I'm currently taking a break from trading for the summer and also going through a life changing event. Should be back to trading regularly in the next few months.
Tuesday, July 13, 2010
Tuesday, May 18, 2010
Price Squaring Update
Here's a quick update on the Price Squaring chart for GBP/USD. I took the low price from that first chart and used the last two digits 53. Since the 39 bar cycle was hitting, I left it up. And instead, added some simple bar counts from swing highs/lows. I thought I had a screen shot from last week when I put up the projections but I guess I didn't take one. But you'll have to take my word for it. Below is the current hit.
Monday, May 17, 2010
Back to the Future
One of the more interesting phenomena about the Gann Square and balancing price-time is that the cycle work backwards in time as well. When I'm squaring the range on certain time frames, the end of the range is 2 or 3 complete cycles away from the end of the square. In this case, I usually just multiply the time factor by 2 or 3. The other technique is to just move the square. If the initial square is valid to price swings in the past, then moving it to signficant highs/lows should show price reactions in kind. The first chart is the initial square based on a range of price. Because of the time frame, the square is pretty far from the end of the range. But look at how price reacted at the end of the square. Bang on with price dropping significantly over the course of a week.
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Moving the square to the next high yields another interesting result.
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And again....
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And finally up to today. The end of square is a few bars out, but close enough for me (I've got other cycles hitting today so those were the main basis for my entry.)
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And to conclude, here is the square by multiplying the time factor by 2. A perfect squaring of price and time.
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So as you can see, price-time sometimes puts things in the past and then it's a matter of just getting things back to the future. I was trying to think of a "Hot Tub Time Machine" movie analogy, but wasn't able to come up with any that weren't junior high potty humor. Yes, I admit to seeing that movie.
Sunday, May 9, 2010
Pound for Pound: Price Squaring on the GBPUSD
I saw an article this morning doing a google search for some Pound images(article link) I'm not going to pretend to know anything about Brit politics or economics, but it's always interesting to see media explanations of market movements.A technique I think I've mentioned on this blog is taking price and using the number to find time cycles. The technique is pretty simple and self explanatory. Just take a price number and extract cycles from it. For example if price is 102.99 you could drop the cents and just go with the whole number 102. 102 Days, hours, minutes, bars, whatever. You can also half that to get 51. Our square root it to get 10.1. If 10.1 is too small, double it, triple it, or whatever. Then maybe apply these concepts by dropping the big digits and only going with numbers left of the decimal which could be 99. Or take the last 3 digits. So for something like 1229.63 use 963.
For this example I'm going to use the last 3 digits of the high on 8/9/2009 which is 1.7039 which yields 39. Counting out a static 39 bar cycle picked up a series of lows including the most recent crash low. Ok, so it's off by a bar on the last one, but who's to say the next bar doesn't end up lower and prove the cycle correct? It could play out that price drops further over the next few bars rendering the cycle hit invalid. However, knowing that price is dropping straight into a cycle point is a good heads up to look for a possible low. In a strong down trend, the low will probably be temporary which is a good spot to pull off partial profits before looking to get back in when the trend resumes. If the cycle were picking highs in a down trend then that's when to time an entry be it an initial or add-on.
The blue square highlights a low that was off by a bar. The 2nd cycle line wasn't useful anyway because price wasn't rising or falling into it. So 4 out of 6 cycle marks have been market lows with one of them off by a bar and the most recent off bar so far.
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If a cycle is showing good hits, then another thing I'll do is half the cycle. In this case, 39 doesn't half very well so I just took a 39 bar cycle and moved it to the half way area. Sure enough... hits.
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I definitely wouldn't recommend trading this method alone. It's just a nice addition to whatever system you're using.
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
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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.
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.
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.
Tuesday, April 27, 2010
Squaring the Range made Simpler?
Nice range, eh? I thought I'd give an example of squaring a range that doesn't require any fancy Gann square. This method is simply taking a range or price and counting out x amount of bars. If it's a lot of bars, I'll also mark off divisions. (Essentially recreating the Gann square time levels.) I'll count of bars from the start and end of the range. In the chart below I measured off a range of 276 pips. The reason I chose that range is because it was the first move out of the double top. Double tops/bottoms can be tricky. This time it happened to work out from the first top and I haven't worked out the second one yet.
After marking off the range of 276 pips, I then counted out 276 bars. Price fell hard right down to that time marker. A bone fide go long signal. So I waited for the bar to close and went long. Interestingly enough, 276 x 2 = 552 and price had gone 547 pips from the first stop. A near perfect time-price squaring of 276 bars of time and 276 x 2 pips.
Is this a major turn? I don't know, but at worst it's a good counter trend trade for a few pips. And that's what it's all about in the end... forecasting areas of possible/probable reaction, evaluating the trend, and then risking accordingly. In this case since I'm going against the trend, the trade amount is small with a tight stop. As of this writing, it's up 50 pips. Not too shabby.
Sunday, April 25, 2010
Trading on Impulse
In one of Gann's writings.. I don't recall which one.. he said something along the lines that the initial move contains the vibration of a given market. I've described the technique elsewhere in this blog when discussing using the Square of Nine. I'd like to revisit the concept because it's really the simplest thing to do and a simple technique for even the noobiest of Gann students to employ.
My buddy Soso also came to the same conclusion independently and worded it very well (considering English isn't his native tongue at that!) I've quoted this elsewhere in my blog and I think it's worth quoting again:
"If you think about it, to trade, we don't really have to arrive to the vibration factor of time through some calculations, it is also possible and much simpler through simple observation when trend changes the first 2 swings or so can tell us the vibration factor of time." - Soso Beton
So the big question is what is a vibration factor of time? I don't know exactly know what it means to Gann or by Soso, but I do know that how I do it works and works well.
The first thing is to accept the concept that price and time are equivalent the same way that Einstein says space and time are equivalent. Therefore, it doesn't matter if price moves x amount of points or x amount of distance because the units of measurement are unified. There are a lot of ways to unify price-time. Squared charts where each point of price is x minutes/days/bars seems to be the "standard". I have issues with how a lot of Gann software/authors use this approach, but that's a deeper topic I've talked about already and don't feel like talking about again.
But basically I prefer to square the range. Again, there is a post somewhere in my blog showing how to do that.
This first chart is a simple example where I had squared the range to create a Gann Square. Inside the square are a bunch of fan lines for the 1x1, 1x2, etc. diagonals from the 4 corners. For now, ignore those. The lines to pay attention to are the dark purple grid lines. I use these to measure price and time within the square. As you can see, the first impulse move up went 5 squares of price. That move in price will have an echo in time. By counting over 5 squares of time, there was a distinct change in trend almost to the bar. This wasn't quite the top but was pretty darn close. (Gann preferred to divide things by 8ths. However, I divided this square by 9ths in order for price to hit the line flush. The concept would still work for 8ths, but it's easier to count 5 exact squares of 9ths instead of 4 1/2 or 4 1/3 squares. Drawing horizontal and vertical lines through the fan intersections are a way to pick up those 1/2, 1/3, and 1/4's.)
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Up next is an example where the impulse move wasn't substantial.. only 2 squares of 8ths, but the 2 squares of time was dead on for the end of a down move and the start of a major up move.
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And for the third and final installment I present a chart where the moves aren't as orderly, but the technique was still valid in finding a bottom.
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If you study the posted charts, you'll also a lot of other ways in which a Gann square and fan lines can be combined to map out paths for price. Just remember... this isn't about predicting the future. It's about knowing when the future has arrived and risking accordingly. Happy Trading.
Edit - If the charts aren't showing up, here are the links:
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Saturday, April 24, 2010
Posting Again!
I've been back to the trading game for the last few months more regularly now that I've wrapped up my degree. Started slow in Feb. with good success and then exploded into March and April with great success. But it's head check/ego check time so I'll probably be taking it a lot slower going forward.
But I do have a point to make. It was interesting to see my progression from serious skeptism and doubt about esoteric type trading to doing nothing but esoteric stuff. It was also amazing to see how the trading results took a hit when I first got into the style and then how quickly the results kept getting better and better. The weakness of course being money management and trade management.
Anywho, the point.... my evolution in the style was more about removing limitations on my beliefs and assumptions. The more I removed the limiting thinking the more possibilities opened up about what is possible when looking at a naked price chart. Granted, a lot of the ideas I came up with independently had already been thought up and written about elsewhere, but I can almost guarantee had I read about those concepts prior to my paradigm shift, they would have been just words in one eye and out the other.
So having realized that, it's back to the books to find out how much I've missed out on because I was blind to the message at the time.
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