It seems to me that where to get out is one of the most difficult aspects of trading and I struggle with it every day.
I am trading on paper at the moment as I don’t think my plan is tight enough on the getting in and getting out front. And given my tendency to worry and hence over complicate matters, I know that I really need to get this nailed down in order to make me feel more confident with my trades.
So lets assume that I am still holding a small part of yesterdays (long) position on cable and trailing on a 4hour. Given that we are going waiting for the big NFP data, is it sensible to keep the trailing stop loose, or tighten it up to a smaller timeframe at this point in time? The fundamentals are still sounding fairly USD negative, but who knows what will happen at 1:30?
In order to satisfy all the gremlins sitting on my shoulders, I think I will take a bit more off, and leave a bit on with a wide stop, & a bit with a tighter stop & see what happens. That should cover everything on the long side at least!
As these guys continually comment, a lot would depend on your original objectives Liz.
When you took the hypothetical trade, what were you looking to achieve?
If a trip to test out the potential at 1.55 was on your radar, & you’ve pared out a little profit ahead of the NFP (& you work your model around support & resistance guidelines), then I guess you’d maybe drop down to a 60 or 30 minute view & see if any of the swing lows match up with prior days high-lows or obvious key levels?
I can see 5145 & 5075 clearly on my radar as profit trailing potential - depends on how close to the fire you want to get?!
Or you could always take a look at the average days range & work out how much has already been covered going into the data release?
Maybe take a chunk of the remaining percentage & see if that matches up with a confluence level?
Thanks Matt for the chart. I have a similar chart only my lines are a different colour!
Thanks Carly
My trade objectives (from yesterday) were to simply achieve a new swing high on the 4hour chart. This was obviously achieved yesterday, but it seemed foolish not to keep some of it running. Up until now I have always been an intraday trader & really want to learn how to get some swing trades going - another reason to be papertrading at the moment! I must admit I had not got 1.55 in my sights at all, but l can see why you mention it.
I have my wide stop at 1.5075 too so I’m glad I was looking at something sensible for that. Would you ever run a trailing stop on anything less than a 1 hour chart for a swing trade?
Todays range has been fairly tight, at only about half the current average, so I guess if it had continued it might have made it up to the next RN. Still its now looking very undecided with that spinning top on the hourly, & final news to come @ 14GMT, so maybe that’s it for the day/week?
If you quickly glance back on your 4 hour chart to the middle of May where Cable began consolidating fair value, it got re-tested during early June & from that point has printed continual higher lows & higher highs.
I’ve simply been taught that unless the rhythm or bias is compromized, expect the motion to continue & take the higher odds play by buying into the move.
I certainly can’t argue with the HHs & HLs. I have a tendency to get freaked out by the big swings in the opposite direction though, but I think this is where you quite rightly pinpointed the issue of trade objectives. Mine are rather woolly to say the least at the moment! However if I want to take advantage of the bigger moves, I have got to learn to let trades run for longer & not get panicked out of them. That is what trailing stops are for, and I suppose no reason not to have more than one trailing stop and have more than one type of trade running concurrently, be it intraday, short term swing or longer term swing, even if it is only for tiny amounts initially. I am hoping that this is going to give me a lot more value than intraday only.
‘Fair value’ is a term that is often used on this forum and I’m not sure what this really means. How do you decide what fair value is?
I think you know Mark? Tess & Jocelyn’s brother?
Yes, I do! Please say Hi to him from me!
I currently work a couple of his accounts & he swears by the average range computations.
Amazing how the simplest of items can add tremendous benefit.
The other two important items he majors on are;
Always play your odds with the current bias (no matter what timeframe you’re engaging from)…&
Never, ever engage in a trade without a clear objective - but then that was taught me by the guy who steered my early tuition, so no surprises there!
Food for thought over the weekend!
Well the 4hour hasn’t reached a proper swing high yet, only a new high, so my trailing stop is still good. Even on paper I find it hard to let things run - I’ve got some work to do on myself, lol!
I’ve been taught (& these guys on here also back it up) that it’s simply a zone or area on the technical chart where buyers & sellers are in agreement.
Consolidation levels reflect (current) value for the dominant set of players. So, if you drill down into your current 30 minute timeframe on Cable, you’ll clearly see such an area playing out right now (5150-5215)
The previous fair value zone to that one played out between 4950-5000 on 23-25 June.
Price then had to re-engage demand back from where it reacted previously…at 4850 which had been Tuesday 22 high of the day & Wednesday 23 low of the day…[I]see how these common levels come into play again [/I]
The opposite of that scenario is where the supply/demand equation becomes top heavy or out of whack. That’s where you’ll witness sharp, aggressive moves away from a (swing high-low) level & when re-tested it acts as positive re-affirmation of the supply or demand.
So fair value is where supply & demand are fairly well matched & can be seen on the chart as an area of consolidation, and the opposite is where one overwhelms the other and can be seen as a sharp move away from a level. That’s not what I thought it was going to be about, so I’m glad I asked the question! Thanks!
That initial pullback zone appears to have attracted continued demand earlier today I see.
It’s also yesterdays low.
Should it clear last weeks high @ 5230 that upper tier supply zone at 1.55 will be well in it’s sights.
Unfortunate that it bounced at an inconvenient time for those residing in europe/uk.
Yeah it’s all looking rosy for GBP so far again today. I do envy you guys with round the clock teams so that you’ve got all the time zones covered. I was well away in the land of nod when that nice bounce off the level you mentioned occurred. However I did manage to get in after the b/o from & p/b to the Asian high this morning. I took half off just below the RN, and waiting to see where it goes from here. Trading my live account today
That’s great.
It’ll need to absorb the offers up here underneath last weeks low to get another decent leg up today.
If it does get a second wind, average days range could see it push on toward 5250.
eur/usd is struggling with similar offers this morning at it’s own key level (last weeks high).
I’d bet they’ll be decent buy stop orders beyond there all the way to the next figure @1.27 if they can probe for them amongst all the counter traffic.
That would certainly offer Cable a helping hand if it could push through.
We’ll see.
S&P’s remaining bouyant all morning in europe (currently +1.3%) have certainly helped the cause.
If stocks can get a decent pop out of the gate that ought to help the positive risk play into the european close.
With stocks, oil, and then EU enjoying the march onwards (seemingly at Gold’s expense) I was starting to think that Cable hadn’t been invited to the afternoon party! Anyway, still in and enjoying the ride. Thanks for the heads up earlier.
All timeframes are considered on their merits Matt.
If the daily view offers a clearer angle or a better perspective of one of our potential activity levels then it will receive due consideration.
However, the detail (including the likely stop order build up & potential supply-demand zones) usually offers more clarity further down the scale, particularly given the types of price action set ups & triggers we engage with.
We don’t operate any exclusive set ups via a daily timeframe.
I wouldn’t even know where to begin with that kind of arrangement Matt, so I’m going to no help regards that enquiry I’m afraid.
I guess if any of the others can throw their hat in they’ll reply, but I’m not sure they’ll be any more help than me to be honest.
They certainly attracted bids again this morning back at their respective levels, nice one!
Most folks would hang fire until either the top of those resistance levels (2660 & 5230) or the lower of the initial supports (2560 & 5075) broke & were tested before committing bets. Either that, or they’d wait for some kind of additional confirmation off either end of those levels before placing a bet – do you always take the price on as soon as it moves into these supply or demand zones?
I realize the preference is to trigger in line with an obvious directional bias, so I assume only longs would be considered on both those pairs at current levels?
But are there occasions where you’d place bets on the return moves (short off the 2660 & 5230 supply levels) back towards your identified demand zones?
Folks will be influenced by whatever input criteria they tap into their strategy or system parameters.
If buying or selling breakouts through top & bottom range boundaries gets the job done & justifies the risk to return odds, then all well & good.
As long as sufficient profit potential exists at the point of entry to justify the risk, then yeah sure.
What folks do regards additional confirmation is purely down to their read of the price action & the set up criteria used to engage the market.
Personally, I can’t see the point of buying at the thick end of an upswing or selling at the thick end of a downswing. That’s generally when the risk is at its highest & the value at its lowest.
That’s certainly the case with Cable yeah.
Just haul up a technical chart covering the last 6 weeks or so & that will justify the stance on that pair.
For the time being, Euro also justifies that outlook. At least until the bids evaporate & it falls through the weeks lows.
I prefer to jog along with the dominant flow (path of least resistance) until it tells me otherwise.
Why make life harder than it already is?
If there was no clearly identifiable directional bias & sufficient profit potential could be identified to justify the risk, then yeah that would be a viable play.
So, if it gets a decend backwind & trips stops above this 1.27 figure (& they’re rumored to be heavy) that puts clear air to the next potential crossroads at 1.31.
Would you now be earmarking 1.2550-75 & 1.2470-2500 as the more likely demand (bid) areas on any determined drop on profit taking?
Look at your chart & dial it back
If you were long anywhere off the 1.22 base & up, then trailing profit underneath those zones would be a sensible option, particularly your 2550-75.
Look for the obvious. Don’t over think it.
You got about 150 pips worth of (current) average range to play with, so gauge it (each session) accordingly.
Providing you were amongst those who managed to capture the value on entry & you’ve now neutralized your risk, then you don’t really want to hand unnecessary profit back if this thing implodes.
If it probes & finds those lumpy, tiered stops above the 27 handle, then dependant on the volume, it could pop quite aggressively.
That’s when you’re more likely to witness some heavy (nervous) profit taking, so you’ll need to start peeling out your profit orders on the run.
We’re also approaching end of week squaring.
It would be preferable to see a concerted shift up above +1.27 to see what it delivers.
Either that or orderly profit taking & a shift back to test demand.
This eurusd car is running low on gas for this week.
Good point. Yesterday it barely covered 60% of current range. Today, so far it’s struggling slightly shy of that return.
Probably a reflection of the importance of this round number.
Funnily enough I have noticed this contracted behavior before around the approach to key levels.
It obeyed the s&r pullback levels yesterday & it’s stair-stepped all day today into the european close, so I guess it’s low on sell orders thus far.
Again, good point.
At least end of week aggressive moves tend to offer clearer choices, especially if they’re still at their extention levels into the european close.
These lower pullback zones will behave nicely as long as North American funds continue to buy the dips as they have been doing since 1.20
The minute that strategy gets canned it’ll all go to hell in a handbasket again.
The spec accounts are dodging in & out every time the S&P breaks wind, so they’re happy to ride the intraday waves as long as it lasts.
Watch out the minute one of these obvious lower demand levels gets flushed & fails to immediately break back up.
They’ll be blood swilling everywhere, lol
Thanks!
