Trading The Higher Time Frames

Trading Systems
1

[B][I]Intro[/I][/B]
Welcome everybody, to my first trading log :slight_smile:

I havenā€™t been around as long as most on here, but Iā€™m a very eager learner and i know after my time spent learning and practicing trading Forex (under a year currently), this is something i have a passion for and something i definitely want to be able to do full time.

Only in the last two weeks or so i have made the change to my personal trading plan to trade strictly the higher time frames - by this i mean anything from the monthly down to the 1H charts. On these time frames is where i will spend the majority of my screen time doing my analysis - and more importantly, watching and waiting for my setupsā€¦

I chose to start this as swing trading thread as the approach i am about to share will most definitely not provide me with a trade every single day of the week - in fact, the reason i want to follow this approach is to keep me out of really the intra-day garbage that in the past has just sucked me in and only resulted in losses to my accountā€¦

I will be sharing a Myfxbook link at the bottom for those interested, and youā€™ll be able to see my full progress to dateā€¦ As my account currently stands as i start this thread, its +25.3% up since i started traded near the beginning of this year - nothing amazing, in fact it was really one month of a few really good trades and have since been rangingā€¦ With my new approach i look to break out of this range and continue on upā€¦ For clarification, i am currently trading a demo account - but i will be switching and going live around September of this year, and i will update with a new Myfxbook link for this :slight_smile:

I will be using this space as a public journal to really air my personal thoughts on the market and what i plan to do - and reviewing what i have doneā€¦

Now with the into done, a little about how i will tradeā€¦

[I][B]The Strategy[/B][/I]
As i mentioned, i will be looking at primarily daily, 4H and 1H charts for my setup. Once i see my setup unfolding on the charts, ill then be zooming in down to a 5m chart and picking an entry on this much smaller time frame as a way to control my risk and limit my stop sizes down to a maximum of 30 pipsā€¦

On each trade i will be risking 2% of my account balance. This amount is halved with each loss down to a minimum of 0.5% risk a trade until i can recover at least half of my losses from the losing tradesā€¦ Then and only then i will be scaling my risk back up until i reach my desired 2% risk againā€¦

On each trade i will be taking partial profits (unless im risking 0.5% - where i will manually trail my stop), at 1:1 risk:reward of my trade. If i take a trade and it is not able to earn me as many pips as i had initially risked, it will be considered an automatic loss - i intend every trade to have a minimum of 1:1 risk to rewardā€¦

I am a fellow student of ICT, and have learned most of what i know and how i trade from his teachings, which can be found:
http://forums.babypips.com/newbie-island/36328-what-every-new-aspiring-forex-trader-still-wants-know.html#post221818
&
http://forums.babypips.com/show-me-money-daytrading/43211-inner-circle-traders-millionaire-traders-guild.html#post324927

Anybody familiar with his teachings should be familiar with the method i am about to share on how i tradeā€¦

In terms of entry criteria into a trade, i will only be looking to trade with the current trend of the HTF, and with each trade i will be looking at the majority of these criteria to be met:

  • Market Structure in Sync with the current HTF trend
  • Market Flow in sync with the current HTF trend
  • Reactions off Key HTF support & resistance levels & institutional levels to allow me to get in sync with the HTF
  • Pivot buy / sell zones
  • Overbought and Oversold stochasticā€™s + divergences
  • SMT and USDx Divergences
  • Intermarket Analysis - divergences between the stock and bond markets

Anyway, enough babbling, ill be giving below my first example of what i look for price to do, and why im expecting it to do it, followed by what i will be looking to trade this weekā€¦

[I]Updated Live Account:[/I]
SanJ System | Myfxbook

Also, finally wanted to give a shout out to ICT, for his generosity in time and teachings - i hope i do you proud here!
Also, all fellow students that have helped me along my short journey so farā€¦
And of course, the fellow musketeers :wink:

Buckle up, i can promise itā€™ll be a bumpy ride!

:57:

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Ok, so my first bit of analysis iā€™d like to throw inā€¦

My current bias for my two traded pairs - the cable and the fiber, is currently bullishā€¦ We are coming down after quite a heavy sell off and but i have reason to believe weā€™ll be looking for higher pricesā€¦

Cable - Left
USDx - Center
Fiber - Right

Divergences.jpg700Ɨ405 39.6 KB


As clearly shown above, there is a strong bullish SMT divergence that had occurred last week which saw the Euro take out a significant Monthly low. The lower low shown in the fiber, is represented as the higher in the the USDx - showing the correlation intact. The cable however failed to make the same lower low indicating there was accumulation taking placeā€¦

Fractalcable.jpg700Ɨ405 27.8 KB

As well as this, in terms of market structure, the daily chart of the cable above i have tried to illustrate what looks to be like a longer term fractal posting on the daily chartā€¦ Represented with a intermediate term low, a longer term low, and another intermediate term low which indicates bullish market structure in the longer termā€¦

CableOTE.jpg700Ɨ405 30.9 KB

At the same time this has been happening, the cable was also approaching its OTE on the daily chart - with all other factors in place, it was a good catalyst for a bounce which we had seen on Friday and a continuation into todayā€¦

Market flow remains bearish on the daily charts of both the cable and the fiber until the respective highs are taken out at 1.2330, and 1.5720 - which i am looking to happenā€¦ 4H market flow is currently bullish in line with what i believe will be an up trend for the near future at leastā€¦

This coupled with the fact that seasonal tendencies show that the British pound shows weakness in July and posts a significant high leads me to my bullish bias in the marketā€¦

So for this week, i will be looking for long entries onlyā€¦ There has been quite a nice buy rally up today in both the cable and fiber and i feel we may have already posted our lows for the weekā€¦ Tomorrowā€™s action will make this a little more clearerā€¦

Iā€™ll update later in the week if any setups play out like i had planned and what the result of the trade wasā€¦

:57:

Divergences.jpg700Ɨ405 40.7 KB

3

For some reason the pictures arenā€™t showing up

4

Decided to be clever and try through a site this timeā€¦ Must have messed up
Edited and tried to re-add, can you see them now?

5

Glad to see you with your thread up and running bro!
ou know the Musketeers will be following!

Nice analysis by the way, and the pictures are working for me. Master this and then its our time to get paid!

6

Yes thanks I can see them now.

7

Sanj,

Can you please go more indepth with explaining your comment below, Iā€™m struggling with understanding it correctly. Thanks

ā€œAs clearly shown above, there is a strong bullish SMT divergence that had occurred last week which saw the Euro take out a significant Monthly low. The lower low shown in the fiber, is represented as the higher in the the USDx - showing the correlation intact. The cable however failed to make the same lower low indicating there was accumulation taking placeā€

8

Sanj,

Just thought I would mention that your link to myfxbook is wrongā€¦ It should include ā€œmembersā€ instead of ā€œportfolioā€ in that address. Example ā€œhttp://www.myfxbook.com/members/sanj/[B](account profile name)[/B]/345058ā€

Hope that helpsā€¦ I look forward the sharing swing trade idea.

Cheers.

9

Subscribing! Love the analysis and it should help me along the way as well. Just starting to demo.

Thanks for starting the thread.

EJ

10

I am very proud of your courage and determinationā€¦

Good Luck & Good Trading :57:

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Way to go on the thread sanj! I will be fallowing for sure. Your analysis matches the one I posted in my thread! Awesome bro!

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SanJ,

Please save me a front row seat! :slight_smile: :slight_smile: :slight_smile:

13

Hey Bro,

subscribing

Awesome intro - I wish you much success, I know youā€™ll make it! :wink:

14

Very important analysis and thread as well. Specially nicely plot the SMT divergence. I do appreciate your journey. Canā€™t we see to plot important price or S/R level in your chart, to be a little bit clear more please? Waiting to watch true sniper shot as like in market review that you honored by ICT.

Wish your :57::57:

15

Apologies JavaPro, and thanks for the heads up on that
Complete noob to myfxbook - have edited the first link, should be working now :slight_smile:

Prediter,

ICT does a better job than i ever will at explaining SMT and USDx divergencesā€¦ This video should explain it all to youā€¦ Iā€™ll be happy to answer any others questions you may haveā€¦

Correlation Concepts - Inner Circle Trader - YouTube

Thanks for the suggestion Shaer, think your right, ill throw up my personal charts tonight with my key HTF levels i am watching for the weeksā€¦

:57:

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Best wishes for this thread.

17

Best of luck with this, SanJ!

Learning to read the market flow and structureā€¦ that one video from ICT has changed my entire trading outlook and as a result, my profitability. Iā€™m forever in debt to him.

Looking forward to reading more of your analysis!
Cheerz

18

Great thread! Iā€™ll be following. I was wondering if you would be interested in trying a stochastic, or some other similar indicator to see if those charts you posted are showing any bullish or bearish divergences? Just a thought :stuck_out_tongue:

19

Nice one Sanj and all the best with the trades ahead. The thread is a good idea and will probably give you more of an account of entries/exits than a standard journal would give.

20

Apologies for the late replies and no post during today - had a bit of a busy dayā€¦

Ok so the first thing i do before the start of the week is to plan my key areas which i will be watching for a reaction for. I purposely avoided using the terms support and resistance, as personally to me, they are nothing but labels which are differentiated depending on whether current price is above or below these levelsā€¦ A support and resistance area, or zone as i like to see them are merely an area in which i expect price to have some sort of reaction from - this can be for example: providing a bounce, multiple bounces, or pushing through and retesting before continuing in its directionā€¦ You get the idea!

My normal routine is now to start at Monthly charts and work my way down to a minimum or 4H charts keying off important levels in which price has made a strong reaction to in the past. For reference, my charts levels will work as follows:
Red Lines - HTF monthly or weekly levels
Purple Lines - Daily and 4H levels
Light Blue Lines - Previous months and weeks highs and lowsā€¦

Ok, so as requested, here are my personal charts with keyed levels i will be watching for the coming weeks - many of these have not changed for a whileā€¦
My charts became quite busy trying to note levels on the chart so im going to post an image and write the noted levels underneathā€¦

Fiber (EU)

Fiber Levels.jpg700Ɨ405 39.8 KB


1.27
1.2625
1.2530
1.2440
1.2410
1.2290
1.2230
1.2150

Cable (GU)

Cable levels.jpg700Ɨ405 45.2 KB


1.5710
1.5650
1.5610
1.5590
1.5540
1.55
1.5450
1.5410
1.5380
1.5330

You dont have to like em, or agree, but there my noted levels :smiley:
Also, on top of these i will also be watching things like smaller intraday levels such as the big fig, mid fig ie the ā€˜1.xx00ā€™ and 1.xx50ā€™ levels, and also the institutional ā€˜1.xx20ā€™, and ā€˜1.xx80ā€™ levels, previous days highs and lows, and Asian session highs and lowsā€¦

Ok so todayā€™s trading i had my first real setup, enough confluences were in place for me to want to put the trade on, but unfortnately price never formed a smaller OTE within my watched area for me to be able to take a position suitable for my risk size i would like to use - thereforeā€¦ No Trade!

This is what i was looking at today:
Cable Chart

OTE Cable.jpg700Ɨ405 39 KB


The pink boxes are the OTE areaā€™s i had noted before todayā€™s action took place, the lower box delineated off the 4H chart, and the upper box was delineated off the 1H chartā€¦

Both OTE areas had a key level - the 4H had a key daily level noted, and the 1H had todayā€™s S1 level in itā€¦

At LC today, price traded down into my OTE entry level and the enough of my conditions were being met to look for an entry in, some of the criteria met were:

  • Time of Day (LC Killzone)
  • 4H Bullish Market Bias
  • Pivot Sell Zone + Key Level S1
  • HTF OTE area
  • 1H Oversold Stochastic

Oversold 1H Stoch.jpg700Ɨ407 38.4 KB

Sure enough, when entry criteria were being met and price was in this area, i zoomed into a 5m chart and looked for a smaller OTE in order to get an entry into the market which was within my risk parameters (not more than a 30 pip SL - also at least 10 pips under the low which i have drawn my Fib OTEā€¦

5m Entry.jpg700Ɨ394 37.6 KB


The small black box highlighted within the wider pink area was where my buy order was laying in waitā€¦ However price did not make the smaller OTE and i had to sit and watch price race off currently 92 pips from where i was watchingā€¦ Which yes, sucks, but as the trade didnt fit my risk parameters it means i will need to be content with knowing my analysis served me wellā€¦

So far no trades this week - not even sure i may get one. So far though, my bullish market bias seems to be holding strong at the moment as we dont seem to be pressing to take out the lows made on Monday, i will still ideally be looking for an entry on a pullback tomorrow to try and hold for a weekly range upwardsā€¦

Will post next when i have some updatesā€¦

:57: