Best Thread Trade2Win's 10 Year Anniversary - Day 5 (Anatomy of a Trade)

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Sharky

Admin
5,546 292
To celebrate our 10 Year Anniversary, Trade2Win has been announcing a different contest every day this week. Today is the final day!

Day 5 - Anatomy of a Trade

In this final contest we want you to talk us through your trade. It's not important if it's a winning or a losing trade but it must be be a trade placed today. It can just be an entry and not an exit, but you should then explain when you'll exit the trade. This isn't about making the best trade it's about explaining clearly and methodically your thinking behind it. It would be great if you can illustrate the trade with charts or even video! Anything that helps to explain it.

All entries must be posted on this thread and only one entry is allowed per member.

The best explained trade, as judged by the T2W staff, will be announced by 12pm noon (GMT) Monday, 24th Jan on this thread. :clover:

The Prize

For today's winner we've got the latest generation Kindle 3G 6" - considered by many to be the best e-book device around. In addition we'll be giving away $100 worth of trading books of your choice.

The Rules

- Only one entry per member.
- Contest is open to all existing members (as of 9am GMT today) including mods and guides but excluding staff.
- The judge's decision is always final!

Edit (22/02/2011)
This thread is a duplicate of the original and has then been culled severely to enable members to focus on the wheat without having to wade through all the chaff. For anyone wanting to view the unedited thread in all its glory and/or post further comment, please do so on the original: Trade2Win's 10 Year Anniversary - Day 5 (Anatomy of a Trade)
 
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the hare

Senior member
2,949 1,283
My system will open a trade at 10:35. I have no idea what instrument, position size, or direction !
 

Sharky

Admin
5,546 292
Well as long as it's not a black box system and you know what the rules are for it, you can explain, in however much detail you're comfortable with, how the system goes about deciding the entry and exit. It's less about specifics rules and more about the types of things that system is taking into account and why.
 

HawkTrader

Established member
620 130
Does this have to be done in real time as the trade is taking place? May be hard for some...
 

Sharky

Admin
5,546 292
Good question HawkTrader, no it doesn't need to be a live trade. As long as it's a trade made today and you've posted your explanation before midnight tonight. It could even still be open at the end of the day, but in that case I suggest you explain your rationale for when you'll exit the trade.
 

counter_violent

Legendary member
9,647 2,455
Right i'd better keep it simple.

Short AUDUSD

This trade opened @ .9850
Target will be @ .9750
Stop will be @ .9915

Chart 1 shows first and second legs of what I believe will be a third leg continuation move.

Rational for this trade is. Continued relative usd dollar strength versus continued relative aud and gold weakness.

Theres no sense in expanding on this basic premise. Most over complicate analysis to the point where they get nothing done.

Win or lose, this is the trade I am in.

If target is not met, then I will probably close before end of play.
 

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tar

Legendary member
10,441 1,309
Right i'd better keep it simple.

Short AUDUSD

This trade opened @ .9850
Target will be @ .9750
Stop will be @ .9815

Chart 1 shows first and second legs of what I believe will be a third leg continuation move.

Rational for this trade is. Continued relative usd dollar strength versus continued relative aud and gold weakness.

Theres no sense in expanding on this basic premise. Most over complicate analysis to the point where they get nothing done.

Win or lose, this is the trade I am in.

If target is not met, then I will probably close before end of play.
correct your stop please
 

bbmac

Veteren member
3,584 787
A trade on gbpusd today

Cable today had rallyed again off yesterday's 5835 lo ( 38.2% 5473-6059 in a 1hr/4hr previous swing lo zone) following an initial 5943 pullback hi, a retest and a dip to 5883 overnight (asian session) Lo. Price then tested and rejected for the 3rd time the 5943 pullback hi (61.8% of the 6009- said 5835 lo)...the first 2 attempts had formed a previous 1hr swing hi zone (ie previous resistance = previous near-term obvious imbalance of supply/demand) See 1hr screenshot below - the circled area is where the 3rd test was, the 1hr 100 sma was also there as confluence (yellow line)



I had missed the 5min set-up right at the top (5943) on the 5min t/f...a regular bearish divergence set-up with a bearish engulfing candle close trigger, there was also regular bearish divergence on the 15 and 30min t/f's



Staying on that 5min and the resultant price action from the potential resistance confluence of the previous 1hr swing hi zone x 2/100sma-1hr/61.8% 6009-5835 - there had been a HL as price pulled back from the 3rd test rejection at 5944 H, then a LH, and then a L formed and then a potential 2nd LH as price pulled back from that L. From the 5944 H there had been a bearish engulfing at that 5min H (5943) and a decisice rejection forming the 1st 5min LH. Then when that pullback occurred off the first L on this 5min t/f ( a L under the last HL) the pullback paused at the previous swing low , ie the last HL (previous support now = potential resistance) and this was accompanied by a 1min hidden divergence based set-up to get short there...see pics below...



The 1min hidden divergence based set-up is here:



Despite the 3 x rejections of the 5943 area I still wanted more confirmation that shorting from here was the highest probability direction from this area particularly as on the 1min set-up entry the 5min 2nd LH was not fractally formed unless/until the 0855and 0900am 5min candles had close, and there had been no LL yet on 5min constituting a fully formed overall price action-peak/valley analysis downtrend on this t/f. I therefore rejected the 1min set-up and waited for the 0855 5min candle to close which it did as a master bearish engulfing inverted hammer candle (bearish candle,) engulfing the last 4 x candles on this 5min t/f...this provided the trigger to get short from this 2nd potential LH on 5min...A LL resulted on this 5min t/f now downtrend, and price continued down until a bounce of the new ascending 4hr trend line after a further knee-jerk leg down after the 0930am Uk data.



I exited the trade as price hit a previous obvious swing lo on the 1hr t/f (ie a previous near-term area where there existed an imbalance of demand/supply) price did indeed bounce from here and went on to form a 3rd LH and then went south again for a further 5min leg down (but that's another story...) The previous 1hr swing lo zone is shown below.



The 5min screenshot shows it more clearly below. You will see the small vounce from the previous 1hr swing lo zone (previous near-term obvious imbalance of demand/supply) before a further 2 x legs down from a 3rd and 4th LH on this 5min t/f;




G/L
 

shadowninja

Legendary member
5,524 643
Live trade
FX Pair: EURUSD
Entry level: Long from 1.35346
Stop loss: 1.35246 (10 pip stop)
Target: around 1.3557

Chart
1 minute chart, using trendlines.


Justification
I am trading on the breakout of the trendline which could fail. If it doesn't then I lose 10 pips. Expected target is around 1.3557 which gives me about 20 pips profit. I will be watching around the target level to see how the price reacts. If it has difficulty breaking through, then I will exit. If it just smashes through, then I'll ride the move like a surfer who walked through superglue.

Comments
  1. Ye gads, I didn't realise the gif was that colour/low quality. It's as if I'm trading from the USSR. :D
  2. Yes, it's a real trade, hence the green and red horizontal lines denoting my entry and stop levels.
  3. This is the first time I've ever shown anyone a live trade. I feel like Kate Adie. By that, I mean it's as if I am a reporter live in the war zone rather than I want to shag a 65 year old female news correspondent.

Updates
  1. Stop to break even at 10 pips profit. I will see how the price moves when it approaches my target. Come on, you mofo. Shoot up 100 pips so I can look like some kinda trading god, get subscribers to pay me £1000 a week and give webinars from my yacht in Bermuda!!!
  2. It's fallen 10 pips since seeing a 15 pip profit but I have not exited as I am watching how it behaves at the support level of 1.354-ish.
  3. Ok, stopped out for zero profit. C'est la vie.

Post-trade analysis
It would have proven prudent to have exited at around 1.3546 as you can see from the M1 charts that it was struggling to head north. From my observations, however, it's very possible to see 30-40 pip moves after such a breakout and we don't want to confuse ourselves with just trading fakeouts for 5-10 pips as that requires a different strategy with different stop losses and a different position management approach.

It is now at the original stop level, so my previous observations suggest that moving the stop to break even was a good idea.
 

Adamus

Experienced member
1,898 97
Here's my trade

Without posting the code here it's difficult to include all the little bits and bobs that make up the trading system, but I'll just give a quick run-down and hopefully that's enough to satisfy the judges.

It's not the easiest to see immediately but the chart does show the entry point and the exit today. If you're not familiar with NinjaTrader charts, the exact level of the executions is where the pink and blue triangles are.

Like I said it's not so easy to visualize what's going on, but each entry has a target and a stop roughly equidistant from the entry level.

What the system does is look for swing / turning points. I originally started this using the standard daily and weekly pivots on the big currency pairs but the stuff like EUR/CAD doesn't have these, or at least if you do calculate them, they don't have much value.

So when the system determines a swing (e.g. mid-afternoon yesterday), it then checks on the two MAs and if they cross in an orderly fashion, it enters in that direction, putting the stop at the swing point or just a bit beyond, and the target roughly the same distance away.

This one illustrated was one of the system's suicide trades. I would like to filter out the trades in the direction opposite to the clear trend (upwards in this case) but I couldn't find a way to do it that was profitable or elegant.

It's an interesting system. I have loads of examples where the system picked the tops and bottoms to within a few ticks, and a few examples where it got 180 degrees out of sync and sold the bottoms and bought the highs 3 or 4 times in a row. But mostly it just chugs along and turns an acceptable profit with trades that go half right, or with trades that pick off only 100 ticks of a 300 tick move.
 

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scose-no-doubt

Veteren member
4,630 954
Bit of a correlation thingy here.

Looking to short aud somewhere in the yellow circle if get a reversal signal.

Been a bit of a disparity between AUD and DJIA correlation in the shorter term but aud has been over performing the longer term so could be turn around.

Last time gold tanked aud overextended the move but this time is trailing above in %terms

Could be trouble around parity

Daily showing lower high and a 4 hour showing bounce off of 835. Will be lower high on 4h if reverses in/around circle so expecting nice place to put stop and good RR in case that 835 level is tested or better if it breaks

Only thing scaring me is high correlation with gold which may turn around as stuck at this 43 level but if that breaks too deffo short
 

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DashRiprock

Experienced member
1,650 482
I will explain my strategy first, and then update or add another post when the trade is put on.

I trade T-note futures on the CBOT. My primary strategy relies alot on reading the time and sales, along with trying to spot where other - bigger - traders are working their orders in the market. The basic idea is this:

1) Identify whether the market is chopping or trending
2) ONLY trade in the direction of the trend
3) In an UPtrend, look for big traders working BUY orders (and vice versa)
4) Join them.

However, this is near impossible to demonstrate on an forum. Instead, what I will do is Use a longer timeframe and ignore the DOM just to try and trade with the trend. I can explain the "trend / chop" part of the strategy here but the scalping but - no chance, hence the longer timeframe. Also, I notice that the spread on ETX for t-note futures is 4 ticks wide!

So, I'll b@stardise my strategy in order to make it "post-able" here!

I use Heikin Ashi charts and a 10 period EMA. I look for longs when the EMA is going up and the Candles are "up" candles. Reverse for shorts. If the EMA is going sideways or the market looks like it's in a narrow range, I stay out.

I set audio alerts for y'days High, Low, Onight High and Low, and any High volume areas. I don't put lines on the chart I think they get in the way. It isn't a rule in my strategy I just like to know when it happens.

Next post or update will be screenshots of chart and trade.
 
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