Forex Help Forum Archive for 06/14/2009

Montréal Taro 23:35 GMT June 14, 2009
Subject: Using Charts Real Time
Bobbl
"central pivots (there are five calulated pivots per day)"
These are the same as pivot point ? Would you mind telling me the 5 times you are calculating them ?

Thank you! GL & GT

San Diego bobl 19:38 GMT June 14, 2009
Subject: Using Charts Real Time Reply   
I think this begins with your layout, i.e. how your windows are set up on one or multiple monitors. The key point for me is I like to SEE the whole picture all at once. Thus I put 4 primary windows (of the same cross, say eur/usd). I "link" them, meaning when I scroll through my market minder, which is just a list of all the pairs I trade, and the realtime pricing and I always refer to the "net change". So, when I click on a pair, all my windows show that pair instantly. My personal windows and a brief explanation are the following:
WEEKLY CHART... This gives me a big picture view of 200 weeks of trading behavior. I can see much about the market character from these. The first thing I look for is... Is there a trend I can clearly see in effect now? If not, then I look for the boundaries of the range trade history now in effect. In both cases, trend or not, I look to "reference" where we are at the moment with the past history that chart shows me. I make many observations; such as what patterns does history show me. Does this particular pair have a tendency to form large formations prior to change, patterns that require time to develop, like a head and shoulders pattern, a rounding top or bottom, a "W" or "M" pattern etc. Or, does it tend to form double or triple tops and bottoms and so on. I also focus very clearly on major "pivot" points, which is a study of where the market changed directions, forming a low or a high for that particular move. Often times I will draw a horizontal line accross my entire chart, offering a clear view of where we are at the moment, and I 'll measure how far that is from the next major pivot. I draw trendlines and use MA's to reference where the trade is. And lastly, I have a system that defines weekly up moves with a green dot, down with red. If a signal dot occurs at a break through of a major pivot, pattern, or MA, then I usually get very aggressive here. The weekly chart defines to me what type of action I will be looking for and taking trades via lesser timeframe charts, which, as I said, are all there for me to view at once.

DAILY CHART... I look for essentially all the same things I mentioned in the weekly. But, there's a big difference. On the daily I can read whether we are at the beginning of move, well extended into the move, and characterize and measure, via Fibonacci lines etc. what the tendency for the pair is. Does it tend to retrace 20-30 % on intermediate pullbacks, or does it go deeper, say 50-60% before getting back on track.
Once I "understand" how the pair has a tendency to trade, then I can go to lower timeframes and particular spots to deliver an entry signal. Again, my system tells me if the movement is bullish, bearish, or neutral via the dots. For position trades, the WEEKLY and the DAILY must be in alignment, i.e. both with green or red dots. If it's in a range trade, then the daily becomes the most important definition of where we are in the range. Even if I see we are at the top of a range, and can lean on that area to catch the next move the other way, I ALWAYS demand that the market has a least one bar in favor of the way I wish to trade. For example, if we hit the top of range, and then reverse with a red bar, then I will be looking to enter MOC or in another session, or at the beginning of the next day. It is here where I determine risk, size, and stops. I do this by referancing on a daily basis the past 30 days of average true range. That way, I know what my most probable maximum excursions are for the day. When these are defeated, then I am usually looking at some sort of squeeze, which is a great time to pile on for impulse move.

2-HR. CHART... I put this up over a period of 15 days, and I get another clear view of how this pair trades at certain levels, where we are in refernce to those levels, and what action I am looking to take there. On this chart, I put in a couple of custom indicators that will show me divergence, which is very valuable at a range trade high or low. If the picture does not line up with the indicator/oscillators, then I wait to place a trade until everything is in sync for my trade.

1-HR CHART... This is my entry timeframe chart. A KEY element here is that I have an automated autopivot function that plots the floor trader number series each and every day. I ONLY go long above the central pivots (there are five calulated pivots per day) and only go short below. If I am in a buy pattern from the weekly/daily signals and display, then if I am trading under the day's central pivot, I wait for a 1-hr. close above it. This is what I call an ideal set-up. The negative activity of the trade has already taken place below the pivot, and now I'm back to the main theme (that of weekly/daily set up), and based on my risk parameters, pull the trigger with "x" amount of size. As AL mentioned, I like to trade multiples of three, so that I can work the trade. Always on my first profitable out, I put the other two thirds at breakeven, completing eliminating risk. The worst I can do from here is to have some profit on first out, and carry NO risk on the remainder of the trade.

In addition to this, I have a couple smaller charts which I can enlarge to full screen at any time, which has different models and uses. For instance, I plot a 15 min. chart with a moving linear regression model up against a exponential moving average. This gives me fluid bands, which I use in Donchian fashion, and always hold a trade when the bands are separated and moving in lockstep in my direction. Once they cross, I usually exit the trade or tighten the stop to preserve profits. The other two charts are a 4-hr, with some indicators, and a specifically tailored divergent indicator chart.

Lastly........ I NEVER violate a "stop area". When in a bad trade, I want out asap, and that is decided before the trade is taken.

gl/gt

GVI Forex Jay 14:17 GMT June 14, 2009
Subject: Videos
This is a discussion on using charts in real-time. Please feel free to add you insights or questions as this is a topic almost everyone has experience with.

Denver AL 01:45 GMT June 14, 2009
Subject: Videos
Jay Thankyou for your kind words. very much appreciated. Trust me I too miss many opportunities that Harry Hindsight can obviously point out

Read of chart in real time: its a case of being PATIENT for the majority of time however then there are certain patterns in no particluar order that I look for. For example an inside bar is an interesting play for a momentum trade that gives risk management control via a stop and reverse the opposite side of the bar. There are other minor tricks to improve both entry and control of risk that I will try to point out in a future video

Another is once the price closes the bar through the 20ma I look for the opportunity then to fade the next move BACK to the 10 period which is a judgmental trade IE take the trade as it hits the line and only if it then closes through the 10 would a stop be elected. After that I am looking for the trend to become clearer and hope/look for an angle that appears to be roughly 45 degrees on the moving averages with both moving directionally - something that some refer to as good angle and seperation.

Once in a trade I like to scroll up and down through different time periods to try to see both the short, medium and long term supports might be either from a fib, pivot, mov.av., previous high/low or even a break of rotation. IE are we still making higher lows higher highs and vice versa.

The objective is always to enter with multiple lots that take something off - Something that BOBL advocates and preaches - to allow a so called free trade to ride. The issue for most is undercapitalization and over leverage and in this respect it may not be possible to enter with multiple lots in which case establishing a strict discipline that takes a fixed P/L whereby a small amount of money say 250 bucks per day results in 75k per annum. The key is the discipline and the easiest therefore for beginners is to establish groundrules where the number two rule is never break the rules - that is until you learn to fly ;)