What Every New & Or Aspiring Forex Trader... Still Wants To Know

[Alishijo]

@NeedyPips

My general feeling on this is that stocks, say as represented by the S&P 500, have a sloppy inverse correlation with USDX. Generally, when stocks soar ‘they’ talk about ‘risk on’, which usually means USD weak and EU GU strong. ‘Risk off’ means strong USD and the S&P tanks as evidenced by these last few days. The chart below shows good correlation between the EURX, EU and the S&P, USDX is generally opposite S&P and directly opposite EU, EURX. Of course that depends on the USD being viewed as a ‘risk currency’ or safe haven, of which there has been some doubt expressed lately. Again, these last days should put that debate to rest… we’ll see.

I am very interested in this discussion on correlations. What I have found is that the USD has an inverse relationship with commodity prices. If you look at the 5 year chart of the CRB commodity index (Bberg CRY:IND), you will see the index rising between the summer of 2007 and the summer of 2008. This coincided with a drop in the USDX from about 82 to about 72. Summer of 2008 to March 2009 the CRB collapsed, and the USDX went from 72 to 89. March 2009 to DEC 2009 CRB rose and the USDX sank from 89 to 75. Dec 2009 to summer 2010 the CRB retraced, and the USDX rose back up to 89. Summer 2010 to April 2011 CRB up, USDX back down to 73. April 2011 to present CRB falling off and dollar bottoming out. You get the picture, even though there isn’t one

I guess this falls in line with the ‘risk on’, ‘risk off’ element. USD is a ‘risk off’ currency, and traders will avoid risk when the world economy is looking bleak. It also goes without saying that a decline in the economic outlook means a decline in the demand for commodities (unless it is gold, silver).

I am also interested in what they are labeling as potential ‘currency wars’. The Swiss are obviously intervening to limit the impact of their ‘risk off’ currency status, but will it be effective? The Japanese have failed to prevent a strengthening of the yen. Will the US be happy with a strengthening dollar if it has a negative impact on their trade balance, and knock-on effects to the already weak job market?

Enough from me…I need to get out there and enjoy my day off!

Regards

EDIT: Did I overlook the obvious fact that the CRB index is priced in dollars, and so a stronger dollar will make imported commodities cheaper, and a weaker dollar make imported commodities more expensive?

[system]

Just managed to default all my fib settings on Mt4 platform,can anyone guide me to which video ITC demonstrates setting them up or send me the values to input?on a side note to the same request,got an account running Dealbook 3**(I am not in any way advertising or endorsing any products with very similar names (except for a few different numbers),and am struggling to input/convert ICTs fib values on this platform too,so if anybody is running it successfully?Any help would be most appreciated

Jeff

[The_Hunter]

Just managed to default all my fib settings on Mt4 platform,can anyone guide me to which video ITC demonstrates setting them up

Jeff

Hi Jeff you want this video, 15 minutes in: 4.3) Swing Projection Application & Fib Configuration - The 1.28 Projection.

Could you use MT4 for charting and DB 360 for placing trades so you wouldnt need to worry about the fib issue?

[Pajo]

…on a side note to the same request,got an account running Dealbook 3**(I am not in any way advertising or endorsing any products with very similar names (except for a few different numbers),and am struggling to input/convert ICTs fib values on this platform too,so if anybody is running it successfully?Any help would be most appreciated

Jeff,
Select the Fibonacci tool on the chart toolbar, and drag out a Fibonacci retracement.
Right click on the chart and select Configure FibRetracement… from the pop-up menu.
Select the Properties Tab.
Type the OTE values (first 62, then 79) into the box marked Value:, and press Add.
Press Set as Default.
Press OK.

[Pajo]

Are any of you using the ICT concept of range days (short-range days, long-range days)? I’ve found that all the short-range days I identify are Sundays! It is hardly surprising that they have short daily candles as they only last an hour or two, and consist of Asian session data only. I am just about ready to drop this part of the methodology from my analysis, but wanted to check with others first.

Cheers, Pajo.

[ambtn723]

Something’s not adding up.

Both the Fiber and the Cable have been in a steady downtrend for the last week, but both are currently trading below thier pivot points. I have some trades lining up nicely but every time I go bullish expecting a bounch (as we’re close to the S1/S2 Levels continuously), the market tanks.

Anyone else experienceing the same thing? Is this one of those things where I should just wait on the sidelines for now as the market is behaving unconventionally?

[Jaroon]

Something’s not adding up.

Both the Fiber and the Cable have been in a steady downtrend for the last week, but both are currently trading below thier pivot points. I have some trades lining up nicely but every time I go bullish expecting a bounch (as we’re close to the S1/S2 Levels continuously), the market tanks.

Anyone else experienceing the same thing? Is this one of those things where I should just wait on the sidelines for now as the market is behaving unconventionally?

LOL yup I went live Friday and my LC trade failed as well as my Sunday open Gap trade, my absolute bankers with about an 80% success rate. So clearly you can blame me!

I’m not worried (yet lol) infact I’m happy with being cool with losers. They were disciplined trades, no frustration or revenge required.

Michael did say that if the gap failed to close (traded Fiber as it had a bigger gap, so bigger potential profit from the fill) it was a strong trend continuation signal. If I can find a retracement in a KZ I’ll trade it. I’m only using .5% atm to keep the pressure off.

Being out of the pivot buy/sell and TT zones I’ll only treat a trade as a scalp, i.e 20 pips would do me

[system]

Many thanks Hunter!

spent most of weekend fast forwarding through videos,but a bit to fast as I obviously missed it !!

I am using MT4 to trade and for analysis but am just trying out 360(as I like the control it gives on your order etc)and really the only reason to do analysis on this platform too is to get more familiar with it.

Cheers

Jeff

(Mods please note I do not endorse or advertise any software products that may be mentioned)

[system]

Thanks Pajo!

I did set a few values previously its more what value to put in for the take profit (potential!)extensions 127,162 etc as they can be input negative on MT4 but I can’t see how to do this on other program,

Jeff

[Pajo]

Thanks Pajo!

I did set a few values previously its more what value to put in for the take profit (potential!)extensions 127,162 etc as they can be input negative on MT4 but I can’t see how to do this on other program,

Jeff

Jeff,
Negative numbers work fine, too.

Cheers, Pajo.

[Manta]

A couple days ago somebody asked me how I average/hedge positions. I was sick and thought Im dying, but extracted part of the code from one of my EA and made an indi, which shows average position (break-even price) for all open orders (long, short, total) per symbol.

I think it is very useful indi for every trader, who uses position sizing, multiple positions etc.

Enjoy…

Download here: MantaFX.com - FOREX Pub

[ambtn723]

LOL yup I went live Friday and my LC trade failed as well as my Sunday open Gap trade, my absolute bankers with about an 80% success rate. So clearly you can blame me!

I’m not worried (yet lol) infact I’m happy with being cool with losers. They were disciplined trades, no frustration or revenge required.

Michael did say that if the gap failed to close (traded Fiber as it had a bigger gap, so bigger potential profit from the fill) it was a strong trend continuation signal. If I can find a retracement in a KZ I’ll trade it. I’m only using .5% atm to keep the pressure off.

Being out of the pivot buy/sell and TT zones I’ll only treat a trade as a scalp, i.e 20 pips would do me

I think the problem is that the market sentiment for both Fiber and Cable is bearish. I’ve been watching the news and the prospect of the EURO or GBP in lieu of the vast economic problems that stem from the area. I was surprised to see the price bounce to 1.370 institutional level during the London Session. That’s been a pretty strong S/R level for the FIBER for the last 15 years. My guess is that the price level will fluctuate with that serving as S/R for some time to come. I’m going to stay on the sidelines for now but if the market continues beyond S1, I’m going to be in a long position to that level or 50% beyond it.

Would love to hear your thoughts, or anyone else’s for that matter. I’m a newbie.

[Jaroon]

I think the problem is that the market sentiment for both Fiber and Cable is bearish. I’ve been watching the news and the prospect of the EURO or GBP in lieu of the vast economic problems that stem from the area. I was surprised to see the price bounce to 1.370 institutional level during the London Session. That’s been a pretty strong S/R level for the FIBER for the last 15 years. My guess is that the price level will fluctuate with that serving as S/R for some time to come. I’m going to stay on the sidelines for now but if the market continues beyond S1, I’m going to be in a long position to that level or 50% beyond it.

Would love to hear your thoughts, or anyone else’s for that matter. I’m a newbie.

I couldn’t find an entry today which is surprising as on my evening analysis on the 15m (fiber) the day looks very much like ICTs buy day template. Analysis paralysis no doubt.

COT on fiber and seasonal tendencies on cable are bullish but with the fundamentals as they are I think you’re right on the side lines. Also I can’t identify a decent level below price that might act as key support on the higher TFs to trigger off.

Interesting how fiber was nailed between 1.35 and 1.37 today.

Don’t want to sound selfish (I am a trader after all lol) but it’d be sure nice to hear from Michael. Anyone heard how he’s getting on?

[fxnumerouno]

ARGH! I’ve just written a very long text about Pivots and TT Buy/Sellzones and the forum ate it :< But I’ll try to write it again hehe.

@Pajo: I’m looking at the range of the days, but more of LO - LC. A sloppy day + normal or small range day is an indication for me that the next LO is going to be a long range day. Open, trade up a bit and trade down with a huge range, closing just a bit above the low - in bearish condition ofcourse.

@Buy/SellZones Traders: Don’t focus on Pivots and TT, focus on the trend! GU was forming a H&S pattern and fallen under the neckline with a bounce of it - Bearish Signal. Trade short until there’s a real reversal signal, not just Pivots that say that there could be a reversal because it’s in the BuyZone. Look for price to trade up through CPP and bounce of it for a long - preferable in the OTE Zone. This is where you buy countertrend.

If price is hovering belove CPP, expect it to drop, eventhough it’s in the BuyZone.
If price fails to trade above equilibrium it’s showing that it’s missing buying pressure to get overvalued - bearish.
If price fails to make higher highs, bearish - even when it’s far below TT BuyZone.

Watch the marketstructure, the bigger picture, don’t buy because it’s below CPP. These are just helping tools, for example to find a intraday target like trading through for Pivots. Sell, because trend is down.

Today’s trade analysis:

GU: Very easy & nice LC trade. But I have to admit that it wasn’t a real LC trade, I just bought into support, but with good confluences and good reasons for a countertrend scalp. GU was approaching a Keysupport, Daily and 4h Williams %R were oversold, ADR was exceeded and EU was already trading up, singaling a bullish divergence. And it was LC, countertrend time! It took off with a hammer and I closed for 45 pips at S1, as I said, just a scalp. Normal LC strategy could have been used too, but it would only show results of 20 pips 50% partial TP.

But this trade doesn’t make me bullish. I’ll wait for price to break to the 3 fractal lows formed on the 4h chart, for showing the possibility that mid September buying pressure is going to unfold. Or the break of the support, showing further bearish trend.

AUDUSD: Price has fallen out of it’s bullish trendline and bounced of it on 7th September, giving me a bearish bias as I’ve written some posts ago. It wasn’t able to fill the gap - strong selling pressure incoming. Price was far below TT and in the Buyzone but it made a perfect bounce of S1 and the 62% retracement from the high after the gap - another example of follow the trend, don’t rely on PP and TT! I missed this move today - it has travelled 120 pips since NY.

greetings

[Alishijo]

I think the problem is that the market sentiment for both Fiber and Cable is bearish. I’ve been watching the news and the prospect of the EURO or GBP in lieu of the vast economic problems that stem from the area. I was surprised to see the price bounce to 1.370 institutional level during the London Session. That’s been a pretty strong S/R level for the FIBER for the last 15 years. My guess is that the price level will fluctuate with that serving as S/R for some time to come. I’m going to stay on the sidelines for now but if the market continues beyond S1, I’m going to be in a long position to that level or 50% beyond it.

Would love to hear your thoughts, or anyone else’s for that matter. I’m a newbie.

If sentiment IS so bearish, you shouldn’t be at all surprised by a bounce!

Price bounced on technical entries that signal demand exceeds supply. This action is explained as the following: Speculators sell hard, but when the last seller sells at a price level where demand (as seen as support on the chart) exceeds supply, price must rise. According to my COT analysis, which is based on a yearly cycle, the speculators have already played a lot of their short positions, which is where the bearish sentiment reading comes from. There is nothing to say that they won’t take more positions on the short side, just that on a 52 week time frame, their position is really quite extended. Hence demand (1.3500 to 1.3420 support) exceeded supply (Specs have already placed 94% of their short positions).

It is also worth remembering that price never drops to a low risk/high reward price level on nice green candles and good news. It is always nasty red candles and bad news. This is precisely why ICT encourages us to take positions that are extended on a daily basis (pivot buy and sell zones), or a weekly basis (Traders Trinity buy and sell zones). My COT analysis relies on the same principle – are the buyers and sellers extended on a yearly time frame? If so, then probability is in your favor for a reversal.

Regards

[Alishijo]

ARGH! I’ve just written a very long text about Pivots and TT Buy/Sellzones and the forum ate it :< But I’ll try to write it again hehe.

@Pajo: I’m looking at the range of the days, but more of LO - LC. A sloppy day + normal or small range day is an indication for me that the next LO is going to be a long range day. Open, trade up a bit and trade down with a huge range, closing just a bit above the low - in bearish condition ofcourse.

@Buy/SellZones Traders: Don’t focus on Pivots and TT, focus on the trend! GU was forming a H&S pattern and fallen under the neckline with a bounce of it - Bearish Signal. Trade short until there’s a real reversal signal, not just Pivots that say that there could be a reversal because it’s in the BuyZone. Look for price to trade up through CPP and bounce of it for a long - preferable in the OTE Zone. This is where you buy countertrend.

If price is hovering belove CPP, expect it to drop, eventhough it’s in the BuyZone.
If price fails to trade above equilibrium it’s showing that it’s missing buying pressure to get overvalued - bearish.
If price fails to make higher highs, bearish - even when it’s far below TT BuyZone.

Watch the marketstructure, the bigger picture, don’t buy because it’s below CPP. These are just helping tools, for example to find a intraday target like trading through for Pivots. Sell, because trend is down.

Today’s trade analysis:

GU: Very easy & nice LC trade. But I have to admit that it wasn’t a real LC trade, I just bought into support, but with good confluences and good reasons for a countertrend scalp. GU was approaching a Keysupport, Daily and 4h Williams %R were oversold, ADR was exceeded and EU was already trading up, singaling a bullish divergence. And it was LC, countertrend time! It took off with a hammer and I closed for 45 pips at S1, as I said, just a scalp. Normal LC strategy could have been used too, but it would only show results of 20 pips 50% partial TP.

But this trade doesn’t make me bullish. I’ll wait for price to break to the 3 fractal lows formed on the 4h chart, for showing the possibility that mid September buying pressure is going to unfold. Or the break of the support, showing further bearish trend.

AUDUSD: Price has fallen out of it’s bullish trendline and bounced of it on 7th September, giving me a bearish bias as I’ve written some posts ago. It wasn’t able to fill the gap - strong selling pressure incoming. Price was far below TT and in the Buyzone but it made a perfect bounce of S1 and the 62% retracement from the high after the gap - another example of follow the trend, don’t rely on PP and TT! I missed this move today - it has travelled 120 pips since NY.

greetings

Thank-you for taking the time to write out your post again. It is extremely frustrating when that happens, and I have learned to copy the text before pasting so that I can quickly try and post again. It often happens when your post is too long, and so you need to split it into smaller parts.

Anyway, thank-you for posting your ideas on how to play a trend trade. I have always had difficulty trading in a market where the action is so one sided, so any help I can get is more than welcome. I have managed to squeeze out some profits this last week, but I have to admit that it hasn’t been easy. As it happens, I took yesterday’s Cable LC trade that you mentioned in your post. It wasn’t a conventional LC OTE entry for me, but I was pretty sure that they were gunning the stops on the Daily chart, and I was watching carefully for railroad tracks on the 5M chart, which would produce a hammer on the 15M. My P4L clock showed me how long it was until candle close, and the second these formations were in place, I pulled the trigger. Entry was dead on 1.5800, 30 pip SL gave me 2 pips on the low, and I carried it to 1.5830. Yes, I could have played it for more, but who knows in this market.

Regards

[Alishijo]

I couldn’t find an entry today which is surprising as on my evening analysis on the 15m (fiber) the day looks very much like ICTs buy day template. Analysis paralysis no doubt.

COT on fiber and seasonal tendencies on cable are bullish but with the fundamentals as they are I think you’re right on the side lines. Also I can’t identify a decent level below price that might act as key support on the higher TFs to trigger off.

Interesting how fiber was nailed between 1.35 and 1.37 today.

Don’t want to sound selfish (I am a trader after all lol) but it’d be sure nice to hear from Michael. Anyone heard how he’s getting on?

Yes Fiber did look like the template, and I was looking for OTE within OTE at LO which meant price came to within 7 pips of getting triggered. I didn’t want to chase it, however, so I let it go.

Fiber support on Daily - I’m looking at an initial zone between 1.3500 and 1.3420. Cable support on Daily - I’m looking at 1.5780 (hence LC gunning stops), 1.5750, 1.5650, 1.5480 etc. If price puts in recognisable patterns at any of these stages, I’ll put my money on the table, and take away full risk at 20 or 30 pips.

ICT tweeted that he would be back on the 19th…next Monday. I am hoping that he has a nice package of goodies for us that will round off his teachings and signal the start of his Million dollar challenge. We already have plenty to play with, but a bit of closure would be nice.

Cheers

[hellogoodbye4201]

Yes Fiber did look like the template, and I was looking for OTE within OTE at LO which meant price came to within 7 pips of getting triggered. I didn’t want to chase it, however, so I let it go.

Fiber support on Daily - I’m looking at an initial zone between 1.3500 and 1.3420. Cable support on Daily - I’m looking at 1.5780 (hence LC gunning stops), 1.5750, 1.5650, 1.5480 etc. If price puts in recognisable patterns at any of these stages, I’ll put my money on the table, and take away full risk at 20 or 30 pips.

ICT tweeted that he would be back on the 19th…next Monday. I am hoping that he has a nice package of goodies for us that will round off his teachings and signal the start of his Million dollar challenge. We already have plenty to play with, but a bit of closure would be nice.

Cheers

Just rewatched the Seasonal Tendencies video to refresh my memory. ICT mentions that the best time to buy GU is in mid Sept… EU and GU are in OTEs on the daily + it’s that time again :p. Also, if I’m reading it right, the commercials have been adding a pretty good amount to their long positions.

[Pajo]

@Spanishjeff - I hope you got those Fibs working right

@fxnumerouno - thanks for the suggestion to keep an eye on the relative ranges of LOs and LCs. I sense these might be useful to compare. And thanks for responding about the question of oversold/overbought. That brings up my next question…

While I understand that the essence of ICT’s method is price action and not indicator-watching, over his long course of materials I have seen him mention four oscillator-type indicators:

[ul]
[li]Williams’ Percent Range (14)
[/li][li]Relative Strength Index (14)
[/li][li]Stochastic Oscillator (5, 3, 3)
[/li][li]Moving Average Convergence/Divergence (12, 26, 9)
[/li][/ul]

Since it appears that he does refer to these indicators at times for entry confirmation, I wonder what settings to use. At the moment, I am using the MT4 defaults, which I have shown above, and I am using them all on the hourly chart. I wonder whether there is a better set of numbers to use, or a better timeframe? Any informed opinions out there?

Cheers, Pajo.

[Alishijo]

It seems Fiber is playing a very nice technical game today. Ran the stops on previous day’s high that came in at MR1 and just shy of the 1.3700 figure. ICT told us to look for them to gun stops above and below 4H fractals, and then trade back in line with the D1 flow. This is exactly what happened at the PDH. Price catches a 135 pip run south to S1 which is OTE from PDL to PDH and support from PD NY afternoon session. Que 95 pips long. Nice!