David Jefferson aka: Rave55 (Technical Analysis Trading Method)

Trading Systems Free Forex Trading Systems
43

[B]OLD POST:[/B]

Question from a member…

[B][I]David, I’ve taken on board the issue of getting in early and staying in late (for winners). My question is what type of exit strategies do you use? Pre-determined targets, trailing stops, phasing out?

Thanks again.[/I][/B]

[B]Answer:[/B]

Targets are only obstacles that stand in your way, nothing more, nothing less.

I tend to do a fair bit of work on support and resistance and either scale out at those levels or close out. Support and resistance also comes in the form of fibs, trend lines ect ect. Your other option is just stay in the trade and trail the stop, letting the stop take you out.

I kind of use a mixture of both, trail stops and scale. What I do is have 2 targets in mind most trades, I will take 2-3 positions at entry with the same stop target one I either scale out 1 or 2 of the positions and target 2 the reaming position/s. During that time I have already been trailing the stop to eliminate risk, but leaving room for price to move.

Try using a 20 day ATR to give you the average range for the pair, and see how far its already moved that day based on this, that going to give you a pretty good indication of how many pips are potentially on the table. Don’t shoot for the lot as its only a guide.

For example lets just say that the EURO ATR over 20 days is 156 pips and so far it has moved 33 pips, at time of entry there is potentially 123 pips left on an average day. Therefore find support and resistance that ties in with this.

So lets say there is 123 pips potentially left, and the EURO is trading at 1.2200, you do some support and resistance work and notice a cluster of support at 1.2150, that could be your first target of 50 pips leaving potentially 73 pips left. You then notice there is another cluster of support at 1.2085, that could be your next target to get out as that would take up another 65 pips of the remaining 73.

Its a case of finding what exactly stands in your way, and what is the average range for the day, and what has it already done.

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[B]OLD POST:[/B]

[B]Question:[/B]

[I]A few points - do you always wait for the price to cross above/below the 100 and 200 SMA for trade confirmations - I note that sometimes the price has to fall/climb a long way to reach the 200SMA at times? How do you price a correction zone - is it purely fib based?[/I]

[B]Answer:[/B]

I will do my best to try and answer your questions.

Questions: " do you always wait for the price to cross above/below the 100 and 200 SMA for trade confirmations - I note that sometimes the price has to fall/climb a long way to reach the 200SMA at times?

How do you price a correction zone - is it purely fib based?"

Price crossing above the 100 or 200 is not trade confirmations. Price crossing those MA’s is for defining direction and defining risk and for anticipating what may happen next.

Trade entry’s come based on the price action that happens after a cross.

If price crosses above the 100 sma, it alerts me to a potential bias change and I may want to study the chart further. The potential entry will come when price crosses and holds above either by pullback and hold, or consolidation, or even dips back below the 100 sma but holds a fib level or support and immediately moves back above it with a close.

I can therefore anticipate a move, define my risk and get in on potentially what could be a major move way ahead of the crowed. I’m anticipating that the bulls are trying to take control at this point.

Once you have defined direction, defined your risk and anticipated a move with entry, if price proceeds to the 200 sma and crosses and holds above either by pullback and hold, or consolidation, or even dips back below the 200 sma but holds a fib level or support and immediately moves back above it with a close, then you can be confidant that the bulls are now in firm control of the market. And as you anticipated the move way back at the 100 sma, the likely hood is, you were in from the start… even before the move started at times.

This places you miles in front of the rest of the market trading crowed that are still waiting for lagging indicators and moving averages to cross. And it also defines your risk to the absolute minimum possible. The closer you get in to the start of a move or before the move has started, the less risk there is.

People who get in after a move has started, or during a move that is under-way, or half way through or near to the end, increase their risk as potential reversals become a factor “during” moves (corrections and reversals increase as the move takes shape).

One of your comments was: “I note that sometimes the price has to fall/climb a long way to reach the 200SMA at times?”

My answer is GOOD!

If its got to fall or rise a long way to get to the 200 sma, then the more potential profit there is, as your decisions are based at or near to the 100 sma. The test/cross or hold of the 200 sma is just to show if the bulls or bears are in full control… but that comes after you have anticipated and entered the move at/near the 100 sma.

So if the 200 sma is 120 pips away from where you got in near or at the 100 sma, then thats a potential 120 pips in the bag before the 200 sma shows its hand and proves if the bulls or the bears are in full control. Remember, you anticipated the move with the 100 sma and price action.

45

[B]OLD POST:[/B]

A few people have been asking me on PM if this is the only way that I trade. So I will answer this on the thread so that anyone who was about to ask the same or was wondering the same… the answer is NO its not the only way that I trade, but it is one of the main ways that I trade.

I also trade a lot of options and other fixed income/risk instruments as well as the spot FX market and futures.

And I also use other technical analysis methods and ways of analysing the market and making trading decisions. I also use fundamentals.

The way of trading that I’m teaching on the thread will suite retail traders very well, and will give you the ability to analyse a chart, and understand what price needs to do and perform in order to define direction, define risk and understand who is currently controlling the market or who should. This will then help you start making more profitable trading decisions that can potentially offer substantial gains with low risk and draw-down if properly analysed and understood. That is why I opted to show this way of trading as its the easiest form to understand and apply.

And it simply works!

David

46

OLD POST:

Question:

Thanks David, I am looking forward to your advice on entries and exits, it would be great to see how you go about them.

Answer:

Entries can come in a lot of different forms via price action.
Personally I use the 15 minute chart but often use the 10 minute chart but nothing lower.

Once I have defined direction, defined my likely risk (where will price need to go in order to invalidate the trade wrong) I then need to find good trade location which will help maximise my profit and decrease my potential risk to reversals or corrections.

What I look for is candle formations at the zones I’m looking to trade…ie: support and resistance zones, fib levels, MA’s… a combination/mixture.

I tend to look for engulfing candles or rail tracks on the 15 minute chart. And only take notice of pin-bars on the 1 hour chart or higher.

Other things I look for is a 1,2,3 pattern and other formations.

Let me show 2 examples of what to trade and what not to trade.

For the first, lets take the GBP/JPY… read back at my analysis today for the G/J, we were looking for shorts to take place at some point. When price tested the 100 hour sma today, there was a minor sell-off, but nothing gave a signal to get short as the sell-off was weak and not convincing enough.

Heres the 15 minute chart with details:

GBP/JPY:

5.jpg700×510 85.7 KB

GBP/USD:

67.jpg700×506 82.4 KB

47

David, what is the Barclay’s Bank Cash Flow Index? I googled it without success…

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Hi yunny1

It is a proprietary indicator created by the bank… ex employer. I was getting lots of questions about this and I wasn’t allowed to share it as its proprietary. So I deleted it from my charts from that day on and continued to post without it.

The indicator is not needed. As you go through my posts and future posts you will see its no longer there or used in anyway.

49

Welcome David - followed you here from the other forum and look forward to many more excellent educational posts -for the BP crowd David has got a LOT to offer those who wish to dump rip off bots and decide to take responsibility for their own trading using his very simple approach to trading…

50

Hi Peter, glad you came over from the dark-side… :16:

Joking m8, good to see you here.

51

Nice to see a pro-ex-bank trader…would you mind answering newbie questions about institutional trading?

You have probably seen some “know-it-all” explaining why he thinks banks move the markets out of consolidation to the very big moves, while trying to "shake off the dumb money, take out stops, etc…since you worked for a very big bank, can you answer this:

do the traders at those big banks really have the capital to together make those big moves? in other words, were you trading such big lots (yards?) that you saw the price actually move when you “pushed the button”?

Or is it really that the pros are just so good at it (this is what I really think) and the banks hire hundreds of them and the hundreds of traders together with a bit of extra capital move the markets the same direction, when it moves, say 80 pips in 2 minutes (rare, I know).

thanks

52

Hi David,
Great thread so far, and good to hear someone with your experience willing to share…very refreshing.

One question: what are the chances of a newbie following this strategy successfully without access to the following indicators:

BBCFI
WIlliams Accumulation Dist

Please be honest.

Many thanks,
BD
(p.s. i dont use indicators for entries)

53

Yes I love my set up here have my 3 pairs up EUR USD, GBP USD and USD CAD . Each pair has 2 monitors top monitor with higher TF and lower with lower TF. Glad to be hear with you!! Yes me too I love taking my dog for a run daily. Try to push him daily on a 10K run during London lunch time. I am here in Toronto so my day starts at 3am and ends around London close. This gives me rest of the day to relax!! Keep up the great work. Glad I found your thread in this forum!!!

Cheers

Jeff:)

54

Hi pipcompounder

Thanks for the questions and good questions at that.

Your question: do the traders at those big banks really have the capital to together make those big moves? in other words, were you trading such big lots (yards?) that you saw the price actually move when you “pushed the button”?

Answer: The currency market is driven by international trade and investment of imports and exports, buyouts and sellouts and economic outlooks, this happens everyday!. Banks trade within the interbank market, which is made up of the largest commercial banks and securities dealers. The top-tier interbank market accounts for 53% of all transactions. From there, smaller banks, followed by large multi-national corporations (which need to hedge risk and pay employees in different countries), large hedge funds, and even some of the retail market makers.

Most transactions placed in the spot market from banks, is another names money, which the bank is acting on behalf of, depending on the size, then yes, they can move the market, but not by large sums as you may think if acting single handed.

For example, lets say that a German company wanted to buyout another company listed and registered in the UK. The German company would have to exchange EURO’s for GBP in order to perform the buyout. Therefore they would acquire a bank to act as the middle man to perform the transaction from EURO to GBP. Lets say the cost to buy the UK company is £400 million and the bank given this transaction paper is Barclay’s. Barclay’s traders would be allocated sums on each tasked desk in order to to exchange EURO’s to GBP (400 million) at the best possible prices they could get, This would be done various different ways. Small positions and large positions within the spot market.

Also banks deal with the transactions of imports/exports… exchange one currency for another for the imports/exports market… this is what drives and moves the market. What does not move the market is one bank trader placing 1 trade with a sum of money, (unless its massive and was during extremely low volume trade).

Here is a true example of the market moving based on a bank transaction on behalf of the Qatar Investment Authority (QIA) and Abu Dhabi Investment Authority (ADIA) who were bidding to buy up 42 Marriott hotels in England on the 9th July.

The bank that was given the transaction papers to perform the currency trade and administering the deal was RBS (Royal Bank Of Scotland). QIA and ADIA wanted to exchange some of their US$ dollar reserves into British£ pounds to perform the takeover. The cost was £700 million.

RBS didn’t waste much time, and pretty much saw low volume trade, so executed almost the full amount in one go which spiked the GBP/USD up then down in one candle, once the exchange was complete the trade was closed.

Here is an article about the news event: Qatar and Abu Dhabi bid for 42 UK hotels - ArabianBusiness.com

And here was the market move caused by RBS placing a 700 million trade pretty much in one go…

gi.jpg700×469 53.2 KB

David

ps: Do you actually know why we call it a yard… just wondering to see if people know?

55

Hi,

The BBCFI and WIlliams Accumulation Dist indicators are not needed, I only made a few posts with them on the chart, but since the BBCFI was Barclay’s proprietary, I deleted it from the chart as I couldn’t share it, and people were asking for it.

Since then all I have done is post charts and give full analysis without the use of them, and thats a lot of posting I done on the last forum.

You have every chance of success in following the way in which I analyse the charts and make trade decisions. Stick with it and give it ago… you will soon see!

Do remember, this is not a strategy, strategies do not work, there is no strategy that can adapt to economic expansion/contraction and dynamic modelling within evolving markets. Your dealer will tell you they do work, the books you buy will also tell you they work, and all of the marketing morons that plague these forums will also tell you they work. All because they make a buck from you following these strategies.

What I’m teaching you here and continuing to teach you, is how to analyse the market and charts without any distractions or influences from silly systems/strategies. Therefore regardless of market expansion/contraction of modelling, you will be able to define direction, define risk and anticipate moves ahead of the crowed.

David

56

David, in your 1H chart, the 100 and 200 MA are Hourly MA or Daily MA?

In which chart you make the decision for your entries?

Thanks.

57

I use the Daily chart, 1 Hour chart and 15/10 minute charts.

The MA’s are SMA’s (simple moving averages).

The daily chart is used to pin-point technical support and resistance, pattern recognition, price action.

The 1 hour chart is the main chart, this is used to define direction (intraday), define risk, find trade location, and locate the correction zone or the BULL/BEAR zone (pro money zones) which I will cover in following posts.

The 15 or 10 minute chart is used for entry.

I tend to only enter based on 4 set ups that print on the 10 or 15 minute once the pro money zone is tested or broken… these are an engulfing candle, rail tracks, divergence, or a 1,2,3… really what ever prints is good to go.

I will cover more soon.

Right catch you all in the morning, I’m off to bed.

David

58

I like this guy, thanks for getting booted out of the old place and showing up here. Looking forward to your post. :slight_smile:

59

Looking forward to learn more from you David …

Cheers
HA

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Now you know why we all followed him over here in our campervan :- )

61

Wow…I have been researching and stalking many different forms for the last two months trying to find someone like this. I have found a couple, but not with as much detail and clarity as I have seen in the last 6 pages. I hope to learn, develop and learn and for this I say thank you for sharing your knowledge and experience DJ!

62

Thnx a lot for your post’s. Really informative and am glad we have a Institutional trader teaching us here…