Comprehensive Trading System/Methodology

[babymush]

c) It was entering a downtrend but I was using it as a Reversal Signal to go into it for a quick 10 - 20 pips profit. Is it not advisable? (sorry don't quite understand this part)

 

[bbmac]

c) It was entering a downtrend but I was using it as a Reversal Signal to go into it for a quick 10 - 20 pips profit. Is it not advisable? (sorry don't quite understand this part)

The entry you took was a long, so it couldn't have been entering a downtrend, although I understand that you were looking to profit from a retrace in the prevailing price action conditions. tTading retrace/pullbacks/reversals are fine if you can get them right per the Reversal set-ups, but you need the confluence of pot supp/res as well,..all other conditions met. Ask yourself what you thought the potential support was at your entry? Compare this to where price has found support 6393 which is the previous 1hr sw lo zone.

Furthermore per your screenshot, you were using the 15min chart as potential rbs area (although the entry you took actually fell outside of the zone you were pointing to in your screenshot) utilising a 1/5/30min trigger/intermediate/trend t/f 15min is not used for any measure of pot supp/res/sbr/rbs, ...just the 5min intermediate and 30min trend.

 

[bbmac]

following lifted from Re-entry set-ups discussion posted to this thread, specifically Part III the attachment on post 74 (page 10)

'...Guidance on when to exercise caution in seeking to Re-enter a trend.

There really are only a few conditions under which the success of a re-entry set-up may be threatened. They are;
a. If a trend does not exist on at least the next higher time frame up from the one on which the re-entry set-up presents itself on.
b. If the Macd histograms on the next two higher time frames from the re-entry set-up are not as advised in this document.
c. If potential SBR/RBS cannot be identified.
d. If technical conditions exist that threaten the chances of a successful re-entry to a trend after a pullback either because the trend may be showing technical signs of exhaustion, ........'

 

[bbmac]

My best advice re this trading system/methodology; either

a. Memorise and trade the set-ups on 1 instrument only
-or-
b. Pick one or two of your favoured set-ups and trade them on multi instruments...for eg the re-entry set-ups.

From my experience it is more practical to trade multiple set-ups on one instrument or one or two set-ups across multiple instruments, but it is difficult to trade multiple set-ups across multiple instruments.

I tend to favour a. above, specialising in the instrument of gbpusd, i. Because I easily recognise all the set-ups in realtime and ii. because I only have to bother with where the trend is on one instrument and work out where the potential supp/res/sbr/rbs is on one instrument. This suits my style/preferences/tolerances, but we are all different.

As stated in the documentation in this thread, the best advice is to use the component parts of this system/methodology along the central theme of confluence, to develop a trading edge/style that suits your own individual tolerances/pereferences, that fit in with your overall objectives/goals and plan for your trading (a whole other sbjecty, lol.)

Also, it is important to keep a detailed log. As an example the trade log extract below shows a trade listed:

1306pm Rev Extr (local bearish div in cci,) no 5min main chart supporting set-up, 15min Re-ent 4 (into 1hr/4hr downtrend, 1hr/4hr macd hists below axis, set-up comes at a LH on 15min and 1hr but after a HL on 15min!!) 1/5min small charts confirm @ pot sbr/res = prev 1hr sw lo zone = potential sbr, 61.8% 4805-4466 current i/day lo)...saw +30+

Going thru the above, Time of set-up on trigger chart | Trigger main chart set-up | intermediate main chart set-up | other supporting chart set-ups | trend info for any re-entry set-ups | small charts confirming conditions | pre-identified potential supp/res/sbr/rbs | entry price and result. (stop used can be included here)

G/L

 

[babymush]

Hi

I just have 2 questions in mind. I was re reading your How to Define Support and Resistance document and would just like to check -

Support and Resistance is identified at the beginning of each day

1) Yesterday High and Low
2) Previous support become resistance or RBS

is there anything else? MNI how do I find it?

And if I were to trade only 1 instrument and the market is sideways choppy ... it will give me no trades for a few days right? Is that suppose to be the way?

 

[bbmac]

Hi

I just have 2 questions in mind. I was re reading your How to Define Support and Resistance document and would just like to check -

Support and Resistance is identified at the beginning of each day

1) Yesterday High and Low
2) Previous support become resistance or RBS

is there anything else? MNI how do I find it?

And if I were to trade only 1 instrument and the market is sideways choppy ... it will give me no trades for a few days right? Is that suppose to be the way?

Read agin the pdf doc Identifying Potential Supp/Res/SBR/RBS downloadable from post 1 (page 1) of this thread. A summarised version of which is found in the downloadable doc Part I - post 74 (page 10) of this thread.

You will read from these that potential supp/res/sbr/rbs on both the trend and intermediate time frames is identified from 4 main factors and mainly centres around previous price hi/lo swings. It is the confluence of these 4 factors or parts thereof that indicate the potentially stronger supp/res areas.

The 4main factors as you will know are;

a. Previous Price hi/lo swings
b. Fibs
c. Bids/Offers reported
d. Trend Lines on 1hr+

With minor factors being the pivots calculated daily, weekly or monthly.

Recording Y/days hi and lo as well as the previous session's hi/lo-for me the overnight asian session hi/lo (effective price swings) is also useful in the identification of potential supp/res.

As for Mni (redirect , it's tech and bids/offers updates are carried by some broker newsfeeds, fxsol etc...as well as by direct subscription from the vendor site itself. Thomson-reuters also offer a similar service and this is similarly carried by fxcm's dailyfx+ service, Forex News | Forex Trading News | Currency Trading News )

Re your 2nd question I find that I always get set-ups in ranging or trending markets...of course in a ranging market (on your designated intermediate and trend time frames) it is more problematic to act on Re-entry set-ups as effectively you have no trend to re-enter, so the Reversal set-ups are favoured, until the range breaks and a trend establishes itself (see section on mimimum requirements of a trend). I have known a few hours when no set-up presents itself, but never a few days.

G/L

 

[bbmac]

Babymush et al, notice how gbpusd intermediate t/f this morning session (5min) was ranging up to the orange vertical line when the range broke to the topside ...and as price retraced off the first HH out of the range the other side of the orange vertical line, it found support at the potential RBS zone formed by the previous swing highs on that t/f, at a HL circled in white, ...price going on to achieve a HH before a sell off at 4745/55 area.

(Incidentally This break of range/congestion followed by a retrace back in, then another breakout is termed 'congestion 2nd breakout' technique.)

The area shown between the horizontal dotted white lines (the prev sw hi zone) became the potential rbs zone on this intermediate t/f and although only this 5min intermediate t/f was trending up then, the 5min, 30min (+) macd histograms remained above their axis as the 1min trigger t/f Re-entry set-up enabled a re-entry into trend in the potential rbs zone, see-ing a 'with trend' follow thru.

 

[babymush]

Thank you. Will read through your posts and try to post more setups when I take them.

By the way, just wanted to check if there is anyway I can edit the 30 mins fib tunnels as it does not work for JPY crosses

 

[babymush]

Also, would appreciate if you could show me a few more examples from time to time on the SBR or RBS that you have shown in the GBPUSD... I think it is very clear the way you show it and I will learn greatly from looking at different charts and how you identify the SBR or RBS

 

[bbmac]

Thank you. Will read through your posts and try to post more setups when I take them.

By the way, just wanted to check if there is anyway I can edit the 30 mins fib tunnels as it does not work for JPY crosses

you need to allter the settings via the code in Metaeditor - to what I don't know (trial and error) as they are set for gbpusd, eurusd and usdchf with chart feeds that use 4 decimal places.

 

[bbmac]

Also, would appreciate if you could show me a few more examples from time to time on the SBR or RBS that you have shown in the GBPUSD... I think it is very clear the way you show it and I will learn greatly from looking at different charts and how you identify the SBR or RBS

I do tend to concentrate on gbpusd pairing.

Potential sbr/rbs is the same on any chart and time frame and is mainly comprised of broken support (swing low) in a downtrend or broken resistance (swing high) in an uptrend that is re-tested from an underside/topside pullback respectively.

Where the trend is so strong that no previous price swing low or high exists on the intermediate or trend time frame - it may be necessary to look at the other potential supp/res/sbr/rbs factors such as fibs, t/lines and previous bids/offers,... and of course it is always advisable to seek a confluence of potential supp/res factors at potential sbr/rbs zones.

The potential sbr/rbs you need to concern yourself with is that on your intermediate and trend time frames so that;

a. a trigger chart Re-entry set-up should be at potential sbr/rbs on the intermediate t/f, a re-entry into the intermediate t/f trend +, all other conditions being met.

b. an intermediate chart Re-entry set-up (co-existing as a reversal set-up on the trigger t/f) should be at potential sbr/rbs on the trend t/f, a re-entry into the trend t/f trend +, all other conditions being met.

The chart below is audusd, and you will see from the red vertical line that a downtrend started to develop, after a rangy period, so that you would look for a re-entry set-up on the time frame below in the areas highlighted by the horizonal lines, (being previous price swing lo zones so potential sbr) Furthermore you would see what other potential res factors exist in those zones such as fibs of the main down moves and previous bids as well as descending resistance trend lines like the one shown in yellow that may provide resistance (this being as yet untested.) Ie look for a confluence of potential sbr/res factors.

In this example you can see that this potential sbr area has already been tested and held @ a LH, but resulted in a HL so in any subsequent re-test you would have to bear that in mind (ie a potential reversal set-up at the bottom threatening the chances of a with trend follow thru to new lows)

 

[babymush]

19:18 GMT Dec 5th EUR/GBP Decent sell-stops reported below 0.8590. Offers also seen in the 0.8650-0.8700 area. JK

17:49 GMT Dec 5th USD/CAD Light corporate bids 1.2920, & 1.2870 then a gap to 1.2600, 1.2500; nothing serious. modest corporate offers 1.3010 & 1.3050 not much above there.PCW.

09:03 GMT Dec 5th EUR/USD East European offers to 1.2800, bids 1.2750 through 1.2730, Stops under 1.2700 and 1.2680 and above 1.2800 and 1.2820. PS

05:15 GMT Dec 5th USD/JPY offering interest from the 92.20-30 area, trails higher. Stops above 93.00. More offers up at 93.50-60. Downside bids ahead of presumed option barrier at 92.00. Stops below here and 91.85. More barriers presumed at 91.75, 91.50, 91.00 and large at 90.00. Bids ahead, stops below.(hi)

05:13 GMT Dec 5th EUR/JPY offering interest towards 119.00, above. Some trader stops mixed in above 119.00 and 119.50. Some bidding interest around 117.50.(hi)

05:12 GMT Dec 5th EUR/USD bids towards 1.2700, some stops below. Topside stops above 1.2850, offering interest ahead.(hi)

05:10 GMT Dec 5th GBP/USD bids ahead of 1.4600, stops below. Initial line of bids around 1.4650 absorbed. Offering interest above 1.4800.(hi)

05:09 GMT Dec 5th AUD/USD bids ahead of 0.6395 double bottom, stops below here and 0.6380. Offering interest towards 0.6475, stops above here and 0.6500.(hi)

Wow this is what I extracted from FXCM. Really do not know what they are talking about for some and when I checked the charts, it seems that even when they said there are bids ahead of 0.6395, it does not seem to hold much.

Could you roughly explain from your experience how do I interprate all the data

Topside stops?
Initial Line of bids absorbed?
Offering interest above?

And so many more lolz

 

[babymush]

Could you help me take a look if these should be considered as support points too

 

[bbmac]

Wow this is what I extracted from FXCM. Really do not know what they are talking about for some and when I checked the charts, it seems that even when they said there are bids ahead of 0.6395, it does not seem to hold much.

Could you roughly explain from your experience how do I interprate all the data

Topside stops?
Initial Line of bids absorbed?
Offering interest above?

And so many more lolz

You may see bids (effective buy orders) referred to as demand, and offers (effective sell orders) referred to as supply. Topside stops refers to stops that may reside above the current market and are liklety to be the stops placed by those in a downside/sell /short position, vice-versa for an upside/buy/long position.

Fx is not an exchange traded market so any vendor/broker can only make 'best guesses' as to the overall market buy/sell interest based on their own book and other info received.

Very often if you have down your own poteential supp/res/sbr/rbs analysis you will see whay a 3rd party is touting bids/offers may be present at the levels they publish. As stated in the 'identifying Potential Supp/Res/SBr/RBS this 3rd party info is just one of the 4 main factors in assessing where potential supp/res/sbr/rbs may lie and if used in it's exclusivity will probably result in a lower strike rate.

Do the analysis, and remember confluence, confluence, confluence is the key to high probability trading.

 

[babymush]

a. Previous Price hi/lo swings

a. Previous Price hi/lo swings

Would also just like to reconfirm that this can be taken from a 5 min chart or a 1 min chart too and need not be the swings for a 30mins or 1 hour chart?

Thank you

 

[bbmac]

Could you help me take a look if these should be considered as support points too

Firstly that 30min time frame isn't really trending per previous price swing peak/valley analysis that is used to establish market conditions in the system/methodology although there has been a move up prior to the retrace/pullback...Secondly I really don't see any obvious previous swing hi zones on that time frame at which you could look for a re-entry set-up on the t/f below, although there are some minor areas such as you point out in your screenshot. This is not to say that price will not continue up after this pullback, but is to say that I don't see any obvious previous price swing hi zones at which to look for previous offers/fibs etc confluence and then seek a re-entry set-up on the t/f below.

Look at the t/f below, the 5min and note too that price has already sold down past the last HL of the uptrend on that t/f , thus making a with trend follow thru to new highs less likely but not impossible.

G/L

 

[bbmac]

a. Previous Price hi/lo swings

Would also just like to reconfirm that this can be taken from a 5 min chart or a 1 min chart too and need not be the swings for a 30mins or 1 hour chart?

Thank you

Previous price swing hi/lo's form the basis of potential supp/res/sbr/rbs zones. You need to identify these on the intermediate and trend t/f's (remember that the 1hr is used as the proxy for the 30min trend t/f, just for the purposes of identifying prev price swing hi/lo's)

In acting on a set-up you should do so at these zones identified on the t/f above.

 

[bbmac]

Could you help me take a look if these should be considered as support points too

Look at the screenshot below it is the 30min t/f as you posted and note the potential rbs circled in red did not hold. You could argue this 30min t/f is in a weak uptrend, but has alraed sold down below the last Lh on the intermediate t/f, per post above.

 

[babymush]

Thank you BB Will study it. Please continue posting any charts you have on Support and Resistance as I am learning a lot from how you see those charrts.

Thank you

 

[bbmac]

A good example today of a great potential sbr/res confluence where a fib and trend line (descending resistance trend line in red) , lined up on the 1hr chart at a previous swing hi/lo zone shown circled in red/green = pot sbr...see the screenshot below at the LH circled in white....there followed a 60pip gain as price dropped before a recovery.

The confluence of potential SBR/Res with the indicator based set-ups/patterns results in high probability trading.

G/L