Two questions I just can't figure out

Bit of a back story first, I’ve been demo trading now for about 6 months (reading/learning for about 4 months prior to that) and since I started I’ve been keeping a list of questions that I knew I’d need an answer to before things start to go right, I noticed I’ve had two questions on there since basically day one. Maybe a few members here can share their input?

  1. Do you prefer buying/selling highs or lows? Now obviously the goal is to buy low and sell high but when you’ve got a trade idea in mind and all you need is to find your entry point what do you do? Say you’re down to the 1hr candles trying to find your entry point, do you wait for it to close above the tails of the last few candles if it’s been having trouble doing so? Or do you wait for a candle to get near a recent low to overcome the spread a bit quicker since you’re fairly sure the easiest pips in this trade are getting back up to high of the last candle. Vice-versa for shorts. Of the 5-6 books I’ve read so far it seems like half of the time people prefer waiting for a trade to come back and tap the trend line/s&r line/fib area etc, is this just a good way to reduce fakeouts?

Now I don’t mean this as in trading a breakout vs waiting for confirmation, assume a trend is already in place and you’ve caught it earlier to be pretty sure you’ve got enough room to go, where do you place your entry and why? Also I’m guessing for some people there’s specific situations where you’ll do either one, care to elaborate on why?

  1. Buying into somewhat counter-intuitive trades. I guess you could kind of consider this a form of hedging, but I’ve noticed a lot of the time I’ll see strong signals coming from two pairs that I don’t want to be giving me strong signals at the same time (IE: should short eur/aud and a few hours later I see a solid PA signal to go long on eur/usd). After spending a lot of time on currency correlation tables the simplest idea is just go long on aud/usd but in practice that pair might not look as appealing as those two specific trades do on their own.

I’ve read back through my post and I THINK I worded my questions the best I can, but if anything is confusing please just ask and I’ll try to reiterate as I would really LOVE some discussion on these two questions. Thank you very much in advance!

Lastly if it matters I generally stick to swing trades with the daily/4hr charts to get some ideas and then the 1hr chart for entry.

Hi jttmi

I have no preference to buy or sell at either high or low.

Base on my analysis and experience.if i think price will continue to go up i will buy even at a high point just sell higher. If i think price is over sold, i will buy at a low point. More often than not, buying at a low point can be rather risky as you are attempting to counter the trend but your risk are usually even out by the huge returns.

Main point in trading is you must hit your predetermined target. If a trade does not hit my target in usually a matter of 4 hours. If i am positive by even 1pip. I will just close the position and bail out. Some people may criticise my risk reward ratio. i dont really bother what people say. Sometimes i dont even set a target. If i think today will be a close down candlestick. I just close my position when time is up. But i do set a stop loss level.just in case i am wrong.

I usually only collect 20candlestick (1hr, daily or weekly candlestick) and calculate the average high low range. By statistical analysis, i project how far price may go. And aim for that price level. I know i know, somebody for sure is going to criticise my sample size of 20 being insignificant. Please pardon me but tats how i much data i can analyse. Unfortunately, I duno how to backtest wih strategy tester. If i analyse more data… i will go crazy. I have to write down and use a simple calculator to do addition subtraction and division. Not easy n quite time consuming actually

Although i make it sound like so simple but is no easy feat. It takes 10000hours of practice practice practice. After sometime, instinctively u can feel it by looking at the candlestick pattern and with the help other indicators. I am well verse in tons of indicator. I switch around indicator to analyse. Usually, one by one i check and analyse with the price. if more indicator are telling price will go up. I will buy.

I always keep an open mind. I never stop learning new trading system while testing my curent system. Actually there is no system. They are just tool for trend determination. To improve the odds that i will hit my target.i even learn some of the unothodox method. I learn many ways to use fibonacci level, astronomy trading calculating the jupiter angle inrelation to earth and sun. Correlate with the price. Look thru the historical data.
Hopefully history repeat. Sometime it does sometime it doesnt. When it doesnt. I go against the entry and trade in the other direction. I use new moon and full for analysis as well. So long it works. If it doesnt seems to be working. I change method again. If the method is working continue using it until it fail u. You must be adaptable enough to change. Ok i know some people are going to call me crazy again. My point is keep an open mind learn everything out there. You never know when it might come in handy.

Use the power of observation and strong inference to deduce if price going up or down. Backtest.practice backtest practice. And please please use smaller timeframe to shorten the learning curve.

Dont compete with others performance. Sometime its simply flair. Just be a better trader after each trade. So long u can make a decent profit. Thats comfort enough to know u have improved. Review your trade. My trading style is rather chaotic. And extremely high risk. Thus can sometime have huge gain in just one month. Amd huge losses too. If you are risk averse… how much do you expect for the expectancy? Its going to be low. Simple as that.

Some good questions

For the second question those correlations are sometimes good sometimes bad

Decent time frames, for the first question I’ll have to give it some thought

For example,

When market is trending. Following a close up candlestick. Next candlestick, most probably will be a close up candlestick and make a new high price right? Why must RR be 1:3? cant it be 2:1?

I say forget abt RR.just hit target and use a small enough lot size that is unable to hurt your equity account. My gut tells me this RR is clouding everyone’s mind. Or maybe i m just an extremely risky trader.

About lows and highs you have to follow the strategy you are following, if you get a signal according to your strategy then you can get in a trade.

Yup. Every trader must have faith in themself. Rather than the system. Believe their analysis is correct. But if there is no result, simply means the methodology is flawed or the trader execution is flawed.

It’s generally intended as that; yes.

Personally, I think a breakout [B]followed by a re-test and rejection[/B] of the “line” is the strongest entry-signal, in this context.

[U]Key concept[/U]: realistically, one has to compare the relative advantages and disadvantages of different entry-styles in accordance with one’s own risk-management parameters.

I find that trading a lot of “first breaks” gives me a lot of fake-outs; waiting for “third breaks” means that I too often miss the boat … so as a compromise, I trade a lot of “second breaks” (as Bob Volman, author of a good textbook on price action trading, calls them), which seems to work out well for me, overall. Just my perspective, for what it’s worth. I offer the observation that “[I]overall[/I]” is what really matters.

It may not [I]look[/I] as appealing, but it can often be just as logical, and it can save on dealing-costs, too (but not always: you need to look at the spreads, too!).