At the request of traders on other Forums, I have been asked to start a thread on my style and method of trading the longer term time frames, i.e., the Daily and up.

This is my 17th year of trading having traded everything that you can hold, eat, smell, taste and grow. I started out on the Daily time frame, blew numerous accounts and over $200K. I have bought books, videos, tapes, dvds, systems, black boxes, and paid stupid, stupid money to attend seminars by those famous $million traders.

I am a degreed mechanical engineer by profession so I love technical analysis and spent hours, days, months and years modifying and developing indicators and devising my own systems. The dawn of realisation hit me a couple of years ago when I realised all I was doing was re-living history. At about the same time, I came across a few professional traders and ex - floor traders and thought this was my golden opportunity to learn THE SECRET. Well it was - but not what I expected!

Far from having super - dooper highly fandangled systems, I learned all they had was their EYES and EARS! No fancy squiggly lines for them - if it went up, they bought; if it went down they sold. Every single one of them told me the same thing - TRADING IS SIMPLE, DON'T COMPLICATE IT.

So, apart from a few indicators which I use to track cycles and volume, I trade what the market tells me.

After having success on the Daily and Weekly time frames, I decided I needed something to do during the day, so I thought I will do the same thing but on M5 time frame. Wow, I couldn't do it. Everything was just moving too fast for me, the wheels between my ears couldn't keep up!

I then stumbled across some professional traders who left their jobs and set up on their own and published their strategy on another forum. I eventually got M5 and M15 to work for me but it was so stressful. After spending all day watching the one eyed monster for a measly 100 pips or so, I felt so mentally and emotionally drained that I couldn't sleep well at night. Then as my health deteriorated, so did my profits.

Again, another moment of realisation for me - I'm not suited for anything faster than trading the Daily. I raised and trained myself on the Daily and up and that is where I belong.

I will post my analysis and trades here for anyone who is interested and hopefully share further insight with like minded traders.

I will apologise right now for my weird sense of humour but I need balance in my life and I know no better way than having a good laugh - usually at my own expense! I celebrated my 3rd 20th birthday last June but usually feel like a 16 year old! (Anyone know where I can get a 16 year old?)

I was a lead guitarist in a group back in England in the early 60s playing Buddy Holly, Chuck Berry, Roy Orbison and Elvis plus all the other stuff. I made it through the Holly inspired British rock n roll era until Jimi Hendrix came on the scene playing scales I couldn't even pronounce let alone play! (Pentatonic, Lydian, Mixolydian, Aeolian, Locrian, Dorian etc.). At that point me and my 57 Telecaster and 59 Stratocaster decided to call it a day!

 

 http://www.forexfactory.com/showpost.php?p=2570651&postcount=19

 

Just a few thoughts on when I had indicators up the ying yang on my charts. I had so many that I couldn't come to a decision on anything as some would agree while others disagreed and I ended up with paralysis of analysis. I always missed fantastic trades while waiting for all the indicators to line up which they never did. Then when I went back to look at the entry, I would beat myself up because it was so obvious even without any indicator.

I used to spend hours just looking at one chart trying to work out all the nuances of what it could and couldn't do and in the end, scared myself stupid into not trading. When I learned that Professional and Floor traders just take a glance or, at the most, one minute on each chart to make a decision, I knew I was doing something wrong. These guys, or the ones I know, make $millions each year using very simple methods and always preach "the simpler the better" or "keep it simple" or "the market is not complicated" or "you don't need anything special".

I'm a technical junkie so I'm fascinated with indicators but it wasn't until I found out what my problem was that my trading improved.

My problem was FEAR - I didn't trust anything, least of all myself so I always wanted something to confirm and then something to confirm the confirmer and so on. You have to find a system/strategy that works and then learn it, believe in it, and as Mr Nike says, JUST DO IT!

Oh and your stop loss of 55 pips on EURUSD wouldn't stop a one legged blind, old man with asthma - the average daily range of the EURUSD over the last 2 trading days is 229 pips!

 

It hasn't been posted but it is basically trading at swings at S&R.

 

Primary goal is to trade with the trend but also to take advantage of deviations and extremes to the norm (rubber band effect) but only when everything lines up with minimum risk.

If you are getting whipsawed on H4 then move up a time frame which will keep you out until the momentum is in the direction of your trade.

I'm not looking to get in at the top or bottom - I just want the "meat" in the middle of a trend - this is the safest with the lowest risk.

 

http://www.forexfactory.com/showpost.php?p=2573475&postcount=50 

Template? Hmm - all I have is a Daily candle chart with a red 20ema, a blue 50sma, a dotted red 100ema, and a dotted Blue 250sma and a Volume indicator in a lower window. I then switch this to Weekly to look at the big picture. When I do my end of week analysis, I add a couple of cycle indicators but I'm not entirely convinced yet that they really tell me anything or are worth the effort. The most important parts for me are to be able to clearly see price bars or candles (not Heiken Ashi or anything else) and support and resistance.

 

My method is very basic and simple:

Price Action at Support & Resistance

The key is to know what Price Action IS and what it DOES at Support and Resistance.

Compared to other Price Action traders, I know I over analyse the charts too much but I have to use my hard earned and learned education somewhere!

I use raw price action using price, volume, support and resistance, momentum, exhaustion, cycles, time, harmonic analysis, elliott wave (only when I can figure the damned thing out!), market sentiment all with a splash of funny mentals thrown in.

After recalling my Dr. Joe experience, which I had chosen to ignore, I am now questioning myself as to why am I analysing so much on something over which I have no control. From now on, I will start to drop out some of the extranneous stuff and see what effect it has on my trading. I suspect (deep inside I know) I will just end up with price action, volume and support and resistance. Anyway, we are all here to learn.

What is important is not to use any one aspect of my method in isolation. For example, it would be foolish just to use Price Action without Support and Resistance. Next it would be foolish to use both of them without knowing where we are in the big picture etc.

My method/strategy will all be revealed here in this thread over time and in and among trading discussions and opportunities.

For those looking to find an entry and exit indicator of some sort then sorry, this is not for you. To be really profitable trading, there is NO shortcut or substitute to learning the basics and what I will post here is starting with the basics through where I am today.

Like every other successful and profitable trader, I have developed what works for me and I am not perfect. In fact, I am far from perfect, I get many of my analyses wrong and make many wrong trades. As we have read and heard over and over, the trick is to limit your losses so that your wins are always far greater. I accept that I will be wrong and I accept that I will have losses. The next trick is to move on. Forget your losses, just treat them as history and part of your learning curve.

Unknowingly, I think I have just written my first lesson!

Also, my style of teaching is like my humour - weird! So again I apologise for it right now. I was never spoon fed anything and had to learn the hard way so don't expect to be given everything on a plate. I will say or post something to stir up your imagination and thinking and provoke questions.

For those reading this thread who know far more than I, please feel free to question anything I say or do. I am still learning and open to any suggestions (Yes, Mrs Robinson!).

And, for those looking for the Holy Grail, I know what it is!

And for those wanting to know why I end my posts with "Rock n Roll"; as soon as I write that it takes my mind off trading and reminds me of the good times I had and that there are far more important things than price bars on a chart!

 

 bet that caught your attention!

I have never been able to do this so when I saw "How to identify a trend before it starts" in the promotional materials sent to me by email a couple of weeks ago, it got my attention.

The wheels of my mechanical logic started turning. "How to see something that isn't there!" Impossible is my first reaction but then I go back to physics which tells me, "Energy can neither be created nor destroyed only transposed from one form to another".

Does this mean that there is something in price and time out there that we have all been missing that this well known trader has found? Does it mean that this is a ssh, secret, known only to a few? W.D. Gann certainly found out a lot - much more than he disclosed in his writings - it is known in the Gann circles that he used planetary alignment in his analyses. Or is it just another scam to get money out of our pockets to pay for "so called successful traders" to live. If it was so powerful and such a secret, why would anyone want to share it?

By the way, in my search for the Holy Grail, I have spent $tens of thousands on financial astrology including being a member of Welles Wilder's Delta Phenomenon. They were all as much use as a crack in a glass eye!

Most traders concentrate and focus on price but that is only half the puzzle - the missing half is time, which has fascinated me from day one of my trading career. There are traders out there, Larry Pesavento is one, who trade on time alone. I think it's because I did my thesis on Harmonic Frequency Vibration and Resonance that pushes me into time cycles etc.

Anyway, I wandered off topic. What I'm doing now is looking at the guarantee on this book to see if I can return it for full payment if it turns out, like most others, to be a waste of a tree.

No, I'm not still looking for the Holy Grail as, in my earlier posts, I said I had found it. I am just looking for ways to improve, if possible, what already successfully works for me. I'm still learning and will be until I meet Buddy Holly!

3/5/09

The MA's are very powerful and I use them both in isolation and in combination with all my other stuff.

They tell you the trend in two time frames, where prices are in relation to the trend, the strength of the trend, are invaluable as support and resistance AND especially when they are in confluence with support and resistance levels and can give us an idea when to expect the rubber band move to come into play.

The cross of MA's, although never used as a trading signal due to the lag, is also very informative. Their slopes provide valuable information as they do when they "trap" prices between them.

Since they are also used by banks, funds, hedge funds, trading houses and large institutions they become "self - fulfilling" much like Fib levels and retracements.

 

The 20 is the 20ema and the 50, the 50sma.

I trade the Daily time frame and, just as in all walks of life, everyone has a BOSS. The BOSS of the Daily time frame is the WEEKLY. So my references to BOSS always refer to the Weekly. I won't go into detail now as Timeframes will be discussed later.

 

I may have over simplified things with my comments about the close. The close, in my opinion, is the most important level on a candle. I do not use tails or wicks for trend lines or any of my analysis. So, on a down trend line, I draw the line through the open but again, that is over simplifying it.

Trend lines are NOT an exact science and there is no right way or wrong way to draw one. The trend lines that I draw work for me because it is part of my overall analysis. If you are just drawing trend lines in isolation, they may not be giving you the information you want.

In certain cases when there is lots of volatility, I will draw an "average" trend line just by eye balling the bars and drawing the line that has the most touches to it.

Although the close is the most important, the other 3 levels also have their use in telling us what went on in that 24 hour bar.

Fibs, like trend lines are very subjective with regard to where you take the swing from and whether to use the tails and wicks or not depends on the volatility of the pair being measured.

What you have to remember is that trend lines, fibs, support and resistance are not exact. That is why you will see us say 1.3650ish. There is no rule that says price has to be "spot on" with any of these - just pretty close will do the trick.

With regard to the points from where to draw your fibs, the general rule is from swing to swing. When that swing has produced it's retrace, rally or whatever the move, then move on to the next swing. Don't worry about getting the exact points right because what you will find is that if you draw your fib and it shows the retrace at 50%, then move your points and you will see that it is now at 38.2% or 61.8% - a level where you should be taking notice anyway.

Finally, as more and more traders are using fibs, they are becoming more and more self fulfilling.

Did you really ask this question "What about setting your S/L? Do you set it above/below the CLOSE of a recent swing high/low?"

If I am long, and identify a swing low to place my SL, why would I want to place it near the close? Think about it. On that bar that produced the swing low, what did the sellers do? Where did they take price? I want to place my SL away from the noise and action of that important turning point. Also, if that swing low bounced off support, I will put my SL below and away from the noise around that support. Does that answer your question? If not, ask again.

"Does it affect how you see price action?"

 

I thought you were in the UK? Doesn't your candle close at midnight GMT?
Well, you're on your way with the learning just by recognising that it has to be learned in layers. That's a very good observation. You have to crawl before you walk before you run etc.

Your candle close and the time a new candle prints is all governed by your broker and no, it can't be changed. If you are not sure when your new candle prints, just ask your broker.

My data feed is midnight NY time which means my new candle prints at 9pm my time (California is 3 hours behind EST).

I consider my candle closed after NY closes at 5pm their time (2pm my time). In recent months though, it hasn't really closed as Sydney, Tokyo and Hong Kong have become more active and not just on their pairs - they have been messing with EURUSD and GBPUSD.

For volume, I use the standard MT4 volume indicator. Volume in Forex opens up a can of worms. Since there is no central exchange as in stocks we get a sampling of volume through our brokers. This brings us to two schools of thought - 1) Forex volume is useless and unreliable and 2) Volume can be used as PART of a trading method.

Think about elections - there are always sampling polls taking a small percentage of the population BUT they have been proven to be somewhere in the region of 90% to 95% accurate. To me, and it's my opinion only, Forex Volume samples are just as accurate.

There are traders who trade ONLY on Volume Spread Analysis but for me, I use it to confirm or otherwise price action so for me, Forex Volume is very valuable and I do not care a rat's ass what anybody else thinks about it's use.

You credit me for something I don't deserve or even understand with regard to fundamental analysis better known by me as "funny mentals". I get most of my funny mental stuff from Jacko who knows it better than anyone else I know and from our resident "Darksider", Nicola. I try to look at Bloomberg but all that stuff bores the hell out of me - I want to see a chart!

 

Whatever gave you that impression? I think I have written at least 3 times

"It keeps on going up 'til it stops going up"

The North bound train can't go anywhere but North until it STOPS in the station, gets on the turntable and turns around to go South.

I haven't seen it approaching the station yet!

 

Amin, you raise an interesting point. If I were trading classic price action (as Baba G does), I would say yes. If you want to follow my method which is price action +, then the MAs need to be on there from the start.

In both cases, support and resistance lines MUST be drawn.

An absolute requirement in both cases is that new traders MUST remove all indicators and never put them back on, check them or have them running in the background. (Not even checking for divergence).

Funny mentals (fundamentals) are best left for those that understand it and can trade it. I believe funny mentals are already factored in and reflected in prices so just trade what price action tells you.

What we must be aware of (not necessarily take any action) are meetings and news events