Dead Pips

[MattW2009]

This thread is about Price Action and you wont find many indicators in this thread nor any set rules for a method (you have to find what works for your trading style). It might, however, give you a great starting point for a profitable method of your own design based on the material contained within.

Feel free to jump in with any questions.

There are far better threads out there that introduce similar material than this one. Do a search for Alternative Technical Templates and 3 Ducks and you will not be disappointed.

[MattW2009]

I recommend skipping to the last few pages for the latest material and then coming back to read the rest of the thread if you are interested afterwards.

[o990l6mh]

I had to take the chance to be your first guest here!

Congratulations on your thread, may the pips be many and the account balance ever growing!

[o990l6mh]

Very nice trade and well executed!

[Shr1k]

Looks good!
I love to hit a top or bottom like that always makes me feel real smart :D.

I appreciate people sharing real trades, even if I don’t trade the same way I learn new things that I might be able to apply to my trading. Thanks.

[o990l6mh]

Two potential setups to watch for might be:

USDCAD monthly pin - could the USD be about to finally show some strength?

USDJPY - I’ve seen it discussed elsewhere too, could potentially be about to shift trend.

Nothing tradeable yet (well USDJPY if you’re brave enough to bet against the current trend), but maybe something to keep an eye on.

[o990l6mh]

For the USDCAD pin do you mean October?
November was an inside bar and a break of both would be a bullish play for sure, although as you know I’m not the keen on the monthly plays - it ties up capital for too long for my taste.

Yep, October’s bar.

Maybe nothing to trade per se, but it gives a hint as to future direction.

You’re quite right about the NFP train taking off without us, but there will be chances to enter on retraces and retests.

[ellave]

I’m currently in a short on AUD/JPY so I’ll put up a chart tomorrow showing this one once I’ve exited.

i’m currently in this trade took some at 81.65 & more last night @ 80.77, i see some S/R around the current price of 80.06. I may wait for the jpy news to come out this morning before reassessing if I should now close.

Also the chf/jpy looks very interesting on the daily’s, have you looked at that chart Matt?

[ellave]

I might add that on CHFJPY the current downtrend is at 8600 which is the 61.8 Fib from the previous uptrend, so this is definitely an area to watch. If you’re around for the next few hours I’d sit and watch this one as there is certainly potential for a long here. Although any long taken should also be closely managed because as I said earlier, I’m still bearish xxx/JPY pairs.

Sigh still at work!!

Anyway i closed part of my AUD/JPY & moved 50pips in profit for the rest of it so will let that ride for a while longer.

I also sold the CHF/JPF as looking back on the charts once it breaks past the 86.60 mark it usually has a good bearish run before heading back North. so far looking good as I type its just broke the 86.00 which will hopefully provide some resistance.

[richieru]

Hey I love this approach, I’ve been using a set stop loss which is a certain percentage of my account on every trade. this, more often than I like, results in me changing the stop to a more approprate location (beyond S&L lines) risking more than I should be.

[MattW2009]

Hey I love this approach, I’ve been using a set stop loss which is a certain percentage of my account on every trade. this, more often than I like, results in me changing the stop to a more approprate location (beyond S&L lines) risking more than I should be.

Yes it definitely makes sense to set the position of your stop loss first, then work out how many pips that is and from that what position size you should use.

I believe Oanda are very good for doing micro/varied size lots which allows this kind of flexibility.

[Shr1k]

Hey I love this approach, I’ve been using a set stop loss which is a certain percentage of my account on every trade. this, more often than I like, results in me changing the stop to a more approprate location (beyond S&L lines) risking more than I should be.

I trade much shorter time frames what I do is start with a set stop and lot size that is a small less than 1% risk then if I need to move the stop I have some wiggle room and I can stay well within 2% risk per trade. The way I trade 2% risk per trade is high.

nice trades BTW

[o990l6mh]

Today’s trade was a classic pinbar setup. We had a good looking pin (91%) and although it could have stuck out further it was sitting on the 150EMA for confluence with the 365EMA providing further support should the pin break.

As usual, we entered on the break of the pin indicated. The nearest PPZ (7500) was the bottom of traffic so I decided to take profits at the touch, as shown by the horizontal green arrow.

Of course price could go higher - anything can happen - but why take the risk? It’s December and prices in all markets tend consolidate somewhat due to low volume, end of year profit taking and the disinclination to open large positions over the Christmas period, along with the anticipation of potential trend changes that January brings.

This is a daily chart of Brent Crude.

Nice one! I’d have taken profit too what with the time of year.

[richieru]

Yeah, this week has been frustratingly dead. Especially monday.

[o990l6mh]

I was thinking earlier about the fallacy of using the 365EMA on a daily chart. I’ve said before that I once heard advice saying, for periods less than 50 we want an EMA as we are looking at quick price changes, for periods longer than 50 we want an SMA so that the average reflects price over the whole range. So a 365EMA is ‘wrong’ on that count. But my main problem with using a 365EMA on the daily chart is that the period is just plain wrong. 365 was obviously chosen for the number of days in a year (so should we use 366 on leap years?!) but there are not 365 [I]trading[/I] days in a year, or even 365 candles in a year - it’s closer to 260 trading days a year.

So with all that said, I’m going to place a lot less emphasis on seeing confluence with the 365EMA as confirmation of a trade in the coming year. Unless I hear on good authority that ‘all the pros use it’ (which will in turn cause it to be a self-fulfilling prophecy) I’ll downgrade it to a ‘standard EMA’ confirmation. What I mean by that is, I will not attach any special significance to it. All the EMAs in a certain range, along with various other MAs, will have approximately the same position on the chart (they don’t tend to show wildly different things) which is why MAs in general work but I don’t think it makes all that much difference [I]which[/I] MA you use.

As much a fan of the J16 methodology as I am, I’ve struggled with the use of divergences, 150, 200 and 365 EMAs and fib retraces.

The conclusion I’ve reached is that the core concepts of bar formations at S/R areas is very sound. The above mentioned “confluences” I look at as superstition and accordingly they no longer have any place on my charts.

From what I’ve seen, they don’t increase, nor decrease the probability of a setup working out.

I think it was Thomas Bulkowski who said, after studying it, that price does not respect the 23, 38, 50 or 61 levels any more than other levels.

For me, bar formations and S/R / PPZs are my entire focus.

Merry Christmas Matt!

[o990l6mh]

If I were to guess, the only indicators possessing any self-fulfilling power would be the 50, 100 and 200 MAs.

I’ve always been short on faith and long on evidence and so far, the concept of S/R is [B][I]the only[/I][/B] concept that has proven to me that it works.

I suspect that the myth of the self-fulfilling power of indicators such as MACD divergence or price reaching a certain fib level is widely exaggerated.

The experience of years of trading will show if I’m right or wrong but for now I’m finding that my trading isn’t any better off with these additions. Ergo - I don’t use them.

[o990l6mh]

Today’s reading material: Trading for Infinite Yield - Utility Theory and You

A closer look at your risk appetite how that affects your money management.

“There is a direct correlation between risk and reward, so when you have a definable, provable edge, you can apply money management that rewards you appropriately for diligently taking your trades with the correct position size.”

Quite interesting read. Reminds me slightly of the optimal F concept which apparently isn’t so great in reality.
It does require a very good knowledge of your win rate with attention given to the fact that sometimes there will be a long streak of losses.

While surfing around reading about optimal F, I found this site with some interesting links. Haven’t read them myself yet, but I think they may be worth the trouble:

Money Management | TurtleTrader

[o990l6mh]

The Kelly criterion is a very interesting read: Kelly criterion - Wikipedia, the free encyclopedia

Basically, according to this, if your R:R is 1:1 and your win rate 70%, you should bet 40% of your account on every trade. Whoa Nelly!
You’re definitely gonna want to start out with a winner or two…

Gonna do some more reading on the subject of position sizing and risk, I’m becoming more and more interested in that area.

[o990l6mh]

Cheers for that link Magnus - not sure I’m gonna risk 40% tho
That’s the point I was making though, even if 40% is the magic number for a given system human nature wouldn’t cope with it and we’re better off using a lower risk to ensure we are comfortable with any string of losses.

Today’s link is “45 Ways to Avoid Losing Money Trading FOREX”, or 45 Reasons Why Newbies Fail:
301 Moved Permanently

Nah, it’s all about finding the personal comfort spot. Maybe James Bond would risk 40%, but not me.

Our illustrious James had some good points, most likely “borrowed” from somewhere else (wonder what he’s up to nowadays?)
Seriously though, several very good points on that list; 1-4, 12, 13, 17-19, 40 and 45 were points I especially liked.

[Letseethepips]

Matt or Magnus i was wondering what your guys opinion is on a pin forming on the GBP/USD 4 hour chart.To me this looks like a good position to enter for a reversal as i type this it is about 40 minutes to the close of the candle.(11.20am pacifac time )If you guys are out and about for the holiadays please disregard.