Show me the money! [Swing Trading]Need some swing trading ideas? Want to share your own swing trade ideas? If you're the next Jerry Maguire and think you can show us the money, then this thread is for you. Also, discover your Forex trading personality in the School of Pipsology.
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The first three images are the current setups and plays i'm in. All are strictly with the trend. I mis-labeled the EURCHF trade as counter trend but as the MA's suggest, it is not. I think i also explained before how I will take a trade if it fails at 75% or 85% and then re-established itself up into the 62%. I hold the swing then to be intact and I enter the trade with a tighter stop loss just below the 75% level. That level has already been tested and thus, should hold.
The next post will be the lesson for today: RESPECTING DA GRID!!!
Ok. The idea here is that regardless of what an ma value tells you or a trade that your in, you need to be constantly measuring for different fib retracement points that could be affecting your current trade or that you need to be aware of to keep you out of the next setup. I'll illustrate this with recent price action in the EURJPY.
Image 1: Assume that we are just trading along and we don't know the outcome of the full chart from the blue arrow onward.
The chart is trending higher, ma values are bullish, the last swing we have measured made a higher high, it pulled back and failed at 62% so we should go long. Well, no. Lets look at the bigger picture here first.
Image 2: What happened right before our setup? On a bigger grid price action came up to overhead resistance and FAILED. It couldn't break through (at least not yet) so our setup now becomes VERY risky because we are trading into heavy fib resistance now. You always need to respect the bigger grids in play. They superceed any smaller grids. And once again if price action respects them, you respect them and don't put yourself in a trade that goes counter-trend to what just happened REGARDLESS OF WHAT THE MA'S MIGHT SAY!
Image 3: Lets assume we took the trade anyway. We feel ballsy, are aware of the bigger grid but want to play a small scalp to the upside. Fine. I'd be lying if I said I hadn't done it before, and that I wouldn't do it again. We again need to be aware of another grid in play here. Now on any trade you take there will be a grid going counter to your pullback. Thats just how it works. But we want to measure them and be aware of what price is doing at those levels. This is why I try and remove risk at 38%, because there is always a chance it can come back in my face. In this instance had I taken the trade I would be targeting 38% to take my profit there. If not, i would at the very least put my stop at break even so I have no risk should it come back in my face.
Image 4: The highest probability setup yet. Yes, the MA's say bullish, so if your really conservative look elsewhere, this isn't for you. But price has just rejected a bigger grid, failed again at a smaller grid and made a lower low. For me, if that happens and price again fails on the pullback i'll short the **** out of the setup. And again it works!
So just be aware of the different grids in play. I don't always play the most recent grid. I try and measure two swings backwards to see where overlayed confluence occurs. Typically any further than that and there isn't much relevance unless you are checking bigger grids for relevance.
Just curious....I've skimmed the posts on this thread and don't see any reference to what I'm about to ask (if I've missed your references, please forgive me)......in your UBPUSD chart in post #10, are the green and blue dots identifying IBs and OBs together w/indicating potential long entries (green dots) or short entries (blue dots)? [I'm so new (at this), I haven't been taken out of the box yet!!]
Just curious....I've skimmed the posts on this thread and don't see any reference to what I'm about to ask (if I've missed your references, please forgive me)......in your UBPUSD chart in post #10, are the green and blue dots identifying IBs and OBs together w/indicating potential long entries (green dots) or short entries (blue dots)? [I'm so new (at this), I haven't been taken out of the box yet!!]
I don't know what IB's and OB's stand for but those green and blue dots are just visual indicators of potential swing highs and lows I like to measure from. Nothing significant to the method at all. Not an entry signal by any means. Those dots are calculated via 3 higher highs or 3 lower lows, also know as the Trade The Markets Scalper Indicator.
Well, we set our stop losses outside of 85% right? That means that we believe we are wrong if price action breaks below 85%. Well, this knowledge allows us to put ourselves in a position to catch reversals and play counter trend trades.
This is always more risky than playing with the trend so you need to be quick to take profits.
Here is a trade I took tonight. Often times price action will stop running in a direction and consolidate and reverse, even if it is only primary. I have found that price action can be considered to be NEUTRAL if it is between the 89EMA and the 150 JTHMA (i'm sure there is a longer period SMA or something similar to spot this if you don't have access to hull moving averages).
Thus, this is a good indicator of neutral price action where you can get in on the action on both sides and make some more pips. It requires you to dial down to a smaller time frame chart to be more nimble with your entry and exit. My smaller chart is a 144T (vs. 233T), roughly twice as quick, over layed with a quicker 50 period JTHMA, and the usual 89 EMA. I want to make sure i'm trading with the trend on this chart on these setups. So even though it may be counter trend to my big 233T chart, it is with the trend on our 144T (or similar) small time frame chart.
Image 1: Price action clearly in a point of neutrality between MA lines.
Image 2: Note how price action has broken the last dominant swing upward by breaking 85%. This adds to my confidence in playing a counter-trend short side play here.
Image 3: Pretty self explanatory.
Image 4: Dialed down to my quick chart I take the same pullback with the small time frame bias and take profit quickly (or at least reduce risk quickly). I took profit at a known level of resistance, being the 89 EMA line on the chart. But still good enough for a quick +18 pips.
And that is one way you can identify and play counter trend possibilities with Fib grids!
Alright, much has been asked, debated, argued, and discussed on this forum about having appropriate management of trades. I believe it to be one of the most misunderstood and sloppy areas of any traders system. Usually it is not defined, and if it is, it is subject to the whipsaw of an indicator or some other factor. Fib levels allow a specific advantage in this area because they MEASURE price action and thus give us visual price levels that we can utilize to take profits and reduce risk systematically on each trade we take, in the same fashion each time. I am going to provide you the exact way in which I manage my stops and profit targets. I had briefly talked about this before, but were going to go more in depth on this one.
First things first. I recommend trading using at least 2 lots. One of the hard things about trading with only 1 contract is you see profit, and you want to take it, but you know if you do you aren't allowing your winning trades to develop fully which hurts your p/l, but also it keeps an additional risk out there that the trade could reverse and come back in your face for a loss. For this method to work, you really need at least 2 contracts. You could apply the same technique to 2000 contracts, but you need more than one for starters.
The idea revolved around using the first contract to take a quick profit at a HIGHLY probable price point. More than 90% (probably more) of the signals this method uses will hit a 38% price point. I also said before that price can reverse here and move against you, so what we have done is to take a quick profit by exiting 1 of your 2 contracts at the 38% level, and then putting your stop at the 62% level on the 2nd contract. So what have we done? We locked in a quick profit on one contract, and we reduced our risk ideally to nothing on our 2nd contract. This will allow us to take some profit out of each trade even if it doesn't work and the 2nd contract stops out, or ideally will allow the 2nd contract to really work in favor and we can gain even more pips, but without any adverse risk to our p/l in our account.
It becomes a free trade, and PSYCHOLOGICALLY, this is KEY to allowing yourself to let your winning trades ride out for more and more gains. If that was the only contract you had on, you would want to be jumping out at every little bump due to fear. This management reduces your fear of loss, and thus will increase your profits.
READY TO LEARN? Here we go! I used a trade that just concluded on Friday in the AUDUSD. I walked away with +205 pips using this technique.
Image 1: Check our chart alignment. Bearish MA's, last upswing broke 85%, meaning downside potential is there. So lets get ready to play!
Image 2: Flip the grid and measure the downside swing. Note how the first pullback into 62% blows through. There is no signal here.
Now note this: If price action continues upward and fails at the 75%, or 85% level and then REESTABLISHES back below the 62% level, i will take that trade. However, if price was to reestablish back below the 50% line, while downside is probable I won't take the trade because price is outside of the 50%-62% area on the grid and there is too much risk from a management perspective to take the trade. I only want to enter if i get the signal and price hasn't blown away from me beyond the 50% level.
In this case, price went up and tested 85%, but failed back below 62% and is still firmly between 50% and 62% so entering at the open of the next candle is A-OK! Entry at the open of the candle with the arrow above. Initial stops are placed at 85% like usual on both contracts
Image 3: Price action goes down to 38% without a fuss. This is the time that we take our first contract off at the .8780 level for a +32 pip gain. Furthermore, we move the stop loss on the 2nd contract from the 85% level down to the 62% level. Worst case scenario is we get stopped out on the 2nd contract for a nominal -9 pip loss leaving us still net profitable. This puts us in a winning trade regardless of outcome. Yet we have no risk to bear here because we know were walking away with profit, so why not let the trade continue to work from here for more money? We have NOTHING to lose, and EVERYTHING to gain. This is the kind of situation traders need to put themselves into.
Image 4: As price action continues downward our next stop loss movement occurs when price action hits 23.6% on the retracement. At which point we move our stop loss from 62% up to 50%. This locks in profit on the 2nd contract for a worst case scenario, but allows the trade to continue to work.
Image 5: Note how price action does retrace, but doesn't come back into the 50% level. I have found it is more likely that price won't pullback into that level if the move is solid. If there is no more room in the trade to work it will fail, but then again you have no risk and have locked in profit on both contracts so whats the harm? We again have no risk here!
So the next action point is when price action hits the swing low/high at 0.00%. We again move our stop loss on the 2nd contract to the 23.6% level to again lock in more profit on our 2nd contract. Price action commonly fails at swing highs or lows in forex, so I want to bump up my profit i lock in on the 2nd position. If it has more room to run here it shouldn't retest 23.6%, if it does so be it, if not I walk away with lots of pips!
Image 6: Time to take profit on that last half position. I prefer to take profit at the -38.2% (or 138.2% extension depending on how you look at it). Note that if you choose to continue to let the trade go, I would again move the stop loss limit down to the swing low/high to again lock in more profits.
Image 7: You could choose to use some sort of secondary indicator for an exit on the last half position. I've found the slow stochastics on the base settings can be a good indicator of a trends exhaustion when the slow line (red line) enters the lower quadrant (<20) on the candle close. You could use a bunch of different indicators if you want, just one example of another way to exit the last part of your trade.
Image 8: A recap. Our inital risk is removed quickly and in the highest probability way. We take profits quickly and reduce risk to nill on the second part of our trade. We can have our cake and eat it too using this method and two contracts. Quick profit, and long term winning runners. All wrapped up into a systematic, consistent method to remove risk, lock in profit, and let profits run at the same time. And its a management technique that will work on any market, any time frame, and swing, big or small. What more could you ask for?!
Really nice step by step description of your trade management Daedalus, thanks
__________________ Tony "What we think we know is anchored only in our assumptions, not in the bedrock of truth itself, and that world we seek to understand remains always on the horizons of our thoughts" - George Kelly (1977)
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