Trade Discussion and Analysis

[wasp 10]

Here you go, this is this week.

 

I missed a couple of these after my bad run and did a couple of scalps here and there but this is the main/all.

[pipMonster 10]

Damn it Wasp! You make this look so freakin' easy. It looks so clear on your charts. My goal is to change my thinking to 'see' the charts as you do. It may very well take a good bit of time. I most definitely do not want to copy you. I need to come to these conclusions using my analysis so I own them. I want to be the fisherman, not buying the fish from you. Of course, if you show me the best spots to fish, I certainly won't complain.

 

Well done with your trades.

[wasp 10]

How do you condense 15 years of experience into one post................ hmmm

 

Here are some essentials that I have picked up along the way for you. Some through experience, trial and error. Some through sweat and tears, through, just nuggets in posts on BB's and other random bits from I don't know where!

 

4 essentials when watching a chart:

 

 

• Support and Resistance
  
• Trends (trendlines derived from HrH's and HrL's or vica versa)
  
• Fibs
  
• News
  

 

The news moves the markets. The chart tells that story better.

Trends are paramount in FX especially.

S/R and fibs then finish it off.

 

When I view a chart, I have all this in mind. Why....?

 

Dave, a market stall owner sold fruit. He sold a lot of oranges. When he first started trading, he sold them for 5p each. They sold better than whisky at an alcoholics anonymous meeting. He put them up to 10p, still sold... 20p, 30p... Obviously good oranges.

 

At 30p the sales started slowing down, he dropped them to 25p and they were selling again. Dave, being a greedy bugger went to 35p and business was okay. Jumped up to 45p and only a few went here and there. Things started to peak. He dropped back down to 40p, then 35p... business was still slow... He went back down to 30p, things picked up and he saw all his old customers come back. He kept them there for a little while, then as things stayed constant, he started to push prices up again. The same thing happened at 45p as they were again, too expensive.

 

This time, a stall opened next to him with even juicier oranges. Dave had to drop prices to 30p again but still no good, he had a bit of interest.. but he had to go back to 25p...

 

Economists and bloomberg analysts said after the event that it was the new stall, the fact it started raining oranges and something else to do with America probably, technical analysts looked at the stats in a chart, saw key levels sat at 25p, 30p, an 45p.

 

Supply, demand, support, resistance. Call it what you will and view it through FA or TA, but at the end of the day, TA always works.

 

That, is essentially, it.

 

Other little things that have helped shape me along the way are posts by other traders. I won't say who as they aren't even on this board but things that have always stuck in my mind;

 

I picked a bank traders mind for a while - he told me that EVERYONE he knows, looks at S/R and fibs. Nothing smaller than 1hr, normally 4hour / dailies.

 

Another person said 'think of S/R as more of a zone'.

 

I'll add more to these but 2 that stand out. With all this in mind, the ideal thing, for me anyhow, is KISS, and 2 of the 4 essentials. S/R and trends on 4hr and 1hr charts.

 

Another thing that helped me was a journal on T2W. It helped from a psych POV originally but also, as things progressed, the HMA's (Hull Moving Averages) I used with the S/R, it taught me that, that is simply how it moves.

 

Price won't rise and rise, then drop in one and vica versa (making MA's pretty useless, it did show that price trends via HrH's and HrL's) so, with the right timeframe for the right pair, the combination of S/R and trends on the charts, works beautifully.

 

The old saying... If I have to explain it, you won't get it' is quite true I think as this probably hasn't helped as much as I'd like (not great at explaining it - its just ingrained in my think head!) but if there was on thing I could tell any new, eager traders, it would be....

 

Watch the charts till you can truly say you are in tune and can understand what the 2 biggest players are doing (IB's and HF's)... I could explain nearly every candle and what is happening (and likely to next) on that chart and could do so in RT, once you can do that, then its like riding a bike, you'll never forget.

 

 

Any questions?!

 

 

 

That'll be $5000 thanks!

Edited September 20, 2008 by wasp

[pipMonster 10]

Fibs! Ah-Ha! I wondered if you used them. Do you plot the retracements from wick to wick, or body to body? Do you use them on the hourly charts or mostly on 240-min and daily charts? The check's in the mail, though by my calculations it would be but a drop in the bucket compared to your profits.

 

One major thing I've noticed from your charts is your patience to make sure price has actually changed direction before entering. Though you're not always correct, your edge in executing this setup more than makes up for it. I was jumping the gun, trying to catch the falling knife. Foolish really.

 

I've been using Alpari's demo platform lately to place trades using my previously poor implementation of this setup. It is quite slow and requotes often. I'm using three lots as a baseline of 4% of a $50k account. Do you have this problem with them in live trading or do you use them for charting only?

Edited September 20, 2008 by pipMonster

[wasp 10]

Fibs! Ah-Ha! I wondered if you used them. Do you plot the retracements from wick to wick, or body to body? Do you use them on the hourly charts or mostly on 240-min and daily charts? The check's in the mail, though by my calculations it would be but a drop in the bucket compared to your profits.

 

Sorry for the confusion, I said they are watched by IB traders. I DO NOT use them though.

 

One major thing I've noticed from your charts is your patience to make sure price has actually changed direction before entering. Though you're not always correct, your edge in executing this setup more than makes up for it. I was jumping the gun, trying to catch the falling knife. Foolish really.

 

I am patient in part, by the fact that 9 times out of 10, I am still in the other direction! Also, I trade only on the hour so I get a break from the screen. Also, where say, I have been trailed out, I will patiently wait for an entry back at S/R because I know any earlier and I may as well just take my wallet out, douse it in petrol and set light to it!

 

I've been using Alpari's demo platform lately to place trades using my previously poor implementation of this setup. It is quite slow and requotes often. I'm using three lots as a baseline of 4% of a $50k account. Do you have this problem with them in live trading or do you use them for charting only?

 

I only use Alpari for testing in small amounts and the charts. They are not my main broker, I wouldn't use them for those reasons you state. I'd go with an ECN broker. I use http://www.capitalforexpro.com/ as I go through currenex, they are based in London, regulated and don't have a fixed spread. The costs are okay and overall a good little company. I'd use Interactive Brokers or another FX dedicated ECN based over there if I was you. Not sure if Hawaii has any?

[wasp 10]

How was your week myrtle?

[firewalker 10]

Here you go, this is this week.

 

I missed a couple of these after my bad run and did a couple of scalps here and there but this is the main/all.

 

That's a nice example of a decent trending market... but I'm more interested to see how you handle rangebound markets. Pull up a chart plz

[wasp 10]

Chaps, just waiting for a cab and off on a break for a week. I need to refresh and relax and after the manic Tuesday, whilst it turned out nice again, I feel a week away will do me some good! Get me refreshed and ready to come back at ease and milk this mrket even more!

 

Have a good week all and keep up the analysis (firewalker needs the help! :rofl:)

 

Cheers

[wasp 10]

That's a nice example of a decent trending market... but I'm more interested to see how you handle rangebound markets. Pull up a chart plz

 

okay......

 

2 seconds

 

 

Here you go.... mate, once you understand, any condition it doesn't matter..

 

S/R and trendlines and HrH' and HrL's are all that matter and profits are there

 

Do you need me to annotate it for you too?

[wasp 10]

You have 20 minutes to show me up FW!!!!

[firewalker 10]

okay......

 

2 seconds

 

 

Here you go.... mate, once you understand, any condition it doesn't matter..

 

S/R and trendlines and HrH' and HrL's are all that matter and profits are there

 

Do you need me to annotate it for you too?

 

Well done on making it to 'guru' status :o

 

Anyhow, that chart is still pretty straightforward, because the way I see it there are two 'trends': one down and one up and during these days prices makes HrH's and HrL's (in the uptrend) or LrH's and LrL's (in the downtrend).

 

Try this, I found this period particularly hard to trade: no clear sense of direction, no sequence of HrH's and HrL's or LrH's and LrL's and before you know it price reverses.

 

[firewalker 10]

I was wondering if anyone had anything to say about "the angle & speed a directional move". I try to gauge momentum by looking at how far each swing goes. If price makes new swings bouncing off support, but each swing failing to reach it's previous high, I am thinking 'weakness' and would be careful going long. Basically I am looking at the picture as it is unfolding during the day, and try to adjust my decisions based on what I see, instead of just buying or selling on a signal.

 

Each situation is different, and context is what matters, right?

So, here are a couple of charts from yesterday's S&P e-mini 500 (ES).

 

I've annotated the chart with my observations real-time. What I am looking at is the angle of the three directional moves. The first (drop) and second (rise back to S now R) are pretty matched in terms of speed and angle, but the last move, just one hour before the close, is pretty sharp. Price falls quicker and on higher volume too. Wouldn't the bias be to the downside in this case?

 

Yet this morning the market has gapped higher and we are around 1202 as I speak, with price already having touched 1210 (see 15-minute chart)! Regardless of news or any external factor, I am wondering if (and where) the chart showed clues that it was actually buyers picking up on the low prices, instead of sellers dumping more, in anticipation of a further fall.

[Phil Mibbutz 10]

I was wondering if anyone had anything to say about "the angle & speed a directional move". I try to gauge momentum by looking at how far each swing goes. If price makes new swings bouncing off support, but each swing failing to reach it's previous high, I am thinking 'weakness' and would be careful going long. Basically I am looking at the picture as it is unfolding during the day, and try to adjust my decisions based on what I see, instead of just buying or selling on a signal.

 

Each situation is different, and context is what matters, right?

So, here are a couple of charts from yesterday's S&P e-mini 500 (ES).

 

I've annotated the chart with my observations real-time. What I am looking at is the angle of the three directional moves. The first (drop) and second (rise back to S now R) are pretty matched in terms of speed and angle, but the last move, just one hour before the close, is pretty sharp. Price falls quicker and on higher volume too. Wouldn't the bias be to the downside in this case?

 

Yet this morning the market has gapped higher and we are around 1202 as I speak, with price already having touched 1210 (see 15-minute chart)! Regardless of news or any external factor, I am wondering if (and where) the chart showed clues that it was actually buyers picking up on the low prices, instead of sellers dumping more, in anticipation of a further fall.

 

I think each index has its own characteristic 'resonant frequency' and price action. After a long time spent watching charts form, you can learn to interpret (or think you can!) what's going on.

re. today's move, isn't the rise just because there are plenty of people hoping the Fed plan will go through, prompting another huge spike?

[firewalker 10]

I think each index has its own characteristic 'resonant frequency' and price action. After a long time spent watching charts form, you can learn to interpret (or think you can!) what's going on.

 

I agree some indices have their own 'characteristics', but this move higher is pretty much on all e-minis this morning and the picture they painted yesterday was very similar. I just picked the ES as I trade that one most, but I could've chosen the YM as well...

 

re. today's move, isn't the rise just because there are plenty of people hoping the Fed plan will go through, prompting another huge spike?

 

There have been a lot of overnight gaps lately, I wouldn't want to be a swing trader! The only news I see is Buffett buying into GS... I guess you could attribute it to that, otherwise...

[Phil Mibbutz 10]

I agree some indices have their own 'characteristics', but this move higher is pretty much on all e-minis this morning and the picture they painted yesterday was very similar. I just picked the ES as I trade that one most, but I could've chosen the YM as well...

 

 

 

There have been a lot of overnight gaps lately, I wouldn't want to be a swing trader! The only news I see is Buffett buying into GS... I guess you could attribute it to that, otherwise...

 

Yes, they generally all go up and down in synch, but the waves have different shapes and charactersitics, I reckon.

Buffett has already made himself even richer, so why can't he fund the Fed!?

[cowpip 10]

Yes, they generally all go up and down in synch, but the waves have different shapes and charactersitics, I reckon.

Buffett has already made himself even richer, so why can't he fund the Fed!?

 

Right!

 

Not only that, but Buffett's strong support for the Treasury getting what they want will probably have some political pull. BUT IT SHOULDN'T!!! This is a man who is about as biased as one can get. He's so detached from the common person that he wouldn't know one if it slapped him across the face.

 

This Paulson bailout may be necessary in some form, but the loss of people-power and freedoms (and the implicit legal abuse that is possible from Paulson's poorly thought-out original plan) leaves the door open for some real bad decisions in the future by future Treasury Chairmen.

 

Section 8 in particular is scary. Why didn't Paulson just dress up like an armed robber and walk into Fort Knox with his bazooka? The results would have been the same.

 

Sorry for the rant. But his bailout plan stinks.

 

Turning this back to trading... IF the bailout plan goes through as-is, that alone may be enough to short the dollar with as much vigour as I can muster. Of course, technicals will matter, but I will be looking for the next available rally to short the dollar HARD. I can't see a way how they could get around this without printing enormous sums of money. Mr. Buffett obviously isn't in a donating mood. Gee, I wonder why???

[wasp 10]

Well done on making it to 'guru' status :o

 

Anyhow, that chart is still pretty straightforward, because the way I see it there are two 'trends': one down and one up and during these days prices makes HrH's and HrL's (in the uptrend) or LrH's and LrL's (in the downtrend).

 

Try this, I found this period particularly hard to trade: no clear sense of direction, no sequence of HrH's and HrL's or LrH's and LrL's and before you know it price reverses.

 

 

Same old, same old......

 

A large enough portion of those with money buy and sell with S and R and trends in mind.

 

In FX this is easier (24hr equals smoother swings) but it is true in any market. Look for obvious S/R, use HrH's or HrL's etc for immediate direction and/or end of move and hey presto...

 

(Used my own chart as easier to annotate and zoom in a tad)

[cowpip 10]

Wasp, do you have a method that permits a reasonable entry (with a reasonable r/r) AFTER a move has commenced? Or do you always consider it best to just wait for the entire next bus?

 

I've missed this move down and it's ticked me off. A run back up to touch the trend-line seems like the next-best hope, on a pull-back?

[wasp 10]

Hi, sorry, saw your post last night but was too tired other than to manage my position.

 

I personally will only take the optimum (original entry or first HrL or LrH) to enter, as after that, the risk is too high for my tastes.

 

How come you didn't enter on the 2nd candle circa 185.50?

[cowpip 10]

Hi, sorry, saw your post last night but was too tired other than to manage my position.

 

I personally will only take the optimum (original entry or first HrL or LrH) to enter, as after that, the risk is too high for my tastes.

 

How come you didn't enter on the 2nd candle circa 185.50?

 

I was distracted and just simply missed it. It happens. I should have been more closely glued to the screens.

[wasp 10]

I was distracted and just simply missed it. It happens. I should have been more closely glued to the screens.

 

It does happen, indeed! I am making a right pigs ear of today and flat when should be short from 181.70. Got myself all confused and not quite sure what happened! Ah well, not much can do about it now!

[cowpip 10]

I pretty much screwed myself last night. I picked the wrong bottom, twice. And I too also missed that move from 181.70 lower. I'm standing aside now. I'm obviously not on the ball today. Time to wait for a clearer signal.

[firewalker 10]

... usually gets smelly fingers

 

But this has potential:

 

 

[wasp 10]

Sat at my drawing board (no, I don't have an actual drawing board!) and contemplating the week.

 

Yes, I accept this week has been a bit manic but it's an easy excuse for a mess and one that can be used all too easily (tight, choppy, out of character)... For me, a skilled trader has the essence in his hands and the 'conditions' mean zilch.

 

So I have been going back to start and here are 3 charts.........

 

1: original old 240m S/R

2: S/R on the 60m

3: current style (that has netted me 1000+ a week for the last month or so ffs!)*

 

So what can we gauge and improve by looking at these 3?

 

 

 

* It would have been better had I not missed the 400 thanks to my laptop dying!

Edited October 8, 2008 by wasp

[wasp 10]

Volatility is only any good if you profit from it!