A brief share, questions around volume, any contribution welcome

Trading Discussion
524

[B]Hello GP and Emerald!

[B]I agree with a lot of what you said, especially the way that opportunities should be caught…

However, given that I am gradually moving away to few, long-term trades on (either as single trades or
overlapping trades in the same direction), I am also moving away from the ‘opportunist’ in me.

The reason for this is that I need clarity of vision, and a trading style that
is not at odds with my lifestyle: I am a full-time teacher, and on top of my 37-hr/week teaching
I also have private pupils in the evening… I am also involved with university projects, and do the occasional translation work… Most of all, I love my girlfriend more than the world itself and we are moving house in less than two weeks, so our lives are dedicated to each other… I covered this in this thread a little bit: 301 Moved Permanently

What I am after is not just a ‘buy and hold’, but a long-term bias, which I can express through the best pair for that; for example, if my bias were for NZD bearishness, would selling the NZD/JPY be better than NZD/USD, or would the latter be better? Or, perhaps, one may like to sell the NZD against the GBP or the EUR… Which pair is the most ‘overbought’ relative to historic data going back a decade, for example? I would then manage that bias through a single trade, or through various overlapping trades (‘scaling into’ a winning trade)…

I am, therefore, narrowing my focus on the two accounts I manage: on one, I have been cutting out trades and not replacing them, trying to have one account focusing on one theme (e.g. GBP strength), and the other on another theme (e.g. NZD weakness)… This is really ‘simple’ but, of course, not necessarily easy. . . However, it will avoid me becoming intractable at home with my girlfriend and at work with my colleagues, as I will not be constantly checking on the charts for opportunities but just managing either a single trade or overlapping trades, here and there…

In other words: [B]I do not want to get that Facebook illness, FOMO[/B] (=Fear Of Missing Out), that hooks you up to the screen every five minutes, just in case…

There you go… That is my new philosophy for trading, and when I say ‘new’ I should say that it has been slowly emerging from material necessities of my lifestyle and from a maturing awareness of my trading needs… [B]Recent trades of the kind that Emerald was mentioning, i.e. the ones for GBP/USD [/B]from that momentous 13th August down-move, have proven to me that if you identify (not predict, just see and process) a longer-term opportunity early on, you may be in for hundred of pips, which will be much better than trying to second-guess choppy trades in directionless markets… Volatility has certainly returned to these markets, so at least we are now able to make more returns, if we play our cards right…Just look at USD/JPY after months of dwindling daily average ranges: it has become one of the hottest Yen-cross bulls…

So, trends are back on![B] EUR/GBP, GBP/USD, NZD/JPY, EUR/NZD:[/B] all of these are examples of pairs, which, in the last few weeks (and months) have offered us opportunities to make trades worth hundreds of pips… I have certainly been more and more able to let winners run into the hundreds, and it has really been a fantastic way of trading, which has paid off majorly.

With this in mind, I hope that, [B]Emerald[/B], whatever you go for with intra-day, 200EMA and S/R trading, you will continue to be involved in BabyPips and share your success stories and insights into the currency markets; equally, [B]GP00053,[/B] I hope that you too will continue to honour us with your insights…

May I also [B]welcome Arbitrager[/B] to the circle, hoping that he (she?) too will stick around for a while yet…

Happy Trading

525

Well, well, well… Three weeks or so after this last post of mine, the FTSE100 has fallen more than
300 pips… Is this the start of the house of cards tumble? Is this correction or deleveraging? Has
the protests wave in Hong Kong worried investors enough, or, rather, more than Kurdistan, Syria,
and Iraq?

Watch this space…

Here is the same monthly chart for the FTSE100, followed by the 4-hour one:

Screen Shot 2014-10-01 at 13.17.24.jpg700×294 27.6 KB

Screen Shot 2014-10-01 at 13.18.24.jpg700×356 26.2 KB

526

Yes Pip, you have sound plan, that’s all that matters in my case as I am closer and closer to that day as futures and currency professional trader, I am more concerned about a diversified approach to trading. This can offer a great dividends because our longer term trend positions will eventually act as a hedge for short term trades.

That kind of trading is purely technical and utilizes very little of the fundamental stuff. So it is essential I grasp a good game plan on the less comfortable time frames. One day when I am managing a few million then swing trading will be preferential but a solid intraday plan is always helpful.

Trading is much harder than it use to be so if I want to make a long term career of this I need to be more versatile against the big picture. All the best traders were able to take trades from a few minutes to months and some like Randy Mckay for up to 5 years. That said you have really nailed down your strategy Pip and that’s what really matters.

527

Hello my friend, in my opinion one of the most if not the most is your trading method, money management and mindset amongst other things must be based on your circumstances. Some friends of mine in both the poker and trading world have asked me to join a group (poker players) that would travel a circuit to play poker through out US, Canada and Europe. In addition to since my car accident physically or mentally couldn’t do it, even if I could the answer would be no.

My top priority is spending time with my wife and kids. I will not be interested in anything that takes away from that. Another trader I know has asked if I would be interested in trading his client list with me. Among other things it would require me to work in an office 90 miles away as opposed to working in my home. Even though again my physical and mental condition would not allow me to, I would not be interested for the same reason that I said no to the poker. Both are great opportunities, but like everything nothing is free, there’s always a cost.

Long term trading is no different than any other trading. You have to have a plan that outlines: When, what and why you will or will not trade. Rules and a money management plan that addresses the what and why. Personally I agree 100% on if you employ a strategy that you’re considering you are much better off doing it with one pair.

I don’t do 2 accounts, but even the most simple plan it’s not always the easiest, which is why the plan has to include smart money management and worked with patience and discipline.

I agree with the pairs you listed and it looks like trends are back .I was trading eurgbp long with short term euro momentum using 30 minute and below time frames, and long with gbp strength on the daily, 4 and 1 hour charts. oththing right now but my favorite pair is gbpusd

Well I can’t speak for Emerald, like you I hope he keeps contributing to baby pips (along with you) and all the other traders that are trying to improve, as far as me, I will keep offering my opinons. I believe it’s a great opportunities for all retail traders to learn from others and at the same time reinforcing what we have learned and use.
As always Best Wishes and Continued success in everything you do.
Gp

528

That was very hearty GP. I agree with you and Pipme family is most important, I have a family of my own, my wife doesn’t really care if I trade in my case, she understands this is soon to be my full time job and I have a bit of money in the game so that is fair. Once cash shows up frequently at the bank and you can afford to take longer breaks I find spouses are definitely more accommodating. Reminds me off a History Channel documentary I saw on Julius Caesars expansion into Germania and the German Princess ends up marrying the Roman General of German descent who had taken charge just after he had killed her husband and father, the narrator was saying that German women valued strength and status (I am sure things are different). My point is a strong successful man will always have the ear of the lady in relation to his profession, the problem comes if they feel you are swapping obvious security for uncertainty, unless you are really charismatic and 007 suave… So I guess it is very circumstance based.

On the flip side back to FX and my game face on. Sterling has been sold heavily and the volume coming in suggests yet more selling, like I said earlier this week for me looked like a whipsaw week, the market reaction to a flurry of good US data has been largely ignored by the market makers, this made me a bit concerned about the USD but seeing EURO and GBP both posted horrible numbers and barely moved instead ticked upwards tells me that EURO sentiment is returning. That said Draghi is try to push through more cash into the system by trying to buy asset back securities, this means the Eurozone will be further exposed, my guess is the market maker has plans for this kind of info.

Technical’s suggest that USD is heading higher but the market can always surprise. I still say 1.2032 for the Euro in the coming weeks if not days. My Long position is still held on my USD/CAD and short on my EUR/USD. We shall see. Wish you everyone the best on their trades.

529

[B]Hello traders! Emerald and GP, your posts are a fantastic celebration of trading in the real world: not just individuals with no commitments doing all-night scalping… Here they are: the real traders, the fathers, the lifelong partners, the home-owners… [/B]

This reminds me of the great thread exchanges I had with SimonTemplar, about trading with a family in tow…

http://forums.babypips.com/forextown/64809-why-we-need-more-good-female-traders-13.html

[B]Going back to trading technicals… Emerald, you are right, there is something in the air for the Euro, and the ECB President(Draghi)'s press conference tomorrow may give us something that the markets may like to move the Euro on… [/B]

As John Kicklighter (DailyFX Chief Currency Strategist) said on Monday, on his strategy/trading videos, it may be that the markets have taken the Euro low enough, namely 1,400 pips from the 1.40 high a few months ago, and that they may be ready to sell it back to the crowds (i.e. time for us to buy)… I must declare an interest, here, through my EUR/GBP long…However, I am open to see what will happen tomorrow…

I am short EUR/USD on my demo and it has been gaining loads… but I am not interested in trading it live because I have all the Euro exposure I need on EUR/GBP… Trading rules: fewer, managed trades…no jumping into any ‘stars in your eyes’ trades!

Thank you for all your wonderful posts today… thank you, also, to GP00053 for all his thoughts…

If you were closer, I would definitely want us to meet up and have a drink!

Good luck tomorrow…

530

I would love to have a drink you guys. It would be a great experience.

Well it has been exciting day for GBP/USD, eventually went short after a break of structural support and finally that 1.5840 level beckons that we have waited weeks for. The benefit of multi-time frame analysis I guess. Short Euro Dollar as well and long AUD/JPY into the weekend.

Taking my EW knowledge to new heights with harmonic trading patterns, with my existing EW and Fibonacci knowledge should final have a half descent intraday system with the same level of simplicity when combined with volume things are shaping up. A few weeks on intraday testing mys system and ahoy!

Have a great weekend guys and thanks GP00 for reminding me of the power of Fibonacci as a tool in not just take profit targets but with entries. Always a pleasure sharing with other experienced traders. Next week is another week.

531

I was just reading your post again on the FTSE 100. This is a wonderful example of structure analysis. We do like to think the markets are chaotic but the further back you go, the more structure you can see in the market place like you have identified, I cannot imagine a better risk reward trade, if that area breaks you can follow, if it struggles you can short, either way your risk is quite low, if you took just those 3 trades above or say 2 then you would be a very rich man regardless of account size, I think that is an average of 6000 points at $50 a point on emini and $250 a point on normal index you would have made a killing.

So that said the bigger picture always takes priority, your profits would have been over 2 years but after that you would have a lovely nest egg. Great post Pip.

532

Hello Emerald… Thank you.

How to trade long-term is not easy because you do not just click and hold for ‘x’ years… Your broker may liquidate your position, for example, by mistake, or because of expiration of contracts; or, a market crash may happen and you would lose the potential profits; so, a long-term trade is managed through time over a series of trades, potentially, which per se is not more expensive and it means that you actually do own some of that money. Most important of all, though, is the exposure: correct size for positioning, just in case… Over a trade that you think is worth thousands of pips, how much would you be willing to risk?

I got stopped out of an initially good FTSE100 short, and I may not enter now, because I want to concentrate on what I know best: currencies. On the account I used for FTSE100 trading, I want to concentrate on the EUR/GBP projection to the upside, and plan how to ride what I think is a major correction, if and when it comes, using ‘scaling in’ with overlapping trades and appropriate risk-reward ratios… I want to trade one large trend well, rather than many large trends badly :slight_smile:

Do you know what I trying to say?

533

G’day lads. Just looking for an opinion on this NZDJPY setup. Particular what is your interpretation of volume on the second chart. Looking at diversifying out from my normal methods. Hopefully you can see what I see. So basically looking for an entry signal in either the buy zone or sell zone. SL at opposite level and TP target of 90 long or 80 short. Just a target but.

NZDJPY weekly prt.jpg700×366 30.6 KB

NZDJPY voumeprt.jpg700×289 17.5 KB

NZDJPY 4hr prt.jpg700×366 28.6 KB

Top two charts are weekly, bottom is 4 hourly.

534

I have been lurking around here for a while though I haven’t finished reading the whole thread. A good video on volume analysis emeraldorc! Your analysis was brilliant!

However there’re few things that I’m uncertain of, you mentioned sometimes a selling volume is masked as a green candle and vice versa if that’s the case how do I differentiate between buying and selling volume if I can’t rely on the candles right above the volume spikes itself?

Should I look at subsequent candles as a sign then ? lets say I wait for 2nd or 3rd subsequent candles for confirmation of a buying or selling volume but wouldn’t that be a little too late ?

And how about the timing, do they form at the same time ? volume and candles ?

535

Hello Bob!

Are you looking to short?

Volume on the weekly chart shows that last week price did not reflect the strength of volume: by the Wyckoff rules, if a huge volume is not mirrored by an equally large candle, there is a false signal.

In the 4h chart, I saw last week what you are highlighting here, maybe inadvertently: NZD/JPY is stuck in a range. While GBP/JPY has dropped off aggressively, NZD/JPY, considering how hard NZD/USD was hit, has had a moderate bear move.

I have entry orders waiting to go below where we are now, as this pair needs to find direction - candles/price matching volume strength.

Over to the Volume Professor, Emeraldorc…

:slight_smile:

536

I would be looking to trade the range break either direction. But as I would on my tick chart, I would be looking for entry signal in the identified zone after the range is breached. If the price just kicks on well that’s just the way it will be. But every picture tells a story and I’ve seen the increase in volume on the weekly charts and wondering what that tells us.

Now if this was PA on my beloved tick chart, I’ld be short all the way. But its not, its the weekly. But then again the same PA forms all charts. But, but,but… lol

537

Aim to practise volume reading in 1h charts first…

538

Use consecutive 1hr volume bars…three consecutive growing or waning volume bars should give you all the confirmation you need if twinned with candlestick action…

539

Thanks for your quick reply I guess the professor himself is busy on the weekends well that is expected for someone who’s got a family. I’ve been lurking around…

Again I appreciate your response pipmehappy!

540

The weekend on here is more like zombietown… It is healthy that people switch off and spend time with friends, family, or just away from the computer… I am packing boxes to move house, so Babypips is a welcome break :slight_smile: Have a great weekend, rookie, and I hope volume-price analysis may enhance your trading…

541

I’ll be hanging around this thread :slight_smile: I guess I’m the only loner around here browsing through threads on Sunday evening. No complains though.

You too Pipmehappy good weekends, as for me its about time for work :31:

542

Cheers…you too, rookie.
Six (and a bit) hours to go, then
the trading week starts again…
And what a week it promises to be!

543

Excellent questions Rookie. I’ll answer one by one, I have been looking at volume behaviour for a while so forgive me if you find I am glossing over.

how do I differentiate between buying and selling volume if I can’t rely on the candles right above the volume spikes itself?

This is particularly tricky, especially in high volatility areas that constitute a battle between buyers and sellers. First off not all institutions are right but they are all active enough to know where stops are on both sides of the market, so at resistance and support areas the volume increases as buyers and sellers are hoping to trigger stops and aid the move. This volume is confusing. I first look at the structure, if I look left on the chart I see other areas of support and resistance, that’s my first clue (if it is support, I assume buying if it is resistance I assume selling), second I check the range of the candle versus the volume and third I check the high and low prices relative to low and high prices of the previous candles, if the volume is highest at the highs relative to the lows I assume selling as well, lastly I look and see if the volume bars were rising in the direction of the price, e.g. if price is falling and volume is falling and suddenly at support the volume picks up then it is certain to be buying (clearly the highs were no longer interesting to sellers, so why would they suddenly be interested in the lower highs?). If price is falling and volume is rising then there is a good chance the momentum will continue, it is at this point the moving averages diverge from each other suggesting momentum. While the focus is still on the volume relative to the price spread, the emphasis must be on the lows and highs described as volume at price behaviour.

you mentioned sometimes a selling volume is masked as a green candle

This is because despite the rising price sellers were buying the highs, this causes the spread and range of the candle to be much smaller than the volume bar. If you watch a whole session you will notice that volume was much slower on the climb but in the last 15 mins volume picked up and depressed the candle. If you go in a time frame you can see this better.

Should I look at subsequent candles as a sign then ? lets say I wait for 2nd or 3rd subsequent candles for confirmation of a buying or selling volume but wouldn’t that be a little too late?

In most cases you are looking to buy and sell into the momentum of the move. So you are never really too late, you cannot always hope to get the entire move, sometimes you have to wait for preceeding candles to confirm especially when the market maker holds the price and you get that real short doji but the volume is so large. This is manipulation and not even the big boys know what will happen next simply because one institution is on the wrong side of the order flow and if they know this they will liquidate their position and the price will runaway, so the market maker must decide the next move.

And how about the timing, do they form at the same time ? volume and candles?

Technically they should to a degree, in a smooth clear directional move. You can easily see when an S&R level is broken, the order flow is one directional so the volume bars form smoothly.

I have read Wyckoff and his emphasis on the 6 rules but these guys didn’t have the market trading volume as we do nor the level technology. Clearly Wyckoff didn’t have to deal with machines making buy and sell orders in nano seconds at highs and lows. Now I firmly believe like Wyckoff we must evolve and build on the past. Put any half descent trader in the early 1900’s they will make as much money as any of the greats on the RSI indicator alone. It is the level of public market knowledge and technology that makes the markets harder to trade today. So you now have to form your own opinion from careful study.

Hope this helps…