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Re: Combination Strategies

Postby Joe Whitehorse » Sun Nov 08, 2009 4:14 pm

whipcrack wrote:I like the generics of it because it reacts to, & reflects, the current volatility of the market. You’re essentially looking to piggy back a determined momentum shift & ride it for as long as it lasts by tracking it closely on the faster moving chart timeframe.


Exactly, that’s all you’re seeking to do.
Price will either accelerate & get carried along on a strong tide of momentum, or it will fake you, fade and/or quickly evaporate. There really isn’t too much to think about when applying this type of strategy play.

If the area & chart reference allows you to plot positive risk, whilst placing the probability factor in your favor, then great.
If it fails to kick on, then you have a very valid reason to scratch it, sit back & wait for a more opportunistic entry.

Am I correct in thinking that you’re only looking for very aggressive momentum shifts? You wouldn’t for instance take a trade on that moves gradually from A to B, pulled back & then followed through meekly at the previous momentum high?


Obviously, a strong, aggressive push simply confirms adequate & acceptable participation (one-way volumes). That would always be preferable to a weak & insipid assault through a prior momentum high. But until the price action works it’s way up or down the chart, you’re not really going to know if it was indeed a strong or weak assault.

That’s why it’s quite important (as of course it is with every type of trade trigger) to stack the odds in your corner as much as possible by factoring in certain elements that satisfies your criteria for a high probability trade.

If part of that equation includes only trading in the direction of the 60 minute, or 240 minute or daily trend & only triggering trades via say a 5 min timeframe that allows a clear, identifiable technically based risk stop, then so be it.

It’s important that whatever trade set up & trigger combination you utilize, it conforms to something you can own & that you trust completely.
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Re: Combination Strategies

Postby goldtop » Mon Nov 09, 2009 3:45 am

Thank you for drawing attention to this excellent technical set up Joe. It's worked like a dream just now on the Cable as price pulled back from the 1.6735 high & then continued through with quite a kick.

It allowed plenty of time to place a buy stop order at 1.6737, trading in line with the recent trend with a stop loss exit 20 pips back at the last 1 minute swing point.

Even leisurely enough to scale out profit on half my stake (1 lot) for 25 pips & drag the remaining 1 lot stake to breakeven!

:)
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Re: Combination Strategies

Postby carl » Mon Nov 09, 2009 4:08 am

goldtop wrote:Thank you for drawing attention to this excellent technical set up Joe. It's worked like a dream just now on the Cable as price pulled back from the 1.6735 high & then continued through with quite a kick.


I spotted that one too. I'm just following the set-ups on a demo account for the time being, but as you say they are quite clear & simple to spot.

It's moving up nicely on the 1 minute chart now. I recently read a couple articles about peak-trough price behaviour & what Joe has explained here fits perfectly alongside that information.

I've just booked my demo profits at 1.6790, just below this round number for 50 quick pips.

Great thread Joe, thanks for posting the information.
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Re: Combination Strategies

Postby goldtop » Mon Nov 09, 2009 4:39 am

carl wrote:I spotted that one too. I'm just following the set-ups on a demo account for the time being, but as you say they are quite clear & simple to spot.

I've just booked my demo profits at 1.6790, just below this round number for 50 quick pips.


Hi Carl,

It's a great little addition to my tool kit. So effortless to observe. There's either a possible trade or there isn't, no ifs or buts, which is what I prefer.

Good exit there. Price has already travelled 185 pips off the days low, & given the average days range is currently 163 pips with no GBP data due out this morning, it might be a little stretched on this leg?

I'm 9 pips behind you. I've cashed out my final lot at 1.6781. A great start to the week.
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Re: Combination Strategies

Postby Joe Whitehorse » Mon Nov 09, 2009 6:28 am

Glad you guys are into it. It really isn’t the most complicated concept to get hold of is it.

If you like to execute & manage via a small 1 or 5 min timeframe, then simply pull up an hourly chart of your favorite pair & look see where the price is at on there.

If it’s moving up in clearly visible higher high-higher low steps, then look to trade longs only on your 1 or 5 min frames as it moves through the momentum highs

If it’s moving down in clearly visible lower high-lower low steps, then look to trade shorts only on your 1 or 5 min frames as it moves through the momentum lows.


If you don’t like the look of the price action on the hourly chart for whatever reason, then leave it be & go look at another pair.
You don’t need to trade every move & you certainly don’t need to trade every day either.

Wait until something inspires or influences the price action in order to drive it aggressively in one direction or the other, then bide your time & step in at the appropriate level.

There’s usually plenty enough time to work out your stop loss exit & next potential upside/downside destination. You should already know how far price has travelled in relation to it’s average days range before you enter a possible trade, & that will give you some idea as to how much is left in the tank from your entry.

Bear in mind though, that any targets and/or average days range are merely guidelines. As you can see from today’s action on the GBP/USD, just because it covered it’s ADR by the time you guys booked your profits, doesn’t mean it’s automatically done for the day!

Friday was an inside day. It also only printed approx 65% of it’s normal days activity.

If you’re trading 2 lots minimum, or a clutch of micro lots & you manage to book a little profit on half your stake, then trailing up your remaining stake behind a visible technical swing will ensure you maximize these aggressive price sprints when they appear.

Try & let the market activity take you in, & more importantly out, of trades when it’s good & done. It’s days like today when you’ll really benefit from this type of strategy play!

Nice trading though guys, keep it going. :wink:
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Re: Combination Strategies

Postby carl » Mon Nov 09, 2009 3:22 pm

Navajo Joe wrote:You don’t need to trade every move & you certainly don’t need to trade every day either.


Some great advice in this post, especially this piece. It’s so tempting to take trade after trade without giving due consideration to the potential risks in pushing your odds to the extreme.

I know I’ve committed the cardinal sin of over trading many times, even though I realise I’m pushing my (luck) risk deep into dangerous territory. It’s so tempting to think you’ve got the better of the market only to be severely bitten on the backside.

Wait until something inspires or influences the price action in order to drive it aggressively in one direction or the other, then bide your time & step in at the appropriate level.

Try & let the market activity take you in, & more importantly out, of trades when it’s good & done.


This is also so very true. It sort of nicely leads on from your last comment. Again, more easier said than done, but it definitely sorts the disciplined professionals from the impatient amateurs.

Some very nice price action movement today & I’m really looking forward to following & testing out this simple, yet effective little strategy.

Thanks again for your prompt & helpful responses & for continuing to support this thread. I’m going to enjoy looking in here on a regular basis.
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Re: Combination Strategies

Postby shona123 » Tue Nov 10, 2009 5:06 pm

Hey guys!
Great thread.
This is really very interesting material Joe. There isn’t much decent stuff out there with a focus on naked price action trading. Most of it is swamped with indicators, complex wave & fib structure or the usual “constantly in test mode” EA garbage – yuk!

I don’t mind a couple of complimentary indicators such as the 5x5 set up you’re using as a base view on the Daily, but it’s really cool that you strip it right back to the bare bones when you drill down into the 1 & 5min charts.

I especially like the use of a simple momentum high/low entry trigger on the smaller timeframes as a follow up to the daily trend confirmer.

It keeps you on the right side of the main money flows & allows the trader to pick & choose the optimum entry according to their time zone preferences.

I’ve posted a couple of charts here to highlight the ease of combining the 2 set ups to signal in trade opps on the smaller timeframes.

The Daily chart is self-explanatory. Simply look for buy orders as long as the 5 sma & 5 rsi are showing positive. And slip in & out of the actual trades by keying in off the 1 or 5min charts where appropriate?

Image

Yesterday’s trading was pretty straightforward & resulted in good reward for the initial risk, but can I ask a question regards the chart from today please?

5 min chart from Monday November 9th price action
Image

Would you have triggered the trade where I’ve marked the entry line at approx 1.6680 on the 5min chart Joe? I’ve put a question mark next to the line as the price action appeared very choppy & hesitant.

I assume you’d wait to see more of a determined run up to a previous momentum high before entering? and possibly the price action stretching out a bit more, as opposed to coiling up in non-directional movement?

Also, in the first 5 min chart from Monday 9th, I marked a line across the 1.6670/80 level in early Asian session trade. Would you ever consider trading this session at all? I realize the optimum volumes are usually present during the European & American sessions, but if a potential entry signalled during the Asian timezone would you take it if you were at your screen?

5 min chart from today's price action; Tuesday November 10th.
Image

Thanks & keep up the fantastic work!
Regards,
Shona.
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Re: Combination Strategies

Postby whipcrack » Wed Nov 11, 2009 4:57 am

shona123 wrote:Hey guys!
Great thread.
This is really very interesting material Joe.

I especially like the use of a simple momentum high/low entry trigger on the smaller timeframes as a follow up to the daily trend confirmer.

It keeps you on the right side of the main money flows & allows the trader to pick & choose the optimum entry according to their time zone preferences.


Hi Shona,

Welcome & thanks for the charts. Yes it’s a very simple concept indeed isn’t it. No conflicting indicators to trip you up or delay your entry/exit into & out of the market.

Main positive for me is the fact you can track the market on the low timeframe of your choice & simply enter after a pullback as it moves through the 1st momentum high after the open of the main London session.

Kind of like a London breakout type strategy, except the choice is handed to you by the market movement & not some arbitrary horizontal line.

If it fails to move more or less immediately & chops around, then the decision is automatically made for you to get out if your entry level is compromised & wait until the market decides what it wants to do.

No more hanging around waiting for your stops to get hit.

I love it!
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Re: Combination Strategies

Postby Joe Whitehorse » Wed Nov 11, 2009 6:45 am

shona123 wrote:can I ask a question regards the chart from today please?

Would you have triggered the trade where I’ve marked the entry line at approx 1.6680 on the 5min chart Joe? I’ve put a question mark next to the line as the price action appeared very choppy & hesitant.
I assume you’d wait to see more of a determined run up to a previous momentum high before entering?


Hi Shona.
You assume correctly. :)

I wouldn't personally take trades that behave in that manner, but that’s just me. I prefer to witness a slightly stronger leading bar push with a little oomph behind it before considering an entry.

I’m seeking confirmation that price is reacting off something likely to influence a determined follow through push either up or down (according to the current bias) with sufficient strength to offer me a reasonable reward for the risk I’m prepared to take.

Some weeks you’ll witness several of these momentum moves across a particular pair or pairs, & other times (when there’s not a lot going on to influence the price action) it will simply chop around inside it’s weekly or daily high-low levels.

It’s very much a personal thing. If you can plot sufficient positive risk to potential reward ratios on your proposed trades, then go for it.

As an example I’ve taken a snag of your chart & marked out possible stop loss & potential profit levels on the area you mentioned as the price action geared up to break that early London high mark.

Entering where you marked @ 1.6680 offered a technical stop loss below that choppy consolidation level @ 1.6630 (50 pips).

1st potential (technical) upside on that 5 minute chart is up there @ 1.6770 (90 pips from your entry).

That’s a 2:1 reward to risk ratio give or take a cats whisker.

So, if you’re looking for buy opportunities in accordance with your Daily chart guide then seeking out those types of opportunities will place you on the correct side of the risk swing.

Image

Also, in the first 5 min chart from Monday 9th, I marked a line across the 1.6670/80 level in early Asian session trade. Would you ever consider trading this session at all?
.....if a potential entry signalled during the Asian timezone would you take it if you were at your screen?


I have traded the Tokyo business day in the past, sure. Mainly the Yen instruments & the Asian equity markets (Nikkei/Hang Seng etc), but there certainly is decent 2 way movement across the main U.S Dollar based pairs on occasion, especially during the Tokyo afternoon trade (from approx 23.30 EST onwards).

If that part of the 24 hour calendar was a period where I was working in full flow, then I definitely wouldn’t shy away from prospective trade opportunities!
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Re: Combination Strategies

Postby shona123 » Wed Nov 11, 2009 10:23 am

Navajo Joe wrote: Hi Shona.
You assume correctly. :)

I wouldn't personally take trades that behave in that manner, but that’s just me. I prefer to witness a slightly stronger leading bar push with a little oomph behind it before considering an entry.

I’m seeking confirmation that price is reacting off something likely to influence a determined follow through push either up or down (according to the current bias) with sufficient strength to offer me a reasonable reward for the risk I’m prepared to take.


I figured as much. Makes sense really when you look at it properly.
I guess as with anything else, it comes down to experience & knowing what works for you in specific circumstances.

I think I’m going to try find my own angle with this generic set up. Put my individual stamp on it.
It’s a pretty neat combination using the Daily 5x5 to direct the smaller chart management. It’s definitely something I can work with!

Thanks for taking the time to put your own slant on my analysis. 8)
It’s nice to be able to share work with someone who critiques without the usual large dollop of ego & who also offers alternative options!
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