RIGHT ANALYSIS, RIGHT RESULTS
As expected, this has formed a Consolidation.
100 Pip Trade was based on this expectation
The types of candles - and other Technical Factors in my Methodology- suggested that this would take place, so one can trade accordingly.
However, the trade was the risky version of my main Strategy for trading the start of Consolidations.
The latest trading opportunity with my Methodology provided me with a 101-Pip gain on the AUD NZD. The pair was shorted as it started to turn at the Resistance of its Consolidation, heading to the Support boundary 250 Pips away.
The pair had formed a Pennant above the Resistance of a larger Pennant following a short-lived breakout attempt in September.
As it continued to move within this smaller Consolidation, a Bearish Signal was given at its Resistance to start a small downtrend back to Support.
After careful analysis, it was determined that this setup satisfied the criteria for trading within Consolidations. Entry then took place on the 4 Hour Chart with the target set for the Support area of the Pennant.At the end of the established Holding Period, the trade was exited for 101 Pips instead of the 140 that was originally targeted - money nonetheless and above our 100 Pip minimum threshold.
As you can see from this graph, a smaller 69-Pip trade was made within the context of that short-lived breakout attempt. The latest result from my strategy means that one would need only a few more months to realize a 100% rate of return - from only 9 more trades.
The main advantage of my approach is that one does not have to trade every day nor every week. Specific high probability opportunities are provided by the Currency Market each month on the larger time frames. Once these are identified and traded within the context of strong parameters, larger and more consistent gains are more likely with reduced exposure to market volatility.
Trading within Consolidation is a very common trading strategy used to take advantage of low liquidity market conditions. As we move within these boundaries, strong short-term gains can be patiently but aggressively taken until breakouts - very rare nowadays- eventually take place. The challenge, however, will always be to determine which of these Consolidations are best suited for this strategy and those that should be avoided.
Another important element of these trades is knowing where to place Stop Losses without the need for Trailing Stops. Although adjusting the Stop Loss is a common approach to avoiding losses from unexpected reversals, it can get in the way of the natural waves of the market as it makes its way to its main target. If a trade is up by 40 Pips but is closed when the market has pulled back to the new, smaller Stop Loss, one could forgo a lot of money if the market eventually moves by 60 Pips more in your direction.
As you can see from the 4 Hour Chart below, using Trailing Stops would have easily eroded gains at the two pullback areas.
4 HOUR CHART - TRAILING STOPS
My Methodology addresses the issue of where to put Stop Losses to capture all of what the market has to offer and how to determine if the Stop Loss area is strong enough to protect your trade. This gives me the confidence to allow the market to accurately and successfully hit my trading targets until my major goal of Long-Term Wealth is also met.
KEY CONCEPTS OF TRADE
[ul]
[li]Trading Within Medium Consolidations;
[/li][li] Strong Daily Candlestick Signals;
[/li][li] Correct Stop Loss Placements;
[/li][li] Obeying the 7-Day Holding Period;
[/li][/ul]
good effort.
'best
thanks man
This is the Demo Account that is a little behind the Live Account results shown in earlier posts. Its now at 8% after the last 3 trades, but won`t be far behind in getting to that same 100% target.
By just trading the best paying opportunities in the market, large returns will be the result.
No Day Trading Stress, No Stop-Hunting Paranoia.
Trade Less, Earn More, Enjoy Trading.
KIWI SETTING UP FOR BREAKOUT
NZD USD could be setting up to either rally back inside of the large Pennant, or start a major breakout short.
It is now hovering at the Support boundary of this Pennant.
LARGE PENNANT
We can see that it is starting to form a smaller Pennant that could lead to the breakout in either direction.
It only needs to form the 2nd Resistance point to complete the formation.
[ul]
[li]In the case of a False Breakout Rally, we would be headed towards the Resistance - at least;
[/li][li]
[/li][li]For a Breakout Short, the large size of the Pennant suggests that significant gains for the USD would be in store;
[/li][/ul]
If this is going to be traded, you will see the result here.
Let´s see how quickly the 100% Target will be hit.
(This Demo Account is 3 trades behind the Live Account shown in earlier posts)
Duane
SMALL 9 PIP GAIN ON AUD CAD
This trade was intended to take advantage of a sharp breakout short from a Consolidation.
However, after re-examining the chart, I realized I had incorrectly measured and missed a major pullback point known as the Breakout Equivalent.
All Consolidations have Breakout Equivalents (B.E.) - it is the area that they breakout towards before pulling back. They will either pause here to then resume the trend or become volatile and reverse. Nevertheless, once spotted and measured accurately, one should either be exiting your trades there (see the AUD USD 148 Pip Trade) or avoiding entries at these areas altogether.
In this instance, the pair had already broken out from a previous Range and was now breaking a Pennant.
(FXCM Charts used for Trade Signals- Dukascopy used for Live Trades)
Based on the way I had originally measured the B.E. for this Range, it would not be hit until a few hundred pips. However after analyzing the chart again for confirmation that my Entry Setup was correct, I realized the error and exited immediately. This provided only a small gain, but was much better than what would have taken place if it was left any longer.
This was the entry setup on the 4 Hour Chart. It required waiting on the market to pullback so that my Stop Loss would have met the criterion in the strategy.
Entry then took place, but shortly after, I realized that this B.E. was actually at the Entry Price of my trade.
Luckily I was able to come out before the rally took place, which would have taken out my Stop Loss.
Mistakes are par for the course. Sometimes they lead to large losses, but sometimes you get lucky with only a small loss or gain. As it stands, the Methodology is still 9 trades away from a 100% return.
(No Trading was done in August; Remaining 9 Hypothetical Trades assume 150 Pips Per Trade as per the average targets in Strategy and no losses)
Duane Shepherd
SWING TRADING VS DAY TRADING STRESS? SWING IS THE REMEDY
With almost 400 Pips in profit generated from the last 6 trades, these results continue to prove that long-term success in the Forex Market can only be achieved by Swing Trading the major Currency Pairs.
Day Trading
This is the more popular and exciting way of battling the smaller Currency movements each day. The adrenaline rush of aggressively capturing pips is very addictive and often profitable. However in most cases, the volatility on the Smaller Time Frames takes away these gains just as quickly, making trading an exciting roller coaster ride that only puts you back to where you started…
Sometimes no matter how confidently I set up my trades, the market always had a way of surprising me with unexpected reversals that come out of nowhere…
As frustration builds from mounting losses, despite several strategies and signals, trading eventually begins to feel like an arbitrary choice between Buying and Selling. When this latest “strategy” also fails, the only solution appears to be a drastic redesign of your workstation…
THE SWING TRADING REMEDY
Despite the longer holding periods involved, Swing Trading has tremendous benefits that will allow you to comfortably put Day Trading behind forever.
This style of trading takes advantage of the Weekly price movements of all the Currency Pairs, focusing on the larger trends that provide stronger, more reliable signals. With twice the reward and half the trading, Swing Traders are able to generate more consistent results on a monthly basis, away from the dangerous volatility of the Smaller Time Frames.
One of the main reasons for the better results from Swing Trading is that you no longer need to guess the reaction of the market to volatile Economic Data. Instead of focusing on these events and trying to determine the number of Pips to grab in a short time…
Reserve Bank of New Zealand Interest Rate Decision - March 12, 2014
…it is much easier to wait until the Daily Chart gives us its signal and wait patiently for a larger payday…
As you Swing Trade, there is no need to pay attention to events related to Economic Crises. Even during the European Sovereign Debt Crisis, Daily Chart signals were easy to spot and trade, hitting targets consistently without the need to even know who Mario Draghi is…
cont´d…
MY SWING TRADING RESULTS
The trades that you see here are based on a Price Action Swing Strategy that uses the most accurate Candlestick Patterns and Signals of the Daily and 4 Hour Charts. These time frames provide more Stable and Reliable trading patterns and are thus more amenable to consistent profitability.
The benefit of Swing Trading generally is that it addresses the major hurdles that I faced during Day Trading;
Holding Period For Trades
The main Achilles Heel of traders, with Swing Trading, it is much easier to establish clear guidelines on the number of days to hold trades based on each trade setup.
No longer am I tempted to grab more money than the market is offering, nor cut trades short out of fear of reversals. With my guidelines, I am more relaxed and confident in leaving my trades, knowing that 95% of the trades will reach their targets within this time period.
Consolidation Breakout Reversals
One minute we can be in the money when a strong Consolidation Breakout takes place and then in the blink of an eye, start to panic as the market slowly reverses to eat away at our gains…
With Swing Trading, it is much easier to establish strict Holding Periods, so that we know in advance where to set our Limit Orders and when to exit early ahead of sharp pullbacks…
False Consolidation Breakouts
Perhaps the most frustrating of all losses, False Breakouts can take place even with the most promising of Consolidation Setups and Entry Signals. What I have found is that there are specific types of Daily Chart candles that help distinguish between the ones that lead to these losses and those that provide successful breakouts - candles that are not seen when one is focused on the smaller time frames.
Emotions
Finally and most notorious of all our difficulties… Emotions. 99% of the emotions that hinder us during Day Trading arise from;
[ul]
[li]Monitoring of our charts and floating profits;
[/li][li]Moving quickly between trades;
[/li][li]Using small Stop Losses that can be easily taken out;
[/li][/ul]
Despite what many have said, it is humanly impossible for you to contain your emotions while looking at your money going up and down before your eyes. Emotions will always be a part of us and can never be eliminated from trading. The only realistic solution lies in avoiding these 3 habits - which Day Trading almost requires- so that our emotions play a much smaller role.
With Swing Trading, you can
[ul]
[li]Set your targets beforehand
[/li][li]
[/li][li]Establish your maximum Holding Period
[/li][li]
[/li][li]Have rules against the monitoring of trades
[/li][li]
[/li][/ul]
You also have more time and less pressure to assess trades and change your mind in case a mistake is made (see 9 Pip Gain on AUD CAD). Stop Losses are larger but are placed at stronger areas that protect the trades until your targets are hit. The result?
99% of Emotions are eliminated.
Once you become familiar with Swing Trading and its ability to be successful, you will no longer need to worry about watching your trades every hour of every day.
As this approach becomes easier, you will no longer view trading as a fight for an impossible dream. Instead, it will become a more enjoyable journey on your way to your major goals of Long-Run Wealth and Prosperity.
My advice? Find a way to move away from Day Trading. Develop a Swing Trading style that suits you and make it work for you.
Duane Shepherd
Hi Duane,
great work i see you have put alot of effort into this. kudos. just curious to why your selling swing trading so hard and dismissing day trading?
I assume by swing trading your meaning using timeframes d1 and higher and day trading you mean 1m to h1?
Both can be profitable, but in the end price is action is the same on any timeframe. I don’t agree that day trading is more risky than swinging. I used to trade d1 now mostly h4 and recently tried m5 and found it no different and i was scared as everyone says scalping is really hard. Its just the same you just have to only trade low spread pairs and depends on brokers.
But anyway keep up the good work.
'best
darth
Hey man, thanks
Yes its the never ending debate between Larger and Smaller Time Frames. Yes, Swing trading - 4Hour and Daily, Day Trading, lower time frames- 1h and lower. Why did you make such a big switch from Daily to 5 Minute?
I will never say that it is [B]impossible [/B]to be profitable Day Trading. But if [B]95% of people[/B] are said to fail and the [B]majority of traders[/B] do so by Day Trading on the smaller time frames, isnt that saying something?
The reality of Forex Trading is that we are all trying to establish a pattern on the price movement of a very important financial asset. However, given that the price of this asset is influenced by so many factors on a Daily basis in such a short-time - trade, investments, Central Bank activity etc.- isnt it going to be more difficult to establish a pattern at such a micro level than with the larger, clearer trends?
Economists already have difficulties in Regression Analysis to establish these patterns using more reliable price data on a monthly, quarterly and yearly basis, so for us to try to do so with even more random, erratic movements each day is a very ambitious task.
There are just too many factors that affect the markets and traders each day to make this a viable choice.
Stop Losses - if these are normally 20-40 Pips for the typical day trader, and the market tends to move by only 60-80 Pips on average, the margin for error is very small especially when you add arbitrary spikes and whiplashes that are much more likely to take out Small Stop Losses than those on the Higher Time frames.
Emotions - this is the biggest factor- trying to constantly force yourself to make money each day given
just makes it an unnecessary uphill battle.
Most will continue to trade this way however, since it is the most promoted way. But the [B]possibility[/B] of profitability is one thing, [B]the reality[/B] is another.
Great response, that’s the thing everyone has his/her view, based apon what they get told, what they experience and what they trade. I’ve been wipsawed on daily as well as ever other tf, banks will manipulate every pair regardless of broker. And don’t get me started on brokers…
But the important thing is that you have a system, that seems to be doing well for you bro. I won’t lie I’m on a losing streak after a winning streak, part of the game. But I strongly believe any tf can be played the same, my mentor trades h4, but loves to scalp so he taught me how, and its no different. Just don’t have the time to be a full time scalper though i wouldnt want to be either.
Anyway look forward to your results.
'best
darth
…well yes, its all about peoples experiences. but the thing is that most people who trade the smaller time frames seem to have the same bad experiences - including me when I used to Day Trade as well.
Sorry about that losing streak…hope it turns around. Thats actually a very interesting strategy- 4H AND 5 minute. My method is actually suited for persons like you who dont have the time to Scalp. It can even work in the background while you use your existing method. The trades are not as frequent but when they appear, they compensate for the wait.
Another good trade came in today on the GBP CAD - 199 Pips. I will go into detail later in another post but I will show it to you here.
This makes 6 out of 8 trades that are successful so far, together providing a 22% return and close to 500 Pips. This means that I and those who trade with me would now need just 8 trades for a 100% return. Earning a 25% or 50% commission managing 1 Million with a 20%, 50% return would look very good in a bank account.
Swing trading with my method allows you to pick the best trades with large returns without having to trade everyday. Sometimes I wonder if this market was meant to be traded everyday, week instead of identifying the major movements, trading them and sitting back to wait on the next one.
199 PIPS GBP CAD - 22% OVERALL RETURN, 8 MORE FOR 100% RETURN
Methodology continues to produce results.
[ul]
[li]GBP CAD provided an ABC Reversal Signal to start a False Breakout Reversal.
[/li][li]
[/li][li]Range was initially broken short, but eventually U-turned, providing the ABC Signal at Support.
[/li][li]
[/li][li]Entry took place on the 4 Hour Chart according to the rules, trade hit target 3 days later.
[/li][/ul]
This reversal was expected based on the 3-Wave Rule of the previous downtrend (Trade Secret/Rule of Methodology) and the pair of Double Bottoms that were formed;
DAILY CHART
So when this ABC Signal appeared to start the Bullish Reversal, it was not much of a surprise.
DAILY CHART SIGNAL
Setup and targets were set according to rules of strategy…
4 HOUR CHART
The market pulled back to test the Resistance of the Range on the 4H Chart and trigger our Entry Order before rallying sharply to our target…
4 HOUR CHART
DAILY CHART
Main Highlights of Trade
[ul]
[li]
[/li][li]Double Bottoms and ABC Reversal Signals;
[/li][li]Testing of the Resistance of Broken Consolidations;
[/li][li]Entry Orders set for Rule-Based Stop Loss;
[/li][li]Not looking at Trade to avoid emotions!!;
[/li][li]FXCM Charts used for our Signals, Dukascopy used for my Live trades;
[/li][/ul]
DEMO ACCOUNT RESULT- LAGS LIVE ACCOUNT BY 3 TRADES, BUT UP 17% IN 2 1/2 MONTHS
This is the FXCM Demo Account that mirrors my Live Dukascopy Trades, but is behind by a few trades.
After only 4 Trades, Account is up 17%, requiring only 8 trades as well for our 100% target.
RATE OF RETURN
TRADES
ACCOUNT BALANCE
Comparing the Live and Demo Returns with the Year-To Date Returns for the BarclayHedge Top 10 as at September 30, 2014…
…the Methodology appears to be able to hold its own.
Swing Trading
Duane
DRFXTRADING
Hi duane, can i ask do you usually trade elliot wave theory? do you always set limit orders? how many pairs do you watch? do you trade patterns everytime or breakouts?
'best
darth
Hey darth, no I dont use elliot wave theory…I use waves for targets and to analyze setups, but in a different way…
Limit orders are a must for me… cuts down the emotions that can get in the way by monitoring a trade etc…Based on the setup that I see and its expected movement, I target a specific amount and leave the market to do its thing…
I look at these 26 pairs…
I usually trade one at a time as well to keep it simple and my stress level down !! lol
so how to you exactly use eliott then? Im intrigued. Also Do analysis 26 pairs in depth or when you see a setup on one pair that instantly catches your eye, concentrate on that pair?
'best
darth
Hey man,
No I dont use elliot wave… I use the general concepts of waves, such as the 3 waves in this graph, but in a different way. (Trade Secret lol)
Yes I go through all 26 each day using Trend Lines etc… as you see in all of the graphs here. Once one meets my criteria for entry, I trade it. After Entry, I continue to analyze the market, excluding those that are correlated to the one being traded. This is done to avoid 2nd guessing my decision about the one being traded.
I also general trade one at a time since I really only see 1 pair providing me with a trade at any one time…
EURO CAD 73 PIP TRADE
This was a short position based on the False Consolidation Reversal taking place. This was happening on the Daily Chart.
After few days, trade exited based on Holding Period Rule for 74 Pips, short of the expected 150 Pips targeted.
Low liquidity during the Holidays was the main factor behind this lower value trade -BUT - MONEY nonetheless.
