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

  #641 (permalink)
Elite Member
London, UK
 
Futures Experience: Beginner
Platform: NinjaTrader, home-grown Java
Broker/Data: IB/IQFeed
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Thanks: 470 given, 778 received

2013-03-27 Wednesday sim trading session

US & Asia still ahead of normal, UK on GMT still. Now using USNO Master Clock as reference to make sure my PC time is sync'd (not relying on Windows 132.163.4.102 to get it right - the internet transmission can easily hang for 5 secs without warning).

Account - sim: GBP 95,743
Position size: US$100K
Max risk per trade: $200
Daily time-out: -$400
Daily full stop: -$600

Lesson learnt

need an office environment with no distractions to trade well

Goal today

Try to get a grip on the fear factor when I know a setup is worth risking - what causes the fear and what can I do to neutralise it, how can I act when I need to act and not hesitate?

Also, need to work on building a psychological barrier across my office door that family won't pass unless it's really important.

Trader State

Physical: pretty good for my age right now I'd say
Mental: better after yesterday's insights
Fatigue: hopefully an improvement on yesterday - still trying to work out how to get into bed earlier
Motivation: Make your own luck. Work hard, put in the time and the effort, and you get lucky (Tom Baldwin, Market Wizards I)


The Tao of Al (Page 407, Reading Price Charts BBB)
2. Every bar is a signal bar for both directions and the market can begin
a trend up or down on the next bar. Be open to all possibilities and
when the surprise happens, don't question or deny it. Just read it and
trade it.


forexfactory.com
 
Code
	07:00	EUR 	Med	GfK German Consumer Climate 		
		EUR 	Low	German Import Prices m/m 		
	09:30	GBP 	High	Current Account 		
		GBP 	Med	Final GDP q/q 		
		GBP 	Low	Revised Business Investment q/q 			
	10:00	EUR 	Low	Italian Retail Sales m/m 		
	10:13	EUR 	High	Italian 10-y Bond Auction 
	14:00	USD 	High	Pending Home Sales m/m 		
	14:30	USD 	Med	Crude Oil Inventories 
	15:00	USD 	Med	FOMC Member Evans Speaks 					
	15:30	USD 	Med	FOMC Member Rosengren Speaks

Higher Time-frame

I'm still seeing a big down-trendline for the grinding choppy bearish action for the whole of March, and we are currently right there on the bottom trendline. I don't know where exactly the line would be, it's more like an area - it doesn't really translate into a simple support line on my 3-min chart because the accuracy on the 60-min & daily charts just isn't there.

So it's choppy, but it's bearish if there's a BO, or bullish if support holds, so neutral I think. The chance of another range day is high.

Volatility

20 day volatility 116 (10 year max 287)
20 hour volatiliy 25 (10 year max 96)
Down from yesterday's monthly high.

Asian Session

Slightly bearish - 30 point range - 2.5 points volatility - quiet, great sine wave curve.

London Session

The bearishness continues. No interaction with Asian High, no sign of that range day yet, 100 point drop with abrupt reversals. Very trendy. Halted for an hour at 1.2800 and almost at 1.2750. I can't see any other S/R on the chart, even from the daily chart and it's already through the rough area that would be the sell-off lower trendline. There's no point in messing around with trendlines in NT7 - the one I carefully placed on the daily chart disappeared as soon as I changed down to 3-mins :grrr:

Real-time Notes

It's now 14:30 and I blew half the session because I lost my trading plan document and desperately scrambled around my hard drive trying to find it. Might have to go to back-up.

Got some horrible spikes up and down now and the sell-off has decelerated into chop so we might have the LOD here. I guess this is a setup, it's testing 1.2750. Got to within half a point with the last spike down.

It's broken out of the sketchy sort of lower trend line I've got for the daily chart, so we could be looking at a break-out failure of that. Why am I talking bullish? What signs of bullish strength, bearish weakness do I see?

1. OK I established the trend deceleration - bullish
2. Highly related to (1) - the bear swings are getting shorter and shorter - look at 07:30, 09:15, 10:15, 11:15, 12:00 then a serious bit of bull strength for the first time, and then another bear swing - or was it 3 or 4 swings from 12:45 to now
3. Bear tails - bulls are pushing back up

But:
1. Bears continuing to make lower lows
2. Bull tails - but the bears are pushing back down.

I can see the bulls moving it, with a green candle up above the last swing high, but I can't recognise anything familiar here which tells me to go long. And sure enough it's coming back down - bar 350.

Setup 1 is around 15:00 as price has stalled after rising off the low of the day. It all looks bullish but I can't see anything really telling me to go long. Sure enough it dips and starts rising, but really slow. I had a buy stop in there just above the 15:03 candle but I removed it as it was too slow for me.

Theoretically this bull run should stop at the last big swing high @1.2787 and then I would bet on another sell-off down to the LOD before any more bull action.

Setup 2 should be a short after it pulls back to 1.2787 but we didn't get there, it got 3 points short of the mark and fell back.

It's now fallen back a good 15 points onto the EMA. I still think it's going to come back up but I'm not going to try a pull-back on a brand new trend.

So 15:30 and setup 2 didn't happen. I'm going to carry on watching this until 16:00 to see if anything appears out of the blue but I suspect there's not going to be any other setups for me now. It might get back to make a higher high above 1.2787.

Setup 3 is actually what setup 2 was meant to be. The market retreated from its higher high, and then came back up but couldn't get higher again. The 15:45 bar was the entry bar. As I watched it move down to the MA, I couldn't work out how to justify it - my brain went round and round but no conclusive thoughts came out. I would be targetting 1.2752, with special attention to any bearish weakness around 1.2760. Damn it, I'm cold and hungry and I need a leak - I think I'm not even in the correct physical state for trading.

This sell-off might take 30 mins to get down there.

Or it might just switch back. Setup 3 results in failure, theoretically, if I'd got short.

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Session Review

Today was another day all about psychology. I started off really annoyed because I'd just lost my trading plan document while doing the session prep, and wasted time looking for it. The first thing I saw was chop around what I rightly guessed would be the low of the day, but it put me on the defensive because I find chop causes twice as many questions in the analysis.

So I was in a state which was a long way from the happy "mental state: good" that I had when I started out.

Setup 1 was meant to be a test of the 1.2750 level, but the PA and the extent of the setup was just so big I thought it was like trading a 15 min chart. As well as that awkward point of view, I also felt that the spike down which made the low was too little - it needed more PA the 1.2750 area. But I was bullish and thought it would go up. So that jarred, and I didn't like the exit from the stall at 15:00 - I thought it was too slow. It dipped down, but instead of rushing back up, it tarried on the dip and gave me enough jitters to take off my entry order.

if i had got the entry, I would have made nothing but a few pips as it never achieved my goal before retracing strongly.

Setup 2 was never a real proposition since I was expecting another green bar to take us through 1.2787 before falling back and that didn't happen.

Setup 3 was the more realistic setup where I wasn't expecting it to climb any higher. I was expecting the bulls to fail to get a break-through to higher highs and I would aim for the LOD. The bulls who'd gone long on the previous rally would be disappointed at the inability to push higher, and would start bailing out when market turned. There were no signals or triggers unfortunately, the bears just launched out of the stall without a warning.

The setup failed though, not making it more than halfway to target.

All in all, an annoying series of psychological mishaps.

Skipping lunch because of earlier wasted time didn't help, and the cold mid-afternoon is bad - next time the central heating is coming on. Plus I didn't take break. OK only 3 hours, but I still should have taken 2 breaks.

You can discover what your enemy fears most by observing the means he uses to frighten you.
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  #642 (permalink)
Elite Member
London, UK
 
Futures Experience: Beginner
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Broker/Data: IB/IQFeed
Favorite Futures: EUR/USD
 
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Posts: 1,085 since Dec 2010
Thanks: 470 given, 778 received

2013-03-28 Thursday sim trading session


The Tao of Al (Page 407, Reading Price Charts BBB)
3. Everything makes sense. If you know how to read price action, nothing
will surprise you because you will understand what the market is
doing. Beginners can see it on a printout at the end of the day. The goal
is to learn how to read fast enough so that you can understand what is
happening real time.

Lesson Learnt Last Session

If you want to trade successfully, don't start trading if you are annoyed, or hungry, or cold, or won't take breaks.

Goal today

Eat, get warm, take breaks, relax - do those chi-gung exercise I didn't do which are in my procedures...

Risk Management

Account - sim: GBP 95,743
Position size: US$100K
Max risk per trade: $200
Daily time-out: -$400
Daily full stop: -$600

Session Details

US & Asia still on earlier time zone than Europe.

Asian finish: 06:00
NY/Chicago start: 12:00


forexfactory.com
 
Code
00:01 	GBP 	Low	GfK Consumer Confidence
07:00 	EUR 	Med	German Retail Sales m/m 
	GBP 	Med	Nationwide HPI m/m 	
08:55 	EUR 	Med	German Unemployment Change
09:00 	EUR 	Med	M3 Money Supply y/y
	EUR 	Low	Private Loans y/y
09:10 	EUR 	Low	Retail PMI
09:30 	GBP 	Low	Index of Services 3m/3m 
12:30 	USD 	High	Unemployment Claims 		
	USD 	Med	Final GDP q/q 		
	USD 	Low	Final GDP Price Index q/q 		
13:45 	USD 	Med	Chicago PMI 		
14:30 	USD 	Low	Natural Gas Storage

Higher Time-frame - PA & S/R

Still got that choppy down-trend with a trendline underneath it, although yesterday and today's bar poke below it slightly - suspect a break-out failure here.

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On the 3 min chart, it's not just a straight line - it's a great swathe of support across the lower part of the chart.

The market is back in the clear zone below the congestion above 1.28 but above the lower trendline.

Forecast: range day with bullish potential


Volatility

20 day volatility 117 (10 year max 287)
20 hour volatiliy 20 (10 year max 96)
Down again

Asian Session

Quiet slightly bullish 22 point range, volatility peaked at 3 points. Slightly choppy, with some weird bars in there which might be data errors - yes it is, for some reason NT7 didn't load an hour in the middle of the session.

London Session

3 pushes up, the middle one was weakest, interrupted by a solid push down right across and beyond the Asian session, which promptly came back up again.

Respecting 1.2800 level and the 60 min SMA(50). Not sure about the strength of the session boundaries.

Nice trends, mostly but not all abrupt reversals. Nice pull-backs, no acceleration / deceleration except perhaps sometimes acceleration into trend at the start (08:30). Not much chop, quite a few medium-sized tails around.

Trader State

This has to go here because I need to record it right before I start trading - not at the beginning of the prep session.

Physical: good except haven't eaten again. oops.
Mental: not annoyed - good - but otherwise still suffering lack of trades with plenty of reasons but feel the need to overcome this, but without forcing trades
Fatigue: not so bad
Motivation: one should practice in all things - whether walking down a street, sitting, sleeping or being with someone, one has to practice it deliberately (Tengu Gei-Jutsu Ron).

Real-time Notes

13:20 the market is hovering around 1.2800, it broke below but bounced back up off the Asian High. Don't want to go back there, been there, done that.

Setup 1 - now it's wrested itself free of 1.28, it's just about to hit the 60 min SMA(50) which could make a setup since it failed to break out here an hour ago. But it's looking too weak for a break-out. This isn't much of a short setup here because 1.2800 is right on the doorstep so the stop loss would have to go really close to balance the risk/reward.

There's a good gradient on the rallies, no slacking off in evidence so that's bullish.

Did my analysis wrong. If there were any bears selling here, it was already done on the candle with the upper tail. I should have got in straight away after the red bar. Now it's gone without a signal, but we have 2 more levels close-by at '18 and '25 from an hour ago.

Setup 2 at 1.2818, the morning high - showing the same PA as setup 1 initially, demanding a quick entry - but it's got a bit different now with a strong pull-back.

OK I'm in at '16, stop '10, target #1 '22 just below HOD, target #2 '28 just below the S/R line from Monday & Tuesday's low - so they're support turned resistance.

Setup 3 right here at the exit at this S/R from Mon/Tues S/R. Got a toddler trying to break down my door here. Strong push up here, but like the acceleration at 11:45 it doesn't mean it's going to carry on up.

Pushed up a bit more. This is the end of an hourly bar too. This is looking strong but not actually going anywhere yet - these upper tails are bearish so best wait until the bears get a chance to prove things one way or the other rather than just piling in and getting trapped.

Ahh, it's gone. Not even a red bar. Up above is an S/R level at 1.2843 from Tues last week, a low which was possibly invalidated by all the choppy congestion this Tuesday in this area.

14:10 deceleration and its pulled back into the setup area again. I was predicting a range day and if a lot of others were too, then there will be a lot of bears short now at this level. There will also be a lot of bulls sucked in by that last candle. Potential for exit order flow when we do move out of here? I think it'd be best to wait for the EMA to catch up and then take a long entry if it bounces off it convincingly, or a short if it breaks below.

It's stalling now, I'm watching for a strong spike down to run the stops on the bull scalpers, down to the EMA and back at '21 or '19 which was the last swing high, nice target for a retrace. Won't trade it though, I'm not that clever yet.

14:20 So it failed to break downwards and is putting in some nice bull action. Should be taking a break now but I am locked into the action here. It can't break above the last high - no correction, it breaks the high by a point but can't hold it. Is it waiting for a trigger to rally or is it just a matter of minutes before it falls... I am still bullish but hesitation is holding me back, despite wanting to buy at 3 points here in the last 3 bars...

OK my mistake, I should have switched back away from the 1 min chart to the 3 min chart. Now everything looks clearer - the setup was for a long and I've missed it been there, done that a few times.

Taking a breather right now.

Setup 4, Resistance at target #1 1.2943 from previous setup never achieved, so looking down now - retraced straight through the last S/R at 1.2829 - what happened to R turned S? Also it's thro the EMA - it could bounce from here.

But it doesn't bounce.

Not a good setup for a short. Big setup area, stop above is almost as far off as the 1st target. Why I am thinking short? Failure to reach target just now was bearish. But the market could be sucked into the black hole of congestion space that was Tuesday, and it's the lower edge of that right here. I guess the market is establishing right now whether this level from Tuesday is going to count as support still or if it's just history.

Right, short was the right answer. Setup over. It's down at the 60-min SMA now.

Setup 5 looks like a perfect pull-back on the rally. I don't trust perfect-looking stuff. But target would be 1.2829 again, stop would be 1.2812.

Too bad, looks like perfect was perfect.

OK session over.

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Session Review

I underestimated the strength going in to setup 1 - it looked weak, leaving an upper tail only to break the line in the 1min chart. I relied on that 1min chart too much today.

In the re-analysis I did figure it was stronger than initially thought, but I still couldn't get a good feeling for it and it carried on up without me. Whether it was just a pull-back in the rally, or a break-out pull-back at the SMA doesn't matter.

The setup was 8 minutes long before it broke out again.

I should have noted the speed that it unfolded, and remembered that later, although it makes me uncertain whether I was right to give the SMA the importance I did. The market stopped again for longer just 5 points higher. But the plan is the plan, this isn't a reason not to trade this setup like a normal setup.

Setup 2 started off looking similar to setup 1, so I hurried, but then those first 5 bear bars a lot more convincingly bearish and there was a convincing dip and surge so I entered. Turned out there were another 3 more dips before it rallied away, but I held the stop where it was and survived. That affected my judgement later on setup 5 - made me more hesitant. After my entry, like I say, it didn't rally straight away but it put in a series of higher lows which could be used as an entry signal.

I think I had my stops well positioned, maybe a touch too close at 11 and 09 (two part exit in NT7 requires two part stops).

I'm happy with the targets too.

Setup 3 I should have entered as the threatening sell-off stalled out. This was seriously weakening bull strength, although I don't recognise it except from the after-effect.

Setup 4 I almost got in short but it sold off out of the setup area without me for just one point and then come back so that threw me - in these situations I overanalyse because I get all uncertain about what the non-event means. So it rallied up, put in 2 nice bearish upper tails at which point I was ready to enter but instead of carrying on down into my entry stop, it rallied a little again and I cancelled the order, lost concentration or something, and missed the sell-off.

I was confused whether this setup was really still a setup I think. In hindsight, and following the Al Brooks quote above, of course it was still valid. (Close is close enough. If something looks like a reliable pattern, it will likely trade like a reliable pattern.)

Setup 5 - I'm embarrassed. I should have nailed that but was too hesitant. Admittedly the entry I did make earlier wasn't right before a great rally and it had me worried by giving me some heat but now I'm annoyed with myself - shouldn't be, I will forgive myself, but not quite yet.

This is what the setups should be! I can't reject them because they look perfect, like in the book.... lesson learnt?

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

Last edited by Adamus; March 28th, 2013 at 03:21 PM.
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  #643 (permalink)
Elite Member
London, UK
 
Futures Experience: Beginner
Platform: NinjaTrader, home-grown Java
Broker/Data: IB/IQFeed
Favorite Futures: EUR/USD
 
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Posts: 1,085 since Dec 2010
Thanks: 470 given, 778 received

2013-04-03 Wednesday sim trading session



The Tao of Al (Page 407, Reading Price Charts BBB)
4. Simply understanding price action is not enough to make you profitable.
You must learn how to take the best trades and follow your
rules.

Lesson Learnt Last Session

Get back to the trading time frame ASAP when finished with order execution. There was a timely newsletter article by Lance Beggs about this: YTC website - but it is a danger if I want to use the lower time frame. I know a lot of people laugh and dismiss the 1-min time-frame as just noise, but that's so wrong. You just have to remember not to get sucked in to watching it all day - it's only to time entries and exits.

Also, I let one trade where the market signalled an entry but then hovered around affect my judgement later, making me too hesitant for what was the perfect setup of the day.

Goal today

Just to get some chart time in - my private life spilling over into my trading time again. Missed the NY start now. Don't worry about not trading - just take a trade if a setup works out, or put it down to experience if you miss it again - no stress.

Risk Management

Account - sim: GBP 95,789
Position size: US$100K
Max risk per trade: $200
Daily time-out: -$400
Daily full stop: -$600

Session Details

NY & Chicago now on DST so time zone differential back to 5 hours. I just seen that Sydney is still on DST and switches back to non-DST at the weekend. What I can't work out is who is operating in the Asian session that makes the difference to the price action at 7:00AM ? They are also not in sync with the European DST change-over, but Japan and Hong Kong and Delhi don't have DST. Maybe it's the Arabs or the Russians.




forexfactory.com
 
Code
00:01 	GBP 		BRC Shop Price Index y/y 	
00:30 	USD 		FOMC Member Evans Speaks 					
09:30 	GBP 		Construction PMI 	
	GBP 		BOE Credit Conditions Survey 
09:32 	GBP 		Housing Equity Withdrawal q/q
10:00 	EUR 		CPI Flash Estimate y/y 
13:15 	USD 		ADP Non-Farm Employment Change 
15:00 	USD 		ISM Non-Manufacturing PMI
15:30 	USD 		Crude Oil Inventories 
22:00 	USD 		FOMC Member Bullard Speaks

Higher Time-frame

Still in the grinding bear channel but making a great case for this being a swing low on the daily time-frame, with potential for a good push up before putting in more lows. I'd say great potential for a spike to the upside, a daily candle with a big upper tail, 100 points or so.

Otherwise, congested, too much S/R in the area just from recent daily highs and lows

Volatility

20 day volatility 109 (10 year max 287)
20 hour volatiliy 16 (10 year max 96)
Down again, the Easter holidays definitely still dampening volatility

Asian Session

33 point range, 2.5 points volatility, bearish, ending near the low but all of the bearish action between 12 and 3.

Not very trending, quite rounded reversals except maybe 1 or 2

London Session

Went from the Asian Low across the Asian range and put 10 points on top of that, finding resistance at the hourly SMA(50). Bullish, but not convincing enough to say that this is a trending environment. Volatility just less than yesterday so I'm classifying it as a possible range day. Reversals all abrupt though so it's not too choppy but it's definitely making steps up, not flowing.

Interaction with S/R looks tradeable.

Trader State

Physical: good but recovering from bad cold over weekend
Mental: OK, frustrated at lateness again
Fatigue: not so bad at all thanks to getting up late today (thanks to my kids' internal clocks also being an hour behind)
Motivation: live by the sword, die by the sword! This is essentially a very technical version of a medieval battlefield. Got to keep that blade sharpened.

Real-time Notes

Starting really late. Missed 4 setups already from my normal start time.

Set-up 1 currently at 1.2855, 10 points or so below last Friday's high. It's not moving nicely at all, failed to break away from this S/R and hit last Friday's high despite a couple of possible signals.

However I don't have any notes on which level is which, would have to look them up again. I'm relying more on the '50 point mark and the SMA(50) from the hourly chart. It's all a bit messy so I guess it's best to think more of a resistance zone around '50 that it's currently having trouble with.

We had a 30 point retrace just before 12:30, then 20 point retrace until 14:15, so now what? Could get a bigger pull-back with the increasing volatility at this time of day - or just the same again - no, it's sold off suddenly.

Set-up 2 - got 30 points retrace - but the last part was all lower tail - didn't quite reach the 60-min SMA(50) and bounced back to the EMA(20), at which point I entered after a tiny lower low on the 1-min.

Put my stops at 1.2843'5 and as expected there was a push up, but only 5 points and it came right back down - I'd moved the stops to B/E and got taken out. I'm not going to trade this set-up again if that's the only order flow that appears.

So it failed to get back above the '50 mark

Set-up 3 - I've got a trend-line coming up from the 12:30 low with 3 points on it, and the market's on it again now. It couldn't make it above '50, and it is having trouble breaking above the EMA20, so I'm laying my bets on a sell-off at a break below this nice trend-line.

Actually I entered on a limit which isn't exactly what I'm good at. I saw the market moving away and expected to lose it, but for some reason I put a limit in there where I had wanted my stop. So I got filled when the market dashed my expectations of selling-off. Bad play. But it carried on consolidating so I drew in my stops and got taken out. Also a bad place to enter with a thick band of support below me.

I think any trade out of this area now would have to be a longer term operation with a wider stop. I guess I would still be bearish since that would round off a range day if it tailed off down a bit from here to somewhere like 1.2820, but that's not part of the plan, so I'm stopping.

(I added the light blue S/R zones after the session)

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Session Review

The set-ups I watched today were all pretty much non-events and I did well to bail out on the two trades I took for a $18 loss after commissions, so damage limited. I remember episodes of getting stuck in chop before where I would flail around desperately hoping a trade would work out. I can't actually say quite why I decided to keep my stops close today when the temptation was there to let the trades have more room. That would have cost me on both trades as they hit their full stops before their targets. The main problem was the proximity of all the S/R - a problem for my style of trading but in hindsight maybe a warning flag too. The market isn't going to respect or interact with all of them. I should create zones by conglomerating the more important-looking levels.

Also related to S/R levels and their proximity, I was analysing stuff sloppily and sometimes ignoring them at random - I was considering going long into resistance, or short into support - mainly because there were so many of the lines, I hadn't really thought through what to do about the lines.

The bull trend-line I created was also sloppy. To start with I ignored the morning low which should have been the first point on it. I also didn't get it to fit the 14:15 low. In fact it was rubbish.

So the lesson today was: don't just give up trying to analyse S/R if there is too much of it. Do something with it. Make zones out of the closest, thickest-laid levels or remove some entirely. Or finish the S/R indicator and get a script to do it. Sloppy. Also need better execution and not some half-baked entry like trade 1. Sloppy. Indiscipline.

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

Last edited by Adamus; April 4th, 2013 at 08:15 AM.
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  #644 (permalink)
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2013-04-04 Thursday sim trading session


The Tao of Al (Page 407, Reading Price Charts BBB)
5. Trading is a job, and if you expect to make serious money, you need
a business plan, just as you would have with any other business, and
you must follow your plan. The plan can be simple, such as only taking
two or three types of setups off a single 5-minute chart, scalping half
and swinging the other half with a breakeven stop. However, you must
follow your plan. The profit margin is tiny in this business so even a
couple lapses in discipline a day can keep you in the red.

Lesson Learnt Last Session

Don't pick and choose S/R just because there's lots of it. Sloppy. Also need better execution and not some half-baked entry like trade 1 yesterday. Sloppy.

Goal today

More discipline. Might be easier because I'm on time at the moment. Better S/R management, and better entry technique required - better said, entry technique as per trading plan.

Risk Management

Account - sim: GBP 95,786
Position size: US$100K
Max risk per trade: $200
Daily time-out: -$400
Daily full stop: -$600

Session Details

US forex trading kicking in at 13:00, no more DST, no holidays except assumed follow-on from Easter by the masses.

Check out the calendar: look at the number of press conferences! Maybe worth opening positions with tight stops in stall areas rather than trying to catch a move that has begun already - if in doubt, i.e. if the question arises, enter now or enter later?


forexfactory.com
 
Code
08:15 	EUR 	Med	Spanish Services PMI 
08:45 	EUR 	Med	Italian Services PMI 
09:00 	EUR 	Low	Final Services PMI 	
09:30 	GBP 	High	Services PMI 	
09:45 	EUR 	Med	Spanish 10-y Bond Auction 		
10:00 	EUR 	Low	PPI m/m 
10:02 	EUR 	Med	French 10-y Bond Auction 
12:00 	GBP 	High	Asset Purchase Facility
	GBP 	High	Official Bank Rate 
12:30 	USD 	Low	Challenger Job Cuts y/y
12:45 	EUR 	High	Minimum Bid Rate 	
13:30 	EUR 	High	ECB Press Conference 	
	USD 	High	Unemployment Claims 	
13:45 	USD 	Med	FOMC Member Evans Speaks 					
15:30 	USD 	High	Fed Chairman Bernanke Speaks 					
	USD 	Low	Natural Gas Storage 	
17:30 	USD 	Med	FOMC Member George Speaks 					
22:00 	USD 	Med	FOMC Member Yellen Speaks

Higher Time-frame

The grinding downward channel continues, and the market is now nearer the top i.e. there's room for 100 point fall from here to the channel floor, although the upper boundary is hardly definable and the possibility of more stall as per the last 6 trading days is also considerable. I'd say 40% chance down, 40% stall, 20% up.

Deleted all my S/R structure and put the lines back in. Looks a bit more sound now. I've got a thick band across 1.2825 to '30 and otherwise an average of only 10 points between all S/R / '00 & '50 levels.

Volatility

20 day volatility 108 (10 year max 287)
20 hour volatiliy 15.5 (10 year max 96)
Down again

Asian Session

28 point range, 2.5 point volatility, flat really until 05:40 when some action kicked off - I still want to know if somewhere there's a trading block which hasn't done the DST shift yet, apart from Oz - are traders in Oz still up & about at this time - currently 10 hours ahead which would make it late afternoon. Are they waiting for European liquidity before launching trades? If so, they are ignoring DST? Doesn't make sense.

London Session

No morning reversal of the Asian session - two cycles and then into a sharp sell-off, and then more cycles, slowly bullish. As for yesterday, reversals are not totally abrupt, more rounded, and a fair amount of sharp tails, dojis and twinned bars, although the swing count isn't so broken up (need to get an indicator that shows this).

Concentrating around S/R @ 1.2830 and 1.2800

Trader State

Physical: good except the stuff coming out of my nose thanks to the tail-end effects of some evil virus
Mental: good
Fatigue: better, nowhere near perfect though
Motivation: "No matter what - afterwards is the time to look at the rules to see if they need changing." (Probably from Mark Douglas - Disciplined Trader?)

Real-time Notes

Lost my notes by hitting the back button by mistake - no big deal, only noted stuff on one set-up which I missed, just before the 13:30 news event.

Set-up 2 is at 1.2771. Plain old pull-back expected.

Got it.

IB sim account / NT7 screwing up my orders - not getting filled on limits or stops

OK looks like it's all running slowly thro sim at IB - maybe lots of real trading going on gets prioritized?

Set-up 3 is the break-out pull-back at 1.2750 / 55. The sell-off has slowed down but I see another 100 points on offer potentially.

In again at '58, 13:55. Stops above pull-back swing high, 1.2771 - big risk.

Back to the 3-min chart - gotta stay off those 1-min bars.

Fills not so bad this time.

Stops taken out. No price action warning either - just straight up and killed.

Set-up 4 could be a pull-back to the EMA at 1.2785 or so.

Entered after the smallest of lower highs on the 1-min and got killed again.

14:21 and this set-up is still going. There's a stall in progress, with volatility. Still see no reason to be bullish, but I've been caught out twice on it now. Some kind of stealth strength in there disguised in amongst the volatility.

Set-up 5 has to be re-test of 1.2800 now. I'm still bearish, the only strength on show is the size of the rally - it took longer to get here and looked like stalling out at a couple of points.

14:36 the stall is broken and market is thro '00, rallying, not stopping again at '00.

Going like a rocket. It's reversed the post-news sell-off and broken the HOD.

Set-up 6 is a more robust pull-back in play now, around HOD @'54 and the '50 mark. Currently building inside bars at the top of this rally.

This is way too fast for me. It just shot away from the set-up.

Set-up 7 now at yesterday's high. Have to be bullish. Trade fails, bail out well. Could have taken the reversal signal, but just feeling out of touch. No feeling for this now.

Set-up 8 is down at the previous level '50 - '54. Game over.

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Session Review

4 trades today, a break-through

1 win, 2 full stop losses, 1 bail-out for a small loss.

Set-up 1 was looking like a simple test of the resistance and SMA so I was looking for a short which I should have taken at bar 304 after a lower high. But news intervened and sent the market up (briefly) so I would have been flattened on that one for a 5 point loss, but justifiably.

Set-up 2 was a break-out pull-back and it succeeded in pushing down to the next level, but I should have bailed sooner on the second half and so only got B/E on that. Maybe it was too volatile to trade, I could have stood aside but I think the emotional ride was a useful lesson.

Set-up 3 was a plain pull-back on the trend but my entry was a minute late - I should have got in without hesitation. My exit was just as bad and cost me as I ignored the price action, or better said, hesitated to bail while the potential profits were still dangling in front of my nose. The stops were above the pull-back, but I should have moved them down quicker to save at least 5 points on the loss. Instead, paid 12 points.

Set-up 4 caused more problems with my read of the market. I was bearish and couldn't see any strength except that the market was rising. In fact there were 3 set-ups on this rally that I was looking to short but I only managed this one. I guess the failure of the set-up around 1.2771 (between 3 and 4) to turn the market back down again should have been a good signal. My trade on set-up 4 as marked on the chart had a close stop at least, so it got hit quick with no real chance to bail out on price action, losing 6 points on average.

Set-up 5 was also a problem reading the market. I should have ditched my bearishness by this point or at least played it both ways. However I think at this point I'd lost my mojo and wasn't feeling it anymore. Bar 325 on the 1-min chart was a nice trigger to go long - seriously, I'm not just looking at the next big bar and wishing - the action at the support and the turn-around were pretty good and I did think it was a good signal but just the wrong way - idiot.

Set-up 6 I thought was too quick but it doesn't look it now. I think I was just too slow - should get quicker at this to be able to seize those set-ups.

Set-up 7 - got in, PA failed so I got out for a 2 point loss.

So issues today were:
  1. hesitating to enter (mostly due to slowness doing analysis)
  2. hesitating to bail (emotional)
  3. not ditching my bias despite evidence against it (difficult to tell what to do here)

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

Last edited by Adamus; April 5th, 2013 at 07:55 AM.
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I thought more about why my trades yesterday were not just badly executed, which is excusable because I just need more practice, but also just mostly wrong.

There were two factors.

First I haven't finished my trading plan and there's a lot of uncertainty still in my mind where there should be confidence in what to do, what course of action to take.

Secondly and more ironically, I was caught by my bearish bias despite only 12 hours previously making these notes from "How We Decide" by Jonah Lehrer:


Quoting 
In many decision-making processes, the brain will silence cognitive dissonance via some shoddy top-down thinking in the prefrontal cortex. One neuroscience researcher studied partisan voters in the 2004 US elections. He showed the subjects from both Republican and Democrat affiliations some clearly contradictory electoral campaign material from both candidates, and asked the subjects to grade the contradictions on a scale from irrelevant to serious.

The results correlated directly to the subjects' existing party affiliations. Brain imaging revealed their prefrontal cortex hard at work during the decision-making process, but the results of their decisions were conclusively predetermined according to their existing party leanings. They were not being rational, they were rationalising. They were interpreting the evidence to back up their preconceived notions. Additionally, once they discovered a fitting interpretation, they got a dopamine rush from reaching the expected conclusion and turning off the unpleasant negative emotional states arising from evidence against their candidate (Bush vs Kerry).

This just re-inforced the tendency not to analyse the facts rationally, rather just to interpret them to fit their preference. Rather than being rational, the subjects cultivated their own ignorance. This preference for rationalising vs reasoning is shown across most decision-making, not just politics. The mind becomes invested in its decisions - a prisoner of its preconceptions.

Because the human brain consists of so many areas and can analyse problems from a variety of angles, making a decision involves a period of uncertainty before reaching a conclusion, and the uncertainty makes us feel insecure. Reaching a conclusion can be a relief, and certainty makes us feel confident. The brain then ignores the statistical outliers and annoying fears, the nagging suspicions and inconvenient truths which made us feel uneasy. Being certain relieves the anxiety of being wrong.

In this way the mind can censor itself and ignore new relevant information for the sake of maintaining certainty. It is a 'certainty bias' linked to complacency and stubbornness. Refer to the Yom Kippur War and the failure of Israeli intelligence to predict the Arab attack.

I distinctly recall the feeling of certainty that it was going to carry on selling off.

You can discover what your enemy fears most by observing the means he uses to frighten you.
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The Tao of Al (Page 407, Reading Price Charts BBB)
6. Don't tum the market into a casino, because that kind of math is relentless
and unstoppable and will destroy you. Many strategies work
often enough to make you believe that you will eventually be able to
make a living off of them, but the math is against you. Trading off the
1-minute chart is the classic example. You win often enough to believe
that you will eventually hone your skills to the point that you will make
a fortune. The reality is that many of the best trades happen too fast to
catch and you will be left picking among the less profitable ones and
make less than you would off the 5-minute, if you make anything at all.

Lesson Learnt Last Session

Be more self-aware. When the emotions seem most persuasive, they are most dangerous - it's at that point that the mind needs to pause for a moment to reflect on the emotion and alternative scenarios and possibilities. The markets are not simple or obvious, so when it seems that way one has to wonder, is anything missing from the analysis?

Goal today

Practice practice practice. And then write it into my trading plan.

Risk Management

Account - sim: GBP 95,695
Position size: US$100K
Max risk per trade: $200
Daily time-out: -$400
Daily full stop: -$600

Session Details

Normal. US trading starts at 13:00. Possibility of less volume due to Easter week-end just gone.


forexfactory.com
 
Code
08:00 	GBP 	Med	Halifax HPI m/m 
09:00 	GBP 	Med	MPC Member Dale Speaks 					
10:00 	EUR 	Med	Retail Sales m/m
	EUR 	Low	Final GDP q/q 
11:00 	EUR 	Med	German Factory Orders m/m 
13:30 	USD 	High	Non-Farm Employment Change 
	USD 	High	Trade Balance 			
	USD 	High	Unemployment Rate 		
	USD 	Med	Average Hourly Earnings m/m
20:00 	USD 	Low	Consumer Credit m/m

Higher Time-frame

Yesterday's rally took the market to the ill-defined top of what looks like this grinding bear trend channel which is too ill-defined to work out if there might be a break-out of it at any point here and now. There's a double bottom in place now, giving more credence to a swing low at this point.

No new S/R to speak of - yesterday's high was practically at the '50 mark and there were no swings put in intraday except down below.

With bad data in the NFP today for the US, there could easily be another big bull bar forming, less likely is choppy small bear bar and even less likely but still 20% chance would be a big bear bar, but that spikey lower tail yesterday is certainly convincing bull pressure.

Volatility

20 day volatility 112 (10 year max 287)
20 hour volatiliy 26'5 (10 year max 96)
Shot back up, but still down on March and Feb (35 point high).

Asian Session

13 point range, 3 point volatility - a bit higher than it should be for a quiet night and slim range, maybe some lingered after-shocks around 2:00AM. Otherwise just wave-like movement, ending up down, action starting again at 5:40AM

London Session

Playing around between the Asian High, the Asian Low and 1.2900. Volatility down a bit on yesterday. Reversals mostly rounded out. A bit of chop coming in.

Trader State

Physical: just got a haircut. irrelevant, maybe. we'll see.
Mental: chastised after yesterday's performance
Fatigue: on a scale of 1 to 10, 5.
Motivation: To get profit without risk, experience without danger, reward without work, is as impossible as it is to live without being born. (Don't know where i got that quote but it's good one).

Real-time Notes

Set-up 1 at 14:30 around the 1.3000 mark - missed the news event and big bars. That was some reversal pattern at the top of the move - it's now bouncing around making lower highs and higher lows but no nice triangle.

Too soon before I'm ready it moves off up, but drops back below 1.3000 again. Makes me initially bearish.

Now it hits the EMA20 - I like this, but I fail to make an entry. Too late, jumping between charts, swopping between bullish and bearish. No feeling for it (except that it's going to move)

Going through these set-ups very quick.

Set-up 2 is at 1.3009, the previous swing high on this level, and a swing high from back in March. Gone again!

Set-up 3 probably at 1.3030 if there's no turn-around.

Seeing a lot of retracement at these set-ups. Won't allow tight stops or quickly moving them to B/E.

But there is a turn-around. It comes back down to 1.3000 and the EMA20 so after a clear deceleration and a doji on the 1-min, I get long. It doesn't behave. The push up turns around and this causes carnage with my decision-making.

moved my stops up in contradiction of what I said earlier - and got stopped out.

Got back in - and stopped out again.

So I think I'll have to take a break now and get my head together again - especially since the set-up still looks valid and I haven't got a clue how to control myself otherwise.

Set-up 4 is at 1.3034 @15:55. Coming to the close of the hour bar, probably building a pull-back set-up here on the way to the '50 mark. Could also be seen as the BO of the earlier spike at 1.3029'5

As stated earlier and as ignored later, I need to keep my stops wider here. More risk - I guess I'm not comfortable. Either I force myself to live with it or I reduce my position size. Easy choice - I'll try to force it and see what happens. This is sim anyway.

Set-up 5 as market gets close to the EMA20 again - can't see it going that far down though. It's put in 20 points retrace so far, just like the last retrace at 15:20.

So it did retrace to the EMA20. That's 25 points retrace. I'm in and there's been a good surge out of the set-up. Much nicer than the set-up 45 mins ago. Stops are at '15, target 1 @'37 just below the HOD and target 2 @48'5 just below the '50 mark.

I'm managing this with the intention of bailing out if it retraces more than 5 points or so before hitting target 1.

3rd bar from entry and it's almost at target 1. Moved stops to '25.

It's now making it look difficult to get up to the last swing high which is where the next set-up is. The impulse to bail out and take those points is huge. But I've got 5 points locked in, and 5 points more available.

Perhaps a bad move, but I moved the stops back down again, to below the EMA20 to give it a good chance off bouncing back up. Just seems more likely than it not hitting my stops at '25. It was only 2 points lower, to '23. Pulled them up behind me too fast anyway.

I think with those 2 spikes at 362 and 364 it was almost a case of trying something twice, failing and doing the opposite - but it looks like I survived. The price action now says it's going up again, so if this fails then I'm out.

Time has slowed right down for this trade. I guess it's late afternoon so it's gone quiet. I'd really appreciate a higher high right now....

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Session Review

Problem #1: started work 1 1/2 hours late due to the normal kind of crap I let intervene with my trading. To be fair, I've made progress this week keeping people out of my office, although I haven't made as much progress towards getting to bed earlier and my fatigue levels are still too high. Lots of scope for improvement there.

Set-up 1 was a bullish situation but there was no trend in place after that big reversal pattern put in there at the news spike. Or was there? I don't know. I was flipping back and forth between bullish and bearish. Guess I had too much information and not enough time to process it. Guess I need to wait for those feelings to come out of the woodwork, rather than trying to find the rational answer.

Set-up 2 - should have taken a long entry. Bar 339 had a great little signal on the 1-min chart. The trade flopped, but I should have got in on it.

Set-up 3. Complete disaster, but both legit entries and theoretically both legit exits. I think. So I should have got in again. Either take small hits by bailing out, or take a big hit on a full stop. The full stop here must be under the lowest point, just under 1.3000. It was only 7 points away from the first entry, 8.5 points away from the 2nd entry so that was not as huge as it could have been - yesterday's 12 point stop was huge. That was probably rearing its ugly head. Maybe I should just practice taking entries and not managing the trades - letting them stop out or hit target. Do that for a while, definitely an option to get over this. It was quite manic so I'm not sure why I did what I did, why I bailed out twice despite saying ahead of time that I shouldn't.

You can discover what your enemy fears most by observing the means he uses to frighten you.
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2013-04-08 Monday sim trading session


The Tao of Al (Page 407, Reading Price Charts BBB)
7. There are no reliable counter-trend patterns, so never trade counter-trend
unless there first has been a break of a significant trend-line.
And even then, first look for a with-trend trade that should lead to a
test of the old trend's extreme. If the market once again reverses near
the old extreme, then you should be entering in the direction of the
new trend.

Lesson Learnt Last Session

Don't get stressed trying to work out the trend for certain. It could be either way. Constantly consider both, and if one feels good, use the feeling, but be vigilant that you haven't become certain about it.

Also listen to yourself - if you say the retraces are big today, then expect them to carry on being big.

Goal today

Be cool about uncertainty, be worried by certainty.

Take note of my own notes. No random decisions.

Risk Management

Account - sim: GBP 95,657 (down £90 yesterday)
Position size: US$100K
Max risk per trade: $200
Daily time-out: -$400
Daily full stop: -$600

Session Details

All details as they should be.


forexfactory.com
 
Code
09:30 	EUR 	Low	Sentix Investor Confidence 
11:00 	EUR 	Med	German Industrial Production m/m

Higher Time-frame

The trend channel from late Feb to last week is conclusively history, we have an up-swing in play. 1.3050 is the immediate resistance which should be crushed soon if this is a real up-swing and not some choppy mirage sent to delude me. Straight 50:50 chance of another trend day vs a quiet range day. Usual minor chance of a complete surprise, although probably not after the surprise reversal of Thursday.

Volatility

20 day volatility 113 (10 year max 287)
20 hour volatiliy 25 (10 year max 96)
Looks like its rising, not as high as mid-Feb or mid-Mar

Asian Session

Range 29 points, volatility 5.5, high as usual for beginning of Monday Asian session.

Mostly bearish, tailing off down at the end of the session. Pretty choppy for low volatility, even as sell-off at end came in. Reversals neither really rounded nor sharp - so little swing movement.

London Session

Looked to sell-off further but turned around 5 points down and reversed the Asian session. Quite choppy with decelerating trends, lots of tails, some sharp, some rounded and some just plain choppy reversals, but bullish with a complex pull-back at 10:30.

Trader State

Physical: good. no ill effects from hair cut that the weekend couldn't sort out
Mental: dissatisfied. Probably ideal then.
Fatigue: yes, as usual.
Motivation: Thomas Edison tried some 5000 different substances to come up with the filament for the electric light bulb. Asked how he could stand all those failures, he replied that they weren't failures, but each attempt brought him closer to finding what would work.

Real-time Notes

Set-up 1 at 15:00 is where it's just put in a spike down and lower low, so some speculation of more selling now, turning the trend for the day. The sharp sell-off 25 point push down to 1.3000 has been completely rejected, and now it's choppy around the initial point of that move, resting on the EMA20. The hourly bars are bullish.

No feeling as yet. Too many opposing indications. From the trend structure, a minor sell-off now would set up a better rally that I could believe in, e.g. to 1.3015, so theoretically at any point this might develop into a pull-back set-up.

On the sell-side, we could get more interplay around 1.3010 which looks like the market's favorite place today.

The sell-off hasn't been as convincing as the previous down to 1.3000 so it all makes me bullish.

So much for a big push or some kind of order-flow from trapped traders. Looks like I made a late entry here.

It's 16:00 and end of my session so I can either leave it to hit target or stops, or I can bail now for the loss of commissions. I'm bailing since this isn't a strong trade.

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Session Review

Definitely a range day then. At least until now.

Sent the wrong way on the only trade I entered - I guess this is how goalies feel in a penalty shoot-out.

My note-taking is really poor because I don't want to take my eyes off the market to write stuff down. I guess I'll have to try writing it down by hand on paper, then I don't have to take the chart off my screen.

As far as the trade goes technically, I guess there are a few things I can learn here from hindsight.

I based most of my guesswork on the strength of the inter-S/R swings, which is why I got long, since the last bear trend was slower than the previous and the bulls had been looking more consistent, when they managed a trend. But checking the 1-min chart, the bear swings all look a lot sharper and more threatening than the bulls, even though they are all pretty short.

The spike down and rejection as it was pushed back up looked pretty bullish.

The entry was on a stop, and the market took it out on the high of the bar, which is easy to see on the 1-min chart. That can be considered as a failure of expectations and therefore should have made me more bearish.

The bullishness of the hourly bar also failed to live up to expectations as the next bar was down.

Plus after entry, the retrace over the next 2 bars actually put in lower lows that were lower than the higher highs were high.

So it was good to bail, although ostensibly I bailed out because it was 16:00 not because my trader instincts told me to. I think.

The main influence on me at that point was that the probability of success was just not high enough. It was a range day, a weak trend, possibly just turning into a big long stall for the rest of the day.

After I bailed, the price action gave away a good short signal with a doji on the EMA20 and sold off nicely out of the stall. They always look so great after the fact. Didn't watch it though.

End result: bad entry, mediocre exit - didn't keep my stop too close.

You can discover what your enemy fears most by observing the means he uses to frighten you.
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Good to see you posting regularly again @Adamus. I've been on a 5 week hiatus due to work so I'm looking to get back in the swing of things too. After such a hiatus I find myself asking if I'm trying too hard to find the perfect entry because, as you mentioned in some of your previous posts, there is always a chance that the market can do anything at any time. I read this today from Van Tharp which made me think a bit as well: "Our random entry system-consisting of random entry, a three-times-volatility trailing stop, and a simple money management system involving 1 percent risk- made money on 100 percent of the runs." Hmmm, food for thought. I believe I am like you in that I am concerned about getting it perfect (ie which timeframes matter, when do they matter, which S/R is most important, etc.). Van Tharp seems to believe that stops and money-management are the most important thing. Or, to put it another way, if we can find an entry that is better than random and we have proper stops and money-management we should do well.


Last edited by SammyD; April 8th, 2013 at 03:59 PM.
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Yes, but you would never go long right below resistance, or short just above support, right?

You can discover what your enemy fears most by observing the means he uses to frighten you.
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Right, I would not personally. Sometimes I question, though, if I am finding too many points of S/R. After all, they are all broken in the end.

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