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Trading spot fx euro using price action


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Trading spot fx euro using price action

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  #591 (permalink)
 SammyD 
Salt Lake City, Utah
 
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Hey Adamus,
To be honest, I have been working a lot on timing, specifically with a 5 minute chart. When the Euro is actually moving, it is usually possible to notice waves of 3 legs up or down. I believe this is similar to what Brooks speaks of with H1, H2, L1, L2. Other than that, I like to make sure support/resistance is nearby (even if it is only the 20ema) and that provides some sort of a stop. I don't use any other indicators besides moving averages. I also look for firm trend line breaks. The timing on the Pound seems slightly different but other than that, it's all the same. Of course, if we are moving straight sideways, timing is out the window and that makes everything difficult so it is nice to find a pair that is moving and has a tight spread, such as the Pound.

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  #592 (permalink)
 bnichols 
Dartmouth NS
 
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Adamus View Post
.... I haven't got the nerve just to swap currencies like that. Apart from what you mentioned, do you notice a big difference? What are you entry signals anyway?

I may have some idea how you feel about trading multiple currencies so will share a few unsolicited thoughts .

I was brand new to Forex 3 years ago and stuck with EUR.USD for almost that entire period while learning the ropes--10's of 1000's of trades--until I finally screwed up the courage to go live.

Over that period EUR.USD volatility steadily decreased however, and it got to the point last year I was sitting on my hands waiting for a decent (middle-to-high probability) setup more often than was tolerable. At that point I started looking at other currencies and settled on the list described in this journal post for reasons mentioned in that post. After trading them on paper for a while to get the feel of them I was comfortable adding most of them to my live portfolio.

It transpires any pair with JPY as the quote currency (2nd name in the pair) is volatile enough for me, with USD.JPY perhaps more prone to large, somewhat sudden, movements than the others. For the most part all obey the rules (i.e., price action can be interpreted in terms of the indicators I use) and in general when I lose money it's because I've used more discretion interpreting price behaviour than I should.

Regarding the Euro, if its volatility has decreased with respect to the USD, IMO EUR.GBP and EUR.JPY are sufficiently active (decent movement--sufficient to generate high probability setups with acceptable risk/reward ratios--over a short enough time span).

I also like AUD.USD and AUD.JPY for the same reason. NZD seems to correlate with AUD with respect to major currencies but I haven't measured the extent. (There are websites that do a better job of that than I have time for; e.g. Forex Correlation)

There is nothing special about my method by the way; IMO it is fundamentally the same as any other spot Forex trading method and hasn't changed in a couple of years. There is no longer any doubt in my mind that profitability is a matter of self-overcoming and mastery of one system or another, and that these 2 processes never end. That said, over time the method is becoming more mechanical than discretionary mostly because a large enough number of trades have accumulated to allow me to trust the mechanics of the system, renewing faith it can be turned into a bot.

Lately I've been looking at volume profile (VP) and cumulative delta (CD) applied to currency futures to see if the host of methods available to VP and CD can improve the edge trading spot. Since a lot of the same principles seem to apply to trading VP and CD as apply to trading spot indicators (not much difference between conventional indicators and quantitative metrics when it comes to trading IMO), depending on how that goes some day might fund the currency trading account appropriately and switch to futures.

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  #593 (permalink)
 Cloudy 
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Welcome back Adamus.

Yes, Brook's method doesn't have to be applied to just the 5min ES. I found the ideas can be observed on most any type of chart aggregation. I like to use 4 rangenogap currently.

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  #594 (permalink)
 Adamus 
London, UK
 
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I traded a bot for 2 years on 21 currency pairs on the 1 hour bar. I followed their actions on the charts in NT7 to see the trading action and roughly speaking I think they were all more or less the same, or at least the big ones, except EUR/GBP and EUR/CHF, which were both weird, more like OJ futures than currencies.

Despite chaos theory and fractals, I don't generally recognise the same stuff on the 3min chart that I saw in the 1 hour charts back then. The 1 hour PA was just less messy, I guess that was it. Could also be down to my poor memory.

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  #595 (permalink)
 Adamus 
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Non-farm payroll, yowsa. Everything remained as it should though, including the brown trousers.

That was some Asian session.

Had to be bullish before the show, but as it turns out, had I traded it would have missed my target and got me only 8 ticks. I've put in some notes on the Pull-back setup that happened as NFP came out.

Looks to me like it's put in a double top, although it could have been prettier.







Looking at the failure of the market to even reach the session high after NFP, you could make a good case for test, failure and reversal setup at that level. However I was way too expectant of a big push up after NFP and wouldn't have dreamt it, dumb newby trader that I am. The closest I got to thinking that was to think about waiting and seeing if the market failed once it had broken the earlier session high.

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  #596 (permalink)
 SammyD 
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It was a trendline-breaks kind of day today


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  #597 (permalink)
 Adamus 
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I was watching that out of the corner of my eye, not enough to analyse it properly, but by about 17:00 I figured it was that kind of day too

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  #598 (permalink)
 Adamus 
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Still not got the support / resistance indicator working, so just doing a little bit of market watching. Here's what I saw today at the US market open.

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  #599 (permalink)
 Adamus 
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More working on the support and resistance indicator - I find it so easy to get sidetracked into spending hours coding it to do cool stuff instead of what I really only need it for.

I was seriously considering getting the indicator to load up data from a secondary time series on demand as the chart is rescaled when in a fast market. Cool but strictly unnecessary

So I concentrated on what happened at the US market open. Pretty ranging today, but not too much chop.



I've got half my indicator going already - that's the support lines in pale blue - probably a bit too pale.

Got to remember to put in the lines for '00 and '50 levels.

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  #600 (permalink)
 SammyD 
Salt Lake City, Utah
 
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Great idea on the indicator. Are you trying to simply transfer lines from higher timeframe charts to lower so you don't have to keep switching? I consolidate all of my charts onto a document on another screen giving each level and which timeframe they are associated with. After doing this for awhile, it seems like the levels become more important as you arrive toward the close of the bar on that level. For example, say I have an hourly level at 1.3520. It seems that price is more prone to test this level coming into an hourly close. If it blows through during the hour, it seems to provide less support or resistance. It is like the market seeks to test these levels according to their timeframe. The exception would be trendlines drawn from swing highs and lows because these are usually similar on many timeframes, which is why I love them so much. Now, as for bar 254 (your first comment) we were coming into an hourly close, 11:00 on your chart, and the 50 period hourly simple moving average was straight overhead.

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