EUR/JPY - here's one for you Mick

[forex1]

Originally posted by MickMason
Only demo but I think long from around 135.25 or 135.12 for 136.00 or 136.50? Stop below 135.00 somewhere, how does that sound?

Mick

Hi Mick

I don't think you would have gotten in at the levels you were looking at this morning but the 'long' idea seems good - currently at 135.66.
And your short entry yesterday morning (136.25) was at an excellent price only going your way (south) from there on...
Don't you want to give us a brief overview regarding what the charts told you this morning, and yesterday morning if you can remember, and how you then determined your entry, stop loss and profit taking levels. And if you can mention something about your entry method and use of trailing stops, it will be usefull!

Actually while you're busy just write down your entire system! ...just joking..a few pointers will be good!

Thanks and best regards.

[Gamma_Jammer]

looks like the decent rising support line I drew has now become resistance, with the pair bumping along below it. Comes in ard 135.79 now by my reckoning.

[MickMason]

...and 200ma at 135.83. Nice shot on that 135.12 support Gamma, right on the button!

Forex1, you're right, I would have missed entry and it's my own fault. I get a bit blase on demo and it was only when you asked for charts and I came to draw the Fib lines in again I realised I had taken the low from the wrong place, it should have been 135.19 and not 135.12, making entry 135.32. I like to think in a live trade I would have been more careful!

In any event I missed entry and stood by and watched. I'll post some charts later with my scribblings, it's all fairly basic though, fibs retracement and projection, and most importantly a reasonable risk.

Mick

[Gamma_Jammer]

James came out with some different fibo levels but I think his high differs from mine by quite a bit. did 136.75 really trade that day? I have 2 or 3 charts from different sources and none of them have it that high. Sometimes you get mishits on EBS when it's really thin, but decent systems will take this out if the market isn't calling it a genuine high.

[MickMason]

Originally posted by forex1

Don't you want to give us a brief overview regarding what the charts told you this morning

If it helps I'd be happy to. This, like the majority of trades I make, is intraday.

Firstly risk, what's the risk involved in taking this trade, what's the most I can lose if I'm wrong and does it fall in line with sensible money management. I look at never risking more than 2% max of my equity, if I lose then it's not too painful psychologically or financially.

The chart below is 15min Eur/Jpy, taking the low at 135.20 and the high at 135.53 I would have been looking for a retracement of 61.8% and a long entry price of 135.32 (except I drew the low as 135.12, my mistake and I missed entry because of that error, my fault for being too blase with a demo trade). With that entry in mind, the logical stop would be support which we'd already seen hold yesterday at 135.12, and the psychological support at 135.00, so allowing for a spike the reasonable place to bail out and be proved wrong would have been somewhere below 135.00, say 134.90/85, any further below there would risk a sharp fall as stops got triggered. The risk would have been 40/45'ish pips, so on a $10k account I wouldn't want to trade any more than $40k. My target, to fall in line with a reasonable risk/reward, would want to be more than 1:1.5, so I'd be looking to see whether there was likely to be 68 pips in the trade, target 136.00. The target seems reasonably achievable. The trade looks good on paper, I've planned the trade, entry, stop, and target, now all I have to do is trade that plan exactly.

Watching the chart and getting a 'feel' for how a currency performs, and it's little foibles and tell-tale signs, is essential. We saw it lose momentum around 135.80 and a doubt arose as to whether it would make it to 136.00 so it might have been a good idea to look at taking some profit, also data was due out at 1.30pm.

And that, in a nutshell, is my 'system'. 1000's of traders trade exactly those same retracements. Strength in numbers? I don't know, but this very simple trading strategy has served me well over quite a long period and until it stops working I'll stick with it.

The most important part of trading is controlling risk, that must come first. Any fool can click a button and take profit, it takes a lot of willpower and discipline to click a loss.

The act of trading is very simple, whatever strategy or indicators one uses. Trading is all about controlling risk and justifying that risk with a reasonable reward.

Apologies if the above seems patronising, you probably already know most of what I've written.

I hope it's helped someone anyway!

Mick

[Gamma_Jammer]

All seems pretty sensible (which is what I'd expect from you Mick!) One thing I really like about the px action on this one is that there are some great levels to use for trailing stops. If I were in it now I'd look to ratchet the stop up to maybe 135.65. Then you have the 100 &200 MA to get through as well as the rising support. Should keep it itcking along and at least if it breaks all of these you know you ought to be out.

If they were all like this it would be soooo easy but sadly they're not.

Good luck all

[forex1]

Thanks for the charts and explanation Mick. I can see you did exactly the same yesterday morning. You are obviously trading nicely in the ‘zone’ - with Mind, Money Management and Method all sorted out. I like the 100% rational view on risk and profit potential. If I may ask – how long did it take you to become disciplined and consistent in your trading? And do you still some times fall back into bad habits? And what are they?

In some of the previous posts you and Gamma referred to the 100 and 200 moving averages – are these simple moving averages and on what time frames are they mostly significant, and in what sense?

Thanks and best regards.

[MickMason]

lol, me, sensible? Don't spread that about, you'll ruin my street cred! Good idea about the trailing stops, once it's this far up I usually try and trade the retracement down, that way if it's turning at least I'm on the right side, or if the trend resumes at 61.8 I'll reverse and stay with it.

FX1 - How long did it take...roughly one and a half accounts and a lot of self doubt as to whether I was capable of making it. At first I thought it was easy, every trade's a winner, then I lost big time. I must have followed every strategy and indicator imaginable, none worked, "it's all fixed, they're after my money, the market is against me", serious paranoia. Then a very good friend of mine, and an extremely accomplished trader, put trading into perspective, and the importance of risk control. It turned me around psychologically and financially. I suddenly realised trading wasn't really that hard to do, it's simply a game of chance with better odds than any casino or bookmaker if you play it right.

I do still have the occasional blip and take ridiculously risky trades on a whim which I usually end up paying for, of course I vow never again until the next time The hardest hurdle to overcome was clicking a loss, especially when I was giving back all the weeks little gains of 2 or 3 pips a trade, I'd be back to where I'd started on Monday. 'Let profits run' was alright for them to say, they probably didn't have a big hole in their accounts!

200day MA, 40 weeks, is significant because it's a 'pivotal support or resistance level for the long term trend', well that's what they told me anyway. It does seem to be fairly accurate and a point to pay special attention to, just like any other support or resistance level. I wouldn't use it as a signal to trade although many do. I can't say I fully understand the deeper technical significance of these levels, it's enough for me that they work.

I'm rambling....Gamma, anyone, any comments greatly appreciated!

Mick