Trade Discussion and Analysis

[myrtleturtle 10]

I can't hardly join in because I don't trade this, but will comment on one issue. Shouldn't one have a strategy for a when price is trending and one for when price is in congestion, where identifying s/r would be different for each approach? And then there is when one should sit out because he has no edge?

just thinking

 

erie

the quality of debate here is so high I feel reluctant to add my paltry observations.

 

I haver tried developing a trend/range switch method, whereby you have two separate methods. What I found was you will still get losing trades. I called them "transition losses"!

 

If you are trading a range, you would be most likely fading spikes.

At some point there will be a breakout and a losing range trade, as the market switches back to trend. Hence the transitional loss, as the fade fails.

 

You then revert to following an MA or whatever.

I tried using ADX. Mediocre results, and I abandoned it.

 

Some pennies are beginning to drop for me, as this site is about S/R, hardly an indicator in sight. I have revisited bbmacs thread on Sup/Res on the "other site", so thanks for that.

 

I still cannot understand WHEN Sup/Res will hold or break, which is what stops me from using it.

 

these trend crossover / reversals are not working so well after all......... even with S/R levels from the 240m and 60m, I'm still getting fake signals which, I can SAR into or watch continue. ATM though, its good for half the position, take a loss and watch it continue to rise...

 

I can't put my finger on it though. The first HrL or LrH is faking it then the 2nd is right but I could post a chart where every time, the first cross is the one and any later and bye bye.....

 

There is nothing that I can see that distinguishes the correct from the incorrect...

 

Any thoughts............?

 

Why must it be correct or incorrect? Isnt it all a numbers game?

Without some Level-2 on FX, how can you possibly get them all right?

The smaller TFs are supposedly more noisy.

Have you been getting them wrong completely, or would you have been right if you had wider stops?

[firewalker 10]

Thanks for posting! Any comments are appreciated

 

I still cannot understand WHEN Sup/Res will hold or break, which is what stops me from using it.

If you're asking WHY then I think the answer is not as important as to realizing it is happening. At some point S/R will fail to act as S/R (probably because the supply or demand at that level isn't what it used to be), but I don't think you need to predict when that's going to be.

 

Why not go along with the market and for the market to show it's hand? For example if you're short and market hits support, you can take off some of your position. Or you can wait to see if there is any reaction. Does price pause? Does volume take off? Does it bounce strongly? Does it pierce through but comes back?

 

Why must it be correct or incorrect? Isnt it all a numbers game?

 

The more I think about it, the more I realize how risk/reward, win/loss, expectancy, sharpe ratio, etc, etc... are all distractions.

 

Without some Level-2 on FX, how can you possibly get them all right?

So are you saying you need level 2 to trade a market in order to achieve a high number of wins?

 

The smaller TFs are supposedly more noisy.

I think 'supposedly' is the right word in that sentence

[wasp 10]

Not so good explaining this in words so tried my best to do this on the charts. I'm still learning and (trying to) improving my own analysis daily so this is just my opinion...!

 

I've used the EURJPY for my examples.

 

the quality of debate here is so high I feel reluctant to add my paltry observations.

 

Don't be daft! On BB's everyones opinion is important as it can bring a new light on a subject and make people see it a different way.

 

I have tried developing a trend/range switch method, whereby you have two separate methods. What I found was you will still get losing trades. I called them "transition losses"!

 

If you are trading a range, you would be most likely fading spikes.

At some point there will be a breakout and a losing range trade, as the market switches back to trend. Hence the transitional loss, as the fade fails.

 

Does this incorporate anything other than the range levels?

 

You then revert to following an MA or whatever.

I tried using ADX. Mediocre results, and I abandoned it.

 

no, no, no, no, no! Don't revert to indicators! Learn why not find a why to exploit a situation. Once you understand why, the how becomes easier. Its like, I dunno, riding a bike...

 

You can put on the stabilisers as they will keep you upright or you can leanr and understand 'balance' and do it yourself.

 

Some pennies are beginning to drop for me, as this site is about S/R, hardly an indicator in sight. I have revisited bbmacs thread on Sup/Res on the "other site", so thanks for that.

 

I still cannot understand WHEN Sup/Res will hold or break, which is what stops me from using it.

 

Incorporate further analysis into these areas. For example...

 

Candlesticks/Bars... don't look for cliche patterns but examine what happened. Say there was a huge dropping candle and that candle retraced 50%. The next one pushes down but also retraces to the start point. I am sure there is a technical name but forget labels, forget what books say, think! What does that action scream?! There are too many buyers to let this go down!

 

Why must it be correct or incorrect? Isnt it all a numbers game?

Without some Level-2 on FX, how can you possibly get them all right?

The smaller TFs are supposedly more noisy.

Have you been getting them wrong completely, or would you have been right if you had wider stops?

 

You can't alwas get it right, no one can, get over it! Again, you are trying to do this purely on reaction to S/R. See the chart explanation below.

 

Thanks for posting! Any comments are appreciated

 

Oi, he was answering my post, I'll say thanks and if comments are appreciated!

 

If you're asking WHY then I think the answer is not as important as to realizing it is happening. At some point S/R will fail to act as S/R (probably because the supply or demand at that level isn't what it used to be), but I don't think you need to predict when that's going to be.

 

Why not go along with the market and for the market to show it's hand? For example if you're short and market hits support, you can take off some of your position. Or you can wait to see if there is any reaction. Does price pause? Does volume take off? Does it bounce strongly? Does it pierce through but comes back?

 

 

 

The more I think about it, the more I realize how risk/reward, win/loss, expectancy, sharpe ratio, etc, etc... are all distractions.

 

Totally. It wasn't until you had your thread and dbpheonix got you to do it, did I even start myself. They are distractions. If you understand the markets and you can consistently get it right more than wrong, all the above will just take care of itself. Just beccause you have an 80% strike rate, there is no reason this should coontinue. Each trade is unique and limits from these statistics draw you away from what you should be doing. Concentrating on the action inthe next trade.

 

So are you saying you need level 2 to trade a market in order to achieve a high number of wins?

 

I sometimes think LII or Volume would help but it is not needed. The price action explains all.

 

The smaller TFs are supposedly more noisy.

 

I think 'supposedly' is the right word in that sentence

 

There is no such thing as noise. Every tick is relevant and tells a story. The only issue personally wit smaller TF's is without pro access, you are fighting too much to profit.

Edited May 23, 2008 by wasp

[myrtleturtle 10]

DAX, with only horiz-lines.

 

The resistance line is the upper-blue line, as it was tested and ultimately broke.

A new res line has formed lower, blue-dotted line, as it has been tested and rejected.

 

Since the market has moved down, I suspect that the lower dotted-line should be good shorting opps.

 

The new active range is 7,045/30.

 

This is what does my head in:

Although the upper blue-line may be another res point, and thus potentially shorting opp, the fact is, it will have broken the lower blue line, weakens the lower blue as res, and may switch to being a sup point.

 

nothing is conclusive until a number of lines are taken out. also time-frame is pertinent.

 

NB: as I write, the lower blue line has been hit, and price is moving towards the upper blue line at 7055.

 

EDIT: I suppose my point is, you could potentially short any number of res points until YOU decide to change your mind as to whether direction has changed, and you are better off buying at sup points.

Arent you still having apply some personal level of discretion as to the key sup/res and how to trade them?

[ianp 10]

the quality of debate here is so high I feel reluctant to add my paltry observations.

 

Hi ,

 

I must admit i feel the same as you !!!

 

But this week has been good for me , after looking at all the crappy bickering on T2w, it has been a breath of fresh air seeing people actually helping each other rather than arguing.

 

My revelation this week has been the SnR zones on the h4 and daily charts, which wasp has been telling me about for a while now !!!!

 

I dont have a clue when price hits a zone what it will do, so I have been watching price action on the M15 when it gets to a zone and if a good looking setup occurs I make a trade, needless to say over half of them didnt work out , but the couple I took this week that did work out really well as my stops are based on M15 and my targets on H4.

 

Ian

[wasp 10]

DAX, with only horiz-lines.

 

The resistance line is the upper-blue line, as it was tested and ultimately broke.

A new res line has formed lower, blue-dotted line, as it has been tested and rejected.

 

Since the market has moved down, I suspect that the lower dotted-line should be good shorting opps.

 

The new active range is 7,045/30.

 

This is what does my head in:

Although the upper blue-line may be another res point, and thus potentially shorting opp, the fact is, it will have broken the lower blue line, weakens the lower blue as res, and may switch to being a sup point.

 

nothing is conclusive until a number of lines are taken out. also time-frame is pertinent.

 

NB: as I write, the lower blue line has been hit, and price is moving towards the upper blue line at 7055.

 

EDIT: I suppose my point is, you could potentially short any number of res points until YOU decide to change your mind as to whether direction has changed, and you are better off buying at sup points.

Arent you still having apply some personal level of discretion as to the key sup/res and how to trade them?

 

I'm explaining in more detail in my other post (to come) but as a quick note on this post, you are simplifying it too much. Trading off the reaction to S/R alone is never going to work unless you incorporate some other factors in there.

 

Whether this is trends on the smaller TF's or candlestick patterns or...., you need further confirmation for decipher the reaction at these areas.

 

IMO.

[myrtleturtle 10]

I'm explaining in more detail in my other post (to come) but as a quick note on this post, you are simplifying it too much. Trading off the reaction to S/R alone is never going to work unless you incorporate some other factors in there.

 

Whether this is trends on the smaller TF's or candlestick patterns or...., you need further confirmation for decipher the reaction at these areas.

 

IMO.

 

I acknowledge that its not just the lines.

I chose the lines in the DAX example, because the lines had been bounced off more than once, so they were re-inforced. And the upper blue line even more so, as they represent the lows formed during the US session, that were breached during yesterdays action, indicating to me a shift of sentiment.

 

As an aside, another potential SHORT from 7045 would have given a 15 pip move.

 

I would also check the amount of time spent at the lines, to see if there was some bias to one line. Sharp rejections of the res lines would indicate to me continued down-strength.

However, failure to hit the support, or smaller moves away from the res line may indicate strength brewing to challenge the down-direction.

 

I am making this all up, of course.

 

I think I have said this before, but the real beauty of geometry (horiz as well as trendlines) is that they remain true in ALL time-frames. An indicator setting may give different signals depending on the TF used, but a sup/res line rmains there no matter what TF you use, so I recognise its strengths.

 

EDIT: of course, if you place the lines in the wrong place, you will be trading wrong in all the TFs!!

Edited May 23, 2008 by myrtleturtle

[wasp 10]

My post above now updated.

[wasp 10]

Hi ,

 

I must admit i feel the same as you !!!

 

But this week has been good for me , after looking at all the crappy bickering on T2w, it has been a breath of fresh air seeing people actually helping each other rather than arguing.

 

Isn't it just. Even (albeit poor) jokes I have made on the main boards have been shot down! If its not trading talk here then sod off it seems! Very refreshing.

 

My revelation this week has been the SnR zones on the h4 and daily charts, which wasp has been telling me about for a while now !!!!

 

The areas/levels from the 240m and 60m are unbelievably vital and just since arriving here have I realised just how much. I did dismiss them for a while due to some problems but as posted prior, its them WITH other factors that make the difference.

 

I don't have a clue when price hits a zone what it will do, so I have been watching price action on the M15 when it gets to a zone and if a good looking setup occurs I make a trade, needless to say over half of them didnt work out , but the couple I took this week that did work out really well as my stops are based on M15 and my targets on H4.

 

Ian

 

A perfect compromise I am finding. Taking the levels from the 240m and the 60m then using the 30m for entries and stops etc is working great. One of the good things about this is the entries on the smaller TF's then get extra strength as they tally with the larger TF's.

 

As for the action at these levels, whether candlestick patterns or trendlines and breaks from the small range etc is up to each but by removing labels and seeing what really happens there, the more time the easier it becomes to read and the higher the strike rate will get.

[wasp 10]

Further analysis and hindsight shows I missed the best entry as I was typing and not paying attention.

 

The 60m level, with the weakness shown in the candles, plus the cross of the trendline after the small HrL, re attempt to drop and then rise again after breaking the congestion area all signalling a move back up.

 

Further clues come in relation to yesterdays breakout plus the break of the 240m level now. Looking for a HrL / congestion to get in a trendline for it to possibly follow.

Edited May 23, 2008 by wasp

[firewalker 10]

As for the action at these levels, whether candlestick patterns or trendlines and breaks from the small range etc is up to each but by removing labels and seeing what really happens there, the more time the easier it becomes to read and the higher the strike rate will get.

 

:thumbs up:

[wasp 10]

Further analysis and hindsight shows I missed the best entry as I was typing and not paying attention.

 

The 60m level, with the weakness shown in the candles, plus the cross of the trendline after the small HrL, re attempt to drop and then rise again after breaking the congestion area all signalling a move back up.

 

Further clues come in relation to yesterdays breakout plus the break of the 240m level now. Looking for a HrL / congestion to get in a trendline for it to possibly follow.

 

Yet, despite ALL that.... Price printed a new HrL above the major 240m level and continued down as sellers rejoined the foray.

 

Just goes to show one thing (240m level) on its own paints only a small part of the picture.

 

Smart money / big banks duped me into exiting a perfectly good position based on the previous weeks tendency to find support and continue.

 

Of course though, let us not forget as, unlike the DOW etc, we are not wholly moved by traders alone. Commerce plays a huge part in FX too, but thats a whole other topic.

 

GJ could enlighten us here but he rarely pops in here so we'll just go by what we see..............

[wasp 10]

Well, after feeling all clever with my last couple of posts and thinking I understood so much better, the market turned around and kicked me in the nuts!

 

:doh::doh::doh::crap:

 

long from the break of major level only to be stopped to the pip. SAR as is broke the lows then bang, straight back up again.

[myrtleturtle 10]

Well, after feeling all clever with my last couple of posts and thinking I understood so much better, the market turned around and kicked me in the nuts!

 

:doh::doh::doh::crap:

 

long from the break of major level only to be stopped to the pip. SAR as is broke the lows then bang, straight back up again.

 

 

whats your max stop-loss on trades, or are they variable? I suspect you are taking trades off 30-mins?

[wasp 10]

whats your max stop-loss on trades, or are they variable? I suspect you are taking trades off 30-mins?

 

max is 25 but try to lower it if the prior H/L is closer. Yep, off the 30 minutes.

 

I know where I screwed up. More than once too!

 

the really annoying thing is, had I not got stopped out, I wouldn't have rushed into the short due to the 60m level and now I'd be only 8 pips out!

 

After a bit of :bang head::bang head:

 

I need more of :beer::beer::beer:

[wasp 10]

For our fifth ninja turtle, this is what should have been had I been concentrating!

 

Obviously, it was only the last couple of days that I have started to use the congestion area break to decide where the trendline / breakout becomes valid so thats shall help next week.

 

All this is plausible in real time now I have this extra assistance and of course, I really need to pay attention better!

[wasp 10]

One for the FX players and anyone else curious...!

Edited May 24, 2008 by wasp
added final decision.

[wasp 10]

Question for all YM players.......

 

Do you watch the larger TF's at all... uncanny how similar they play out compared with FX.

[firewalker 10]

Question for all YM players.......

 

Do you watch the larger TF's at all... uncanny how similar they play out compared with FX.

 

I pay attention to 'the big picture' (see also my blog), but I don't make trade decisions based on them. Although there seems to be a rule about trading against the trend: "trade with the longer term term, but against the short term trend", I've found that there are long & short positions each day by trading off support and resistance.

 

Nice clean charts

Are those horizontal lines support? I haven't checked all, but on the YM I have 12470. Is there a reason why there's a line at 12514?

[wasp 10]

Clean is best. When actually trading, my main chart now has 5 lines on it at any one time max. 1 trendline and 2 S/R either side.

 

Just had a butchers and no idea why I have one at 514. It should be at 468 but it was just a quick observation.

 

As it goes, if I was to take any YM or NQ positions I would use use the 240m charts as I like bigger moves.

[wasp 10]

it is! After all this time................ :rofl:

[gilligullu 10]

it is! After all this time................ :rofl:

 

You still think it is heading for 162.3?

[wasp 10]

You still think it is heading for 162.3?

 

atm yes. Needs to break 162.75 region as new level is building there but if you view the 240m EURUSD/GPBUSD/EURJPY's they all have broken the larger TF trendline too.

[wasp 10]

nope, with a public holiday here and in the US, the Japs and Europeans haven't enough clout to really move the markets so whilst the EJ has moved up, its not far!

 

That said, 163 may now act as support so need to be careful there.

[wasp 10]

A shoot up overnight in the Japanese session (why didn't that happen the previous night? Did they have a holiday too?) and a retest of the highs again atm. Didn't follow EURUSD or GBPUSD down this morning either....

 

Just awaiting a possible short unless we break 163.80............