Sludge pit indeedy….aint that so Seth me old yankee mucker!! :54:
#slippinginthesludge #coveryourtracksstealthily #bettercallsaul
[B]Part 3. How (more detail)[/B]
Approach market analysis at 8:00am - 9:00am GMT.
My [U]primary bias[/U] chart will be the 4Hours with some input from the 1H.
Using SMA(60) and visual price action (HH, HL, LH etc) to determine bias (e.g. bullish).
First filter: Only the “best” trending cases will be carried forward.
Second Filter : Any important news that day (nfp, interest rates) will exclude affected pairs.
Third Filter : If a large number of pairs still exist then take into account which currency is strongest relative to the weakest to narrow down further.
My [U]entry[/U] chart will be the 15M.
Actual Entry will be variable and driven by consideration of the following factors
-Use of the Stoch Hook
-Use of price action (HH etc, 1-2-3 pattern)
-Use of ADR : ensure that at proposed entry the pair has not already traveled more than 50% of its daily range
-Use of prior ‘important’ levels such as previous day/week high/low
-Minimum R:R must be 1:2
Trade Management
- All in and all out approach
- Stop to be placed behind a logical level (e.g. behind a 1-2-3 , or a prior ‘important’ level such as previous day/week high/low)
- Target will be 80% of ADR or an ‘important’ level if one is upcoming before that (e.g. previous day/week high/low)
- Close at end of day if position is still open
- Stake 2% of capital for each trade (max of 2 trades open at one time)
[B]Part 4. Record Keeping.[/B]
On back burner is writing an application to document my trading, entries, results, P/L which I will use mostly for my non-forex trading.
Then this forex TT trading could fit into there as well. But for the time being I am tracking everything on spreadsheets.
Recording will comprise the following:
- Date,Time
- Instrument
- Entry price
- Exit price
- Reason for Entry (e.g. “Stoch hook after bounce from previous day’s low”)
- Reason for Exit (e.g. “Hit ADR target”)
- Graphic of 4H and 1H which led to instrument being selected
- Graphic of 15M at time entry was submitted
- Graphic of 15m at exit
- Check (Y or N) as to whether Entry reason was valid part of your plan.
- P/L
[B]Part 5. Ways to expand and adapt the approach.[/B]
Just some things to consider while in demo or after some time when trading approach has bedded in:
- Adding any addtional fx pairs into the mix to increase pool when doing initial 4H filtering
- Adding non-fx instruments into the the mix (e.g. metals, oil)
- General Forex related fundamental reading on how various “factors” affect price and which data events are more important than others.
-
With regards to ADR. Is this just applicable to a straight line direction from open price to current price ?
So for example say EURUSD has ADR=100. In current day…your entry price is 20 pips away from current day’s open. However previously during the ‘day’ it has moved up 50 pips then down 30 pips. Has it already used 80 pips of the ADR by virtue of that movement ? -
People who are trading this approach, do you typically check you primary bias on a daily basis ? For a 4H timeframe, it may not change much over course of a few days. So do you say check charts at weekend to filter the possibilities then stick with those same choices during the upcoming week ?
Thanks
The average range is purely a cursory guide or barometer as to how much potential gas is left in the tank on any given day or week.
If you’re placing a session or day bet having identified the primary direction, & you’ve mapped out a likely entry area, you want to try ensure a decent percentage of the day’s range is still in play.
If for example it’s moved up during the Tokyo session & pulled back during early European trade & it hasn’t used up too much of its available range, it still offers decent probability of continuation providing the bet offers reasonable odds when taking your stop & risk into consideration.
It’s the same story regarding the weekly range. If you’re seeking to enter with ambitions of rolling your bets over into the next & corresponding sessions you want to see some potential for further movement.
As you correctly note, there isn’t usually very much fluctuation in the dominant directional bias over that period of time, particularly if the trend is established & well supported.
I tend to use this framework in identifying & filtering my watch-list on a revolving basis.
Once I promote a candidate onto the front burner I’m constantly monitoring others whenever circumstances dictate they come under scrutiny due to either a positive or negative focus from the market participants.
It will generally take a good few sessions for a dominant regional currency or specific pairing to begin exhibiting signs of exhaustion or consolidation, which is plenty of time to monitor, track & change it’s staus on your watch-list.
Experience is telling me I don’t usually need to demote/promote very many candidates during a typical week. Once they’re in vogue they can sit there for most of the week & longer unless the fundamental landscape changes dramatically.
As mentioned before, not experienced in Forex.
Does the pair you trade ideally need to be traded in its own session. E.g. The USDCAD is showing a clean trend on the long term 4H chart and is on my A-list for a long. Is it best to enter into it during the NY session rather than say the London open ?
I guess the same might apply to the Asian currencies AUDJPY …best left to the Tokyo session ?
Or can you generalise and trade the London open irrespective of the pair ?
Well obviously you can trade it…but what I mean is it advisable to trade it.
Thanks
Thanks.
The London session is the “king” of when price will most likely move - basically irrespective of the pair. So as you note - certainly matching the pair to its’ session may produce some good trades - -but really nothing tops the London for activity in a general sense.
(of course the overlap and NY session can make for interesting opportunities as well.)
As Perch Tird say’s, London & the hours leading into the mid afternoon of the North American business day are usually the optimum activity periods for the majority of regional currencies.
You’re ok to be considering bets on most pairs during those 2 sessions.
The Australasian sessions can be quite lively on occasion for Aussie, Kiwi & Yen related instruments, particularly when they release key economic numbers as you’ll observe if you plot those cross pairs, but again in the main they’ll tack on a good percentage of their movement during the busy European & North American business hours.
Question:
When trading the structure of the ‘trend’ does the “first” failed trade, then tell you that that structure is no longer ‘valid’?
Answer: (this is the answer I suspect I will get, so I guess I am asking to gain confirmation or clarification on what I think the answer is) Thanks
It depends 
or
Yes many times it does indicate the end of that structure - but also many times it may just be a pause and the structure may reinstate itself.
or
Just as in any other ‘decision’ making process within forex - the probability - - where I guess the probability of it (the trend not continuing. . . is MUCH higher than the probability of it continuing)
You’re never dealing with certain outcomes or cut & dried scenarios, so yeah it definitely does depend on the circumstances.
In the majority of instances the answer would be no, primarily because the breakdown might simply be a result of a one-off event or aberration.
It would appear rather premature would it not to abandon an established trend or bias, rendering it invalid, simply due to what might only amount to a temporary hiccup?
Just look at the recent behavior of GBPNZD to highlight that scenario.
Thanks for replies so far to my questions.
A trade to chuck out there to check if I’m on the right track.
Any comments welcome.
Thanks.
P.S Repeated comments below as bit blurry on charts.
Chart 1 :
My Higher TF Chart 4H
Some USD news to come @13:15pm
Chart 2 :
Trading Timeframe : 15M
Blue line is prior Days High
Drifting down overnight > then move up during London morning towards prior day’s high.
Went short on Stoch cross after it failed to reach prior days high.
Risk; 20 pips (other side of prior days high)
Target: 50 pips ( to reach prior day’s low)
Chart 3:
Shows second possible entry short after retest of previous high in Chart 2 and no success in getting to prior day’s high.
I’m pleased to see you mention that pair actually as I had it still featuring on my watchlist for the beginning of the week.
Most of my trades last week were made on Euraud up to the ECB announcement, but that’s now taken the Euro pairs off my radar for the time being at least.
I’ve highlighted below Audcad, Audjpy, Nzdcad & Gbpnzd.
We’ll see if the Aud & Nzd strength can continue.
There’s a kiwi rate announcement on Wednesday evening, but until then I’ll still look for set-up’s.
You’re quite clearly more than comfortable, not to mention competent with the concept kechel.
It should be no surprise for you to hear that the (consistently) top performers at the brokerage who play this style of approach have also been very heavily invested in the above exact same pairs for the past few weeks too, which I hope adds another notch to your confidence level.
[B]Identify
Filter[/B]
Execute
Manage
You’ll also no doubt be on top of the CAD/Oil relationship kechel 
USD/CAD has been holding higher weekly lows of late as oil has come under further pressure & put it’s sneakers on this morning attacking the prior couple of weeks highs.
Relatively high probability hook plays on that pair via 4 & 1 hour the last couple of weeks.
One to bring up onto your watch-list for sub hourly hooks if you haven’t already filtered it.
As with kechel, you’re also confidently demonstrating you’re getting to grips with it, particularly regards plotting your coiling breakout gambles.
As has been advised multiple times, it always offers much much higher probability & lower risk to get aboard these coiling pressure moves from underneath (or above) via pullbacks & play a sit-wait game as the breakout unfolds - or not!
Just as it’s far easier & less stressful to unwind a scratch gamble & re-assess if the b/o proves troublesome, than become entangled in a potentially messy battle if it fails to attract participation & follow through.
The added bonus being you’re already seated with excellent value if/when it does indeed grow legs & continue such as today’s usd/cad gamble.
Nice one!
There haven’t been too many lately which is why this one stood out like a bit of sore thumb.
I did however miss the optimum entry 3 weeks ago when that 4 hour hook formed at 3250 off the first clear breakout fail. I promoted it back onto my watch list that week & took my first bite on the next 4 hour hook during the 25th.
As you say, the risk to potential reward ratio is very positive when it’s being supported by higher low or lower high flows.
I like it a lot & will definitely be on the lookout for more that develop in future.
Yeh, that’s what led me to have the AudCad & NzdCad pairs on my list. Unfortunately I didn’t have UsdCad at the time as it didn’t look quite as clean to me, but it’s there now.
One to bring up onto your watch-list for sub hourly hooks if you haven’t already filtered it.
Done 
There was a good example today of where the identifying & filtering of higher probability pairs can still give you winners, even if they’re not the strongest running on a certain day. I’m learning that having the right structure in place on the 4h/1h can generally keep you on the right track, even when you mess up 1 aspect or another.
NzdCad took a bit of a backwards step this morning, but still managed to hold above its hourly HL, so was still an option for me to buy on dips.
It meandered for quite a while (not the perfect scenario for this type of bet), & almost got stopped out a couple of times but I let it run to see if New York could give it some legs, which it duly did after a while.
I was definitely on one of the weaker ponies out there today, but with the structure still being in place & the set-up appearing, it still allowed me a winning bet. So not my finest trade, but still a winner.
& thanks Double 6 & Sketcher - it’s always a help reading your advice & comments.
It’s certainly remained afloat since your post & as with usd/cad, looks to have attracted further cash injections.
Some nice (& classic) shallow 15 minute hooks on both of them today during the London session as oil continues to remain under the cosh. I’d imagine volumes will now begin to dissipate the closer we get to the xmas holidays, but the loonie, ably assisted by depreciating oil, has proved to be a nice steady gamble the past month.
Ya, thinning volumes are already noticeable on quite a few currencies already this week.
It can work for you just as well as against you though when you’re seated into a move that simply keeps jogging along, such as the 2 mentioned here this week.
The problems usually arise in liquidating markets when the order flow is predominantly one-way. It won’t unduly affect folks at the retail end gambling the typical bet sizes, but some slippage can still impact exits depending on time of day & outside influences.
Just be aware of that if you’re looking to engage between now & early January.
And if you’re looking to get out of a liquidiating move or catch a rise/drop into one, use your pullback hooks to negotiate them. Be very careful of using stop (b/o) orders in those situations.
When it was first presented over on the technical templates thread jitasb folks (probably naturally to be honest) would stress out about the precise turn & location of the stochastic, but as you become more familiar with its presence in relation to what it’s encouraging you to look out for, you’ll discover it really doesn’t need to be hooking under 20 for a long or above 80 for a short.
Providing the pair is trending on your primary or background timeframe of choice & it has pulled back & appears as though it’s clicking back into its directional cycle on your secondary timeframe of choice, you’re good to go. The hook is merely a natural by-product of the cyclical activity of a trending move.
As the guys have already mentioned, this is an approach of very, very few moving parts which lends itself perfectly to a plug-in-and-play type operation.
You can quite literally put it down, walk away & pick it back up again 6 or 12 months down the line confident in the knowledge it will continue to work just as efficiently as it did the last time you utilized it.
There really isn’t much that can go wrong with the set up & the beauty of it is you can apply it across a multiple array of timeframe choices, durations & objectives.
You were one one of the original participants of this model hawkmoon when it was part of the templates thread here & across at FSR. I assume from your comments you’re still currently playing it?
I can see where you’re coming from when you say it’s a timeless classic because at their core, the markets don’t really change much & will always drift into & out of strong momentum cycles. Which is the main reason i quickly bought into the concept when i first encountered it.
Do you operate it solely from one specific objective? or do you mix & match it with day & rollover objectives?