For those of you who are just starting to read this thread. Entries are colour coded BLUE and POSITIONS EXITS or SQUARES are colour coded RED.
Now back to my elaboration of my exit reasons... Even though weíre trading a mechanical system here, it doesnít mean that we have to switch into ďDumbĒ mode; having an automatic gearbox doesnít mean the steering wheel is going to turn on its own!
The reason I exited was because the price hit S1, which yesterday was located at 1.3169. Supports can be whacky sometimes; today it goes straight through, tomorrow it bounced with 25 - 50 pips in a few seconds... I preferred to play it safe in that situation and take what profits I had, rather than the possibility of half or less later.
Either way as youíll notice the price did bounce off where we bought back and Squared and if you have set up your MAs like I advised before, you would realize the 10 MA handled the price vary nicely - this is a good sign of continuation in the same direction.
The second reason why I closed of the trade was Stochastics - note how they went into the oversold zone, floated about in there (Which is the continuation of the down move) - then started trying to break out of it to come back up.
This is normally where consolidation starts and you should try and get use to these signals so you can prepare yourselves, as after each consolidation there is a breakout and the 5/10 E-MA crossover is a wonderful breakout signaler.
As you will notice on the chart I was lucky enough to wake up, catch the taxi to work and sit in front of the pc just in time to catch another good entry point signaled by my system.
Iíve entered a long at 1.3145. Although I was a little biased, due to the fact that 1.3131 Support hadnít been tested yet + the obvious imminent 5/10 crossover on the Daily Chart all pointing to a bearish sentiment.
Regardless, Iím still holding the position now, its broken through 10,20 and its now testing 50 E-MA.
As I mentioned before a price breaking the 50 has intent, so stay alert. At the moment there are two scenarios; 1. The price bounces of the 50 E-Ma and comes back down to test 1.3131 after which we might have a break leading to a much further down move OR 2. The price breaks 50 and goes for Resistance of 1.3190 Or in other words the 100 SMA - colour coded pink, then R1 at 3223, then Resistance at 3252, 3293, 3335, 3364 etc.
These are just scenarios, as a trader you should always have at least 2 or 3 scenarios in order to prepare yourself psychologically.
Why psychologically you ask? Because ďFearĒ and ďSurpriseĒ two of the feelings we try to avoid are spawned by NOT Understanding and NOT being Prepared! If you are aware of something and you expect it as a probable occurrence, then when it happens it canít surprise you, which in return leaves you calm, cool and ready to react optimally with a sober mind. That is all for now."
Last edited by elang; 12-15-2006 at 07:49 AM.
Hello again guys.
As I mentioned today there were two scenarios. The first was that the price bounces of the 50 E-MA on the 30 Min Chart and comes back down to test 1.3131 Support.
I guess the small move, which I caught at 1.3145 was just a little breather and a last attempt by the bulls to take back charge before the bears get back to their inevitable test of 1.3131.
Either way from 3145 to 3171 was a 26 move. When RSI broke above 50 and the price broke 50 E-MA, I moved to a higher time frame H1, to gauge if RSI was going to break 50 on H1.
A confirmation of this would have been reassurance to stay in the trade, but RSI had no luck breaking above 50 on H1, rather the price was handled by E-MA 20 (Green) on H1, ending up with a shooting start (bearish). After I saw that, I moved back to M30 and closed my position when the price came back down at .3165 for a 20-pip profit (ENTRY 1.3145).
I SQUARED at 3165 with twice as many lots as I Entered the trade so I could go short immediately at the same price 1.3165 as I determined a fall back down to try and retest 1.3131.
Now, I donít want you to get confused, the system works, but I am used to it so in a lot of cases I know when to enter the trade before the signals show up. The more you use it the better you will get at being able to predict a 5/10 Crossover before it happens. You will also notice that Iíve implemented Support Lines (1.3131), Candlestick Patterns, Multiple time frames and simple logic to get bet results.
Try and educate yourself in different areas, so you can see more every time you look at the chart. It is crucial if you want to trade better.
Now I am just going to sit back with my short from 1.3165 and hope for a retest and break of 1.3131 Support, also watching the System Indicators and MA, RSI, Stochastic hints.
As you can see guys, the retest of 1.3131 definitely happened and Scenario 1 was confirmed. All in all with trade 1 and 2 today weíve manage to bag about 90 pips, which isnít too bad for a few hours you might agree, no?
I know I entered a little earlier on the first charts above, so I posted another set of charts which shows WHERE you should have entered using my system, either way you would have still made about 50 pips today if you went only with the second trade (Short) and well above 50,60,70,80,90 if you shorted where I did around 1.3165 on the first set of charts.
I would like to take the opportunity here as well to emphasize on the importance of multiple time frames when using a system like this. When both a fast and slow time frame confirm crossovers - it is an all go situation so try and gauge things on a multiple level in order to better determine a more accurate course of action, whether it be
Entry, exits, position addition etc.
Well there we have it... a perfect example of what the news can do to you. If you got caught in this newsbreak, you got it bad.
Always keep up to date on news releases and try and exit your positions before they are released or you will eat dirt!
In any other case, I would have held this position as everything was pointing bearish, but knowing CPI is coming out the smartest thing to do was take a hint front the Indicators and try and exit with the most profit.
- MACD Crossover
- Stochastics Oversold Zone BREAKOUT
- RSI had broken over 30 and was actually up to 50
instead of its initial direction of back down to 30
- That’s all for today folks - if you followed through with this from the start you may have bagged at least 20 to 65 pips - Not bad for a days work
As an experimental trade relying on Dows theory, that the news can't change the majour trend, i've shorted at 1.3180 - i still believe the bias is still bearish here.
So we get a mysterious white package in front of the white house and not so hot of a CPI, so what ? Let's see what the forces of nature can do for this trade
Elang, I've completed setting up my charts using your 4 ema system. It looks promising. I am testing it now on gbp/usd,eur/usd,usd/jpy,usd/chf, and usd/cad on the 1H chart. Well see in the next few days. Are you trading this system live?
Yes, I trade with it on both my live and demo accounts, i try and enhance it on my demo account every day, where as i adhere to strict rules on my live.
The results are promissing as you can see in the trades logs in this thread.
The experimental positionentered at 1.3180 has gone great so far and it just goes to prove that D. Jones was right when he said news canít change the market trend. After having digested the news the price has moved back to its previous bearish plans.
Previous Supports have been broken and thigs are looking very well.
Being the end of the week, iíve set a Trailing order with a 30 pip stop, so i am just going to let it run.
My thoughts are that the price will most likely try and test 50 E-MA on the daily chart, till then i will have a good profit and have nothing to worry about.
Overall today has been a great trading day with over 60 Pips profits locked in and over 100 trailing with a 30 Stop Loss.
I will see how things look on monday, but either way my legs are kicked up and iím happy.