Committing to Proper Technical Analysis

Fellow Pipizens,

I’ve been interested in Forex trading for about 4 months, experimenting with a live account, low capitalization ($500) and little knowledge/experience. So far, I’ve been able to break even, leading me to believe that with a proper trading plan I might be able to make this work. My audacious goal is to become good enough to do this full time and trade from anywhere in the world.

So. I’ve moved back into a demo account that will enable me to test with proper capitalization, and refine a strategy that works for me. I plan to trade once a day (when I can) since I don’t have time to scalp (current full-time job). With this thread, I will share the various trades I make, the results, and look forward to some constructive criticism that will assist in my refinement.

Stay tuned for trade 1…

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Trade #1: SUCCESS

This is my first attempt to use technical analysis to determine if I want to place a trade. I’ve been heavily focused on GBP/CAD, but will need to branch out if I want to find good trades on a regular basis. Brexit is making this pair a bit unpredictable.

Indicators:

  • Stochastic indicator showed oversold on the purchase date (Feb 15).
  • MACD was diverged, but showed a bit of a move towards converging and moving up.
  • RSI was not showing oversold, but appeared to be moving towards an upswing.

Chart Analysis

  • Trend line channel indicated possible support level.
  • Fibonacci indicated support at .786, which further lead me to think that support was close by.

I realized I took a leap of faith on a couple of these indicators, due to their lagging nature. I set my limit to about halfway to the resistance level of the channel. In the end, I was up 21 pips.

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I’m wondering how someone rates their “successful” trades when, in hindsight, you could have earned more by setting a higher limit. Is that still considered a win?

Pipizens!

I haven’t posted in a little while, as I’m waiting for my current trade to wrap up. I shorted EUR/CAD on Feb 21 @ 1.49543.

SL @ 1.50783
TP @ 1.48273

It’s been a bit up and down, but still hoping the downward channel continues.

More to come.

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Trade # 2 EUR/CAD is still open. It’s been quite the ride, but today I’m back in the green.

In the meantime, I saw the channel on GBP/CAD, price hitting the top, and thought I’d look into it more. Basically the same setup as Trade # 1, since GBP/CAD appears to be moving in an upward channel.

Trade # 3: SUCCESS

Indicators:

  • Stochastic was showing the moving average crossover.
  • MACD, okay I think I jumped the gun there. It wasn’t yet indicating a downward crossover.
  • RSI was on a downward trend.

Chart Analysis:

  • Honestly, I just saw the channel and the price testing the resistance level.

I was only in the trade for a day, and took 79 pips. I feel like I exited prematurely, but was concerned about the Canadian GDP report coming out today, expected to be disappointing. Didn’t want to lose the 79 pips I made overnight.

I’ll post shortly with my lessons learned from this one, after the news comes out and the markets close for the weekend.

(As I type this, my Euro trade moved back into the red. C’est la Vie)

One lesson learned, if I closed out the GBP/CAD due to the Canadian GDP forecast, I should have closed the EUR/CAD (even though it was only at a few PIPs of profit). EUR/CAD now close to stop loss… :frowning:

Let’s see where this goes. Holding my nerve, committed to my original entry (for better or worse).

Trade # 2 (EUR/CAD) just hit my stop. :frowning:
Looks like the GDP news from Canada was the nail in the coffin. All my trades are closed, so will have to live to trade another day.

Happy weekend.

Hi, I hope you are doing well. I feel like you have far too many indicators. Why do you need so many indicators? Find a simple way to judge trend, such as, Keltner channels, exponential, 16, 1.3, and 89 and 50 exponential moving averages. When the middle Keltner channel line comes up above or goes below, it is a visual indicator that a trend has started. Your goal is to get in early. If you can’t get in early, right after the trend starts, don’t bother. Now, beyond those types of indicators, look for trend characteristics. In an up trend, price breaks resistance. Put on a fibonacci retracement, and wait for a proper retracement around some level preferrably at least 38.2 Look for the price to engulf. Enter. If price breaks support, trade is done. If price continues, seek to follow the trend. Lock in profit at successive support levels. Your goal is to produce a system that has a superior risk to reward ratio. We don’t care about losses, they are no concern. We want our wins to be far larger than our losses. We want to have a system for everything. We want to protect profits through a systematic approach. Also, I tend to trade things that are highly liquid. EurCad and GbpCad seem attractive, but are they really liquid? Consider trading futures. There you can see that the currencies don’t have much liquidity. The stock index futures are however extremely liquid. EurUsd in Forex is very liquid, even though, since the volume is hidden except through the commitment of traders report. Think about the Forex. It seems to have been created for the banks to trades currencies with, but such that their activities can be more hidden. Show us the volume. In stocks or futures, you can see the volume. The banks don’t like that. You might see the stupid stuff their up to and start taking their money. :slight_smile:

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Thanks @brmicha, appreciate the input.

I’ve simplified my approach, and tried out some of the analysis that you suggested, was able to find an interesting trade, albeit on the EURCAD pair. So I haven’t yet tried to shop around for a more liquid pair.

I noticed the price drop through the center line of the Keltner band, which also coincided with the .236 of my Fib retracement. Had a fairly tight stop and watched it drop all the way to my TP (1.505). Total of 75 pips for the morning.

Thanks again for adding to my accumulated knowledge.

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Any specific pairs you’re set on trading, or anything goes?

That’s great. Looks pretty nice. I just thought I would show you one of my trades that I made today that had some success. I entered long around the lower white arrow, and I ended up exiting at the upper white arrow today. I exited because it showed major strength and engulfed at the resistance level. If it just corrected some and then was able to break the resistance, I would have had a trend I could follow, move my stop loss and protect profits at successive support levels. Exiting like this is a part of my trading plan, and everything is described in depth in my trading plan. I do not trade based on feelings or emotions. My risk per trade is about 1 percent of my account size. Everyone loses trades, and so, they have to have a good system of risk management if they want to be successful. I am using a tick chart, which is a volume based type of chart. Doing that in Forex really has no meaning since no one knows what the volume is. This type of chart is not time based. So, let’s say you set a 1000 tick chart. Each tick is an order. Orders can be made up of 1 or multiple contracts, and volume is the number of contracts, so it is not exactly based on volume, but more on number of orders. This allows to see more times when price engulfs or has a lot of strength regardless of how slow or fast the market is moving. Take note that to trade with trends, you really don’t need anything on the chart at all. I just kind of like these indicators because they give a little more visual indication, and they tend to make it easy to stay more out of transitional sideways periods between trends. My trade today was on the Nasdaq stock index futures. My stop loss would be under the support. One of the big ideas of my trading system is to be able to take a good portion of some successfully formed trends. If someone can do that, they are miles above most other traders out there. Most people tend to take small profits from winners and let losers run hoping that they come back. This approach tends to end up with them losing money. This trade today was still able to make around twice what it risked. Lately, I’ve been trading into a lot of movements that didn’t form into trends, and I broke even or took some losses. That’s going to happen with any trading strategy. But, if you can trade such that you end up with a good risk to reward ratio, which most people out there don’t do, I think you have a high probability to make some money over time. I’m not talking about getting rich quick. The more money you have, the more you can make. But, it’s a lot of fun to be able to make money trading in this type of market, and do it with limited overall risk. One of the worst things that someone might do is trade one of these markets with no stop loss. Tomorrow they come back and their account is in negative and they owe the broker money. Well, have a good one.

In case you’re wondering what I’m trading on here, I’m trading futures on Think or Swim with a TDAmeritrade brokerage account. One of the nice things about trading with this type of account is that your money really actually is held in it’s own bank account and it’s FDIC insured. It’s nice to know that your money is protected while it’s just sitting around in your account. With Forex, if your broker goes out of business, your money can actually be used to pay their debts, and it can just sort of, dry up and disappear. Who could possibly take that kind of risk, especially if you have a large sized account? Also, many futures only accounts also actually work this way where your money is not very well protected. This account is a stock\option\futures combined account.

@brmicha, I really appreciate you taking the time to provide your insights into trading. I am still relatively new (6 months), and still just working in my demo account until I feel I have a good enough feel to start using my live account. At the moment, it’s looking quite good for me, but I want to spend another few months to confirm that it’s not a fluke, and then I will start working with real money.

  • At the moment, I am just looking at Forex, since that’s what drew me in, and I don’t want to spread myself to thin trying to understand other financial instruments.
  • @mtb_rex, I’m open to pretty much any currency pair, but have been focusing on CAD, GBP, EUR since I’m a Canadian who lived in Britain, and well, that’s about as deep as it went. I’m considering @brmicha’s comment about liquidity.
  • As much as I like the idea of becoming independently wealthy, I completely accept that this will take time, effort, losses, wins, and still may not end up in a full-time gig. We’ll see. My audacious goal is to make a solid living on this, and be able to live anywhere in the world (I love travel).

I’m keeping an eye on GBP/CAD again over the weekend. It looks like it’s hit a Fib level (0.618), with the H4 chart showing a couple bounces. Still well within an ascending channel, and the candlesticks aren’t telling me much (maybe a three inside up, H4 chart).

Anyway, thanks for all the input. It’s really appreciated.

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Well gosh golly, the lessons can by painful to learn.

Trade #5:

  • GBP/CAD yesterday looked pretty good.
  • I entered at 1.7639, believing that there would be a retracement
  • I set my stop above a recent (and long term) resistance level.
  • Price was heading toward the top of my Fibonacci (Back to 1).
  • Price was nearing the top of the Keltner channel.

What happened?

  • The retracement happened.
  • The resistance level was correct.
  • The Fib level was correct.
  • Just look at the glorious drop overnight (EST)

My stop was too tight

I could have walked away with a cool 55 pips as I write this post.

Mustn’t grumble. Lesson learned. Onto the next.

Trade # 6: USD/CAD

Technicals

  • Was watching the Keltner Channel and (thanks @brmicha) saw the price piercing it both D1 and H4 charts.
  • Fib levels drawn from the last long-term uptrend showed that price was piercing 0.382 level, also on the D1 and H4 charts.
  • H4 chart showed bullish engulfing pattern.
  • D1 chart showed bullish piercing pattern.

Stop: 1.3291 based on past support/resistance.
Take Profit: 1.3410 based on past resistance (just below).
Risk/Reward: 1.31

So, I’m taking a look at the 6C. These are the canadian dollar futures. It’s the daily chart. The futures show the Cad upside down from Forex, so you’ll notice that this has been down trending, while yours has been up trending. I don’t really look at multiple time frames much for my strategies. For the daily chart, I’d be looking to trade longer term. For my intraday trading, I trade on a chart where the candles move about 1 candle per minute. This would be day trading, so I can only hold the trade during the session and it is closed at by at least the end of the day. First, take a look a little earlier on the chart. One of the big things I think is important that I want to incorporate into my trading plan is getting into trends early. Most people get in too late into trends, often times buying at the top or selling at the bottom. The top white arrow shows where the center line of the Keltner channels breaks out of the both emas. This is what I consider like where the trend is starting, and if I can get in on the first entry after that, I can be early in the trend. After that, you notice a bearish engulfing pattern candle at the next arrow down. Now, take a look at the current movement. The center line of the Keltner channels has gone back above the emas and now has broken down. So, maybe we are early in a new trend. We have been able to break support. It has retraced. I drew a Fibonnaci retracement and it came back to around the 38.2. But, today, I have not yet seen an engulfing pattern that I want to trade in order to enter the down side trade.

If I get an entry, I’ll make a paper trade and see what happens with it. I don’t really plan on trading currrencies, but I like trading gold longer term like this. The way that I trade, with this type of longer term trading, I am likely only going to get a few trades per year at most.

Feeling not very clever today. Price blasted out the bottom of the ascending channel and killed my trade.

Realizing that I just convinced myself of the trade, and was showing up to the part too late. I hung in there hoping that the next upswing (within the channel) would get me to my TP, but CAD strengthened unexpectedly and knocked me out.

Keeping my eye on the descending channel EUR/USD.

  • Close to the top of the channel.
  • Multiple drops through Keltner band over the past few months

Looking for a signal that it’s dropping, but not exactly sure what to keep an eye out for.

  • Candlestick pattern?
  • I don’t think Elliot Waves apply here.
  • Will ponder this more in the morning, see if the price is heading down.

Thoughts and insights welcome.

Keeping an eye on a few things a the moment.
Been reading more about Keltner analysis, thanks to @brmicha.
Trying to keep it simple.

So far, my go-to analysis is:

  • Looking for trending or ranging channels
  • Sticking to D1 time-frame, occasionally looking at shorter time-frame to catch signals.
  • Looking for support/resistance levels (finding it a bit tricky to identify)
  • Using Keltner channels to identify reversals.

I’m currently eyeing:

  • USD/CAD Long Potential: Looking for a turn-around after moving below centre of the Keltner channel OR hitting the bottom of the long and short term ascending channel
  • EUR/USD Short Potential: Looking at the short term descending channel. Today’s interest rate news caused it to jump out of the channel, so waiting to see what happens next. I’m hoping for a(nother) drop down past the centre of the Keltner channel. (There was a long-term channel I had drawn, but felt I was “forcing it”).
  • GBP/CAD Long Potential: My favourite pair, just cause I love all things British. I’m hoping for another turnaround under the centre of the Keltner channel, heading higher. Some of the previous breaks above the centre line (in this generally ascending channel) have resulted in multi-day gains.

Okay, slight adminssion, I also keep an eye on the Stochastic indicator as a small addition to my analysis.

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