I’ve been on Babypips for some time now, even posted on other people’s threads, and decided to start my own.
I have been studying forex trading for about a year now, you name it, I’ve probably read about it and sometimes even tried it! My problem is I work full time, live and work in the UK so it is not possible for me to day trade, hence my trying the daily TF in the evenings after work.
I will be using a combination of tactics picked up from here & there, I will describe them as I go. It is not my intention to teach my methods (if you can call it that), anybody following my trades must do so at their own risk! There, we have the disclaimer, as I am a novice.
I have traded both demo and live accounts with mixed results.
I intend to trade initially on demo until the new year when, all being well, will begin trading with real money.
I will be trading 1% of my a/c balance on all trades as I believe good money management to be key to survival.
I will be attempting patience while waiting for a set up and also within a trade.
I will be using Price action, support and resistance, trend lines and fibo retracements mainly with one indicator - the cot report as I believe this to be useful on my time frame.
I will use the daily, weekly and monthly tf for market analysis and place trades using the daily, sometimes dropping to the H4 for a zoom facility.
Well that’s the idea anyway, feel free to post, I will attempt to answer all genuine enquiries to the best of my abilities.
I thought I would post my trade setup for tonight when I get home as I am not busy atm.
I will be placing a buy stop on the break-out with the SL at the bottom of the break-out for the sell position and a sell stop on the break-out to the downside as shown again with the sl above the buy break-out on the chart. This is a trade for symmetrical triangles from Courtney Smith’s book, which I am trying out.
As promised, my trade entries. I am leaning towards a break-out to the upside as the cot report for AUS commercials have decreased their shorts less than the large traders have increased their long positions as of last week’s report. In my view the commercials are the ones with deep pockets and therefore have more clout.But let’s see what happens.
Nice thread John. I’m in a similar position as you, work full time, based in the UK and have little time to trade so I base pretty much all my trades on the daily TF. I only trade one pair as well, GBPUSD and hold my trades anywhere from a day to 3 months and that fits nicely with my lifestyle. Few points that may help:
find a strategy and master it
keep your strategy simple, as long as the probabilities are in your favour for back testing and you have sound money management, you’ll be fine
stick to one pair. I would compare forex pairs as languages … They have similarities but ultimately they are unique. A successful strategy on one pair doesn’t necessarily mean success in another
always broaden your knowledge
be patient, organised (journal everything) and set a realistic goal each year
Good luck, hope this helps.
Welcome mrchilled, and thankyou for your kind words of support. I appreciate you taking the time to post.
I take on board all you say, I am currently monitoring 8 currency pairs, but this may be reduced as time goes by. I agree with you when you say each pair has it’s own characteristics. I am using these pairs to find ones that suit me while on demo.
I have read through several threads here on babypips including ICT’s material, Petefader’s and Nikitafx’s along with reading both courtney smith’s book and Edwards & Magee’s book technical analysis of stock trends issue6.
I have created a spreadsheet for my journals with one page per currency pair along with this thread.
Now the au has joined it’s sisters eu & gu going up the high street, we are not out of the woods yet.
Looking at the chart below we have a strong supply area marked by the two red horizontal lines which will provide good resistance, also the fib retracement of 78% is nearby which is a good short trade entry making a sort of H&S reversal pattern. So I will be watching this and the correlated pairs eu & gu like a hawk, which both are looking quite leggy and may be in for a retracement.
It seems the usd is being dumped in favour of other currencies atm, judging by other usd pair’s performance.
The latest cot report isn’t out yet so it’s difficult to guage the sentiment of large traders and the commercials, but it looks bullish so far.
Well that’s my outlook, but I’m no font of forex knowledge, we’ll just have to see what the market does from here and act accordingly.
You need to scroll down to current legacy reports and click into the field Chicago Mercantile Exchange Short Format. This will bring up the current week’s report.
You only want to look at the long & short positions of both the large traders and commercials, ignore the others as this group is us!
What I do is to get to the net position for both groups, one will be net short, the other will be net long. They always oppose each other as this creates the market we trade in, but bear in mind this report is on the futures market but as at the previous Tuesday. It will, however impact on the spot market before long.
Once you have the net positions for each group, you need to monitor the changes each week of both groups to see who is going long(er) and who is going short(er). I try to err on the side of the commercials when price action tells me to as these will win in a battle with the large traders if they want to.
I keep a spreadsheet with the details on it of the currencies I watch. Be careful though it only gives you one currency not a pair and it is only the US traders.
As you can see from the data below of the Aussie dollar, The large traders increased their long positions by 7,829 while the commercials increased their short positions by only 1,881, this could have been what we saw in Friday’s move up. Also eu & gu were going up against the us dollar but au was not prior to this which is unusual (but not impossible) with correlated pairs. Whether this will continue, we’ll have to see. New cot report should be out Monday due to thanksgiving holiday i think.
I closed my au long trade last night with a loss of 68 pips on the grounds of the rule of instant gratification not being met, simply if a breakout does not proceed beyond the entry point in the first 2 days, it is probably a fake-out.
It looks like au, eu and gu are retracing at the 62 to 78 fib levels, I have placed the following trades:
au short @ 1.04372
eu short @ 1.2972, being the 62 fib retracement of today’s down move if it manages it.
gu short @ 1.5993, when it gets picked up.
All trades 1% risk of balance.
John
Edit: Reasons for trades are that part of my attempts is to swing trade on the daily TF. As I work during the day, I cannot place orders until I get home at night and sometimes price has already shot further than anticipated.
My swing trade setup consists of waiting for a swing high or low to form and place a trade in the direction of the new trend either below the low of the swing high or above the high of the bar creating the swing low (The definition of a downtrend is if price is making lower highs and lower lows, since we would have the highest high provided by the swing high and a lower high by the next day’s candle, all we now need is a lower low which would be caused by the break of the low of the swing high candle). As in the eu trade, I placed the sell order at the fib retracement of the day’s movement using the H4 TF, in an attempt to reduce the large sl and risk.
I have actually jumped the gun as I have called yesterday’s high the swing high, hope I am right. More patience is required I think. Also in these trades I don’t think the cot data is actually helping me, so I have ignored it as I only treat it as an indicator.
Just made a graph showing the weekly price action of the last 5 months with the cot data, it looks like there is a change in direction to the upside. Large traders now buying from the Commercials, just looking for a retracement to jump aboard!
The signal was when both were at extremes apart, but because of the future nature of the cot report, we need to watch price action to verify a swing low or swing high on the weekly. Seems I am late to the party.
Just a quick point on COT data from my experience. I use it but (1) I am a swing to long term trader. I’m in a trade for a few weeks to 4 months, so the COT data gives me an indication of risk appetite on the dollar (2) As I pointed out on my first point, I use it to give me a steer. I use a whole set of other factors to influence my trade, COT being one, so it’s not the main driver.
If you are an intra day trader or scalper, using the COT data won’t on its own help. In fact, it lags so can be destructive. Don’t fall for the trap that I fell in when I started in thinking it’s the holy grail because it definitely isn’t. Hope this helps.
I am trying to become a swing to long term trader myself and am exploring the cot data to help with bias for my trades. I know there is no holy grail, I am hoping to become reasonably successful, but this will take time, effort & learning.
My graph below also shows the upside sentiment on this pair being similar to Gbp/Usd, which is to be expected I suppose. The swing low 3 weeks ago is where I would have liked to buy, Looking for a retracement on this also.
Here is the chart showing GU is currently in a large rectangle consolidation.
We have entered a buy program which should last until the end of the year imo. This brings a number of scenarios as price reaches the heavy resistance area.
1 Price can retrace before resistance, get more momentum and smash through it. This would make a small wave up.
2 Price can run up to resistance and immediately turn back down sinking lower. I’m not with this scenario because of the buy program.
3 Price can run up to resistance, bounce back down and return to break resistance, retrace to test it as support and carry on. This is my guess.
4 Price can break through resistance, peak and return back down into the rectangle. This is also a possibility making a fake-out.
Just set a sell order below the low of today’s candle. This is a counter trend move, reasons follow;
1 Price is at resistance level of 14 November 2011 (red arrow), and May 2012 retracement.
2 Price is at 78% fib retracement of last down move and in the 62% retracement of the larger recent down move.
3 Market structure is still bearish as the recent highs have not yet been taken out.
4 I was expecting this retracement but probably later in the week.
Again I have jumped the gun a little in that I am taking today’s pinbar as the swing high.
As always 1% of account balance risked.
Well my swing high has been confirmed, now I’m in the trade.
Looking at my screenshots below I have made the elliot wave 5 and subsequent abc retracement waves. If I am correct with this we should be now going short for wave 2 retracement of wave 1 marked. I am targeting 1.5900 being the 78% retracement ICT ote end of wave 2 and the start of glorious wave 3 which should take us up out of the binding rectangle shown on the weekly.
On the other hand, if price breaks through my 1.5825 swing low of wave c, this eradicates my elliot wave count and “I’m reviewing my situation…I think I’ll have to think it through again!”
Just a quick update.
Entry: 1.60852, half off @ 1.60488 targeting 78% level or sooner if swing low is formed.
John
Edit: Closed trade @ 1.60121 total pips: 73. Reason for closure: expecting an upturn soon as it’s friday, will re-assess on Monday to re-enter on retrace.
Hello All,
As you can see from the graphs below of the latest data, it is the commercials who are dragging the prices down for both eu & gu. Looks like more downside next week. Look out for a swing low though, as this could be commercials stopping the decline.
