Don't Make Trading Harder than it is

[KENNETH_LEE]

Trade Inspiration Not Desperation

Thank You for allowing me to share my trading ideas with you,

But before we get started on this trip I would like to share some general thoughts first . We all know lots of people who are unhappy with there present sitiuation in live bad job , to many bills. etc… and if your like me they are all interested in what we do but most are waiting for us to find that instant money making machine for them to use. I know it is human nature for us all to want to succeed without any effort. But be for real it hardlly ever happens. and the only times I have heard of great profits with little work it involves some questionable ethics. That has never been my style. I perfer a honest return for a honest effort.

 I would suggest to everyone out there if you would devote at least as much time to making actual changes to your life as you do to complaining about it. The change will happen without a doubt. We should all set aside a given amount of time per day or week to educate ourselves and improve our knowledge. All contractors in America have to have continuing college credits to maintain there liscence. Why should we think any differentlly.

 My background is the following. I was a blue collar worker must of my life .  (Hence my lack of literary ability it shows.. Just bear with me I am simple.) 

But never turned down the opportunity for continuing education if someone offered a free course in anything, I was there. I got into Forex off a software program that told you where to place orders and was a hedgeing interest drawing strategy it fell apart. But not being someone to do anything blindlly I started studying Forex from that point and have Learned a lot since those begining days over 2 years ago. I am a successful trader. I have had over 80% positive hit rate on my trading for over 1 year now. The last issue I have had to beat was myself. I would let a bad trade run against me even knowing it had passed the point of no return. That now having been solved I want to give back. Almost everything I have learned came from this website directlly or indirectlly. I have adapted somethings and ommitted others but I am a very basic guy and try and keep things simple.

If anyone feels I have stolen there ideas. I am very sorry but this is a  free forum to share and expand our knowledge. I am just doing that If You have a thread on anything I may mention feel free to put in the link, But please don't blast me I am just putting thoughts together in one place. 

Knowledge is power in everything you do. If you study taxes you save money, If you learn to maintain your car and home you save money. So knowledge and money go hand and hand. 

  But we all  start at different levels. So we will start with the what I think is the easyest trading ideas and move up to the more difficult and complex.

I only trade price action I don’t use many if any indicators as you will see. I want to be able to open a web based platform anywhere and be able to trade. I am not a script guy don’t write programs.

 As we go along I know we will get some feedback from some of the more 

successfull traders I just ask to keep it simple and on topic. This is a progressive thread , and as such may not interest you at all. Please limit negative post to other threads as those aren’t needed or desired here.

I am doing this a much for myself as for anyone else to reinforce my own

strategies to trading and investigate some I plan on using later on.

I am done  with the intro next post we will begin.

                                                    Thanks Ken Lee

[KENNETH_LEE]

Trendline Bounces

 I think one of the quickest and simplest strategies to learn and make some positive trades are trend line bounces. They work on any time frame  and give more than they take if used correctlly. 

 The hardest part about trendline trading is trusting them. When your new you KNOW that it can't be that easy there has to be more to it. So you don't have the trust. So gain that trust start drawing lines watch the bounces. Start placing the demo orders gain the skill. 

 The reason trendline bounces work is many, We don't really care 

but lets discuse it anyway. A trendline is drawn from 2 points of price
that are at extremes ( they stick above or below the rest ) chart 1.

 The points also have other things in common If you look to left on the charts provided, you will see that price in all instances was there before and reversed there this is support and or resistance 

( resistance in this case as it is at the top) If you know fibs the price points also turned at the same fib level on the second and fourth peak 78.6% ( in fib trading a break of that level normally signals a reversal in trend) Which on our trendline trade would have been a
loser.
You place your trade as close to the trendline as possible this
will make your stop loss less and make you more pips. Your stop is on the other side of the line. The problem with setting your stop is that the other team your trading against knows you took this trade and are pretty sure where you put your stop 15 or 20 pips the other side.
This is one reason many people feel there brokers run stops. It isn’t your broker it is your compettion. Say your a bank and your trading a 4 or 8 hour chart with a huge posistion and you know
( because you have a team of 30 analysing everything in the world) that price is going to go down for the next day or so. They can run the price up and collect your money and the price will fall right back down. It comes back down because other major players now sell or more retail trades waited for this level to trade the bounce, there were some who had been long and this trendline or resistance level is there exit point if there trades didn’t get closed fast enough it can push it past the trendline usually by that 15 or 20 pips. Some play it safe and wait for the price to actually start down before entering. So you say where do I place my stop. You can place it anywhere doesn’t matter if you get stopped out and it turns a fake breakout, you can get back in, or you can have a large stop to allow it some room to move and if it closes above and the next candle continues up get out . ( this is another trendline strategy which is next) A lot has to do with how much per pip and your available drawdown amount. I normally watch it an wait for a confirmed failure, cost me a little more but we all hate it when we get out of a good trade by mistake and your to scared to get back in. But either way your lose should be smaller than your gains and if you trade all the trades that come along success rate is great than loses.

   There is also another option trade smaller time frames the shorter time frames have smaller stops as the swings are tighter. They can also offer you better entries that get you in quicker than the longer times.

I have attached 3 15 minute charts of the GBP/USD from friday.
Firat shows where you would draw your trendline form and extended it out the second shows first trade the last shows last trade. I then attached a 1 minute GBP/USD showing the same type setup that is available…

                         Good Trading To All Ken Lee

[potaire]

I will gladly trade you grammar lessons for your forex lessons. lol I’m just teasing ya, bro. I would never have poked fun at ya if you hadn’t poked some fun at yourself first.

Right on to what you are doing. You have already got me thinking & learning about “trend trading”. I will gladly read anything you have to offer.

Thank you,

Potaire

[ThePhoenix]

Great post. I’ve found trading trendline bounces in the direction of the trend to be a great way to trade.

You mentioned the stop loss issue, of everyone knows where it is because that is the logical spot.

What I do is (if going short) is to wait for price to go up past my entry AND past my stop loss, if I believe a bounce down is iminent. As it’s going up I’ll place my entry. This is after is passed both and still going up or stalled, not in front of them. So, my entry gets hit on the way down.

This potentially avoids me even entering the trade if their is breakout against my direction. Also, the SL and entry have already been touched by price on the way up and down. So, it becomes less likely it may go their again.

P.S. don’t worry about your grammer or spelling. Some other posts I’ve read make me wonder if english is the writers first lanquage or just straight up stupid.

[sandpipper]

Hello Ken and thanks for taking the time to share your insights. I look forward to see your methods and wisdom falling out of my computer screen. I too am blue collar and am glad to see that you are successfully profiting from fx.

[KENNETH_LEE]

The Subjectivety Of Forex Line Drawing

   As we continue on through this adventure you will see one of the

greatest difficults I have found in trading. Is following directions that aren’t clear and people saying it doesn’t matter but not clarifing the issue… Trendline drawing is subective. Your asking yourself what the heck does that mean. It means what ever works for you.

 There are always multiple sides to any issue. So why should it be different in Forex. We have the body people and the wick people. I am of the wick or extreme family. I want the price to be as far out as possible. ( less stop loss ,greater profit ) The only downside to that is there are less trades for the wick traders , But the body traders also have to realize that the price can and does move on out to the extremes of the wicks ( greater stop loss potentials, less profit ).

The problem is neither is wrong it is our choice. That is what is making your trading harder than what it should be. There isn’t a right or wrong way there is only your way.

If your of the body family hence more trades and your gains out weigh your losses then. Who could find fault with that. As we continue on and move into other type stategies that require input from us it even becomes more clear. That there isn’t a wrong way.
Just your way…

I actually Looked for a good body trend area and didn't find one for friday.. Just start drawing lines and you will find the way.

                                Good Trading To All    Ken Lee  :D

I know what your saying Phoenix. But sometimes you might not get in, unless you enter a bit lower. I have a friend I will tell him price is going to turn at a lets say 1.2300 he’ll set a limit sell at 1.305 and never get filled I will go short at the 1.2298 where it turned at… We all have to remember that price works areas not pinpoint accuracy … There is also differences in price from broker to broker.

[OneTexan]

Another good post-informative and simple.

Thanks for sharing

1Tex

[KENNETH_LEE]

Trendline Breakouts

In the previous strategy Trendline Bounces., We saw that price bounces off Trendlines. But it also HAS to go the other way from time to time. This gives us our next trading strategy.

Trendline breakouts the confused cousin of Trendline Bounces.
Why confused ? You ask. For a lower risk Breakout trade, it is our
preference that the price cross the trendline then comes back hits the trendline and bounces back. Just like a trendline Bounce, But not. Hence the confused cousin Doesn’t know which way to go.
But we do…

Breakouts happen in trendline all the time if price doesn't bounce it breaks out. Only other option is a fake break. Which tells it's hand quicklly normally in the next candle. 

 As with Bounces they are good on any time frame. Just as all Signals the longer the time frame the more accurate it is. But the less amount of trades we will have. 

I have attached 3 1 min. Charts for the EUR?USD from friday.

The first showing the intitial trendline and a few good bounce trades.
(notice I didn’t include the extreme wick at the top . It didn’t fit in on the other side coming up and didn’t fit in again going down) From time to time you get these wild rouge candles. They can be stop hunting a bit of news etc… As you spend more time drawing lines it will become clear which ones to ignore as misfits.

The second chart magnifies the breakout area. The green candle closed above the line. The next candle a doji came down touched the line. Then I would have entered at 1.2984 . stop again is the other side of line.

 The 3rd chart shows the price coming back to and retesting the line again. But what was once resistance is now support and we now have a  Trendline Bounce trade.


                                     Good Trading To All  Ken Lee :rolleyes:

[Volcom27]

This a great post. Simple and to the point. The Graphs help clarify things well as I am big on visual

Keep it up!

[KENNETH_LEE]

Patterns… Coming Soon to a Thread Near You …

[johnnykanoo]

Ken L nice thread and your grammers pretty good too I look foward to your pattern lessons.

[KENNETH_LEE]

Patterns Trendlines of a Different Sort

 Flags, Pendants, Triangles and Consolidation areas are nothing more than trendlines moving into shapes. We can trade any of them the same way we trade our Trend Lines Bounces or Breakouts. Just 

differentlly, and normally with a bit more accuracy.

 As we continue on our trip you will see that everything I use to trade is related to each other. I hope not to lose anyone along the way. I have struggled to have a trading strategy for every time of day

and every time chart. If anyone needs more information on anything just shout out.

  A Pendant is a pattern that looks like a Flag . In a uptrend price moves up then starts going side ways at a little downward or upward angle looking like a Flag on a Pole. The majority of traders believe when it breaksout it will continue in the direction it arrived with that information in hand. We now know That trading Trendline Bounces in the direction of the tend is prefferable. We will then be going in the right direction when it breaksout. This gives us a edge. Which we will gladlly take.  See Attached Chart   Flag Pattern.

  A Triangle Pattern is when two Trendlines start to close up on the end getting closer and closer, until price has to breakout we can trade bounces while it is far enough apart. But as it closes up and gets tighter depending on the pair and the spread. We must wait for the Breakout which will always come. 

 Consolidation is basicly a Flag that moves more in a sideways direction. This happens a lot at end of a countries session. Such as at the end of the Asian session. At the begining of the European open price takes off. This is normally the best move of the day. Large amount of people trade just this breakout and are very successfull with this strategy, The Consolidation pattern can be very tight and the only trade might be the Breakout..


                         Good Trading To All  Ken Lee :)

[KENNETH_LEE]

I think I have put out enough basic information to give you something to mess around with and occupy your mind a bit.

 So our next step is to better understand why Trendlines form and how we can use it our advantage.

 Next section ANATOMY of a Trendline. 

Ps. During the week I also have to make a living trading so post might get a bit slower…

 Good Trading To ALL  Ken Lee:)

[Ray_1]

Kenneth great job, you had created a good thread. What you illustrated here is simple and popular technical setups, trading trendlines(support and resistances) bounces and breakout. Your trendlines are your support and resistances. My trading setup is almost the same just that mine template is using horizontal lines. Looking forward to more of your sharing and hope everyone can start to discard indicators and focus more on support and resistances zones. Happy pipping.

[KENNETH_LEE]

Trust Yourself

 You are Blindfolded and lead down a hallway. The only thing you are told is your coming to some stairs. So playing it safe as you always do. You shuffle your feet a long the floor looking for clues.

Your toe hits a wall. What do you do ? Simple you pick your foot up and you step up on the step. The stairs are going up!! So we pick our foot up again and go up another step. And we continue on … TILL !!! You pick your foot up and there is nothing there and you almost fall. But being safe you didn’t because you know that stairs have to end and you always have to come down… You gentlly place your foot back down and you feel around and you find the edge and yes Eureka !! The stairs are now going down. You then continue on down the stairs.

 This is trading in it's raw form..  There are only two directions UP and Down. If we tossed a coin. We would have to be right half the time. So why is it with so much information at hand we can't shift

our trading in our direction and get at least 75% or 80% or more accuracy ? WE can, no problem all we need is like the example above shows. What is it ???

BLIND FAITH

Why do we not trust our senses in trading we do in everything else if it is going up, BUY !!! If it is going down SELL !!! Is it really harder than that NO…

Next we start to see the trees that make up the forest. The bones of the charts. 

( disclaimer; In the chart the trendline is for demonstration purposes only , In real trading in a uptrend, Trendline would be on bottom of Price not top. Unless you were trading it as a channel. Then there could be 2 trendlines. )

                                               Good Trading To All  Ken Lee  :p

Stairs Analogy.bmp (1.4 MB)

[KENNETH_LEE]

Ray ; Yes Trendlines and Support and Resistance are very similiar,and are traded much the same But S&R areas deserve a bit more attention than what has been given here so far . They will have there own section. There is a lot happening at those levels…

                 But Thanks for commenting.  Ken Lee  :)

[gasanvill]

Hi Kenneth, very interesting post. I�m actually learning to trade trendlines, and i find them really profitable.

I have a question.
Take a look at the first graphic of the post #8. You have a down trendline and you can see that at some point the prices break the trendline and then they bounce back to the trendline. My question is: if is a down trendline, shouldn�t the price cross again the trendline? So that way they stay in the down trend. Why te price doesn�t return into the down trend? Instead, it stays above the trendline.

That is my doubt.

Thanks! =)

[KENNETH_LEE]

The retest of the trendline is the safest type tendline breakout trade there is. As you said why didin’t it go back to the other side of the line. Trendlines are like support and resistance in this respect. That line having been on top was Resistance , but once price crossed to the top side it is now Support. This is classic Trendline trading .

It does retest the line at times immedatelly after it crosses and this ok to. But the safest trade would have been for the later retest, when price moved away and then came back and retested later. This can be found on any time chart, on a dailly chart it can come back and retest weeks later. Which it does and why trendlines on higher time frames are Stronger.

I don’t know what time frame charts you trade . But I use a 15 min for my lines, But saying that, I first make it a 2 or 4 hour and add trendlines from that time then change it back to 15 min. Those lines are stronger nad more likelly to hold than the ones drawn on the 15 min.

What all this signafies is that it is a true break to the upside and has been tested and confirmed. Hence safer trade.

Try looking back on charts and you will spot these retest. That will help build your confidence in them.
Good Trading To You Ken Lee

[KENNETH_LEE]

Swings The Skeleton of the Chart

A swing is what makes up the movement of the price. Even when we think price is moving sideways, on smaller time charts it is normally still moving up and down. 

To me this is the Frame of our charts and is what holds everything together. A swing is a series of candles that make a top and bottom once they have exhausted there move is when we can use the information they have left us to use. Just as a tracker can track and know which way a animal has gone , how heavey it was by the depth of the track, and how fast it is moving by length between the tracks. We can use the swings information to do the same.

In Trendline trading we saw our trendlines laying on top of price, the points they are laying on are the swing extremes.

In the previous Trust yourself analogy of a stair case it is the swings that make the stairs a actual entity, and just as you would use a tool to build something. Swings can be used also. They are the basis of trading .

What do they offer.
The swings show use the direction of our pair.
They can show use the momentum or power of the move.
They give us signals on when to get ready for a trade.
They give as warning as when to exit with the most profit.

 First The direction of the pair again as stated with line drawing it is all up to you..

 Your saying to yourself what, this guys a nut case , How can I change the direction. Easy change the time frame you trade. Make it what you want it to be.

 First chart is a 5 minute chart from this morning It is a completed picture of a swing.  It is a down trend Swing as the Red candles are lower than the bottom of the Green candles. So if this is all you had to go on to take a trade. Using Blind Faith we would ( because the stairs are going down ) have gone short at the top around a  1.4178. And taken it down to the bottom of the green candles at least. Safest exit. ( we will get to entries and exits later)

But HOLD ON one Minute ( or 15 To be exact ) . On the second chart a 15 minute same time and pair. It is a uptrend swing . The red candles are higher then the Green candles. Thus using blind faith ( as the stairs are going up ) we would go long when it breaks and [U]closes[/U] above 1.4100 and a safe exit is at the top 1.4200.

 But that isn't right look at the next  chart it is a 4 hr., and a very strong downtrend indeed. Are you getting the picture. It all depends on what we are looking at to decide the trend we are trading. Every time frame chart can be a different trend. Our goal is to use ALL this information to make the charts or price do what we want them too. 

I rule though is the higher the time frame chart the greater your profits and your[B][U] loses[/U][/B]. So keep that in mind when you trade. We can also you use that to our advantage , Get into a trade using a small time frame chart , that way our stop is closer if it goes wrong, Then if the next time frame chart is the same direction at this [U]POINT[/U] in time (because all trends have to change direction) use it for a greater  profit exit point.

Next up what we look for to gauge the power or speed of our swings Momentum.

                                   Good Trading to All   Ken Lee  :cool:

ps. The trendline on the 4 hr, The reasoning behind the area in the middle not being below is that every candle came back below the line The higher trendline should be hit later on as it is at a very good level for numerous reasons. But that is for later.

5 min Down Trend Swing.bmp (695 KB)

15 min Uptrend Swing.bmp (701 KB)

4 hr Down Trend Swing.bmp (700 KB)

[perfectsun]

Great stuff Ken!