Making Money Trading

Which market do you want to learn to trade?


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Jan 28, 2007
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Panic exits and holding when "right"

Here is a chart of £/Swissy. I don't think I took the first pin shown, but for some reason I had highlighted the second pin on my chart when it closed and then not taken the signal. I'm not sure why I didn't take the signal, the pin being off an S/R pivot etc, but I didn't.

Anyway, the point is that even if I had I would most likely have been shaken out for +20 or so on what turned out to be a very large move indeed. The stop required for the second pin was only 20, so this would have allowed me 3 units using my position sizing method. After the trend took off, a simple strategy of moving the stop to the low of the previous hourly bar when long (reverse when short) when price makes a new high would have kept me in the trade for a couple of bars. Not moving the stop up until the trade made it through resistance would have kept me in until now. However, such a method would lead to losses on other trades.

TD - how do you exit your positions, and could you offer any general advice for our trade management since it appears that we can now make a reasonable job of entries?
 

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Jan 28, 2007
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There is a good article on this subject called Psychology of Trading by Jason Alan Jankovsky. You can find it here: http://www.traderslog.com/jankovsky.htm
And a good start from this article is this little gem:

So the first thing we do is impose the rule: After you execute you have to turn the screen off for at least one bar of your time frame as a minimum.


My new rule for today. I'm looking forward to seeing how it goes. Since I check for pins on the hour every hour, it shouldn't be too difficult to walk away from the screen until the close of bar. I think I also need to be more mechanical in rules for adjusting the stops. Finally, I wonder if it would be beneficial to work a target in advance by way of a limit order, and hold the trade until stop or limit is triggered, rather than working out where to cover at the market when in the trade. The only issue I see with this is the market changing direction before the target is hit, therefore causing a profit to turn into a loss...
 

trader_dante

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Anyway, I have gone with daily tf and so far booked 11 trades, 8 of which are still live, 3 of which i have been stopped out of.

Taking just the smallest size that my sb would offer. I would be 139 quid down on the closed trades 1,426 quid up on my current open trades (TOTAL PROFIT 1,287). Some of which are approaching 4 days old.

I havent been super strict with the criteria as I want to interpret it my way and tune it going forward.
James,

You are approaching this strategy exactly the right way. Demo it and adapt it to your style. It's a great endorsement that you have demonstrated so much profit. Well done and thanks for sharing. Please do continue to let us know how it goes!

Tom
 
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Jan 28, 2007
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GBPJPY Live Call

Bearish pin bar on the hourly. Orders in to sell 226.25 with stop at 227.10. Note that I'm going to pull these orders if the resistance of the left eye at 226.73 is taken out. It seems to have capped a rally on this bar, but if that level is taken out the trade is much lower probability in my view.

I'll need to watch until the order triggers (so I can pull the orders if 73 is broken first), but if I get filled I'm walking away until close of bar.
 
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bansir

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Sep 29, 2002
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stick pins in your ducks

Hi folks,
Current thread topic is fantastic, don't want to interrupt but couldn't resist posting this one. Amazing what you notice when someone points the way.

This pin-like candle piercing the SMA(60) gave me confidence I was on the right side of the trade having gone short at around 09:10.

Sorry to cut accross topic, please carry on.
Best Regards,
Neil
 

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trader_dante

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Hi folks,
Current thread topic is fantastic, don't want to interrupt but couldn't resist posting this one. Amazing what you notice when someone points the way.

This pin-like candle piercing the SMA(60) gave me confidence I was on the right side of the trade having gone short at around 09:10.

Sorry to cut accross topic, please carry on.
Best Regards,
Neil

Neil,

This is exactly what I like to see - traders using price action in a way that works for them.

However you enter, you are using the price action, on your own timeframe (5m) with your own supporting factors (60 SMA) to give you confidence in the continuation of the move. Great stuff!
 

trader_dante

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After the trend took off, a simple strategy of moving the stop to the low of the previous hourly bar when long (reverse when short) when price makes a new high would have kept me in the trade for a couple of bars. Not moving the stop up until the trade made it through resistance would have kept me in until now. However, such a method would lead to losses on other trades.

TD - how do you exit your positions, and could you offer any general advice for our trade management since it appears that we can now make a reasonable job of entries?
Lurker,

It really is about finding out what works for you by trial and error. A trader has to trade in their own style to be truly comfortable.

To operate the same way I do requires a trader being prepared to give back a significant amount of profit in order to capture a large move.

I will walk you through how I would have managed Gbp/Chf trade in the next few posts.
 
Nov 29, 2005
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Don't have time to check back very often and feel rude for not saying thanks for the replies and all work that's getting put in by TD (thanks for the charts, really helpful to see how others would look at things, even if it's just to confirm your thinking) and others. Great to see others becoming successful with it as well.

Moved my stop to b/e on eurchf daily, around +100 at the moment.
 

trader_dante

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Managing a trade *Part 1*

I am going to talk you through how I would have managed this Gbp/Chf trade on the hourly TF to give you an idea of dealing with the difficult problem of exits.

Being in a trade is naturally very different to looking at it in hindsight where you can be less emotional. However, you should get a good idea of how I approach trade management.

This chart shows the S/R pivots that I already have on my chart. They are all based on the daily TF as I could find no significant ones on the hourly.

The reason that the one nearest to price is not straight is because it is the underside of an ascending TL.

Assuming that we have decided to trade this pin, the initial entry goes above the high (one pip for me).

The stop goes below the low (again, just one pip for me)

The first area of resistance is just under 100 pips higher. This is the first target. Remember, I like to see momentum coming into this area.

Once the trade triggers we see that after the first hour, we are marginally in profit. At this point, the stop stays in place and we wait to see what happens next.

As you can see, we immediately get a strong bullish bar. What is important about this bar is that you can see the lows test our initial entry. As I have said frequently throughout this thread, you will see this happen time and time again.

At any rate, at this point, with the position looking like this, I would move my stop to breakeven.

We are below a long term trend line (have a look at the daily TF for confirmation of this) and unless there is going to be a decent attempt to get back above it then I no longer want to be in this trade.

It is important to realise that I am not looking at any other TF but the one I am trading. It doesn't matter to me if the 5m or the 15m is showing a bearish setup. Many times you will get stopped out and you can look at the 5m with hindsight and see the "perfect" exit right at the turning point. However, you will also get shaken out of many a good trade if you try and fine tune an exit in this way.

Remember, there are 12 5m bars in a one hour bar, 20 3m bars and 60 1m bars.

That means even in a very BULLISH candle on the hourly, you are still almost certain to see not only periods of consolidation that looks like the price has run out of steam on the lower TF but RETRACEMENTS AGAINST YOUR POSITION.
 

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trader_dante

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Managing a trade *Part 2*

It is the next bar that tests a traders resolve and often means the difference between a large win and a small one.

Look how the move initially retraces. A trader has to give back 35 pips here to see his conviction in the trade justified.

The retracement stalls above not far above our stop and then takes off to the upside once again and closes just beneath our resistance.

Now the candle that prints immediately after is the first warning sign that the trade may be running out of steam. We get a pin bar that shows the underside of the TL has been TEMPORARILY rejected.

At this point, I would move my stop up to just below the low of this pin bar.

I don't exit just because the target has been hit. I want to give the market some time to see if it can take out this resistance.

However, when the market gives me a warning which it does with the pin bar I want to make sure that I am ready to act if it shows signs of turning.
 

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trader_dante

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Managing a trade *Part 3*

Next candle shows us another pin bar. Clearly the market has run into some difficulty making headway but the important difference between this pin and the one before is that on his one, the close is ABOVE the resistance point.

At this stage, I would expect to see some retracement. The long wicks of the candles tell me this much is likely. However, I also want to see if this resistance can now hold as support.

The logical place to move our stop seems to now be the low of this pin. HOWEVER, since we know that our S/R pivots are unlikely to hold to the pip and the low of this bar is only 5 pips below the pivot, I would still keep it where it is, underneath the previous bar.

There is one important factor that helps me make this decision. That is the fact that my EMAs, which have previously been consolidating are now starting to pull away from one another which often (but not always) signals a sharp move.
 

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trader_dante

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Managing a trade *Part 4*

As the trade progresses we can see that the market is consolidating but also that it is finding support once again at this TL.

At this point, the EMAs are trending upwards and I would be now looking to the second target up at 229.20.

The stop would still stay where it is. It is safely below the TL and also has the 10ema onside.
 

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barjon

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..........................Assuming that we have decided to trade this pin, the initial entry goes above the high (one pip for me).

The stop goes below the low (again, just one pip for me)..............
td

Apologies if you have covered this before (this has become a long and fascinating thread
:D ) and also that I'm not familiar with forex since I don't trade it.

What spread are you operating with? When you say "one pip" do you mean one pip on the mid-price (thus actual entry price is above that)? Or, do you mean one pip above using an offer price chart? Or what?

Just interested :)

good trading

jon
 

trader_dante

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Managing a trade *Part 5*

It is at this point, where the trade, at 365 pips in profit, has returned a reward of 8 TIMES THE RISK, that I would operate in a way that people would find hard to follow.

At this stage I would be playing for the next target (unseen on the charts but at 2.3298 to be precise)

To make sure that I am not shaken out by minor retracements or a phase of consolidation I would move my stop up to just beneath the previous resistance which now coincides with the 20ema.

I would keep it here until I see a more meaningful place to put it.

With this stop placement I am prepared to give back 185 pips of my profit in order to catch a larger move. Since my next expected target is over 190 pips higher that still gives me a R:R of 1:1 which I am more than happy with.

I also stay in the trade in the anticipation that the market might present me with a potential situation to add to my position.
When I hit on a large move like this I am always thinking of how I can make the most out of being right. This is key to me.

Where I can ADD not where I can EXIT.

Adding to positions or pyramiding requires careful planning. We will consider ways to do this at a later time.
 

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trader_dante

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td

Apologies if you have covered this before (this has become a long and fascinating thread
:D ) and also that I'm not familiar with forex since I don't trade it.

What spread are you operating with? When you say "one pip" do you mean one pip on the mid-price (thus actual entry price is above that)? Or, do you mean one pip above using an offer price chart? Or what?

Just interested :)

good trading

jon
Hi Jon,

My charting works off the bid. So if the high of the pin is 2.3114 then I would add 1 (to equal 2.3115) and then add the spread, which in this case is 8.

Therefore my entry would be 2.3123 if I was going long.
 
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