There is an argument to be made for using a filter chart (longer time frame) and only trading in the bias of the filter chart on the smaller charts and it is a valid point.
However, in my experience, there are great trades to be had with the longer term trends and against it. Over 100 random trades i’m sure it probably would average out to be about the same outcome.
I simply trade in the context of whatever chart i’m looking at. If the trade isn’t valid on a 30min chart, but is on a 4 hour chart, then in the context of that 4 hour chart, why not take it? I just haven’t really found there to be an edge with trying to use a bigger daily or 4 hour trend to establish my entries.
Makes life too complicated!
If you did want to do this - and the scenario you outlined did happen (one is in uptrend, the other downtrend) you just need to sit on the sidelines. Thats the entire point of filtering trades with a longer term bias.
When in doubt, take the bigger grid, or, better yet, measure both grids and look for confluence between the grids.
Image 1: Big Grid - Price action obviously respecting that grid.
Image 2: Smaller Grid - Price action respecting it, but respecting a higher level.
Image 3: Note the confluence at the 61.8/75 levels with both grids? Thats where I would want to get short.
Daedalus has referred to this before but I thought that this was such a good example it was worth repeating. Irrespective of higher timeframe grids the position you are in is always subject to 2 different fibs in operation. I went short after the 78.6 retrace of the downtrend. When in turn that peak falls 78.6 your fib comes into play again and becomes a high probability turning point which on this occasion was tradeable in its own right. Although my profit target is the 38 area there is an arguement that to make the approach logical the better target might be 23. This squeezes the most out of the trade while having you on maximum alert for the turn
Just to complete this idea the same relationships are apparent if you focus down on the retracement at the end of the H1 fall. This is clear on the 15M shot. Important then to note where we are right now (shot 2)
Great Posts Tony! Thats a very important point! There are always two grids competing with one another and we need to be cognizant of both if we want to be successful in the markets.
i took the GU trade yesterday and didnt know where to set my profit target cause of the two grids in play. what would you do then? just take the 38% to be safe?
My initial target is always a significant nearby SR zone or the 38 level. I look to see what price action does at these gateways and dont always get it right as my early exit on EY yesterday showed. In testing though if you just exit at 38 you have a winning strat
That last graph makes it seem like 3 grids are in play…no wonder my win-loss ratio hasn’t been very good lately…or is it because of all the stock market kaos playing with the trends? Otherwise It’s been hard to determine which trend I’m in
But that does help a lot as I had just noticed it myself, and I thank you for your confirmation. Thanks Now I just have to practice some more.
Entry this morning on EY. You dont need an indicator to tell you that the upward momentum is slowing. Once we are in the 78.6 zone we are looking for a turn. This is riskier than normal because the failure swing on the way down may indicate the H1 is turning up but in my experience there is no way of truly knowing and even when it does we often get a successful trade. Keep a close eye on this though and get your stop to break even as soon as you can reasonably do so. This is an evening doji star (reasonably rare). It is not quite classic as candles 1 and 3 are a little shorter than you would like
Sweet Pip, just remember what timeframe you are currently aiming for. I look for a strongly trending 4H. So on EY and GY at the moment that is incontrovertibly down. I am therefore looking for short trades (although will occasionally take a long against the trend). I then drill down to the H1. I am primarily looking for a 78.6 retracement of the major and obvious peaks and troughs on this timeframe. I then move down to my 15 min where I am looking for a reversal signal or for a retrace that is so close to 100% that I can get in with a tight stop. I have posted the charts for this mornings trade to try and clarify it for you
ok ive going through your risk management daedalus. lets say i have $1000, 100:1. if i trade a mini lot and the distance between the 61% level and the 100% is 100pips, when i get stopped out i would be down 10%. Am i right? is there a way of tweaking the risk a bit?
If I enter at a 75% retrace, I move to B/E at 50% and take profit at 38%.
If i enter at 87% retrace, i move to B/E at 61.8% and take profit at 50%.
In either instance i’m still taking roughly 30-35% on any given setup worth of profit. My stops are place just above the swing high/low. So to answer your next question…
Yea, you’re right. If you don’t want to take the 61.8%, take the same signal on a 75% or even 87% retrace. That should limit your maximum loss, and still yield the same gains.
And if you want to limit your risk on a grid… DON’T TAKE BIG GRID PLAYS THAT YOU CAN’T AFFORD TO LOSE ON. If the risk is too high for you, sit on the sidelines and wait for a setup that you can stomach. It will come.
I personally will play any of the grids for entry (61.8, 75, 87) as long as the grid holds and i see some signs of a reversal why not? I figure i’m just getting it at a discount up above.
The harm is that I’m supposed to be working, not trading currency :D. Being friends with the IT guy, I’ve been warned that the company has just put in a system to spy on what employees are doing over the net. I hope quit my job someday (when I’m consistently profitable in forex), but I’m not quite ready to be fired yet.
Oh well, just thought I’d ask.
By the way, I read a post you wrote somewhere where you mentioned the forex factory. Thanks a bunch for that. I meandered over there and found a wealth of stuff. (Hmmm… I hope it’s not against forum etiquete to mention/praise another forum. Babypips is great too, but you can never have too many sources of good info.) If you frequent that site, I’m sure you would have found it already, but just in case: There’s a great thread called James16 Charts, and he mentioned some of the stuff you covered here with fibs (among other stuff). He does some fibs acrobatics though… Overlapping several grids, mixed in with some pivot points, peppered with some more price action and stuff. Anyways, as I said, if you’re over there a lot, you couldn’t miss it. But just in case, here’s the link: james16 Chart Thread .
Ok, here’s the continuation of the chart in Tonymand’s 01:38 post of today’s EUR/JPY (…hope you don’t laugh at all the indicators I’m using :o)
So after moving my focus to the bigger grid 157.ish/152.ish if I understand correctly, I should go short around the 78.6 grid line…right?
So I did. But not just EY but GY & UY too (as they had basically had the same setup…take a look!). I set all t/p to the 23.6 grid.
Little while later I was up 60 pips ($280) heading to the 50 grid, and I thought wow! But then it started to evaporate back down to -25 total. Now it’s up again to $75…hovering at the 61.8 grid…and it seems to be stuck.
“So which way is it going to go?”…I ask. Any wagers But sersiously, If anyone would like to critique this setup, I’d be happy to know. I see the Stochs, Macd, Awesome Oscillator and 4 HAS Bars all seem to indicate it’s good to go down. (I wish they had a fingers crossed icon here). Only the RSI is > 50 but not by much.
Hi Sweet Pip - get rid of the indicators (you probably knew I would say that!). I have moved my stop to break even and we will see what will happen. No one knows for the individual trade. There have been no obvious exit signals for me its just rather drifting around. It was up 2R at one time and that was handsome and could have been taken. All we know for certain are the statistics based on backtested methods and watch for reactions around main support areas. At 2R I could have taken all (as I did yesterday), half and trailed the rest or go for all or nothing which I have today as there has been no strong pullback and we are not at a major support. Its just a matter of having a plan for these things. Remember the 50% pullback so far is well within normal trending behaviour. This trade is riskier than yesterdays in my view because of the failure swing at the low so we are no longer following lower low behaviour and this could be the start of a turn on the H1 but it is now a free ride
:eek: OK…I couldn’t take it anymore…little spurt down just now got me over $350 profit …so I closed the trades. They mostly all touched the 50% line, so with my daily goals in mind, that’s way more pips than I needed, and that’s a good thing (…but was it a “good deal”?). Time will tell
As you can see Sweetpip we are still heading down and this area is playing out like it did yesterday. One thing you might consider though is you have opened trades on 3 correlated pairs so you have tripled your risk. You might want to close one or 2 positions if you are overcommitted to what is essentially the same trade.
Just read your post as I was completing this. Sounds like you were overcomitted
i took the USD/JPY trade yesterday on the hourly chart right after it tested the 61% level, it hit my profit target at the 23% level. i wanted to hold on a little cause it seemed as it had more momentum but i was disciplined and closed the trade. good thing too
Couple of very nice opportunities on UC tonight (didnt trade them unfortunately). Being less volatile it responds better to a 61.8 retrace and exit at the 23 level although you have to be careful about it snapping back at the 38 area. As you can see the 4H is down with TL break and drop through support. The second trade could potentially still be ongoing
Now I just have to practice some more.
(as they had basically had the same setup…take a look!). I set all t/p to the 23.6 grid.
But sersiously, If anyone would like to critique this setup, I’d be happy to know. I see the Stochs, Macd, Awesome Oscillator and 4 HAS Bars all seem to indicate it’s good to go down. (I wish they had a fingers crossed icon here). Only the RSI is > 50 but not by much.
