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Spot FX Day Trading: The Jigsaw


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Spot FX Day Trading: The Jigsaw

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  #111 (permalink)
London, UK
 
Experience: Beginner
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mokodo View Post
Thought I'd pop in an and update my journal. I've nearly finished a revamp of my trading plan after a prolonged layoff and I will be back trading as from Monday 3rd June. I have pretty much cleared the decks of other work commitments for a few months.

There have been changes, but nothing too drastic. Main change is I'll be day trading just one instrument (EURUSD) and swing trading a few other currency pairs.

Biggest change is that I went off and learned how to trade! In the last year or so I had been leaning more and more toward market structure and 'context' and have adopted the Wyckoff method as a way to speak that language. This has added volume to my chart reading and, well, it's made a difference.

Looking forward immensely to getting back in the groove. So probably SIM for a few week or two and then tiny steps live.


Hi Mokodo,

what volume are you using? If Wyckof needs volume, you'll have problems using it on the interbank forex market, surely?

On another subject, I was considering the feasilbility of putting on a position trade at the end of my session to benefit from days like today - since I'm doing the higher time-frame analysis anyway, I figure I could wrap up my session by working out if there's a good trade to be had on the hourly time-frame. Is that something that you do with your swing trades?

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  #112 (permalink)
Bridgwater, UK
 
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My long bias paid off today.

First trade was a scratch. A poor entry as I was afraid I was going to miss the move as price had seemed to break up and hold above my upper band of the last few days. I hadn't completed my morning prep and jumped in. Price was over bought in the channel, the proper entry was 10 pips lower. I sat through one rotation and as price accepted the demand line was fortunate to get out with a couple of pips loss (stop was 15 pips). I got out as I did not see any demand coming in. Again I had thought perhaps we may get a bit of a swing in before the malaise prior to BOE, ECB rates and the Euro press conference.

Price held above the previous resistance (now support) all morning with a spring off that level as the press conference got going. I stood aside of that set-up as it was very fast and hoped for a low volume pull back to get long on. Missed that too as it was a spike down.

I did get long on the first MACDh entry after the retracement came back to 50% of the breakout leg, testing the breakout area and sitting right on top of the high put in in the London open. Buyers fought hard to absorb the sellers and it took three pushes down before a nice pop with a bull bar which took out the highs of the previous five bars. At this point I set my profit targets and walked away. I managed 75 pips of the move, missing the last 75. 3R winner and happy with that.

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  #113 (permalink)
Bridgwater, UK
 
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Adamus View Post
Hi Mokodo,

what volume are you using? If Wyckof needs volume, you'll have problems using it on the interbank forex market, surely?

On another subject, I was considering the feasilbility of putting on a position trade at the end of my session to benefit from days like today - since I'm doing the higher time-frame analysis anyway, I figure I could wrap up my session by working out if there's a good trade to be had on the hourly time-frame. Is that something that you do with your swing trades?

Hi Adamus,

Oh the thorny question of FX volume. I didn't go near it in the past for the well known reasons. The volume I use is tick volume (trade activity) and I think it is a fair reflection of the activity. I'm learning to use it in relative rather than absolute terms, which is the reason for the wave volume indicator. I've compared MB Trading to FXCM data and the two are close enough for me to trust the MBT data on a swing by swing basis. I also refer to the CME EURUSD futures volume (available with a delay free from the CME site). David Weis uses tick volume in the FX market for his volume. If it's good enough for him....

https://library.constantcontact.com/download/get/file/1110646200653-206/June-6-2013.pdf

(see page two of this study on GBPJPY for an example, these are freely available at David Weis' site https://weisonwyckoff.com/)

Yes, the swing trades idea came from the exact same thinking. If I was doing the HTF stuff as part of my prep, then why not trade on those time frames for the longer swings? That said I am still working up a routine to put some longer term trades on - should be done by next week.

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  #114 (permalink)
London, UK
 
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Oh right, I hadn't heard of that. Interactive Brokers has some volume but it comes from their limited system and doesn't encompass the whole market (obviously). I have FXCM for historical data (because IB is so crap) - how did they compare to MBT?

On the position trades, I figured I would aim to use the same methodology, but also look into the idea of putting on a trade to exit on the close. Haven't had a chance to check into that more yet, either. I figured on trend days it could be useful.

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  #115 (permalink)
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Adamus View Post
Oh right, I hadn't heard of that. Interactive Brokers has some volume but it comes from their limited system and doesn't encompass the whole market (obviously). I have FXCM for historical data (because IB is so crap) - how did they compare to MBT? .

I just compared the two to assess how much similarity there may be to the tick volume. Tick for tick it is rarely that similar but over longer time spans (5 min+), they seem to be roughly the same. Same for the CME volume on the EURUSD futures vs MBT.

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  #116 (permalink)
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No trading for me on Friday - don't tend to trade NFP days.

My prep said long today. We have retraced 50% of the big swing from Thursday and have been making less and less progress on the downswings. My two areas of interest are the blue bands. I was looking for set-ups in the blue areas, long off the bottom or long on a break and pull back to the upper band.

The spring at 08:20BST was before my trading session started (start 10am on Mondays). However after the Axis line held there was ease of movement back down into the lower band - which I didn't like and perhaps made me a bit nervous during the trade I took shortly after. I took my long at a no supply bar plus a pip or two to get clear of the tight range that had formed. There was one more little low volume retest of the low and then a swing up. I allowed one rotation and after 10 bars went to what I thought was the swing low and was taken out for a scratch.

The break came shortly after, there was a nice 3 pushes into yesterday low with buyers taking all they could and then pop - up a quick 40 pips through the upper resistance. Alas without me on board. I stood aside as I was more than a bit peeved I had stalked a trade all day and scratched it. But pleased with the analysis. I'll take a pullback the upper band if it sets-up, there is a fair amount of accumulation to act as fuel for higher prices if we can hold on top of the axis line at 1.3230.

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  #117 (permalink)
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Bad luck on the trade, especially after taking that much heat at the start. In hindsight do you think it was a mistake or just tough luck? Managing a position is one of my many weak points

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  #118 (permalink)
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So I did take the trade on top of my upper band. Carbon copy of the previous one.



Adamus View Post
Bad luck on the trade, especially after taking that much heat at the start. In hindsight do you think it was a mistake or just tough luck? Managing a position is one of my many weak points

Thank you for your question

Both these trades were the same. I got in early and out early. I actually feel comfortable getting in early as the background was showing strong support for the levels and my stops were tucked underneath. It is the process of holding the trades after say 20 minutes whilst they 'brew' that I struggled with yesterday. I no longer have a mandatory time based stop in my trading plan, but I used to and think I am reverting to this as a way to get out of the discomfort of holding a non-performing trade. Add to that, that I always think that taking a scratch trade is OK and I talked myself out of both of these trades.

A quick review of recent trades would suggest I could do better with a set and forget, waiting for my stop or profit target to be hit, or, my preference, work on timing better entries.

However, capital preserved, much learned and start again with a clean slate today.

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  #119 (permalink)
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Ignore the first trade noted here. I am using my MBT demo account for June, but the accounts did not load this morning, so used NT SIM account, I used the first trade to check it was working OK.

So the story of the day...

I didn't have a bias either way today. My upper and lower bands are at the Asian session high and low. I could see signs of weakness coming in after we up-thrusted the HOD, with ease of movement down. I took an entry on a no demand bar. But the trade got stuck at the same level price broke clear in the run up to the HOD. I held on as I wanted to see what price did next. There was a promising little upthrust, but it failed to break down. The wide range down bar was erased on a potential spring set-up so I closed for a couple of pips loss. The break-down came shortly afterwards, a failed run at the HOD with a reversal bar being the best entry.

Second trade was a flop. My idea was for price to hold under the lower band, for a another leg down. I got in on a no demand bar, but in hindsight (oh cruel, cruel hindsight), could clearly see why this was a bad call. Firstly, this level is where lots of demand came in yesterday (see the big green wave far left of the middle indicator panel) so if buyers were so committed then, they may well put up a fight again today - and this is around the 50% retracement of the previous swing. Full stop of 15 pips there, but all was not lost...

3rd trade took advantage of the situation. Biggest demand of the day off the lows and I got long on a MACDh / no supply signal. First target was at the upper band and I decided to hold to see if we had enough ummmph to hold above resistance. Price came back and took me out on the demand line.

Ended up on the day by the skin of my teeth.

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  #120 (permalink)
London, UK
 
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Posts: 1,085 since Dec 2010
Thanks: 471 given, 784 received


sorry, just another stupid question: what's a no demand bar?

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November 18, 2013


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