What Really Turned My Trading Around

[Relativity]

Hi Rel,
seems you've made a great job, but I must admit I've understood almost nothing about the way you trade...... I'm too dumb to understand it.....

E.g. 1 H candle close retracing at least 20 pips from S/R Area (Pivot, Round numbers etc.): If candle was long we go short?
Is this the way?

Thanks!

You almost got it, just need to put it the other way round : A retracement of a higher timeframe is a trend on a lower timeframe. So if we are using D1 as the higher and H1 as the lower, we will see :

1- D1 chart, see green candle, retracing down 20 pips
2- Switch to H1 chart, you will usually see the 20 pip retracement coming from the D1 is represented as a H1 red candle here.
3- Look to go short from here.

Note that this is only 1 of the ways to trade. Its actually one of the descriptions of price action across multiple timeframes. Understand this 1st.

Simple isn't it?

[Aztrader2]

Starting to understand...... Thanks for quick reply....

The Daily candle must be closed or, as soon as we see the 20 pips retracement, we look at 1H candle (must be closed?) and enter in that direction immediately?

Thanks again!

[Relativity]

Starting to understand...... Thanks for quick reply....

The Daily candle must be closed or, as soon as we see the 20 pips retracement, we look at 1H candle (must be closed?) and enter in that direction immediately?

Thanks again!

There is no need to wait for daily candle or the H1 candle to close. Price is price. Think what happens if you only have the tick chart to trade, which IMO is the real chart. However, the color of H1 (and to a better degree as far as I see, M30) does provide some level of 'safety', since it takes 15 to 45 mins to flush out weak players when a price extreme is occuring. So far, I do have statistics (again) proving this.

Time / Price Efficiency. Very simple. Just take time and avg price ranges and divide against each other. Do you see something?

[Aztrader2]

Thanks Rel,

I'm looking back thru the charts and it seems easy enough to spot entries following your hints..... The problem maybe is how to manage the trade...as always, but I think taking 1/3 or 1/2 @20 pips, set SL @BE and let the rest run until an opposite entry signal, could work pretty good... What do you think about?
Another couple of question.....
1) What pair do you suggest to follow, according to your studies?
2) Have you specially created an indi to analize the datas and see what pairs & values are good for this technique?

Thanks once more.....

[Relativity]

Thanks Rel,

I'm looking back thru the charts and it seems easy enough to spot entries following your hints..... The problem maybe is how to manage the trade...as always, but I think taking 1/3 or 1/2 @20 pips, set SL @BE and let the rest run until an opposite entry signal, could work pretty good... What do you think about?
Another couple of question.....
1) What pair do you suggest to follow, according to your studies?
2) Have you specially created an indi to analize the datas and see what pairs & values are good for this technique?

Thanks once more.....

Thats actually more or less of what I really do. So yup.

1) Any pair that moves well enough. There are certain basic qualifiers, but it all sums up into price volatility / liquidity.
2) Yes. One good way to measure price volatility for many pairs quickly is to do this :

a. Take the average range of last 14 to 20 D1 candles for the pair
b. Divide the average range against the spread for the pair. The variance of the spread due to different brokers doesn't matter in the long run.
c. Convert the result into %



The results can be surprising. It uncovered 2 things from what I see ;

a. Some of the most unusual pairs outside the majors that I've never considered actually have good price volatility. e.g. USDDKK. Don't let its spread deceive you. Let the % tell you the better story.
b. From what you can see, this can give u a nice overall sentiment of the market. Basic observation will tell you that the lower % certain pairs have, it implies money is flowing in / out of a certain area. Something is happening! You can tell where the greed / fight and flight areas of the market are. A good example would be EURCHF again. When the market was in fear a few months ago, this pair is hitting 1.00% (!!!!). Now its slowed down to 5%++.

i see.. i see tht the smal time frames are made up of the biger time frames ofcourse.. i see how u get in the retracements by looking at the daily and the one hour.. could you mayb put up a picture of a recent or any trade so to get a clear picture of whn and how to get in practicaly? how often do you take these trades and how long do they last for you?

thanks man..

If you look carefully, the 2nd picture for my recent crude oil trade actually answered your question.

I take 2-10 trades per week. They tend to last ranging from :
- 1-4 hours, if I am looking to scalp in order to get some profit to create a capital cushion
- 2-5 days, holding onto winners that already have breakeven at their stop losses. Making sure my capital is intact. If there is no BE, 2-4% risk onto capital is allowed.

Quite a relaxing style I must say, once you see the benefits of :
1- Precise and patient entries with reasonable SL. Price takes time to develop into good opportunity positions.
2- Holding onto winners and letting them run. Good trades need time to develop into profit.

I was telling a friend who plays poker professionally that nowadays I go to work (IT professional) daily 8am to 5pm for 'vacations', and that my real work (trading) starts from 5pm onwards. =>

[Aztrader2]

Wow.... Great job you've done....
So, what % is acceptable to trade a pair? < 5% ?

Actually I'm jobless, and it's time to become profitable in forex... After a couple of years of study & testing, i feel your thread will be the turning point of this problem...
So, my old job will become my hobby.....

[Relativity]

Wow.... Great job you've done....
So, what % is acceptable to trade a pair? < 5% ?

Actually I'm jobless, and it's time to become profitable in forex... After a couple of years of study & testing, i feel your thread will be the turning point of this problem...
So, my old job will become my hobby.....

It depends on what kind of spreads your broker gives you. For me its 5%. You will have to play around on your own with an acceptable % figure.

Anyway, this brings up a side issue about spreads. IMO the spread of your broker doesn't really matter too much. The spread is the basic difference of buyers VS sellers. Thats why a market exists. I've always held a basic principle that if I can't beat the spread, then I am generally wrong anyway.

Of course getting a broker with a smaller spread may help anyway. But how much, really?

There is a thin line in this. You have to ask yourself why your SL gets hit :
a- The spread is affecting the bottom line
b- Your analysis of direction is wrong

Which is more likely? How much responsibility are you willing to take for your trading decisions? Think about it.

[Aztrader2]

I'm with Alpari Uk & fixed spreads. They seems to be smaller than yours (as I see in your post with calculations): EU 1.6, GU 2.5, AU UC 2.6, AU 2.8, EJ 3.2 etc.
Anyway, answering your question, I think that spread doesn't affects the overall outcome, because the answer is: my analisis of direction is wrong....
I have to thanks you forever , because you gave me a better knoweledge about how the market moves
I was just considering (before reading your thread) naked trading using price action (peaks & walley and so on), but there was always an obscure reason behind the up and down of the moves... whipshaws (in any timeframe.....) are always there to confuse each kind of analisys.
You gave us, instead, a clearer view of the whole movement, and a simple rule to get in & eventually out! (Incredible: just few posts ago, I did understand nothing..... )
There will be losses, of course (expecially in hard trending days, where 20 pips bounces are just little retracements of big trends), but nobody here is looking for the Holy Grail. We just need an edge to win more than we loose, and I'm sure you've found this edge!

[Relativity]

I'm with Alpari Uk & fixed spreads. They seems to be smaller than yours (as I see in your post with calculations): EU 1.6, GU 2.5, AU UC 2.6, AU 2.8, EJ 3.2 etc.
Anyway, answering your question, I think that spread doesn't affects the overall outcome, because the answer is: my analisis of direction is wrong....
I have to thanks you forever , because you gave me a better knoweledge about how the market moves
I was just considering (before reading your thread) naked trading using price action (peaks & walley and so on), but there was always an obscure reason behind the up and down of the moves... whipshaws (in any timeframe.....) are always there to confuse each kind of analisys.
You gave us, instead, a clearer view of the whole movement, and a simple rule to get in & eventually out! (Incredible: just few posts ago, I did understand nothing..... )
There will be losses, of course (expecially in hard trending days, where 20 pips bounces are just little retracements of big trends), but nobody here is looking for the Holy Grail. We just need an edge to win more than we loose, and I'm sure you've found this edge!

Yes you are using Alpari Uk so the calculations are going to be smaller. But it still shows EURUSD is skewed to the lowest %, since it is still the prime pair many traders participate. So, I say its ok.

I am happy that you are able to 'see it' too =>

Regarding the edge, yes, it is a very obvious and usable edge once you get it. However, you (and many other members in this forum) might be surprised where and how I've came about to learn this particular method from.

What I did is to prove that it works, expand its usage and implemented it along side with other sound trading methodologies. Plus I intend to release ALL of my work / indicators / research to the public domain.

[Peirce]

..... Plus I intend to release ALL of my work / indicators / research to the public domain.

Found them! Thanks.