I hasten to say anything because it’s hard to say some thing when I have my own problems learning to trade. With that said, there is a big difference between demo accounts and live trading. Demo accounts are like monopoly or play money they are not real. Personally I do not believe in demo accounts after someone has a small idea of what to do, even if what they know is incorrect. Don’t get me wrong, I don’t want to see people lose money but if you have nothing in the game you are not really trading. The ugly head of fear, greed, self-doubt, second guessing and confusion only happen when real money is at play. I believe after a very short time in a demo account the next thing is to trade the smallest percentage of account as you can. Don’t be thinking 2%, 1.5%, 1% or even .5%. Instead think pips, like how many pips was I able to acquire. Maybe your idea will be that you would trade 2 or 3 micro lots because your style is to take profits at different TPs. Whatever you decide is fine but without real money on the line you can not develop into the next level of not worrying about the results. That may sound counter intuitive but worry will kill you as a trader. Once you see that you can handle micro lots you can move up and overcome the next level that will be a challenge again because there is more on the line. By thinking pips and how many pips you are acquiring it takes the edge off looking at the bottom line. ICT says to improve your consistency, so that is your main goal, but keeping your head straight when things are not working out is also part of it. One thing about having money in the game, it is a big motivator to find out what you are doing wrong. It will make you think to consider other possibilities and learn more than a demo account that is showing profits will ever do for you and a demo account showing profits will give you a false impression of what trading is in Forex.
We all tend to plan a trade as we think it will go. We get that in our head and it’s hard for us to see other possibilities. A wise trader told me that most successful trades don’t go against you by more than 12 or 15 pips. He also said that once you hit that spot you should be considering that you’re probably wrong or you are in too early. So before I take a trade I try to say to myself if it would go negative by 15 pips what would I do, what action would I take and what new idea would I have about where it should go. This helps me to try and see other alternatives that my mind otherwise would not readily see.
Hang in there, everyday learn something and try and not make the same mistake more than a half a dozen times. Forex - there is nothing else like it.
An outstanding post,certainly gets the brain moving,for me you can get on that soapbox anytime!!
The 50% rule is in one of ITC’s videos stating that price action is unfolding from a previous swing,i’m not going to quote it
its best you look throught the old stuff.
look up exactly whats said about 62 &79% retracements too and the sweet spot.
Thanks for the feedback and good luck
Jeff
P.S I know you have been studying/trading forex longer than I,please don’t take anything I say the wrong way
I like the way this thread works, the way we tackle our issues as a group like EST v. GMT pivots, SMT, fundamental analysis and now psychology :5:
I’m still running a small live account but echoing watchdog regarding my demo account, I’m exercising much better discipline on demo than I ever did live, weird but once identified I hope to make the mental switch to consistant discipline.
My tweek this week has been to place a whiteboard right infront of my laptop with the major points of ICT and a few quotes on it. I look up and read them regularly and before considering to enter a trade. It’s helped me quite alot.
Some are paraphased from Chris Lori and one I heard on the Sopranos the other night and it struck a chord. “Contentment comes from trading discipline not pips” “Discontentment leads to Risk, Greed and Loss” and "Exercise Impulse Control."
These really address my current weaknesses in trading.
I posted early in the week two trades from early Monday & Tuesday, both were winners. On Wednesday the setup occured again! This one lost but should have brought home pips. The OTE was based on a mere 19 pip move where the others were 61 and 38. 19 is a bit under optimal but did perform according to plan. Problem was I had TP set way too aggressivly and I went to sleep. Had I been awake partial profit and/or moving SL would have been in the cards. Main point of the excercise was to watch the Asia open and see what happens there. Thursday and Friday did not see those setups. It seems I recall ICT said his Asia strat would be forthcoming… can’t wait!
So, going into Wed NY Open, I had 4 trades (all time low for sure) and was up 48p! The remainder of the week saw me “fall off the wagon” as I reverted to my system hopping, posted another 20 trades, ending down 20p. :eek:
I just wanted to mention that Backwardation in the FX futures market is actually an effect of the “cost of carry” (think interest rate differential) being priced into the contract.
So any pair with a net positive interest rate differential (such as the EUR/USD and GBP/USD) will display Backwardation. Look at the futures market in EUR/AUD and you’ll see Contango, simply because the pair has a net negative interest rate differential.
You should read up on “the carry trade” and how it relates to “Risk” sentiment in the market place. When there is a “Risk on” sentiment, pairs with large positive differentials will get a boost, and when there is “Risk off” sentiment, those same pairs will take a large hit.
Think of the size of the differential as the sail on a boat. If it is big, it will be easy for the “winds of risk sentiment” to push the boat along. Pairs with small sails won’t be pushed along as easy, but the forces are still there. The interest rate differential between EUR and USD isn’t big, but when the market is Risk averse, EUR/USD will still feel the effects (by falling).
and if your next question is “how do I tell if Risk is on or off?”, well that’s a bit of an enigma to all traders. You can see the effects on the financial markets when either is in play, but the cause usually leaves a lot of room for guesswork and speculation
edit: Currency Carry Trade Definition
here’s a short but sweet summary of “the carry trade”, but I’m hoping this will pique your interest and you will search out more materials because the concept drives these FX markets more than you would believe!
It makes perfect sense that backwardation is a result of the interest rate differential, but I had never considered it. I am aware of the strong link between the carry trade and exchange rates due to the impact it has had on my private investment portfolio, but I haven’t yet tried to understand why the Futures market works in the way that it does.
I think your analogy of the sails on a boat is a good one. I always think about it as swimming against the tide, or with it. I started my business back in 2002, and for the first few years I was re-investing a lot of my income so wasn’t concerned with exchange rates. From 2005 to 2007 I was taking profits and investing overseas which meant I was swimming with the tide - good returns on Chinese equity with the Yen carry trade in full swing (I earn in Yen and invested in China through $ denominated funds). Since 2007 I have been swimming against the tide - average returns due to the financial crisis plus the negative effects caused by the unwinding of the Yen carry trade.
I definitely need to learn more about ‘Risk on’ and ‘Risk off’ sentiment, and if anyone has any good links then please post them here.
This is just market commentary, on things like economic reports and speeches by the financial powers. You can attempt to put together your own perception of the risk environment from what you read on that liveblog. But I’ll tell you right now, things mentioned that bring Fear or Uncertainty into the financial markets will generally translate into a “risk off” environment.
…and a revisit of the Monthly Pivots that I posted at the start of last week. The question is still on the table - ‘Are we following the monthly PP Calculator by entering at MR1 and trading down to MS2?’
First of all i would like to say thank you ICT for the amazing videos and inspiration.
Now im still trying to figure all this out so please correct me if im wrong.
Now from what iv gathered for todays trading is that market flow on the fiber is Down on daily,4h and 1h.
so does that make this area here a good place to short?
It has a low from a previous session and the 50% retracement from a swing hi - swing low
oh and also the daily central piviot is less then 15pips away.
Any comments would be awesome thanks guys.
Hi Scraws. You’ve definately identified a significant level and if price moves up it well may well see a reaction based on the points you’ve raised.
Couple of things, Optimal Trade Entry is around the 72% fib. level. With possible resistance from the previous R1. I’d draw your fib. from the top of the daily swing myself.
The 72% is around the 1.4280 institutional level and is also in the area of the previous daily high, as price moves up it is more likely to respect a previous high than a previous low. Price would also be nicely into our sell zone and a short from here would still be trading with the 4hr and daily market flows.
I would normally place my stop 10 pips above the swing high but as it’s more than 50 pips away I’d probably go with a 30 pip stop at 4310 beyond which I think I’d call the trade invalid.
Remember to wait for a “Kill Zone.” I don’t know why these work but I definately have a better win rate when I stick to them, it maybe we just have a better chance of trading with the Smart Money at these times.
All that said, I still think the level you identified has a fair probability of being, at least tested if PA takes it there.
P.S I don’t want to come across like a know it all as I’m a noob but the only trading method I’ve really focused on is ICTs so I’m familiar with the set up.
Hey guys, I’m enjoying your analysis on the Fiber & Cable.
I haven’t been trading or in the chat room for a while, too busy, family stuff & been a little off color, but today I have some spare time to sit down & have a good solid read of the thread here & my charts.
One question Alishijo, you’re looking at a bearish trend to what you have marked as MS2. Is this acronym MS2 = Monthly Support 2 or Mid support 2.
My monthly pivot point calculations don’t seem to line up so I can’t tell for sure.
As for my conclusions on price movement (for what it’s worth )
The Cable has been bullish for the past 12 months,
If you draw a trend line from last May to current you’ll see it coincides with today’s ADR low, S2 & yesterdays S3 (all near 1.60500)
Also the current downward movement looks like a nice retracement on the weekly chart, draw a fib from the low on Mach 27th (1.59396) to the latest high (1.67444) & you can see we are in the [B]kill zone, as I understand it[/B].
EDIT: the bold text above is incorrect, I should have been referring to OTE (Optimal Trade Entry), Kill Zone refers to the time when the markets open / close, sorry about that.
So my conclusion is that if price ever moves right to this point there is a good chance of a nice swing back up.
Thank you for your reply it got me thinking =)
It did clear a few things up i think i just rushed in trying to find anything and call it a valid set up. which is the complete opposite of what is trying to be taught in this thread ill be sure to set up higher probability “Kill zones” and wait for price to come to me.
once again thank you =)
im off to watch more of ICT’s trading videos i’m still trying to learn it all.
This has been one of the most informative threads I’ve ever visited, on any subject, period. Truly excellent work by ICT! I started reading yesterday and haven’t been able to visit another thread since. Up to page 35 and just finished video 3. I’m brand new to Forex, but am already getting a great understanding of what drives the Forex markets now. Taking some pretty intense notes which is causing the videos to take a while to go through, but the information in the videos is definitely worth the time. Looking forward to being all caught up in the next few days.
Yeah, sorry about that green. I tried to make the chart clearly visible but I cut off the R1 and the S2 so it is not clear what the MR1 and MS2 are. MR1 is Mid-Resistance 1, and MS2 is Mid-Support 2. The pivots are calculated manually using inputs from the month of April, and are done so using ICT’s Pivot Point Calculator that is on the first page of this thread. You might find that your software calculates Pivots in a slightly different way, or that they are rolling month Pivots. One of my broker platforms also has completely different Pivots to this, and so I prefer to go with what ICT suggests for the time being.
Bear in mind that this is just one scenario that I am putting out there, and that I have added question marks for a reason. ICT’s PP Calculator was introduced as an intra-day tool, and I am curious to know if it is applicable on higher TFs (time frames). The general rule is that if we enter the period at MR1 and trend downwards, there is a likelihood that we could make it to MS2. This is already evident in the Fiber chart, and it could also play out in the Cable. Having said that, it is worth noting that we are only half way through the month of May, and Price Action doesn’t always go in a straight line. In that respect your analysis would also be valid.
One thing that I am working on is the mindset of a professional trader. We need to get away from absolutes and think with a flexibility that is quite alien to the average person on the street. We need to think in probabilities. What you are suggesting seems to me like it could be a possible scenario in the short term. If price continues down to the 1.6050 area, then it is likely to reach it’s destination at London Close. It will have been trading under the Central Pivot for 3 full days, it will be at ADR for the day, an institutional figure, and Y’s S3 and today’s S2. That all seems pretty good, but don’t let it blind you to the possibility that, as I see it on my charts, there is much stronger NATURAL support in the 1.6000 to 1.5950 area.
So this is where you screw down to the lower time frames if and when it gets there, you make sure you have an OTE swing on a 15M chart, and you look for SMT divergence. That is how you increase the probability of putting on a winning trade, but NEVER bank on it being a winner! It only takes one of the big sharks to put in an order in the opposite direction and blow hundreds of thousands of the small fish out of the water in a second. THAT should always be in your mind.
(I hope it doesn’t sound like I am an expert on this! You can see from my previous posts that I am struggling with the right mindset, and my words here are merely a way of processing the information that I am trying to take in at the moment.)
[B]Currency Pair:[/B] GBP/USD
[B]Date:[/B] 16th May 2011
[B]Time (GMT):[/B] 06:00
[B]Pre-Trade Market Bias [/B]
[B]USDX:[/B] Has pushed up to 76.00 figure but there is resistance around this level.
[B]US Bond Yields:[/B] All putting in lower lows and lower highs on a 3 month timescale, but short term all but the 2yr note have put in higher lows.
[B]COT Data (Net position and direction):[/B] Commercials are net short, but they increased their net long position by 18,276 contracts this last week. Have we seen a turn in the COT?
[B]Backwardation:[/B] Yes.
[B]Futures Market Open Interest (rising/falling):[/B]
OI: 110,677 down from112,819 previous trading day.
[B]News Releases Scheduled (Only High Impact)[/B]: None
[B]Currency Pair:[/B] EUR/USD
[B]Date:[/B] 16th May 2011
[B]Time (GMT):[/B] 06:00
[B]Pre-Trade Market Bias:[/B]
[B]USDX:[/B] Has pushed up to 76.00 figure but there is resistance around this level.
[B]US Bond Yields:[/B] All putting in lower lows and lower highs on a 3 month timescale, but short term all but the 2yr note have put in higher lows.
[B]COT Data (Net position and direction):[/B] Commercials are net short but they increased their net long position by 45,123 contracts this week. Have we seen a turning point in the COT? Williams%R on D1 was overbought when Fiber put in a high at 1.4950, and Commercials and Large spec. were at extremes.
[B]Backwardation:[/B] Yes.
[B]Futures Market Open Interest (rising/falling): [/B]
OI: 237,711 down from 238,315 previous trading day.
[B]News Releases Scheduled (Only High Impact):[/B] None
Babypips is messing around with me again and won’t let me edit that last post. Please refer to COT. What I mean here is that Commercials are net short in their positions, but they are reducing those short positions by the figures stated. Sorry for any confusion there.
