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Trading spot fx euro using price action
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Trading spot fx euro using price action

  #11 (permalink)
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As you gain experience you'll have a better idea of when price will go further. You'll start noticing patterns in the price movement and also how price is behaving during those times and you'll know that there's a good chance it will run. So really, just keep getting that screen time in and make sure to watch price move and it will come to you.

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  #12 (permalink)
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Steep learning curve


Trankuility View Post
As you gain experience you'll have a better idea of when price will go further. You'll start noticing patterns in the price movement and also how price is behaving during those times and you'll know that there's a good chance it will run. So really, just keep getting that screen time in and make sure to watch price move and it will come to you.

You mean the way the ticks appear and move on the screen, as opposed to the way the bars lie?

So far this my first week, each day I'm going over 4 hours of the market playing catch-up on what I feel I should be watching from a start time of 8:00am UK time, so in reality I only watch the market heartbeat for about an hour, the first 3 hours or so are not live, reading books, articles, figuring out what the latest bar means (just pressing the right arrow to move forward).

I hope this will change next week or the week after as I progress up the learning curve and have less hoops to jump through getting into this new phase of work.

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  #13 (permalink)
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Adamus View Post
You mean the way the ticks appear and move on the screen, as opposed to the way the bars lie?

In my experience it's a combination of both those, plus some other things, like the speed of the price movements. I wasn't looking for it but at some point I started seeing price behave in a certain way and I'd feel strongly that it's about to pop, and most of the time I'd be correct. I imagine this started coming about because I would watch price with an open mind and ask myself constantly, "How can I exploit this movement?" Might be different for others but that's how it was/is with me.

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  #14 (permalink)
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Day 4, chart and comments

Got a bit wrapped up it in all today and ended up with a chart with comments on that was so long I had to save the image in 3 seperate files. I know it makes it hard for people to follow what I was doing but still just for the record I'm uploading it. I hope it gets uploaded at least in chronological order.

I was indecisive about what to do regarding HH/LLs or H1/L1s. My plan had been to do a NT market replay of yesterday's EUR/USD to test HH/LLs and 10 point rannge bars but I ran out of time and decided to follow today's action using HH/LLs and range bars instead.

This defeats the object which was to compare the two methods, but hopefully over the weekend I'll get the chance to do market replays of both Thurs and Fri.

Unintentionally because I've been putting myself under a bit of time pressure to get stuff done, I launched into the trading session today and only realised half way through that the 10 range bars are actually 5 point range bars because Ninjatrader is set to work with half ticks.

That meant that it took me a long time to get from session start to the live bar when catching up. Hence the long long chart.

Essentially though I liked HH/LLs a lot compared to H1/L1 and 5 min bars, it was just all a bit simpler. Maybe it was just the day itself and I should reserve judgement until I've done the market replays over the weekend.

Still not happy about defining the trend, it helped to realise I should be looking at the bigger timeframes, (thanks Big Mike in that video you did) so from the daily and the hourly chart, I defined the trend as down, a significant retracement going on at the moment in the general long term up-trend.

Still I would love to get some kind of 'opening range' theory as for S&P. Need to read more.

With the range bars and the HH/LLs, I found I was regularly revising what was what, dropping the previous HH or LL count in favour of another one if it made more sense for the current bar.

I determined to make the entry rules simple like for 5 min bars: enter long only for HH/HLs, and vice versa.

enter short for LH/LLsk only.

I didn't stick with the higher time frame trend.

To enter, wait for 3 good trend bars after the swing point to be sure of the signal. i.e. the HH or the LL is the first trend bar. If it doesn.'t look good, wait for another.

Again the target exits were easy and letting the second lot run normally ended in B/E since I didn't know when to bail out.

Pulling up the stop from below the entry to break-even was slightly ambiguous to define. I decided only to do it when the next bar had closed above the close of the entry bar and even then only when it wasn't too close (ill defined)

I can see that trading for real would have got really hairy around 9:30 London time - I got confused enough what to do next just reading the chart in simulated step-forward mode. The market was again having difficulties working out if it wanted to break below 1.4500, it did a couple of time but came back each time in a display that was about as indecisive as my own.

Hope the charts make sense, have to go now, dinner calls.

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Trading spot fx euro using price action-eurusd-10-range-2011-05-06a.jpg   Trading spot fx euro using price action-eurusd-10-range-2011-05-06b.jpg   Trading spot fx euro using price action-eurusd-10-range-2011-05-06.jpg  
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  #15 (permalink)
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Just going over the day, I had 3 times as many short trades as long trades, maybe this was a reflection of the higher timeframe down-trend.

I had 8 trades altogether, 2 long and 6 short.

Of the 8 targets, 6 were hit, 2 hit initial stop. Of the 8 runners, I only took profit on 1 and the rest were either initial stop-outs or B/E.

I guess it would have been profitable even taking into account spreads, slippage and commission.

I get the idea though that it was a great day for trading, so maybe on any other day it wouldn't have been as good.

I see Big Mike's done a sequel to Thursday Euro action on the Elusive Price Action thread - I'm going to do the NinjaTrader market replay of Friday trading with H1s and L1s and 5 min bars, to see how it compares and then doubtless I'll have another hundred questions on the whole subject. In the meantime though it's Saturday morning and my time is not my own, there's a whole list of chores to take care of and the list's not getting shorter on its own

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  #16 (permalink)
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Monday 10am to 11am London morning session

This is probably not a good idea but I had only 1 hour just now and I thought I'll try following the market to see what I can do.

The main deal was, I figure, I've only got one hour so I really want to make a trade - which was not the way I should be looking at it.

Sure enough I managed to get myself in on a trade (ok, a paper trade) which broke my rules and of course turned bad.

I actually decided I would jump in half way through a bar - with hindsight I was obviously desperate to make a trade despite telling myself at the beginning not to make a trade unless it was begging me.

The Euro looks like its high time frame retracement is over and that it will resume its bull trend, so that's another reason I shouldn't have gone short.

The first reason I saw I'd missed was that the entry bar was on the trend line - just - but my rules say No. It must be completely away from the trend line.

I was busy looking for other signals as well as H1s and L1s, so I was very distracted. Not sure whether to read more Al Brooks or concentrate on what I've got.

I have to take care of some other matters now and I'll work out what to do next.

You can discover what your enemy fears most by observing the means he uses to frighten you.
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Trading spot fx euro using price action-eurusd-5-min-_-eurusd-5-min-bid-_-eurusd-5-min-ask-2011-05-09.jpg  
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  #17 (permalink)
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Rules concerning the trend

I figure that the simplest definition of a trend is what a child would say if you asked one to look at a chart. I can't remember where I heard that, probably the Market Wizards, but it occured to me now that these are the lines I should be thinking along.

Looking back at the chart for earlier today, I can see the trends, particularly the bull trends, start below the EMA and end above it, so instead of rigidly sticking to a relatively random rule of not entering a position until there are three clear bars on the correct side of the EMA denoting strength, I'm going to loosen off that rule for trades in the direction of the higher time frame trend.

So if today is the second day of the renewed bull trend for the Euro after a retrace, then I'll allow myself to go for any bull trend trades regardless of the EMA, but I won't touch short trades unless the market is well below the EMA, i.e. according to my rules it showed 3 bear bars clear below the EMA.

Maybe that makes sense in the long run, maybe it won't. I think it's better to go along refining the rules I'm using rather than trying to take on five new types of signal and miss the stuff I'm meant to be concentrating on.

One signal I do want to use though is the reversal bar, which don't seem so frequent at all, but I'll leave out stuff like double top twins (up/down) etc.

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Trading 5min bars, 3 hours London morning session

Only done 3 hours, from 11am, the second half of the London morning session through the first hour in NY.

Reason being, I want to run through the same period using HH/LLs and range bars and time as always is limited. Didn't help that I wasn't organised enough to start at 8am when I intended, but I'm still fighting to stop this disorganisation being a feature in my schedule.

Anyway, checking the higher time frames, on the daily chart the Euro is still in a bear reversal, or perhaps even it can be called a new trend now since it's broken any trend lines I could draw on the bull trend. Or maybe it's just daily chop!

On the hourly chart it looks choppy for real, although better said perhaps we have clear bear trends seperated by choppy retracements - too choppy and long to call flags or trends themselves.

On the 5 min chart I'm always a bit out of my depth when starting. At 11am, the market was in a retracement and gave me a potential L1 to think about but since it was such a clear bull trend bar, I didn't think of trying to take it and wasn't given the opportunity to anyway.

The next 6 bull bars made me think I'd have to restart my H1/L1 count but I have no clear idea of whether to or not, confusing, since a potential L2 appeared which would have been a good 15 pip scalp.

I'll have to re-read the rules on H1/L1s and H2/L2s to work out what to do about that.

I put more annotations on the chart after that point which looks better than my previous charts because I could expand the x-axis to show only a few hours and not a whole day as I've done before.

I think today was good experience of a ranging market, although I'm not sure it can be called 'choppy'.

I made up my mind beforehand to look for reasons not to take trades, to counter-act my desire to dive into trades. I don't think I was seriously tested though - I paper-paper-traded the extra trades I wanted to do, so I didn't put them on the chart but I followed them in my mind. A bit of cheat since I'm not sure I could do that if I was trading live - e.g. I saw an up/down/up which would have been a good trade, and a reversal that would have failed, a break-out of the range that looked like it was going to fail at 2pm when I stopped.

Only saw one real L1 that I would have traded and it slam-dunked my stop.

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Using market replay to do the same session with 5 pip range bars

This time I'm replaying the same session as this morning and using range bars instead of 5 min bars.

I'm using 5 pip ranges and a 10 pip target with stop placed according to the signal bar.

This time instead of just doing it in my head and annotating the chart, I used the chart trader to simulate entries and exits. It was a lot more realistic and I obviously need an ATM to place the initial stop and targets for me, and making them OCO since I wasted a lot of time doing that.

So the result - it was hard. Even with the benefit of knowing more or less what it was going to do, although I tried to ignore that.

Plus I made a lot of mistakes because I rushed it and ran the market replay on fast forward a few times when I shouldn't have.

I think the lesson of this story is that I should have only entered on the bull trends once the market had passed the previous HH, or for bear trends vice versa. The losses would have been smaller and a couple would have been winners, instead of just the one. If I had managed to take it.

As I said, I was rushing it with market replay on fast forward so I had several technical mistakes, including leaving a stop in place which made me miss a probably winner at the exact same spot.

Thinking about it more, I guess I didn't discover anything conclusive to make me choose this HH/LLs with range bars vs. 5 min bars.

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Last edited by Adamus; May 10th, 2011 at 01:50 PM.
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Same session but with perfect hindsight


This makes it look easy.

I'll have to sit down again and look at this and ask myself if I seriously ever could trade this perfectly.

Or whether I'm fooling myself about hindsight here.

You can discover what your enemy fears most by observing the means he uses to frighten you.
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