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walterw

The "Second Wave" Trade

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Ok... I started this Forex research on june 18 with my first forex research thread, things evolved to the FHR trades and now I hope I can evolve to even better territories where I expect to see some of the topics already dealed being optimized here... I smell that this probably will be my final method for forex... I am going to call it the "Second Wave" trade... because I plan to trade the second wave or second attempt on a move...

 

It will have a nice combo of FHR + Icon trade, if it sounds unfamiliar this are the threads that deal with detail on the topics (I suggest reading to understand this thread better) http://www.traderslaboratory.com/forums/f24/walter-s-first-forex-research-various-1916.html http://www.traderslaboratory.com/forums/f24/the-fhr-trades-1976.html

 

There is no doubt that market moves in waves, from there on lots of analyst had developed methods based in waves, from elliot to some other derivated analisis of waves... I am no elliotician and dont pretend to be it, I like things more simple... I did present on the futures forum the "abc" trades http://www.traderslaboratory.com/forums/f34/the-abc-trade-1940.html wich actually refer to this second wave price structure... it is a PRICE STRUCTURE that keeps happening over and over again... you will see it in any market any time frame... looks like a kindergarten chart...

attachment.php?attachmentid=2095&stc=1&d=1185686511

 

well that level of simplicity should any trader reach on his career... too complex setups will not necesarilly make you more profitable...

 

What does this graph means ? well basicly three things:

 

1) First Wave... the market shows a first intention... he may "probably" want to go there...

 

2) Pullback He has waves, cant go there on the first move... has to take a rest (but his original intentions are still there)

 

3) Second Wave... he resumes and continues with his intentions... and here is the habitat of our business... the second wave, his second attempt on his original intentions...

 

Now, its hard to see this some times... the very trained eye of an old seasoned trader may see it at a glance, but not the new trader or the left brained (me)... so here comes some tricks in order to be able to see this formations in an easier way...

 

CONTEXT... context can do that for as, and this context also can give us some edge if we understand some other crucial facts about the market.

 

Markets have centrifugal and centripetal action in relationship to key ranges areas be it from MP or S&R analisis x time range, etc.. centrifugal normally brings momentum, while centripetal refers to cycle... wich finally gives us two clear clasifications of the market... Trending or cycling...

attachment.php?attachmentid=2096&stc=1&d=1185687271

 

This is happening all the time... market is expanding to the outside or playing inside this ranges...

 

SO ¡¡ first we must then decide what range are we taking into acct... there are numerous ways of doing this, you can use MP valua areas, pivots, x time ranges... etc, but deciding normally for one to keep things simple... in this case I will be using the x time range, wich takes the low and the high of a given time and creates a range... so far I am using the range of the first 3 hours previous to London open (thanks to Don)... so there we have the range...

 

What can happen in relationship to this range ? well we can take off to the outside OR we can refresh to the inside...

 

So here comes the combination of this context Range/centrifugal/centripetal with my 2nd wave price structure they both will combine two series of very independent and powerfull concepts all together in one setup...

attachment.php?attachmentid=2099&stc=1&d=1185688659

 

 

So here things start to take more color... you can notice that we combine a very intersting series of concepts all sinergized for one clear purpose, make our way on a simple trade.

 

I will keep explaining on next post... cheers Walter.

5aa70de91ba89_2ndWave.thumb.png.dead52a705b9ae629fbf20d5afaa3226.png

5aa70de92124e_centrifugalcentripetal.thumb.png.1a16498a6b975123f85a159361acc51a.png

5aa70de926ed4_wavesinrange.thumb.png.8a022110ec97b1e52a0facd6e9e5bee0.png

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OK... so far I had explained the overall concept of what I am trying to do here... Now I will try to explain how this trade setups...

 

So far we have two diferent setups situations here.. one is centrifugal and the other one is centripetal...

 

For now lets get strated with the centrifugal one...

 

What starts the setup ? well a break of the Range... this break will be considered the first wave... after that we expect the pullback and prepare to get in the second wave... so this would be the secuence :

 

 

1) Break of Range = First Wave

 

2) Pullback

 

3) continuation on the Second Wave...

 

 

On this graph you can see how this is formed :

 

attachment.php?attachmentid=2101&stc=1&d=1185733721

 

 

I still want to work with fixed targets, and I like the 10 pips target...

 

So we have a very simple setup here... lets asume this one could also work a 50/50... ( I think it may have a better than that performance )well it should still be profitable as the target has to be higher than the stop giving us a very nice RRR...

 

And here I attach a first real world example :

 

attachment.php?attachmentid=2102&stc=1&d=1185733959

 

there are a lot of details to add... I will keep posting... cheers Walter.

5aa70de935a4d_2ndwavecentrifugalsecuence.thumb.png.9f6719fc552daef3d22768a70249cd21.png

5aa70de93a889_secondwave1.thumb.png.f0f0af230b0cfb6cc8bbc50a53524f7c.png

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I believe looking for a 50% fib retracment is the most consistent way to play these setups. It's tempting to get in too early only to have the market retrace more and stop you out, or to wait to long and then chase. But consistently waiting for the 50% seems the ticket.

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I believe looking for a 50% fib retracment is the most consistent way to play these setups. It's tempting to get in too early only to have the market retrace more and stop you out, or to wait to long and then chase. But consistently waiting for the 50% seems the ticket.

 

Yes it could be used, but so far I am trying to keep it simple... it would really get more complicated to determine wich levels etc to use.. here cci can give a nice entry and go for a hit or a scratch... cheers Walter.

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And the third video with a real world example.... cheers Walter.

 

Is this a shock wave file, walter? I can't get my computer to view it.

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Very nice walter, It seems simple but we will see!!:D Only kidding!

 

Nice info Walter. Thanks man.

 

Glad to hear that... there is much more to come... all interactions as usual are welcome... this is an open research and remember I am not teaching any proven or closed method "yet"... this are clean ideas... and they had been done thanks to the help of all your interactions my dear forum friends for wich I am so greatfull... cheers Walter.

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Just to follow along with Walter and Don's great work, here's how the GBPUSD acted this morning.

 

Entry nice and swift, no heat taken really and in and out in 5-6 minutes, target hit.

 

Nice work, keep those videos coming

 

 

Cheers......Blu-Ray

2ndwave.thumb.png.c71cfb1559fb509521c3aa4172b1e55c.png

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Great Blu-Ray ¡¡ I see you are a fast learner ¡¡

 

System looks nice and I hope during this week I will be testing at least 1 year worth of data... results from that test will give more strength to this aproach... nice to have you aboard Blu-Ray, are does charts TS ? cheers Walter.

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Walter

 

Yes, I'm using TS, it's good because I can just code a paintbar to visually see the zero line cross on the cci, but it does have the downsides, as I can't find the same cci as the one your using ( T3 smooth ).

 

Anyway, it's nice to be onboard:)

 

Blu-Ray

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Walter

 

Yes, I'm using TS, it's good because I can just code a paintbar to visually see the zero line cross on the cci, but it does have the downsides, as I can't find the same cci as the one your using ( T3 smooth ).

 

Anyway, it's nice to be onboard:)

 

Blu-Ray

 

Let me see if I can program one for you... give me some time... cheers Walter.

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