A-B-C-D Trade - page 337
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Food for thought.
Forex Education: Why do Many Traders Lose Money? | DailyFX
2009-2010
12 million trades
Won more than 50% of trades
However, the end result was less than 50% of traders had winning results, over the sample period.
The reasons cited were:
1) Trading without stop-loss
2) Risk/Reward not above 1:1
We have our our additional thoughts. When traders create their systems or techniques, it is often "curve fitted" with back testing.
This is not a reliable way to design a system, since conditions in the sample back-test period may not repeat itself in the future trading period(s).
We also agree, and have mentioned, that the trader needs to have a plan prior to entry. Understand what the realistic R/R is, and under what conditions will trigger an early exit.
The Euro pairs gapped to the negative at this week's open, due to concerns pertaining to Greek bailout/restructuring of debt. The proposed solution was to tax bank accounts. Boisterous objection prevailed, especially from those with under USD 100,000 in account deposit. This also caused a spike in withdrawals.
The attached 4-hour EUR/CHF plots the fib channel A-C at lows of Feb 26th and Mar 18th 04:00. Point B = Mar 8th high. We also drew a yellow trendline from peaks of Feb 25th and Mar 14th.
The slope of A-C is the same as the yellow trendline. The horizontal fib plot is A-B, with C at about the 78.6% retrace. The trigger zone is between 78.6 and 88.6 for the Fib Channel Triangle (FCT).
Therefore, this is the set-up to trade the closure of the gap. We had German Zew data and Greek debt solution vote on Tuesday, and U.S FOMC Wednesday.
Price closed the gap with a large move to the upside on Mar 18th (Mon) during the 08:00 period. It hit resistance at the -68.6% level of the FCT.
A subsequent revisit of the A-C trendline occurred during Mar 19th 16:00, for a bounce trade opportunity.
Attached is 4-hour Silver, with 3 different Standard Deviation Channel plots (Deviation setting = 2.0). Listed below are plot dates/times, and trade opportunities at outer SDC lines.
1) Mar 1st 12:00 / Mar 8th 12:00
SELL Mar 8th 16:00
SELL Mar 12th 12:00
2) Mar 5th 12:00 / Mar 8th 16:00
SELL Mar 12th 12:00
BUY Mar 14th 04:00
3) Mar 12th 12:00 / Mar 21st 12:00
BUY Mar 22nd 12:00
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Plotted on 2 lows of Jan 4th and Mar 19th.
Align Fib Channel tool to full size of SDC, with corresponding interior ratios.
Price has been trapped between mid-channel and -31.4 since Feb 25th. Another confirmation that this is a good plot, is the Feb 1st high at the upper channel.
Price just bounced off of the mid-channel again yesterday/today, resulting in a large move down to the -31.4 again. Lets see if it goes further or price respects this support area again.
One way to look for swing points for your Standard Deviation Channel (SDC) plots is to use a zig-zag indicator.
On the 1-hour chart, the 2 lows used were Mar 22nd 03:00 and Mar 25th 17:00.
After the bounces off the mid-channel (twice), and a small bounce up off of the lower channel, we look for the expansion to the downside to trade the bounce up.
Align the fib channel (FC) tool to the full size of the SDC, and lower it to the downside. Price hit the 100% expansion (1.0426) during the Mar 27th 13:00 period.
After a slight probe lower (1.0417), price bounced up and reached a high of 1.0433 thus far. This trade is in the direction of the slope, when using diagonal interior ratios for Take-Profit (TP).
This means TP can increase with time, and S/L decrease with time. It also allows us to place trade on automatic mode, since we would not have to adjust TP for less profit, or increase amount of S/L.
Note that there are automatic tools (EA) that work with diagonal trendlines, that can enter and exit trades.
If price advances, the exit this and the next hourly period is about 1.0448/50 TP, based on bounce up of 31.4%. Some would have pulled S/L to at least break-even by now.
Follow-up on last AUD/USD chart that used zig-zag to assist SDC plot.
The get the 100% expansion on outer levels, set Deviation to 6. For 200% expansion, set to 10.
The outer lines are the only ones that adjusts to Deviation setting. The mid-channel remains the same.
Just remember that the alignment with the fib channel is based on the size of the 2 Deviation channel.
The attached 4-hour chart shows bounce off of the 200% expansion on Mar 28th during the 13:00 candle period. It made a 50% diagonal retracement.
The first arrow points to the bounce at the 100% expansion, as per our comments on last post.
2 DIPS Mar 25th 15:00 & Mar 27th 13:00
Align Fib Channel to half of the SDC, to see bounce Mar 27th 19:00.
That level is also the 78.6% fib from H/L Mar 25th 05:00 1613.26/Mar 25th 15:00 1589.47.
As practiced with the Fib Channel Triangle technique, we can plot this at the Mar 25th high = A and the 78.6% = C, with Mar 25th low = B (not shown on attached chart).
Price declined to that FCT's 50% level.Mar 28th.
[ATTACH]12425[/ATTACH]Once the 03:30 GMT Royal Bank of Australia (RBA = central bank) rate decision (unchanged as expected) and any accompanying verbiage was out of the way, this pair made its move to the downside.
The attached 30-min chart has its first arrow marking that event. The highest white horizontal trendline shows previous Apr 1st support level at 1.4580. We can see price bounce off of that and into the resistance provided by the HAMA_T3 zone.
The 2nd arrow and horizontal trendline illustrates the support level, bounce/pullback into the HAMA_T3 during the 07:30 period.
This was the opportunity to trade the pullback, for a SELL, at a safer time AFTER the RBA.
We also applied the Standard Deviation Channel (SDC) in orange color, with Deviation = 10.00. We used the 2 lows on Mar 31st 21:00 and Apr 2nd 03:30 as plot points, which are marked by "X".
That Deviation setting means we're looking for diagonal support at the 200% expansion level from the standard 2.0 setting on the SDC.
The trend type of indicators, such as the HAMA_T3, can be a good tool. However, if we depend on it by using its cross-over, the lag can be severe.
Therefore, in an attempt to find a better take-profit (TP) level, we can use support/resistance (S/R) tools.
GBP/USD with a strong move to the upside today.
It is at the 100% expansion of an Andrew's Pitchfork plot. Can you make that plot and align the FC?
That would be on the 1-hour.