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Trading spot fx euro using price action

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  #51 (permalink)
 Adamus 
London, UK
 
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Zwaen View Post
Hello,

this looks interesting. I'm simming the 6E market like you. I mostly trade the setups of Lance Beggs on the 3 min chart.
One point I found it is very important to recognize a trade which is going to fail.

My rule ( which is a subjective rule) is that on the 3 min chart, my trade has to move some points in 3 1 min bars ( or ofcourse 1 3 minute bar) , or else I will scratch the trade immediately. Let's say within 4 1minute bars you should be able to move your SL to entry.

This is because when this happens 8/9 out of 10 times the market will not move in my expected direction.

This approach saves a lot little losses, because if the trade will not go my way quikly, I can scratch the trade with -1/-2 pip loss per contract, instead of losing e.g. -7 pips per contract. So 1) my losses are smaller and 2) losing is less demorilizing
The 1/2 times it does run after I scratched I don't care. That was not my trade. It is important not to eat your hat when this happens

Hi, glad to meet someone doing roughly the same thing. I subscribe to Lance Beggs's blog and it's v. interesting, but I haven't bought his e-book on PAT yet - too much on my plate with Al Brooks still, and actually I'd rather have a real book rather than a PDF - but I do plan on getting it soon. Do you recommend it? I mean, obviously you're using Lance Beggs methods, but would you say the e-book's definitely the way to go?

I like that Lance Beggs approaches PAT as a complete business and personal enterprise, not just as a method of technical analysis - I mean, I think these non-trading details are v. important, especially when you haven't thought about them before.

I too like you think it is important to ditch a trade if it doesn't feel right - simming with hard 15 point stops doesn't allow for that though and fixing the issue is an item high up on my list. Of course though on the plus side there are numerous occasions when a hard stop allows the market to make good and come back to hit the target. I haven't tested the expectancy of that yet, but I want to know if it's a net winner as a strategy.

The number of times I'm simming a trade and it's heading the wrong way and I know it's going to hit the stop, that's a frequent occurence. I try to figure out why I think I 'know' but as yet I haven't put my finger on it. I guess it could be something as obvious as the trend but I like to think my intuition sees more than that.

Your exit rule looks like a timed stop. Do you use it at the end of the bar only? I would assume you'd be looking to enter at the close of strong bars going in your direction already. You need a bit of momentum if you're going to scratch all the trades that go against you a little.

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  #52 (permalink)
 Adamus 
London, UK
 
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Step one - mission accomplished.

I sim traded the whole year of 24 hour days on 5 min bars from May '10 thro April this year, all sessions on the EUR/USD.

At the end, today, after working out all the minor details of how to sim trade and how best to learn from it, it's taking me about 50 mins to sim trade a whole week. I'm glad to know I can do it without going nuts. I've also got a fairly good idea of what I will get out of it in terms of knowledge and experience. This is definitely the way to go for me now to refine my PAT strategy. I can't see a better way of doing it, despite the cost in terms of time required.

One slightly disappointing feeling though - I'm pretty sure I haven't seen everything the EUR/USD is about - I know I'm going to sit down when I go live and see it do stuff I've not seen in testing.

Now I've got to work out what I'm going to test next - and from where I'm sat at the moment, I'm spoilt for choice with the array of different price action formations to include on top of H1s and L1s and the old 20EMA.

With a wide range of different shapes and guises that an H1 or an L1 can appear as, it seems to me that many of their occurences are actually random and don't have any causality. It wasn't possible to judge that during testing, I could only hope to pick up an impression as I went along, but I didn't - I wasn't going slow enough to take each trade and carefully consider it - I figured it would have to be tested on its own. It was only 3/4 of the way through the test that I realised that the weak H1s and L1s could be recorded on the decision matrix seperately - stupid me. But by then it wasn't worth going back to start again.

The whole result showed a win rate of 50:50.

It was seriously annoying to sim trade though the Asian session, since the session often only has a narrow channel, but the H1s and L1s signals keep coming.

I'll post up a few charts with different "quality" H1 and L1 signals, to go over what I'm talking about, for the record. I mean "quality" as in appearance rather than profitability.

So I came out of this with a great knowledge of the EUR/USD's general price action, which is good, but I now see the work is not even half done, which is a bit of a disappointment. It's obviously going to take longer to home in on a profitable setup, but at least the ground work is there now.

Besides posting some charts later with more details about H1s and L1s, I'll also make another post with a list of the options for the next generation setup I'll test.

In the meantime parallel to this, in case any readers out there are wondering why my progress is on the slow side, I'm also keeping a couple of mechanical trading systems running and re-writing the NT7 strategy for one of them to allow me to see comprehensive results across all the currency pairs I trade it on - one of the major omissions of NT7 strategy testing and running is that it doesn't give you total account drawdown for a run on multiple instruments - unless you code all instruments into one strategy, which is what I'm doing.

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  #53 (permalink)
 mokodo 
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Hi Adamus,

Spotted your journal thread and thought 'hey that sounds a bit like me'. So I'm saying hello. (not read all your thread yet).

I trade spot forex (15 min charts), I use NT7 (MBT data), I use a rule based discretionary system heavily influenced by price action set-ups.

I started my trading business full time February this year, so looking at nearly 5 months blood, sweat and tears so far (yes lots of tears!). I've given myself a dealine of December to reach consistent profitability. Not there yet, but getting closer every day.

I'd be keen to bounce ideas around seeing we are doing similar things in the same time zone.

Let me know if you are interested.

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  #54 (permalink)
 rassi 
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Interesting thread and I wish you the best of luck on your journey. I susspect you are going to have to work through the following issues.

trading 1 market you are going to need several trade setups as just 1 setup will either be too infrequent or be frequent but with a poor r:r

this will be especially true depending on the hours you can trade





Adamus View Post
Step one - mission accomplished.

I sim traded the whole year of 24 hour days on 5 min bars from May '10 thro April this year, all sessions on the EUR/USD.

At the end, today, after working out all the minor details of how to sim trade and how best to learn from it, it's taking me about 50 mins to sim trade a whole week. I'm glad to know I can do it without going nuts. I've also got a fairly good idea of what I will get out of it in terms of knowledge and experience. This is definitely the way to go for me now to refine my PAT strategy. I can't see a better way of doing it, despite the cost in terms of time required.

One slightly disappointing feeling though - I'm pretty sure I haven't seen everything the EUR/USD is about - I know I'm going to sit down when I go live and see it do stuff I've not seen in testing.

Now I've got to work out what I'm going to test next - and from where I'm sat at the moment, I'm spoilt for choice with the array of different price action formations to include on top of H1s and L1s and the old 20EMA.

With a wide range of different shapes and guises that an H1 or an L1 can appear as, it seems to me that many of their occurences are actually random and don't have any causality. It wasn't possible to judge that during testing, I could only hope to pick up an impression as I went along, but I didn't - I wasn't going slow enough to take each trade and carefully consider it - I figured it would have to be tested on its own. It was only 3/4 of the way through the test that I realised that the weak H1s and L1s could be recorded on the decision matrix seperately - stupid me. But by then it wasn't worth going back to start again.

The whole result showed a win rate of 50:50.

It was seriously annoying to sim trade though the Asian session, since the session often only has a narrow channel, but the H1s and L1s signals keep coming.

I'll post up a few charts with different "quality" H1 and L1 signals, to go over what I'm talking about, for the record. I mean "quality" as in appearance rather than profitability.

So I came out of this with a great knowledge of the EUR/USD's general price action, which is good, but I now see the work is not even half done, which is a bit of a disappointment. It's obviously going to take longer to home in on a profitable setup, but at least the ground work is there now.

Besides posting some charts later with more details about H1s and L1s, I'll also make another post with a list of the options for the next generation setup I'll test.

In the meantime parallel to this, in case any readers out there are wondering why my progress is on the slow side, I'm also keeping a couple of mechanical trading systems running and re-writing the NT7 strategy for one of them to allow me to see comprehensive results across all the currency pairs I trade it on - one of the major omissions of NT7 strategy testing and running is that it doesn't give you total account drawdown for a run on multiple instruments - unless you code all instruments into one strategy, which is what I'm doing.


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  #55 (permalink)
 Adamus 
London, UK
 
Experience: Beginner
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Broker: IB/IQFeed
Trading: EUR/USD
 
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rassi View Post
Interesting thread and I wish you the best of luck on your journey. I susspect you are going to have to work through the following issues.

trading 1 market you are going to need several trade setups as just 1 setup will either be too infrequent or be frequent but with a poor r:r

this will be especially true depending on the hours you can trade

Thanks Rassi. I agree. Those are issues that I have considered. Brooks's H1/L1s are currently my only signals, but I hope that other signals will become obvious candidates for me as I progress through the learning material. But right now I'm only at the stage where I am looking for additional price action formations that strengthen H1/L1s.

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  #56 (permalink)
 Adamus 
London, UK
 
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mokodo View Post
Hi Adamus,

Spotted your journal thread and thought 'hey that sounds a bit like me'. So I'm saying hello. (not read all your thread yet).

I trade spot forex (15 min charts), I use NT7 (MBT data), I use a rule based discretionary system heavily influenced by price action set-ups.

I started my trading business full time February this year, so looking at nearly 5 months blood, sweat and tears so far (yes lots of tears!). I've given myself a dealine of December to reach consistent profitability. Not there yet, but getting closer every day.

I'd be keen to bounce ideas around seeing we are doing similar things in the same time zone.

Let me know if you are interested.

I am absolutely interested. Fire away.

Talking about time zones, that means sessions, and I am aiming to trade 4 hours a day but I haven't decided which session yet. Sim trading 24x5 gave me a good idea of the different sessions, and it's clear I'm not going to try trading the Asian session. I momentarily thought about trading from 6:00AM to 10:00AM because there does always seem to be plenty of market movement at that time. It would be difficult to fit in with my current personal timetable right now though.

I also think that I should avoid trading through the lunchtime period, although that idea is based on only very thin evidence, plus the big non-farm payroll days reach their climax at 13:30GMT.

What are your trading hours?

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  #57 (permalink)
 bnichols 
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Quoting 
One slightly disappointing feeling though - I'm pretty sure I haven't seen everything the EUR/USD is about - I know I'm going to sit down when I go live and see it do stuff I've not seen in testing.

Hi Adamus

I had similar thoughts until going live (real money) 16 June. The only situation I worry about now is the kind of move EUR/USD made during the Greek vote today (as you may have noticed it dropped ~100 pips in about 20 seconds). I suspect one's stop would have slipped seriously if one were on the wrong side of that. I wasn't in the market because paper trading taught me not to be during events like that, even though I was expecting any move would likely be to the downside since all the good news seemed already baked in It seems the first lesson live trading tries to teach is have the courage of one's convictions.

B.

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  #58 (permalink)
 rassi 
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Adamus View Post
Thanks Rassi. I agree. Those are issues that I have considered. Brooks's H1/L1s are currently my only signals, but I hope that other signals will become obvious candidates for me as I progress through the learning material. But right now I'm only at the stage where I am looking for additional price action formations that strengthen H1/L1s.

Also i have just seen what a h1 / l1 is, be aware your success trading this kind of system will hinge entirely on how you manage your winners.

I imagine nearly all your profits each week will come from a handfull of trades, the rest will be losses / be / small gains. You HAVE to maximise your winners and be brutally clinical in your trade management.

All the best.

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  #59 (permalink)
 mokodo 
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Hi Adamus,

Great news, thanks for accepting the invite. If our chat imposes too much on your thread we can PM or even start a new thread (maybe others can get some value out of that - or possibly not!).

I can initiate trades 7.15 - 15.15 GMT. I have a time based exit if a trade isn't performing (but hasn't hit my stop) after 4 hours, so even if I get a signal and enter at 3.15, I know that I can be away form the screen 7.15 latest. I also have a rule that says I don't enter once a pair have travelled more 80% of their last 14 day ATR, so I take most trades before 2ish.

I'd be interested in reading up on the price action system you are using? Can you point me in the right direction?

My system is pretty straight foward, buy a higher low after 2 higher highs (reverse all that for shorts). I time in on the dip using a MACD indicator and exit on a 10/30 EMA cross if at my pc, or trail a 2ATR stop if away.

Screen grab attached of a near perfect set-up.

Blue circle shows the entry. ZigZag line indentifies the higher low in the trend and the large blue dot is the signal that MACD has turned (with enough momentum to suggest the next leg will at least get going). Yellow lines are the EMAs, looking to cross soon. This signal was 15mins outside my window yesterday so couldn't take it.

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  #60 (permalink)
 Adamus 
London, UK
 
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bnichols View Post
Hi Adamus

I had similar thoughts until going live (real money) 16 June. The only situation I worry about now is the kind of move EUR/USD made during the Greek vote today (as you may have noticed it dropped ~100 pips in about 20 seconds). I suspect one's stop would have slipped seriously if one were on the wrong side of that. I wasn't in the market because paper trading taught me not to be during events like that, even though I was expecting any move would likely be to the downside since all the good news seemed already baked in It seems the first lesson live trading tries to teach is have the courage of one's convictions.

B.

That would be them Big A***d Bars!

You don't say whether you intend to learn to trade those BABs - I certainly do - and I think the way to learn is to ratchet down your leverage to 1/2 or 1/4 of normal and then just learn! See what it does to you. I guess it's like being in a tumble dryer.

I say that with mixed feelings because i know my main motivation for it is purely the adrenalin. Bring on the non-farm payrolls, Greek votes, etc etc

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