Hallo Alan
Thanks for the kind words, I can relate to your situation with regards to having some "unclear" / "unanswered" conceptions about trading these patterns. I am suspecting that they are the same as the one's I used to have that kept me from even looking or trying to find these kind of patterns...
Quote:
|
Originally Posted by firehorse
Could I ask what made to take the trade at 161.8 rather jumping in at 100 or 127.2 (This is one of the bits I'm still missing  ) Was there something on the 1 minute chart, some other indicator, or do you just watch the wriggle? |
Well, the answer is two fold basically. But before I get to that, bare in mind that I have been trading these patterns for quite some time already and my eyes have been "trained" to spot them. In the beginning I thought they never existed
The first reason was that I was hoping for a up move to the AB=CD level, however, price moved at such high velocity it simply blasted through there and even right through the 1.272 level. I was very tempted to trade the 1.272 level, although experience has taught me that a running train does not turn on a dime and thus what I usually do in cases like this is let it run up and then catch it on the rebound back a few points below the intended entry level ( 1.272 in this case ). In this case, this solution served me well once more as the price actually initially stopped I think about 6 or 7 points from the 1.618 level and then made a short bounce back down although not taking out the 1.272 level. When it is just hanging in between two levels, I NEVER take any trade, only when it works with a preset level. I was fortunate that a few moments later it did in fact cross above the 1.618 level. Once more based on the same rule as the one I applied to the 1.272 level, I was waiting for a cross back below the 1.618 level which happened. I then entered a few points lower down and put the stop loss at the high of the highest bar that pierced the 1.618. As you can see the risk/reward was quite good for this trade to.
Usually I enter multiple lots and scale the first half out at the 38.6 target and the rest at the 61.8 target. If the 61.8 is not reached and the price turns back against me before then, I will exit the remainder lots at the initial 23.6 level not taking a loss, perhaps a small profit still on the remaining deal.
The second reason is more psychological in nature. On this topic I can probably write my own book. In brief however as a matter of principle I do NOT believe a person should suppress his feelings in trading at all. I believe that the feelings are the highway via which we learn from our mistakes and also learn when we have done something good. It is the emotional reward or lack of it that helps a person restructure his behavior. On this topic I have many theories which I can discuss in detail sometime. I sometimes take trades and it immediately feels good and I am more positive than the electricity current running in my computer and sometimes I immediately get a feeling that I have really put my foot in it this time. I soon realized to simply just get the hell out of trades when it feels like this. This might sound like crap, but there is a certain amount of logic to this. Initially I did not understand this, although after some study I know understand why I feel like this.
The reason is the same as why you do not remember changing gears when you drive your car or you do not think about why you pull your hand off of a warm stove plate. The reason strangely enough is also the same as the reason newbie traders hold on to loosing trade and stuff up other trades over and over and over and over although they know perfectly well not to do it again they still somehow go and stuff it up again. Why, what is this then ?
Well, the answer is that it is your sub conscious mind that is doing all these things, that is it's job. If you train it long enough and expose it long enough to certain things, it will learn to do it by its own and not bother your conscious mind with those "mundane" task. It is no secret that the sub continues mind is the guide of the conscious mind.
My theory is thus that if you expose yourself long enough to charts for example and keep on trading a certain pattern your sub conscious mind will learn to recognize it on its own sometime. Also the market is highly repetitive in certain ways on charts... if you keep on taking a trade and then a few moments later on the trade just goes against you over and over...eventually although you might not consciously realize why you keep on loosing, you sub conscious mind might have picked up on a chart patterns that materializes just as you take the trades, this is probably why you take them in any case...
The point is, I am suspecting that after a lot of exposure to charts, about 8 years of which the last 3 years have been 12hours + per day, 5 days a week... my mind has learned to know how a bad entry might look like and automatically fills my mind with doubt at that stage that keeps me from making a trade.
Now, to come back to my point about not suppressing your feelings in trading...if I did go ahead and suppressed my feelings, I will never have the benefit of this magnificent function of my mind because I would be ignoring my doubt.
Sure, if your mind has not been trained properly, then yes, you will be getting weird signals
. People always say, find a system that suites you. How will you know it suites you. The only way in judging that is by how it makes you feel when you place a trade, the amount of stress you have to take while in the trade and so on and so forth. If you immediately also learn to ignore your feelings, how will you know when you have the correct system for yourself. You will be entering a circle race and perhaps never find "the one".
Learning to suppress ones feelings can be quite a dangerous game. Suppressing anger for example and not being able to express that emotion can lead to all sorts of disorders such as split personalities. Where the emotions get so bad that you can not handle it anymore and your mind creates a duplicate of itself almost which will be receiving all the bottled up emotions while the regular you will have peace and quite again. Each time you get angry, it just gets diverted to the other you in your mind until one day the other you has gained enough strength from being fed all this energy and then all crap hits the fan when that you surfaces
We are complete human beings with all sorts of characteristics for good reason, we should not mess about with this stuff in a amateur and uncontrolled manner. My motto was to trade and absorb the feelings I got from trading, if it pleases me I will continue with a system and if not I will change to something else.
So, this relates to that trade in the manner of me having felt doubt at that point as well, which kept me out of it until my entry rules were clearly confirmed.
I know this last part is probably the last thing you expected when you asked that question, but you seem like a fellow that could appreciate the detail and truth behind reasoning, so there you have it, explained to the best of my ability
Well, I hope this is helpful in some way.
>>
I will try to put some post up for charts as I see things unfold and am glad that you have found some benefit to all of this. I might however start a completely new thread and just copy all of this to it.
Keep well and happy hunting
FX Sniper
Licensed Brokers
Linear Mode
