Technical Templates

[midgely88]

I have read the entire thread and tried really hard to understand the concept of it all.
I know it has been mention throughout the entire thread how easy this method works. But to tell you guys the truth, I am still struggling with it.

I will echo the other advice & implore you to take your time.
There's no rush. The market will still be there to trade next month & the month after.
There's really only a 3 step process to the whole structure.
1) Choose your preferred primary & secondary timeframes based on your trading objectives.
2) Identify the current dominant bias via the primary timeframe.
3) Wait patiently until the set up/trigger criteria lines up with either a sell rallies or buy dips scenario using the tools described within the thread.

As long as you don't make the mistake of adding more unecessary clutter to your charts or trying to over analyse the technicals you won't get into too much financial difficulty trading via this approach.
It will take time to become familiar with the framework & how it interacts with the price action & you will make mistakes & experience losses whilst familiarising yourself with the surroundings, but stay on demo until you can begin to establish a positive expectancy.
You can't go broke trading demo & it will enable you to get comfortable with the concepts.
If after a while you feel it's not for you, then at least you gave it a good go.

eurusd isn't on my current watch-list, but if it was I'd be erring towards selling rallies based on my intra-day objectives & my primary timeframe view.
Providing the price action begun to turnover anywhere from current levels back towards the highlighted zone I would go through the normal process of looking for hooks/price action triggers & risk placement to get onboard.

And once again the higher probability option (selling into rallies via the current dominant bias with a solid stochastic hook primer) offered up another lower risk opportunity as price rejected the over-extended ADR barrier.

[Eidriel]

Thanks xerb and midgely88!

Xerb:
I see the power of the ADR now. The moment you mentioned about ADR, I plucked it into all the trades which I took several hours ago, and sure enough, I entered all of them when the ADR were close to 0 or had a negative value. AND sure enough, all my trades were "stalling" not moving up or down much.

If say, you see a signal to enter the trade but not much ADR left, do you simply wait till the next day to enter instead?


Midgely88:
Yep I totally agree with you, the market will always be there However I wished I picked this up earlier like several years ago, therefore I am sort of trying to make up for lost time in a way I always tell myself to take it easy and slow. Thanks for the advice

By the way, I am actually quite amaze that different primary timeframes can actually show you a different directional bias. Is it right to say that the bias shown on a 4H would be more valid for short term trades (eg. intraday trades) while the bias shown on the Daily is more valid for mid to long term trades?

Which means to say that for the case of EURUSD, 4H shows a downtrend bias, but Daily is still showing a uptrend bias (unless it breaks the previous low), so for that day itself, is it right to say that prices will most likely fall first, but go up in the long run? (if everything goes right)

[Carll]

I am actually quite amazed that different primary timeframes can actually show you a different directional bias.

That's what is meant when referring to individual trade aims & objectives.
It's horses for courses.
Even people using the same timeframe will have very different objectives depending on their risk attitude, financial capabilities, experience & time limitations.

Is it right to say that the bias shown on a 4H would be more valid for short term trades (eg. intraday trades) while the bias shown on the Daily is more valid for mid to long term trades?

That would certainly be an accurate reflection with regards the information & material presented within this thread yes.
Because the guidelines & definitions of establishing a tradeable bias are very precise, the identification & preparation of set ups & triggers is clear & unambiguous on both the 4 and/or 1 hour primary timeframes.

Which means to say that for the case of EURUSD, 4H shows a downtrend bias, but Daily is still showing a uptrend bias (unless it breaks the previous low), so for that day itself, is it right to say that prices will most likely fall first, but go up in the long run? (if everything goes right)

Yes, I wouldn't argue with that view.
As you quite rightly point out, it's more than logical to assume the current Daily chart on eur/usd could be viewed as being in bullish pullback mode from the July 1.2050 low to the September 1.3170 high.
Some technicians use Fibonacci retracement measures as a guide to establishing potential entry or exit points, & as yet that pair hasn't even threatened the 38% level of the aforementioned move, so any price action based signal/trigger forming ahead of that area could be taken to get back into a long trade looking for a test and/or break of the September highs.


The (shorter term objective) opposite of that view clearly shows eur/usd in an immediate bearish phase if we observe either of the more commonly viewed hourly charts, supplemented with the tools used to identify a bias from the material presented here.
A case of picking your weapon of choice, establishing your preferred style, objectives & risk profile & matching that criteria with your available funding base.

And of course, there are those involved in the market who trade both options at the same time.

[xerb]

Xerb:
I see the power of the ADR now. The moment you mentioned about ADR, I plucked it into all the trades which I took several hours ago, and sure enough, I entered all of them when the ADR were close to 0 or had a negative value. AND sure enough, all my trades were "stalling" not moving up or down much.

If say, you see a signal to enter the trade but not much ADR left, do you simply wait till the next day to enter instead?

If I'm tracking an intra-day set up then the average daily range takes high priority in my pre-trade prep, especially the remaining availability prior to entry.
It has proved it's importance constantly right from the very first time I began to adopt & implement this stuff.
Personally, I'll scratch or hang fire on an entry if the ADR has exceeded 60% of normal range coverage prior to entry.
In those circumstances I will wait for a deeper (intraday) pullback or shelve the entry for that session & take another bite out of it next day if the momentum/bias & forward risk is still favorable & justified.

The experienced guys will confirm that it's importance is somewhat diluted when setting up & executing longer term bets, but then the preparation, risk & potential rewards are based on slightly different parameters & criteria.

[Eidriel]

Thanks Carll for another insightful post, will digest it

I agree with you xerb, as we are definitely looking for high probability trades, and we would not want to take this kind of unnecessary risk.

Today however, AUD has been on a free fall. I exited too early because all the ADR have been covered, little did I know that it just continue to plunge so drastically right through its ADR like butter. I guess these are the rare exceptions, but we wouldnt want to take this kind of risk do we

[jack mason]

Today however, AUD has been on a free fall. I exited too early because all the ADR have been covered, little did I know that it just continue to plunge so drastically right through its ADR like butter.
I guess these are the rare exceptions, but we wouldnt want to take this kind of risk do we

Data/news events that skew & accelerate the price action way in excess of normal ADR barriers are indeed minority occurances rather than the majority.
Prices will usually get pitched 25-30% either side of their normal daily ranges especially if there's heavy participation trading away from a key supply or demand zone, but instances such as today aren't the norm.

If you prematurely exited that very good value EURAUD long trade from yesterday, then you did indeed get hustled unecessarily out of it.
If & when you're next involved in a move that gets carried along on a positive wave of exuberance such as today's price action, don't panic or get distracted.....just drill down to a 15 or 30 minute timeframe & look for an obvious swing or consolidation zone to hide your trailing stop behind & wait until the market starts to blow off all it's steam before making a (final) exit decision.

If you're intent on trading from a longer-term angle you're going to need to become very familiar & comfortable using trailing stop-loss orders.
It's days like this where you're going to need to milk these moves for all they're worth.
They don't come along as often as you'd like, but they make for excellent & effortless profit compounders when they go your way. And believe you me, you'll have your fair share go the other way that kick back against you & take you out of a position in double quick time!!

[Eidriel]

Thanks Jack, will tell myself to trail the price when in profit next time.

Took profit this time because I had many past experiences with trailing prices up, and ended up dropping from a decent amount of profit, to just a measly profit after I got stop out from my trail stop.

However it seems like the way to go to really ride the trend. Will avoid the temptation to take profits too early

[jack mason]

Took profit this time because I had many past experiences with trailing prices up, and ended up dropping from a decent amount of profit, to just a measly profit after I got stop out from my trail stop.

That's totally understandable Eidriel. It's a (psychological) habit that is very difficult to break & overcome, especially when we're first starting out & the majority of the bets we place result in little or no profit. That (fear of giving back profit), more than anything else helps to explain why it's very difficult for most (new) folks to chisel out a consistent profit in this business.

Our natural psychological instinct is to reward ourselves, & when we see what appears to be a nice profit - particularly when it comes on the back of not having to outlay a large risk in order to generate it - we grab at it & stick it in the account. Kind of like a-bird-in-the-hand type of analogy.

Trouble is though, like I said in my previous post, those kinds of opportunities aren't nearly as regular as we'd like, & they really have to be squeezed for all they're worth every time they make an appearance.
That much I've learned the hard way over time!

When that type of opportunity turns up again & you're fortunate enough to get on the right side of it, just take a breath, drop down a timeframe or two (to perhaps a 15min chart) & mark off the most obvious swing or pullback zone that forms after a kick up (or down) in the price action & pull your trailing stops up underneath it. As the price continues to swing up as it has done in that eur/aud pair, simply lock-step your stops along with the peak-trough price action after it's made another high until it invalidates the last higher low.

That way, you won't give too much back to a failing or fading market & you'll give yourself (& the market) a little breathing room to ensure it's done milking the current momentum.
I won't kid you that it's easier said than done, & it'll take a lot of guts & iron discipline to follow that rule, but once you start to gain confidence from adopting that view you'll begin to see how the few positive results heavily outweigh the temptation to cash out your bets prematurely

* A big tip*....Whatever you do don't ever succumb the the temptation of scaling out partial profits on an aggressive move like this next time you're onboard.
All that does is dilute any potential profit you might enjoy.
Folks will try & persuade you that it takes the pressure off, gives you a little payday & covers your costs blah, blah blah.....but if you're confident enough to place a bet in a directional move & you have the opportunity to trail your profit stops up/down, then do so. The only "scaling" a trader should be considering is scaling into a winning position, not scaling out of one

[Eidriel]

Nice advice Jack!

Yes I got to agree its really an extremely difficult psychological barrier to overcome, especially when you see the big numbers you just wanna hold on to those cash

And what I usually hear is that paper gain is not worth anything, if you are happy with the profit better to put those money in the pocket, and re enter the market if another entry signal comes in.

How about during times when price reaches your "target" which happens to be a support/resistance level, and the ADR happen to be almost reached as well. Do you fully close the trade, take partial profits, or still continue to trail stop the entire trade?

[jack mason]

How about during times when price reaches your "target" which happens to be a support/resistance level, and the ADR happen to be almost reached as well. Do you fully close the trade, take partial profits, or still continue to trail stop the entire trade?

Remember, everything pivots around the specific aims & objectives for that particular bet.
If you were executing & managing an intraday position, the average day's range & next potential upside or downside reaction zone (S&R) would rank as a pretty major priority on your trade plan check-list, yeah?
So that would make your decision to cash out up at 1.2530 a sensible & logical conclusion.

But you've stated your preference to try & engineer more medium term duration trades due to your tight time limitations.
If that's the case, & it remains your primary objective then the focus needs to be based around identifying opportunities where you can bring that objective into play as often as possible.

And the bet you highlighted to the thread on 1 Oct with that push through 1.2422 certainly fitted that bill nicely, especially when the Aussie got beaten with a big stick early next day & the price action held up strongly on that pair beyond 1.2500

It's absolutely fine to encash a bet where you based your exit on the next potential S&R barrier, aided by the average daily range coverage.....but only if it forms the bedrock of your intended trade objective.
If you're going to trade an intraday approach, then you're focusing on the correct tools.
If you're going to trade a medium term duration approach....your objectives, priorities & trade management tactics are going to be very different indeed.