly determine good trading opportunities... but actually trading them well is significantly more complex. So, over alll this was a lot of work for very little gain (if any). At least I'm up for the week, and will be looking for the next idea today. My biggest regret is not holding the GBP/AUD short I had nailed so darn successfully well... should have taken 100+ pips on it, instead settled for 20-30, trading around the position for a little while. Oh well, such is trading.

Well, not my ideal day, but not bad either. wish I had held the GBP/AUD short for a longer time, considering it's dropped 160+ pips from the high of this week so far. Anyway, going to continue to holdthe AUD/XXX trades (the remaining positions anyway) into the asian session, unless of course they hit their targets while i'm away. I'm not sure if i'll be trading much more this week, or posting up here, but if not i'll be around in the next couple of weeks.

Huh... seems like the AUD/XXX trades are indeed starting to work themselves out. Kinda cool. I hope this continues for at least another 20-30 pips. It could do a lot better than that, but 20-30 would be a nice place for me to take 1/3 or 1/2 off, and let the rest try for a further target. Anyway, it could still all reverse today, and this whole trading opportunity will have been for naught, but, so far so good.

Seems I got in the USD/JPY bit too early, but I'm taking one more stab at it... in around 78.18ish. This will be the last attempt. volume analysis show it's at a critical point, and i'm bullish on the USD/JPY over all, so 1 more attempt at it here is worth the risk IMO.