Potential swing trades

[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

Steve

Unfortunately the ATAA conference comes with a rather brutal entry fee of $780 for ATAA members, or $980 for non-members, which I imagine will be too expensive for quite a few people.

Non farm payroll figures can work for you or against you when you're holding open positions. Many trends last long enough to take in at least one NFP announcement.....you may be prematurely exiting a big trend if you automatically close your trades before the NFP figures come out.
I know you can always go back in again but physiologically it's harder to re-enter than to stay in the trade.
Might be worth considering a middle of the road strategy of tighten your stop prior to NFP....you'll preserve some profit if the figures work against you, or you'll still be in the trade if the figures work in your favour.

Good trading
Bunyip

 

[stevo58]

Steve

Unfortunately the ATAA conference comes with a rather brutal entry fee of $780 for ATAA members, or $980 for non-members, which I imagine will be too expensive for quite a few people.

Non farm payroll figures can work for you or against you when you're holding open positions. Many trends last long enough to take in at least one NFP announcement.....you may be prematurely exiting a big trend if you automatically close your trades before the NFP figures come out.
I know you can always go back in again but physiologically it's harder to re-enter than to stay in the trade.
Might be worth considering a middle of the road strategy of tighten your stop prior to NFP....you'll preserve some profit if the figures work against you, or you'll still be in the trade if the figures work in your favour.

Good trading
Bunyip

Ouch, yeah thats a bit too much for me, maybe one day if I can become more profitable. Are you going to go to this one?

I'm not too disheartened about the breakeven trades, there will be times when it goes in my favour and that 300 points could be profit. That said it can't hurt to tighten stops if a major fundamental event is happening. I'm not good with the fundamentals but trying to improve this aspect of my trading knowledge, so I can keep my ear to the ground so to speak.

Now patiently waiting for the next setup, I'm sure one is just around the corner.

 

[bunyip]

Ouch, yeah thats a bit too much for me, maybe one day if I can become more profitable. Are you going to go to this one?

No Steve, I won't be at the ATAA conference. I attend the Trader's Expo in Brisbane each year as it's within driving distance for me. I've heard plenty of speakers over the years, including most of those who will speak at the Melbourne conference. Probably wouldn't pick up much that I haven't already heard.

 

[bunyip]

Steve, Chorlton & others

As an alternative or an addition to trading Forex from end of day charts, you can intraday trade without gluing yourself to the screen like many intraday traders do.
Apart from my trading from daily charts, I also have a dabble from 15 minute and 30 minute charts.
I've got my laptop set up on a small table on wheels that's just the right height to wheel in over my knees when I'm sitting in my TV chair.
I follow 15 minute charts, also I look at 30 minute charts every half hour. I don't sit with my eyes glued to the screen - every 15 minutes I look at the screen for a minute or so to see if my setups are there - if they're not, I close the lid of the computer so I'm not tempted to watch the screen, and I open it again and look at the charts when the next 15 minute period rolls around.
Rare is the night when there are no setups before bed time, but if there are none then I go to bed at my normal time. Gone are the days when I'd sit up most of the night watching the screen.

I look for only three setups...

1. Brief consolidations during established trends....go short below the consolidation if the trend is down, or buy above the consolidation if the trend is up.
2. Brief rallies culminating in Shooting Stars as shorting signals during downtrends, and brief pullbacks culminating in Hammers as buy signals during uptrends.
3. Bullish Engulfing patterns after pullbacks during uptrends, Bearish Engulfing patterns after rallies during downtrends.

My stops average about 20 points and are moved to break even after the trade gains 20 points. Thereafter I use 20 point trailing stop with a 10 point step. IG Markets have the facility for setting this trailing stop.
The moving averages I use are the same ones I use for daily charts....10, 20, 30 EMA's to show the shorter term trend, 65 EMA to show the longer term trend.

The trailing stop has a number of benefits.....
*It takes the guesswork out of where to exit.
*It progressively locks in profit as the trend moves in my favour.
*It allows me to go to bed and let the trade take care of itself.

Typical of exit strategies, the trailing stop exit sometimes works great and captures a big chunk of the trend, other times not so great - overall it's probably as good as most other exit strategies I've used.

My three setups show up frequently among the six pairs in the two timeframes I follow. Best of all, it takes only 1 minute or so to eyeball the charts every 15 minutes to identify the setups.
It's a low key way of intraday trading that eliminates the need to sit with my eyes glued to the screen following shorter time frames. I used to do that once upon a time but I found it was a very tiring and draining way of trading.

I can trade from the comfort of my recliner in the family room while I'm watching TV, and it requires very little time watching the screen - this allows me to have normal interaction with my family while I'm trading.
I'm finding this to be quite a lucrative and mentally stimulating addition to my trading from daily charts.

Below are a couple of charts showing the setups I trade.
The last chart is tonight's trade on GBPUSD that I entered from a Bullish Engulfing pattern. It was still in progress when I did the screen capture. It has subsequently been closed out by my trailing stop for 30 points profit.

Cheers
Bunyip

 

[stevo58]

Steve, Chorlton & others

As an alternative or an addition to trading Forex from end of day charts, you can intraday trade without gluing yourself to the screen like many intraday traders do.
Apart from my trading from daily charts, I also have a dabble from 15 minute and 30 minute charts.
I've got my laptop set up on a small table on wheels that's just the right height to wheel in over my knees when I'm sitting in my TV chair.
I follow 15 minute charts, also I look at 30 minute charts every half hour. I don't sit with my eyes glued to the screen - every 15 minutes I look at the screen for a minute or so to see if my setups are there - if they're not, I close the lid of the computer so I'm not tempted to watch the screen, and I open it again and look at the charts when the next 15 minute period rolls around.
Rare is the night when there are no setups before bed time, but if there are none then I go to bed at my normal time. Gone are the days when I'd sit up most of the night watching the screen.

I look for only three setups...

1. Brief consolidations during established trends....go short below the consolidation if the trend is down, or buy above the consolidation if the trend is up.
2. Brief rallies culminating in Shooting Stars as shorting signals during downtrends, and brief pullbacks culminating in Hammers as buy signals during uptrends.
3. Bullish Engulfing patterns after pullbacks during uptrends, Bearish Engulfing patterns after rallies during downtrends.

My stops average about 20 points and are moved to break even after the trade gains 20 points. Thereafter I use 20 point trailing stop with a 10 point step. IG Markets have the facility for setting this trailing stop.
The moving averages I use are the same ones I use for daily charts....10, 20, 30 EMA's to show the shorter term trend, 65 EMA to show the longer term trend.

The trailing stop has a number of benefits.....
*It takes the guesswork out of where to exit.
*It progressively locks in profit as the trend moves in my favour.
*It allows me to go to bed and let the trade take care of itself.

Typical of exit strategies, the trailing stop exit sometimes works great and captures a big chunk of the trend, other times not so great - overall it's probably as good as most other exit strategies I've used.

My three setups show up frequently among the six pairs in the two timeframes I follow. Best of all, it takes only 1 minute or so to eyeball the charts every 15 minutes to identify the setups.
It's a low key way of intraday trading that eliminates the need to sit with my eyes glued to the screen following shorter time frames. I used to do that once upon a time but I found it was a very tiring and draining way of trading.

I can trade from the comfort of my recliner in the family room while I'm watching TV, and it requires very little time watching the screen - this allows me to have normal interaction with my family while I'm trading.
I'm finding this to be quite a lucrative and mentally stimulating addition to my trading from daily charts.

Below are a couple of charts showing the setups I trade.
The last chart is tonight's trade on GBPUSD that I entered from a Bullish Engulfing pattern. It was still in progress when I did the screen capture. It has subsequently been closed out by my trailing stop for 30 points profit.

Cheers
Bunyip

Thanks for that Bunyip, funny you should bring this up as I've been looking at trading the odd setups during the London and maybe the US opens whilst waiting for valid setups for a longer term positions. One thing I found out is that metatrader can be downloaded with data free for the lower time horizons which is a massive plus.

Another thing I've had a bit of joy with is trading pin bar setups, (definition - bar opens, creates a long nose before returning to a spot near the open for a close). Its basically a fake out manoevre but extremely effective and from what I see pretty rare. If the nose protudes into a minor support/resistance level providing confluence even better. There is a great thread on this over at Forex Factory, if the TKO bar is also a pinbar then we have a very good setup.

These setups are extremely rare on intraday so something I have been trying with a little success are 1-2-3 setups, not as aggressive as yours but looking for the first swing in the London session to see if I can bag some points. I reduce risk per trade on these setups and usually looking to take no more than 2 setups. I'm with you Bunyip don't want to be glued to the screen all night!!! For this setup I look for an obvious trend, identify the swing high, wait for the retracement and enter 2 pips above the swing high. Stop below the retracement. I will obviously sacrifice more points using this though hoping to ride the momentum of a rubber band snap back effect. Quite excited about the possibilities here and your post offers similar good ideas that can be meshed into something.

The big issue I'm having not only with these intraday setups but with longer term setups is the exit strategy. So far on the intraday setups I'm using an aggressive 20 point trailing stop (similar to you) which works okay but tends to be whipsawed at a breakeven heavily. Not too concerned at the lower time frames here but have given back a lot of open profit on the 3 TKO daily timeframes I've traded so far. The last one GBPJPY was heavily in profit which was all back eradicated last Friday using my 6 bar stop. Stop was at breakeven was is good though is a bit galling to see 300-400 point moves reduced to nothing. I've never been a fan of taking partial profits so will keep looking for ideas and try your crossover theory again over these previous setups. Another idea might be trailing stops using previous resistance come support zones to lock in profit.

Either way I'm a convert to the FX world and have you to thank for it Bunyip.

 

[bunyip]

Thanks for that Bunyip, funny you should bring this up as I've been looking at trading the odd setups during the London and maybe the US opens whilst waiting for valid setups for a longer term positions. One thing I found out is that metatrader can be downloaded with data free for the lower time horizons which is a massive plus.

Another thing I've had a bit of joy with is trading pin bar setups, (definition - bar opens, creates a long nose before returning to a spot near the open for a close). Its basically a fake out manoevre but extremely effective and from what I see pretty rare. If the nose protudes into a minor support/resistance level providing confluence even better. There is a great thread on this over at Forex Factory, if the TKO bar is also a pinbar then we have a very good setup.

These setups are extremely rare on intraday so something I have been trying with a little success are 1-2-3 setups, not as aggressive as yours but looking for the first swing in the London session to see if I can bag some points. I reduce risk per trade on these setups and usually looking to take no more than 2 setups. I'm with you Bunyip don't want to be glued to the screen all night!!! For this setup I look for an obvious trend, identify the swing high, wait for the retracement and enter 2 pips above the swing high. Stop below the retracement. I will obviously sacrifice more points using this though hoping to ride the momentum of a rubber band snap back effect. Quite excited about the possibilities here and your post offers similar good ideas that can be meshed into something.

The big issue I'm having not only with these intraday setups but with longer term setups is the exit strategy. So far on the intraday setups I'm using an aggressive 20 point trailing stop (similar to you) which works okay but tends to be whipsawed at a breakeven heavily. Not too concerned at the lower time frames here but have given back a lot of open profit on the 3 TKO daily timeframes I've traded so far. The last one GBPJPY was heavily in profit which was all back eradicated last Friday using my 6 bar stop. Stop was at breakeven was is good though is a bit galling to see 300-400 point moves reduced to nothing. I've never been a fan of taking partial profits so will keep looking for ideas and try your crossover theory again over these previous setups. Another idea might be trailing stops using previous resistance come support zones to lock in profit.

Either way I'm a convert to the FX world and have you to thank for it Bunyip.

The so called 'pin bar' appears to be basically a Hammer if the tail is pointing south, and a Shooting Star if the tail is pointing north.
Hammers and Shooting Stars after retracements are quite common on 15 minute charts if you follow six pairs.
They don't always protrude into an old support or resistance area, but they're obviously an even better setup when they do.

You'll find that you'll frequently give back an annoyingly large portion of your gain irrespective of what exit strategy you use.
This can lead you to a never-ending quest to find the 'perfect' exit system.
Now I don't worry too much about giving it back, I know that some trades will yield big results, some will yield only a little, and some will be losers.
I work on the theory that the small winners cancel out the small losers, and the odd big win is where the real money is made.

Even a modest average weekly profit of 40 points can produce impressive results.
Lets say you start with an account of 2 grand US, trading 2 mini contracts with a 20 point stop - you're risking 2% of your account per trade.
A weekly profit of 40 points X 2 contracts = $80 US per week = 4% weekly return on your trading account.
Providing you maintain 40 points average weekly profit, your account will be up 50% in 3 months, at which time you can increase your number of contracts by 50%, from 2 to 3 without exceeding 2% risk of your account.
Keep increasing your number of contracts in proportion to the increase in the size of your trading account, and you'll more than double your trading account every six months.
Keep doubling your account every six months and - well, you do the figures - suffice to say there's a lot of money to be made.

 

[bunyip]

Here's an exit strategy from Bill Poulis, an American who sells a highly priced Forex course. I didn't buy it but in his promotional information he gave out a few tips about what was in the course, including this exit strategy.


Bill Poulis exit strategy.

Longs...
Exit half your position at a target calculated by adding 5 days average true range to your entry price.
Calculate the true range of the setup day and the prior 4 days, add the five figures together, and divide by 5.

True range of a day is the greatest of the following.....
1. The range of the day.
2. The days high less the previous days close.
3. The days low less the previous days close.

Exit the remaining half on a trailing stop 0.1% under the low of the last three days.

Reverse the rules for shorts.

 

[stevo58]

The so called 'pin bar' appears to be basically a Hammer if the tail is pointing south, and a Shooting Star if the tail is pointing north.
Hammers and Shooting Stars after retracements are quite common on 15 minute charts if you follow six pairs.
They don't always protrude into an old support or resistance area, but they're obviously an even better setup when they do.

You'll find that you'll frequently give back an annoyingly large portion of your gain irrespective of what exit strategy you use.
This can lead you to a never-ending quest to find the 'perfect' exit system.
Now I don't worry too much about giving it back, I know that some trades will yield big results, some will yield only a little, and some will be losers.
I work on the theory that the small winners cancel out the small losers, and the odd big win is where the real money is made.

Even a modest average weekly profit of 40 points can produce impressive results.
Lets say you start with an account of 2 grand US, trading 2 mini contracts with a 20 point stop - you're risking 2% of your account per trade.
A weekly profit of 40 points X 2 contracts = $80 US per week = 4% weekly return on your trading account.
Providing you maintain 40 points average weekly profit, your account will be up 50% in 3 months, at which time you can increase your number of contracts by 50%, from 2 to 3 without exceeding 2% risk of your account.
Keep increasing your number of contracts in proportion to the increase in the size of your trading account, and you'll more than double your trading account every six months.
Keep doubling your account every six months and - well, you do the figures - suffice to say there's a lot of money to be made.

I've always used bar charts until recently so am trying to get better with Candlesticks, these pinbar/ shooting star setups are pretty effective. Certainly building an arsenal to attack the FX markets with, just need to stay consistent and take the setups when they come. Sooner or later I'm going to catch a big trend, just need to make sure I have an exit strategy to capitalise fully. Thanks for the additional exit information, it will come, I guess I should never be discouraged by a break even free trade.

I like the idea of a couple of quick trades during the London and NY opens. Currently only using 0.5% risk on these type of trades at the moment and am up 10 points through this strategy for the week so far. Hopefully one day I'll be able to return 40-60 points a week using this strategy, again in all in good time. Obviously would really like to grow an account and its great to hear from someone who has succeeded with this. Its good to know I'm on the right track, just need to practise a bit longer then its all systems go. Overall I'm down about 2% of the account but have left a lot of points so far on the table. Absolutely love doing this though.

I've been on the lookout for a trade this evening but nothing has slapped me around the face so far. How long have you been trading these kind of short term trades? Does the 1-2-3 strategy sound okay to you?

 

[bunyip]

Steve

Your 1 - 2 - 3 system might be OK. Test it over a couple of months and see how it goes.
An alternative would be to buy above the first bullish bar after the pullback....a smaller stop would be required and you'd be getting in right where the retracement ends and the trend resumes, which means that more of the trend is still in front of you.

I've been backtesting such a system on a dozen or so daily charts going back 18 years for most pairs and 10 years on the Euro crosses, using the Bill Poulis trailing stop as an exit. It's a work still in progress but results look impressive so far.

Below is a 1 - 2 - 3 system that's a bit different to your's.
Click on the chart to expand it.

 

[bunyip]

Below is a chart of AUDUSD showing a number of technical features that frequently show up in Forex charts.

 

[stevo58]

Steve

Your 1 - 2 - 3 system might be OK. Test it over a couple of months and see how it goes.
An alternative would be to buy above the first bullish bar after the pullback....a smaller stop would be required and you'd be getting in right where the retracement ends and the trend resumes, which means that more of the trend is still in front of you.

I've been backtesting such a system on a dozen or so daily charts going back 18 years for most pairs and 10 years on the Euro crosses, using the Bill Poulis trailing stop as an exit. It's a work still in progress but results look impressive so far.

Below is a 1 - 2 - 3 system that's a bit different to your's.
Click on the chart to expand it.

This is great stuff as always Bunyip. Of course the 1-2-3 system is just as well played out on the daily charts as well! So looking at your charts, would you place your stop under the last swing low or always wait for the pullback before entering? That AUD/USD chart shows just two trades which would have made my year!

I see on the second setup a TKO opportunity to pyramid as well. A lot is dependent on the demoing but if things go to plan, I might even bump risk up to 2-3% a trade for the longer term opportunities (I currently operate at 0.5% in stocks). I'm in a drawdown at the moment so will try for 2-3 profitable months before going live.

I'm also trying to improve my price action skills as well as I look at your charts and see how much you can gain by having an idea where the higher probability lies in regards the current trend when a price pattern forms. Again, referring back to your AUD/USD chart on the first setup, once you see the hammer (pinbar in my lingo) at point 1 of the second setup, well you can tighten trailing stops.

I'm also working on a discretionary system to tackle ranging periods as well. Again forward testing is key here for me on demo. If I have success will post my findings here. Its basically based around price action (Bearish, Bullish Engulfing and IB patterns) around major (Monthly, weekly, daily) support resistance zones. Hardly ground breaking stuff but simple. That said there always seems to be a trending currency pair to take advantage of.

 

[Chorlton]

I like the idea of a couple of quick trades during the London and NY opens. Currently only using 0.5% risk on these type of trades at the moment and am up 10 points through this strategy for the week so far.

Hi Stevo,

Can I ask how you are only risking 0.5% of your account size on these trades? How close are you placing your stop?

 

[Chorlton]

You'll find that you'll frequently give back an annoyingly large portion of your gain irrespective of what exit strategy you use.

Hi Bunyip.

Can I ask how many contracts you trade at any one time on a particular pair and if this number varies then what rules do you use to determine the number of contracts?

 

[Chorlton]

Hi All,

I have a couple of very basic question regarding FX, which hopefully someone can quickly answer for me.

1. Firstly. what does the value of 1 pip equate to? My understanding is that a Pip equates to the smallest price change that can occur. Is this correct?

2a. How many decimal places are normally used to represent a currency pair as I've noticed on the charts posted here that the FX rates can be anything between 1 and 4 decimal places? Would I be right in assuming that this is dependant on the currency pair being quoted, and if so then this would also mean that the value of a Pip will differ depending on the currency pair being traded? Have I understood this correctly?

2b. If the number of decimal places does vary depending on the currency pair, then is this number of decimal places "standard" across all brokers? I ask as I read somewhere that different brokers could implement different decimal points compared to another broker for the same currency pair !!??!!

3. Using the chart shown in Post 69, the high @ Point2 is approximately at 0.835 and the low @ Point 3 is at 0.800. How many pips difference would that be? Would I be right in assuming it is simply 35 pips?


Many Thanks in advance,

Chorlton

 

[Grep]

Hi Bunyip,

My first post here on this forum.
Thank you for the excellent series of posts on this swing trading method.


Just a question if I may, I have just re read my copy of Landry's book that describes his TKO pattern.In it he uses a reading of above 30 on a 14 period ADX to qualify trend strength. I note on your charts that you don't do this.I am right in saying that you basically eyeball the three moving averages to determine trend strength ?

 

[bunyip]

Couple of good 1 2 3 trades currently underway on 15 minute charts.

 

[bunyip]

Hi Bunyip,

My first post here on this forum.
Thank you for the excellent series of posts on this swing trading method.


Just a question if I may, I have just re read my copy of Landry's book that describes his TKO pattern.In it he uses a reading of above 30 on a 14 period ADX to qualify trend strength. I note on your charts that you don't do this.I am right in saying that you basically eyeball the three moving averages to determine trend strength ?

Hello Grep

Welcome to the forum.

I no longer use ADX 14 - it's slow to react - too much of the trend gets away from you before the ADX wakes up and signals 'strong trend' by rising above 30.
I find the three moving averages do a better job. Like Bollinger Bands, they contract when the market becomes directionless, and expand when the market starts trending.
The more daylight (space) between the averages, the better the trend.

Dave Landry told me in email correspondence that he too has abandoned ADX for the same reasons.

Cheers
Bunyip

 

[bunyip]

Hi Bunyip.

Can I ask how many contracts you trade at any one time on a particular pair and if this number varies then what rules do you use to determine the number of contracts?

Chorlton my friend - some information is classified!

Early in my trading career an older experienced trader told me you shut yourself in your office, you study your charts, you don't listen to the financial news or read the financial pages, you don't tell anyone what you're trading or how much you're trading or what your profit or loss is. You adopt a lone wolf approach to trading, and you'll trade a lot better as a result.
Well I can't claim to follow his advice exactly, but for the most part I do.

Regarding what rules I use to determine the number of contracts......I look at the size of the stop loss, then decide how many contracts I can trade without exceeding 2% risk of my account.
Example...An intraday trader with $1000 USD in his account - if he trades 1 mini contract with stop of 20 points or less, he's within his 2% risk parameters (20 points X $1 per point per mini contract = $20 = 2% risk of his trading account.

If he has 10 grand in his account, and his stop is 20 points from entry, he can trade 1 full contract - his risk would be 20 points X $10 per point = $200 risk = 2% of his 10 grand account.

 

[bunyip]

Hi All,

I have a couple of very basic question regarding FX, which hopefully someone can quickly answer for me.

1. Firstly. what does the value of 1 pip equate to? My understanding is that a Pip equates to the smallest price change that can occur. Is this correct?

2a. How many decimal places are normally used to represent a currency pair as I've noticed on the charts posted here that the FX rates can be anything between 1 and 4 decimal places? Would I be right in assuming that this is dependant on the currency pair being quoted, and if so then this would also mean that the value of a Pip will differ depending on the currency pair being traded? Have I understood this correctly?

2b. If the number of decimal places does vary depending on the currency pair, then is this number of decimal places "standard" across all brokers? I ask as I read somewhere that different brokers could implement different decimal points compared to another broker for the same currency pair !!??!!

3. Using the chart shown in Post 69, the high @ Point2 is approximately at 0.835 and the low @ Point 3 is at 0.800. How many pips difference would that be? Would I be right in assuming it is simply 35 pips?


Many Thanks in advance,

Chorlton

1. That's correct...a pip/point/tick is the minimum price movement that a currency pair can make.

2a. Most pairs are quoted with 4 decimal places, even though the price scale on the right of the chart may show less than 4. When you put your cursor over a price bar, a data window pops up showing 4 decimal places. On a quote screen they also show 4 decimal places.
Those with 4 decimal places are...USDCAD, GBPUSD, USDCHF, EURUSD, AUDUSD, NZDUSD, EURGBP, AUDGBP, AUDEUR.

The Jap crosses are quoted with two decimal places...AUDJPY, USDJPY, EURJPY.

The 'front currency' is the first of the pair being quoted, the 'back currency' is the second of the pair.
Example... USDCAD - $USD is the front currency, Canadian $ is the back currency.

Contract values...
A full contract is valued at 100,000 of the front currency. Example....EURUSD - one full contract is valued at 100,000 Euros.

A mini contract is one tenth the size of a full contract, and is worth 10,000 of the front currency. Example...USDCHF - one mini contract is valued at $10,000 US.

Pip values...
For the Japanese Yen crosses, a pip is valued at 1000 Jap Yen for a full contract, and 100 Yen for a mini contract.

The other currency pairs are valued at 10 of the back currency per pip for a full contract, and 1 of the back currency per pip for the mini contract.
If the AUDJPY pair moves from 75.76 to 75.77, that's a 1 pip move upward. If EURJPY moves from 133.33 to 133.13, that's a 20 pip move down.
If USDCHF moves from 107.75 to 107.76, that's a 1 pip move upward. If the contract moved from 107.98 to 107.12, that a move downward of 86 pips.

2b. The number of decimal places is standard across brokers. However, there seems to be some difference in how they express a quote. Some will quote the AUDJPY at say 75.66, while some will leave out the decimal point and simply quote it as 7566. It seems that you have to know to insert the decimal point yourself.
In fact I've seen IG quote a pair both ways - sometimes as 7566, and sometimes as 75.66

It sounds confusing, and it can be, but as you become familiar with currencies you get to know how to interpret the various ways of expressing quotes.

3. Post 69 shows a chart of AUDUSD. This pair is quoted to four decimal places. Therefore a price of .835 is actually .8350. And a price of .800 is actually .8000
The difference between .8350 and .8000 is 350 pips.
If this pair moved from .8350 to .8850, that would represent an upward move of 500 pips.

As I said earlier - It all seems confusing at first, but when you involve yourself with currencies you soon learn how to interpret the various quotes and contract values.

 

[bunyip]

This is great stuff as always Bunyip. Of course the 1-2-3 system is just as well played out on the daily charts as well! So looking at your charts, would you place your stop under the last swing low or always wait for the pullback before entering? That AUD/USD chart shows just two trades which would have made my year!

I see on the second setup a TKO opportunity to pyramid as well. A lot is dependent on the demoing but if things go to plan, I might even bump risk up to 2-3% a trade for the longer term opportunities (I currently operate at 0.5% in stocks). I'm in a drawdown at the moment so will try for 2-3 profitable months before going live.

I'm also trying to improve my price action skills as well as I look at your charts and see how much you can gain by having an idea where the higher probability lies in regards the current trend when a price pattern forms. Again, referring back to your AUD/USD chart on the first setup, once you see the hammer (pinbar in my lingo) at point 1 of the second setup, well you can tighten trailing stops.

I'm also working on a discretionary system to tackle ranging periods as well. Again forward testing is key here for me on demo. If I have success will post my findings here. Its basically based around price action (Bearish, Bullish Engulfing and IB patterns) around major (Monthly, weekly, daily) support resistance zones. Hardly ground breaking stuff but simple. That said there always seems to be a trending currency pair to take advantage of.

Steve

If you want to trade the 1 2 3 setup by the book, you'd follow the rules and put your stop below Point 3 of a bullish 1 2 3 pattern.
Bear in mind though that this stop can be quite large, meaning that you'd need to cut back the number of contracts to stay within your chosen risk parameters. Either that, or bend the rules by using a smaller stop.

Alternatively, if you lean towards a more conservative approach then you'd wait for the first pullback or pausing pattern after price moves above Point 2.

I advise against bumping the risk up to 3% until you prove conclusively to yourself that you're consistently profitable.

Good luck with developing your system for trading ranging markets.
But when you have a market like FX that trends more often than not, I see no need to mess around with ranging markets. They're difficult to trade and they have smaller profit potential.
A good trending market like FX gives you plenty of trend trades over the course of a year.