I am looking for your suggestion - what extra protections could I do, BEFORE entering into position, to avoid unwanted retracement into the opposite direction comparing to my opened trade. I am facing all the time this problem and result is wasting several months of waiting for the trend to go into correct direction matching my opened position. I am spending months by months where time could be invested elsewhere on different position. What I am doing is correct BUT I clearly need to do a lot of other work I am unaware of. Please if someone could help because of being additionally extremely worried due to negative Swap charges - they are rising (into negative = expense) day by day and trend just doesnât go where I it was going according to my analysis work so I could close position with at least zero profit to avoid the loss.
In order to ask for our suggestion, I obviously need to describe my strategy: it consist of Alligator indicator and Fractals indication:
UPTREND Position Opening: Trend of current green candle must go at least for minimum distance above the entire shape of valid ( * ) upward fractal but this green candle must fully form. Valid upward fractal must occur above alligatorâs TEETH line. The LIPS alligatorâs line must cross above both JAW and TEETH line for at least minimum distance above both. The angle of crossing doesnât matter. Additional situation that must also happen is that closure of green candle must be above all three alligator lines.
DOWNTREND Position Opening: Trend of current red candle must go at least for minimum distance below the entire shape of valid ( * ) downward fractal but this red candle must fully form. Valid downward fractal must occur below alligatorâs TEETH line. The LIPS alligatorâs line must cross below both JAW and TEETH line for at least minimum distance below both. The angle of crossing doesnât matter. Additional situation that must also happen is that closure of red candle must be below all three alligator lines.
valid fractal is the one which is the closest to the said cross.
Besides this, I am doing three major part of work BEFORE entering position:
checking economic calendar. Assumption is the following: if relevant event occurs while i am in position or at least in first few hours after having position opened, then it could mean that result of event (forecast vs. actual) may cause trend to go into unwanted direction. To protect myself, I need to make sure there are no high impact economic events related to the symbol. Similar when trading stocks: to make sure there are no major meetings or news on relevant finance blogs websites about particular company.
analysis of support and resistance line. Obvious assumption is the following: if the support or resistance line is touched or even breaked out, without confirmation candle, then this could be a sign that trend will go into the opposite direction.
primary patterns such as bullish/bearish engulfing patterns, hammers, evening starts, dojis, etc. Assumption is the following: if such primary pattern occurs with confirmation candle then there is huge possibility that it is showing CORRECT direction of a trend. So i need to be careful there are no unwanted primary patterns near by showing opposite direction of a trend comparing to position i am considering to open.
It just doesnât work!
I am getting tired of situations as shown on attached picture. Note: manually drawn white arrow is pointed to show you approximately where/when i opened position. Even usage of classical indicators such as Stochastic Oscillator, RSI, CCI, donât solve the problem. Please see picture below.
What else could I do to prevent all the time happening what is shown - occurrence of opposite trend? I am sure that all the work I am doing BEFORE entering into position is correct BUT i clearly need to do something else too and I am unaware of what else should be done? Hopefully someone will be able to assist, I simply wonât be able to wait half year and more for every single position to be closed just to come to zero profit (covering negative swap) and avoid losing money.
Your assistance would be highly appreciated.
EDIT: Previously I MAY have been saying I am about to upload three pictures but due to forum bug, it lets me upload in this message only one picture. So I am uploading it below.
I never cease to be amazed at how GOOD we are at picking Exact tops and bottoms - and betting - The WRONG way !
You are new. Thatâs why you can only load one picture. I think you can load one per post - so try using a fresh post.
I donât have AUDDKK charts, but would like to see daily and weeklies to get some idea where we are !
Failing that, you seem to have just tested Resistance on the upside, which if it holds might better your position, but if the pin on that last bar is confirmed, it doesnât look good !
Falstaff: daily chart is attached. I donât understand what you are saying in your latest paragraph.
I am not worried that something would be incorrectly done by me (analyzed) but I am extremely worried that I should have done many more tasks before opening position and I am being unaware of them.
OK well if youâre not worried about your reading of the trade, then Iâm afraid I cannot help you much because I would not have taken that trade, but I am not familiar with your indicator and anything I say would probably just confuse the issue.
Looking at that weekly, you now have a chance of seeing a retracement downwards from where we are NOW ! - or it could punch straight through. - past history seems to favour the latter - but hey - weâre just gambling here !
rectracement downward? But i am already in Short position. I assume you meant to say that i have a hope of getting retracement next week but this wasnât my question. Perhaps I didnât type it with enough well described situation: I was asking what else could i do (particularly but not only on h4) do expect this major uptrend BEFORE opening Short position?
You could learn about support/resistance, about price action, about doji candles, everything about that 4hr chart was screaming go long, as it is also in an uptrend.
BufferBloat see the white arrow. on h4. This is approximate time where i entered downtrend. Major support like got downward break out. Downward confirmation candle occurred. Also this candle was below downward fractal. Even green Alligator curve downward crossed the other two Alligator curves. Doji that you are referring to wasnât formed yet so I had nothing to consider it as primary uptrend pattern. I wish I knew what exactly where you referring to when you said uptrend is coming.
As I just posted in another place, give up chasing reversals. The alligator system is a reversal trading strategy masquerading as a trend-follower. Just follow trends from the dailies.
didnât say uptrend was coming, from that point you entered trade, there was no way of knowing an uptrend was coming, if you look at the price action you have 20 hours of down movement where it really struggles to get down, it then posts a pinbar, (doji), which would suggest rejection of further movement down, so after that 4 hour candle posts, which is also at support, the case for going long is strong. You are also in an uptrend, but you have now way of knowing that is what is going to happen, this is just learning to read the charts from experience, the trade to take was long, because it was in your favour, how far it moves up, is unknown, but looking at the chart I wouldnât take a short.
support line was already downward crossed but it seems like you are telling me that the mistake i did was NOT considering doji. I am referring to the candle which is one (1) before the candle having manually drawn white arrow. But Downward fractal was downward crossed.
@YourFriend0 I donât know the system your using, I can only tell you what I would have done, and looking at your 4hr chart, my points are as follows why I would have gone long and not short.
You are in a several days uptrend. Momentum is up, this relates to the doji when itâs posted.
it took best part of a day to get down to support, which is about the sell line you have, this is diminishing bear price action.
the chart posts a doji, an important rejection candle, on support, more struggling bear price action, a doji is a simple graphic representation of how the market behaved at a certain price point.
it then posts a strong engulfing bull candle, which in 4 hours covers the past 20 hours bear price.
if you donât understand what Iâve posted above, any of it, then you should study futher
@YourFriend0 - In fairness, looking at the weekly chart you posted, I can see where this trade is coming from.
7 weeks of resistance with a large pin bar failure to break out upside, back in January.- Your stoploss gives the trade plenty of room to breathe.
However, you choose to trade the first sign of a reversal there and before the upper limit of the resistance box has been tested. what you traded there appears to be a âFakeyâ - which may turn out to be a good bet - yet. Iâm not sure why you chose to trade some trendy named system, but you say you obeyed itâs rules - ok if youâre happy with that fine.
Now I can see three main issues with the trade;
it is in the middle 1/3 of the long term range
Taking into account the Risk size against previous action, I donât think the reward ratio is adequate
The resistance took seven weeks to form, I think you are in quite a lot early, on the first sign of weakness on the 4 hour bars. - As you say you may need to sit a month or more in loss from your entry position, before you even know whether the bet is good or not !
In answer to your question, you are betting a weekly resistance, there is no way from the action prior to your bet that I can see anything to say it is a bad bet, but neither can I see anythng to say it is anything other than a minor pillback, especially on a four hour chart with only one venture part way int the resistance.
If youâre going to trade reversals, you need to be looking for better entries and tighter stops, so you lose less if youâre wrong (IMO) - but of course if youâre trading âBreakoutsâ (and this as @tommor says does seem to be a pseudo âBox breakout systemâ even though it is an OLD âBoxâ) - you simply canât do that - because the distance from the reversal is by definition large !
There are many resistance/support lines. I assume I have a lot to learn where it comes to separating ââqualityââ resistance and support lines from the ones that are not worth to be considered. Basically every small retracement can produce new resistance and new support line. As you can see on AUDDKK (H4) there are TWO high impact ( ââqualityââ ) support lines. At least I consider them as high impact ones, I could be wrong too. There were both crossed downward. Being aware that mistake is NOT considering Daily chart but I should have done it. However there is not much helpful on daily chart either. The green candle (i am talking about the second-last candle if you look at daily chart) has been forming on the day on my Downtrend position being opened by me (June 1st). The key info is that it has not been fully formed yet but in progress. Since before said candle are two red candles (still talking about daily AUDDKK chart), the daily chart isnât helpful at all. It is showing downtrend and also showing that my decision was correct but current loss on currently opened AUDDKK position shows that my decision was wrong. Even further: on AUDDKK you can see the primary pattern (this is NOT bearish engulfing pattern, it more looks like either Bearish Harami or Evening Star) showing downtrend. I am confused and worried that even looking at Daily chart wouldnât solve the problem here.
BufferBloat: If you donât mind me asking, what makes you think soon enough (means BEFORE i opened position on 1st June) that sign of downtrend is not strong enough, meaning that there is high possibility for downtrend to stop and uptrend (previous uptrend) to continue?
Iâve looked at your weekly chart, these are the points Iâve noticed,
you are in a 5 week uptrend, the previous week broke through resistance, if you look left you will see the two doji weeks where they reject right on your opening price. This resistance becomes support, you sold right at support.
the 5 week uptrend went through a lot of resistance, so the bulls are incomplete control.
the uptrend started on a double bottom at 4.6 roughly.
Iâve added a chart of mine, EUR/USD, I trade off these charts.
Probably uptrend (Long position) if the resistance line (horizontal blue on your picture) will be upward crossed with green candle = its closing above said blue line.