Saturday, May 8, 2010

Mayday... Mayday... We're going down...

May 6th, 2010. Wow. I was on my lunch break looking to scalp a few Euro pips during the typically quite afternoon. Then price dropped. And dropped. And dropped. I'm in a trading contest and had been up just over 50% in a few days. Got caught trying to find a bottom and gave back that 50%. Stupid. Anywho...

It's funny listening to the talking heads and writers come up with a why. The fat finger conspiracy theory is a good one. Interestingly enough, I brought up a chart I had created back in 2006. It's a Weekly DJI chart with a simple Price-Time grid like Pyrapoint. Using the impulse method I've showed recently, the Dow peaked beyond 360* of price just shy of 405*. The Mayday crash occurred beyond 360* of time just shy of 405*. I'm sure if I bring up more charts/markets/time frames, there will be a lot of confluence as well. I seriously doubt you'll ever hear about this correlation of price/time mentioned by the talking heads.



Monday, May 3, 2010

Simple Cycles

There's not much to this blog post. Just showing a different way to plot cycles of price. The parabolas are all identical. The last one is identical but inverted. The appearance of the cycle is pretty simple. The whole concept of the parabola is a subject for another time.

The way to find these is to just look at a chart and spot a bottom to bottom or high to high pattern. Draw in a parabola and then duplicate it going forward. Simple. Of course they won't stay valid forever, but you can also extend their validity by shifting them when they fall out of sync. There are certain numbers or vibrations that never go away. They just hide themselves occasionally. The trick is to find that number for whatever instrument and time frame you're observing.


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And right into containment like a good price cycle...

The Psychology of Trading Time


Note: This is a blog entry I had written but left in draft mode about 2 years ago. I totally forgot about it but regardless of it's age, it's still appropriate. I don't recall if I was going to show the charts I was watching at the time or not but I wouldn't have the foggiest idea what charts those would have been in the hundreds I've captured over the years.

The Psychology of Trading Time

One of the most difficult aspects of using "Time" as an indicator is not whether to buy or sell at "Time", but to NOT buy or sell at "Time". Why is this? For me it's because when I've done my work right, the left side of the chart will have hit after hit where the time markers are spot on. Even down to the minute if I drill down that far. So it's inevitable that when I see that next time marker coming up to want to lean into the pitch and swing for the fences.

But of course not all hits are good hits. Buying into resistance and selling into support are recipes for disaster regardless of whether price has made a nice move into the time marker. In baseball, a good pitcher will beat you because he knows how to work the count. You know what pitch is coming and you know not to swing at it but you do anyway and end up grounding into a double play. It does not matter that you knew what pitch was coming. It was the wrong pitch to swing at for the situation. The pitcher knows this, your coach knows this, and you know this. So you end up riding pine for the rest of the game.

Last night I bought into resistance knowingly because I was itching so bad to make a trade instead of waiting for the right setup. My time marker was a good entry... that is if I were trading the 1 min. chart looking for 10-15 pips for 10-15 minutes max. But I was so sold on my daily chart projection that I ignored a major trend line and the 45° lines. I lowered my lot size because of the risk and felt the trade was justifiable because of that.

I woke up stopped out of course. Subsequently, price dropped right on down to 360° of price and time squaring up perfect for a beauty long. But now I was gun shy. With 2 outs gone, I was sitting on a 3-2 count looking right at a hanging curve ball over the plate and I watched it drop right into the catchers glove. There went the setup I had waited 2 days for.

Now the itch was really on. I tried shorting 3 times at time to catch a retrace. In other words I was on tilt.. juggling knives.. revenge trading. 3 losses in a row. All small because I lowered my lot size even further, but stupid trades none the less. So I benched myself. Turned off the charts and went and checked out the hockey headlines.

Sunday, May 2, 2010

Scalping

One of the things I don't do a lot of is scalping. Mainly because I just don't have the time to sit in front of the charts for a hand full of pips at a time. I'd rather be researching or analyzing for the bigger moves. Having said that, I do find it fun at times and the similarities scalping has with sitting in a casino are plenty.

Like playing poker or counting cards in black jack, scalping is waiting for the right time and setup to put money on the line. I've used quite a few strategies/systems/methods in my 10 years of forex trading to scalp. Most of them involved a lot of indicators and were more about quick reflexes. But if you could anticipate and time when to scalp, wouldn't that make things a lot easier?

The charts below show the last scalp of the evening. For this trade, I used the all familiar Gann Square to get an idea on when/where. On the chart are also pivot points. I use pivots quite a bit for scalping mainly because I have an indicator that draws them automatically and it's part of a very simple intraday method I use for short term intraday trades. Also on the chart are some mustard colored cycles lines. I typically start the session with nothing but pivots and the cycle lines and then only look for trades when price rises or falls into the pivots. If price is rising/falling into a cycle line, that's a sign for a decent price reaction. The key is to watch for when price and time meet.

This first chart shows where I entered where price fell into a cycle line near a pivot and Gann grid vertical division line. The exit target is the dashed blue line pivot at/near the red 1x1 line and Gann vertical division line. Price had fallen back into a Gann division line which would be a good add-on signal on a larger time frame. But this pair has a pretty wide spread and even price hit the target, the profit would have been minimal or b/e. So I passed.


Price ran right up to the box, but needed a second push to hit the target. You can also see on the far left where I shorted when price ran right up to a Gan division. The exit was the yellow pivot line. So as you can see, using time and price are an easy way to map out intraday (evening) trades and nail the entries/exits to the minute.


Below are the trades for the day. These were demo trades testing out the platform link to www.myfxbook.com for the FXDD sponsored demo trading contest I've entered for May.