Excellent thread MasterGunner …look foward to R&R strategy
what kind of results was he getting?
i havnt heard from him but i have been reading his posts all over the place and yes he seems to do very well
mg99, I am looking forward to your R&R strategy. Its been a great thread so far.
The above illustrates an example of an R&R. Take note, that there will be no discussion of any indicators or oscillators of any kind. Nor where there be any mention of trend lines, horizontal lines, or Fibonacci lines. This is nothing but pure price action.
When looking for an R&R, the ideal set up would be around an area of known support or resistance. This is not a hard-lined rule as you can still take advantage of them in other areas. However, when trading you want to give yourself the best advantage possible against the market. When you can greatly increase your edge, your win rate ratio increases. This can play a dramatic effect on one’s psychology in the market, as losing can pose a negative effect on a lot of us.
So looking at this picture, the area of resistance has been clearly defined by three doji-ish candles that appeared last week. It was after that third candle that I actually placed a limit order to go short. The trade, expired however as price continued to rise. Which brings up a quick point as it is a good idea to always wait until you know where price is going, not where you think price is going to go.
Price eventually shot up. But then two candles after the three dojis, what do we see. Price tried to make a new high, but was completely rejected. So much that it started to reverse and become a bearish candle. It was at this point that another limit order to go short 10 pips below the low of this candle. Which was eventually triggered. My stop was 20 pips high above the R&R candle.
Now, while in the past I’ve made mention that I only post relevant real time examples and not trades that I’ve done in the past. The only exception I’m making here is because an opportunity to go short again has made itself present.
Yesterday’s candle did the same thing. It attempted to make a new high, was rejected once again, and reversed. This time the reversal was stronger than before. It even closed below the low of the previous candle. Price clearly here is demonstrating that it’s going down.
And finally, we see the current candle. It did a retrace, but ran into the resistance that was earlier mentioned in the beginning of this post. It shot back down and is now threatening to break the low of the previous candle. If it does, a good short opportunity will present itself.
If you’re the risk taker, taking a short at the point of resistance would be a good move as it would have added another 50 pips or so to your profit. However, for me, I’m willing to wait. I’ll take the short 10 pips below the low of the previous candle.
Again, I just want to know where price really is going. I don’t mind walking away from the table with pips left on it. Stop loss could either a bit above the resistance we first mentioned or the high of the previous candle. Take profit where you can. I don’t fall into the trap of thinking that I need a hard lined risk/reward for every trade. It’s in general a good idea, but if you’re closing your trades when you should, and taking profit when you should, you’ll be okay in the long run.
Now look back throughout this picture above. How many other examples can you see where a simple R&R set up would have paid off nicely. And you didn’t even need a single indicator to show you how to make money in Forex.
Trading Naked at its finest.
Great post & I agree that Stop orders suit me better than jumping in immediately. I also see a triple bottom from 3/13-4/15, price boke through the dbl top of 3/24-4/8 and after some consolidation price had a good run up. And of course one could have traded the channel created by the 3 bottom 2 top area.
I used to drive myself nuts trying to determine where a line of support or resistent should be until I read in in one of the Technical Template threads where one of the sisters said to think of a S/R “zone”, that allows some wiggle room.
Hope I didn’t stray too far off topic. A good post such as yours activates the thinking cells.
Nice post, but i dont see how the R&R is any different then a normal pinbar setup … ?
An R&R can be a pinbar. However, not all pinbars are R&R’s. I prefer the candle to bounce off an area of support/resistance and completely reverse to either a bull/bear depending on the direction the trend was in.
You mention a normal setup, so perhaps you trade your pinbars in a similar fashion. As mentioned before this methodology has a variety of names and rules surrounding them. This is my interpretation of the price action at hand.
thanks for the reply … so an R&R would be a candle that bounces of resistance and reverses into an opposite trend candle. for example if the trend is bearish and the R&R candle hits support and turns into a bullish candle then you would look for long trades. When you say wait for the R&R to turn bull/bear are you refering to the colour of the candle. So for the example above the R&R candle would be green. Or is there another way you identify an R&R candle ?
Dan
I wait for the candle to close with the opposite color. The candle above-mentioned would be red, which at the time of the original posting it was. Price had retraced since then and my order was never filled.
btw what currency and time frame was the eample of an R&R you just showed ?
Great post to read from MG on RR. To all those friends who are wondering where I am; I am tied up with my work commitments and so not actively trading as I used to. I do hope I can get time to spend on forex in near future. Till that time, I am lurking around grabbing golden nuggets like the one posted by MG.
Regards,
Muthu.
Chennai.
India.
M. -
Good to know you are still around.
I bought the GBP/USD on the 08:00 CDT candle. Long @ 1.4622; closed half @ 1.4712 & the other @ 1.4722. I’m a pretty happy camper as I took a beating on a 15M TF strategy and may just forget trading that way. Good trading all, d.
did you trade this on the daily … im just having a look at the chart now and it looks as if you took a break of the two candle highs … correct ? What else made you trade this ? would it be possible for you to post your chart with analysis.
looks like you took profit right at the high … nice one
Not the D but the 4H, 8:00 am CDT. Sorry for not saying which TF I used. Getting out was pure luck as I was waiting for an important call & just closed the trade so I could focus on other matters. Nice to sample pure luck once in a while. I have tried & tried to post charts but haven’t mastered MS “Paint” to post directly on charts. Hard for an old guy. d.
edit: I never seem to get all of the information into a single post. I used a S/R indicator much like Muthui’s and it is in a post a few pages back and called “Barrys…” something or other. It is very much like the one M. uses (he mostly trade the 1H it seems) and it repaints for every TF you select. The GBP/USD had broken R. and volume was good so I jumped in. Find that zip file and see how you like it - I sure do.
No problem about the charts im having im going to have a look at the 4 hour and see if i can spot your reason(s) for trading this.
by the way if you want to post charts just have the chart up on screen and press the ‘PrtScn’ button on the keyboard > Paste in MS paint > save > then go over to imageshack and upload the picture > copy the forum code > paste in the reply/text box on babypips … simple lol
Dan89 -
“copy the forum code” - Dan, I don’t know what this means.
Sorry Dobro i should i made my self clearer. have a look at the steps below a guide
Once you have pasted your chart picture in MS Paint and saved it, go over to ImageShack (ImageShack® - Online Media Hosting) and click the browse button, then find the picture that you want to upload and double click it and it will show up in the ‘upload’ window. (see pics 1 and 2)
Once you have done that, click the ‘upload now’ button (pic 3)
Once it has finished uploading you a window will pop up and you will see a list of things that you can select … highlight the ‘Forum Code’ and copy (right click mouse > copy) this code (pic 4)
Then simply go over to babypips and paste the code you just copied in the message window (pic 5).
Now just type whatever else you want in the message window and click post reply
Hope this helps Dobro
Dan
Dan89 - thank you. D.