Don't Make Trading Harder than it is

Beginner Questions
42

the wonder of the computer is that it DOES things for you !

trendlines, support and resistance areas and even automatic fibline placement are all within the purvue of those little add on indicators for the MT4 platform, the higher end charting programs and probably the ipod at this point in time (you think steve jobs dont check his net worth daily ?)

simpler to just let the computer do it methinks

enjoy and trade well

mp

    I agree if you have that skill set you could more than likely design a program that would do most of these functions . But as I stated in the beggining that is not one of my skills. So I am trying to just show what is away a trader can have a greater advantage using his on senses.

Even if you have those programing skills you would still need to know what to make the progarm do ( or look for ). But this whole thread is aimed at the begginers level moving forward to more complex, basiclly using everything together. For the best desicsion making ability.

I thank you for your comments though, As I am sure there are many people with those skills who have had that same thought.

      Good Trading To All  Ken Lee

If you would like to do that, ( post Indicators are EA’s ) I would prefer if it was done on a different thread as the questions on there use are inevitable and normally occupy great space taking away from the focus of this thread.

Thanks Ken Lee   :)
43

Sum Up What We Know So Far

Lets go over what we now know. Before we add the next section to it.

Trendlines are the easist way for anyone to start trading all you need to do is draw a few lines and watch what price does when it approachs them.

The 2 types of trend line trades are a Bounce and the Breakout.
The Bounce is when the price reaches the line and turns back and goes back the way it came. Hence the name Bounce (just like a ball).

    A Breakout is when price approaches the line but fails to stop pushing threw ( or Breakingout of it is confinement). It is perferrable for the Breakout price to turn back and re-touch (or re-test) the line as this confirms it is a true Breakout and not a trap or stop run. Always try and wait for the  candle that OPENS on the otherside of the line to close as at anytime it could pullback and close back on the original side , Making it a bounce trade instead.  

 Sometimes when price has a lot of momentum it may push through at a great speed and never look back. This is a riskier trade because at some point price will revisit that line.

 We now know that swings are what form our trendlines. The lines sit on the extremes of the swings. And we have a good idea as to which way price is going to go by observing our swings . So using that information we already have we should have a better than average ability to make positive trades.

  In the attached chart. The Red arrows are pointing to higher highs on our swings. The Blues to higher [B][U]LOWS[/U][/B]. The white arrows are pointing to lower highs and the green to lower lows. I put both colors on the last swing it is a higher high but I felt it would be a short signal which if you check it was. 

 As we continue you will see there were a lot of indications it was going to turn there, besides the trendline making it a favorable short. 

On all our swings except the last with the trendlines and swings in favor we have excellent signals to make our trades. 

When trading just the swings and the swings change from the upside to the downside. Which is at the first white candle we normally wait for the push down and then go short at the second white candle. But since we are trading with the trendlines also we had a bounce  trade and the lower high . So we could take the trade with good confidence.

This is the whole idea behind this thread is to add to our education and make us have a almost perfect ability to chose the next direction the price will move in.

        Good Trading To All   Ken Lee    :)

Have a great weekend… :smiley:

1 min euro...jpg700×306 49.9 KB

44

Nice post Kenneth!

I can�t wait to see what�s coming! :smiley:

45

kenneth…i have one question! :smiley:

You have explained how to trade a bounce and a breakout. But what happens if is a false breakout. I mean, after a while the prices come back to continue with the trend.

How you trade that?

thanks!

46

I feel to counter false breakout, best is to wait for price to close above/below the trendline to confirm that the trendline is broken. In addition, you may want to see a positive candle(red for short and green for long) that close above/below the trendline to add to the conclusion that the trendline is being break. Finally if the candle has a long wick it is a suspicious candle and make me less likely to play the break. :slight_smile:

47

although there is a “school” on this site, its always nice to see a teacher emerge who may have better ideas, but i will offer two things - - - -

first is that you use LINE charts, which enable quicker identification of failures or weakening prices, BUT do NOT show the actual price height or whether or not the price has hit either support or resistance, meaning you are immediately GIVING AWAY a number of pips per trade — simply draw (or use a readily available s+r indicator such as “barrys” (considered the de facto standard for this work) and you will see that your highs NEVER hit resistance and your lows NEVER hit support, which they DO if one uses CANDLES ! So right away, there goes 2 pips out of every trade (the beginning when we bounce from support to the end, when we hit resistance !

In a scalping situation (since you showed the one minute chart) this would be a HUGE giveway.

when scalping, one can choose to MAKE every move there is, which is a tad difficult on MT4 since you have to open one trade and close another, ALTHOUGH there is a script and EA that will do that for you, but to do it manually is near impossible (an ECN with one way trading is better, as you simply enter a short, which immediately closes your long and opens the short !)

if one wants to enjoy more than a few pips, there are smoothed indicators that will show the overall trend of the timeframe involved, even through the short reverses that the one minute makes, so you can easily remain in the trade for 20 - 40 pips, instead of moving around like a mexican jumping bean TRYING to get each and every move — it helps if one suddenly feels the need for food or a “pit stop !”

BTW — the preexistent computer goodies i spoke of are readily available custom indicators out of the thousands that are available — one lays them into the indicator folder and gets on with their trading, but now you have a “buddy” helping and talking to you as you trade !

just a thought !

enjoy and trade well

mp

[I][B]Within the great hall at Elfinore stands a wondrous coffer, precisely four cubits square and securely latched against the outside world. Inside that repository, shut away from impertinent eyes, abides many an intriquing trading secret garnered from around the world and over the ages !

As a child, i used to watch from the darkness as the secrets were debated and annotated by the elders. No one there held a single thought of my presence – BUT I KNOW WHERE THEY HID THE KEY !![/B][/I]

48

gasanvill kenneth…i have one question!

You have explained how to trade a bounce and a breakout. But what happens if is a false breakout. I mean, after a while the prices come back to continue with the trend.

How you trade that?

thanks!

I had already posted this on page 2 This is how I traded it… Also Ray and if you look back at Phoenix’s post also. There ideas would also work. But if you wait possiblity to lose some pips. If it never breakouts but I guess safer entry. Depends on your amount of risk

Also as you get more exprience you will start to gauge the momentum of the price and get a good feel to wether it is struggling to reach the trendline or it is going to go through it. Might look at that section again on momentum.

                Good Trading To All Ken Lee       :)

( This my original post on bounces pge 2 )

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.

49

first is that you use LINE charts, which enable quicker identification of failures or weakening prices, BUT do NOT show the actual price height or whether or not the price has hit either support or resistance, meaning you are immediately GIVING AWAY a number of pips per trade — simply draw (or use a readily available s+r indicator such as “barrys” (considered the de facto standard for this work) and you will see that your highs NEVER hit resistance and your lows NEVER hit support, which they DO if one uses CANDLES ! So right away, there goes 2 pips out of every trade (the beginning when we bounce from support to the end, when we hit resistance !

Apparentlly we have a problem , I know you have been on this sight a long time and I have enjoyed some of your teachings myself. But if you can’t look at my charts and tell they ARE CANDLES. I don’t now what to say…:eek:

Plus you keep bring up Support and Resisitance I REALLY REALLY know of there importance. But I have a method to my madness. I am trying to incorporate the ideas in a logical easier to put together fashion. What effects what to form the price action.

Also I am aware of MT4 and the availblity of software to Use with it. It is the preffered platform for programers hence a lot of ready stuff is out there to be had. But I don’t use MT4 and I also DO NOT use indicators only one. Which I will also get too.

     Good Trading to All  Ken Lee

n a scalping situation (since you showed the one minute chart) this would be a HUGE giveway

Yes I do Scalp I also trade longer times if you had actually read my thread you would have seen the part that says. I look for trades on all time frame charts for all times of the day. To do so you will have to scalp… Because at times the price action is very narrow and requires a quick in and out. I
look for the SMOOTHEST action to trade. Where ever it may turn up . Be it a 1 min a 5 min or a 15 min. I do not yet trade longer than 15 min. To trade the 15 min a will study up to a 4 hr chart for levels of interest.

I apreciate your comments, though they keep dragging me off topic and sometimes as the last post don't make sense to me . I apologize if this thread is below you but it as much for me, as we are always told to write down our trading plans and that is basiclly what this is. I am just putting down everthing I look at to arrive at my choices of different trades, and showing what makes up price movement and gives us the edge.

I continue to welcome your input. I would just ask that they pertain to what we are discussing st the time…

                  Thanks Ken Lee   ;)
50

area of confusion

you state you use LINE CHARTS, but you show candles.

i have read your posts, which is where “line charts” came from, and either you made a mistake, or i shall go back to “english 101” for a refresher course !

if indeed you stated you use line charts, my statement rings TRUE, as line charts SHOW increasing or decreasing strength in better ways than candles, but like heiken ashi candles, DO NOT show the top or bottom of a move very well, thus precluding TRUE profit taking.

so DO you use line charts or not ?

thnx

mp

51

Mr Lee

Thank you for your posts. I enjoyed your posts this far tremendously. I am so looking forward to your fibs. Please continue.

Waiting in anticipation.

52

Mr. Lee,

I also want to say thank you. I have been reading your thread and find it is easy to understand and transfer to the live charts. I look forward to your continued discussion and encourage you to not be frustrated by those who would try to distract you from your mission.

53

This seems very much like the method TRO has posted in the NEVER LOSE AGAIN thread. Also, Breakout Bounce is one of TRO’s ebooks. No, I am not accusing you of anything so do not get me wrong. Do continue. Perhaps, you have something to add to this method.

54

Mp I read threw my entire thread never was line and chart beside each other , I did make a comment That trading trendlines was easy because all you have to do is place a few lines on a chart.

     But as far as charts  go I have always and will continue to only use Candlesticks. Sorry for the confusing.. But I am teching what makes price move not what peopel should trade at this point . As I said in the begining this is a progressive thread moving from simplest to more detailed information and would not most likely interest more seasoned traders.

Pipgobbler; I have Read a bit from " The Rumbled One" never a e-book though trendline breakouts and bounces are nothing new. I was always interested in his stuff but all most all of it ended with a custom indicator as he was a confessed professional programer and I don’t use MT4 or a programable Platform. I read a lot of trading with HEAT. But couldn’t wrap my head around it , without the indicator. He did have one called just trading a horiziontal line that was pretty interesting, although I never really tried it.

     But as I said in the begining this is a collection of information mostlly accumlated through and around babypips. Just my interpatation of it and the way my thought process applys it. So I am sure it is all familiar as it is nothing new just laid out in my words.

I will try and get started on Fibonacci now , my charts have been down for maintenance today,

                      See you later, Thanks for Reading   Ken Lee  :)
55

having re read your thread i must agree with your “candles” statement.

where i got the idea of a line chart must have been from another thread and lived in my confused mind for longer than a few seconds, throwing the situation over to you !

MY APOLOGIES for my stupidity and poor memory !

mp

56

Thanks for your reply. What platform do you use?

57

What a gentleman. So nice to see manners.

58

No problem MP Isn’t like we all don’t make mistakes every once in a great while…:smiley:

Pip Gobbler : I have accounts with GFT and Oanda. Use them for different styles of trading , One longer term faster on the other, The price action seems faster on Oanda , but I like the Charting package on GFT , Which is the chats I have been posting.

Hopefully tomorrow will start with the fibonacci section charts still offline…

  Have A nice Evening .... Ken Lee     :)
59

Thanks Kenneth! :slight_smile:

60

Do you know why “The Rumbled One” get banned???

Does anyone know?

Thanks!

61

YES we know and if youd allow me to pm you, i will answer !

mp