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thalestrader

Reading Charts in Real Time

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This threads seems to be turning into my weblog....

 

Update:

 

TP2 filled then price dropped down past BE to near my original entry. Price later shot up but I was logged for the day as per my rules.

 

I've also included a couple of daily chart setups. The bold red lines are potential setups that I have not taken but have triggered. The dashed lines are new setups that I'm watching though may or may not take.

5aa710a4d933a_eurusdlong1.37869pt2.thumb.gif.a3ca0ffcad9b9a9321ea515bfe5d4698.gif

5aa710a4e25fe_GBPUSD1.57067shortsetup.thumb.gif.f216a877f9c4b3e6c540e90bf51b1246.gif

5aa710a4eb317_usdchf0.89255longsetup.thumb.gif.00d082fccf1b7862548b725bb0a7368b.gif

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12/20

 

Eur/Usd long @ 1.38049

 

There's a bit of a choppy range between the SL and TP1 area, especially around 1.38, a contested level yesterday. Wouldn't be overly surprised if this one stops out but I placed it anyway as per the rules. I chose a higher resistance for TP3 as since it would be a BE trade if TP2 hit I could get a better R:R/more profit than the closer one, 63 pips versus 42, assuming of course that the market decided to take price higher at that point. Next time I try a mechanical system, I'll consider SL on TP3 to move to TP1 to bank some more profit, need to test how this would affect profitability of course

5aa710a511c98_eurusdlong1.38049.thumb.gif.4893256e6166757ac590d3569fd65b7a.gif

Edited by iwshares

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what is your stop loss?

 

Hi poortorich. On the mechanical exercise I'm conducting I buy/sell 3 contracts at market with a 20 pip stop loss on each position. The entry signal is when the 5 period EMA crosses the 20 period EMA, in line with the trend on a daily chart.

 

I close one contract at profit target 1, the next at profit target 2 and the last at profit target 3.Profit target 1 is always 20 pips, profit target 2 is the next swing high and profit target 3 is another swing high up. I adjust stop to break even once profit target 2 is hit.

 

In the case of trade 12/20 I aimed slightly higher on PT3 for a better R:R (though am thinking that was a greedy move to make given the current price action, we shall see). 12/20's SL is 1.37849.

 

I'm going to revise the rules next batch of 20 trades to BE once TP1 hit (reducing the losses associated with the whipsaw effect of EMA's) and limit orders above/below the high/low to reduce the risk of false EMA cross orders.

 

I'm trading this system as an exercise in consistency, though the discretionary elements of TP2 and TP3 keep me thinking and allow me to exercise my discretionary muscles...

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Update:

 

Well as price action suggested my other 2 contracts were stopped out at SL. And it was something else, price just jumped 10 pips through my stop in a blink of an eye - a great H L LH short setup (which I'm not trading)! Logging for a few hours, will check the forums later.

5aa710a519c24_eurusdlong1.38049pt2.thumb.gif.fdaa570ab67540017b2eebf8512aabc2.gif

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13/20

 

EUR/USD short @ 1.36517

 

Price was in a range between 1.36473 and 1.36684, placed trade anyway as mechanical system, though am noticing a great L H HL long setup. Stop is also below recent high

 

Update: as suspected, price moved up and I was stopped out

5aa710a55b534_eurusdshort1.36517.thumb.gif.31ec823a1539623989cf396a7ba17186.gif

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14/20 was a short that stopped almost as soon as I placed it. 15/20

 

Sell eur/usd @ 1.36786.

 

Will be interesting to see if price carries on down to TP1 and TP2 and then if it breaks down through TP2 or reverses back into what seems to be the daily range at the moment

5aa710a564ccc_eurusdshort1.36786.thumb.gif.7cd251c3e0136f0e0620c20d80901e26.gif

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Update:

 

Price moved down through TP2, almost hit my entry (which was now at BE), moved around TP2 a bit then headed down through TP3 to another resistance I'd identified. I considered using 1.35912 as my TP3 but thought it too greedy a target. Overall today was 3 trades, 2 losers, 1 winner, 11 points lost. This system still has a positive expectancy, though more aggressive move to BE once TP are hit would help profitability quite a bit. At the moment the Average winner is 5.12, average loser 3.48. With the change to BE rules (and assuming same fills) the average loser would drop to 2.63. Definitely gaining a lot from focusing on exits and leaving entry to the system.

5aa710a588e44_eurusdshort1.36786pt2.thumb.gif.5cc7145f994e4c693279db7214b34688.gif

5aa710a58e9db_eurusd5mzoomedout.thumb.gif.abe76d28e58c73d4770055b9f10a25ff.gif

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16/20 EUR/USD short at 1.36136.

 

TP2 and TP3 are next swing lows. Still concerned they're not far enough to help pay for my losing trades, we shall see. SL in a good position as above the range that's developed towards the end of the asian session.

 

So far price is moving within the tight overnight range, will be interesting to see if it breaks further in either direction.

 

Update:

 

Price broke out to the upside, full stopout

5aa710a5963e1_200911eurusdshort1.36136.thumb.gif.086f531e2ef3e2d8756039dec50aee66.gif

Edited by iwshares

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17/20 Eur/Usd short @ 1.36621

 

TP2 is at the top of the sideways range marked by the lower blue box. TP3 is at the bottom of the range marked by the lower blue box. Price will have to break through the possible support at 1.36479 to hit the TP's, will be interesting to see if/when it does this then how it does this. Again possible issue of small TP but I think it makes sense give PA.

 

Update:

 

Price approached support, then pulled back up (stopping me out by 0.3 ticks...) before dropping back down again through the entry point. Will be interesting to see if price hits 1.37066 (resistance price found after gapping down at the weekly open) or even re tests the 1.37207 high yesterday

5aa710a59fddb_200911eurusdshort1.36221pt2.thumb.gif.a792f65feb682a60e851089b5ac28fa8.gif

Edited by iwshares

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Back in discretionary world...

 

Here's another market I watch in the time frame I view it - I find 4h works for EUA with its low volatility. I stopped trading yesterday morning so didn't see the setup or place the entry order today but thought the chart was worth posting.

5aa710a684206_220911euashort.thumb.gif.92b472501418ac512b0b9e9ef826c83b.gif

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EUA:

 

Price is suggesting a short, however I wouldn't take it as quite poor R/R for me on TP1. One possibility is using TP1 as BE rather than the magenta line and then using the dashed line as a TP2.

 

N.b. my normal approach for profit taking with EUA is to trail a stop on the whole position above/below swing highs/lows. However while this has left me with overall a favourable expectancy, some of my trades have had a poor individual R/R, hence exploring other profit taking options.

5aa710a72dce2_260911euashortsetup.thumb.gif.f2bf0269c77edbee8432561a967641b1.gif

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Possible GBPCHF Long. Price has been in a range marked by the dashed blue lines. Either breakout could be a possible Trade. Appears to be a 123 long setup within the range. Taking that into account I've bumped up the entry level, which reduces TP1 R:R a little, but I wouldn't want to take a trade where price is still stuck in the range

 

Dashed Line Trade:

 

Entry - 1.41488

SL - 1.39871

TP1 - 1.42451

TP2 - 1.44078

 

 

Solid Line Trade (not posted before but thought I'd leave the lines on the chart):

 

Entry - 1.35269

Stop - initial 1.25203, moved up to 1.37034

TP1 - 1.45544

TP2 - 1.51835

 

Note I'm not in either of these trades, though it is a pair I look at on a daily chart timeframe.

5aa710a73dacc_260911GBPCHF1.41488long.thumb.gif.2ed96a6156cba121b712b15e3437c9c8.gif

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Updates:

 

EUA: Trade stopped at BE, and HH and HL, potential chop zone emerging

 

GBP/CHF: Price printed LH, staying within sideways range so setup invalid on dashed line trade. Bold Line trade still open stop at 1.37034. LL will lead to stop moving up to 1.388, a swing point in the middle of the chop zone.

5aa710a75026d_260911euashortsetuppt2.thumb.gif.b8a40f4e699a2aa61c1e3ddba55a2127.gif

5aa710a75955d_260911GBPCHF1.41488longpt2.thumb.gif.5f767b89b6dad26079b5020922c5478d.gif

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Though interestingly price has continued to move down, below TP2, and quite gappy moves down too. Advantage of a market that closes is you get a lot of time to think about what you will do, though that of course can be a double edged sword at times...Watching what will happen around the 10.17 low if price continues to drop.

5aa710a7e7f2e_280911EUA.thumb.gif.afb95300b0bb66a45e521604e0ab5f63.gif

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EUA:

 

Price almost exactly hit the 8/8/11 low as you can see on the chart then has risen and pulled back. Not trading this because the RR is not great but my TP's and stop would be as shown on the chart. N.b. 11.41 is a bit below the 261.8 fib level but I chose it as it was near the top of the congestion zone price was in last week before it continued its move down.

5aa710a85b7ac_300911eua.thumb.gif.3a27fec91611c6e63bbc00be129bcf22.gif

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EUA:

 

Price almost exactly hit the 8/8/11 low as you can see on the chart then has risen and pulled back. Not trading this because the RR is not great but my TP's and stop would be as shown on the chart. N.b. 11.41 is a bit below the 261.8 fib level but I chose it as it was near the top of the congestion zone price was in last week before it continued its move down.

 

Looking at it now, there is also a potential short at 10.55 with stop at 10.71, tp1 at 10.45, tp2 around 10.28. Again RR on tp1 is a little poor so I wouldn't take it.

 

Waiting to see whether price breaks down again, or heads up

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Update:

 

TP2 Filled, price now broken through 10.18 support. What's interesting for me about this trade is that had I been using my usual profit taking method for EUA of trailing stops behind swing points my stop would still be above entry, leaving me liable to lose not only 42 points of profit but also the 17 points of stop loss. Please note it has worked quite well in the past with this security. It kept me in from 10.75 - 11.75 two months ago. However I recently gave back 34 points on a short - hence the exploration of different profit taking methods.

 

Mark Douglas idea from "Trading in the Zone" of "5. I pay myself as the market makes money available to me" makes more sense to me as time goes by. There were many 123 opportunities with fixed targets on the way up and down, which would have carried less risk if traded with fixed targets. Before you worry that I'm seeing all the good points, I have found in my mechanical exercise (2 trades today, not had time to post them both stopped at -1R) that the biggest problem is the full stops for 60 points a time on what is essentially a 50% win system aren't paid for by the winners (since 50% is the chance of hitting TP1 which only yields 20 points). N.b. I didn't put anything into the system to adjust SL except at TP, which is something that could be done to increase profitability.

 

Perhaps the next thing I need to explore is a fixed TP1 then a trailing TP2 so I ride a winner as far as the market will go, rather than re-enter on a new setup that may not occur. This also has the advantage that I'll be banking some profit to pay for the losses and commissions etc.

 

Please note that my original entry method was an ascending/descending triangle break, which I realised a few days ago is very similar to a 123...

5aa710a8a9bf7_031011euapt2.thumb.gif.c763dc3e32d7e8e6cc70c1e7bc751728.gif

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GBPCHF update. Price has broken out of the range.

 

Bold Trade: Will price move up towards TP1? or pullback to the range. Stop moved up to 1.3963 in case price moves back into the range.

 

Dashed Trade: Have drawn on a potential 123 setup as dashed lines. Will be interesting if price will make it to the TP which correspond with strong resistance bands.

5aa710a8d7a90_041011gbpchfincludingpotentialdashedtrade.thumb.gif.1e6bfc971fe288ef0841cb62609eaf5a.gif

Edited by iwshares

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EUA:

 

Price hit resistance at 10.33 then dropped below entry (second half stopping at BE) before making a big push up towards the old TP2. The L H HL this price action has printed indicates there is another potential long. Of course another way to view it is as in the third diagram, though as that opportunity has been and gone I will go with my first idea about price (with coincidentally the same TP2) and see if this up movement is a pullback in the down trend or a reversal.

 

Looking at the last 5 months, it's quite interesting to note how price appears to be in a shallow down-channel, with price only recently dropping out the bottom, before pulling back up again. I wonder if it will carry on up to the top of the down channel. We shall see

5aa710a98caec_041011eualongpt3.thumb.gif.bb5c563bc7d64320581dbc7396d9bd04.gif

5aa710a9938bc_061011eualong.thumb.gif.ab0a7092b1e61ed91c1ebb477674ca1a.gif

5aa710a998cf7_061011eualongalt.thumb.gif.618ba787f9db382b4621d036fa6794b9.gif

5aa710a9adee9_061011euazoomedout.thumb.gif.5373d915228de90bc5d19cbfb9542e9a.gif

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