Watch A Typical Day Of A Real Day Trader

[ForexTraderX 10]

Ok... so, essentially, one significant part of the USD/CAD analysis that led me to conclude a long trade was a likely outcome was the way that various highs and lows had been developing over the past weeks, as well as which highs and lows had been retested, and which ones hadn't... as well as how significant various highs and lows were likely to be (for instance... a weekly high is more significant than a session high, usually because a weekly high is going to have a higher concentration of buy stops just above it than a typical session high would.)

 

So, with that in mind, take a look at the following charts. See if you can start to understand how I'm looking at situations like the USD/CAD long opportunity last week......

 

Henry... let me know if this sheds some light on my reasons for taking the USD/CAD long. Thanks.

 

FTX

[ForexTraderX 10]

ForexTraderX:

 

On your # 6 post, page 1 you said you look to see a strong trend as defined by the 20 ema above the 50 ema for a filter. See above quote. I understood that to mean for a long trade you need to see the 20 ema above the 50 ema with both sloping up as a condition for considering a long trade.

 

But on your Oct. 18, 2012 #360 page p 45 you were saying you saw the easy trade for the day to be long USD/CAD. But on the daily both emas looked pretty flat and the 20 ema was not even close to being above the 50 ema at that time. So another rule or rules must have trumped the moving average filter. Please explain.

 

And congratulations on your great call for this long USD/CAD trade, amazing.

 

http://cdn2.traderslaboratory.com/forums/images/FH_Sahm/smilies/custom2/cheers.gif

 

See chart.

 

I posted some of the most important factors that I saw regarding that USD/CAD long trade... but I wanted to address some of the questions you brought up regarding this trade, and my "formula" that I included near the beginning of this thread.

 

The "formula" that I give in the beginning of this thread is designed to help people who are struggling to use a "turn key" analysis method for finding high probability opportunities once they have developed the skill for reading price action. If they have a relatively undeveloped eye for price action, then they will probably only be trading A+ pinbars, and bullish/bearish engulfing candles.

 

As price action reading develops, there are more opportunities to be taken advantage of, but regardless, the method I outline is something that I use on a regular basis, and it's also something that I believe most people can use once they have spent maybe 6 - 12 months watching charts and have developed their eye for price action and S/R levels.

 

Personally, I do a whole lot more than just this setup (though I do use it all the time still...it's probably my most straightforward "just grab a trade and make some money" setup)

 

Often times I'll take a trade that may conflict with this basic setup, for any number of reasons. If your watching my trades to see if I "followed my rules"... you'll be confused no doubt.

 

I tend to look at the market on a more organic level... a lot of market correlation, sentiment, etc. A lot of trades based on taking educated guesses as to who might be buying at what price... and why, and where they will best be able to get out, and why...etc.

 

It's sometimes more like a poker game than market analysis, but it works for me. However, many want something more mechanical, more concrete, and something easier to determine using empirical data rather than inference and educated guesswork. That's really what the method I outline in the beginning is all about. Sometimes I trade with it, and sometimes, I don't.

 

FTX

[ARTjoMS 10]

On the daily, 4 hour and 1 hour chart it looks like USD/CAD is making a double top to the Oct. 3 High.

 

It is usually not a good idea to relay on what it "looks like" without confirmation. I don't recommend guesswork, unless you are really good at it.

 

Just put up 1minute chart and watch how price approaches that level... That is what I call a great textbook example. Stall, BO, test - one of typical ways that suggest that price movement will continue,

 

Solid red line is 03.10 top, purple lines - various resistances from 18.10.

[ForexTraderX 10]

It is usually not a good idea to relay on what it "looks like" without confirmation. I don't recommend guesswork, unless you are really good at it.

 

Just put up 1minute chart and watch how price approaches that level... That is what I call a great textbook example. Stall, BO, test - one of typical ways that suggest that price movement will continue,

 

Solid red line is 03.10 top, purple lines - various resistances from 18.10.

 

Ya, that's a pretty good observation Art on the way price approaches. It shows the majority of the "impulse" type moves are bullish, not bearish. This is one of many clues I like to use to help me figure out if i'm gonna fade a level or trade through it.

[ForexTraderX 10]

Also... another point on those stops and prevoius lows and highs and such, as I was discussing in the USD/CAD...

 

someone asked me a while ago a question that went something like this:

 

"Ok... so, if there is a previous hjigh for a day...say, yesterday. And yesterday was a pretty strong bearish day... it makes sense that a lot of people would put their stop right at or slightly above the high... and I get that the stop order will basically be a 'limit buy' order... so, once price moves up to test that high, shouldn't it suddenly jump up 5-30 pips as those limit buy orders (the stops of the guys who are short) are triggered? So, why do you look to FADE those moves? wouldn't it make more sense to use those buy orders to help push your trade up?" How do you know that it will not only bounce a bit, but often it reverses a great deal, say, 50, 75, or 100+ pips?"

 

At first glance, it seems that it WOULD make more sense to use a large cluster of buy orders to help push the market up.

 

Except, I'm really looking to see what the underlying message the market is telling me!

 

Lets say last tuesday set the high of the week. Price then sold off 200 pips by friday, and now it's the next monday, and suddenly, price is within about 15 pips of last weeks high.

 

It makes sense that there would be a high concentration of buy orders (stops, and a few limit breakout orders) above the high of last week made on tuesday.

 

So, price SHOULD hit this, and push up pretty fast, pretty strong!

 

Except... what if it doesn't push up. What if it spikes, and instantly reverses. Or, what if it tests the level, even pushes past it by a few pips...but then it just stalls, and starts to drop back. What if 2 hours later, it looks like it broke the high of last week by a couple pips, but since has been just consolidating, with lower and lower volume on the green candles as the last 2 hours has past....?

 

Well, what this tells me is simple:

 

1. There were probably a lot of buy stops at or just above the high of last week.

 

2. common sense says if there is a price point with a high concentration of buy orders, once price triggers those orders, it should move up quickly.

 

3. However, when price touched the high of last week, it did not move up quickly, but instead stalled, or even started to drop somewhat quickly. The Only Way price can hit a large concentration of buy orders, but yet stall or drop off, is if there is even a bigger bunch of sell orders right around the same price.

 

4. It's then reasonable to conclude that there is ample evidence of a large seller who is selling such a quantity that it is no only absorbing all the market orders being executed at that time and price, but also all the limit buy orders at that price.

 

5. Now that the "big money pro's" have essentially tipped their hand as to where their order is, as well as how big it is (big enough to absorb a high concentration of limit and market bids, and take the starch out of the bull move), and what their intentions are (selling), and the level of commitment to their trade (pretty significant, considering they picked a price point where there were a LOT of buy orders, and started selling there....and yet the market still moved down. So, this isn't a small short order they are placing... it's some serious size, and that means serious commitment)

 

6. So.... with this info that we can have some expectation of being correct more than we are incorrect... and therefore, using those "buy stops" to help push the trend further is all fine and good... but the REAL opportunity is when those buy stops are fully absorbed by sell orders... because losers getting stops hit is one thing. But to have big money traders using the losers stops to help fill their orders... now that takes serious commitment by some serious money... and that's the side that I want my trades to be on.

 

FTX

[ForexTraderX 10]

It is usually not a good idea to relay on what it "looks like" without confirmation. I don't recommend guesswork, unless you are really good at it.

 

Just put up 1minute chart and watch how price approaches that level... That is what I call a great textbook example. Stall, BO, test - one of typical ways that suggest that price movement will continue,

 

Solid red line is 03.10 top, purple lines - various resistances from 18.10.

 

Also, contrary to popular belief and many technical analysis books... a horizontal line that marks support or resistance actually is less likely to hold the more times it is tested.

 

A lot of folks seem to get very worked up over this idea... not quite sure why. And it makes perfect sense also. A common chart pattern is a "double bottom". A less common chart pattern is a "Triple bottom". A even less common chart pattern is a "quintuple bottom". And rarer still? the "Octuple bottom"

 

If somehow support or resistance actually did strengthen each time it was tested, then octuple tops and bottoms would be more common than triple tops and bottoms.

 

Anyway Henry, this move up in the USD/CAD was the 2nd retest of this resistance area, and each time it made a higher low as it dropped than the time before... plus when we hit the sell stops as price dropped into the 9770 level, but then FAILED to quickly push down, but in fact stalled and started to reverse... it was all too clear that there was some big money that was busy accumulating around the 9770 level, and would likely push right through to a price that they could dump their obviously large long trade... and the best place to find enough buy orders for them to sell into and close out their trade would be around the 9880+ price.

[ForexTraderX 10]

Well, at the risk of sounding something like a broken record... I'm looking to short CAD, against either EUR, or USD.

 

Between the two, sentiment seems bearish, and though we had a slight bounce off the lows in the equity markets (U.S. equity futures i'm looking at)... the asian equity markets are down for the day so far, and I'm thinking the S&P nneds to retest 1400 at least before we will have the possibility of a new upswing...

 

and since the EUR/USD has a high correlation level with the S&P... I'd say the safer bet is probably the USD/CAD long.

 

Not to mention that the USD/LFX (lite forex weight basket of currencies against the USD... similar, but different, than the dollar index) is showing on the daily chart what looks like a breakout yesterday, and is currently retraced to the point of the breakout... so, I wouldn't be surprised if we saw in general a risk off trade again today, at least until the immense amount of news and data releases comes out for the euro and other currencies today starting in about 90 minutes...

 

Yea. If one wants to avoid the news, the USD/CAD is absolutly the better way to go for a long USD, short CAD trade.

 

the best entry places are 0.9912, 0.9902, and 0.9886-0.9880.

 

Finally 0.9850 with a 30 pip stop, 100+ pip target would be a great opportunity IMO... it very likely won't trigger, but would be a great opportunity if it did.

 

The only thing about the USD/CAD long trade that I question is the news related selloff yesterday when the Bank of Canada announced that they were going to keep their prime rate unchanged. Based on just how overbought the CAD is showing on the COT reports, and the price action the last 2 weeks, and the fact we stll haven't hit parity, I think a long trade is still the play, regardless of the lack of easing by canadas central bank. (They did however warn of future possible rate decreases, in focus is how their housing sector does)... However, if we do have a deep retracement, it'll likely be due to the "aftershock" of BoCanada rate decision yesterday.

[ForexTraderX 10]

Today in fact... it's looking like the GBP is likely going to be stronger than the EUR....

 

I'M long both, but if I had to choose just 1... I think I'd look to get long GBP/CAD instead of the EUR/CAD

 

and USD/CAD still looks solid for a long.

[ForexTraderX 10]

Another really interesting looking trade setting up IMO is an AUD/CAD long... long from around 10.0210, then again at 1.0195-1.0190... And one final entry around 1.0180.

 

Seems like a bit of a reversal move from the bearish drop yesterday. with slightly better than expected news coming out of china, and the CAD just being so very overbought, and with the price action that has developed in the AUD/CAD over the past 2 days... I think a long from those points is kind of a trade I have to take.

 

No idea if it will make a profit, but the opportunity is there, and it should be taken.

[ForexTraderX 10]

I think this should just about be the low of the day in the USD/CAD... news may push price into 9885, but I don't see it dropping much lower today...or really at all, until we test parity.

[ForexTraderX 10]

Well... looks like it worked out just as I figured it might... the USD/CAD has shot up. That candle was indeed the low of the day. Here's a new, updated chart... looks like about 50 pips up from the time I took the last screenshot of the USD/CAD (15 min chart)

[ForexTraderX 10]

Here's a screen shot of the entry I got in the USD/CAD. Well... it was one of several entries, but nevertheless, it was a very good one.

[ForexTraderX 10]

ForexTraderX:

 

What days of the week and what hours during the day are you trading Forex ?

If somewhere in the world a market is moving... it's a good bet that I'm watching it. But, if I had to narrow it down, i'd say monday - thursday, the first couple hours of the europe open... and then if i'm feeling up to it, the U.S. session until london closes

 

 

Are there days of the week and certain hours that you consider to be the best times to trade Forex ?

 

Thank You

 

Henry1000

 

Yes. Every day except friday. Also, first 2-3 hours of europe session, and first 4 hours of U.S. session.

[ForexTraderX 10]

Well... it's shaping up to be a banner month. Of course, it could all change from this moment, and I could end up wishing I had called it a month about 6 trading days before the month was over...but, such is trading.

 

One thing I DO make sure of is whenever I have a double digit month (like this month, so far up over 10%)... I usually pick a number greater than half my monthly profit to "lock in", and that's the least I will finish the month with.

 

For example, today I decided to "lock in" 6% of my profits. This means my absolute max loss for the rest of the month cannot exceed about 4% from where I stand right now.

 

Truth is, I will now dial down my risk until the month is over on a day to day and trade to trade basis... I will probably accept no more than about 1.5% drawdown on open positions, and I'll set my max loss per day at about 2% for now.

 

If at any time my monthly profits drop to 6%, I will shut down my trading until the next month arrives.

 

Why do I do this? Because I can't express how psychologically demoralizing it is to have above average success in any given month, only to see most or all of it wiped out in the last few trading days of the month. This way, I know i'm virtually 100% guaranteed to finish this month with a minimum of a 6% profit... and that's a number I can live with without regrets, and with a good attitude towards trading in general.

 

Here's to protecting profits.

 

FTX

[ForexTraderX 10]

Well... I just got a small long position in the EUR/AUD.... here is 1 min chart with my entry.

[ForexTraderX 10]

Last chart for the day... this is a 1hr of the E/A I just got long in around 1.2510...

[ForexTraderX 10]

Alright...well, this is the final chart for now. Just wanted to include an update of the EUR/AUD trade I hopped in on just a little bit ago. So far so good.

[ForexTraderX 10]

Hey guys... another thing that I use on a regular basis is order flow information that is sent out in my newsfeed.

 

For all you out there taht think "oh man.... the smart money just does whatever it wants, if only I knew where the banks were placing their orders, I would be able to make money trading"

 

Well, there IS a way to find out where the banks are placing their orders. Also where nations are placing their orders. It's not the "holy grail" you might think it to be...but it is helpful... particularly in knowing what levels price may target, and who is interested in buying/selling at around what general price points...

 

If your not making money in the markets yet... check out this pic that I included with this post. This is one of many pieces of infomation that I am using to base my trading decisions on.

 

If you are still trying to buy and sell when this moving average crosses over that moving average.... man, I don't know what to tell you. Except that my information kicks the living shit out of your information. And I'm coming for your lunch. Every. Single. Day. Your lunch... is mine.

 

Moral of the story? Either learn how markets work by doing whatever it takes to develop the skills to be able to read price action, understand the "poker game" that the big boys play, know what market microstructure means, and know how various market participants operate, as well as why they can really operate no other way. (commvercials vs. large specs vs soverigens, vs institutional money over all vs retail vs informed participants using a particular type of order, and most uninformed participants using a different type of order...etc)

 

Learn how to read market sentiment, gain some understanding of market profile, and definately learn how to incorporate volume into your market analysis. Also learn how to use your brain to make some deductive as well as inductive conclusions about the siginifigance of what your seeing on your chart. It's not just a pattern. a particular set of behaiviors and actions all contributed to form that pattern. Now figure out what those actions and behaviors were. And by who. And why? Get yourself a news feed. And don't you dare confuse some pathetic idealized image of what you think a trader should or shouldn't do or consider in their trading with your own self image and self worth.

 

I can't tell you how many jackasses have told me "I don't pay attention to the news, because all the news is in the charts!!!" Or... "price discounts all fundamentals!"

 

Mind you, I believe the only people I've heard this from are those that DON'T trade full time.

 

Know why? Because any real full time trader knows that the only way they make money is if they take it from someone else. And I'd be a real moron if I wasn't profitable, yet already had made my mind up about what information can help me, and what can't.

 

Look. I'm a real person, who really trades real money, and really pays bills and buys stuff with it. And this is my primary job. And I am relentless in my search for better information. Because better information is what enables me to take your money from your brokerage account, and use it to buy my car and pay my bills and take my vacations with the family.

 

And besides, something tells me that my auto insurance won't be very sympathetic if I call them up and tell them "well, ya know... I would have paid you...but, I'm a 1 minute chartists super scalper... and that means I don't look at daily charts, news feeds, or trends in sentiment. So, it's not like you can blame me for not making money and paying you guys... because my competition had better information than me!!! It's really all their fault I'm broke!!"

 

FACT: it's not all in the charts. Sometimes it's other places. You can choose to identify those other places...or you can choose to trade with less information and knowledge than me. I'll give you 1 guess as to who will more often end up on top.

 

FACT: does this mean you absolutely need more than a chart to make money? NO, it doesn't. But it does mean only a fool disregards viable solutions to a problem that they haven't yet solved.

 

That's it for this rant...for now. If your not making money, just go through my thread, and if you don't understand what i'm talking about, or why some of these things are important, or how I use certain bits of information... and your not making money...

 

Then the reason you are not making money is because guys like me know more than guys like you, so we are better prepared to take advantage of more opportunities than you are, while at the same time we avoid dangers or poential problems more often than you do.

 

It's really that simple. Learn how to understand the markets. Read the markets. Recognize clearly what the market is telling you. Or turn off your charts, and go visit Find Jobs. Build a Better Career. Find Your Calling. | Monster.com , and get yourself a career you are serious about. Because this one isn't it.

 

FTX

[ForexTraderX 10]

Oh hey guys... I've not been on skype for weeks now..had a computer problem that was interfering. However, I've got that fixed now...and I'll be around later on...

 

so if anyone wants to hit me up on skype. Feel free to do so.

 

my ID is: forextraderx

[ForexTraderX 10]

Hey henry, I just made a post on another thread on this site that covered some other, seperate aspects of my thought process that went into developing my directional bias.

 

Some of these elements I mention don't apply specifically to the "double top" you brought up, but they DO apply in general as to how I develop my long term directional bias in situations just like this USD/CAD one we've been discussing.

 

Here is a link to that post. Read it, and let me know if this helps shed some light on how I do my analysis...

 

http://www.traderslaboratory.com/forums/futures/14233-never-catch-falling-knife-5.html#post164584

[ForexTraderX 10]

Presently, my only real considerations today are what price levels do I want to see in the EUR/USD, EUR/CAD, and USD/CAD...and possibly the GBP/USD, to justify putting more money at risk on a long trade (in any or all of those markets)

 

That's it. That's my only real consideration at this point, for this incoming london trading session.

[ForexTraderX 10]

Oh...I should also includ ethe EUR/AUD as a potential, viable long opportunity. I've already taken profits on the lowest entry at 1.2511ish... and closed out the rest that was on it for a very small loss. Now, I'm back in a small position, but I'm really confliced on this trade over all. Mainly because the AUD has been so strong, but it is approaching a pretty critical inflection poin,t, and I expect a stall, if not a minor pullback. That should be enough to provide the EUR/AUD enough of a boost to take some profits on the position I have now.

 

But, it's myh least favorite. USD/CAD long or EUR/CAD long are my 2 favorites.

[William H 10]

Good stuff, I look forward to sharing my trading insights.

[ForexTraderX 10]

This is a list of some of the more detailed posts I made regarding various longer term opportunities in the currency markets. All but one of these opportunities played out (or is in the process of playing out) pretty much how I speculated that they would.

 

http://www.traderslaboratory.com/forums/market-analysis/13737-watch-typical-day-real-day-trader-23.html#post160945

this goes into two opportunities that I saw in two seperate markets. One worked out extremely well (and is still working out in fact.)

The other... basically totally failed. But, I think it gives a good idea of how I look at the markets.

 

http://www.traderslaboratory.com/forums/market-analysis/13737-watch-typical-day-real-day-trader-28.html#post162540

my lower line was within 20 pips of the low for that next week, a low which saw a 250+ pip move

up off that level.

 

 

http://www.traderslaboratory.com/forums/market-analysis/13737-watch-typical-day-real-day-trader-31.html#post162744

A great GBP/USD short opportunity is mentioned here. We haven't retested that price again since.

 

http://www.traderslaboratory.com/forums/attachments/2/31834d1349455614-watch-typical-day-real-day-trader-aud-cad-long-opportunity.jpg

0.9925 was the low for almost 400 pips (and still going)

 

http://www.traderslaboratory.com/forums/market-analysis/13737-watch-typical-day-real-day-trader-32.html#post162754

price touched the lowest resistance level, and reversed literally at 1.5900... Exactly as I

mentioned in the post. It easily hit the target within a couple of days of touching and reversing off of 1.5900

Here's a link to the "results" chart: http://www.traderslaboratory.com/forums/attachments/2/31872d1349681026-watch-typical-day-real-day-trader-ga-short-update.jpg

 

 

http://www.traderslaboratory.com/forums/market-analysis/13737-watch-typical-day-real-day-trader-39.html#post163455

here is a post that goes into some of the factors and my thinking regarding the CAD shorting opportunity.

I posted this up on Oct 14th... so far, it'll all played out as I posted (so far. anything could happen of course)

[ForexTraderX 10]

Here's an update of what I think will likely be the best trading opportunity for the next session or so. CHeck out the picture to see exactly what levels I"m looking at for an entry price.