[Dinerotrader]

Here is how I am currently marking up my chart. I try to put red lines at S/R breaks that in my mind were unprofitable based on some general stop loss positioning and how far the break went. My hope is that I will start to see some of my problems as I go back and look through days of these breaks.

Looking hindsight, it appears easy to see what breaks you should have taken. In foresight, you start finding all kinds of breaks not knowing if any of them are going to lead to that big move up/down. Thales' uncanny ability to call movement gives me hope to become successful. I liked that post Thales put up a few posts before. I am also trying to balance in DBPhoenix's posts on how to NOT find S/R in the middle of nowhere which leads me to want to put more major S/R levels from prior days.

I attached the EUR/JPY chart that I have been marking up. I am now looking for breaks between the lines and inital profit targets out the outer blue lines.

[thalestrader]

Originally Posted by Gabe2004 »

Thales

Would you have shorted @ A or B and how many pips below the blue line?
Would you have taken profit @ C (1/2) and @ D (second 1/2) or you would let the whole thing close @ C or another option?

Thanks

Gabriel

Originally Posted by thalestrader »

Once price breaks below that blue trendline, it should not return above the double red lines before it first reaches the lower red line. So a sell stop at 1.5594, with a stop loss at 1.5634, and a profit limit of 1.5544 (as price feeds vary not only between different brokers but also between different customers of the same broker, anyone looking at these figures would have to adjust to his or her broker's price feed).

So sell at A, take profit at C, especially as this would have been an overnight trade. If this had been, for example, the 6B, and I was entering an order at night, I would have 1 entry at A, a stop loss above the upper red lines, and one profit target. If it were during the day, Iand I was able to stay on top of the trade, I would have taken half profits at c, and either let the second half ride with a breakeven stop or I would have had a profit target below at the next support.

I see that this particular pair has a 4 tick spread at FXCM micro, which means it is probably 5-6 ticks elsewhere, so that 50 tick profit I spoke of may be more like a 40-45 tick profit.

As far as entries go, I have always been one to enter on a 1 tick buy/sell stop. Of course, trading at a bucket shop where there is a marked up spread like this pair has, maybe, maybe I'd add a pip or two, so that I wouldn't get filled at a price where price never really traded.

That is the one problem with trading at a bucket shop that I do not have to contend with trading currency futures. If have a sell stop on the EURUSD at 1.4100, I may get filled there, even though price never traded there anywhere by at my broker and in my account. Whereas if I have a sell stop on the 6E, and I get filled, I know that price really did trade there, even if I were the lone piker who sold the low tick, it was a real trade.

All this is really to say that if you are a forex trader trading with a bucket shop, then you need to get a feel for the manner in which your broker deals the spread.

I have my daughter trade primarily the EURUSD, GBPUSD, and the EURJPY. The spread on the EUR rates at FXCM micro are typically 1.2 ticks or less, and the spread on the GBP is typically 1.8 ticks or less (a far cry from the olf Refco days of fixed 3 tick spread on the EURUSD and 5 ticks on the GBPUSD).

The good news is this: If you trade S/R, the bucket shops can be beat. But you do have to learn to accomodate the spread in your trading.



Best Wishes,

Thales

[Gabe2004]

Originally Posted by thalestrader »

Once price breaks below that blue trendline, it should not return above the double red lines before it first reaches the lower red line. So a sell stop at 1.5594, with a stop loss at 1.5634, and a profit limit of 1.5544 (as price feeds vary not only between different brokers but also between different customers of the same broker, anyone looking at these figures would have to adjust to his or her broker's price feed).

Sorry I missed that in your first post.

I trade FX with Oanda and their spread varies based on time of day or news.
I was nailed several times by INVISIBLE spikes but not too badly.
Overall they are OK.

Have a good weekend all.

Gabe

[thalestrader]

Originally Posted by Gabe2004 »

I trade FX with Oanda and their spread varies based on time of day or news. I was nailed several times by INVISIBLE spikes but not too badly.
Overall they are OK.

Have a good weekend all.

Gabe

My daughter uses FXCM, and they had a strange price spike on the GBPUSD the other day that disappeared later. She wasn't in a trade at the time, so it did not affect her at all. I do not know if FXCM varies the spread at news times as I haven't paid that much attention.

Best Wishes,

Thales

[thalestrader]

Hi Folks,

Continuing our Support/Resistance study of the "PoundYen". GBPJPY broke support at 155.35 area and should drop it to at least 155.15(20 ticks). A break there takes it to 154.95 area (40 ticks), and a break there leads possibly to a drop to 154.60 area (70 ticks).

Best Wishes,

Thales

[thalestrader]

Originally Posted by thalestrader »

Hi Folks,

Continuing our Support/Resistance study of the "PoundYen". GBPJPY broke support at 155.35 area and should drop it to at least 155.15(20 ticks). A break there takes it to 154.95 area (40 ticks), and a break there leads possibly to a drop to 154.60 area (70 ticks).

Best Wishes,

Thales

I see that I deleted the 155.15 line when I was deleting some of the text from last week. I put it back on, and you can see that price came down right to that level and is finding a bit of support. I doubt that it is very strong support there, and I'm fairly confident, though nothing is certain, that should price break below that 155.15 will take the GBPJPY quickly down to 154.95.

Again, if you are playing along at home you may beed to adjust the precise levels discussed here to your own broker's price feed.

Best Wishes,

Thales

[Gabe2004]

Originally Posted by thalestrader »

I see that I deleted the 155.15 line when I was deleting some of the text from last week. I put it back on, and you can see that price came down right to that level and is finding a bit of support. I doubt that it is very strong support there, and I'm fairly confident, though nothing is certain, that should price break below that 155.15 will take the GBPJPY quickly down to 154.95.

Again, if you are playing along at home you may beed to adjust the precise levels discussed here to your own broker's price feed.

Best Wishes,

Thales

Had you shorted at the break down of 155.35, where would your Stop Loss have been?

Thanks

Gabe

[thalestrader]

Originally Posted by Gabe2004 »

Had you shorted at the break down of 155.35, where would your Stop Loss have been?

Thanks

Gabe

Unfortunately, the sensible place for me would have been a quite uncomfortable 90 +/- ticks above at then high of the day. If you look at the chart there was no real swing point that stands out as a closer natural stop. As the minimum anticipated move was only 20 ticks, I would not have considered shorting that break other than as a quick scalp, e.g. 20 tick stop 20 tick limit. When I trade the 6E and 6B, I don't mind 100 tick stops if my profit target is close to 100 ticks. I like to have the relationship between the stop loss and the minimum profit objective be close to 1:1 if not better.

The break above that high at 155.20 would have been a good long entry, as
154.80 level did provide an ok stop level, and the first profit target would have been 156.85 level, for a 65 tick profit potential versus a 40 tick risk.

Right now, GBPJPY is heading into a real thicket of resistance. Unless there is some external impetus (e.g. news) then this rally will liekly remain choppy as it moves toward 157.30-157.60, and subject to reversal anywhere along the way. Should price break and hold above 157.60, then there should be a good bit of no man's land in which to run.

Best Wishes,

Thales