An epiphany about trading times

[cowmadagan]

After you've read and learned a bunch about fundamentals, technicals, money management, and risk to yield ratios, it might occur to you as it did me that the more you 'apply the formula' the more you should win, just as in a casino more players means more winning.

Also, if you lose often, you might blame it on the indicator, or in my case you'll blame it on yourself. The truth is that 'applying the formula' or your misapplication of the formula might not be the problem.

Applying a trading formula is only going to be the right time in certain circumstances in the market, and it's not luck. None of us have a crystal ball, but figuring out when the market is unpredictable, and thus stay out for the day or hour or whatever, is a huge tool in your trading toolbelt just like having done your homework on the fundamentals and technicals.

If you have little tips that you can give that fairly consistently show when you should stay out, please post them for us.

 

[ernest8fingers]

good thread

I trade the Eur/Gbp/Aud vs USA dollar- I only place trades during the NewYork session (for me about 6 am PST) and/or the London session (about 11 pm PST). Both Eur/Gbp typically follow set pattern of run up to/or down to Support/Resistance of previous day. I wait till either pair are near one of these areas before deciding on when to fire a trade. Aud is similar except this is a dedicated commodity currency that is affected by what China has to say about its currency(Aud more so than some others) and Aud can be traded during the Asian session as well. I follow the "heard" and wait(typically) till I have a close above or below a 14 period MA on Hourlies and the use 15 minute Chart to fine tune entry. After trade is 15 to 25 pips in Black I lock in small profit with OCO(Stops) and I am done. This is usually how it goes-except when it doesnt. I will let trades ride(like yesterdays for over 300 pips combined between all 3 pairs) but in Forex,I have learned to "take the money and run" as soon as I feel a retrace coming on. There will ALWAYS be another opportunity to profit in the future. I could have made even more yesterday but why chance it? Today-not so much-about 8 pips of profit so far( I missed the continued slide of these 3 pairs so I stayed out mostly). I am a lousy teacher(and student) and had to learn everything the hard way. Though I do very much stress Forex education of EVERY kind- spending hours studying the movements of these pairs is what saved me. I gained a valuable insight into how and when these currency pairs move w/o knowing or caring about underlying fundamentals. Today at the NewYork open USA Consumer Confidence came in positive-you would think that would send these 3 pairs screaming south-instead they all went North(Aud more than 100 pips) but that is a perfect set up to short these pairs at London open-IMO. Time will tell though.

 

[Eric Alyea]

“When to walk away”.

I have always looked up to “ernest8fingers”.
The mark of a true winner is his knowing “When to walk away”.
Technical + Analytical + Gut = trade profit & hold

 

[ernest8fingers]

Eric- I love that Avatar - is that a 50 cal sniper machine gun?-lol. I so do admire OVERKILL. I could use that when I travel Rt101 here in Hollywood. My Avatar was givin to me by my then 6 year old son when I 1st started trading forex. He's now 12. Sadly,for me, my Avatar is better looking than I am-and with more teeth-lol.

 

[Eric Alyea]

Carlos Hathcock M-2

since you asked, That is a scan from the original bk&wt Ma Dues (M-2) that Carlos Hathcock got his record kill from:
THAT SCAN was mine....Hmmm. Why do I have that (original photo)?
As to over-kill, the USMC qoute:
"some times it is totally appropriate to kill a fly with a sledge hammer"

 

[ernest8fingers]

since you asked, That is a scan from the original bk&wt Ma Dues (M-2) that Carlos Hathcock got his record kill from:
THAT SCAN was mine....Hmmm. Why do I have that (original photo)?
As to over-kill, the USMC qoute:
"some times it is totally appropriate to kill a fly with a sledge hammer"

I am liking you more every day! OOH-RAHH!

 

[cowmadagan]

Hey ernest, the grabbing small profits is what I try not to do but always find myself doing. The complaint someone told me about that is that if you keep your stops at say 40 or 60 pips, then you manually take profits after 15 or 20 then one wrong guess costs you 3 right guesses. I usually only tend to go by the logic of 'one right guess should pay for two wrong ones' when I sleep. Other than this week, logic and probability says I should sleep more.
You said that every once in a while you let them ride, but what do you use to spot a retrace rather than just a valley?

 

[ernest8fingers]

Thats a great question. I use combination of Momentum/MovingAverage(14 Period)/Price Action near levels of S/R. Unless a currency pair is driven by a Major News release-I would expect it to Stop/Reverse around areas of S/R.If that does happen-and Price Action carries the price above/below my MA-I place a trade in the same direction of MA(again only at certain times of day). If, however, the price IS driven by major news release-and I get a break of a key level of S/R-I know it usually continues in a power slide/rise in same direction of break. After I place a protective Stop/OCO order- I am through sweating. If no major news release-and price nears a level of S/R-I would expect a Retrace(but I always wait for the MA to confirm momentum-15 m Chart) and this is when I fire the trade.In that scenario I take the money and run as soon as possible(depends on Instrument-Eur=maybe 10-15 pips profit/Gbp=25-50 pips profit/ Aud =somewhere in between. I am not over simplifying either. Its just the waiting for the currency pair to approach a zone of S/R that (on Hourly charts for me)makes me crazy. I Absolutely do not place trades in a currency pair that has an upcoming Major/Medium News release. I made a very base mistake today and placed a Sell on the Aud/usd 5 minutes before a News Release and was forced to eat a 27 pip loss. I just made it back and then some as I write this post by placing another sell at .9037 and rode that down to .8950 area and took my profit. Again-its the waiting that I cant take. As I write this post that pair has retraced up to the .8970 range already. I will not take another sell now though-instead I am out till the morning NY session. Hope I was helpful. Lots of luck CM.

 

[cowmadagan]

That was really helpful, thanks. The only thing you didn't say was how tight your stops are.

 

[clem699]

Ernest,is that not scalping?Any way,i agree with cowmadagan on not wanting to go for small profits but just couldn't help it as well.An example is GBP/USD sell order at 1.6220 with a risk of 150 pips since last thursday expecting it to roll down to as low as atleast,1.5900 in the first instance but had to exit this morning at 1.6120 having find it difficult to convincingly break 1.6100 area since thursday.I intend to sell again if i see a good set-up at 1.6360 or possibly at 1.6600 area.

I may be wrong but i just don't consider those indicators or news when looking at my chat or making trade decisions because i feel that they do not move the market,this is based on my research.I feel the market will always go wherever it want to go regardless of news and as traders,we should just follow it,provided you are able to know the direction.I feel that news only lags the market or say,create noise but do not direct the market in the long run.Like i said,i may be wrong,but that is my philosophy and it has been working for me.The only indicator i use is pivot point,relying on both monthly and weekly to get reliable signals,and 4 hrs to monitor its movement.Although there are 5 other important consideration which i use that are aimed at given further assurance of profitable set-up.If any of all these things is missing,i stay away.