Making Money Trading

[forexbee]

Sure.

Drawing Fibs in an uptrend

We draw fibs in an uptrend to see how far the market will retrace.

So, we start at a SWING LOW and draw the fib UP to a SWING HIGH. See Chart 1 of Gold

The circled area is the swing low so we click on that and drag the fib level up to the recent high and then release it.

As you can see, Gold has retraced 23.6% of the move up it made from the lowest point on the chart to the recent highs.

Drawing Fibs in a downtrend

We draw fibs in a downtrend to also see how far the market will retrace.

We start at a SWING HIGH and draw the fib DOWN to a SWING LOW. See Chart 2 of the Usd/Cad

Here you can see that the pin bar circled appears at a swing high. If we draw the fib from here all the way down to the low we can see that the market is heading towards the level where it will have retraced 38.2% of that whole move down.

Hi TD,

Thanks & Fine TD, in what way it differs in my chart fib lines...! i can see in my chart the low or high from where i start drawing the fib line starts from 100%..! In your Gold & USDCAD i see the same... i was confused on this bit ...
Fxbee

 

[trader_dante]

Hi TD,

Thanks & Fine TD, in what way it differs in my chart fib lines...! i can see in my chart the low or high from where i start drawing the fib line starts from 100%..! In your Gold & USDCAD i see the same... i was confused on this bit ...
Fxbee

Forexbee,

In your original chart you made reference to a pin bar and said that it had its nose poking through a fib level. This fib level was the 100%.

The 100% level does not provide a meaningful reason to take a trade. All it means is that the whole of the move has been retraced.

So I am not necessarily arguing that you drew your fib lines WRONG but I am stating that you can NOT make a decision based on the fibs that are appearing on your chart.

 

[forexbee]

Forexbee,
The 100% level does not provide a meaningful reason to take a trade. All it means is that the whole of the move has been retraced.

So I am not necessarily arguing that you drew your fib lines WRONG but I am stating that you can NOT make a decision based on the fibs that are appearing on your chart.

Hey TD,

I understood this on your previous post, this reply made me to think which part i was missing to correct myself in drawing fib.

Now got it, checked your previous charts, i realise that i drawn fib line after seeing the pinbar in the recent chart rather drawing the fib lines to see market retrace and identify pinbar in it. I hope iam right now...

By the way you got great patience to explain... Hats off
Thanks, Fxbee

 

[jitasb]

Opening a position.

Hello TraderD.

Apologies if this has already been answered on the thread, but I couldn't find it.

Say, you have a pin bar with confluence set up on whatever TF you are trading. So you decide to open a long position once the pin bar high has been broken. Does this price order only reamain "valid" for the TF that you are trading.

E.g. For Daily TF, if by end of the next day, your order has not triggered,, do you delete it period. Or do you review the charts again to decide if the reasons to go long still apply and leave the order in place ?

Same for the Hourly TF ? I.e Every hour, check if order has triggered, if not then review ?

Thanks

 

[trader_dante]

Hello TraderD.

Apologies if this has already been answered on the thread, but I couldn't find it.

Say, you have a pin bar with confluence set up on whatever TF you are trading. So you decide to open a long position once the pin bar high has been broken. Does this price order only reamain "valid" for the TF that you are trading.

E.g. For Daily TF, if by end of the next day, your order has not triggered,, do you delete it period. Or do you review the charts again to decide if the reasons to go long still apply and leave the order in place ?

Same for the Hourly TF ? I.e Every hour, check if order has triggered, if not then review ?

Thanks

Hi Jitasb, I did attempt to answer this in an earlier post.

Go to this page: http://www.trade2win.com/boards/showthread.php?t=26947&page=33 and read post #326 through to #329. You might also be interested in post #334.

 

[Newk]

Timeframes

Go back to the earliest date on each timeframe you are interested in and draw in the S/R levels as I have shown you, based only on what you can see on the screen.

Dear TD and everybody else,
I feel I'm one of the 'silent majority' watching this thread with great interest.
Well it's time to break silence and ask a question.:-0

Having looked at charts on MT4 you can select timeframes such as daily or weekly, but you can then zoom them so they can be seen over a similar period of time. This means you see the same highs and lows. That leaves me feeling a little confused (not difficult...) as I thought you ought to see different S/R levels depending upon what timeframe you are in. Then you can see which ones coincide.

So my question really is: How long is a timeframe period?

Is it years for the weekly? Months for the daily? etc...

Look forwards to your reply,

yours sincerely, SAE enclosed...:cheesy:

Newk

 

[trader_dante]

So my question really is: How long is a timeframe period?

Is it years for the weekly? Months for the daily? etc...

The simple answer to this is that the higher the timeframe and the further back you go on it, the better the perspective you get.

The futher out you zoom, the less "noise" you see on the charts and the more obvious significant levels such as highs, lows and S/R pivots become.

 

[trader_dante]

Trade update *Wheat*

I am currently long based on the pin bar at the bottom of this descending wedge in a long term uptrend.

This position had an initial short move upwards that failed to meet with any further buying and has now turned and come down to challenge the recent lows giving me a net open loss of 20 cents per bushel.

As of the previous close the market was trading just above my stop which is beneath the pin bar (Horizontal line on chart)

Now even though this market is closed for trading with my broker until late afternoon, I can see this morning that in early electronic trading, the market has continued lower and has moved two cents THROUGH my stop.

As a result, I am going to move it in anticipation of the open.

I want to make it very clear why I am doing this.

Firstly it is my opinion that a stop should never be moved when a market is TRADING unless it is to LIMIT your risk further or lock in profit. It should never be moved further away from the market.

When the market has closed like this it presents a slightly different scenario, at least for me.

Since this trade is now a LOSS, I want to get out. The purpose of my plan is not to prevent taking a loss (because usually it will still result in a loss), but rather to minimise the loss by waiting for a better opportunity to sell into a rally.

As a result, I have moved my stop significantly lower so it is not hit on the open. As soon as the market opens I am going to let it trade for a full 30 minutes. This gives the market time to absorb any of the selling and often prevents one from closing a trade at the low of the day.

At the end of the 30 minutes I am going to mark the absolute low and place my stop there. I will then watch the market and if it moves higher I will trail my stop up behind it by placing it below the low of each PREVIOUS HOURLY bar.

If the market is, at any time, to trade back up through the initial level where my stop would have been, I will place my stop back in its original position.

I will give an update on this after the open.

 

[black bear]

Price acceptance at Stop level

I am currently long based on the pin bar at the bottom of this descending wedge in a long term uptrend.

This position had an initial short move upwards that failed to meet with any further buying and has now turned and come down to challenge the recent lows giving me a net open loss of 20 cents per bushel.

As of the previous close the market was trading just above my stop which is beneath the pin bar (Horizontal line on chart)

Now even though this market is closed for trading with my broker until late afternoon, I can see this morning that in early electronic trading, the market has continued lower and has moved two cents THROUGH my stop.

As a result, I am going to move it in anticipation of the open.

I want to make it very clear why I am doing this.

Firstly it is my opinion that a stop should never be moved when a market is TRADING unless it is to LIMIT your risk further or lock in profit. It should never be moved further away from the market.

When the market has closed like this it presents a slightly different scenario, at least for me.

Since this trade is now a LOSS, I want to get out. The purpose of my plan is not to prevent taking a loss (because usually it will still result in a loss), but rather to minimise the loss by waiting for a better opportunity to sell into a rally.

As a result, I have moved my stop significantly lower so it is not hit on the open. As soon as the market opens I am going to let it trade for a full 30 minutes. This gives the market time to absorb any of the selling and often prevents one from closing a trade at the low of the day.

At the end of the 30 minutes I am going to mark the absolute low and place my stop there. I will then watch the market and if it moves higher I will trail my stop up behind it by placing it below the low of each PREVIOUS HOURLY bar.

If the market is, at any time, to trade back up through the initial level where my stop would have been, I will place my stop back in its original position.

I will give an update on this after the open.

Hi TD

Price acceptance at Stop level :?:

I use the same method to take a loss BUT

It can cost market dives for 1/2 hour

Q: Where is your HARD stop and what % of your bank is it :?:

That is where I calculate my Risk where do you :?:

Andy AKA

 

[Chorlton]

Hi Matt,

I'm currently backtesting and also looking at various exit methods.

In terms of setting price objectives consider:
1. Key support and resistance pivots
2. Big round numbers;
3. The 127.2% & 161.8% Fibonacci extension of a prior swing;
4. Daily/Weekly Pivots and Daily/Weekly Fibs;

HTH

Hi Fibonelli,

You mention that you are currently backtesting. Does your strategy include Fibonacci Retracements and if so, how are you managing to incorporate them into backtesting?

Just Interested,

Chorlton

 

[Col_Stiffler]

Lurker,

It is clear from the number and neurotic content of your posts that you are far too emotionally attached to the outcome of this trade. You have to work hard on this. You cannot trade effectively in this state of mind. You should strive to view each trade with an almost scientific detachment.

I hope this won't be considered too outlandish an idea, but I have a suggestion that might help others in this respect. It certainly helped me.

A while ago, I picked up a book on casino Blackjack and learned something called "Universal Basic Strategy" (UBS). This is a mathematically proven system which gives you, the player, a specific set of actions to perform given the hand that you have been dealt, and the dealer's up-card. If followed to the letter, this system will reduce the casino's edge in the game from around 5%, when playing against an average punter not employing UBS, to roughly 0.5% (this is based on standard Atlantic City Blackjack rules which most casinos offer - I won't go into this now though). This makes it almost an even game and by far the best "value" game in a casino.

The first time I used it in a casino for real, I played for over 2 hours at a table and came out even. Sure, there were times when my starting capital was down some 25%, but there were also times when I was up 25%. I have since spent quite a bit of time playing this system against online casinos, and it has really taught me to detach from the outcome of each hand. I simply played each hand according to the system, trusted the long term expectation, and emotion was completely removed.

I have now noticed that this attitude has spilled over into my trading, allowing me to detach emotionally from the outcome, as TD puts it, with "almost scientific detachment".

I think this might be a useful thing to try for many traders who have problems in this area, you needn't risk a great deal playing online but there has to be real money involved, of course, else the emotional problems do not surface.

Anyway, I hope this proves useful to someone, somewhere - as I said, the experience definitely helped me.

 

[trader_dante]

Hi TD

Price acceptance at Stop level :?:

I use the same method to take a loss BUT

It can cost market dives for 1/2 hour

Q: Where is your HARD stop and what % of your bank is it :?:

That is where I calculate my Risk where do you :?:

Andy AKA

Hi Andy,

When a market is about to close very near to a stop, I have to make a decision whether I will:

a) close it at the market to limit potential risk if the market gaps against me in the next session with the acceptance that I may be acting prematurely or;

b) hold it and risk suffering an increased loss if the market gaps through my stop

In this case I asked myself what would my loss be if the market went LIMIT DOWN on or shortly after the open and would this cause an unacceptable loss in terms of my risk profile.

In this case I am comfortable with the added risk.

My HARD stop is at 722 as this is below the key 50 and 61 fib levels of previous swing lows and beneath an area of minor consolidation.

However, as outlined in the post above I will look to get an exit long before this point.

Tom

 

[black bear]

%

Hi Andy,

When a market is about to close very near to a stop, I have to make a decision whether I will:

a) close it at the market to limit potential risk if the market gaps against me in the next session with the acceptance that I may be acting prematurely or;

b) hold it and risk suffering an increased loss if the market gaps through my stop

In this case I asked myself what would my loss be if the market went LIMIT DOWN on or shortly after the open and would this cause an unacceptable loss in terms of my risk profile.

In this case I am comfortable with the added risk.

My HARD stop is at 722 as this is below the key 50 and 61 fib levels of previous swing lows and beneath an area of minor consolidation.

However, as outlined in the post above I will look to get an exit long before this point.

Tom

Hi Tom

Thanks for clearing that up, I ask because well pairs and remember i do not trade them so correct me if wrong.

Trades are per 10th of a point and well daily pin bar is , well pretty large price acceptance in such a volatile market

WHAT % Risk per trade :?:

what do you think is a correct %

Andy AKA

 

[trader_dante]

Thanks for clearing that up, I ask because well pairs and remember i do not trade them so correct me if wrong.

Trades are per 10th of a point and well daily pin bar is , well pretty large price acceptance in such a volatile market

Hey Andy,

Different SB brokers will quote the same market in a different way. The minimum move in Wheat futures is 0.25c so a move of 1 cent down should be worth 4 X your stake.

My original stop was placed 24 cents from my entry.

If I had been trading with a broker that quoted it as the standard Wheat futures contract is quoted this would have been 96 ticks (24 X 4). However, E*Trade quote in full points. So, my risk on the trade is only the original 24 ticks.

WHAT % Risk per trade :?:

what do you think is a correct %

Risk is a very difficult area to advise on. Generally 2-3% per trade is considered the recommended amount to risk.

However, it depends on the individual traders risk profile.

I will give you an example of one type of risk profile that I mentioned early in the thread and that is of a friend of mine.

This friend had heard about my trading and I suggested he open an account that offered a free bonus and I would see how much I could run it up for him. He duly agreed to do so and we decided on a "commission" that I would get on any profit I managed to make him.

When I began trading my friends account he had only the "free" £150 and there were minimum trade size requirements on the markets that I wanted to trade which meant the intial risk I was taking was huge. To give you an idea of how much risk: When I entered a position in the Dax the SPREAD ALONE was 4% of the account

He was prepared to lose the money that was courtesy of the house and which he therefore never had in the first place but was reluctant to add any of his own.

As a result, the intial trades were made with the acceptance that either the account would be blown and we would consider that the experiment to see how much we could run it up, was over OR it would grow and we would gradually reduce the risk.

So the risk profile a trader has when he trades to see how much he can make is very different to the risk profile a trader has when he wants to make a business of trading.

A trader that wants to make a living in this game has to watch their risk very carefully because once their capital is gone, they have no means of making it any more.

As a result of the individuality in risk profiles, I don't want to reveal how much risk I took on this particular trade in terms of percentage of account because the risk profile of the account holder I am trading is exceptional.

 

[black bear]

O I see

Hey Andy,

Different SB brokers will quote the same market in a different way. The minimum move in Wheat futures is 0.25c so a move of 1 cent down should be worth 4 X your stake.

My original stop was placed 24 cents from my entry.

If I had been trading with a broker that quoted it as the standard Wheat futures contract is quoted this would have been 96 ticks (24 X 4). However, E*Trade quote in full points. So, my risk on the trade is only the original 24 ticks.




Risk is a very difficult area to advise on. Generally 2-3% per trade is considered the recommended amount to risk.

However, it depends on the traders risk profile.

I will give you one type of risk profile I mentioned early in the thread which is that of a friend of mine. This friend had heard about my trading and I suggested he open an account that offered a free bonus and I would see how much I could run it up for him. He duly agreed to do so and we decided on a "commission" that I would get on any profit I managed to make him.

When I began trading my friends account he had only this £150 and there were minimum trade size requirements on the markets that I wanted to trade which meant the intial risk I was taking was huge. To give you an idea of how much risk: When I entered a position in the Dax the SPREAD ALONE was 4% of the account

He was prepared to lose the money that was courtesy of the house and which he therefore never had in the first place but was reluctant to add any of his own.

As a result, the intial trades were made with the acceptance that either the account would be blown and we would consider that the experiment to see how much we could run it up, was over OR it would grow and we would gradually reduce the risk.

So the risk profile a trader has when he trades to see how much he can make is very different to the risk profile a trader has when he wants to make a business of trading.

A trader that wants to make a living in this game has to watch their risk very carefully because once their capital is gone, they have no means of making it any more.

As a result of this, I don't want to reveal how much risk I took on this particular trade in terms of percentage of account because the risk profile of the account holder I am trading is exceptional.

Hi TD

Thanks

Andy AKA

 

[trader_dante]

Trade update *Wheat*

December Wheat opened above my original stop and is showing some early strengh trading 8 cents up shortly after the open.

My stop has been moved back to its original position at 743.

 

[trader_dante]

The point I hope I made with my earlier post concerning what I would do if Wheat opened below my stop is that it is very important to PLAN YOUR TRADE.

Trading with a plan is not something I have always done but since doing so I have greatly increased my profitability.

A trader with no plan is likely to react with FEAR when the market goes against them.

Fear often leads to panic which is an IRRATIONAL thought process.

Having a plan allows you to react with CLARITY of thought and this can often save you a lot of money when things turn bad.

By having a plan I know that if X happens I am to immediately do Y.

I always trade with a plan because I know that when I have one, the market can surprise me but it cannot catch me off guard.

 

[fibonelli]

Hi Fibonelli,

You mention that you are currently backtesting. Does your strategy include Fibonacci Retracements and if so, how are you managing to incorporate them into backtesting?

Just Interested,

Chorlton

I'll send Chorlton a PM.

 

[trader_dante]

Trade update *Eur/Gbp*

++++++++++++++++++++++++
Original call and the reason for entry given here: http://www.trade2win.com/boards/showthread.php?t=26947&page=36 on posts #354 - #358
++++++++++++++++++++++++

Price broke out sharply from the inside bar and this trade is now +116 pips.

The thin grey horizontal line shows price at the time of writing this. We can see that recent highs have been cleared and price is now reaching serious resistance. See chart 1

In light of this I am moving my stop up to breakeven. This is close to the top of a recent area of consolidation on the daily TF. See chart 2

 

[forexbee]

Hi TD,

Had identfified a pin like setup in EUR @ 4Hrs chart, though EUR had made new high, couldnt find any proper pivots to draw from history. but have identified a resistance point . It doesnt provide good possible strong signal entry. Whats your take on it... Your advice on this will be helpful.

Fxbee