Trade Discussion and Analysis

[wasp 10]

Wasp, when you get a chance, I'd appreciate some clarity on the following chart.

 

I've circled an area where price on the hourly has gyrated. According to your trend-line drawing rules, we need to see a higher high and a higher low before we can "connect the dots." In the case circled, would you refrain from connecting the high to the open of the largest right-side red bar because the "pull-back" didn't technically create a higher high and a higher low?

 

I personally would be inclined to draw the trend-line - it just seems to fit. But I'm curious how you would handle it?

 

Thanks.

 

PS: It's a 30 minute chart, not an hourly like I said... but let's pretend it was an hourly chart, ok?

 

No! Lets not! Put up a 60m too!

[cowpip 10]

No! Lets not! Put up a 60m too!

 

Ahh, you're no fun! The hourly doesn't have such a pattern.

 

I see now that they're not that common on the hourly chart. Hmmm... that's interesting. Perhaps a side-effect of noise?

 

Hmmm...

[wasp 10]

Ahh, you're no fun! The hourly doesn't have such a pattern.

 

I see now that they're not that common on the hourly chart. Hmmm... that's interesting. Perhaps a side-effect of noise?

 

Hmmm...

 

Its simply a case of a statistical edge. The lower the timeframe, the more trendline crosses you will get... The larger, the fewer. For me, the 60m gives a perfect blend of everything to capture what I want from the week.

 

As my sig says though, I have included a trailing method from the 30m to allow for these HrH and LrL etc so as not to give much back (adapt) and whilst the 30m TL may have won this time, the 60m wins overall.

[firewalker 10]

Well my view is completely different. That makes a market!

 

That's quite a different view... a lot of it comes from what one defines as 'a reversal'. I guess erie takes the classic view when the last swing breaks, after a break of the trendline. But I am cautious calling things a reversal when before that break of the last swing price still managed to set a higher high (in an uptrend) or a lower low in a downtrend.

 

You say the reversal occurred beforehand, but I think that's only possible to say in hindsight. For sure it might have been a short signal, and most of my trades are entries before the actual reversal took place. Because if you wait to enter until price confirms the trend has been reversed, you're often in too late...

[wasp 10]

That's quite a different view... a lot of it comes from what one defines as 'a reversal'. I guess erie takes the classic view when the last swing breaks, after a break of the trendline. But I am cautious calling things a reversal when before that break of the last swing price still managed to set a higher high (in an uptrend) or a lower low in a downtrend.

 

You say the reversal occurred beforehand, but I think that's only possible to say in hindsight. For sure it might have been a short signal, and most of my trades are entries before the actual reversal took place. Because if you wait to enter until price confirms the trend has been reversed, you're often in too late...

 

 

You know how I trade and I don't wait... I am in first with the big money... I am not a fan of waiting for the crowd and the weak hands.

 

It broke the trendline and made a LrL and LrH on my charts (not that posted one) and that would have had me in whilst 'textbook followers' were all still giving back their profits.

[firewalker 10]

Question: at what point do we have a reversal?

 

Everybody is free to participate, so let's not always see the same hands

There is no right or wrong, as I think it all depends on what you personally see as a reversal.

 

After you answered that, the second question is where would you go long. I've marked some potential long entries.

 

[wasp 10]

Okay for a start, not my ideal viewpoint (bars, crass colours!) but FWIW...

 

See, are you looking to call perfect bottoms and entries to ride back up or trade your style?

 

My style is not one trade at the top and at the bottom, then one at the top, catching only the greater swings, I'd have (tried) to milk the bottom too and take profits from every occurrence, I'm not looking for 100+ moves only, I'm looking to take what the market offers right there and then/now.

 

But hey, thats just me!

[firewalker 10]

Okay for a start, not my ideal viewpoint (bars, crass colours!) but FWIW...

 

See, are you looking to call perfect bottoms and entries to ride back up or trade your style?

 

My style is not one trade at the top and at the bottom, then one at the top, catching only the greater swings, I'd have (tried) to milk the bottom too and take profits from every occurrence, I'm not looking for 100+ moves only, I'm looking to take what the market offers right there and then/now.

 

But hey, thats just me!

 

Thanks for the insight into your approach. I'd definitely not try to catch every turn or swing when the range is not big enough. But that's just me...

 

To be honest I do like the occasional +100 Calling perfect tops & bottoms isn't going to happen I realize that, but that doesn't mean you need to cut your profits short.

 

PS: Yeah I know you don't like bars, next time I'll pull up a line chart. Price is price, candles are only a representation as you know

[firewalker 10]

Report of today's action so far.

 

I didn't take all those trades annotated, only the first three.

 

[wasp 10]

Thanks for the insight into your approach. I'd definitely not try to catch every turn or swing when the range is not big enough. But that's just me...

 

To be honest I do like the occasional +100 Calling perfect tops & bottoms isn't going to happen I realize that, but that doesn't mean you need to cut your profits short.

 

PS: Yeah I know you don't like bars, next time I'll pull up a line chart. Price is price, candles are only a representation as you know

 

Its hard as I didn't know just what size the chart was... If it was a 1 min chart I wouldn't have touched it anyhow!

[firewalker 10]

Its hard as I didn't know just what size the chart was... If it was a 1 min chart I wouldn't have touched it anyhow!

 

It was a 15-min chart... but what difference does it make?

[wasp 10]

It was a 15-min chart... but what difference does it make?

 

Alot... whilst my style is 'one with the market' and taking whatever it offers, from a P+L point of view, its not a size I would bother with... not worth the hassle.

[cowpip 10]

Well Wasp, you pulled it off again this week. Congrats.

 

Here's a graphic chart of one of the problems I'm having. Perhaps you can help identify something that you've experienced in the past and have since resolved?

 

All I can assume is that you are patient enough to wait for price to reach an area that you would consider worth cashing out on - and you keep your stop 60 pips or so above your entry until that target is reached, at which time you look at price (and the TL's) and determine if it's reversing. You then reverse if you get the right signal at that level.

 

But in REAL-TIME, when you see something like the first spike I highlight show up, all I could think was, "ok, the TL was broken and it's now turned." But it ends up being a big fat stop-hunt that gets me in an undesirable reversal position where I double my losses.

 

Is there any clear way to avoid these situations?

[wasp 10]

Your trend lines are slightly different from mine for a start. Also, I guess its intuition and experience.

 

Where you saw a reversal, I was just more cautious and I was sceptical about that original TL too. It didn't make a HrH IMO and well, I just didn't go long!

 

That also caused me too see the next TL different too and be in after that jump and reverse as I saw that as my TL point.

[cowpip 10]

Hmmm... very interesting. Thanks.

 

You raise a very important point that I have neglected to consider:

 

When you enter a trade, you MUST expect a pull-back. They happen - and it's valuable that they do so you can better assess the true trend. BUT, sometimes the pull-backs will be pretty severe and you have to examine them as nothing more than pull-backs (or stop-hunts) and hold your position.

 

I don't think I was looking for pull-backs enough this last week. I saw them and immediately thought (uh-oh - trend-change). But no, they were just pull-backs superimposed on the larger move.

 

Interesting.... hmm...

[wasp 10]

Hmmm... very interesting. Thanks.

 

You raise a very important point that I have neglected to consider:

 

When you enter a trade, you MUST expect a pull-back. They happen - and it's valuable that they do so you can better assess the true trend. BUT, sometimes the pull-backs will be pretty severe and you have to examine them as nothing more than pull-backs (or stop-hunts) and hold your position.

 

I don't think I was looking for pull-backs enough this last week. I saw them and immediately thought (uh-oh - trend-change). But no, they were just pull-backs superimposed on the larger move.

 

Interesting.... hmm...

 

Price rarely drops, rises, drops, rises... yes it happens and its a bitch when it does but usually, you will get a break of S/R, then a pullback to the most recent S/R (not necessarily the main one you used to help enter), then continue till S/R stops it going further and the process continues (which is why MA systems only work in strong trends).

 

I use the 60m to get me 2 or 3 trades a day (30m = double / 240m = half) but I always wait unless it properly breaks S/R otherwise you would be chopping and changing all day on the smaller TF's.

 

I am not saying price trends more in FX but, it is more likely to find such a pullback, however minor (or harsh) before price reverses as, as I said, price just doesn't fly one to the other that simply.

 

I do use the 30m S/R / swings to exit too occasionally and wait for a pullback then re-enter but you'll see that when I post the 2nd chart to my blog over the weekend.

 

Anyhow, must log off or I'll start having to charge soon! Have a good weekend!

[firewalker 10]

Your trend lines are slightly different from mine for a start. Also, I guess its intuition and experience.

 

Where you saw a reversal, I was just more cautious and I was sceptical about that original TL too. It didn't make a HrH IMO and well, I just didn't go long!

 

That also caused me too see the next TL different too and be in after that jump and reverse as I saw that as my TL point.

 

If I'm reading this right, you guys are calling each swing where there is a change of direction (but that's by definition a swing) a 'reversal'! It's just a thought but it might help distinguishing between these kind of directional moves depending on when they occur:

 

(a) when price is trending

(b) when price is rangebound

 

Taking reversals when price is in a range is by definition not countertrend because there is no trend. Taking what could be a reversal when price is trending, might turn out to be just a pullback. If you can determine beforehand what type of trade you are planning to take, you might be in a better position to determine the potential of the trade.

 

I'm just thinking out loud here, not directed at you in particular wasp

[firewalker 10]

Here's my homework!

Hourly chart... as I don't trade FX (yet?!), I think I'm very objective and neutral about everything...

 

 

At 'F' we can assume price has gone into rangebound mode, it takes a while to break lower.

 

At 'L' I think it's a 'longs only' game.

[wasp 10]

I think labelling causes more problems than assist. I am, rather happily, trading back and forth and ready for when price really drops or rallies like it did today. Some I lose, some I grab 20 here and there.

 

This is my point the other day about a trader profiting from any condition as I do not label the market, I ride with it each move back and forth and I am ready for anything.

 

That's all very pretty and great textbook stuff FW, but, IMO, I think, whilst you may be able to explain price action better to those who have read a book or two, I will still make more pips! I have all those levels on my chart too btw!

 

I'd be interested to see where you think you would have traded...

[firewalker 10]

I think labelling causes more problems than assist. I am, rather happily, trading back and forth and ready for when price really drops or rallies like it did today. Some I lose, some I grab 20 here and there.

 

This is my point the other day about a trader profiting from any condition as I do not label the market, I ride with it each move back and forth and I am ready for anything.

 

Yes I know you ride everything that moves :o

I was just trying to provide some ideas/thoughts for those who might be interested in something else. Cowpip has been trying to adopt your approach I read, but perhaps he might feel more comfortable trading something that he made himself, that way he knows it inside out.

 

My chart is just an illustration of some other things you can incorporate in the process of determining what constitutes a reversal or just a reaction.

 

That's all very pretty and great textbook stuff FW, but, IMO, I think, whilst you may be able to explain price action better to those who have read a book or two, I will still make more pips! I have all those levels on my chart too btw!

 

Thanks but it's not really that much textbook stuff... I mean it's just talk about trendlines, lower lows and lower highs. Nothing more nothing less not a lot of theory!

 

I'd be interested to see where you think you would have traded...

 

Show me yours I'll show you mine! It's easy to say in hindsight what I should have done, but I have a pretty good guess that the number of trades you take will be twice at much as mine (the net profits might be higher too...)

[wasp 10]

Yes I know you ride everything that moves :o

I was just trying to provide some ideas/thoughts for those who might be interested in something else. Cowpip has been trying to adopt your approach I read, but perhaps he might feel more comfortable trading something that he made himself, that way he knows it inside out.

 

My chart is just an illustration of some other things you can incorporate in the process of determining what constitutes a reversal or just a reaction.

 

Yeah sorry, totally agree and an alternate view is wise... Tad defensive there! Plenty of ways to skin a cat!

 

Thanks but it's not really that much textbook stuff... I mean it's just talk about trendlines, lower lows and lower highs. Nothing more nothing less not a lot of theory!

 

Yep and that is pretty much I do, I just dislkie labels is all. Once you start labelling you start expecting certain things and you need to forget the names sometimes, read between the lines and just go with the flow.

 

Show me yours I'll show you mine! It's easy to say in hindsight what I should have done, but I have a pretty good guess that the number of trades you take will be twice at much as mine (the net profits might be higher too...)

 

Yep and why? Through experience I have learnt that there is no suc thing as a no brainer. No such thing as an optimum time of day or guaranteed result, (my overnight NZ experience taught me that one the hard way) and so, I am always in, ready...........

 

Oh, that and I am a greedy git! :o

[firewalker 10]

let's compare notes

 

others are free to contribute (but probably asleep right now)

 

Hmm, I just realized I left volume (my favourite confirmation signal) completely out of the equation :shocked:

 

[wasp 10]

Damn! I was already up nearly 300 pips before your first trade of the week!!! Mine is in my blog btw!

[firewalker 10]

Yep and why? Through experience I have learnt that there is no suc thing as a no brainer. No such thing as an optimum time of day or guaranteed result, (my overnight NZ experience taught me that one the hard way) and so, I am always in, ready...........

 

Oh, that and I am a greedy git! :o

 

Absolutely... lot's of times I saw a perfect setup go bye without me because it was premarket. But no longer! I'm going to take the damn trade (although Murphy will make sure I'll lose out on them this time...)

 

As to answer your question "why"... because we have different styles and I feel much more comfortable after having nailed the entry and managing the trade. If I were too look for more entries, I'd need to take more trades, which means more stress, more potential for error, more potential for stops hit. So in the end => more risk, financially and emotionally... but that's me! :\

[firewalker 10]

Damn! I was already up nearly 300 pips before your first trade of the week!!! Mine is in my blog btw!

 

Hey! I didn't start there because I only considered the chart "as is", not what happened before... no cheating plz

 

I interpreted the chart as if it were the beginning of the beginning!

 

Setting that aside, I see I have a pretty good idea of where your trades are.

Always knew you were transparent :haha:

 

But take that long from the lowest point of your chart. Unless you had S there from before, no way you would go long right? I had no horizontal lines on the chart to determine trades, because I used nothing from back left. Still, remarkable how good my psychic powers are