A-B-C-D Trade - page 251
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Chart 1
Split-screen. Left is 1-hour PSQ9 last posted, with FC expansion levels. The pivot low entry is enhanced by Mars 0-degree support, which was aligned with the -31.4.
Price reached the -25 level, and this would be the entry if your set-up is designed for that. (Others may use the -31.4 for entry)
Chart on the right is 30-min with MurreyMath1.0.
The pivot low entry is near 1/8th MML level. This is additional confirmation.
Chart 2
Yellow horizontal fib plot:
High = Nov 9th 08:30 1.38072 Low = Nov 9th 14:30 1.35513
Pivot low (reversal) was at the 127.2 extension fib 1.34817.
Retracement reached the 38.2% fib during Nov 10th 13:30 period.
Take your fib channel tool and align it with the 5/8th MML and pull down to 3/8th MML.
That 13:30 peak was a 31.4 overshoot of the 3/8th MML.
There are different types of traders. 2 types are:
1) low account, high leverage
These traders like to seek out high returns. Often they try EAs that boast returns of 20% or more per MONTH.
Many of these traders even expect a percentage of their account to bust.
2) larger account, low leverage
These traders may risk 1/2% to 2% per trade, and do not exceed their limit on all open trades combined. They do not want to risk busting their account(s).
Can be very methodical.
****
When we look at the OS trade/technique, we see the good reward/risk ratio. Repeating an example:
Entry at -31.4
TP at +31.4
S/L at -40
Risk = .086
Reward = .628
After deducting 6 pips for spread/slippage, the R/R = 4:1
Average result is about 17-pip risk and 68-pip reward.
Here are the monthly returns based on 2% risk per trade and 10 trades per month.
Win % ---------Monthly Return %
60% ------------------40%
50% ------------------30%
40% ------------------20%
30% ------------------10%
*****
Trading counter-trend takes experience. Saying that it takes guts doesn't fully describe this. One can have guts but take bad reward/risk trades.
The psychology associated with trading can be very strong. The difference in trading a large account and small account is huge. In fact it is human nature to panic under stress.
If a trader has a plan and understands the reward/risk, not only for the trade at hand, but for the long run, trader will be much less prone to panic.
The above example illustrates that a low winning percentage of 30% will still return a profit. This knowledge should keep trader calm. Trader will take the losses and move on, because trader understands the big picture.
Chart 1
XAU_USD 1-hour with PSQ9 Moon at 45-degree intervals. Fib channel plot Moon 135, pulling up to Moon 180.
The Nov 7th 20:00 hit to the 31.4% expansion is labeled with a check. The revisit to this 31.4% occurred on Nov 8th 17:00 period.
The open of the next candle was $1800.25, and thus unable hurdle round number, after slight probe higher. BAJA bearish divergence with the 2 peaks.
SELL position back down to the Moon 135-degree produced about $21.00 net. Reasonably tight S/L of $5.00 made this a R/R = 5:1
*****
Chart 2
Flip fib channel plot upside down, plotting Moon 180 pulling down to Moon 135.
1) Bounce trade BUY Nov 9th 09:00 low $1779, and reversed up as high as $1799.65, and unable penetrate round number $1800. Net about $18.00.
2) A lesser odds SELL opportunity once again, near round number $1800 at 13:00 approach to Moon 180. Took only one candle to make it back down to the Moon 135-degree, marking price of $1780.65 for about net $18.00.
3) Breakout of Moon 135 to downside during Nov 9th 19:00 period. with expansion fibs for exit levels, maxing out at the FC 200 thus far..
Yesterday's OS plot. These are the R/R numbers.
Entry at -25 price 1.34824.
Subsequent price advance to the FC 100 and horizontal 38.2% retrace fib (blue) during yesterday's 10:00 period, marking 1.36284. Net gain about 135 pips.
S/L at -40 price of 1.34660 plus cushion made this a risk of only 20 pips.
Trading to the FC 100 = R/R 135/20 and ratio 6.75:1.
Here's a 1-hour chart that illustrates utilization of another technique as additional confirmation for entry on the OS trade.
Fib channel plot from Moon 270 pulling up to the Moon 0-degree.
We drew a yellow trendline at the Nov. 1st 23:00 closing price, after probe to the -31.4 level.
The trendline was hit again during the Nov 3rd 07:00 period, just about at the -31.4. This is the entry point for the BUY, pricing out at 1.3660 after spread.
BAJA bullish divergence also registered.
Pair made a precise hit to the +31.4% and enjoyed further gain to the 131.4% level during Nov 3rd 17:00 candle period, marking a price of 1.38540. That was a net gain of about 190 pips.
Tight S/L at the -40 price of 1.3646 plus cushion = 20 net pips risk. A few pips ore gets us below that Nov 1st low.
R/R = 190/20 and ratio of 9.5:1.
Traders won't get every pip and they won't always let it run. However, once in a while it is very possible, and this can be the math.
Once trader gets accustomed to the technique, trader can elect to employ their own trailing stop style. They'll also understand that the trailing stop cannot be too tight, unless sufficient/adequate profit booked.
After another traumatic week of events in Europe, the buy-and-hold type crowd (position traders) are probably happy to just coast to the week's finish.
The attached split-screen on EUR/USD
Left = 30M with MML
Right = same 1-H just posted.
The bounce off the 4/8th MML is the same as the 50% of the horizontal fib plot on right chart. That is due to almost the same High used as the MML 7/8th.
BAJA bearish divergence when looking at RSI(4) with those 2 peaks, registering 89 and 79. Smaller difference in divergence with 03:30 1st peak.
Currently the bounce has landed on the 3/8th MML for +50 pips. The 08:00 peak of 1.36673 is near previous high Nov 10th 13:30 of 1.36520.
After the Italian Senate approved their budget measure, the market reacted by sending pair higher, breaking the 4/8th MML and 50% fib.
Split screen has 30M session colors and MML on left, and PSQ9, horizontal fibs, and Gann Fan on right.
The 17:00 period on the 30-min chart made a hit to the 6/8th MML 1.37939 level.
The 16:00 and 17:00 candles on the 1-hour, closed at the horizontal 78.6% fib.
Moon 315 sliced through that peak as well.
We can see by the session colors, that price rebounded to pre-Italy panic level of Nov 9th European Open, which is the area of the 6/8th MML. This rebound even overrode 14:55 positive U.S. data (Univ of Mich Confidence).
Attached is a chart from May3rd, but no specific reason we had to go back that far. Just an example. We used a vertical line to indicate end and start of the week.
The chart applies Mars at 90-degree intervals and Moon at 45-degree intervals.
On the left, we can see a surge in price and subsequent consolidation (sideways).
One method in which to use the PSQ9 and fib channel (FC) is to set-up for the new week. After Monday's price activity, we can plot the fib channel from the Mars 0-degree to the Mars 90-degree.
The yellow check mark labels the May 2nd hit to the FC 31.4 expansion level. That level was also resistance the previous week, and in fact near the high of the up-move. This observation by trader can be described as recognition of adherence to S&R.
This picture creates the set-up for the short (SELL) on the next revisit of the FC 31.4. That happened on May 3rd 15:00, and price also met the diagonal Moon 90-degree. The RSI(4) was in overbought 85.
We added inputs into the fib channel tool "Fibo Levels" of -31.4 and -61.8. You'll need actual input of .314 and .618. In the description, you can use whatever decimal placement you prefer.
This simply allows us to have take-profit (TP) levels on the same plot. The -31.4 is labeled as TP1 and -61.8 is TP2.
Once again, this is an example of a good reward/risk scenario.
The S/L placement can be placed just above the previous high of May 3rd, or at the 40% level. We're going to walk you through the math again.
S/L = -40
Entry = 25 or 31.4 (in this case, it would be 25 as it didn't quite reach 31.4. You can see the 25% intersect the Moon 90-degree.
TP1 = -31.4
TP2 = -61.8
Trading to TP1: Risk = .15 and Reward = .25 + .314 = .564
Trading to TP1: Risk = .15 and Reward = .25 + .618 = .868
Distance between Mars levels is about 120 pips.
To TP1:
Risk: 120 X .15 = 18 pips. Add spread and cushion of 6 = 24 pips
Reward: 120 X .564 = 67 pips. Minus spread and cushion of 6 = 61 pips
R/R ratio = 2.5:1
To TP2:
Same risk as TP1 of 24 pips
Reward: 120 X .868 = 104 pips minus 6 pips = 98 pips
R/R ratio = 4:1
Note that on the previous post, we reversed the direction of the fib expansions for easier viewing. It really doesn't make a difference, as in one method, we would have a negative value and the other method would have a positive value for the overshoot. For this example we have returned to the original layout.
Again, using vertical line to separate old and new week. This time we spaced the fib channel plot over 180-degrees.
Plot from Mars 0-degree pulling down to Mars 180.
What this did was fit the peak of Mar 7th 11:00 onto the -31.4% overshoot level.
We now have a price peak at a ratio that we can understand. We know that any reversal shall have a high probability of coming back down to the +31.4 and +61.8. Those 2 levels are labeled TP1 and TP2 again.
When price broke the Mars 180, we can anticipate price going to the 31.4 and possibly to the 61.8.
This would be a breakout version of the technique. S/L can be placed just above the peak on Mar 8th 04:00. We can calculate the R/R.
S/L 1.39876 + 6 pips = 1.39936
Entry 1.39480 (7 pips below Mars 180 1.39550) Risk = 40 pips
TP 1 = 1.38847 + 6 pips spread & cushion = 1.38907. Reward = 64 pips
TP 2 = 1.38163 + 6 pips = 1.38223. Reward = 132 pips
TP1 = R/R Ratio 1.6:1
TP2 = R/R Ratio 3.3:1
***
Those adapt at using horizontal fibs will see other confirmations. The plot from the high (-31.4) to the pivot just below TP1, would generate a 127.2 extension fib at the TP2 level.
Using the almost horizontal Mars is similar to horizontal fib plots. We normally use the 38.2% or 138.2% ratio of expansion. This is close to the 31.4 we use with the PSQ9.
We noticed how the Mars and Moon plots respect the 31.4 ratio as well as 1.314. This ratio is derived from 3.14 Pi, which is an impact number associated with circles of course.
From Wikipedia:
A circle's circumference is slightly more than 3 times its diameter. That ratio is 3.14 and called Pi.
***
Gann's use of planetary position and other relationships (such as speed), included plotting support and resistance. This technique can be plotted into the future.
The alignment between planets are referred to as "aspects" or angles. Gann used fractions of the 360-degree circle. These are intervals of 45-degrees.
Therefore, with the PSQ9, we use 0,45,90,135,180,225,270,315. Note that 0 (zero) is the same as 360.
We have integrated the use of the fib channel tool to produce interior fibs and expansion fibs.
As per above, we are used to using horizontal ratios of 38.2, 61.8, 78.6, 88.6, 100, 127.2, 138.2, 161.8, etc. The PSQ9 are almost the same with switching out the 38.2 for 31.4.
The big difference between horizontal and these PSQ9 levels is that with the PSQ9, we do not have to plot from a low/high in price, to get expansion, retracement levels.
That takes away uncertainty in situations where we are faced with multiple options for high and/or low, with horizontal plotting.
Since we can plot into the future, standby orders can be placed in advance. The impact is even more distinct with diagonal analysis, such as application of Moon lines.
The combination of the PSQ9 and the fib channel tool is very powerful. It is unique. It is yours.
Here's another 1-hour chart with PSQ9. Moon at 45-degree intervals and Mars at 90-degree intervals.
Align fib channel (FC) tool to Mars 0, pulling down to Mars 270-degree.
We can see price adhere to the 31.4 and 61.8 expansion levels on Monday Oct 17th. The hit to the FC 61.8 also intersected the diagonal Moon 270.
Price retraced to the FC 31.4, and proceeded to make an extension to the 131.4 level Oct 18th 09:00.
Price action behaved very nicely and conformed to the S&R, and made a revisit to the 131.4 Oct 20th 14:00. A good bounce opportunity was there that happened to be the last pivot low prior to the next uptrend.
A horizontal fib extension using the high near Mars 0-degree and low just below the FC 61.8, resulted in the 131.4 bottom as its 138.2 extension (labeled H138.2).
Entry as breakout trade was just below penetration of Mars 270, or upon revisit after bounce off of the FC 31.4.
Many other trade opportunities within the week existed. BAJA divergence at the resurface touch of the -31.4 Oct 19th.
New viewers/traders need to get used to looking at these S&R levels, and the market's compliance, in order to formulate a plan.
Once you have a plan, stick to it. Do not deviate, and do not compromise. This is the only way you can stay disciplined. And obviously, make sure the R/R is good.
A R/R of 2.5:1 means you only have to win 30% to breakeven.