catching the moment

[gazelle]

What would be the the appropriate steps to catch a move like the one I am about to mention. My knowledge in the FX arena is minimal and as of next week I will be doing the currency course with Abe from LearnFX which I am very much looking fwd to
It feels like a jigsaw puzzle at the moment where one can see the pieces scattered across the floor but is unable to fit them togethor to achieve the whole picture.
This price movement has already begun and as usual I have just picked up on it.

Stalking the trade -

currency pair - GBP/JPY H4
from the peak 19251 to trough 18504 we plot the fibbonaci line
and take notes of all the possible points a reverdsal may occur
( 23.6%18680) (38.2%18679) (50%18879)
For the sake of this excercise lets assume the price move is just beginning to twitch up from the trough at 18504

what do you do now - do we programme these numbers into an alarm setting and if so how much lattitude do we allow for fluctuations - eg: if we set the alarm at (50%18859) this is 20 points before the exact 50% point which will allow us a window of time action to prepare for what may occur at the 50% lv and begin to look for signals or patterns - instead of waiting for the price action to hit 50% and trigger as price may move so quickly at this point one may be ill prepared to take advantage of the move. Is this correct and how do others go about this ?

Back to the chart - the price continues to press ahead via the three white soldiers block , the first clue that the trend may be weakening is delivered just above the 38% retracement lv courtesy a dark cloud cover - this is where it becomes somewhat awkward for me (or lack of understanding ) using multiple time frames in unison in order to cut my risk lv down - lets run an example that doesnt sit comfortably with me from a risk perspective but I will learn from this.

trigger shrt @ 18805 DC
stop @ 18861
$Risk 56 points (560.00AUD)
%Risk 2.8
20K Bank
exit - very bloody soon
the proceeding rickshaw man would scare the life out of me , although it may add further evidence to suggest a top was being set the upper fluctuations (shadow) would blow my risk exposure right out and I wouldnt feel comfortable with that.

GBP/JPY H1 - the Bearish Engulfing coinciding with the 50% zone would add further validity to our H4 observation but the risk is even more!!
trigger shrt @18813
stop 18891
$Risk 78 points - too much

GBP/JPY M30 - Bearish Engulfing
shrt trigger @ 18849
stop @ 18891
%Risk 42 points - on a 20K account still too much

these observations lead me on to a few others questions which are candle related - will post them later

Regards Gazelle



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[gazelle]

H1 bearish engulfing pattern occuring @ 18853 lv - although this isnt one of the stronger BE- it is still resonably significant as it shows that the selling forces have overwhelmed the buyers for this point in time and it has also occured at an important juncture lv (50%fibb) the upper shadow reveals sellers stepping in with the bulls being unable to close above enemy lines 50%
18811 would have been quite a logical place to enter a shrt position as we have waited for the signal to be completed (engulfed prior candle)

From a risk perspective where would the most logical stop placement be
1- would it be 18852 which is the point at where the selling begun , a stop at this lv would risk 39 points approx
2 - or would we place a stop at the upper shadows (the highest price peak , this way we would give the trade a bit more room and possibly minimze our chances of being whipped in and out and the bar chart perception is somewhat different to that of candles - a stop at this lv would risk 80 points apoprox


Any advice most welcome
Gazelle

[bam]

Sell : 188.78
Stop : 190.20
Target: 185.50

To be honest I'm not really sure what you are talking about but if I was going short I would do the above.

[gazelle]

Bam , Sorry for the long delay , I have just arrived home.
I will return to the forum once I have a solid grasp of the basics - until then I am merely treading water - did I miscalculate your stop loss (142 points) away from entry?

Gazelle

[bam]

I place my stops above or below support/resistance levels to protect them.GBP/JPY is very whippy and 142 points is only .75%
when the daily range is around 1%.
A poster called mongoose posted this not so long ago and I thought was pretty much bang on.

The penny drops!!


When a trader discovers that indicators are not predictive in any way, he/she is one step further along the road of success. The market presents limitless opportunities, but indicators restrict your view of the market (blinkers) and take you out of the "flow" of the market.

Someone showed me the best uptrend I have ever seen in my life, then said that they were going to sell short because the RSI was overbought!!

Price... that's the next step. The market will always display recurring patterns that present LOW RISK OPPORTUNITIES.

Your comments are right on the nail, these indicators are "complex", "predictive" and the market is unpredictable

The damaging thing is that most people think "the more I learn about indicators, the better my results will be. BEING A BETTER ANALYST WILL NOT MAKE YOU A BETTER TRADER. This seems like a harsh comment, but years of live trading and backtesting has proven this to me time after time after time.

The market is the ultimate freedom, make sure that when you "rely on my intuition" you have RULES that you SHALL NOT BREAK pretaining particularly to money management.

If you are consistent in your approach, then you will soon find out what works, and what doesn't... maybe even improve on some systems, but in the end, money management, and consistency will make the lion share of your profits.

I say, congratulations, you have moved on to a place that very few traders reach, and you discovered it by yourself.

As a general guide there are 5 steps in the traders evolution.

1. Novice
2. Realise that indicators cannot be the edge and the market can't be predicted.
3. Mechanical or consistent simple system trading and Mechanical or consistent money mangement trading
4. Money mangement advancement for exponential returns OR discretionary element
5. The Zone

Believe it or not, most of us were closer to the Zone when we first started trading.

You will click when you reach each of these steps. One can't stay in the Zone all the time, but you find it easier with 24markets than others because of the flow without the train and carrages effect of the open and close. The live calls I made today were 2 mechanical and 1 from intuition or the Zone as it is called.