PL: +1.4% / £32.76 CAP £2494.67
Trades
A. price needs to return to 252 EMA
B. H1 Ranging = 252 weak
1. REV to & thru 252 (+1.4) as H1 was in range the 252 was weak. Fault, exit discretionary. Could have made TPO for 2%, just wanted to book some profit. You can trade setups around major S/R provided they break them, (and you could have traded Trade C from 190813 because H1 was ranging) Add to Guide.
C. REV to R, couldn't takes as MN R just above so RRR poor.
D. trend weakens. FTMNHC - ATMNLC
E. HSL, could trade due to poor RRR with D1 and W1 S just below
F. REV to Trend, this is a new trade which uses a HSH (highest sessions high) at a RL/PB to 21EMA as the trigger, confirmation comes when price closes above the high. Add to Guide.
Notes
In trade 1 I could trade through Monthly S because confirmation broke it.
Trade F. Is a new setup but is really a variation on my REV to 252 setup. But in this case instead of returning to the LT mean, the trend instead returns to the prior trend after a little break. Because the setup returns to trend the only confirmation required is a close above prior highs (if long) or lows (if short) as all MA's should be below Price if it is trending.
Summary: Okay I can't lie this was a bloody frustrating day but I think (excluding scalpers) a lot of traders might have struggled too. My problem was lack of setups. I require strong PBs' and RL's (to the 21EMA) because I find otherwise the RRR is completely whack. TBH I went through hell, I tried writing new ideas down for trade strategies etc but managed to calm down and didn't act on them. The truth is I did trade well (except exiting trade 1 early) because I followed my strategy exactly. The Strategy didn't perform as well as I would have liked, however it is very challenging trading safely around a truck load of major S&R and to be fair it did keep me out of 3 poor RRR trades that all would have lost me money. So I am being hard on it. I wasn't to bothered about missing the first move up as there was D1 and W1 R to contend with. But the 2nd large move was hard to swallow the missed opportunity. However i spotted a variation on my REV strategy which is so obvious I'm surprised I haven't noticed it before. So actually not a bad day, made some profit and got a new setup.
Very interesting read, although I'm not quite sure what I'm reading! Your definition of your setups, complete with acronyms/names, must help with consistent action.
ReplyDeleteMay I ask what triggers your trades? Bar closes or price? And how long do you trade for each session? I once had a dream to trade only 5 minute charts with an Al Brooks/Nine Transitions style, but don't have the time or patience.
Hi JMF3. Good to hear from you, thanks for the comment!
ReplyDeleteYeah sorry about that. My language seems to have developed from abbreviations into unintelligible. I'll try and give some definitions in the future...
Of course...
1. I use the close of bar/candle as my trigger. Basically a variation of John Carter's LOHP (low of high period)on rallies, HOLP (High of low period)on pullbacks for trend trades. And a variation on these for Reversal trades which act as high probability breakout / breakdowns. I try and trade with the trend, however when the trend is weak I trade it back into it's LT mean (to me this is the H1 21EMA/ M5 252EMA).
2. I completely understand what you mean about patience on the 5 minute chart! I started off with 2 sessions. 1. London open (ish) GMT 0700-1000. 2. US open (ish) GMT 1330-1530. Which I still roughly follow but often need to take trades in between the sessions or slightly before the London open which can result in long days.
TBH I'm struggling a bit with S&R levels. I'm using the high and low from yesterday's D1 session, the high and low last week's session and the high and low from last month's session. These have been helpful but I feel like maybe I'm giving them too much weight which results in me missing moves... I noticed you recently posted about getting distracted by a big daily high (it looked to me like you traded well around it). If you don't mind me asking, is there anything you'd recommend about interpreting/ weighting S&R?
BTW big thanks for mentioning Al Brooks/Nine Transitions. Shamefully I'm not that read up on them, however do share Brook's fondness for the 20EMA. I know Brooks has got four books out and was a little confused where start, if you have any recommendations I'd be most grateful.
best
George
George - I just thought to check this post again to see if you had responded - I apologize for the delay in getting back to you!
DeleteDon't worry about other people understanding your terminology - if it works for you, then thats what counts. It is interesting to read along and try to follow, thoug. I don't understand what the "high period" means when you reference "low of high period" - then again I have never heard of John Carter so a little research on my part would probably make me understand!
As for Al Brooks - I've read a few PDFs of his, but to be honest, I think the best way to get to the point is read the Nine Transitions blog ( http://ninetrans.blogspot.com/ ). Started on the ES and now with CL, this guy details setups, and explains the ideas behind much of what Al Brooks wrote, but with more examples, and more detail. I found it more useful, and the guy that write it is an absolutely excellent trader.
So for S&R in my trading - I trade primarily from the 5 minute and the 1 price change charts, and will look at a 30 minute or higher if the 5 minute doesn't show upcoming highs or lows (for example, if we are in a hard run into new highs or lows on the 5 minute, I need a bigger chart to see the S&R. And with S&R, I am not generally looking for them to turn the market, I am merely looking to time a countertrend trade once we reach them for 2-6 pips. Makes it an easier proposition as to whether it will hold or not because most levels will have some little reaction.
The fibs and pivots on my 5 minute chart are my S/R I use on that chart. In general, I don't just trade from those levels unless that I have seen that they have cause priced to at least bounce from them previously on my 5 minute - so really they are more like a grid and instead of having to draw s&r lines, I check the grid to see if price has respected them. The best bounces from them occur when the price stretches rapidly to them. As James always says, its like a rubber band - when it stretches far enough it snaps back fast. Those stretched countertrends are usually pretty nice because there is an immediate 2-4 pip reaction in seconds. Then again, R:R isn't great on them, at least for where I generally take profit.
The Daily S/R line I was talking about - I was only looking at that because we were so high on the 5,30,240 minute charts, that the daily was the chart I had to use to see that top. To really read S/R with a better light, I studied a lot of supply and demand trading... aka the teachings of Sam Seiden. S/R are merely the extremes that are visible by eye, and hence why the receive a reaction. Supply and demand zones, however, aren't only just at extremes like that - the extreme is just a turning point, but typically after a large rally or drop, there is a base. And then from that base, price will either continue to rally, continue to drop, reverse and rally, reverse and drop. There are some good threads on ForexFactory about it as well.
The point of mentioning Supply and Demand is that while you may be approaching a resistance or supply level, you may be coming out of a higher time frame demand level, which would imply that demand is in control, not supply and the resistance you are looking at will most likely break. Its way beyond the scope of this message to explain any more, but if I were trading from 5 minute charts, I would use 30 minute and 4 hour supply and demand levels to determine where I am in the "curve" - i.e. where I am in relation to the larger zones.
Hi JMF3, no need to apologize!
DeleteThanks for the encouragement regarding my terminology, I will persist! Re Carter's setups he should have named them better. What they should say is "in an uptrend/ rally, mark the most recent bullish candle and sell when price closes below it's low" AND "in a downtrend/pullback, mark the most recent bearish candle and buy when price closes above its high".
Huge thanks for the Al Brooks and Sam Seiden info, I'll have a look out for those PDFs, the forex factory threads, but will do as you recommend and start on Nine Transitions blog. It's great to be pointed towards excellent traders. Really interesting what you said on S&R vs supply and Demand! Q: Would you say that it is better to concentrate on identifying areas of supply and demand, rather than precise support and resistance numbers, or are both equally important?
Wow it's amazing that you've gone through all your S&R analysis. I've setup a chart to run along side the my current trading template so I can really see and understand how you go about it. Because I'm a bit thick could you just check I've got the main points correct?
1. Use M5 for S&R, BUT if unclear (due to a hard run)...
2. drill out to higher timeframes for upcoming highs /lows, particularly M30 and H4 but acknowledge that what you're really looking for is a clue as to where you are in the curve/ which larger zones of supply and demand are in control.
3. Don't expect too much from these S/R level instead of a full out reversal look for a counter trend reaction for 2-6 pips.
4. Place fibs and pivots on the M5 but view them as a grid. Only trade from them if they have been tested / respected. Particularly look out for rapid stretches to a level as these produce fast snap backs (be aware of lower R:R).
JMF3 I can't thank you enough for not only sharing your method but also taking the time to explain it to me. Big big thanks.
best
George
Thanks for the clarification on the terminology - Al Brooks would simply call such a circumstance an H1/H2 or L1/L2. For example, if your trend is up, and price retraces, he would say you would wait for the H2 entry. The H1 would be the first time a candle makes a higher high than the previous one, and the H2 is the second time the high pokes above the previous candle. By trading the H2, he is essentially trading a 2 leg pullback. In hard trends, which I frequenty talk about, he would consider trading the H1. I don't really look at that for my own trading (I am buying on Down bars, and selling on Up bars) but just an interesting comparison between methods.
DeleteAs for specific levels (Support and Resistance) versus zones (Demand and Supply) - I'd say that typically I am using Support and Resistance points because my time frame is small. So I primarily look for a support or resistance line to break, and then trade the pullback to it. And then I continue to look for that as the trend continues. Or, say we are in a downtrend, I will look for a pullback to a previous pullback, trading at or slightly above the last resistance point (the reason being above is because thats where stops are and often the market will take the stops out before continuing down).
While I'm trading these patterns and levels on a tick chart, they apply to all time frames. I only use timeframes larger than 5 minutes to see where the next likely place for the market to stop is so I can possibly take a fade trade there, or just wait a little longer to trade with the trend on the pullback. Primarily, I will assume that the trend will continue (although I do have some mental blocks about this) and will trade as such. If I end up trading into the end of a trend, I will add to the trade at the next level of sup/res and try to get myself out at BE and then reassess the trend and the levels I will trade from going forward.
I hesitate trading from the fibs/pivots and find that using the markets own S/R levels makes more logical sense. Often these points might coincide with a fib or pivot level and then I will consider that. But again, my preference is to wait for a level to break, and then trade when it comes back to it - I determine the price to trade at, then watch my quote panel for price to reach it and trade when it gets there. I actually don't watch my charts that much once I've determined the prices I have chosen to trade it.
Its hard to explain all this, but will try to keep some good notes on the chart. I know you are trading from a different time frame, but my 5 minute chart is my most important chart and provides the basis for all trades, so in that respect we are fairly similar. One example I should have posted today was today's slow crawl down.
I was hesitant about shorting too heavily because we are sitting in a big 4H demand zone. It has been tested twice before, and we have just come down from a big daily supply zone, so it will most likely not hold. However, there is still HTF demand sitting there so I figured progress downward would be slow. But note - this was a bias that I formed from a higher time frame that has little to do with my trading timeframes, and as such, kept me from making better profits in an easy, albeit slow, down trend this morning.
Anyway, long answer - sorry it took so long to get back to you.
Search "BS Trading with Kenneth Lee" on Forex factory, and read his PDF on the first page of his thread. Its a great overview, and probably all you need to read for the Supply Demand basics.
Thanks for the Al Brooks defs... I've really got to read more on that and Nine trans! These setups sound far clearer and concise.
DeleteThanks for going further into S/R vs S/D. My hunch was that for smaller timeframes specific S&R levels would be more important, but how you explained S&D areas was very interesting and made me see it in another way. (your explanation was a more intellectual way of thinking about it.)
Good to hear about your trading method, how you interpret the data, HTF bias and your focus on a specific price rather than watching the charts. I like it, it's a very innovative. Sort of counter trend - trend trading. I'm not surprised that you get some "mental blocks" about trend continuation as you are clearly a skilled counter trend trader, I imagine you see a lot of potential to the otherside?
Brilliant that you mentioned trading from the fibs/pivots and preferring S/R levels. That really cheered me up as I have struggled with them for a long time and eventually took them off my charts to concentrate solely on S&R levels (which helped a lot). I didn't like how pivots so often don't have any S/R effect on price and how objective fibs are. But I can definitely see that using them with a convergence of S&R would be very useful for strengthening a signal / trade.
Couldn't agree with you more, the more we talk the more I can see how similar our methods are, certainly in terms of the M5 being the basis for all our trades. In terms of your ninja trader charts do you mind me asking how you've set them up it looks like a moving average ribbon? But I now see through your explanation that these are more to show in detail where you bought and sold rather than entries.
I've downloaded the BS trading pdf and will get cracking on that shortly, thank you.
Don't worry about the time we seem to cover so much, I need a week to digest it any way! haha.
Have a good week and thanks for all the help!
James is a much better countertrend trader than I am. I see the entries, but usually don't take them. My preference is to trade with the trend as usually trends will at least retest the previous low (for a downtrend) or previous high for an (uptrend) before the trend is completely over. Therefore, trading with the trend, I will typically get a chance to get out at BE or better after adding to the trade, whereas on a countertrend trade, there is no safe way to add as the trade may move infinitely against you (infinitely in terms of my timeframe).
DeleteBut yes, my entries into the 5 Minute trend are countertrend on the tick chart, so I'm looking to fade the pullback. I hate waiting for confirmation with some sort of candle close in the direction of the trade. Its a later entry, and most say its "safer". I'm not sure what that means - all it means is that price has travelled a certain distance in your soon-to-be trade direction over X minutes of time. This doesn't mean its safer - it means the turning point was missed. Nonetheless, the candle closes do have some weight just due to the fact that I'd say a majority of traders watch them. However, I would rather fade the close of an up candle in a downtrend, then trade the close of a down candle. A very simple entry I take is just that: I trade at the close of a countertrend 5 minute candle inside the 10 and 21 EMAs. (i.e. if we are in a downtrend, I will trade short at the close of an up candle inbetween the 10 and 21 - this could honestly be a trading method on its own, closing the trade at the close of the next down candle in profit).
The fibs I use are just drawn from the previous day's high and low. I hate drawing intraday fibs - it takes time and believe that coincedence causes them to hold the market, not the fib. I'd rather figure out what the coincedence was.
I do trade watching primarily the tick chart. I watch the 5 minute for where we are, and use it for deep pullbacks. But if you notice my charts, and James' also, a majority of our trading is done when the market is trending hard. These are entries primarily from the tick chart, as the price pulls back across the spine of the rainbow. The spine is the direction, and the price is just yo-yo-ing back and forth across it. That's how I see it. It never gets too far from it, and when it does, it usually snaps back.
The rainbow is WMAs starting at a Period of 6, going up by 6 up to a period of 156 (the "spine"). Nothing special - Cyrinus from the Cyrox scalping method set those up. Its just become familiar to look at and pattern recognition is the name of the game I'm playing. That's why its hard for James' to teach what he does - some of it is based on the 5 minute, fibs, pivots, MAs and other tangigle lines on the chart, but most of it comes from years of pattern recognition, I believe. I'm way behind him, but trying to catch up...
I've adopted his theory that the market is chaotic, and furthered that to include that chaos cannot be contained mechanically, its a case by case study to determine action. However, that chaos can appear surprisingly similar to other points of chaos, and my job is to spot that correlation and act on it the same way I did before.
Sincere apologies for my late reply, I had some family stuff last week, was working on a reply yesterday then blogger crashed (grrr).
DeleteI can't thank you enough for going through this with me.
Very interesting what say about candle closes... I have a love hate relationship with them. I love that they are clear and non-objective (if using the close). I hate them for the same reason as you (how much profit they eat up to get this clarity). Wow thank you for explaining your 10-21 fade method it's a clever method.
Could I ask, do you strictly need a tick chart for this?
and
do you need very low spreads to make this profitable?
(I only have MT4 and my spread on the EU is 1.5 pips)
Your fib method is brilliant, I might have to adopt that if you don't mind. I love that it doesn't require any objectivity!
Re yours and James charts, absolutely I have noticed that you predominantly trade in hard trends but have never quite known how to read them. Thanks or going in to this for me ! I had not released how much importance was placed on the spine! This is quite a surprise because the major premise I believe is price will return to mean (to me that is the 252EMA (H1 21EMA) so usually have more faith in price action when it is trending towards it than away from it, Yo-yo ing as you say. I must read some more on the Cyrox scalping method.
I'm very open to the chaotic market idea, would you mind explaining to me what is the cause of the chaos to you...I've always thought that the market is ruled entirely by emotion, especially in FX where central banks only set the supply and demand once a month, so IMHO the only thing that can move price is peoples emotional responses/ which can be entirely chaotic.
Thanks for all the help advice, have a great week!
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