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firewalker

Trade Discussion and Analysis

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It looks like R/R is somewhat similar to your 4-hour method (perhaps a tad reduced on the reward side). Do you keep stops at your standard size, or haul them in a bit?

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Tighter definitely. One of the other annoyances with the 4hr is the larger stops and the R:R does stay the same with this.

 

I have check a couple of weeks and the results are better/similar and less missing out this way.

 

Not 100% yet, still looking but I think I may well go back to the shorter TF's.

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Last question - does this method use an automatic SAR if you're wrong on the direction, or is that discretionary?

 

I would act per new candle. All manual.

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Wasp, in your chart, do the shorter term S/R lines (those that formed during the last day or two) have the same weight as the longer-term lines? I guess what I'm trying to figure out is this: what happens when price tests but fails to close above one of the shorter-term S/R lines?... do you short off those lines as readily as off the main S/R lines? I would imagine you would, but am curious if you have any set criteria.

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Wasp, in your chart, do the shorter term S/R lines (those that formed during the last day or two) have the same weight as the longer-term lines? I guess what I'm trying to figure out is this: what happens when price tests but fails to close above one of the shorter-term S/R lines?... do you short off those lines as readily as off the main S/R lines? I would imagine you would, but am curious if you have any set criteria.

 

Act of them all as the same importance.

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Well I've slightly modified the chart, changing a few trades, replacing the arrows with simpler ticks & crosses (wins & losses), and looked back over the last 119 days, which is 45 trades.

 

I feel the walkthrough simulation is fair and not cherry picked.

 

With a 150p max sl, there were 15 losers, 27 wins, and three trades that would have benefitted from a BESL or TSL from +160-+272p

 

The overall net profit being +5130 pips.

 

So not bad i think, as the method/rules/logic are consistent and make sense.

 

This 5.5 month period shos a mixture of chop ad trend, mainly chop i would suggest.

 

As wasp mentioned earlier, the problem with this S/R SAR method is the possibility of messing up the trend - i.e. trying to SAR on a rejection of a S/R level, only to see price/trend continue to move against you.

 

PS. All my S/R lines were drawn using the open/close of the candle (the body).

 

PS2. If you ignore all my pointing label lines, its not all that complicated! Milod eye strain only!

 

Please ignore these 2 charts, or at least don't take them as being wholly realistic.

 

I realised that i hadn't applied all the (what i saw as relevent) S/R lines in the right order - from the beginning to the end (1992-2008).

 

Also, these lines paid no attention to whether or not these levels were still relevent later on, or had they been surpassed, with the new S/R levels moving on as a result. Therefore postive results may just be a coincidence that the lines were in the right place at the right time, and price acted in their favour, though not necessarily for a reason -

eg. an S/R line begun in 1995 that has been broken up & down several times, today causing a reversal and profitable trade. This would have to be put down to chance/good luck, and for me shows no logic in terms of having kept that 1995 line on the daily chart until now.

Edited by JT1

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Wasp, do you have any methods (aside from just walking away from the screen) for knowing (or feeling) when it's wise to cut a 4-hour trade and close out before the end of the 4-hour period is up? Failures to run higher on the 30-min don't necessarily work, because I've seen you take 4-hour trades where price reverses almost all the way back to your entry before running right back up. Is it just a judgement call you make (based on experience), or is there something you're seeing that causes you to say, "this is done... time to cut and run"?

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eg. an S/R line begun in 1995 that has been broken up & down several times, today causing a reversal and profitable trade. This would have to be put down to chance/good luck, and for me shows no logic in terms of having kept that 1995 line on the daily chart until now.

 

JT1, how many longer-term players out there do you think saw that 1995 line and used it? Was it a S/R line on the weekly charts? Monthly charts? There are other reasons why it may or may not serve as S/R. It doesn't always have to be a 4-hour chart S/R line that is resisting or supporting. It could be that the 4-hour line also coincides with a longer-term S/R line on a larger time-frame. Just a thought...

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You know what Wasp... disregard my last questions... I'm a smart guy and know the answer pretty well already. It's dominantly a discretionary thing anyway and I would be surprised if what you described fit with what I related to. So don't bother responding to it. That's something I'll handle on my own.

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JT1, how many longer-term players out there do you think saw that 1995 line and used it? Was it a S/R line on the weekly charts? Monthly charts? There are other reasons why it may or may not serve as S/R. It doesn't always have to be a 4-hour chart S/R line that is resisting or supporting. It could be that the 4-hour line also coincides with a longer-term S/R line on a larger time-frame. Just a thought...

 

True.

 

(It was the daily chart i posted btw).

 

But i just got a bit confused as to the order in which i applied the S/R lines from start to finish etc. and once applied, as seen as they run the entire screen length it was near impossible for me to be sure the point i marked them from etc. etc. It just all became a bit confused, after the fact, and so I've scrapped it, for now.

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It seems we majoritively use support and resistance in this section and whilst the analysis and discussion thread holds for all aspects, I think we need a more dedicated thread per the discussion of this.

 

As most will have noted, both firewalker and I have been having a few issues lately with our S and R and I have personally pinpointed this down to lack of concentration and detail paid to ensuring the levels I pay the most attention to these levels to ensure they are perfect.

 

Its slightly easier for FW IMO as the smaller timeframes show levels of S/R easier whilst I have 240m charts and swing thus need to have a years worth of data to pinpoint those levels accurately. (apologies if not the case FW).

 

 

So, what is it we are looking at?

 

Support/Resistance > levels where price reversed at prior (normally more than once) and the chance of this occurance happening again.

 

We have a few factors to consider;

 

1: Where do these lines start, when do they begin and become important?

 

2: Where do they become irrelevant?

 

3: How do we act at these points?

 

4: When it an area doesn't hold a couple of times but then does again?

 

I know these areas on a chart form in any market, the most important things to consider. Just how do you use them correctly and the most effectively?

 

Hey presto, a thread to thus discuss it.................

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Interesting wasp... question at this point is how do you trade w/ all these lines on the charts? That's not an attack, just a question. From an outsiders view, I see a bunch of lines all over. So how does one use that to actually trade? And are you using this for intraday trading or swing trading?

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Interesting wasp... question at this point is how do you trade w/ all these lines on the charts? That's not an attack, just a question. From an outsiders view, I see a bunch of lines all over. So how does one use that to actually trade? And are you using this for intraday trading or swing trading?

 

Hi Brownsfan,

 

I am a swing trader essentially, few trades a week, max 10-ish normally. Personally, I will watch price action at said levels and see whether price will find support or resistance then either hold position or reverse.

 

Interesting you only see a bunch of lines, do you not hold much stock in price reversing at S and R?

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Interesting you only see a bunch of lines, do you not hold much stock in price reversing at S and R?

 

I think it depends on how you define the S/R. That's the first step - is the S/R valid and if so, why? I'm not saying your lines are not valid, but they mean little if one cannot trade from it.

 

From a swing trading perspective, I think it is easier to draw the S/R lines and I do it myself when looking at a longer term perspective.

 

I guess the next step of the thread is to document possible trade setups in the future and see how they work. As you know, finding a possible place to enter is only one part of the equation.

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I think it depends on how you define the S/R. That's the first step - is the S/R valid and if so, why? I'm not saying your lines are not valid, but they mean little if one cannot trade from it.

 

From a swing trading perspective, I think it is easier to draw the S/R lines and I do it myself when looking at a longer term perspective.

 

I guess the next step of the thread is to document possible trade setups in the future and see how they work. As you know, finding a possible place to enter is only one part of the equation.

 

Yep, totally agree. With just the lines alone you are only half way there.

 

This is the point of the thread, to discuss the S/R levels and then to go one further and look at price ation for the best entries or to carry with the trend if applicable.

 

I'm not one for 'trade setups' or 'no-brainers' personally and like to see action at the level and take it tick by tick but I am all for examples if anyone comes up with them. I'm not looking for exact answers here or an end goal, just an extension of the 'discussion and analysis' thread with more emphasis.

 

Just looking though to find some choice examples to post. If you have any, please post too......

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I mainly focus on intra-day trading now, so my version of S/R is a little different than viewing a bigger timeframe like you have done here. Keep it going though, I'm sure there are plenty that are watching the thread!

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