Very busy this morning. I took large positions based on 4H and daily CBL’s and trend line breaks yesterday. My observation is combining a retracement trend line break with 4H and daily CBL’s as well as another good reason to enter the trade produces a fantastic swing trade entry system. The retracement trendline break might not be required, but it’s part of my trading plan from years ago and changes to my plan are evolutionary after being carefully tested and proved in demo like CBL entries, not revolutionary like scrapping a system that works for me.
All these trades were taken with tight stops, 35 to 45 pips. I am very close to completing enough demo testing to be able to change my SL and exit method to Tymen’s PSAR BB Midband method as detailed in his thread, The Finest in Trend Trading. This would be a huge change in my method, so it will be demo tested for a long time before I can start folding it into my trading plan, but results so far are fantastic! Soldier on everyone. It’s worth it.
Graviton, I cant believe you will let your trade breathe !!!
While I was stading your thread I have agreed, that the better is to take profit and reopen trade at the end of retracement(at retracement trend line breakout)
even more better is to trade retracement in particular on higher TF. :rolleyes:
what would you do with your multi lots at retracement??
isnt Tymen’s PSAR BB Midband method a retracement breath???
RenaLa, I haven’t completed my demo practice with Tymen’s method yet, so I can’t completely say how it will fold into my trading plan yet. I always give trades room to breathe, the question is how much and when. I probably can’t change the way I initially manage an entry. I’m just too old to change that now. But I’ll probably use Tymen’s system to trail the stoploss once the PSAR crosses my usual stoploss, and then swap to the mid band as he recommends. So no difference as to how I enter a trade, or add a lot on for that mater. But trailing the stops might be done a little differently. We’ll see.
Like I said, it will take lots of demo work for me to sort this out. If you have something that works well for you most of the time, I’d be very slow and careful about changing it. It takes a long time to determine if both things work equally well, or one is better than the other. Sometimes one thing works better in some situations, like high volatility, and something else works better in slow markets. If you need something that will work for you though, you might try Tymen’s system in demo.
Both cbl and trendline break often happen at the same time. Then I count the cbl and trendline break as two good price action confirmations of the trade and I only need one more reason to enter the trade (to follow my rule of having three good reasons to enter a trade). If it’s only one or the other, a trend line break OR cbl, I need two more good reasons to enter the trade. Just my rules. You need to come up with some that make sense and work for you.
Yes those are good rules. I add one more which is direction of the higher TF trend and stochs. But stochs is secondary as its a lagging indicator.
Haven’t been a good week, its mentally draining.
Graviton, I remember reading that years ago you used to scalp on the lower time frames, and that you believed this helped you with your entries. To someone that was trying to practice/drill their entries to get them solid, would you recommend scalping 5M/15M charts (on a demo) as a way to get a feel for it? Or is there any other form of practice that you would recommend (aside, of course, from practicing normal trading)? Do you have any thoughts on the use of simulators – good or bad?
I have prior experience with trend trading, etc, and more often then not I’ve found that I can get the longer-term movement correct. However I have no experience with scalping, so entries are my weak point. I’ve been working on drilling them in so that I can take advantage of riding those trends with tighter stops. I don’t think this weakness is due to any lack of knowledge regarding your method, I just haven’t developed that “feel” for the short-term charts yet.
Where I’m at: I’ve been demoing with tight stops for the last two and a half weeks. It has been frustrating, but I’m getting the hang of it, and I’m practicing every day (simulator on weekends). My weekly average on the demos is slightly above break even, so obviously I haven’t been able to catch any trends on demo yet. During the weekends on my simulator I have been able to catch a couple of really nice moves – I had the pleasure of moving one of the 15M entries up to a 1Hr, and then a 4Hr as you described, and it was an incredible feeling. Even if I can learn to do that once a month on a live account, and breakeven on the rest of my entries, I will be a more profitable trader than I’ve ever been with wide stops.
I’m not looking for specific advice as far as your trading methods go, because I know you’ve already went through great pains to spell all of that out in this thread. I’m really looking for specific advice as far as your philosophy on developing as a trader and getting better at weak areas so that I can apply that to working on my entries. Any advice that you could provide would be greatly appreciated.
Yes, I’ve discussed entries a lot. Keep a journal and rate each entry as good or bad, say if it goes 10 pips for you (excluding spread) before it goes 10 pips against you, it’s good. Write down your three good reasons for entering every trade and look for things in common in good trades and use those.
For, demo practice, it doesn’t matter what chart or TF you trade, though my method only works well for 15M and above for me. For demo, you can even trade multiple time frames in the same pair. Trade gold, sliver, Mexican peso, 15M to daily, anything to get lots of entry practice. Just keep track of it all. You can easily get 20 to 30 trades going at any time trading multiple time frames on all pairs. Probably 4 entries an hour or more. Follow the trades to conclusion just as you would real trades. You’ll find that some reasons for trading, like trading with the trend on your home chart, or at least not against it when it’s strong, will produce more wins than not so valid reasons to enter, like what someone said on the TV. It’s very intense practice, but if you do it you will see your good entry % improve week to week. A good entry % of 50% is not a bad start. Mine runs about 70% and I watch it carefully because if it drops it indicates I’m getting lazy about picking my entries. Measuring your improvement is the key.
I’ve not found a simulator that can simulate market psychology, but if you have a good one, great.
Thanks, having a benchmark percentage to shoot for will help me a lot. Even if I could get it up to 55-60% I think I would be very happy… then I stand a lot better chance of consistently getting past the +10 pip point and onto an actual trend.
Also, the simulators that I have seen aren’t really “simulators” they are just replaying past prices. So you can go to April of 2007 on the AUD/USD, or October 2006 on the USD/CHF, etc, and enter/exit trades. It doesn’t feel the same as demo trading, though, because you can’t see the real time news and you have the option of increasing/decreasing the tick speed (which probably makes you “more patient” than you really are since you can just fast forward).
EDIT: I have always kept a trading log, but looking back over mine now I just understood the beauty of all the specific metrics you have had us add to our logs. When you look closely you can literally see where your trading is doing good, and where it is doing bad, so you always know exactly what to work on. In this case, it is evident for me that my problem is entries without even looking at my log, but after this problem is resolved I will have another bottleneck, and to resolve that I can simply look back over my stats and decide what to work on next. Profit too soon? Too late? Not catching any trends? Etc. Very nice.
Brad – I can confirm that focusing on it over the last 2 and a half weeks has helped (it’s just been slower progress than I would like). I think I’m going to just have to devote more time to it if I want to improve faster. I’ve done a lot of research/reading on the issue and it seems to really just comes down to screen time.
Yesterday I decided to make a new rule for myself, I won’t end the day until I’ve got 3 good entries in a row on demo (or simulator if necessary like during illiquid times). In a few days it’ll be increased to 4 in a row, then a few days later 5 in a row, etc. One interesting thing I’ve noticed is that after 2 good entries in a row, when you are trying to hit the 3rd one, it puts you in a pressure situation and forces you to calm down and focus even though its just a demo. It feels just like stressful live trading situations. (Everyone can probably relate to this – think back to high school whenever your coaches did this sort of thing to you, i.e. you can’t leave practice until you hit 10 free throws in a row… the first few are easy, and then the last ones feel like a real game)
Brad, do you have a written trading plan? Are you keeping a trading journal with your stats? What is your good entry %? What is your win/loss ratio? What is your risk reward ratio? what is your MAE? What is your profit taking efficiency? Are these measures improving with practice?
Here is Greg’s look at the usd/cad. He does the reports three times a day and on weekends. There are many pundit reports on the web. I think Greg’s is good, but remember, pundits are only right 45% of the time. If they ever get over 50%, they become traders:
I was up early this morning, running all the numbers for the previous weeks trading. That’s all done now and it’s getting close to lunch. I put a huge amount of time into my trading, but that’s mostly because I enjoy it and it’s all I have to do now that the kids are grown. Typically I’ll put 70 to 100 hours per week in and I’ve been doing that for decades. So anyone who thinks trading is fast easy money probably needs to think again. I haven’t seen many traders who are successful with less than 1 year practice and for most it takes 2 to 5 years to be consistently profitable. I know many traders that only trade the daily chart and are very successful with just a few hours a day after work during the week and lots of work on the weekend. But almost all have studied and practiced for several years to become successful. Every successful trader I know is highly organized and tracks their numbers very carefully.
My numbers this last week were all very good. Profit in pips was one of my highest ever. A big part of those profits was due to a floor trading technique of front running the large traders. Large traders trade such large size it takes them time to scale into and out of their positions without moving the market against the direction of their trade. If you can figure out when they are going to have to buy to cover short positions as the market is moving sharply up, you can get in front of them with a large buy since they must move slower, then after they have covered you can get out with a nice fat profit as the buying pressure slacks off.
Friday, large traders positioned themselves short ahead of Euro bank stress test results. The Europeans love to gossip to the press and about an hour before the official results were announced news leaks were that the results would be good. I bought in with a large position on eu, ej, gu, gj and waited. I had a large stop loss at 2 X 1H ATR to ride out the inevitable volatility of the announcement. The initial announcement caused the market to swing wildly up 50 pips and then down 50 pips and then back up slowly. I wasn’t really trading the news, I was trading the belief that large traders were heavy short and would have to cover before close on Friday. Sure enough, after the initial swings were over, price worked up as large traders started to buy to close their short positions. Price only moved up about 120 pips from my buy-in, but I pyramided up putting on additional lots as the close approached. I took everything off fast at the first sign of weakness about an hour before the close. One of several good trades during the week, but a nice way to close the week.
I have lots of studies planned for the rest of today including studying charts of all the pairs I trade and finishing a book that’s not that good, but I’ve read the first half so I’ll finish it. Perhaps I’ll post another entry technique for those who like to have a tool kit full of them. Happy Trading
On Saturdays when you study the charts of the pairs you trade, are you typically looking back over the last week to try and find any new patterns/tendencies/etc? Or is there something else you’re looking for? (I know you’re also looking at your good/bad trades, but I’m assuming this is something different?)
I select trades out of a total of about 20 pairs during the week, but some I don’t trade for long periods because they are not trending well for me. The pairs I trade most are eu, ej, gu, gj, au and aj. I have those charts memorized and I just look at them again briefly and make a few short notes. Some of the others that I haven’t traded for a while get a little foggy, so I will go back and study the charts, starting at the 1 month chart and working down, looking for trends, patterns etc. Sometimes when I’m finished I believe there will be a good trade next week if certain conditions persist or develop, a set-up. I put that pair and the time frame and the set-up I’m watching on a watch list and I’ll watch it all next week. Since I trade longer TF’s, it’s easy to glance down my watch list to see what’s happening with them several times a day during the week. In the end, price either confirms or refutes my belief about what it will do and only then do I take the trade.
This isn’t the only time I’ll open the charts though. As the weekend rolls on I’ll read opinions on pair pricing all over the web and will re-open charts many times to reference what they are doing as I read. That’s why you need to always be able to access your charts, even if the market is closed.
Which group of large traders are you referring to here Graviton? & where are you obtaining your info regards positioning.
Cable was offered in strength on the approach to 1.55 from last week & EURUSD was on offer at 1.30 from mid month.
BIS, one or two notable East European sovereign names & the Chinese were visibly nibbling (bid) at 1.27 & 1.28 on Wednesday as order books continued to slip on profit taking, but most firms have been neutral/bullish running into the Stress numbers.
In fact appetite for Cable especially was surprisingly positive all thru Thursday as evidenced by the techs & the usual (smart) candidates were accumulating it into Tokyo & early London business on Friday.
This was the exception however, as most desks were reporting unsurprisingly thin deals into end of week workloads.
Retailers with their heads screwed on could have legged into a bargain deal on Cable longs Friday, but that was begging to be hit Friday morning.
thanks for this link of Greg Michalowski, as I am Greg too, it’s natural for me
interesting thing is than his approch on H1 Tf is same than mine, I trade with fibo, wait for pull back on 38.2 and 61.8 if happen and tp1 is at 100 %, tp2 on fibo expansion.
I try since I read Tymen’s thread to find better ratio to my method adding CBL method, not easy at this time but if you look at this H4 example chart you can see the 61.8 level buy entry is an CBL too, that’s what I am looking for.
Work is not finished yet, but interesting to study this way.
So it’s my first post on your thread, but i take pleasure to read it when I can, only thing is my native language is not english and you are very prolific in writing, I think i increase my english too reading your texts
The shorts were large positions by a few NY firms. The usual suspects. I believed that if news was bad they would hold over the weekend and if good they would close. So if the news was bad I’d join them and hold over the weekend and if good I would front run their buys to close their shorts.
