Technical Templates

[jcpfx]

What were your objectives (day trades or rollovers) today with those trades jcp & how differently or better do you think you could have managed them?

Hello Sarah,

given the advice & the results shown by many here, I am prepared to roll-over any trade that's worth it - or that needs it. My circle of comfort is currently at a stage where I prefer to take some risk off the table at an evident level (like Cable's 1.5375 today upon break of y'd highs) and let the rest run. Today I was fully prepared to let EurUsd run (my targets to the upside are 3200 and 3250), GbpUsd to 1.5450, and EurCad to 1.3625.

So, as planned, I took 1/2 off the table from Cable at 1.5375 and, on the 1H 1-2-3 that fired off during ADP, 1/2 off at 1.3546.

Given the structure presented, I thought GbpUsd looked bullish enough to pull my stop to par on the other half. On EurCad, the structure required a stop back behind the "1" of the 1-2-3, which were today's lows.

Allow me to shed some more light on the dilemma in my mind. It may not make sense - but here goes: by stripping down to the basics my trading, I have tried to understand important levels vs. less significant levels, and match this with the daily trend. Basically the analysis goes like so:

On EurCad we had a bullish close yesterday, which surpassed a major swing high from mid-april. The daily trend is up, so I liked what I saw comming into the market this morning. Price had hurdled last week's high/yesterday's high and was comming back for the retest. 1.3500 is the round number.

Now, we could have had 2 scenarios: 1) price hurdles yesterday's high and trades above the overnight high this morning > breakout of highs scenario with a stop below the day's low (as with Cable today) 2) Price rejects the overnight high and should find buyers at yesterday's low or the most relevant flip level (in this case the later). If the lower boundary does not hold, long bets are off for the moment (and as per this scenario I was also looking to buy euro off the lows today, but diddn't find a suitable entry).

So EurCad tested 1.3500 and I was too eager to get aboard the ship that I took a 5Min 1-2-3 when we were still below the open & the 1H chart had violated a prior low. Definitely not the right structure to trade off. Then, before the ADP data, EurCad setup a 1-2-3 triggering at the open, so things looked good. Given that we are playing a cross rate, the USD effect of the big news event should be reduced.

I hid my stop below the day’s low, but it was not effective. I got stopped out and then the market rallied.

So I got the direction right, but I got the stop wrong.

That’s about it…

[strobe]

My circle of comfort is currently at a stage where I prefer to take some risk off the table at an evident level (like Cable's 1.5375 today upon break of y'd highs) and let the rest run.
Given the structure presented, I thought GbpUsd looked bullish enough to pull my stop to par on the other half.

Obviously your personal risk & financial tolerances are unique to you & will be very different to other people, but that tactic didn't work for me when I used to apply it. In fact I basically trod water, barely making any money at all over the 6-8 month period I carefully documented it.

I found I was diluting the overall profit when booking partial stakes on a successful outcome, yet absorbing the full stake impact when I got stopped out. Also adjusting stops too soon (at least before prices had confirmed another hourly swing point) killed more decent moves than I'm willing to admit to
Every time one of my bets streaked to a decent pip coverage I was left extremely frustrated because I'd lost the full (financial) impact of the win by banking far too early.

You have to appreciate that not all these rollover bets will cover 200, 300 or 400 pips every time. But my financial returns improved markedly when I left my full stake in place & trailed my bets up or down behind previous swing levels once price had confirmed another higher high or lower low.
It meant I had to get used to using larger stop loss placements at entry & as a result reduced/adjusted my bet sizes to maintain my desired capital risk exposure. It also tested my discipline & resolve to leave stops where they were for another session/day until the price action confirmed potential follow through.

Booking partial profits is a comfort/psychological & confidence crutch. It makes us feel like we're not losing money if the bet washes out, but in reality it's a mirage.
If it works for you over the long haul then great, but it definitely handicapped me over the period I tested it out.

[jcpfx]

Thanks for that insight Strobe,

the only way for the scaling-out strategy to work is to be able to pull half off at 1R and let the other go - so if stopped out on the second half it's a neutral transaction. That thought comes from my experiences of having price travel 0,5-1R on me, only to see it come back and stop me out.

Which leads to the second consideration that I forgot to include in the previous post: there are levels that are more important than others, tell-tails, that give a definite head's up on direction & intent. My personal reasoning is that price should not come back down below that level, if it's going to proceed higher. And yet, so many times price has wiggled around back & fourth, stopping me out and then going in the desired direction.

Lets take EurCad from yesterday at the 1H 1-2-3 that triggered on ADP at 1.3530 (day open). Price triggers at the day open, so pushing higher, the bulls are showing more strength. On a 1-2-3 the more conservative stop is below point 1 so 1 had it at 1.3502. Someone once told me not to pay attention to the candle formations on anything lower than the daily - so I wasn't afraid seeing the 14.00-15.00 CET pin bar, I was confident it was due to ADP volatility and that having rallied aggressively above the open, things could still look good. Adn yet price came right back, stopped me out and then rallied.

When you look at the chart in hindsight, you notice how the structure leading into that stop was neutral at worst. Also, if you look to the left, at the market structure that led to the break of 1.3500, there is an order flow imbalance zone between 1.3495 and 1.3503.
So should I have had my stop below 1.3495? But theoretically if a 1-2-3 is broken to the downside, it shows the trade is a mistake.

More generally, lets say I'm bullish because the daily trend is up, and I buy a break of the day's highs. Today on Cable is an example. I had placed an order to buy a break of yesterday's high looking for 1.5450 and put my stop below 1.5400 because 1) it's going to be an intraday bet and 2) structurally speaking, it would be illogical to see a break of the highs followed by a break of the prior intraday swing low, unless of course the trade was a mistake and the market is comming back down.

I find it very hard to balance out the fact that price may do what it wants during the day, after hurdling a significant level on good structure, and maybe find itself above that level again on the close of the day. Hope you can shed some light on this...

[strobe]

I find it very hard to balance out the fact that price may do what it wants during the day, after hurdling a significant level on good structure, and maybe find itself above that level again on the close of the day. Hope you can shed some light on this...

That maybe so, but it happens. And it happens for any number of reasons.
Everything presented here is nothing more than a guide. In a perfect world technical structures won't get compromised once they begin trending up or down in orderly sequence, but we all know that's not always the case.

Pulling up stops when prices are still playing out during a particular session will sometimes result in perfect trade management, but a lot of times it will result in a premature exit.
You're only going to obtain the evidence you're seeking by strictly monitoring every aspect of your individual tactics when applying this approach. I & others can only feedback what we found when attempting to do similar things, but at the end of the day we're all different in respect of our skill & experience levels, risk profiles, capital availability & objectives.

My risk & stop loss tolerances won't match yours, & mine won't sit right with others.
Although we might all be using the same framework & structure presented here, we won't all be operating in similar fashion.
That's the beauty of & one of the downsides of operating a discretionary approach.

[whipcrack]

the only way for the scaling-out strategy to work is to be able to pull half off at 1R and let the other go - so if stopped out on the second half it's a neutral transaction. That thought comes from my experiences of having price travel 0,5-1R on me, only to see it come back and stop me out.

I find it very hard to balance out the fact that price may do what it wants during the day, after hurdling a significant level on good structure, and maybe find itself above that level again on the close of the day. Hope you can shed some light on this...

I think it's going to have to be reiterated again jcp that if you're not completely comfortable adopting a particular style such as rolling bets over and/or operating wide risk parameters, then don't do it, because you'll simply store up a whole bunch of emotional & financial hurdles for yourself going forward.

However much you want to, you can't force a square peg into a round hole.
Just because the majority of participants here don't day trade & prefer to take a longer term view of the market, doesn't mean you have to. You've stated previously that day trading is your preferred style.

If that's the case then you’re going to have to construct an approach that utilizes the basic template here that offers you a happy medium between risk appetite & profit potential.
That approach will have to fit perfectly with your current funding capital availability, risk appetite, experience level & preferred operating style.
Then you're going to need to give it sufficient time to offer you a realistic appraisal of it's merits. You can't keep chopping & changing the criteria because you're never going to obtain accurate or worthwhile feedback via your record keeping.

The basic template here is a trend/momentum approach.

There are a couple of additional aids (moving average, ADR & stochastic hooks) that can be incorporated to enhance or improve potential set up/trigger & timing criteria, along with one or two key common technical levels such as prior day/week high-low & obvious big figures/psychological round numbers, but it's entirely up to the individual whether they utilize all or none of them.

I cannot emphasize the importance of only triggering the big, obvious high probability opportunities enough, especially if you're adopting a day trading mentality.
In my opinion you're taking too many low probability background set ups, & that will definitely impact the speed at which you progress going forward.

You're trying to accelerate the learning curve & it's not going to work.
Unfortunately it takes a lot of time (& sometimes money) to test, tweak & develop a strategy to suit your style & one that also suits certain market conditions that offer that strategy improved odds.

The conclusions of that research takes time & cannot be short circuited.

[jcpfx]

Hey whipcrack,

thanks for showing up!

I think it's going to have to be reiterated again jcp that if you're not completely comfortable adopting a particular style such as rolling bets over and/or operating wide risk parameters, then don't do it, because you'll simply store up a whole bunch of emotional & financial hurdles for yourself going forward.

True, but since i'm evolving literally as we speak, and trying to adopt the sturdiest practices available, it's only natural that I strive to roll over positions when possible. After all, profits are a matter of time & space. It takes time for price to travel a distance...

You can't keep chopping & changing the criteria because you're never going to obtain accurate or worthwhile feedback via your record keeping.

Hopefully I'm done changing criteria. It's been a long journey but I've arrived at the daily & since adopting it last week, my feel for the market has enhanced.

The fact that my presence on here, and my errors, are far superior to anyone's in here is that my experience level - and prior influences - put me at a disadvantage. So I'm flipping up charts & doubts as they come, as I put into practice the lessons learned & find what fits and what doesnt.

The basic template here is a trend/momentum approach.

There are a couple of additional aids that can be incorporated to enhance or improve potential set up/trigger & timing criteria, along with one or two key common technical levels such as prior day/week high-low & obvious big figures/psychological round numbers, but it's entirely up to the individual whether they utilize all or none of them.

Yes...and this may be another one of those cases where my approach, when perfected, will deviate from others. I just can't get my head around justifying an entry because "the stochastic says so". The stochastic measures the %-ile of current price relative to the lookback period. Knowing what it does, I don't feel the need for it. And yet I'll bet that many of my entry locations deviate from yours because of this.

So this leads to a question: once you have identified a trend, what constitutes a "big, obvious high probability opportunity pullback"? I may need a refresher

Of course, there may not be a pullback at all, just continuation. I have been stripping everything back to essentials regarding the location of the trade - and the prior post from this morning explains most of my reasoning. But maybe a couple of examples of recent high probability plays could be soothing.

You're trying to accelerate the learning curve & it's not going to work.
Unfortunately it takes a lot of time (& sometimes money) to test, tweak & develop a strategy to suit your style & one that also suits certain market conditions that offer that strategy improved odds.

The conclusions of that research takes time & cannot be short circuited.

These last points are all accepted at this point of my journey.

Thank you whipcrack

[whipcrack]

I just can't get my head around justifying an entry because "the stochastic says so".

It's never been about triggering a bet based on the hook though.
You're not justifying an entry via the stochastic. It's a visual aid to assist in focusing attention on likely pullback/continuation triggers on your timeframe of choice.

But like I said, if any or all of the price aids don't press your buttons don't use them.

So this leads to a question: once you have identified a trend, what constitutes a "big, obvious high probability opportunity pullback"?
maybe a couple of examples of recent high probability plays could be soothing.

I didn't say pullback opportunities jcp, I was referring to filtering & prioritizing the higher probability background opportunities.

You're going to the trouble of posting succinct detailed analysis of your views but still continuing to focus on lower probability, choppy background candidates - an example of which was picked up again quite recently by visualxray in his post of May 31.

[Se7en]

Of course, there may not be a pullback at all, just continuation. I have been stripping everything back to essentials regarding the location of the trade - and the prior post from this morning explains most of my reasoning. But maybe a couple of examples of recent high probability plays could be soothing.

It might be helpful for you to revisit goldtop's post from the 10th May & shona's post the following day jcp.

goldtop posted up another reminder to take note of the typical technical behavior that usually precedes a momentum breakout as opposed to a pullback/continuation move & shona followed up those comments with a current chart example highlighting the potential breakout moves that were setting up on USD/JPY & CAD/JPY.

Those exact same pre-breakout technical scenarios once again played out this week on USD/JPY ahead of 98.80 & EUR/USD ahead of 1.3100-10
The price action was sitting there priming all week long.

Having that kind of simple, effective information to hand & being in a position to recognize it ahead of time helps to focus you in on the pairs most likely to offer higher probability continuation opportunities in that particular scenario & thus place sell or buy stop orders ahead of the potential b/o level.

[jcpfx]

Thanks Whipcrack & Se7en,

I have gone back to the charts from those days, to observe better, and I will do some work on my background selection during going into next week.

I really appreciate the feedback & hope you got some satisfaction out of yesterday's action and this week's action in general You deserve it!

Have a great weekend!

[jcpfx]

Good Morning everyone,

going into the week, my focus will be on Kiwi primarily. NzdCad shorts - paying attention to the space it could retrace, whilst remaining in the downward trend; NzdUsd shorts; and also UsdCad shorts.

I am going to pay attention to AudUsd & UsdJpy also..but I think that the false break of lows on friday may give way to some profit taking before/if the downward move will continue. So I'll watch 9670s carefully on Aussie & 100.50 on UsdJpy.

Is this type of background work ideal?

Thanks & good luck going into tomorrow!