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Snow Dog

Higher Lows Lower Highs

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Markets go from highs to lows with bounces along the way. These retracements provide good opportunites to enter into a move with a relatively small stop loss. A good trader said to me that the first retracement is the best trade, ie the first higher low/lower high.

 

I have previously used indi's but my best results come trading naked so I'm back to that.

 

There are 3 trades to consider:

 

1)Higher lows and lower highs from 5 min can be taken at extremes (also known as 1 2 3 tops/bottoms) and are great trades. I want to see some supporting information from the 15 min chart ie a nice reversal candle and for the turn to be at a key level ie pivot, round number etc etc.

 

2)What I'll call 100% system trades that will follow the 1hr and 15 min candles with entry from 5 min higher lows and lower highs. I do not want to see an obvious contra indication from 15 min, e.g. I would not want to be selling a 5 min lh immediately after a high vol hammer on 15 min. I would like to be selling a 5 min lh after an engulfing negative close candle/shooting star with little/no lower wick on 15 min. There are always exceptions to the rule, a double top high, lower close on 15 min that fails to go higher would be a good sign of failure to move up. For example, if a 5 min lower high followed a previous 1hr negative close and a 15 min DTHLC I'd consider selling.

 

3)Between 7 and 9 am gmt where a decent range is around 50 pips, we will look for 1 min hl/lh's at key levels (round numbers, psych 75/25, prior session proven supp/res levels, pivots etc). This is to try and take advantage of Frankies open 40-60 pip range, the London open head fake moves.

 

 

General

GU - Each time there is a stall and turn that extreme becomes the starting point potentially for the 125 pip London session move. This bigger move is more likely to happen after 9.30 gmt than before.

 

Some knowledge of candlestick analysis is required as you want to be trading the right candles. To help see http://www.candlesticker.com. I see there are some candlestick threads here.

 

This is not some indicators line up press go system, analysis is required as markets change. Some of the key items are: consider key levels for turns (round numbers, D W and M pivots, some fibs), follow the 1hr, are we above below 1hr 8 lwma, look at 15 min candles, 5 min hl/lh's. A cross of an 8 lwma on 5 min chart gives an easy visual clue of a higher low or lower high in most cases. Once set up on 5 min price should move a pip or so beyond the high low of the set up candle to confirm the trade.

 

Current set up

 

1hr chart. 8 lwma on close. Pivots and pivot point multitimeframe.

 

15 min chart. 8 lwma and 24 lwma. Prev day hl + open. Better volume.

 

5 min chart. As per 1hr chart plus sdx sweetspots v 5.2 for round, half, 25 + 75 numbers. #MTF moving average settings 60,8,0,3,0 to approx the 1hr 8wma. I have some traffic lights that show whether 1hr (top line), 15 min (middle line) have closed positive green or negative red and whether we above green or below red the 1hr 8 lwma.

 

I am unable to post templates as there is a 'virtualisation' problem between vista/mt4,

 

NB Watching and trading the right candles is always important.

 

Stops: Around 15 pips 1.5% of capital.

 

Exits: Up to you. Please consider that my better half Mrs V has been inducted into The 20Pips Bank Hall of Fame and thats something I have to listen to all the time.

 

NB This is naked multi-timeframe trading, the above "indi's" are not any kind of rsi etc combo they show the state of candles, 1hr and 15 min ie in their upper or lower half and whether we are above or below 1hr 8 lwma.

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Had this sell on ej today.

 

1hr down 15 min down, nice lh shooting star with little/no lower wick. Tried to exit at +19 when move below even number failed. Jumped up quickly and I couldn't get out, thought it was going again and that failed. Out at BE.

6.gif.1aaf8a12bf96731f4da86c6b4802b243.gif

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......... A good trader said to me that the first retracement is the best trade, ie the first higher low/lower high............

 

I can tell when it is the first HL or LH 100% of the time - in hindsight.

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Have a look at both charts posted, if you trade with mt4 you'll know the buy and sell lines are where I've entered the trades, so there's no 'hindsight' about it. There may be the odd (repeat odd) trade where I forget to take a pic when I'm in the trade. By then I trust I'll have built up some cred.

 

On another point are you normally so distrustful of new posters here? Not a very nice welcome.

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I can tell when it is the first HL or LH 100% of the time - in hindsight.

 

If there is a 100% set up that I didn't take I'll make a post and say why.

 

For example 100% system trade 1hr down 15 min down but I didn't take this entry just above the RN as I thought the 20 odd pip set up candle was a little too large.

 

I see from your profile that you are at tradestation, as mentioned above mt4 is kind enough to place buy and sell on every chart so you'll know where an entry is made.

 

Please either contribute constructively or take your comments elsewhere.

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Mrs V liked the ej set up better. Was against the 1hr lower close but had 2 x 15 min hammers with vol coming in. Nice hl at extreme moving above the RN, days open D S1 combo.

 

We got a microsoft warning that internet explorer has stopped working and we were at W M3 so we exited with +26.

 

Same warning has come up again, 1st time I've ever seen that. NO funny websites or emails opened.

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These are the kind of days you love to see wish I got more pips. With the computer problems this morning I went out having some things to do and missed out on this one. A perfect hl continuation on ej. 100% system.

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I got asked this question and its an important point.

 

What I meant was, what level (psych/pivot...) made you take the trade. We had yesterdays high and res. at 529x above.

 

 

We didn't take the gu trade, we were watching and I liked it (gu) but we had ej up as we also liked that. Apologies if my post suggested otherwise but I was sure I said we missed the gu trade for the ej set up.

 

Generally I do not care what psych level/high/res level is coming PROVIDED the set up is right approaching it I'll take the trade. I would have taken the GU trade at 88 if we were not set up on ej.

 

The reasons why I'll take a trade and that one specifically. A weak bounce from a key level is an indication that it may well fail. The rationale being if the big boys were going to defend you'd see vol and a bigger reaction. I don't know how long trading time it took me to learn this lesson but its served me well. A weak bounce from a key level is an indication it may fail.

 

On the move you mention Y's high was 96-ish but price was struggling at M3 5281. The first bounce lower was to 5250 after that bounces were to 65 and then 75. Thats a vital clue. See the chart with the arrows up showing the weaker bounces = the higher lows.

 

When the right circumstances per system develop ie in line with 1hr, 15 min, 5 min hl with set up candles little/no lower wick take it and don't worry what the res level is. Those circumstances above = high prob trade.

 

Shout if above is not clear.

 

See post 31 May 2010 Vantage fx

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Now you are really not going to like me when I say that that little link at the bottom of your most recent post I believe is a no-no per rule# 5 - No promotion allowed. So please remove it or ....

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Now you are really not going to like me when I say that that little link at the bottom of your most recent post I believe is a no-no per rule# 5 - No promotion allowed. So please remove it or ....

 

No problem with that at all. I don't see an edit option for that post can the moderators delete the blog reference pls. I can always paste whatever from the blog here. Thanks for the warning, cheers.

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There weren't any decent set ups for me so no trades today.

 

On a different note from the blog:

 

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. IMHO of course.

 

Have a think about it.

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And finally, for today at least:

 

You are not gambling, you are trading, this is a business treat it like one. Your job is to take calculated risk. Calculated is the key word, what does your research tell you about your system?

 

Had a look at this or any other method? Check it out and satisfy yourself that YOU can make it work for you.

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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.

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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. Nobody went broke banking profits.

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Review each session, what did the market give, what could you reasonably get. If you are consistently falling considerably short on whats reasonably available review your entry and exit strategy.

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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. Learn from these trades. Did you trade your plan?

 

Plan your trade, stick to your system.

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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.

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

Trading rules, get them, follow them. Trading rules should cover what set up, 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.

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