According to Krugman on his third figure, “in cases where we have to choose between multiple potential areas for retrace entry, it is best to pick the lower (for short)”. Here, you do the exact opposite by taking the highest possible level for retrace entry in your short trade.
It still may work at the end, and if it works, the RRR is awesome. But taking on the highest possible level of retrace entry on short trade also give you multiple possible trouble ahead. At least that’s how I interpret it.
I might be wrong as I’m also new to retrace entry. So, any second opinion here? Especially from Krugman?
Oh no I see where the confusion comes in, this is a counter-trend trade!
What you are referring to is trading with the trend, in which you certainly want to enter at a much lower price, in a decent pull back and then retracement.
Is there any rule from Krugman that for CT trade you are free to take the highest level of retrace entry, while for Trend trade you should take the much lower level?
If you are trading long, you want to enter as low as possible.
If you are trading short, you want to enter as high as possible.
That’s what it all boils down to. Because I went short, I got it high to have very small risk if the trade goes against me. Does that make any more sense?
Hey guys.
Wow. Just got caught up on the last few pages.
I just want to let you all know I learn so much from you ALL.
This is what I am learning.
Captain…that was very very insightful about the correlation of weekly to daily market structure on the CAD,(NZD/CAD). You are a genius.
I am walking behind the crowd, trying to pick up on all the stuff you are all learning. But, just can’t keep up. It’s gonna take a lot longer for me I guess. Needless to say, keep it up! I hear every word you all are saying.
And I know I have a whole lot of work to do for a rigid trading plan. Lots of bits and pieces, but nothing like I want. Which is a very strict method.
I appreciate every one of you!
Keep it up. I will catch up…sometime.
Mike
I agree if it’s in general PA configuration, we want to enter at swing low to go long, and enter at swing high to go short.
However, in retrace entry I think things are different. The closer you retrace entry to your SL, the more difficult your price to move into the direction you want, as that means the more potential trouble area that you need to overcome along the bar you use for retrace entry.
Counter trend trades by nature have extra risk. If you are not experienced in filtering out poor quality counter trend PA setups, entering at the break may help keep you out of poor quality trades. Due to the added risk of a counter trend trade, entering at the break helps level out the risk of the trade. Ultimately it is up to the trader to understand his/her own abilities in finding high quality trades and then deciding how much risk they are willing to accept for a given reward.
I still remember you from ‘the good ol’ time’ at Newbie thread. :16:
Well, let bygones be bygones.
Anyway, your quote from Krugman does not really make sense as it’s about break entry criticism.
But I think I understand why me and cyanidez do not get consensus up to this point. cyanides uses his retrace entry from the bar just before a pinbar, while I refer to the retrace entry on the BEEB 2 bar after that very pinbar! Well, I do not talk about break entry from his pinbar. I refer to retrace entry on the BEEB. Kinda funny when you think about it.
It’s slightly different among brokers I believe, that’s why cyanidez has pinbar, while you and I don’t. Well, as long as it’s NY-Close chart, we could live with that. Mine is FXDD at this point.
Radio station?? :18:
Yep, I’m the DJ of this house. [B]It’s time to par-tay!![/B] With Captain K as our host, let’s burn down the house. The roof, the roof, the roof is on fire!
This is such good advice. I hope you won’t mind if I make a few additional points in support of your view on this topic - stuff I have learnt myself out of my experiences trading and on the forum this week.
I’ve seen some of you saying that you will post live setups in the future and I just wanted to pass on this observation of mine to help others making live posts in future.
I have posted my analysis of live trades - I did this because I genuinely thought they were very good setups and in the spirit of sharing wanted to give people a heads up in case anyone else wanted to take the same trade - in fact, I realise now that one of my trade filters should be to ask myself “would I post this on the forum?” if yes, it’s probably a good one :-).
I think the same educational value can be derived from posting setups/analysis whether the trade is currently live or it is already closed. The only point I was making is that you can have a 4/5 start setup up even if the trade is ultimately a loser - it would be interesting to see a few of those, because that helps with the psychological element - really understanding that you can have a good trade even if it turns out to be a loser.
However, it is always great to hear about people’s successful trades and profit taking, that’s encouraging for all of us and show how valid trading PA is :-).
The setups I have posted or pairs I have queried have been on trades I had already taken and had closed or where the trade was already live - I did my own analysis first before posting for comments.
I find it valuable to post my setups (live or closed) as I am always interested in hearing people’s feedback - it helps us all learn - please keep it coming, I really value the input from this great community.
What I didn’t account for is the impact that getting feedback from people while a trade was open/live would have on my ability to stick with my analysis and stay objective - the psychological element. I took a trade that I managed differently and against my plan because others here held a different (entirely valid) view of the particular setup. It’s best to stick to your own analysis, even if it is wrong (!) - I have always learnt more from my losing trades than I have from my winners.
So, if you do decide to post your trades live (before they are closed,winner or loser) please make sure you take account of how it may affect your trade management if you get feedback for others while you are in the trade, otherwise, it’s probably best if you wait until your trade is closed before posting setups and asking for feedback.
Hi - thanks for this - sorry if I am not clearly explaining the question.
In my “PA journey” I have come across a number of teachers, full time traders, who do not advocate trading correlated pairs at the same time and say that, if you come across 2 or three setups that you want to take on correlated pairs you should only choose one of them and usually the way to do this they say is to take account of relative strength.
I have come across different ways people have of determining relative strength some more scientific than others. I know of one full time trader that has developed his whole strategy around relative strength. So I was very interested to hear what your view was. Actually, I have now found that my trading platform has a feature that constantly calculates relative strength of all pairs across all time frames and graphs it too.
I’m not sure how useful this all is in practice. When I asked the question, I kind of expected you to say the same thing. However, when you say “Most likely if 1 of the trades goes south, all of the trades will go south” - that answers the question, you don’t take account of relative strength, and I would treat all trades on correlated pairs as one position in effect and just risk total capital across those trades that I feel comfortable with.
That’s where I have been coming out at myself and why the relative strength debate seemed a bit of a red herring to me - if there is valid PA/market structure etc why wouldn’t you take all those trades? - then the only issue is how much capital you have at risk, on the kiwi, for example.
I have such a small account (!) that I could only afford a 50% retrace entry on all three of those pairs - in fact, I did place pending orders on all three kiwi pairs but only the NZDUSD order got triggered.
Possibly when you have been in Babypips as long as I have you will see the reasons
for all of that.
Anyway, your quote from Krugman does not really make sense as it’s about break entry criticism.
It’s about CT trades in general.
But I think I understand why me and cynadinez do not get consensus up to this point. cyanides uses his retrace entry from the bar just before a pinbar, while I refer to the retrace entry on the BEEB 2 bar after that very pinbar! Well, I do not talk about break entry from his pinbar. I refer to retrace entry on the BEEB. Kinda funny when you think about it.
It’s slightly different among brokers I believe, that’s why cyanidez has pinbar, while you and I don’t. Well, as long as it’s NY-Close chart, we could live with that. Mine is FXDD at this point.
Still awaiting a reply from cyanidez however I think he took the PB trade short
with an entry on retrace.
Radio station?? :18:
Yep, I’m the DJ of this house. [B]It’s time to par-tay!![/B] With Captain K as our host, let’s burn down the house. The roof, the roof, the roof is on fire!
… but seriously, I have no idea. Do you?
Radio WM is a radio station in the UK on 247metres medium wave hence RadioWM247.
Interesting testimony, Amy. I have never heard any of this ‘relative strength’ idea with correlation pairs, but I also know that there are so many ways to skin a cat out there. I still think it’s unnecessary to have that ‘relative strength’ as a PA trader. Definitely not in my toolbox, and I have no plan to incorporate it in the near future.
BTW, as a Londoner, are you doing Forex trading now or spreadbetting? It seems like many British traders I know prefers spreadbetting over trading, mainly for tax reasons. Spreadbetting is illegal in US, unfortunately, that’s why I never really understand how it works.
Hi WM247 - yes, I spread bet. Basically, since you aren’t buying the underlying asset you just bet on the price movement in the asset - the UK tax authorities treat it as “gambling”, a game of chance, and not a business endeavour - gambling winnings are tax free in the UK so that’s how spread betting is tax free too. There’s a debate here about whether it’s still tax free if you earn your main income from spread betting (don’t think I’ll have to worry about that for a while!) but I heard from one prof trader that a hedge fund (corporate form) is getting tax free treatment on its spreadbetting activities. Very generous! Only thing is, as we know, most traders (including all the retail/amateur) who spread bet lose money - if the UK authorities were to tax it they would have to allow deductions for all those losses and they would probably not raise any taxes! so they probably aren’t being all that generous
Hi, Is this a valid flag pattern on the USD/CHF and if so what timeframe would best clarify a breakout without too low a R/R ratio and at the same time avoiding a false break?
Never traded a flag before!!
Steve.
Not really. I have read way too much horrible stuffs [B]AND[/B] people at Babypips, that I agree some can really drive you to give up your faith in humanity. It solidifies my path to become a Knight in Sour Armor, that’s for sure.
Remember, you’re talking to a guy who has the insane perseverance -or maybe just the insanity- to completely finish reading all 15000++ pages on the old J’s thread.
Anyway, I still think we have settled the issue with cyanidez. If it’s the pinbar he was using for his retrace entry, that’s not a problem then.
Hahaha DJ wm247, you crack me up man! Party up in here!
daydreamer, you sir, have it 100% correct. I can’t believe I failed to articulate my thoughts so poorly, sorry about that guys. I went short on a retrace into the pin bar after it formed, exactly right as daydreamer said and wm247 also now understands. LOL well lesson learned, if I don’t provide any context, how will anybody understand?
Keep it rocking guys, thanks for keeping this trade positive and awesome.
