What Every New or Aspiring FX Trader Wants To Know

[system]

I have a question.

In the case of today’s long trade, is it still reasonable to expect price to go through four pivot levels?

Thanks for the awesome material.

I wouldnt expect that no… the flows will seek to fill the four pivots based on direction or news impact. Once filled… leave the show, it’s basically ran its battery out, in otherwords. Flows will dry up and liquidity will thin… take the rest of the day off or manage any open positions, but refrain from new trades after London closes.

Welcome!!

[indy360]

I enter off of a 5 minute chart - monitor it on a 15 min chart - find setups on 1 hour and 4 hour charts with longer term trend analysis and S&R levels in mind.

I set my orders last night and went to sleep… I got up and adjusted my stops and limits and went back to bed. So it possible to work a day job and find a few pips. :rolleyes:

Glad to see you enjoy the content.

ICT, When you say you set your orders do you mean a sell limit and a buy limit around a major support / resistane level? If so i assume you use some sort of protective stop just incase as you wont be able to monitor the trade if one of them gets filled? If i’m way off the mark with this just say! I’m a noob to Forex and still finding my feet. Anyway thanks again for the great info, keep it coming!

[Sweet_Pip]

[B]Originally Posted by InnerCircleTrader [/B]:

Swing Highs at Key Levels are always sold short by aggressive Bears and scalpers… and these traders are considered the early birds. While it can be said, the early bird gets the worm, it is [B]the second mouse that gets the cheese![/B]

[B]Professional traders like to trade a retest [/B]and look for the stops to be blown out and you eventually see a price rejection occur and this is noted by a rapid move in price away from the level stops were suspected to be “hiding” at.

This price rejection is confirmation that your trade is likely to pay off and pay off handsomely. Look at your charts and study when highs were retested right before a dramatic slide and 90% chance you will see this phenomenon occur. It goes untraded by thousands of novice and unlearned traders and maybe these same traders were in right at the previous high… [B]and because of fear they rushed their stops to one pip or two just above the Swing High fearing being stopped out.

They want to keep a close stop… then liquidity takes their stop and they watch the price slide lower and lower and they suddenly feel sick they were right on the direction.[/B]
So Where Should Your Limits Be Placed?

Let’s assume the swing low price [B]is retesting on your entry [/B]is 1.5520 [B]and you want to buy the Cable [/B]using this smart money approach to entries. You could use a Limit at 1.5524 to 1.5520 or better. You have to remember the spread and this will be a factor in your trade. You want to capture the raid on the stops, but try not to be too fancy that you Limit too cheap and miss the move.

So How Are Your Entries Confirmed?

[B]Remember you’re entering right when the candle will be the most bearish looking on long entries and most bullish looking on short entries[/B], this will be scary until you get used to trading the method. Your charts, when you look at them in hindsight have those powerful looking hammers with long wicks at either end. What do you suppose those hammers and long legged dojis were before forming?

Before those long wicks appear they are those boldfaced candles you entered at or near the extreme end of! Welcome to Professional Smart Money Entry folks!

Now do some maturing and review your past trades and see where you entered and how you might have been able to better place your orders to reduce risk, increase profit potential and cover the Dealer’s Spread more rapidly [B]so you can start bringing those Protective Stops of yours closer to breakeven![/B]

Wow!..I think I’m excited for us too! Thank you

I think I can see now what it was that I was doing right at the time I took my $1k demo account and turned it into $5k within a month, compounding 20 pips a trade. However, I didn’t really know why it was working, and later after trying it out for real I didn’t know why it stopped working. Now I think I do…I had it backwards and didn’t pay attention to key s&r levels from a little higher up…lol

I bolded your text that is causing me some confusion. So you say professional traders like to take the retest, so is it the most bullish/bearish part of the retest candle, or of the candle of the initial break/touch of the high/low? What do you mean by the swing low price is retesting on your entry…and you want to buy…that sounds like I’ve already entered? So moving stops up on the initial bounce is not recommended because of retests, so when is a good time to do that?..again that sounds like we entered a trade prior to the retest?

Or is this all happening on the same candle…then again I suppose the lower timeframes would show it over multiple candles?

I’m bumping this up again cause it really got pushed back and I think you missed it…maybe a quiet enough time now to ask again. Hopefully you understand my confusion

Thanks

[Synergistik]

I finally caught up with all the posts in this thread. And I wanted to thank everyone for their posts, info, suggestions, tips and more.

When I was first introduced to pivots, it just wasn’t explained in a way that a newbie such as myself could understand it, trade it, and see it’s potential. This thread has done just that.

I’ve added pivots to my charts, and so many of those seemingly sudden reversals, many of them, are right at the pivot points!

Great thread.

Synergy

[akeakamai]

You got it, however there is a lot in between those two events occurring profitably.

I already made a post concerning when I look for follow-through on breakouts beyond PDH’s and PDL’s. See TalonD’s thread he posted the concept in his thread as well… might be easier to locate there.

I’m not trying to put your questions off… but my pace is purposely intended to be slow and only bring small portions out at a time. It is not because I do not think any of you are not intellegent enough to understand it, but rather… If I tell you everything in one post you will miss something or do it incorrectly and walk away thinking this doesn’t work. My goal is to see profitable traders trading with excellent risk control and sound trading technique… consistently. I hope this is yours as well.

Trust me… it will all be understood in time. Just enjoy the journey… you already have plenty to make a nice trade selection and now where to get in and out of. If you want to know more, that is great… just please don’t expect me to put it all out there at once. If you noticed there are some in here that have caught on to things already and it’s my intend to have the material properly outlined so I won’t have to revisit posts I already made.

I will tell you this, in 90 days or so, my only posts will deal with current market conditions using everything I am detailing here. So this should help you in understanding my timeline. Then you can refer to posts on any given topic as the trades I am hunting unfold. There is a method behind the slow poke posting. Hang in there!

It will all be worth it later on…

Well I’m thrilled that you intend to make an extended stay at our humble trading forum

I don’t expect to be spoon-fed information, I truly appreciate every post you take the time to write. Sometimes I think you’re too nice to us haha, it’s not like we’re paying you.

I’d be glad to sit back and let you present what you’ve got planned, I might have gotten hasty with the questions only because I thought you could disappear at any moment! :eek:

[samys]

Hi ICT.

I am another noob who has become a massive fan of this thread, so I’d like to add my appreciation.

I have a couple of questions for everyone.

First off, how important is it to determine the directional bias of the day beforehand??

Even in obviously trending markets, there are odd “opposite days” thrown in. Not necessarily pull back or re-tracements than can be identified, but just random days that are out of trend.

This becomes more pronounced in periods of consolidation where the market is chopping around. The market is up and down almost day by day.

I’m not sure if it is even necessary to determine a daily bias to practice you method, but if it is, how do you go about it?

Cheers!

[system]

I’m bumping this up again cause it really got pushed back and I think you missed it…maybe a quiet enough time now to ask again. Hopefully you understand my confusion

Thanks

What specifically are you confused about?

When markets make a high you will typically see a second attempt to trade above it after the initial retracement lower. This retest of the high is where the LOW risk entry is found. True the shorts that rode the initial high down during it’s retracement may have made profits or maybe they were greedy and and held for lower prices not thinking price might retest the high they shorted. They will likely have their protective Buy stops at or just above the High they just shorted… this is sometimes the early bird in trades. However, since this trader is already in the market their Stops are now known and therefore likely to be raided and see their short be knocked out of the market.

The patient trader that looks for this condition can place a limit order to sell right at or just above this recent high and when it gets penetrated by a few pips it will provide the smart money an opportunity to sell right in the area the initial bears went short… effectively they are buying your short position entries with their protective buy stops… which is in some way quite cool to me.

So the early birds might be able to say they sold the high and got the worm… it can become the bear trap they set for themselves by placing the Buy stops on their shorts that presents the pocket Market Makers pair orders at to provide liquidity. Much like setting a mouse trap… the first mouse gets the snap on the neck but it is the second mouse that gets the cheese… the trap has sprung on the first bears… we come in right after and short right into the high and nail down the actual High.

When we look at examples this will become more clear as we deal with examples. For now, just look at last night’s highs and what unfolded. Precisely, what I just explained above.

When you trade into opposing direction to your trade, you will be able to cover the spread quicker and thus provide you a faster means of bring your stops you place to limit losses to breakeven and this is where you want your trades to go as soon as possible… then it gives you freedom to relax and allow the numbers to get filled on the pivots since your trade now has become essentially risk-free.

Your entry today was an example of this as well, whether you understood that at the time or not… you traded or attempted to buy under the 1.502ish area… look on your chart and it is where stops on longs from last Friday might have been “hiding”. Price went right to them and this provided more liquidity in the market.

This is not an easy concept to teach or explain in a post… it will be understood by chart reading daily. Just for now, try to look at your charts with both bears in mind and bulls in mind. If you were short and the market had traded lower… where would your buy stops be in the market? Wait and see price move right to the level in the near future and raid the stops. Reverse for longs.

This event is where you want to identify for optimal trade entry. Entering in opposing candles as you do. Hope this helps. If not, give it and me time to illustrate examples.

[system]

Refer your charts back to last Friday and study the chart below…

[system]

Hi ICT.

I am another noob who has become a massive fan of this thread, so I’d like to add my appreciation.

I have a couple of questions for everyone.

First off, how important is it to determine the directional bias of the day beforehand??

Even in obviously trending markets, there are odd “opposite days” thrown in. Not necessarily pull back or re-tracements than can be identified, but just random days that are out of trend.

This becomes more pronounced in periods of consolidation where the market is chopping around. The market is up and down almost day by day.

I’m not sure if it is even necessary to determine a daily bias to practice you method, but if it is, how do you go about it?

Cheers!

You do not need to know the directional to make money… but it does increase the wins when you do.

[Sweet_Pip]

What specifically are you confused about?

I guess I was confused with the sentence where you said “is retesting on your entry” …entry as in order?..and then in the same sentence "and you want to buy the Cable " …so “retesting on your entry” at first sounded like we already made a short entry…and then saying “want to buy the Cable” contradicted that. Now I’m thinking perhaps “retesting your entry” just refers to, for lack of a better reference to it, the “entry zone”. :o…Sometimes I overthink things, or think a particular word means one thing…lol. I’ve used “entry” to refer to where you pull the trigger. Had to have a bit of a paradigm shift there…lol

So we don’t enter when it first enters that entry zone, and if it doesn’t retest that entry zone, then we don’t enter a trade…or at least not in [B]that[/B] entry zone…? So then I shouldn’t have entered my long on that first bounce and instead waited for a retest, which is seen better on the 5 and/or 15m timeframes?

I know you’ll make this more clear in due time…no problem

[wrtm_19]

Here’s tonight’s levels for me.

I have weekly and daily pivots converging 20 pips above the daily low.

I haven’t checked any other technicals, but which area could have more weight for a long set up? The pivots convergence, or the daily low.

I’m guessing it depends on if price founds support in any particular area and makes the re test.

Any thoughts?

P.S. Thanks Sweet Pip for the image upload tip.

[akeakamai]

When markets make a high you will typically see a second attempt to trade above it after the initial retracement lower. This retest of the high is where the LOW risk entry is found. True the shorts that rode the initial high down during it’s retracement may have made profits or maybe they were greedy and and held for lower prices not thinking price might retest the high they shorted. They will likely have their protective Buy stops at or just above the High they just shorted… this is sometimes the early bird in trades. However, since this trader is already in the market their Stops are now known and therefore likely to be raided and see their short be knocked out of the market.

The patient trader that looks for this condition can place a limit order to sell right at or just above this recent high and when it gets penetrated by a few pips it will provide the smart money an opportunity to sell right in the area the initial bears went short… effectively they are buying your short position entries with their protective buy stops… which is in some way quite cool to me.

So the early birds might be able to say they sold the high and got the worm… it can become the bear trap they set for themselves by placing the Buy stops on their shorts that presents the pocket Market Makers pair orders at to provide liquidity. Much like setting a mouse trap… the first mouse gets the snap on the neck but it is the second mouse that gets the cheese… the trap has sprung on the first bears… we come in right after and short right into the high and nail down the actual High.

I think this pretty accurately describes 50% of my losses in the last few years. I pledge to no longer be the “dumb money” hahaha

[wrtm_19]

What specifically are you confused about?

When markets make a high you will typically see a second attempt to trade above it after the initial retracement lower. This retest of the high is where the LOW risk entry is found. True the shorts that rode the initial high down during it’s retracement may have made profits or maybe they were greedy and and held for lower prices not thinking price might retest the high they shorted. They will likely have their protective Buy stops at or just above the High they just shorted… this is sometimes the early bird in trades. However, since this trader is already in the market their Stops are now known and therefore likely to be raided and see their short be knocked out of the market.

I’m curious here.

I recall you wrote in another post that you put a parent and contingent order before you go to sleep.

If this is the case I wonder how you manage to avoid the first entry and enter in the re-test.

[Sweet_Pip]

I’m curious here.

I recall you wrote in another post that you put a parent and contingent order before you go to sleep.

If this is the case I wonder how you manage to avoid the first entry and enter in the re-test.

I’m thinking you’d wait for the first bounce, then set your pending orders for the retest.

[MCAWally]

Here’s tonight’s levels for me.

I have weekly and daily pivots converging 20 pips above the daily low.

I haven’t checked any other technicals, but which area could have more weight for a long set up? The pivots convergence, or the daily low.

I’m guessing it depends on if price founds support in any particular area and makes the re test.

Any thoughts?

P.S. Thanks Sweet Pip for the image upload tip.

Also I’ve got a Weekly MS1 and a long term S&R sitting right on the low of yesterday, it’s gotta be like a brick wall to break though, gawd I hope it tries
Wally

15min later
Lol. showed me. Went straight through it. Lesson learned.

[system]

I’m thinking you’d wait for the first bounce, then set your pending orders for the retest.

ding ding ding… we have a winner! That is correct. If there is not setup… there is no order. I trade the setups I see not predict. It’s all patience driven.

[system]

I have 10% of my position still on and looking to see if we can run under the days low put in, resting buy stop on last portion at 1.5080.

Covered 60% at 1.5120
Covered 30% at 1.5025
resting limit order to cover last 10% at 1.4999

Sold Short @ 1.5202

Short covered at limit as posted… protective buy stop 1.5080 canceled upon limit fill.

Hope you caught this one folks… FOMC today… sidelines until 2:30pm est New York time.

[system]

This why & where my position was covered and why I chose to limit out of the short where I did. This 15 min. chart is only meant to further illustrate the areas I focus on to enter and exit swings for optimal trade execution.

[pullice]

ding ding ding… we have a winner! That is correct. If there is not setup… there is no order. I trade the setups I see not predict. It’s all patience driven.

Could you please tell us what a set up would be unless I missed something

[trav72]

Could you please tell us what a set up would be unless I missed something

here sweetpip describes the setup that got her in the trade

ok, do you mean like:

Supporting factors that might find confluence at this same price level are:

daily highs and lows - Yes, it was yesterday’s daily low
Pivot level Yes, it at pivot point
monthly, weekly or daily s&r level
price patterns
candlestick formations
indicator divergence - Yes, I had a bullish divergence with my CCI indicator
fibonnaci levels and extensions - forgot to check…:o
time of day (session openings-Asain, London, New York)
etc… - price had covered the average daily range

Also, it fit with your description for buys…:

“[I]I like short term oversold conditions and price in the S1 and or S2 levels under the the Central Pivot. I like buying Previous days low or a false break under this level given the conditions warrant a bounce[/I].”

?

the setup is when you plan to enter the trade/pull the trigger, normally looking for atleast 3 of the above reasons as mentioned above to enter the trade