This video really sums everything up so no need for a long post. Feel free to fire off some questions.
Supply and Demand. The Professional way of trading
Finding high probability turning points starts with identifying the supply and demand on the charts. These trading posts cover supply and demand trading
The GBP has been playing games with my trading setups this week. A short play that triggered in, stopped out and then dropped hard to my target. A long play that had the entry price missed by a mere handful of pips. When price came back again to the area, again, price hovered above my entry and then rallied. I removed the order and sure enough, price came back a third time, dropped 3 pips BELOW my entry and then rallied. Crazy huh? Sound hard to believe? Check out the last two blog posts.
http://www.atradingplan.com/general/to-chase-or-not-to-chase/
http://www.atradingplan.com/suppy-and-demand/best-laid-plans/
Redemption was at hand. The last rally up was heading towards an area I identified as a low risk short opportunity. With an 18 pip risk and over 100 pip target, I set the pending order…and waited. About 3 hours later, my trade triggered in, dropped hard where it was closed for over 100 pips of profit. This certainly made up for the earlier short that stopped me out. Check out the video below.
That is the question. Well, not really. It is a no brainer to know that chasing price is a sure way to increase your risk, decrease your profit potential and, in time, probably blow your account. It can be tough to not pull the trigger when your initial price point was missed. Below, is an example.
This chart, the blue square, shows an order to go long in the GBPUSD. You can see by the placement that the order was placed before price was even thinking of going towards it. The red candles show that price was dropping pretty hard to the entry price and I was rubbing my hands as I noted the strength of the drop. I wanted to fade that move.
Price dropped within 5 pips of my order. That first yellow line was a risk reward area of 1-2 and I would have taken action, banked profit and breakeven stop, at that level. The market didn’t drop far enough. I kept the order in the market because there is clearly a lot more bulls in that area. Today, price came within 3 pips of meeting entry before rallying off for about +80 pips. Missed again.
Could I have just marketed in? Sure I could have and I still would have made profit. That is not a play I do though and doing it and then being rewarded by a winner is dangerous. It can lead you to think that breaking the rules is a good thing. Before you know it, your own trading has fallen from being rule based to simply “whim trading”. I could have altered my entry point and gotten in the second time. The setup I took called for a certain price. Clearly, I was in the right ballpark so changing the price would have been rewriting the plan.
In the end, I cancelled the order and will look further down for an entry. Price could again come to the area and fade a great distance. However, looking at the last rally tells me that the bulls are running out of steam at this point. This is only one trade in the line of many and I will stick to the probabilities. Price is telling a story and I will listen.
I woke up totally blown away by the intervention in the Swissy. If you happened to be on the right side of the move before the event, you pretty much made your month! Love to say I milked every inch of that trade. Fact is, I was never even in play on that currency.
However, a short play in the GBPUSD caught my interest yesterday and I put a pending order in to trigger at my price. Almost on command, price rallied up to my sell order getting me short. 18 pips later, I was stopped out as price continued the rally and then met with some strong bear action. What did price do after that? Dropped hard to my target 62 pips away. My usual routine after a trade is to reflect on how it played out. When you are right at the wrong time, those can be frustrating. For me though, I can see the error and it was simply missing a better shorting area about 25 pips higher.
The keys for me after this trade are simply:
1. I kept a good risk % of the account that will allow many losing trades without a severe impact on the account.
2. The r/r was respectable.
3. There was a plan to this trade.
4. I accept I missed a better entry.
When you get into a trade, you have an expectation of something happening. What do you do when it doesn’t happen? Do you know what to look for?
This video covers a short side play in the AUDUSD currency pair. I wasn’t expecting a position type of trade but just a bounce. As the week came to a close and into a long weekend, price just wasn’t showing the gas to bust down to my ultimate target. There were some signs that I should take some cash out of the market and I did just that. No need to stick around in the trade once expectations are not being met.
It was an objective area to short at, the scale out and ultimate close of the trade were objective as well. A one hour trendline came into play for a stop placement after scale out.
It has been a pretty light month in updating the blog. It is August and the weather here has been awesome and enjoying the summer is a priority for us Canucks. I have been trading but once the trading is done, the last thing I am thinking is to make a video. I am sure you all can relate.
Protecting yourself? The markets have been crazy to say the least. There is money to be made in this situation (lots of it really) and being a little conservative in grabbing the trades has been my main goal. Look at some daily charts and there are wicks all over the place. Depending on the situation, I have dropped my risk on some trades to just under 1%…like the latest EU trade.
A couple of videos to show you. One is showing trading using orders that are being “touted”. The video will explain that in a little more detail. The other one is a supply demand type trade. This is one trade I actually held over the weekend (after scaling out and locking in profits with the stop). I had some things to do on Friday so I left the trade running. Had I been home, the trade would have been shut down….and the video will tell you why.
Finally, thanks for the many emails I have received. I am grateful you find these videos useful and are taking something from them. Sadly though, even though I have received numerous requests for private mentoring, that is not something I plan on doing. I appreciate your confidence though. I have always said that I don’t care about the price of a book if I can get one thing from it ( I don’t simply mean trading books as many are just fluff ). The good thing is that this blog and videos are always going to be gratis. Don’t look for a book or course from me.
If you are ever looking for a trading strategy, the only company I suggest you look at is Netpicks. I do a little work for them only because, I feel, they are a stand up company with strategies that work! I actually was a customer several years ago after watching them trade crude oil live. Probably one of the only companies that offer strategies that they ACTUALLY TRADE!
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No Links?
http://youtu.be/IASOaetMMzA
http://youtu.be/jotvufoQzeQ
It has been awhile since I added some content to my blog. Nothing has changed except that it is summer and there is only so much time in the day.
I have put together a few videos over the last week covering some of the important news releases. Interesting enough, not many traders pay attention to these releases nor their affect on the markets. By no means am I an expert in these releases. Some general knowledge, their importance and the safest way to trade them is about it for me. I say safest and what I really mean is what makes sense for me in each circumstance. Context matters.
The last video covering the GDP release for Canada is also going to go beyond general information and will show how I traded it. Hope you pick up something from it.
This first video walks through the CPI release in Canada
http://youtu.be/N5Z5t5qcWbM
The kiwi has been on a steady uptrend. This is their CPI release.
http://youtu.be/D4Ht1sjpHS0
Finally, the GDP numbers were released last week affecting the CAD. Here is my take on it and how I traded it.
No video? Click here http://youtu.be/cTZ_4Dnuel8
I have to admit that it is much easier recapping trades during the trade! Talking through the setup and management, while prone to rambling, seems a lot clearer in the moment. This video is a EURUSD supply demand short trade. What you won’t see is a ton of indicators. Trading pure price structure is no easy task and there can be a lot of subjectivity to it…unless you have rules. This video, I think, covers rules and a way to look at price and what it is doing/done to help you manage your trade.
You Will Enjoy These Trading Tips
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This video started out just covering a supply demand trade in the EURUSD. A decent trade. It quickly evolved into something else. I had some buy orders ready to go and cancelled those. Price then broke through the levels and just having a feel for price, saved me from two losing trades. That said, prices then rallied nicely. The direction and anticipation was correct but a little early.
Trading with only price is a tough road. It can also be the most lucrative as you can really zone into high probability areas with exceptional reward to risk setups. They also teach one key element……patience! Without that, you can truly be a slave to price. Jumping in when price is moving without a plan. That is the road to ruin. I may have missed these trades….but that saying “I’d rather be out wishing I was in…..” is the truth.
As the video progresses, I note a AUDUSD long setup and take the trade while the camera is rolling. I manage the trade just before bed. The result is not what I wanted but, in the end, price did rally nicely from the area, just without me on board. Trading without being surrounded by indicators is such an art. Frustrating art. That said, there is nothing more pure than price…yes?
Enjoy these trading tips!
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Sure, why not? When the opportunity is there, why stand aside? The USDJPY has been in some ranging action for the last little while and when I say a nice demand area on a shorter time frame, I was looking for a drop into that level. The chart did not disappoint. Price dipped into my level by 3 pips and then rallied into the supply area I had marked off. A 1.5:1 reward to risk was this trade and for a short term high probability trade, that is fine to me. Every trade brings a new level of understanding.
