Potential swing trades

[bunyip]

What does the 20 day EMA signify?

The 20 EMA often acts as support and resistance and is watched by a lot of traders, many of whom look to short rallies to the 20 EMA during downtrends, and buy dips to the 20 EMA during uptrends.
It probably becomes something of a self-fulfilling prophesy in much the same way as Fibonacci retracements do.
There are quite a few trading system that are built around using the 20 EMA as a reference point.

Mind you, there are still plenty of good trades from retracements that go nowhere near the 20 EMA.
The trick with any retracement is to trade them in the direction of the trend so that your profit potential is magnified.

 

[bunyip]

Yes you're probably right there, no point complicating a simple system with a complicated exit strategy.

One other quick thought when going through the FX and US stock charts last night. There are a number of PPS setups each day in the US markets yet these are to some degree as I mentioned earlier, governed by the overall market trend. I guess similar setups in FX as well as the TKO aren't subject to such restrictions so one can sit tight and wait for the setups to present themselves. I'm a little guilty of overtrading atm in the US markets, which I do need to work on.

On a sidenote, I've noticed USDJPY and one another might be setting up for a TKO tonight. Will check when I get back home.

Looks like the USDJPY has decided not to give us a TKO after all eh Steve!

You're right about the overall market influencing stocks. FX doesn't have a higher order 'overall market' as such.
Sitting tight and waiting for the setups to come to you is the way to go. Patience is a virtue - I always do better when I wait for the setups to show up, rather than chasing around looking for trades that aren't there.

 

[stevo58]

Looks like the USDJPY has decided not to give us a TKO after all eh Steve!

You're right about the overall market influencing stocks. FX doesn't have a higher order 'overall market' as such.
Sitting tight and waiting for the setups to come to you is the way to go. Patience is a virtue - I always do better when I wait for the setups to show up, rather than chasing around looking for trades that aren't there.

Nope it didn't but the EUR/USD and USD/CHF did. Do you think its dangerous trading correlated markets like this? Okay its only demo but I'm on both at the moment and will manage the trade as per the rules and trade what the market throws up. I really do like this TKO setup and will continue to test. I've read so many books now and I'm coming about turn to keeping it simple, stupid, focussing on price action and trending with the trend.

On a sidenote I did notice the USDJPY has formed a Head and Shoulders top pattern and prices have been rejected by the neckline. If they continue to strongly reverse off could be another TKO setup around the corner.

 

[bunyip]

Nope it didn't but the EUR/USD and USD/CHF did. Do you think its dangerous trading correlated markets like this? Okay its only demo but I'm on both at the moment and will manage the trade as per the rules and trade what the market throws up. I really do like this TKO setup and will continue to test. I've read so many books now and I'm coming about turn to keeping it simple, stupid, focussing on price action and trending with the trend.

On a sidenote I did notice the USDJPY has formed a Head and Shoulders top pattern and prices have been rejected by the neckline. If they continue to strongly reverse off could be another TKO setup around the corner.

Actually I was wrong - the USDJPY did form a TKO but not one that would have been of interest to me, for the reasons stated in my last post.
I see what you mean about the H & S pattern etc. If it falls away from that neckline then retraces back in that direction briefly, it could chuck up a TKO worth taking an interest in.
I'm reluctant to go searching for patterns like Head & Shoulders etc because firstly, they're very subjective, and secondly, they add what I consider an unnecessary element of complexity to trading.
I remember Daryl Guppy's comment that Head & Shoulders are one pattern that gives technical analysis a bad name because they're so subjective that traders who go looking for them tend to find them everywhere, even where they don't exist. Just his comments, not mine, but I do always try and keep my analysis super simple by trading only during strong trends, use a couple of simple patterns and setups as entry signals, endeavour to make my wins much bigger than my losses by letting profits run but getting out of the losers pretty quick.

EURUSD and USDCHF are strongly correlated, one goes down while the other goes up, same story for some of the other pairs - I only trade one or the other for my initial entry, but not both at the same time.
But I will sometimes get into both of them but at different stages. If I take a position in one, it goes my way and there's another setup in that pair a few days or a week later, the mirror image of the setup will often appear in the other pair that's correlated. So I'll take a position in the other pair, rather than pyramid my position in the first pair that I'm already in. But I won't enter both of them at the same time for my initial entry.

Yeh, EURUSD and USDCHF offered a couple of handy TKO's that were ideal opportunities for adding to existing positions. These TKO's formed during nice shallow pullbacks that stopped well short of the 20 EMA, which is typpical of how price action behaves during strong trends.
I would have liked these TKO's to be smaller range days so that entry and stop loss could be closer together, but in all other respects they're classic TKO setups.
One day you'll have to shout me a beer for telling you about this TKO setup!

I'm sure you've seen that USDCAD had another big bearish day on Friday - I believe you're paper trading this one too? - it's been an absolute dream trade for anyone who went short early in the downtrend. Big trends like this are one of the outstanding features of the Forex markets.

 

[stevo58]

Actually I was wrong - the USDJPY did form a TKO but not one that would have been of interest to me, for the reasons stated in my last post.
I see what you mean about the H & S pattern etc. If it falls away from that neckline then retraces back in that direction briefly, it could chuck up a TKO worth taking an interest in.
I'm reluctant to go searching for patterns like Head & Shoulders etc because firstly, they're very subjective, and secondly, they add what I consider an unnecessary element of complexity to trading.
I remember Daryl Guppy's comment that Head & Shoulders are one pattern that gives technical analysis a bad name because they're so subjective that traders who go looking for them tend to find them everywhere, even where they don't exist. Just his comments, not mine, but I do always try and keep my analysis super simple by trading only during strong trends, use a couple of simple patterns and setups as entry signals, endeavour to make my wins much bigger than my losses by letting profits run but getting out of the losers pretty quick.

EURUSD and USDCHF are strongly correlated, one goes down while the other goes up, same story for some of the other pairs - I only trade one or the other for my initial entry, but not both at the same time.
But I will sometimes get into both of them but at different stages. If I take a position in one, it goes my way and there's another setup in that pair a few days or a week later, the mirror image of the setup will often appear in the other pair that's correlated. So I'll take a position in the other pair, rather than pyramid my position in the first pair that I'm already in. But I won't enter both of them at the same time for my initial entry.

Yeh, EURUSD and USDCHF offered a couple of handy TKO's that were ideal opportunities for adding to existing positions. These TKO's formed during nice shallow pullbacks that stopped well short of the 20 EMA, which is typpical of how price action behaves during strong trends.
I would have liked these TKO's to be smaller range days so that entry and stop loss could be closer together, but in all other respects they're classic TKO setups.
One day you'll have to shout me a beer for telling you about this TKO setup!

I'm sure you've seen that USDCAD had another big bearish day on Friday - I believe you're paper trading this one too? - it's been an absolute dream trade for anyone who went short early in the downtrend. Big trends like this are one of the outstanding features of the Forex markets.

Haha yeah I think I owe you a few beers for that one as do the other people monitoring this thread! System simply defines the intermediate trend, offers a low risk entry and is an ultimate example of KISS. Not to keep harping on about it but the other benefits I see are that it makes the process of trading boring (a good thing) and it prevents one of my current achilles heel of overtrading. Funnily enough I've found the research of Technical Analysis to be quite exciting, reading the different books, scouring the forums for different ideas but am aware that this doesn't not equate to profitable so scaling back to something simple and boring appeals greatly in the grand scheme of things. More and more I'm being attracted to this FX game.

I hear what you're saying about the USD/JPY chart, certainly wouldn't use the Head & Shoulders pattern as a signal to enter the trade but it does look like there will be a shorting opportunity if prices rollover and if we see a little pullback. I guess its all about letting the trade come to us rather than chase.

As for that USDCAD trade, well that was a case of me looking back through the charts and finding a great example of the TKO so not on the paper trade. Have you managed to catch a piece of that one? I think it stands at 1428 points now for a month and a halfs work! Obviously its not totally fool proof, when is anything? But trading with the momentum of the trend, if you get filled, often gives you a chance to get the stop to breakeven, thats all the opportunity I'm looking for.

Yep I owe you quite a few beers Bunyip.

 

[bunyip]

System simply defines the intermediate trend, offers a low risk entry and is an ultimate example of KISS.

Funnily enough I've found the research of Technical Analysis to be quite exciting, reading the different books, scouring the forums for different ideas but am aware that this doesn't not equate to profitable so scaling back to something simple and boring appeals greatly in the grand scheme of things. More and more I'm being attracted to this FX game.

Have you managed to catch a piece of that one? I think it stands at 1428 points now for a month and a halfs work! Obviously its not totally fool proof, when is anything? But trading with the momentum of the trend, if you get filled, often gives you a chance to get the stop to breakeven, thats all the opportunity I'm looking for.

Yep I owe you quite a few beers Bunyip.

Yeh, Landry's TKO really is a KISS system in the true meaning of the word.
I've swapped quite a few emails with Dave Landry over the last few years and have gained plenty of insight into his trading ideas and general trading philosophy. All of his setups and ideas have simplicity as the key element.

Like you, I've found Technical Analysis to be a fascinating journey of discovery. After 15 years in this game, 13 of them studying TA, I still get enjoyment out of researching different TA ideas.

I got aboard USDCAD but my entry was later than optimal, due to the fact that I was touring around northern NSW in late April. Still sitting on a tidy profit though which hopefully will get even bigger. And I'm in a couple of others that are putting a smile on my face, so no complaints.

On the subject of exits, here's a chart showing how DMI can be used to take swing traders out if momentum starts fading, or keep trend traders in for bigger gains if the trend continues.

 

[stevo58]

Yeh, Landry's TKO really is a KISS system in the true meaning of the word.
I've swapped quite a few emails with Dave Landry over the last few years and have gained plenty of insight into his trading ideas and general trading philosophy. All of his setups and ideas have simplicity as the key element.

Like you, I've found Technical Analysis to be a fascinating journey of discovery. After 15 years in this game, 13 of them studying TA, I still get enjoyment out of researching different TA ideas.

I got aboard USDCAD but my entry was later than optimal, due to the fact that I was touring around northern NSW in late April. Still sitting on a tidy profit though which hopefully will get even bigger. And I'm in a couple of others that are putting a smile on my face, so no complaints.

On the subject of exits, here's a chart showing how DMI can be used to take swing traders out if momentum starts fading, or keep trend traders in for bigger gains if the trend continues.

I read about ADX before but have never tried to incorporate it into one of my trading strategies. When reviewing some of my old US trades over the weekend was thinking how one could tighten stops when a certain profit target is reach, say at a 3R or a 5R level. Maybe this is something that help that process.

I'm not keen on taking profit off the table as invariably could ride the big winners with only half of the position on. But say if using my 6 bar trailing stop, if the ADX trends lower could then tighten stops by implementing a 3 bar trailing stop instead. Might be worth further investigation. I think we will always be searching for the perfect exit strategy!

I've downloaded all the FX data now. Looking at the EUR/USD charts, looks like the EUR had a 5 year bull run against the USD. I bet you took several chunks out of that one. As you say, the EUR looks to be a great currency trendwise to trade.

What markets does Dave Landry prefer to trade? Will try and look up one of his books.

 

[bunyip]

I read about ADX before but have never tried to incorporate it into one of my trading strategies. When reviewing some of my old US trades over the weekend was thinking how one could tighten stops when a certain profit target is reach, say at a 3R or a 5R level. Maybe this is something that help that process.

I'm not keen on taking profit off the table as invariably could ride the big winners with only half of the position on. But say if using my 6 bar trailing stop, if the ADX trends lower could then tighten stops by implementing a 3 bar trailing stop instead. Might be worth further investigation. I think we will always be searching for the perfect exit strategy!

I've downloaded all the FX data now. Looking at the EUR/USD charts, looks like the EUR had a 5 year bull run against the USD. I bet you took several chunks out of that one. As you say, the EUR looks to be a great currency trendwise to trade.

What markets does Dave Landry prefer to trade? Will try and look up one of his books.

I posted that DMI info for interest only, not because I use it myself - I don't, except I've stared looking at it as a possible exit system.....the never-ending and probably futile search for the perfect exit strategy. But heck, if I don't investigate things I don't know what works and what doesn't.

Your idea of using the ADX as a trigger to tighten stops from 6R to 3 or 4R could have some merit. I've done lots of work with trailing stops but I keep coming back to the crossover of those two EMA's that I mentioned earlier.

I wasn't aware that the EUR had 5 year bull run against the $USD. Yeh I've bitten a chunk or three out of it but they weren't all on the long side - there were some mighty impressive EURUSD downtrends as well, including a 3700 point bear run between July and October 2008.
Swing trade or trend trade or whatever, the EURUSD provided a real banquet for anyone who traded with the trend while those who traded against the trend would have been lucky to pick up a few scraps by comparison.
The EURUSD is probably the most stable trender of them all, but there are quite a few others that are not far behind.

Last time I spoke to Dave Landry he traded stocks exclusively. I mentioned currencies to him - he said he's traded currency futures but not Forex.
I'll post another of his systems on here shortly, one that was in one of his swing trading books. Dave is not actually a real swing trader in the true definition of swing trading...he likes to hang on to at least half his position in the hope of catching really big trends, and quit the other half early for relatively small profits so that he's at least covered his costs and made a few quid as well if the trend fizzles out and turns against him.

 

[bunyip]

Here's the '2/20 EMA Breakout System' from the book 'Dave Landry On Swing Trading'.
I'm not real keen on it myself but thought I'd post it just for interest.

 

[stevo58]

I posted that DMI info for interest only, not because I use it myself - I don't, except I've stared looking at it as a possible exit system.....the never-ending and probably futile search for the perfect exit strategy. But heck, if I don't investigate things I don't know what works and what doesn't.

Your idea of using the ADX as a trigger to tighten stops from 6R to 3 or 4R could have some merit. I've done lots of work with trailing stops but I keep coming back to the crossover of those two EMA's that I mentioned earlier.

I wasn't aware that the EUR had 5 year bull run against the $USD. Yeh I've bitten a chunk or three out of it but they weren't all on the long side - there were some mighty impressive EURUSD downtrends as well, including a 3700 point bear run between July and October 2008.
Swing trade or trend trade or whatever, the EURUSD provided a real banquet for anyone who traded with the trend while those who traded against the trend would have been lucky to pick up a few scraps by comparison.
The EURUSD is probably the most stable trender of them all, but there are quite a few others that are not far behind.

Last time I spoke to Dave Landry he traded stocks exclusively. I mentioned currencies to him - he said he's traded currency futures but not Forex.
I'll post another of his systems on here shortly, one that was in one of his swing trading books. Dave is not actually a real swing trader in the true definition of swing trading...he likes to hang on to at least half his position in the hope of catching really big trends, and quit the other half early for relatively small profits so that he's at least covered his costs and made a few quid as well if the trend fizzles out and turns against him.

I got the tightening stops idea from Tharp's books. From memory, I think he severely tightens stops when a 3R target is reached on a % from the price basis. I think this could strangle a few winners so my thinking would be to switch to a 3 bar trailing stop instead. That said if we were in a bull market the full exit criteria would probably need to stay implemented but in more volatile times something more creative might be required. Certainly looking forward to getting stuck into Currencies and testing a few exit strategies there. Finding a robust exit strategy spanning different market conditions is definately a massive challenge.

Thanks for the next Landry strategy, it didnt stand out as much as TKO setup you posted but will run it through a few charts. I guess if we can just find a good edge and wait for the opportunities it presents then thats half the battle. I have two breakeven paper trades at the moment with the TKO so very happy and will continue to scour for setups. Looks like the AUD is having a nice time against the USD as well at the moment.

Just out of curiosity, do you ever trade pullbacks to round or Fib numbers when pairs are trending strongly, I know thats very similar to the TKO but it looks like theres often support at these levels and it keeps one in line with the overall trend.

Thanks,

Steve

 

[bunyip]

I got the tightening stops idea from Tharp's books. From memory, I think he severely tightens stops when a 3R target is reached on a % from the price basis. I think this could strangle a few winners so my thinking would be to switch to a 3 bar trailing stop instead. That said if we were in a bull market the full exit criteria would probably need to stay implemented but in more volatile times something more creative might be required. Certainly looking forward to getting stuck into Currencies and testing a few exit strategies there. Finding a robust exit strategy spanning different market conditions is definately a massive challenge.

Thanks for the next Landry strategy, it didnt stand out as much as TKO setup you posted but will run it through a few charts. I guess if we can just find a good edge and wait for the opportunities it presents then thats half the battle. I have two breakeven paper trades at the moment with the TKO so very happy and will continue to scour for setups. Looks like the AUD is having a nice time against the USD as well at the moment.

Just out of curiosity, do you ever trade pullbacks to round or Fib numbers when pairs are trending strongly, I know thats very similar to the TKO but it looks like theres often support at these levels and it keeps one in line with the overall trend.

Thanks,

Steve

AUDUSD is going very well and is showing a nice profit for me.

Fib retracements.....yes they happen all the time and quite often after a pullback to a Fib level you'll get a reversal signal such as one of the candle reversal patterns like a Hammer or Shooting Star, Harami (Inside Day), or Engulfing pattern.
I'll trade the Fib retracements but although they're common, there are plenty of other pullbacks that don't go to the Fib levels, but are still good trades.
The Fib levels are so close together that a pullback is bound to go to or near one of them.
I'm a bit dubious about retracements beyond the .618 level - that's a fairly deep retracement and makes me suspect that the trend might be in question.

 

[stevo58]

AUDUSD is going very well and is showing a nice profit for me.

Fib retracements.....yes they happen all the time and quite often after a pullback to a Fib level you'll get a reversal signal such as one of the candle reversal patterns like a Hammer or Shooting Star, Harami (Inside Day), or Engulfing pattern.
I'll trade the Fib retracements but although they're common, there are plenty of other pullbacks that don't go to the Fib levels, but are still good trades.
The Fib levels are so close together that a pullback is bound to go to or near one of them.
I'm a bit dubious about retracements beyond the .618 level - that's a fairly deep retracement and makes me suspect that the trend might be in question.

Well theres opportunities to be had all over the chart you posted. Another night of whipsaws in the US but 2 nice FX trades on paper, if only I could reverse them! Sorry don't mean to delve too much into your trading strategies but do you use a whole range of discretionary ones or just a couple of dedicated setups? I certainly like the idea of Fib retracements on a trending pair or any pullback really. I was reading about this interesting strategy on one of the other sites called the anti hedge. Idea is that you buy a pullback in an established trend, if you're stopped out you wait for prices to reverse say 50 or so points then put in a new limit order where your stop was. The idea is that the trend will come to the rescue and reverse the loss you incurred. Nice simple and effective idea.

Well, I spent all of 3 minutes going through the FX charts this evening and determined no trades to be had. This thread has been a real eye opener for me. It goes against the human psyche really in that you feel guilty for only doing a few mins work, that you should do more work in order to be more profitable. Starting to find that isn't the case with trading! As I'm in a full time job, the appeal of FX is certainly becoming stronger.

 

[bunyip]

That's OK Steve, I don't mind sharing my strategies. I trade just a few dedicated setups, all of them based on pauses or pullbacks during strong trends. I've covered most of them in this thread....PPS patterns, TKO's, reversal candlestick patterns after a retracement, Inside Days after a retracement to Fib levels or to old support or resistance levels. (I've attached a chart showing the Inside Day setup.)
A couple of setups I haven't mentioned are double Inside Days and small sideways consolidations of a few days - once these pausing patterns break out in the direction of the trend they can make some very impressive moves.

I just keep doing basically the same thing over and over again, all of it based on very simple setups that can be identified in just a few minutes a day.
The main thing is having the patience to sit and wait for the setups to come to you. If that means no trades for a month, then so be it.......better not to trade than to chase half-baked setups because you're getting bored.

Yeh, you almost feel guilty of not working hard enough to deserve the results you get. But this really is one of those games where the simpler you keep it, the less work you have to do and the more profitable it becomes. I've got quite a few mates in the trading game - all of us have come full circle from accumulating the knowledge that enabled us to do complex analysis, finding that complexity adversely affected our results, and finally coming back to simple basic strategies that work.

The big FX trends currently in progress will come to an end, probably sooner rather than later, currencies might muck around for a short time with no clear direction, then the whole process will start all over again with more good trends. Or maybe new trends will start as soon as the current trends end. I don't know - I don't need to know - I'll just trade it as it comes.

 

[bunyip]

Sorry don't mean to delve too much into your trading strategies but do you use a whole range of discretionary ones or just a couple of dedicated setups? I certainly like the idea of Fib retracements on a trending pair or any pullback really.


Well, I spent all of 3 minutes going through the FX charts this evening and determined no trades to be had. This thread has been a real eye opener for me. It goes against the human psyche really in that you feel guilty for only doing a few mins work, that you should do more work in order to be more profitable. Starting to find that isn't the case with trading! As I'm in a full time job, the appeal of FX is certainly becoming stronger.

Not sure what happend to that last post, my post seems to have got mixed in with yours rather than being separated from it. I'll re-send to see if I can improve things.

I don't mind sharing my strategies, Steve. I trade just a few dedicated setups, all of them based on pauses or pullbacks during strong trends. I've covered most of them in this thread....PPS patterns, TKO's, reversal candlestick patterns after a retracement, Inside Days after a retracement to Fib levels or to old support or resistance levels. (I've attached a chart showing the Inside Day setup.)
A couple of setups I haven't mentioned are double Inside Days and small sideways consolidations of a few days - once these pausing patterns break out in the direction of the trend they can make some very impressive moves.

I just keep doing basically the same thing over and over again, all of it based on very simple setups that can be identified in just a few minutes a day.
The main thing is having the patience to sit and wait for the setups to come to you. If that means no trades for a month, then so be it.......better not to trade than to chase half-baked setups because you're getting bored.

Yeh, you almost feel guilty of not working hard enough to deserve the results you get. But this really is one of those games where the simpler you keep it, the less work you have to do and the more profitable it becomes. I've got quite a few mates in the trading game - all of us have come full circle from accumulating the knowledge that enabled us to do complex analysis, finding that complexity adversely affected our results, and finally coming back to simple basic strategies that work.

The big FX trends currently in progress will come to an end, probably sooner rather than later, currencies might muck around for a short time with no clear direction, then the whole process will start all over again with more good trends. Or maybe new trends will start as soon as the current trends end. I don't know - I don't need to know - I'll just trade it as it comes.

 

[stevo58]

Not sure what happend to that last post, my post seems to have got mixed in with yours rather than being separated from it. I'll re-send to see if I can improve things.

I don't mind sharing my strategies, Steve. I trade just a few dedicated setups, all of them based on pauses or pullbacks during strong trends. I've covered most of them in this thread....PPS patterns, TKO's, reversal candlestick patterns after a retracement, Inside Days after a retracement to Fib levels or to old support or resistance levels. (I've attached a chart showing the Inside Day setup.)
A couple of setups I haven't mentioned are double Inside Days and small sideways consolidations of a few days - once these pausing patterns break out in the direction of the trend they can make some very impressive moves.

I just keep doing basically the same thing over and over again, all of it based on very simple setups that can be identified in just a few minutes a day.
The main thing is having the patience to sit and wait for the setups to come to you. If that means no trades for a month, then so be it.......better not to trade than to chase half-baked setups because you're getting bored.

Yeh, you almost feel guilty of not working hard enough to deserve the results you get. But this really is one of those games where the simpler you keep it, the less work you have to do and the more profitable it becomes. I've got quite a few mates in the trading game - all of us have come full circle from accumulating the knowledge that enabled us to do complex analysis, finding that complexity adversely affected our results, and finally coming back to simple basic strategies that work.

The big FX trends currently in progress will come to an end, probably sooner rather than later, currencies might muck around for a short time with no clear direction, then the whole process will start all over again with more good trends. Or maybe new trends will start as soon as the current trends end. I don't know - I don't need to know - I'll just trade it as it comes.

Great post. I'm not an avid poster when it comes to forums but I'm glad I did do here. Its not the strategies I'm enjoying reading about (well I do like the TKO) but the psychology. Must get pretty boring waiting for those trends to reverse but simple and boring are major assets of this game which I'm starting to learn.

I was whipsawed out of a few positions overnight in the US and therein lies the problem, theres no discernible trend going on at the moment. The breakout hasn't followed through, then we have the individual stocks offering up their own nuances. So probably the sensible thing would have been to sit out this period and wait for a trend to establish itself. I look at the EUR/USD chart you posted and followed it back a few years and there are trends jumping out all over the place. Looks easier to trade just a few instruments so when my final positions are closed out, I'm going to give FX a try and learn to be patient.

Thanks again Bunyip, many good lessons in this thread.

 

[bunyip]

Great post. I'm not an avid poster when it comes to forums but I'm glad I did do here. Its not the strategies I'm enjoying reading about (well I do like the TKO) but the psychology. Must get pretty boring waiting for those trends to reverse but simple and boring are major assets of this game which I'm starting to learn.

I was whipsawed out of a few positions overnight in the US and therein lies the problem, theres no discernible trend going on at the moment. The breakout hasn't followed through, then we have the individual stocks offering up their own nuances. So probably the sensible thing would have been to sit out this period and wait for a trend to establish itself. I look at the EUR/USD chart you posted and followed it back a few years and there are trends jumping out all over the place. Looks easier to trade just a few instruments so when my final positions are closed out, I'm going to give FX a try and learn to be patient.

Thanks again Bunyip, many good lessons in this thread.

Steve

I've found Forex to be a good market to trade - I really hope it treats you well.
The main points to remember are....

* The trend is your friend - no trend no trade, no exceptions.

* Control you losses with stops and conservative money management. Don't risk more than 2% risk of your account per trade, 1% would be even better until you find your feet.

* Let the profits run. You'll always give back some profit at the end but you'll miss out on much more if you don't stick with the trade while the trend continues.

* Pyramiding can enormously magnify your profits during big trends. Once your stop is at break even, look for other setups to add to your position - you'll find lots of them.
But don't add to your position until all your stops on previous positions are at break even or better.

* Be patient and wait for the setups to come to you. If there are no setups then there are no setups, and you won't do yourself any favours by trying to find them where they don't exist. Better to sit and wait for the next trends to develop. Fortunately you don't have to wait too long for trends in Forex.

You might find the attached chart of interest - it shows the first Forex trade I ever did back in September 2004.
I watched the AUDUSD make the transition from downtrend to uptrend, watched the 10, 20, 30 Moving Averages roll over from bearish configuration to bullish configuration, saw the first pullback take place but I wasn't convinced at that stage that a new uptrend was established. The market moved up more than 300 points from the bottom before there was another brief pullback that culminated in a Hammer. I bought just above the Hammer and after a bit of a shaky start, the trend really built up a head of steam and the trade worked out very well for me with 600 points profit.
I clearly remember feeling immense impatience to get in and trade the damn thing after it had risen more than 300 points and I still didn't have a position. Somehow I controlled my impatience until I thought the time was right.....it's never an easy thing to do.

Once I got into that trade and had moved my initial stop to break even, I saw a short entry setup in USDCAD which was heading downhill while the AUDUSD was heading north. I went short in the Canadian and pulled a 600 point profit from that one as well.
After two decent winning trades in quick succession I was starting to feel like a real pro. I got overconfident and took a number of trades without really waiting for the right setups to present themselves.....paid the price for my foolishness by copping a number of confidence-sapping losses!

Anyway Steve, I hope you enjoy the journey and become a real Forex pro.
Contact me by PM if I can help in any way. I won't tell you if you should be buying here or selling there, but more than happy to help with pretty much most other queries you might have.

Cheers
Bunyip

 

[Chorlton]

Steve

I've found Forex to be a good market to trade - I really hope it treats you well.
The main points to remember are....

* The trend is your friend - no trend no trade, no exceptions.

* Control you losses with stops and conservative money management. Don't risk more than 2% risk of your account per trade, 1% would be even better until you find your feet.

* Let the profits run. You'll always give back some profit at the end but you'll miss out on much more if you don't stick with the trade while the trend continues.

* Pyramiding can enormously magnify your profits during big trends. Once your stop is at break even, look for other setups to add to your position - you'll find lots of them.
But don't add to your position until all your stops on previous positions are at break even or better.

* Be patient and wait for the setups to come to you. If there are no setups then there are no setups, and you won't do yourself any favours by trying to find them where they don't exist. Better to sit and wait for the next trends to develop. Fortunately you don't have to wait too long for trends in Forex.

You might find the attached chart of interest - it shows the first Forex trade I ever did back in September 2004.
I watched the AUDUSD make the transition from downtrend to uptrend, watched the 10, 20, 30 Moving Averages roll over from bearish configuration to bullish configuration, saw the first pullback take place but I wasn't convinced at that stage that a new uptrend was established. The market moved up more than 300 points from the bottom before there was another brief pullback that culminated in a Hammer. I bought just above the Hammer and after a bit of a shaky start, the trend really built up a head of steam and the trade worked out very well for me with 600 points profit.
I clearly remember feeling immense impatience to get in and trade the damn thing after it had risen more than 300 points and I still didn't have a position. Somehow I controlled my impatience until I thought the time was right.....it's never an easy thing to do.

Once I got into that trade and had moved my initial stop to break even, I saw a short entry setup in USDCAD which was heading downhill while the AUDUSD was heading north. I went short in the Canadian and pulled a 600 point profit from that one as well.
After two decent winning trades in quick succession I was starting to feel like a real pro. I got overconfident and took a number of trades without really waiting for the right setups to present themselves.....paid the price for my foolishness by copping a number of confidence-sapping losses!

Anyway Steve, I hope you enjoy the journey and become a real Forex pro.
Contact me by PM if I can help in any way. I won't tell you if you should be buying here or selling there, but more than happy to help with pretty much most other queries you might have.

Cheers
Bunyip

Hi Bunyip.

As Stevo has already mentioned, there are many good points throughout this thread (especially in the post above) and consequently I'd also like to say thanks for openly sharing your experience and thoughts.....

I'm even now tempted to enter the forex arena myself ;-)

All the best,

Chorlton

 

[bunyip]

Hi Bunyip.

As Stevo has already mentioned, there are many good points throughout this thread (especially in the post above) and consequently I'd also like to say thanks for openly sharing your experience and thoughts.....

I'm even now tempted to enter the forex arena myself ;-)

All the best,

Chorlton

Cheers Chorlton, good of you to say so - I'm pleased you found something of value in what I posted.

While Forex is the best market I've traded, I want to make it clear that it's no pushover.
You get your losses as well as your wins, trades that frustrate you as well as those that leave you feeling elated. If you can win half your trades you're doing well. The trick is to ensure that your average win is much bigger than your average loss. Hence the strategy of trade with the trend, cut your losses fast but let your profits run. If you can do that then a win rate of 50% is more than adequate to make you very profitable.

If you're going to try Forex then I'd suggest trading a demo account first for several months, then if successful you can start trading with real money. I suggest initially trading the smallest position size your broker will allow, which is one mini contract with most brokers. One mini carries a point value of 1 unit of the back currency per point, as opposed to 10 units per point for the full contract.
By 'back currency' I mean the second currency of the quoted pair. In USDCAD for example, the US $ is the front currency and the Canadian $ is the back currency.
So one mini contract of USDCAD is worth 1 Canadian $ per point of gain or loss, while a full contract is worth 10 Canadian $ per point.

It's handy to have a currency converter so you know the size of your stop loss or your profit in the currency of your own country. The Universal Currency Converter is available at http://www.xe.com/ucc/

Good trading
Bunyip

 

[bunyip]

As a point of interest...
Dave Landry will be giving two presentations as a guest speaker at the ATAA National Conference in Melbourne, October 23 - 25, 2009.
Details below.


Dave Landry - The Best Patterns to Capture Trends
In this presentation, Dave will show you why you should trade trends, how to recognise them, and some of his favourite patterns to capitalise on the three phases of a trend. But a pattern in itself is useless unless it's applied properly. Therefore he will show you when to use each of the patterns. Further, he will touch upon important concepts such as money management, traders psychology, how to find the best setups, and discretionary techniques so that these patterns can be applied in the real world.

Dave Landry - Entering New Trends Early
Trends don't last forever. Eventually they exhaust themselves and quite often, a new trend emerges in the opposite direction. However, established trends can often last much longer and go much further than most people anticipate. Therefore, trying to buy a market because it's 'low' or short a market because it's 'high' is a loser's game.
The good news is that markets leave clues that a trend is turning. Dave will show you how to recognise these clues and capture new trends early with his favourite trend transition patterns.
He'll also show you how major bull and bear markets all begin with easy to recognise transitional patterns.

 

[stevo58]

Steve

I've found Forex to be a good market to trade - I really hope it treats you well.
The main points to remember are....

* The trend is your friend - no trend no trade, no exceptions.

* Control you losses with stops and conservative money management. Don't risk more than 2% risk of your account per trade, 1% would be even better until you find your feet.

* Let the profits run. You'll always give back some profit at the end but you'll miss out on much more if you don't stick with the trade while the trend continues.

* Pyramiding can enormously magnify your profits during big trends. Once your stop is at break even, look for other setups to add to your position - you'll find lots of them.
But don't add to your position until all your stops on previous positions are at break even or better.

* Be patient and wait for the setups to come to you. If there are no setups then there are no setups, and you won't do yourself any favours by trying to find them where they don't exist. Better to sit and wait for the next trends to develop. Fortunately you don't have to wait too long for trends in Forex.

You might find the attached chart of interest - it shows the first Forex trade I ever did back in September 2004.
I watched the AUDUSD make the transition from downtrend to uptrend, watched the 10, 20, 30 Moving Averages roll over from bearish configuration to bullish configuration, saw the first pullback take place but I wasn't convinced at that stage that a new uptrend was established. The market moved up more than 300 points from the bottom before there was another brief pullback that culminated in a Hammer. I bought just above the Hammer and after a bit of a shaky start, the trend really built up a head of steam and the trade worked out very well for me with 600 points profit.
I clearly remember feeling immense impatience to get in and trade the damn thing after it had risen more than 300 points and I still didn't have a position. Somehow I controlled my impatience until I thought the time was right.....it's never an easy thing to do.

Once I got into that trade and had moved my initial stop to break even, I saw a short entry setup in USDCAD which was heading downhill while the AUDUSD was heading north. I went short in the Canadian and pulled a 600 point profit from that one as well.
After two decent winning trades in quick succession I was starting to feel like a real pro. I got overconfident and took a number of trades without really waiting for the right setups to present themselves.....paid the price for my foolishness by copping a number of confidence-sapping losses!

Anyway Steve, I hope you enjoy the journey and become a real Forex pro.
Contact me by PM if I can help in any way. I won't tell you if you should be buying here or selling there, but more than happy to help with pretty much most other queries you might have.

Cheers
Bunyip

Hi Bunyip,

Just lost a fully written reply on this site so hear it goes again. Thanks for the offer to help, will be good to have someone of your experience to bounce the occasional idea off. I won't be treating the task of trading FX lightly, its been great to get a few ideas of this thread and have some more ammunition for the toolbox when I do eventually start. Quite happy to identify a trend, wait for a pullback and jump on via a continuation pattern or a TKO bar. I spent quite a while over the weekend going through some of my US stocks traded over the last few months and identified quite a big mistake I was making. Trading FX to a degree will help eliminate this and looking forward to a more patient demeanour when approaching the charts.

Well both trades I initially had on paper were stopped out at breakeven so learned quite a valuable lesson. Which is to close out positions before a big news event like NFP. Saw 300 points of profit dissolve to nothing in just over an hour. There are a few setups out there so will jump back on given the opportunity. When I do start will keep the capital at risk on each trade to a bare minimum whilst I find my feet, market will always be there. Hopefully when I do start I can experience similar success like you first AUDUSD trade, only need a few of them a year to make a difference.

Is there a fee to attend Dave Landry's presentations or do you have to be a member of the ATAA? I think I will be back in the UK when they are on but if not would be keen.

Thanks again for all the advise offered up in the thread. Will let you know how I go in my first few tentative steps in FX. I've gained a new perspective on trading here.

Steve