The Trader's Arms 2nd Floor

Beginner Questions
27

Two cents from my playing around with the 5 min and 15 min charts Sanj.

Just following the S&R levels on the respective charts has been been a mix success. I have not done it in earnest long enough for me to say that its profitable.

But what trading the min 5 and Min 15 candle patterns in areas where the S&R lines were drawn on the H4 or even H1 chart has been really great. a 15 or 20 pip profit per entry when candle formations on Min 5 are observed in this area has been the norm.

Just sharing what I realised meddling with the smaller TFs.

28

… and my disaster SL is a fixed risk, never more than 2% of my account… plus R/R has to be at least 1/1

29

£3.58

Eventually, we all have to form our own opinions on the placing of stop losses on each individual trade. The more experienced we become, the different little personal nuances we can introduce just as Banker and yunny have developed in their own trading over the years.

However, I reckon for the beginner trader, this very basic way of looking at it will suffice until we gain in experience.

Imagine a battlefield, to the left of the field is the bad guys, and to the right of the field is the good guys. In the middle of the field is No Man’s land. This is the ground both sides are fighting over, and there is no way of telling which way the battle will go.:

Now imagine a price chart. You have marked a line of resistance at the top of the chart, and some way below that you have marked a line of support. But price has just been bobbing around in between the two for quite a while. This is our No Man’s Land:

By selling ONLY when price approaches Resistance (Top green zone) or buying ONLY when price approaches Support, we significantly increase our chances of being right.

Trading while price is bobbing around in No Man’s Land is no more than a guess, a shot in the dark.

Now nothing says price will always adhere to my somewhat less than classic pictures, but this is an odds game, all we’re doing is trying to increase our odds. So where do we put our stops then?

Well obviously we put the stop on the other side of our Support and Resistance lines, by how many pips depends on your maximum 2% risk. But then using the info that Banker and yunny have both alluded to, if we can learn trade a set up that places a secondary barrier in between that line of Support or Resistance and our stop, (an institutional level, a pivot line, a moving average, fib level etc) it will increase our chances even further.

Like I said previously, I have no doubt we will get to the subject of these secondary ‘barriers’ in the fullness of time. But for now the maxim just has to be, “Never Trade In No Man’s Land”

Very simplistic for the experienced guys I know, but we’re learning !!! :slight_smile:

I reckon I am just about done on the stop loss subject. If anyone else would like to make comment please feel free, but I think I’ll move on to Support and Resistance next.

I may edit a previous post, or create a new post later that has the heading “NOTE PAD”. Please ignore this post everyone as it is merely a post I am using to note down my “Rules” and also keep track of the questions I would like to ask in the future.

Cheers Gang

30

Thanks for the heads up Nikita…

Ive only been messing around paper trading this for the last week or two so all still new to me… Will take your advice and start drawing up this 1 and 4H S/R levels and play with them…

If i can get some consistent results ill start using it to scalp in my live account :slight_smile:

31

Excellent write up HOG. That is one great post

32

I have another way to set a SL but it is a totally different strategy. The strat is something between intraday and Swing trading.

The idea is to follow the trend using the 21 day SMA as a filter plus the ZigZag indi to identify swings (yeah I know, I am lazy :smiley: )

The SL goes 5 to 10 pips below/above the last swing point given by ZigZag…

1022×535

http://i1086.photobucket.com/albums/j449/yunny11/eurusd109.png

33

Sorry I’m not posting a lot on this thread. But off screen I am reading and looking at charts. RC’s mention of line charts has me looking at them, now yunny has thrown in the zig-zag (you’re allowed a piece of laziness now that you are a dad yunny).

But a question to be asked, nothing to do with stops or zig-zags, is this. Is it fair to say that you don’t buy/sell the move, you buy/sell the re-test of the move, if you see what I mean?

34

Sorry HoG, the idea of my post is just to show that a SL depends on the type of strategy. Forget the ZigZag :slight_smile:

35

Yep, no problem yunny, don’t think the zig-zag is for me just now anyway, but the question still is generally, would you say you traded a move , or the re-test of a move, I hope I’m explaining that clearly enough.

For example, if price traded up to a resistance area and broke through, would you take the long trade. Or would you wait until price fell back down and tested it as support before you took the long?

36

Lol your resolve to have a down-to-business thread didn’t last very long!!

37

I believe the equation goes something like this;

reading = male
writing = male
watching videos = male
making tea = male
doing all of the above at once = multi tasking = female

LOL!! And anyway, when you walk into Tesco, do you think those loaves got on the shelves over night all by themselves?? Of course they didn’t mate, it’s what goes on behind the scenes that you don’t see that makes it all go like clockwork :wink:

38

Well you need to work on the juggling skills in this game, matey. Or at the very least stop neglecting the trading thread by posting trading discussion in the other one instead…! To prevent confusing your long term readers maybe you want to look at merging them back together? At the moment I’m not seeing a difference so never know which one to leap in on!

39

Actually you may have a point. The 2nd floor may turn out to be just like tight leather trousers - a great idea, but murder on the legs !!

40

Lol you’re incorrigible. I thought this was about taking it more seriously?!

41

Yes it is, but I fear you may have thrown up a very valid point. All this hopping about is driving me insane already. Maybe the tangents of the downstairs is all part of the charm, or ambience (now there’s a word for a FX forum) of the place. Just needs an extra sprinkling of seriousness tot he mix.

Wudya think ??

42

I think you need to watch the original Eric Thomas video you sent me again.

43

Yep you’re right, too much focus already being wasted just trying to remember where I am. Think I’ll hang around up here for a while, just in case anyone is looking for a hob nob or two :slight_smile:

44

Not to throw things off topic here, love the video, thought id share a post which for me was a great read and a little motivating too…

http://forums.babypips.com/newbie-island/36328-what-every-new-aspiring-forex-trader-still-wants-know-558.html#post301974

45

Hey HOG,

First off, I would like to say this is the first Thread I have read, in my 2 years here, word for word… LOL…
I mean, I read threads, and posts, but I have never entered any other traders threads, per, hummmm, educational purposes.

Why now? Well, lets just say, I have done some reflecting in the past days, ( because my internet was shut off) and have come to the conclusion, that my plan sucks… Now, let me rephrase that… Im a crappy trader, lol…

I hate to think im still in testing phase, but I guess I am… I feel like I have been sleeping for 4 months… So, now its time to get serious… I need money…

ANyways, thru my adventure thru conciousness due to not being connected to the rest of the world, which seemed like weeks, but was like, 34 hours or something, LOL, I found myself… I reinvented my plan, my strat, my thought processes… I guess you can say, I rebooted… But let me add this… I did Extensive back testing, for hoursssssss recently… And then took everything I know, threw it on the wall, and kept what stuck…

Im a scalping fool, Im good at it, but I dont think its the right game plan for me… i need a more hands off approach…

So, I combined a few of my personal systems, and then found something that stuck out to me while backtesting… It allows me to make my very own personal Pivots and R/S… Bottom line is, I want to make IMPORTANT TRADES… Or, more known as the " Gamble"

But whats genious is, its my missing link to everything I have studied in my time…

So, I will post my set-ups here, and see what happens…

It also allows me to just use Limit orders, and with limit orders, it just proves you have a PLAN…

I HAVE to turn the corner fellas, now Im putting it on the table, and getting this show on the road.

So, I hope you welcome me with open arms into your thread, and hope to maybe learn something, or share something…

I learn the hard way…

Thanks, and great profits to you

46

O, and on the Stops, Let me give you a MNVS response, " If your trade runs against you by more then 7 pips, its a bad trade, rethink your plan if its chronic."