Higher Lows Lower Highs

[Snow Dog 10]

1hr upper wicks then engulfing negative closes. These candles are strong and would not count as what we call weak pre/early US CT candles that we avoid trading.

 

15 min lower high little/no lower wick sell at 1.5750, exit at bounce from S1 for +35.

[Snow Dog 10]

Recap 5 Feb

 

EUR - Bias was down. We got a doji at W S1 1.3464 and the identified support level that sparked a return to trend.

 

GU - I had 1hr can go either way its on a higher low and lower high. Bias up but if 1hr falls it will shift short term flow down again. London open took us up then a large upper wick rejecting move above W M3 and 1.5800 followed by a negative close took us lower.

 

EJ - View was 1hr can easily flip to a higher low here to revert to trend. No bias can go either way, we'll see what London open brings. Reverted to uptrend.

 

6 Feb

 

EUR - Positive D close, yesterdays high respected over night. The D positive close should follow through higher, 1hr flow higher high higher low. Is the W pivot 1.3587 at a possible head and shoulders level? Bias up. Failure for that kind of D candle not to go higher should sound some alarm bells.

 

GU - D engulfing negative close should follow through lower. D and 4hr charts showing divergence, flow lower high lower low. The divergence is a concern, bias down and looking for solid set ups to continue trend.

 

EJ - Positive D close just about getting to the previously mentioned resistance level 127.77 area. D, 4hr and 1hr showing divergence. Bias up until price action confirms otherwise, even then if we do have a pullback will be looking for signals to resume uptrend.

[Snow Dog 10]

Yesterday 1st trade ej buy 127.08. 2 large lower wicks on 1hr, often in trending market I suppose this would be a good enough set up. With divergences on D, 4hr and 1hr perhaps not good enough for today. Not closing across the 1hr 8lwma is a bit of an issue. Would I have done differently, I have absolutely no idea, its easy to armchair quarterback. Like I said all you can do is file it away, try and remember to watch out in future, is it a tweak needed or just one of the 25% + or - that don't work out. 1st losing trade this week, she's up 6 trades to 1 so lets not over react hey!!.

 

2nd trade sell at 126.49 CT. OK she gave it a 2nd chance to go, but when it paused the 2nd time at the low/RN and failed to go lower I would hope to see the exit closer to the low/RN.

[Snow Dog 10]

Recap 6 Feb

 

EUR - View was D positive close should follow through higher. Bias up. Failure for that kind of D candle not to go higher should sound some alarm bells. A scrappy day lots of lower wicks after London open then a small fall going into YS session.

 

GU - Said the divergence is a concern, bias down and looking for solid set ups to continue trend. Scrappy day with the lower support level holding 1.5625.

 

EJ - Bias was up until price action confirms otherwise, even then if we do have a pullback will be looking for signals to resume uptrend. Like EUR lots of lower wicks around London open then a bit of a fall. The sell divergences played out.

 

7 Feb

 

Interest rate day UK and EUR.

 

EUR - D lower high negative close, appears to show a 4 day reversal pattern. RSI crossed lower. 4hr made a lower high RSI below 50 level. Bias down.

 

GU - D closed a doji, showing positive divergence RSI still below 50 level. 4hr showing positive divergence and a base forming. Bias up.

 

EJ - D negative close doji at the resistance level 127.75. D has crossed RSI lower after the divergence. 4hr still on higher high higher low but thats looking like failing. Short term bias down but should flow confirm move up on 1hr with positive close crossing RSI/8lwma would be looking for uptrend to resume.

[Snow Dog 10]

EJ moved up to the area of the highs in 1 big 15 min candle this morning then spent 4 hrs going nowhere. 1hr engulfing negative close. 15 min lh little/no lower wick in direction of trade. Out at the prev days lows +79.

 

One thing we need to work on is re-entries when its apparent that it isn't going to reverse.

[Snow Dog 10]

Recap 7 Feb

 

Interest rate day UK and EUR.

 

EUR - Price moved up to the W pivot where it stalled for 4 hours, bias down then played out.

 

GU - Bias up played out.

 

EJ - View was short term bias down but should flow confirm move up on 1hr with positive close crossing RSI/8lwma would be looking for uptrend to resume. We did move up at London open, same 4hr stall and fall as EUR.

 

8 Feb

 

EUR - D engulfing negative close stopped at the 11-24 Jan resistance level/W M1. 4hr and 1hr lower high lower low flow. Below RSI 50 level on 3 time frames. The only doubt is if the market having absorbed Draghi's comments decides to resume the uptrend. Bias is down move up would need solid price action first.

 

GU - D has upper wick and RSI crossed up. 4hr and 1hr above 50 level. Bias up.

 

EJ - Same as EUR, bias down but if the post news comments do not follow through will need solid candle patterns to resume uptrend.

 

Friday morning so care needed.

[Snow Dog 10]

Just thought I'd chuck up D charts to show the previously identified SR levels.

[Snow Dog 10]

8 Feb

 

EJ - Same as EUR, bias down but if the post news comments do not follow through will need solid candle patterns to resume uptrend.

 

Friday morning so care needed.

 

15 min lower high little/no lower wick in direction of trade. Exit when W M2 held after bounce up 2hrs earlier. +46.

[Snow Dog 10]

This finishes one of our best weeks ever. 9 wins 2 losses, one of the losses was a completely stupid trade taken by Mrs V. :doh::doh: Wasn't system or close to it so not posting.

[Snow Dog 10]

Recap 8 Feb

 

EUR - View was "Bias is down move up would need solid price action first". Price had a small move up at London open, hesitated for approx 4 hours before falling on a 15 min engulfing lower high negative close (the close lower than prior 2 candle closes). I have highlighted the 1 particular candle.

 

GU - Bias up played out.

 

EJ - Same as EUR, bias down but if the post news comments do not follow through will need solid candle patterns to resume uptrend. Bias down played out.

 

 

The engulfing close indi shows where the candle immediately before the arrow closes above/below the prior 2 candle closes.

[Snow Dog 10]

Trade Rules

These rules are very close to ours. I have been asked by someone to help with their trades rules which is not possible. All I can do is say what mine are. These are our bread and butter trades, those that do not comply with this will be very few and far between. They should either have solid logic that we can live with or be part of a trading strategy that we previously used but is not the main focus now.

 

General

 

I will trade according to what I identify as the flow of the market. I will analyse EUR, GU, EJ prior to the trading day. I will look to trade the currencies that comply with my analysis. I accept that between the time of my initial analysis and London open circumstances may change and I will take that into consideration.

 

I will research the methods, currencies and time of day that I choose to trade (20 days each in uptrend/downtrend/sideways markets). This will assist with the background to be comfortable in my method.

 

Rules

 

I will:

- do analysis from D, 4hr and 1hr and enter from 15 min and if necessary 1hr candles.

- look for flow from my 3 higher time frames. Are we above or below 8lwma, has RSI crossed its signal line (8 RSI, 8sma), above or below the RSI 50 level. Do we have engulfing closes or completed candle patterns (higher low/lower high, double top/double bottom, morning/evening star). Big picture trend in line with D, short term counter trend from 4hr/1hr.

- identify support and resistance levels that can influence the trade

- look for divergences

- enter trades from 15 min chart, candles that open and close opposite side of 8lwma or test the 8lwma

- always use stops, a few pips beyond the last swing high/low. Typically 15-25 pips on EUR and GU, 25-35 for EJ.

- assess exits depending on range of the day, typically at support/resistance levels, psych levels and pivots.

- look to trade at three main times around London open, pre/early US and post US news

- trade at other times only if past analysis supports this e.g EJ during late Asian session/pre Frankfurt open

- trade with the trend as identified by higher time frame analysis and buy above/sell below 200 ema on 15 min. This ema is a guide and price action must support each decision. Above/below any ema will never make it a trade, proper analysis does.

- trade counter trend from proven support and resistance levels and W pivots. Only when price has proven over a period of several hours that it does not want to continue in trend (specifically not 1 x 1hr candle). I will look to assess divergences and candle engulfing closes for patterns (higher low/lower high, double top/double bottom, morning/evening star) on 1hr that by their very definition require several hours to complete.

- accept system compliant losses as the risk of doing business. I will critically assess each loss for mistakes in execution or for possible improvements to methods. I will not accept none system losses (or none system wins) and will strive to avoid repeating errors. I fully believe Discipline is the Bridge Between Goals and Accomplishments. None system trades will not get me to my goals.

 

These are the general trade rules I follow, amend them to fit your trading circumstances.

[Snow Dog 10]

With the above rules in mind go back and look at the D analysis I post, then the trades taken and look for the view in trend or not. If CT look for the reasons, I'd usually mention SR level/W pivot, several hours refusing to continue in trend and good 1hr set up candle.

[Snow Dog 10]

You can expand your own rules to include more specific/technical requirements of your preferred set up e.g. size of 15 min candles on entry such as leaving eur, gu 15 min candles larger than 30 pips. For me I have a requirement of little/no wick in direction of trade on set up candle.

[Snow Dog 10]

Key levels, will they hold or fail

There are numerous key levels on any chart. For example previous support and resistance levels, pivots, round numbers, fib's. The more important the level the bigger the reaction should be. There are some very good traders out there that can identify and trade these key levels.

 

I look to exit trades at key levels and then look for a reaction. As an example if a certain price caused a 200 pip move previously and comes back hits and moves 40, hits again and moves 20 (hopefully you've been in all the trades in direction of trend). Those smaller bounces away from the key level are usually pretty good indications that the key level will fail.

 

Nothing works 100% (as previously mentioned and price will do what it wants) but apart from the hope that we will have been in the moves (trading higher lows and lower highs) to the key levels, we look at the size of bounces. If the bounces are getting smaller we'll look for the right candles to see if that key level will fail.

 

Higher lows/lower highs from these levels provide opportunities to enter the market at extremes.

[Snow Dog 10]

Discipline is the bridge between goals and accomplishments.

 

If you can get this simple concept right you'll probably have a great trading career. The only trick is it's a massive all embracing concept.

 

Discipline to:

 

1)Take the time and effort to check your trading plan works (in up/down/ranging markets).

2)Execute flawlessly. This doesn't mean every trade is a winner (they won't be) but it means to trade when you see your rules play out.

3)Not chase a move simply because you are scared you'll miss out, there are more trades coming.

4)Know the difference between a price move and a trade. A trade is something that complies with your rules. A price move is a random jump in the market that you couldn't have anticipated.

 

So plan your trades, trade your plan and avoid the wrong trades.

[Snow Dog 10]

1. Trade what you see not what you think. Don't get locked into an opinion about direction. You could be wrong just as easily as right.

2. Build a strong self image.

3. Review your trades and your goals.

4. Mistakes are valuable lessons, perhaps more important than winning trades. Make sure you learn from and don't repeat mistakes.

5. Have you looked at how your system stacks up in a trending (up and down) as well as a ranging market?

6. Learn to relax. Feel good about yourself.

7. Think clearly, got major problems in your life? If you do it's probably not a good time to trade.

8. Picture yourself as a successful trader.

9. You do not have to have trades generating hundreds of pips to make a great income.

10. Don't carry on making the same mistakes, if your system is not working stop trading real money and go back to the drawing board. Making the same mistakes is going to give you the same results and it isn't pretty.

[Snow Dog 10]

1. A none system trade than wins is probably the worst thing you can have happen to you. You'll either dilute your system or trade everything in sight thinking you can. Act in your own best interests.

2. Trading rules, get them, follow them. Trading rules should cover entry, stops and exit strategy. Its your trade take 100% responsibility. Rules can also cover hours you trade, stopping after so many losses, whatever is right for you.

3. Trading because you are afraid of missing a move is not acting in your own best interest.

4. If its going up buy, if its going down sell.

5. Flawless execution. You don't need to buy the absolute low or sell the absolute high to make money. Flawless execution means acting on an opportunity in terms of your rules the moment that you see it. Act without hesitation. Follow your rules flawlessly.

6. Use stops always.

7. Lock in profits, trail stops in a manner appropriate to your system.

8. In this business protecting yourself and acting in your own best interests is so much more important than taking a chance. Its not even close. Remember you are trading, not gambling.

9. Keep yourself out of bad losing trades, the quality winning trades per your system will come.

10. Bank profits, what's the market offering and what are your goals? Let winners run.

[Snow Dog 10]

1. Setting goals. They must be realistic, attainable and measurable. Visualise yourself reaching these goals.

2. Always use stops, appropriate to your system.

3. Time has no bearing on money. You could earn 5% in an hour more than you get from a bank account in a year. That has no bearing on whether the market is going to carry on in the same direction.

4. Nobody went broke banking profits.

5. Review each session, what did the market give, what could you reasonably get.

6. If you are consistently falling considerably short on whats reasonably available review your entry and exit strategy.

7. Demo trade successfully before you trade with real money. The market will be there tomorrow.

8. Go for experience before you go for the money, in trading and in life in general.

9. Don't stay married to a trade if everything suggests get out. Review losses, what, why, where and when are always good questions to ask. Did you trade your plan.

10. Plan your trade, stick to your system.

[Snow Dog 10]

1. Poor self discipline is the quickest way to lose money. A good trader with a poor plan will outperform a bad trader with a good plan.

2. Discipline is the bridge between goals and accomplishment.

3. You are not gambling, you are trading, this is a business treat it like one.

4. Your job is to take calculated risk. Calculated is the key word, what does your research tell you your system will do?

5. Forgive yourself for making a mistake and move on. Don't repeat the same mistakes.

6. Reach a stage where you can control your emotions. You can do that by ensuring your plan works and if a trade does not go your way that's just one of those things. You will not always have winning trades.

7. Set achievable, measurable goals. Percentage winning trades and numbers of pips. Average wins and average losses will influence these numbers. If an average win is 150 and an average loss 15 you need far fewer winning trades than if your average win is 30 and your average loss 15.

8. Do not give yourself undue pressure trying to trade on a full time basis too early in the game. Act in your own best interests.

9. You cannot control the market, you can only control yourself and react to what the market gives.

10. The market will do what it wants to, not what you want.

[Snow Dog 10]

Often when gu, eur are moving up through 85 level it will push through the round number to + - 15. The opposite is also true when falling through 15 it will push to 85. Whether it is big boys taking out some stops I don't know.

[Snow Dog 10]

Wait 20 minutes and try again. Perhaps more appropriate on 5 min charts.

 

When higher lows or lower highs are running nicely a move will be followed by a short period of consolidation before moving again, 20 minutes or so.

 

There are exceptions of course. When price moves aggressively away from a moving average perhaps due to news etc a longer period of consolidation may be required.

[Snow Dog 10]

Several things we talk about:

 

- smaller bounce from a key level = level likely to fail

- ignore weak pre/early counter trend US candles

- intra day higher low/lower high a decent signal

[Snow Dog 10]

Divergence on a bigger time frame, D or 4hr, is a great way to get an early warning of a potential counter trend move. When pa confirms the divergence with a good candle set up (such as a hammer or engulfing close), or you get a signal from indicators you have tested (RSI cross of its ma, RSI cross of 50 level, move through 8 lwma) a decent move will generally follow.

[Snow Dog 10]

Price action must confirm the divergence. On any time frame the higher low or lower high that follows the divergence is normally a good set up.

[Snow Dog 10]

In trend we look for flow to continue in particular on 1hr. Higher highs higher lows or lower highs lower lows.

 

Counter trend we want flow to prove over many hours that price does not want to continue. We would be looking at higher lows/lower highs, double tops/bottoms and morning/evening star patterns. By their definition they are multiple 1hr candle patterns. Finishing off with an engulfing close would be good, price closing above/below the last 2 candle closes.