Alternative Technical Templates.

[Jocelyn]

Those of you who have picked up the s&r (supply-demand) baton & run with it, require no convincing whatsoever that this type of trading works on a consistant basis. Entries, partial profit taking, adding contracts to a core position, full exits....can all be planned & managed around these common technical traits.

Today, price is once again hustling a previous level of supply on the Eur/Yen from back in late February. It got pumped off the lower channel of demand at 152.0-152.80 during mid March, where previous pockets of demand shunted it north back in mid January.

I've pinched Tess' example from March 26 (page 74 post #740) to clearly highlight the journey & stuck today's snag alongside it to help quantify the process.

If you observe the Cable at current levels, you'll witness similar behaviour too from the upper 2.0100 ceiling to this lower support floor at 1.9775-9710, where price is now consolidating again.

Loading up & trailing your positions accordingly off these regular jaunts on the price map are not only viable, but incredibly cost effective.

Just one or two sensibly planned & managed trades using this type of execution model can put more money back into your accounts than several dozen trips to the intra-day trough. Plus your transaction costs & risk profiles are dramatically reduced.

[kagein]

When you initiate a trade on your trigger time frame, do you stay on this time frame to manage the trade?

[Jocelyn]

Very good question!

Usually yes, we will manage the position on the timeframe from which it originated.

I say usually, because there will be occasions when we need to be flexible & drop down or scale up a timeframe to locate an appropriate technical level to hide stops or locate a stop order to compound a move.

Obviously, that flexible & discretionary type of activity is always dictated by the market. We don't subscribe to the usual rigid or inefficient methods of pre-determining risk-reward ratios. Markets simply don't operate that way

For instance: we might have executed an order on the 4 hour frame, but need to drop down to the 1 hour reference to slim down an appropriate technical zone to hide a stop. Same when going up the scale from say a 4 hour to the Daily in search of a level to guage a (forward) potential supply-demand zone.

It’s extremely rare however that we’ll wander too far from our template frame to manage a position.

Slightly different for intraday trading, but then that’s a whole other kettle of fish altogether.

[pipvader]

Been going through this thread the past few days now, excellent read.

Slightly different for intraday trading, but then that’s a whole other kettle of fish altogether.

What would you do differently?

[Jocelyn]

Originally Posted by pipvader

What would you do differently?

Triggers, planning & execution are different. I’ll generally adopt a far more aggressive stance when trading a specific intraday engagement. Certainly regards compounding size on the move.

Grade A opportunities in line with that strategy are minimal on the fast timeframes (for me), so the level will need to be pretty hot to tempt me in.

The longevity of the positions are usually quite small too, which is why the level & accompanying price action requires has to be right.

Match the size with a decent level & you not only decrease your overall (longer term) risk employing this type of strategy, but also ramp up the positive expectancy.

Costs, excessive risk & inappropriate management dilute the effectiveness of these fast timeframe strats for most folks. The other drawback being, they're all too often engaged with a total disregard for the current market structure.

Better to have a balanced strategy play, kind of like a "man for all seasons"

[kagein]

What do you take into consideration when hiding your stops larger time frames?

[Jocelyn]

Price influence would be a big consideration for starters. Is price being driven by sharp fundamental bias or technical jostling?

Aggressive fundamentals tend to exert strong psychological sway on prices as players react & position themselves accordingly to the output, & I’m not just talking about a rogue NFP or inflation report.

A key item of influence (such as the current credit crunch turmoil or Central Bank reshuffling, leading to carry unwinding for instance) can run prices thru several big figures very rapidly, & impact on the ongoing management of your positions.

Wide ranges will require different stop & management structure than a confirmed or maturing trend. Some of the range extremes witnessed on the Yens can be anything up to 300-500 pips wide. The opposite of that scenario would be the current (smoother) trending structure of the Euro, the Franc or maybe one of it’s cross pairs (EURCHF…GBPCHF).

Of course, the timeframes employed in each of those examples will also have a bearing as to how each scenario is played out. You know as well as I do that trends within trends (5 or 15m snaking inside a 240m or daily frame) will unfurl & contradict consistently, & it’s down to the skills & ingenuity of the trader to decipher which step trumps the other LOL. (did anyone assume this was easy???)

Once you’ve determined the recent & current structure of your chosen pairs, you can begin adapting your strategy model to the price action. Stops will be positioned & trailed according to your proposed profit take steps, compounding opportunities (if you adopt that principle) & ongoing observation of the technical behaviour.

There are a number of options one could use. 2 or 3 bar reversal deployment, usually more productive in range environments might be one choice.

Trailing up behind the previous or secondary swing points might be advantageous on a trend run? Hiding trailing stops away from the obvious round number & quarter number levels on pullbacks would be sensible, especially as prices are bedding in on a confirmed (trend) reversal.

I’d guess the types of trade management deployed will be directly & heavily influenced by the account balance in most parts. Someone running a 5k micro account won’t be engineering the same type of outlook or aims of a competitor coming to the table with a 150k pot.

The whole attitude, psychology & make-up of the trader is totally different & again, very heavily influenced by the account size available in the first instance.

However, the principles are exactly the same. The disciplines, planning & execution skills can be practiced & honed regardless of the account size. Sure, the (financial) progress will be slower, but from little acorns etc….

First & foremost, before you even begin considering what’s required regards stops management, you need to determine which type of trade plan or strategy model you wish to become engaged in. Once you know that, you can begin formulating your game plan.

[kagein]

I've finally taken my method live, ive decided on scaling out my position at 1R rather than adopt an all in, all out strategy. It's easier on my emotions and i let my trades run longer.

I was wondering, before there were charting programs, what tools did traders use to trade with, you know the guys with like 20+ years experience.

[Tess]

That's good to hear George. As long as you can find a combination that sits right with your psychological syle, then it'll inspire you to keep progressing it.

Our folks used to draw their prices/charts by hand. Pop still does every now & again

There weren't always 24/5 markets. Markets would wind down each trading day & if data was printing after the market closed, it would shake itself out next session when the market opened up again. Needless to say, there were quite a few wild gaps back then LOL.

Deals & trades were conducted by inter-broker phone (& obviously floor) before electronic screens began making in roads.

[kagein]

Just wondering where you guys are looking to engage on the E/Y if your not in a position already. It's not really going anywhere.

I have my eyes on the 161.50 & the 162.75 levels.

Oh and how does the Nikki performance effect yen pairs in general?