Jack,
The technicals don’t change for me. In fact technicals become more important as market participnats react and attempt to second guess the next big “doom & gloom” news release.
I am currently riding a nice BB walk on the USD/JPY pair which I got onto around 2000 GMT. Like you, I missed the “crazy” time but saw an opportunity due to excessive flight to the Yen by panicked big boys.
It’s done a few retraces since then and each time I take profit on all my lots when the M1, M5 & M15 tell me a retracement is underway; then put new ones back on at a cheaper price when the trend resumes. It just so happens that this approach is working well for me today on this pair during its expected bounce back to “normal” levels.
In the FWIW department: I step aside when I see activity such as today’s. I don’t know how to interpret the volatile action on the streets (e.g. in Greece) in terms of what might happen in the 4X markets. I wait for things to settle down, not only 'cuz I can’t make that connection but also because the action is happening much faster than I can work with, given my H1 orientation .
was trading on the EURJPY today on a nice downward trend. I would make the trade, and by the time I had then numbers for my SL put in, it was time to add the next trade. I would add the trade, move the original SL to a bit above BE, and have the other stop set, and the trade would retrace, wipe out both trades, and then go back in the original direction.
I was using a 20 pip SL and 20 pip to add a trade…
This happened 5 times.
The PA is still going short at this minute. Is there any advice on how to deal with this??
The problem is that a “fixed pip” method for Stops and entries is being applied; yet the pair is extremely volatile right now. You may wish to try either the Parabolic SAR or ATR approaches which have been mentioned in this thread. These methods allow you compensate for volatility.
e.g: Place your Stop 2 or 3 ATR’s away from the current price. If using PSAR, instead of trailing stop at 1 PSAR point away from price, trail it at 2 PSAR points.
Also, watch the M5 & M1 TF’s and use them to time your entry. Apply a stochastic filter to the M5/M1 TF which will help as well.
Lots of questions about yesterdays wild market swings. These type days only happen once every couple years on average. The last I remember was back in 2008 when banks and stocks were failing. So it’s not something you need to worry about happening to you very often. In general, if you are not comfortable with market conditions, step aside. There will always be better days to trade ahead. The rule is, when in doubt, get out.
Several questions about stops and some good answers provided. Thanks to those contributing. Fixed stops just can’t withstand price action like we saw yesterday where volatility can explode over just a few minutes, settle back to normal, and then suddenly explode again. I’ll normally trade 20 pip stops for NY+London session. When I did my market analysis Thursday morning for me, I could see a lot of volatility in the market and I added 5 pips and went in with a 25 pip stop. I was quickly stopped out and went back in with 30 pip stops and those held until the Euro went wild and the Dow dropped 900 points. I had to widen my stops to 60 pips at one point just to stay in my good trades. That is very unusual. As things settled down later I dropped them back down to 50, 40, 30, 25 and finally 20 after the NY session. Wider than the 12 to 15 pips I would normally run after NY and before Asia, but not by a lot.
After being stopped out of a thousand good trades for running stops too tight, and not being stopped out of hundreds that you wish you had been, you start to get a feel for market volatility and when you need to loosen or tighten stops. Some have suggested using PSAR and ATR indicators as a guide to correct stops and both of these are good tools for your trading kit and you should be very familiar with both. But the fact is unless you have traded the markets for many years you could not be expected to understand and react properly to a day like yesterday.
The perfect stop setting leaves you in the good trades and takes you out of the bad ones. I wasn’t stopped out of any of my good trades during the market madness, but I did exit one trade early, EURJPY at -10 pips, due to it’s going the wrong way for me (better to admit I was on the wrong side of PA). The best advice I can give is that if you are comfortable with the price action, time of extreme volatility can be times of great profit. If you are uncomfortable with it get out. Anytime the price action doesn’t follow the picture you have in your head for it, get out. As time goes on, you’ll be more and more comfortable with these extreme days and even be able to paint a good picture of them to follow.
As for today’s trading, I will wait until the jobs report has come out and the market has settled a bit before I go in. Unless you have done lots of research and are very comfortable trading that news, this may be another moment in the market that you’ll want to sit out. By next week, if Greece doesn’t default, the market should settle back into more normal patterns.
hi hachiko,
I didnt know you are familiar with MT4 language
I just have found the thread “set and forget”. I was reading it
You may want to take a look. I have just download EA and I will tryt it next week. http://forums.babypips.com/free-forex-trading-systems/18300-set-forget-ea.html
Interesting is there a way to programm squezes trades ? what do you think?
btw, what time is in asia, it seem to me that you are like owl :rolleyes:
but I still may wish something for you too
There is a code that uses 3 MAs only if we could modify that with tymen’s A_Dicrection indicator, we defiantly can be more successful
its night overhere, til tomorrow
With all the volatility of the last couple days, we’re still getting lots of questions on stops. If there is a magic formula that always works for any pair under any market condition, I haven’t heard of it. Often, I have a hard time putting some things into words that seem clear to me after so much practice, but I’m going to try again because it’s so important. For trend trading, we’ll start with a definition of a good stop as being one that keeps us in good trades, defined as a trade trending with us; and a good stop takes us out of bad trades, defined as a trade trending or changing to trend against us. That’s a lot to ask, but fortunately we have some tools in our kit to help.
First of all, we know what range of stops usually work well in a “normal” market for a 30M or 1H TF. We know on a calm day, stops of about 25 pips are good for a London + NY session. About 20 pips are good for a NY only session. Stops of about 15 pips are usually good for after the NY session, 15 to 20 pips for Asia only, and for London only, 20 to 25 pips. We just know this from collective experience. If you have different experience, just substitute your own numbers.
We know we need to add some pips for a volatile day, but how many? As Hachiko stated above, the ATR and PSAR can give some good clues if your stop is about right. If I see a very volatile day, I’ll immediately add 5 pips to my stop. If I’m trading a very volatile pair on a volatile day, I’ll add another 5 pips. That gets me “in the neighborhood” of a good stop, but we want to do better. We are looking at a range here of 15 to 35 pips and that is still a wide range. There is another way to examine stops and try to narrow the range a bit.
Our goal here is to trade nice long trends and we have to stay in them to trade them. An uptrend is defined by a series of higher lows, not higher highs. A down trend is defined as a series of lower highs, not lower lows. This definition of higher lows for an uptrend and lower highs for a down trend can help us set our stops. Tymen has already told us how to do this, that is, set the stop under the extreme candle for an uptrend (the last higher low), and above the extreme candle for a down trend (the last lower high).
Sometimes this works out fine. You already think you need a stop in the range of 15 to 35 pips, and looking at an uptrend case (just reverse everything for a down trend) you see the last higher low will require a stop of say 24 pips including spread. This is near the center of our range and if we get stopped out, it was probably bad timing or direction of entry, not a bad stop. If Tymen’s method only requires a stop of 15 pips including spread, you get off light on that one. No need risking more than necessary. But you do want to use common sense. Compare that stop to ATR and look at the location of the PSAR stop. Also, consider what session you are trading. If you are trading in NY + London, the PSAR stop is +40 pips and the ATR is high, you might want to add a bit more to a 15 pip Tymen stop. In that case I would probably go with my experience of needing a 25 pip stop for a NY + London session anyway.
But suppose it’s the other way around, as often happens. Suppose that to put the stop under the last higher low on our home chart, or under the extreme candle, it will take 47 pips including spread? We know that’s higher than our usual range. Is the market really that volatile? When the DJI fell 900 points yesterday, for a while, yes it was really that volatile. I was running stops of 50 to 60 pips to stay in trades moving over 100 pips in 30 minutes, but that is a very rare case. In the case of using the H1 chart as the home chart, I’ll look at lower TF’s, just to see if I can get a tighter stop if I think that’s reasonable.
I’ll drop down to the 30M chart and study it, then if necessary drop to the 15M chart and study it. Since the 1H extreme candle is made up of 4 15M candles, I can often see a higher low on a lower TF that will allow a stop that I consider to be in a reasonable range for the volatility of the pair. Sometimes the bottom of the higher low candle on the 1H chart is also the bottom of the last higher low on the 15M chart, so I will move down to the 5M chart that has 12 candles for every 1H candle. Generally I can find a higher low on that chart that seems to be in a reasonable range. Of course if your entry is for a 4H chart with TP1 at 60 pips and TP2 at 140 pips, you may decide in the end that a 47 pip stop is very reasonable.
Like everyone else, if I push this technique too far, I’ll have a stop too close and get stopped out of what in hindsight was a good trade. If I don’t even try to optimize my stops, I’ll wind up occasionally getting stopped out for more pips than I should have risked in that trade. In the end, if I can’t justify the wide stop for a narrow profit potential, that is to say the risk is too high for the reward of the trade, it’s best to pass on that trade. I pass on many more than I take.
I know this might all seem difficult, but after doing it many times it becomes almost a reflex. It usually only takes me a couple seconds to set a stop, and if I have the time I will review that decision after I have entered to make sure I haven’t made a mistake. That’s about all I can say about setting stops. I tried hard here to analyze and write down something I do in a couple seconds almost out of reflex. I’m sure I probably left something out. If anyone has something to add, please do so.
do you have pairs that you “hate” . . . thought first they were trending, but found eventually that they’re not? Or at least, generally, they are trending pairs, but just ain’t worth the time anymore because they’re such a mess when they get choppy.
RenaLa,
I am a night owl; that is true. You have to be if trading Forex when you live in Asia and you want to trade both the London and NY sessions.
I don’t know mt4 but have coded a little in some other lanuages and the principles are pretty much the same.
To date, I have never considered EA’s for my own use. I am of the opinion that we are up against lots of very smart people who get paid a lot of money by very big institutions and if they can’t get automated trading right; what hope do a couple of teenage newbie hackers have playing around with moving averages. :rolleyes:
Thanks for the link. I think my biggest concern when I read through that thread, is that people pop up, say it works great for a week and then you never hear from them again because their accounts have blown up. You’ll notice the thread starter last posted in Jan 2009 and hasn’t been heard from since.
Now, if someone can write an EA that uses price action, Bollinger bands, count back lines, candlestick reversal patterns, multiple timeframes, trend analysis, volatility, scaling, low draw downs and good money management; then I will be interested. (Maybe the people in this thread could all work together on one, then license it to institutions and retire rich. :D)
Until then, I remain a humble human, subject to emotion, ill-discipline, fear and greed. But for all my faults, I have one thing in my favour, judgement.
) which moved it to the right hand side of the screen and added colour. Hope this helps you understand.