Since some of you shared your results for this week I thought i’d share mine too.
Like a few of you I did not close out the EUR/USD long trade before the news and the rest is history. Took a 85 pip loss which equals 2% of my account.
I am in two other trades at the moment which survived the news.
I have a short position on the AUD/CAD trading a weekly bearish engulfing bar and it looks like price is moving in my favor right now. Currently +70 pips in unrealized profit. I am only risking 1% of my account on this trade because it is a counter trend trade and also is correlated with the other pair i have a short position on.
The other trade is a short position on the NZD/CAD trading a daily pin bar & double top with a modified stop loss (thanks Aaron!). Only risking 1% on this one also because of the same reasons as mentioned above and i have a tight TP for this one since the next support area is pretty close. Price is already close to hitting the TP.
Phenomenal trading! You should be really proud of yourself for applying what you know and sticking to your rules. I am glad to know that some of my teaching helped play a part in your increased profits! Teaching doesn’t mean anything if the student can’t turn it into real profits. I can see you are obviously doing that. Many people will talk down retracement trading and say that it doesn’t work. You and many others are proof that it does. Many of these techniques works when applied in the right condition. The same way that EMAs fail when using in ranging conditions, retracements can fail if not in the right setup. It looks like you are growing in your understanding of when and where to apply certain trading techniques. I look forward to hearing how things go into the future!
Phenomenal trading! You should be really proud of yourself for apply what you know and sticking to your rules. I am glad to know that some of my teaching helped play a part in your increased profits! Teaching doesn’t mean anything if the student can’t turn it into real profits. I can see you are obviously doing that. Many people will talk down retracement trading and say that it doesn’t work. You and many others are proof that it does. Many of these techniques works when applied in the right condition. The same way that EMAs fail when using in ranging conditions, retracements can fail if not in the right setup. It looks like you are growing in your understanding of when and where to apply certain trading techniques. I look forward to hearing how things go into the future!
Thank you again![/QUOTE]
Hey Aaron
Hope your having a good weekend. I would like to join everyone here to say thank you for all of your help. This is a great thread with a really nice community feel to it.
Will you be discussing more on retracement trading? I would like to learn more about when to use them. As you know I didn’t have much success with it when I tried but this may very well have been due to the wrong conditions. I really like the idea of retracement trading and can see how it could offer great RR and would like to learn when to use it.
EternalNewB, mancamy, Diablo and of course Aaron, thank you very much for all the kind words. It’s so great to have a learning environment like this one, you guys rock.
Aaron, you said it. I attribute much of my success to knowing when my trading strategy excels and if the market condition doesn’t present any trades, just sit it out. One day you are watching paint dry, the next day there are trades all over the show.
The one biggest lesson any newbie can learn from this is that if I was impatient and took impulsive trades when the market started moving just because I had to be in the action, my profit curve would NOT, I guarantee you NOT have looked like it now does. The simple yet most ironic truth about trading is that you make the most money by not always trading but waiting for the A+ setups.
Over the last few days I have actually been thinking about making retracements the topic of my next article. I have already seen some comments here about how people are already seeing larger gains and profits from it and others wanting to do it but they don’t know how, so I think it is a good time to cover it in detail. I am going to try and find some good real life examples of the various types of the various retracement techniques, and also cover the setups where you shouldn’t be using retracements. Not everyone is going to be like me and try to find those ultra high RR setups, but even if you are normally shooting for 1:1 RR setups and learning retracements can bump you up to 1:2, that is a doubling of your normal profits.
There are 3 main reasons people don’t think it works, one is because they did try it long enough. I have stated before and will continue to state, any new technique requires “at least” 100 trades to find out if it works, anything less and the results are near random. If you take 5 or 10 retracements and they all fail, that does not at all mean it doesn’t work, because who knows if your next 20 retracements would have all been winners? The other problem is trader is simply taking poor quality trades. Retracements are more risky, which means if you are going to take them you need to make sure as a trader you are taking those 3-5 star trades only. The final reason is that retracements aren’t being done correctly. There are certain trades that are better candidates for retracements. I personally don’t put retracements on all of my trades, I put it on “most” of my trades. There are some that entering at the break and using a modified SL is a better solution. It all comes down to the price action candle positioning and the surrounding candles.
I will try and cover all of that in more detail, as I think a disciplined PA trader that can learn proper retracement techniques can be a very powerful combination.
Great trade. To be honest I am kicking myself a little bit for not taking this trade. I was seriously considering a retracement short, the only thing I didn’t like was the price action candles weren’t farther up in the resistance area. I agree with your decision to hold the trade, as that is what I would have done. My charts won’t load so I can’t see the next logical resistance area, I would be curious what your trade plan is and where you plan on taking profit.
Hey Diablo - those are nice trades - on the NZDCAD - what gave you the clue to take it short, since price was in an existing uptrend at the time price hit the resistance level (in fact the PB was preceded by a really bullish daily bar) - was it simply the pin bar/reversal bar - the PA suggested market rejecting higher prices at such a key level? Thanks
Diablo, those are two great setups, I would think so because I am in both!
Well actually, I was in a daily time frame trade for the AUD/CAD and has since taken full profit because I analyzed it as potentially going even a bit higher, but only time will tell.
I must admit that i am fighting against my greed right now because looking at the weekly chart it looks like this downward move has a lot more to give. We have a huge pin bar on the weekly showing a lot of selling pressure on this pair right now.
An alternative plan for my trade would be to now move my SL to BE and then just trail price on the 4 hour chart using new swing lows. Of course if we get a bullish PA signal at the nearest support the trade has to be closed out.
Thanks. Well, first of we got a bearish price action signal at a major resistance level that earlier this year stopped price like a concrete wall after it had been tested twice. And exactly like last time we got a double top this time also and the bulls lost once again. Of course we do not know if they will gain control of price again and push it up… Time will tell.
If you compare the last double top formation in April and the one we have now they are almost identical. But this time we had a deeper penetration of the resistance level before the bears took control. Another thing i am using when trading double tops/bottoms is the RSI indicator. What i am looking for is a divergence on the RSI showing a retest of the level at falling momentum (price pushes up into the resistance again but the RSI curve is lower at the retest) which shows that the retest is “weaker”. If you want more information regarding divergence (RSI/Stochastic) there are some really good articles on that in the babypips school.
I was actually talking about the AUDCAD, but both trades were very nice. If price breaks below that last weekly pin that formed there could be a big selloff. You have a couple options, take profit where you are planning, based on the daily candles. Now that we have seen some repeated rejection on the weekly, you could hold onto the trade and shoot for a much larger reward than you are currently shooting for. The final option is the riskiest of them all but the most rewarding which is staying in your currenty daily trade, setting another sell order at the break of the weekly bar and holding until you hit a daily/weekly support level. That is called pyramiding up. I am not a big fan of trailing stops, I prefer to put them above/below key levels.
For the NZD trade I would probably do the 2nd option and mentioned although on the AUD trade I would consider pyramiding. Do what fits your trading plan and what you are comfortable with.
Ah, ok. Yes, the AUDCAD trade is definitely my favorit and one of the better ones i’ve seen for some time. It got a pretty good rating when i applied my system.
Thank you for your advice. I agree that the second option is the most attractive one when looking at the big picture on the weekly chart.
When i trail with my stop loss i always wait for a new lower high (in this case) and put my stop above that which is similar to what you mean i guess, because lower highs normally form at important s/r levels.
I have not yet tried pyramiding but of course it’s a great way to boost your winning trades if you get more valid entry signals along the way. I guess that is the next thing i will have one my to-do list, to work out a solid plan around pyramiding.
I’ve been a silent lurker for quite some time here and want to thank krugman25 first! It’s been a great thread with many, many super informative posts and I learnt a lot in here! This seems to get the new James16 thread for me ;).
Here is my trading idea for tomorrow. Maybe I can contribute something:
Clear downtrend
Nice Pinbar
Room for price to move down
Confluence of Pivot Zone, Trendline (and Fib level, not drawn on the chart)
Nice entry possible on retracement back the pinbar to get a good R/R
Like many of you i am running my trades through a filter before entering or deciding how much to risk. I know many of you use a 5 star rating but i just had to many filters and 5 points/stars where not sufficient for my trading plan.
I thought i’d share how i rate my trades, maybe you can get something out of it if you are still working with putting your trading plan together.
I only take trades that get 3 or more points. If a trade get 7 or more points i will double my risk on that particular trade. For instance my AUD/CAD weekly trade got 6 points out of 14 possible.
Below are the things i am looking at when rating my trade:
Well defined price action signal + 1 point
Very strong price action signal + 2 points
Signal on weekly chart + 1 point
Minor Support/Resistance + 1 point
Major Support/Resistance + 2 points
Trend line + 1 point
Big round number + 1 point
Very big round number + 2 points
Clear rise in volume + 1 point
With the trend + 1 point
Confluence at Fibonacci 50%/61,8% + 1 point
Double top/bottom + 2 point
Trading into traffic - 1 point
Counter trend - 1 point
Trading into very big round number - 1 point
