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

  #411 (permalink)
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Friday 2012-03-16

10 setups - but I only numbered 9 because one setup is an entry scratched and reversed, so 2 entries.

Reduced trading session, from 09:30 to 13:30 GMT+0

(1) Break-Out Pull-Back bull setup, offered only scratch B/E, missed anyway.

(2) Failure of (1), short, offered 14 pips. Late entry, hit target, got 10.5 pips.

(3) Break-Out Pull-Back bear setup fails, offering 6 pips. Missed it, too bearish, ignored the double bottom, and the tails and thought it was too far gone once it had broken above the MA.

(4) Break-Out Pull-Back bull setup scratched, probably for -2 pips. Got it but entry was v. late and exit too. -5 pips.

Invalid trade immediately afterwards - broke my rules. -3.5 pips.

Another invalid trade - thought I'd re-focused successfully but no. Took an untested setup. -7.5 pips.

And another invalid trade, although it was probably just mis-reading a setup rather than lack of discipline. -4 pips.

(4 again) Finally got in on the setup as it gave another PB, at the second entry: +18 pips - got it.

(5) Break-Out Pull-Back bull setup just after the US CPI numbers released. Offered 8 pips. Missed it completely, looked at browser at the wrong time.

(6) Break-Out Pull-Back bear setup failure, long trade offered 13 pips. Missed it, went the wrong way first and that took the wind out of my sails.

(7) Break-Out Pull-Back bull setup failure, short trade offered at least 8 pips. Missed it, again went the wrong way twice, trying to get in on a long PB trade before the BO. Paid -3.5 pips.

(8) Break-Out Pull-Back bear setup fails, short trade scratched for BE, failure long trade offered +10 pips. Got the short trade for -1 pip, missed the reversal/failure.

(9) PB setup long - got in on (8) long trade late with this PB, got 7.5 pips.

So, 4 out 10 setups entered. 3 out of 4 trades exited well.

Pips on offer: 75.

Pips achieved: 11.5

Invalid trades: 6, 3 totally invalid, 3 through impatience at setups & reading them wrong.

The 3 invalid trades were all in a row and make me think I had completely blown my focus but was unable to see it. I actually have a little checklist - what to do when I break my rules - which I read through but it looks like it didn't have the right impact. I'll have to beef it up, make myself think harder about what I did and what state my focus is in.

Part of the problem was also the speed I was trying to take decisions at. The market wasn't fast as it was a bit later, I should have been more relaxed.

The 3 other invalid trades were through impatience which stemmed from the volatility. That should be easy enough to overcome through practice at replay.

One other problem that's still there is the fatigue. Again I didn't get enough sleep and felt the mental drag as I tried to get into trading mode, analysis and decisions etc. I didn't sleep this time, deciding to combat the fatigue with a chi-gung exercise which does a pretty good job of waking me up. I would like to be able to trade today again without the fatigue, to see if I would have got some more of the setups and avoided the errors.

You can discover what your enemy fears most by observing the means he uses to frighten you.
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  #412 (permalink)
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thewardiknowof View Post
Yes I understand how you are coming up with your S/R levels now. The reason I was wondering is because there were so many, rather near together. I had found it hard to trade with so many close together when i was using only the 30 min as my HTF so I actually backed that off to the 4 hour (I trade EUR/USD spot also). My charts were cleaner. trendisyourfriend also gave me some suggestions on better defining the trend. Very helpful, in my opinion.

Not suggesting you change anything. If your method is working for you, STICK WITH IT.

Best of trading to you.

@thewardiknowof

here's a typical example from Friday. If I remember correctly, 1.3056'5 is the low from Tuesday and 1.3052 is the low from Wednesday. It looked like the market was interested in both levels. I hate trying to decide between them even though it seems a bit dumb having S/R levels so close but I guess I work around it when it occurs.

It's just a work-around to make up for my indecisiveness I guess. It seems I really need to look at what I'm doing when that happens and take a good look at whether I'm doing something that's logical and legitimate, or whether it just makes no sense. In a nutshell, I combine the two S/R levels and won't touch the break-out until it's gone through both. At the moment my ill-thought-out opinion is that it probably makes no difference.

Need to look at your way of doing it - and then also take a look at that volume nodes horizontal bar graph....

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  #413 (permalink)
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Yesterday nothing happened so there was no trading to be done. When the move did happen I had given up and was doing something else. So I have installed @Fat Tails ' User Defined Alert Lines and hopefully if the market decides to go to sleep for so long, I'll get the wake-up call too when it comes.

You can discover what your enemy fears most by observing the means he uses to frighten you.
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  #414 (permalink)
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(1) Looked like a great entry, break-out pull-back setup with stall and strong push, but I missed it, didn't have my stop entry in place for a long entry. Poor setup though, would have scratched it for -2 pips.

(2) Reversal of (1). Difficult but I guess with experience I should add maybe 2 or 2.5 pips onto my entry stops when it looks less convincing. Would have got stopped out in a perfect world too, but would have reversed in on the obvious short entry - or am I being hard on myself? It was crying out but I was too cowardly. +3.5 pips on offer, managed -5.5 pips - terrible exit management, not visualising what I thought would happen.

(3) Simple break-out pull-back setup and continuation for +6 pips - got it.

(4) Break-out pull-back setup at the next support below, failed for B/E, got in late, exited OK, -2 pips.

(5) Break-out pull-back setup offers two false moves up out of the bull channel that has formed, both failing, for -4 pips (-2 each). Missed them. Too bearish.

(6) Break-out of the bull channel floor here, should have bailed for +3 pips, only managed B/E.

(7) The bull channel that was building and re-formed after a break breaks again, and then price ploughs on through 2 S/R levels for +14 pips (conservatively). Got in late and got out even later!!!! -7.5 pips. Basic psychological error: looking at that lovely 40 pip space down to the next S/R, I was determined to stay in the trade to get it, no matter how big the retrace.... pretty dumb of course when it's on the wrong side of the low of the day. I actually retreated the stop a couple of times, so even dumber.

(8) Another grinding move higher, this time without an obvious channel floor, offers only B/E on a break-out pull-back setup. Someone better might have got more but I got whacked for -8 pips. Wrong entry twice, and once with a bad full stop hit again. Not visualising the expected move or failure again. Deserved the loss. The
second entry was worse, although its exit was better.

(9) Finally the previous bull swing hits S/R and breaks out by a pip. It achieves my target 1.5 pips in front of the S/R. I got the entry, not the exit. Didn't use the S/R for target and then failed to bail quick enough though, ended up without the possible +5 pips, just -.5 for my effort. Again, not visualizing the failure and trying to cheat on targets.

(10) Break-out pull-back setup failed really quickly and obviously, just can't seem to overcome the hesitation at this speed of play. Offered +8 pips.

(11) Move from (10) continues quickly through S/R with a BO PB - I got in on a stop - not sure I needed to leave 6 pips to the stop. +7 pips on offer, got +10 by moving the target.

(12) Big move up increased the volatility, but still a decent setup with one false move first. Missed the good entry because of IB connection outage. Getting a lot of these in the afternoon. Might be just on the sim account. Not sure, will have to check with IB. +2 pips both trades if targetting previous swing high, +8 if targetting next S/R above. The swing high level was really close. Theoretical anyway.

Possibly valid setup I took in between, should really have waited for a better break-out. -3 pips.

And another - BE.

(13) This is a complex pull-back. I'm including it because I keep forgetting about this one and I shouldn't. +5 pips. Missed.

(14) Entered too early for the break-out, or too late for (13), not sure which. Poor exit too.

(15) Failed to reverse at the failure of (14). Got in on a PB for BE, should have got +6 pips. Trying to cheat on targets. On offer +15 pips from the BOPB failure.

Totals:

Took 10 out of 15 setups, but on 4 of the setups I went the wrong way and failed to take the reversal or got the first entry, had to bail and missed the 2nd entry.

On all the setups where I went the right way - 6 - I goofed the exit, leaving it too long.

57.5 pips on offer, achieved -20 or so.

Choppy day - bail quicker.

Must visualise trade working and trade failing before entry! Stupid, not following the rules.

Also trading with fatigue. Need to cut that out. Other mistakes, not drastic. Bad day overall I guess.

You can discover what your enemy fears most by observing the means he uses to frighten you.
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  #415 (permalink)
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Wednesday 2012-03-21

(1) An easy short with a great entry since the market had formed a bear channel and the PB after this BO hit the ceiling of the channel and turned down again, so I took it. Ugly finish though, felt like it had hit an S/R level that I hadn't identified. Maybe it was pivot point - 1.3234.

+14 on offer, I got +9.

(2) This pull-back called out my name as it played out, but my concentration lapsed and it didn't wait for me. It's so important not to waste gilt-edged opportunities like this one.

+6 on offer, missed it.

(3) More difficult than (2) but the same type of PB. Got caught going in early and lost the nerve to try it again.

+7 on offer, got -0.5

(4) The market's now going into the old lunchtime chop. BO fails.

-2 on offer. Missed it - too fazed by the increase in volatility as the US opened.

(5) failure of (4) - same thing - market's consolidating. No action required, fails.

-2 on offer. Missed it because hesitating. But it then stopped trying as I saw the chop set in.

(6) Potentially coming back to life, price makes a bullish move up thro MA off the S/R, but fails again.

+2 on offer, missed it, too bearish, poor analysis

(7) Didn't know what this was when I saw it but thinking about it in hindsight it is a simple test and failure
of support with no BO.

+2 on offer. Missed it, confused whether it counted as a setup

(8) This was hell. An expanding setup zone gave 4 possible entries. I think the experts would have been caught for at least 2 of the entries if they didn't stand aside.

-6 on offer. Made one attempt for -2

(9) Final failure of (8) as price stormed off - obvious break of MA.

+20 on offer. Missed it. Too lazy to think, happy to sit there and watch safe in the knowledge that I wasn't going to get whipsawed if I didn't trade - but I wasn't watching for the signals that the chop had cleared.

(10) At this point my focus was gone and I couldn't work out what this was doing. I missed the entry, which
was a straight failure as price immediately stalled after moving out of the BO PB zone.

-1 pip on offer - missed it.

Then annoyingly the market tanked in the next 30 mins, but I would have missed the move with my frazzled concentration.

So 3 out of 10 setups attempted.

Of those 3, I got the trade right on 2 of them.

40 pips on offer. Got 6.5 pips.

Much better focus from a fatigue point of view but let my focus suffer due to indiscipline, reading emails during a consolidation phase meant I got sucked in to something and then missed a 6 pip trade.

I let my cowardice get the better of me too, chickening out of the reversal trades and/or 2nd entries on at least 2 of the trades, on of which was a 20 pointer.

I also missed the series of poor setups through midday to 13:00, sort of suppressed by the consolidation more than I should be and unwilling to take clear setups. It's focus as well I guess. I know I need to take all these trades, since even the bad ones if managed right only cost a couple of pips.

I am slowly beginning to cultivate a sort of zen attitude to the outcome - I should be oblivious to the result, I just need to take the entry and the exit well - the results will be positive. I think in a way my early trading attempts here 3 months ago with large, repeated losses scared me so much, I just hesitate because of that.

All in all today was a mixed day for the hindsight experts - only 4 out of 10 setups succeeded, but the points gained were still fine - and slightly better than BE for me: another warning to me about my focus and discipline and psychology.

I'm totally convinced this method is totally profitable, it's just my focus that needs adjustment now. When doing my hindsight review of the day's setups, I think I'm being fair and not giving the method more than it's due - (which is easily done). The failures suppress my ability to take an entry on the reversal or 2nd entry or the next setup. And that's important because today more than half the setups failed.

I included the 1-second chart of setup 8 which was a monster - with brutal application of the rules, it would have had 4 failures - but the 5th was a beauty for 20 pips. Judge for yourself. Under this methodology the expert would probably have stayed out of some of the whipsaws due to the chop.

Fatigue was not an issue today. I think that was the difference between today and yesterday - as well as that today wasn't quite as choppy as yesterday.

You can discover what your enemy fears most by observing the means he uses to frighten you.
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  #416 (permalink)
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Thursday 2012-03-22

(1) Tail end of the big move down after the European & Chinese data - break-out pull-back at 1.3141'5, move fails offering only B/E. Was pretty fast move. Experts: 0, me: missed it.

(2) Failure of (1) - not obvious on the 3min chart but the retrace to the S/R fails and then pushes up nicely. I wasn't ready for it after the strong bear bars, but I should have been. First up, the chop after the sell-off was big. Then there was a nice start to a sell-off again on the 1-min, with perfect bars, which got snuffed. Then there was the big bull retrace bar. Lesson: big bars don't mean it's going on for ever. Experts: +13 pips. Me: messed up my order entry

(3) Pull-back for a short after the big retrace - experts -2, me missed it

(4) Test of resistance at lower swing high after big sell-off - fails - experts 1 pip, me missed it

* Invalid setup taken - still not persuaded that this is complete consolidation now -2 pips

(5) Another test of same (4), after the news release unemployment data - experts BE, me missed it.

(6) Failure of (5) - experts +13 pips, me: argh, couldn't hit the trigger on the reversal.

(7) A test of resistance at next level - 1.3178'5 - R holds again - experts -2 pips, me -5 pips (failure to bail)

* another invalid attempt to get short on a PB - invalid setup - can't have a pull-back before the move has got going - -2.5 pips.

(8) Pull-back now that this slow grinding move has formed a bear channel - and it accelerates. Experts +18.5 pips, me the same.

(9) Pull-back after the previous move fails to reach target - but it starts consolidating again. Experts -2 pips, me -3 pips.

So 5 out of 9 setups taken - 2 handled correctly - 3 messed up the exits.

2 invalid trades - poor analysis not seeing that the setups I thought I had were just in consolidation.

On offer: 38.5 pips. I got 3.5 pips.

Since the period I traded just went sideways, it's not surprising there were only 3 decent setups and the rest were losers or BE. My worst error then was not taking all the setups. As yesterday, and the day before. I got more than 50% of the setups but I missed 2 out of 3 of the decent ones.

The first 2 misses were probably because I was having trouble getting into trading mode. The 3 miss was due to messing up the order entry menu so when I placed the order the position size was wrong. The last miss was due to cowardice and not taking a reversal. I can let the first misses go, but the cowardice was unjustified. I can't see a single reason why I should have hesitated.

The other bad error was letting the market retrace past the correct exit point on a couple of occasions. On the one I think there was no reason at all, and on another, just as I was about to bail at the last second I saw that it might be possible to draw a channel ceiling down - but that was just out of the corner of my eye and then the market surged up to take an extra 3 pips.

So that's the difference between making a profit and making nothing. Cowardice does not pay.

And the first lesson again - don't marry your bias because of a few impressive bars. So more of the same homework for tomorrow.

You can discover what your enemy fears most by observing the means he uses to frighten you.
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  #417 (permalink)
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Adamus View Post
And the first lesson again - don't marry your bias because of a few impressive bars. So more of the same homework for tomorrow.

I like that rule

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  #418 (permalink)
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Friday 2012-03-23

(1) First trade of the day and it took a bit of concentration to ignore the fact that I missed another big move by starting late. But I always goof up the first setup anyway, but I still had to squash the emotion before it did any damage. The first setup that I am presented with turns out to be the top of the day and it pans out as a classic break-out pull-back failure should do, with all the signs.

I wasted my time trying to decide whether to follow my rules or bend them a bit, since yesterday's consolidation brought up the subject of entering on the break-outs vs entering deep and early at the reversal before the break-out or after the break-out.

I have a set of rules to follow and I don't have "enter early at the extreme of the pull-back". I have "enter on move after the pull-back". So I need to do that and not worry about it. I know it works in the long run.

In periods of consolidation, I keep out of the setups (or I might take a setup if it coincides with a channel boundary but that is not something I've written up yet - I was doing it yesterday but I need to define it and the variations better).

Otherwise I always enter on the move after the pull-back when it breaks the extreme of the break-out, and bail if I got it wrong.

If I get it wrong, I watch for a 2nd entry or a reversal if it looked like a failure of the move. I ask, are there going to be trapped traders ahead? They should give a bit of ooomph to the move with their stops.

No ooomph = no trapped traders = probably a bad setup.

Result: experts +15 pips, me nothing. Why? Probably looked at the last 2 pull-backs and thought it's got to take longer than this to move again. Should trade what I see not what I think.

(2) Trying to get fancy now. This caused trouble later. Couldn't get in on the 1st clean move after the break-out, it retraced quickly into my stop. I missed the direct next opportunity to get back in short below the break-out and then gave up and looked for a less painful way - the market had formed a bear channel so I just sold at the ceiling and achieved the same effect. I need to treat this as a prototype and only use it once I've confirmed it in hindsight. Not sure of its long term validity.

Experts +5, me same

(3) Simple break-out pull-back short setup, the move runs into the sand though, experts bail for +2, I missed it - out of the room.

(4) Market reverses - break-out pull-back setup going other way - long setup. First move suckers me, but reverse should have been easier, I goofed up just hitting the buy button.

Experts +6, me +2.5

(5) This is the work-around that I use when S/R levels are too close. I enter as normal but target the 2nd next S/R ahead. The one thing I don't like is getting into a move right in front of S/R which sounds kind of dumb, but I figure price action will tell you what to do. There's 3 possible outcomes I see: best is that price breaks out at the S/R so I'm already in with a good entry to ride out hopefully a continuation. 2nd outcome - the BO fails, so I bail for a couple of pips profit. 3rd outcome & worst - price just tests S/R and reverses.

This example I missed the trade and in hindsight it's easy to see, but the S/R levels are more than 10 pips apart so it rules out using them together as a S/R 'zone'. I just didn't take the trade because the next target was too close but that's no reason if I use this plan.

Experts: +11 pips, me zilch

(6) Another test, of support this time, short-lived move fails trying to break MA. Experts B/E, me -1 pip. Went the wrong way.

(7) Break-out pull-back at previous swing low, tricky one as first move goes straight into a stall. I bailed with my tight stops but missed the chance to get back in when it was obvious it was a stall. Experts +5 pips, me -2.

(8) Had a bad overreaction here to my tight stops, left the stop really loose and got it hit too. Missed the deceleration that was obvious on the 3-min chart, watching the 1-min chart too much. Expert B/E, me -3 pips.

(9) Not sure whether this was a failure of (8) or its own setup, whatever, good trade. Experts +7.5, me too.

(10) Got in at the break-out upwards of the swing low from previous, turning out useful this level. First resistance too close, only 4 pips, so aimed for next level up, didn't get it. Experts +1, me +1,

(11) Failure of (10). Since I was trying to ride out the break-out pull-back at the next level, I should have been waiting for the failure with a reversal, but I wasn't. Stupid. Experts +7 me 0.

(12) Break-out pull-back succeeds. Experts +8 me missed it.

(13) Break-out pull-back at next level down. Fails. Experts -2, me same.

(14) Loads of volatility kills me straight out here. Experts -5, me same.

(15) More volatility, experts -3 me too

(16) Failure of (15), how did I miss this, exact same happened earlier this week, experts +13 me 0

(17) Break-out pull-back setup looks like a failure but then doesn't fail at all. Short entry, bail quickly, experts -2, me too.

(18) the BO in (17) actually succeeds - although I got in late and moved my target, and tried to ride out the break-out pull-back at the next resistance, which I didn't, chickened out and missed out on 5 points. Experts +5 pips, me too.

(19) the break-out at the next resistance up, pulls back and then continues but doesn't make it to the target. Experts +1, me too.

(20) second break-out from the resistance at (19), again fails to get to target. Experts +8, me -1, bailed out with a really tight stop, again too tight.

So 20 setups - I think I traded too long today. I'm wiped out now but I couldn't stop earlier with the loss for the day. Stopped eventually when I realised I wouldn't have enough time to write this all up.

I got 13 of them, of which I goofed 6 of the exits, mostly on the initial stop.

82.5 pips on offer. I got a miserable +3.5 of them.

There were 3 "big" trades (netting more than 10 pips), I missed them all.

Will have to go over exactly why tomorrow. At least I got a lot of material to work with.

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Stops


A lot of my problems yesterday stemmed from applying just one stop method right from the start instead of selecting the appropriate method depending on the setup.

It's the initial stop position that was causing me grief all day. I was trying to minimise any possible loss by having it really tight - a scalper's stop I guess - but of course I was stopped out way too often. Just re-read the YTC material and that outlines his technique: put the stop at a point where you would no longer want to be in the trade if price retraced there.

I don't have any problems with the stop positioning once the trade is moving in my direction. I can judge price action normally well enough to get me out at the right place - in comparison to the problems with my initial stop location.

So I guess I can look at the initial stop location in the same way. Disregard the entry point and B/E - that's irrelevant in the long run. Start with the stop on the opposite side of the price action in the setup, at a point where you reverse and take the setup failure trade. Now let price action dictate what happens.

The root cause of the problems I'm having is that my S/R levels are all pretty close together in the area where all the price action was happening. Yesterday started off pretty good with well-spaced S/R, apart from 2 levels that were 11 points apart. The market spent a long time at those levels, and also put in a significant swing low 13 points below them, and moved up and down there as well.

So I have a choice -
(1) amalgamate the S/R levels together as a big one,
(2) or try to trade with setups where the target is so close, a normal stop would give bad R:R so I use a closer stop,
(3) or lastly, put the target on the next S/R level away

Option 3 is the worst because the near-by S/R level is still there. I can tighten up my stop to bail quickly if it looks like reversing at the first S/R, but even then price needs a bit of room to play out and betray its intention so tightening up my stop is really no good.

I took option 3 a couple of times yesterday and basically I can rule that out.

I've used option 1 before when the S/R levels were closer, less than 10 pips apart - there's no other way really.

I took option 2 most of the time. I think option 2 is the whole skill set on its own because Lance Beggs who produced YTC has also produced another related programme called YTC Scalper, but I don't have that.

So in these situations with a close target and the setup zone extending half way to the target, I just pull up my stop really tight after the NinjaTrader automatic stop dumps it 5 pips away from the entry. This is bad, just using a fixed 2 or 3 pips every time. Must be a hang-up from my mechanical trading. But if the target is only 5 pips away then the initial stop can't be more than 5 pips.

I have to admit I prefer having a stop 3 pips away rather than 10 pips away - psychological failing. If I need 10 pips I should use 10 pips. Having a 10 pip initial stop is a lot more stressful than having my stop 20 pips away from the market in mid-trade, but it's essentially the same thing. I guess the reason is that the start of the trade is mostly the time when I get stopped out for a loss.

But it doesn't have to be a 10 pip stop. The position is dependent on the price action in the setup zone. And I can bail from the trade at the occurrence of price action betraying weakness, although that's easier said than done. For instance, the next bar after my entry might be a huge bar going straight up to my stop. I hate that so much, I get the impulse to bail out after an entry if a huge bar starts pushing towards my stop - but then again I'm just choosing an arbitrary number of pips instead of sitting there (lamely it would seem) and letting the market hit my full stop in one candle. I measure the rough size of the big bars occuring during the day, so if they're 10 pips,, and my stop is at 12 pips, I should take the heat.

The other thing I need to keep an eye on is roughly how big the retraces are around setup area. Add on a couple of pips and that's the number of pips retrace to place the stop.
Covered about 10% of the subject, but it's a start

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