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

  #81 (permalink)
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Latest version of trading plan for testing

Now that I've learnt the material on counting highs and lows in the chapter on pull-backs, I'm not going to restrict myself to just H1s and L1s.
  • Setups
    • variations of H/L count to filter for
      • only go long above the 20 EMA
      • only go short below the 20 EMA
      • rebound off the EMA after an extend push above/below it
      • in a good trend, take H1/L1s
      • in a poor trend or trading range, wait for two legs and take H2/L2+
      • after a microtrend or trend line break on the main trend, take any because break-out failures are good
      • double tops / bottoms in pull-back
      • reversal bar in pull-back
      • up-down & down-ups in pull-back
      • double top / bottom twins in trend
    • variations of H/L count to filter against
      • a H/L bar that is countertrend in weak trends
      • preceding double tops / bottoms in trend
      • reversal bar in trend
      • up-down & down-ups in trend
      • trend channel line overshoots in trend
    • ditch H/L signal if it's not triggered during this pullback
    • be very careful if the daily and hourly charts don't display a clear trend, maybe avoid trading until the market gets away from the 6AM Open
    • be more careful when the trend has already put in two legs, even more after 3 legs
    • beware resistance approaching round numbers and big pushes after them
    • daily and hourly trend line S/R
    • swing highs & swing lows and highs and lows of previous day are S/R
  • Execution
    • session: 6am -> 9pm London time (for backtesting, I'll shorten it for live trading obviously)
    • Brooks entry 1 tick above / below signal bar
    • Brooks exits one tick below / above signal bar for initial stop
    • move it to break-even when the 15 pip scalp target is hit
    • let one lot run to the end of the bar after reaching target
    • trail stop one tick below / above 2 bars back
That is my trading plan. Now to test it. I'm going to backtest starting a year ago. The temptation to leapt right in with both feet and trade today with the market volatility and the non-farm employment is huge, but fortunately I'm feeling sensible.

So I need to create some decision matrices to record the performance of this price action.

You can discover what your enemy fears most by observing the means he uses to frighten you.
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  #82 (permalink)
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Adamus View Post
be more careful when the trend has already put in two legs, even more after 3 legs

I think you were asking about the EU specificities in an other thread.

One is that trends in the FX market tend to last much longer and to be much more explosive (good break out instrument).

2 or 3 legs doesn't mean the trend will lose strength.

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  #83 (permalink)
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Yes, one of the pitfalls of learning to trade forex from an index trader.

Fortunately I'm only testing, but I can still mess up the test by putting too much stuff in it.

I can ditch 'number of legs' from my trade plan and I'm sure I'll still find it challenging to assimilate.

You can discover what your enemy fears most by observing the means he uses to frighten you.
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  #84 (permalink)
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forex vs stock market indices

on the same subject, since you seem to have a bit of experience here, what do you think about trend channel line overshoots? Are they good counter-trend signals in forex as well as stock indices? Brooks seems to give them a cast iron guarantee as a reversal signal.

On another subject, what do you make of the current EUR/USD action? I can't see a way into the current rally, unless is was through the failed break-out of the inside bar after the non-farm employment bar.

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  #85 (permalink)
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Still a beginner at this game but I've spent almost a year trading Brook's method day in, day out on the EUR/USD.

Finally I gave up discretionary trading and I now try to automate strategies.

Channel Overshoots are very nice but this is a counter trend setup and I prefer putting all my efforts on with trend entries for the Euro.

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  #86 (permalink)
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TheTrend View Post
Still a beginner at this game but I've spent almost a year trading Brook's method day in, day out on the EUR/USD.

Finally I gave up discretionary trading and I now try to automate strategies.

Channel Overshoots are very nice but this is a counter trend setup and I prefer putting all my efforts on with trend entries for the Euro.

I'm only taking with-trend entries too - no intention of trying to stretch myself by launching into counter-trend trading as well. In that context, let me rephrase my question: would an overshoot put you off an ensuing with-trend entry?

I'm curious to know why you are concentrating on mechanisation now. I do a lot of it, but I see both styles of trading as possible, in fact complimentary. I hope to get some serendipity out of discretionary trading to boost my mechanical efforts.

You can discover what your enemy fears most by observing the means he uses to frighten you.
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  #87 (permalink)
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Nothing should prevent you to take a with trend entry, not even an overshoot.

If you enter at the right place, you should be able to get out at a small loss.

Totally agree, both styles are possible and complementary and I think you could even be much more profitable as a discretionary trader IF you can let your emotions out of the way - which is very very difficult when you trade 8 hours a day everyday.

Everyone has to find his own way, I think I 've (almost) found mine

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  #88 (permalink)
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I only plan to trade 4 hours a day by hand. I'll be concentrating on the mechanical systems for the rest of the time. More or less.

I'll be interested to see what you're up to on that front.

You can discover what your enemy fears most by observing the means he uses to frighten you.
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  #89 (permalink)
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Jumped across to Beggs / YTC Price Action Trader

I abandoned that test outlined above. While I'd put it together with what I thought was a decent level of structure, I couldn't stick at it without constant nagging doubts that I was missing something. I think it was the large chunk of time I was about to invest made my subconcious complain. I don't think the test I'd planned contained enough of the 'right stuff' from the bigger picture that I've built up of the field of price action trading.

Trying to concentrate was failing and I ended up reading lots of stuff to add to wikipedia Price Action Trading article. I bit the bullet and paid Lance Beggs the approx USD$200 for his YTC Price Action Trader e-book/course and was instantly hooked. This was what I'd really been looking for.

I've more or less finished reading it all now, approx 16 MB of PDF - and I've torn up my previous test. I'll outline here the new techniques and analyses as I start and progress. It looks as if it's still fertile ground for big tests, decision matrices and a systematic approach, in fact even more so since Lance Beggs's material emphasises structure on every page.

I've put out a call to see if other people are at the same level with YTC Price Action Trader and want to form a study group:

ytc price action trader getting going

I also discovered this interesting looking thread, which I'm posting here to remind myself to read later:

Traps and failures

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

Last edited by Adamus; August 17th, 2011 at 11:40 AM.
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  #90 (permalink)
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Hi Adamus

I will be really interested in your discoveries. I too am struggling to be profitable and would like to have a mechanical (as opposed to descretionary) trading strategy on a longer period chart.

So I am reading with interest - thanks

Daniel

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