Absolutely crazy 24 hours with Euro nausea

VSA in action

Not too happy trading yesterday evening and today: quite substantial losses, yesterday due to big stop let run and it was hit on EFSF rumours, and today on opposite - too small SL and got jammed in ranging price action.

However managed a classic good trade later on on demo, VSA plus MACD. I have been going through my trades and analyzing them, found inconsistency mainly caused by either calling reversals solely on basis on some TL being broker (unreliable) or even horizontal support/resistance broker (more reliable but far not enough) with VSA confirmation only good for few pips and reverse. So I started to look for a filter to those signals and found it in MACD. So, if we have positive MACD on M5 and M1 and on M1 it crossed zero line to down and on M5 it crossed down the signal line - I start looking for VSA confirmation to go short on breaking of the level or momentum candle, by this time MACD on M1 must produce 3 consecutive bigged down bars. Opposite applies to long trades. Trade is open till it hits SL or TP (based on current volatility), or if opposite signal is received (3 bars) then I will close the trade but not reverse unless M5 MACD supports it.

And another one from earlier today, when I just started to apply MACD:

Few live VSA trades today

Entered on a weakness of up bars and high churn, while in a strong down trend aiming for a continuation. Aimed 21 pips, got almost there but was stopped out by a trailing stop at +16. Stop was around 9-10 pips risk.

Another one: first attempt failed, stopped out for 13 pips on a single position, of course I used authomated trade management and did not accommodate for this specific trade, I have learnt the lesson though, and increased default stop level while will be adjusting for a smaller individual TP after the entry.

However, then I re-entered with one and then second lot and closed out in an overall profit counting in first losing trade. The moment I closed it run twice that. I cut my profits too short. Need to learn to let them run, however it is also wise to cover initial loss if possible. So I guess it is a success after all.

Order flow trading today - slightly positive

Not the best example. Lots of opportunities missed, I should start at 7 AM CET and finish at 9 before news start to come out and trends break..

OrderFlow scalping: mixed bag of trades today

Today I had two trading sessions: first I did with Nick in the room, but taking trades myself, although there were in most time similar to Nick's so I assume he's influencing me, wasn't good day, difficult PA, undecided, maybe due to two expiring options on EU, and FOMC later in the day. 

Then Sander took over and since he trades much less I did trade on my own and results were better, despite tight-range PA continued. I need to practice solitary trading I believe, but room at RockShore is great.

I took 13 trades, 70% winning, max drawdown 0.5%, best trade 1.06%, gross profit 3.6%, gross loss 1.25%,  total net profit 2.35% (23.5 pips).

OrderFlow-assisted scalping

Had a decent scalping session today: took three long trades on EU towards expiring option at 1.3725, market was around 1.3680. Made +10, +20, +13 pips. Then engaged into scalping, bit of mess, lots of small winners and losers, my mistake was I started doing it too late, around mid-way through US session, and the best time is start of London. In any case did around 30 trades during the day, net result +70 pips.

Some trading rules to follow:

To do:
1. Wait for a decent trend to establish on M1, don't trade ranging market on M1.
2. Identify support or resustance on a pull back, or breakout-pull back (the best)
3. Use Order Flow and OrderBook sentiment bar to identify sentiment and pressure
4. Wait for a signal from MFSI and confirmation from PA with a price moving same way, on a decent volume at least through the half of a first M1 candle and enter
5. Decent pressure on OBFX viewer bar is a big bonus
6. Start trading option/stops run around 2-2.5 hours before expiration on counter-trend breakout/pull-back

Not to do:
1. Don't trade after 4 PM CET
2. Don't trade ranging market and indecision
3. Don't trade against immediate trend and H1 trend if present
4. Don't trade against an expiring option or noted stops cluster

OrderFlow trading: Option Assault

I was given an opportunity today to test DarkStar's method for a second time, the first attempt was last week. And again it played out by the book:

1. This morning information about a resting put option with a strike 1.3600 was leaked on TalkingForex.

2. EurUsd was in an intra-day down-trend, which quickly reversed, just as DarkStar noted.

3. A short up-trend was used to achieve a better price to accumulate offers being sold to break out buyers, to shake out short weak hands and to invite bottom callers to long, in order to hit them with a big sell-off forcing their stop orders into liquidation.

4. With a break out from a short-lived up-trend the down trend resumes, occasionally producing long up candles, scaring weak hands again and use propelled price to add to shorts at a better price.

5. As time is closing to the cut at 10AM NY, the price is breaking under 10-pip zone of 1.36. My first target is hit at 1.3615 and 1/3 position closed.

6. A fierce battle commences for about 15 minutes storming the 1.36 barrier. The option underwriter fiercly defends the strike price in order to avoid a pay-off and retain a premium. An option buyer fights to avoid paying a premium and to capitalize on whatever profit may be (a number of pips a price will be below 1.36 at a cutouff time).

7. An option buyer and stop raiders won again as price closed at around 1.3598, creating a small profit for  an option owner forfeiting a premium. But the battle is not over yet as now there are less defenders left to protect 1.3600 since the option underwriter doesn't care any more. Only people who care are stop raiders and people who have stops below 1.3600.

8. Half an hour later raiders managed to push price below 1.3595 and force a stop liquidation, visible on a strong down bar. However there was no cascading stop liquidation what would be visible as charts failed to produce consecutive large down candles. Therefore there was no more selling interest and it was a time to close positions.

9. I had an entry split in 3 parts and also had 3 take profits, all 3 were hit as limit orders.

10. The best part is this highly profitable fun happens several times a week in FX for every major, every week :)

Result of the trade: 130 pips collected within 3 hours. Stop was 50 pips as emergency, I would be closing positions if retraced over 20 pips. OrderFlow principles and OrderBook data feed was used to select entry points precisely and also monitor for the potential bail-out.

Order Flow scalp

I have started to study some order flow trading, I got a trial of OrderBookFX software, and here is an attempt to scalp M1 market with an entry confirmed by the order book imbalance: at the moment of entry order book was heavily skewed towards offers and indicated strong selling pressure. Setup itself is a range top with stochastics cross and exit from overbought area but exact entry was based on chart pattern and volume indicating struggle to move higher with small candles produced on high volume (churn). This type of consolidate can be before reversal or breakout, but when I saw the heat building up in the order book with lots of offers above the area, I went short and price followed in a couple of minutes. I took only 14 pips but about 50 was available, the sell-off was pretty big and order book imbalance big too. Stop was only 5 pips. P/L 2.8:1

Another one: this went around 12 pips against me, but I consciously entered against a trend as I saw a point of exhaustion and anticipated a bigger run for stops above swing highs and potentially up to 1.3700 before down trend will resume. I went with a half normal lot (0.25% risk) and was tolerating up to 18 pips floating loss. It went then up to 16 pips in profit, but then I saw bears starting to take control over order flow, pressing lower and a climax low candle down on a big volume where I bailed out for 9.3 pips (on half lot, so 4.65 pips normal lot equivalent).

Some great information about market structure to read about: http://www.forexfactory.com/showthread.php?p=3609096#post3609096

US CPI fade

I did not play that one by the rules, was more looking in using tick charts and volume rather statistics instead. However it did play by the book: 25TP 10 SL.

Morning glory G/U classical trade

I did not take it, but I had order in place, just removed because went on a conference call. Anyways, this is a classic example of range breaking trade on high volume with nice VSA confirmation. Good 20 pips with risk 10 (drawdown was only a matter of spread).

US Initial Unempl Claims fade

A loser today. Went in as per my rules, but unfortunately a pullback moment was not sustainable and it reversed immediately and trade never seen a profit.

Correction to US Durables trade

I am an idiot. I posted a trade (and took it!!!) on EURO/USD, however my plan assumes a trade is taken on EUR/JPY as I never trade US news on EUR/USD!!! I lost 10 pips yesterday, but if taken properly on E/J it would yeild 7 points instead!!!

US Durable Goods fade - loss

A loosing fade trade today: SL10 with TP7. Release created unusual for this weak release reaction, probably due to lack of other news from US. After producing one reversal candle market went again into buying EURO/USD and quickly trade hit SL. Next please.

IFO Bussines climate fade

Small trade on aftermath of IFO release. First M1 candled pushed lower but reversed. We would be waiting for the confirming candle on M1 (since the first candle body was under 10 pips) and enter on its close. I did not take this trade, but I would go for 5 pips SL and 7 pips TP. Also it was possible to close half of the trade at 7 pips and let other half run with 7 pips trail stop. In this case second half would yield 1-2 pips only as trade quickly reversed.

CAD RS fade trade

According to setup, first M1 reversal candle with TP7/SL9. I came late, so entered on retracement, that bettered my position by few pips, but used TP and SL that would be used with original entry. +7 played out, my position managed profit of 11 pips thank to late entry.

German ZEW fade trade

Entered live on M1 first reversal candle with TP5/SL5. Hit TP.

S/D 15M E/U trade

Pretty heavy supply zone, set pending order which triggered during the night. I took profit manually as price approached 1.44 where it could reverse or stagnate. +36 pips on .5 lot cashed, equal to 18 normal pips, pretty much my daily target. However yesterday wasn't very good day as I managed to lose more than I gained so I will shoot for another 10 normal pips for today to break week positive.

VSA S/D 15M U/CAD trade

I took this trade primarily from VSA perspective as it did not reach my level where I looked for long (STT from 1D area). However VSA shown some good reversal sign and I decided to go after I have seen price reversed from small supply area on M15 from Friday. I took only 10 pips as bias is bearish and I will be looking to long from a lower level using VSA.

First trade of the week - a 33 pips winner on G/U

Ok, that was one with a bigger stop, so it accounts to win of normal 10 pips, but entry was placed last week and trade got triggered on Friday late night, I closed down for profit manually when opened charts this morning as price struggles at 1.65 which is a very strong resistance area and supply is abundant. My mistake in the first place was to place take profit at 1.6520, I should have noted significance of 1.65 and place tp just before that. Nevertheless week is nicely opened with a profit trade.

CAD CPI fade

I did not take this one, was busy otherwise, but here is the aftermath: TP10 SL10 on M1 would work awesome.

Many losers on pending order entry, great winner on VSA

Today was a bad day for lazy trading - that is using pending entries. I got 3 losers on EU (however only one entry was justified, other two were rushed in, one of these was market order but I opened it without confirmation so no different than limit ones). However I waited a bit and took market order entry after EU had topped out and produced down candle on decent volume, after market shown buying climax and high churn. I took 30 pips out of it, but there were at least 10 more to gulp. As usual. Best trading in terms of closing out is when I am not around. My EU win covered all three losers, the only damage left to fix is from AU loser. I will look for confirmed trades only today since there are some commercial and central bank buying happening today which drives market through supply-demand areas with ease.

Some good links

Lowering risk by using multiple time frames: http://www.tradingacademy.com/lessons/20110816/featured_article.htm

Why you need to fall down to rise up: http://www.fxstreet.com/education/trading-strategies/lessons-from-the-pros/2010/07/27/

E/U M5 S/D scalp

Off the bottom of trend line and supply area. Took 20 pips with SL less than 15.

Several losses today

EURUSD scalp M5 with VSA

Similar setup to AUDUSD one. Once I saw support zone given up, and break through candle had a big volume (selling climax as per indicator, but rather mark down), I placed pending buy at the bottom of the zone. It took me in, closed manually for 11 pips at the level where previous two candles indicated minor demand.

Two successful AUDUSD M5 scalps

First one is using sell stop below the previous support area with a view that if triggered the break through will be bigger. Took 11 pips. After this trade placed limit offer at the bottom of the same area with a view that it will bounce up again and take me in again. This is what happened. Take profit order triggered for healthy 23.2 pips profit. In both cases stops were above the zone.

5M VSA S/D scalp

Eurodollar was rising through the day, seemed to top out, then gone through the support area of previous demand. I put a limit bid order at the lower side of this area. Took 11 pips profit.

UK CPI trade

While I recon it is one of the best fade trades on calender, today it wasn't so good. I used M15 to enter, but looked at M1 for VSA signal. Once I got it I was in. Trade moved into profit immediately, but I had a big spread on broker so wasn't looking to close soon. It moved about 15 pips into profit and then reversed. After few moves like that it actually went to 30 pips profit where my TP1 was but failed to close part of the trade due to damned spread again. Eventually Fitch announced AAA reaffirmation for US and GU blasted up. Quite soon it hit my SL, which I extended above supply level at 1.6400-1.6415. If I would be entering on the first reversed M15 candle I would be stopped out almost right away. It happens. Move on.

Trading psychology

Excellent (as usual) from Sam Seiden about trading losses.
http://www.fxstreet.com/education/trading-strategies/lessons-from-the-pros/2010/07/27/

Trading both ways

Idea is to put a set of extra rules for some simple long-term systemto enhance it in a way it will produce less or smaller losses. The key is that we look for a main direction on daily chart and enter as per system rules. However we are also looking on a smaller time frame, like 4h or 1h (for main direction on daily) using similar rule set for a temporary reversal of the main trend and enter on a lower time frame in an opposite direction to main time frame, with the same position size, effectively hedging against moves against main direction. Once trade is hedged, the stop loss on a main longer time-frame trade is removed. We keep both position until there is a sign of lower time frame reversal in a direction of main trend. We close a secondary position in a profit or in a small loss, and continue with a main position. Also we re-set a stop loss using current higher high or lower low. If by this time we can see that original entry is no longer valid, we close out both trades and look for a trade from scratch.

The idea is to prevent use from being whipsawed from the good trade, or to prevent from taking full loss during the reversal of trend. The main application I would see for trades that are already in profit and experiencing a temporary pull back, so we can avoid being stopped out at BE or small profit or protect ourself from early profit taking.

Level scalping

We all know that most if not all tech trading is based around support and resistance, be it fixed like historic levels and psych levels or moving like EMAs and pivots.

However, with working of bounces on resistance and support level of any sort, too often we see that price just pushes through and the question always how big stop loss is. Important is not to make to small to get hit on momentum move that will turn soon, but making it too big we either risk too much or should dismiss many trades as potential profit is not too big. However, here is what I have been thinking playing around this week with a next best thing to raw tick market - M1 charts, observing and studying price habits. Actually very entertaining and very informative. There are repetitive patterns mostly around SR levels of all sorts. There are two things that can be taken off it: more often then not price will bounce off them even if a little bit, or it can consilidate around the level and then in most cases it will push trough in the previous direction. By studying price action at these levels (alerter can be used - not need to sit staring charts) we can better our edge and increase chances and also we can take few nice scalps while bigger trade in under development. One this I noticed being mostly present is that price will first pile through the level, go out from 5 to 15 and rarily to 20-25 pips (pound pairs can go even to 30-35), and then return. When it returns to the level there is a big chance it will continue it's backwards move for another 5-10-15 pips at least, this is almost a free cheese as stop losses will be very small too, around 10 pips so those 10 pips as good as 40-50 in intra-day trading due to the lot size. But even more importantly by observing how price react around that level we can judge whether to enter our longer time trade or not. In conclusion, there is nothing more pure and real than a price action, no indicator can be used at those core levels and they lag too much, however this low level can often help with trades set at the higher time frames. Same applies for exits, when you are not sure whether to hit kill switch or let it run. Go down to the earth, look at the core price action on M1. After some not long time you should develop a feeling for it.

US Empire State Survey Live Trade

Here is the trade I took live just now. According to my setup I took it with 25 pips Stop Loss and progressive take profit at 15,30 and up to 60 pips profit on equal parts. However I looked at higher time frame before the trade and put some support and resistance lines as well as fibbed swing low to swing high for last weeks. Trade went short on EurJpy so I looked to long it. My 15 and 30 pips targets were before the next resistance line as well as before the 62.3% Fib line. However my 60 pips target was above resistance and Fib, so I decided 60 pips target to be optional and leave an option to close it early if price struggles. This is how it went...

My EA took 1/3 of position at 15 and then another 1/3 at 30 pips, however price pulled back and struggled showing some supply up there. Then approached 30TP again and system took another profit. I had very small position left (since there were not precise 1/3 but little less) which I closed manually in the same region. It is unlikely that price would go much further up without a swing down which would take me out of the trade so I cashed it in. Net result is 15+33+30 pips on average 27 pips gain on 25 pips risk which I consider excellent for high-probability scalping setups. 

US Initial Unempl. claims trade

I missed this one, as I looked at CAD Trade Balance instead and it was same time with Claims, and of course Claims have priority. CA Balance trade lost, while proper trade on Claims would be a winning one for 7 pips with risk of 10 pips.

Classic VSA scalp snapshot!

Classic VSA scalp setup! I wasn't near to take it. You see mark-up, then high volume churn that failed, you can also call it test, very good signal that supply has exhausted.

Another quick scalp on E/U M5 off supply level

+12 pips with 10 pips SL, 48.5 for today.

G/U 5M buy setup from supply zone

+14 pips on GU with 10 pips SL, idea for trade taken from @50pips blog!

E/U 5M Supply-Demand scalp

Just grabbed my 22 pips today on EU, short off formed supply/resistance with weekly pivot in there. Looked for candle volume, but it was relatively low and not enlightening. So I guess I just spotted a good level that is it. I planned originally for some 60 pips but decided it's too much to expect from M5 chart setup and better not to be greedy even on demo, steady profits make balance.

Stop was at 1.4290 in 19 pips from entry, could be closer actually, 15 pips.

AU EC trade

Another glorious setup. Unfortunately I did not trade it live, as my current broker had around 5 pips spread on A/U and with stop loss of 15 pips it would consume third of it immediately and increase risks. While I am waiting on getting account open with another broker, this setup would work like a charm:
- over 60 pips on first minute spike and around 85-90 to the low
- trading it off the 15M charts
- since the very first candle provided a bill pull back and was more looking like a pin bar it justified the entry without waiting for the next 15M candle
- 25 pips would be easily obtained (in fact up to 70) with 15 pips stop loss, trade never went into negative except spread on opening

UK Industrial production trade

Here is my first trade today according to new studies:
- one minute made over 20 pips,
- overall move down was 46 pips
- time frame chosen 5M
- stop loss 20
- take profit 30

Result: profit target reached!

Probability trading

Ok, I finally started my big project on quantifying a strategy for trading after-news underlying market mechanics. I plan to develop trading EA where appropriate setups for every type of news will be loaded and trade will be done automatically. Some big pips cooking, guys!



I have only gone through 11 reports and selected only 8 possible to trade and on average (using statistics for the last 12 months) it gives about 190 pips monthly weighed for 30 pips risk (obviously different setups have different SL but I put everything for the common divider). And only from 11 reports out of 50+ relatively important every month!

Setups are of high probability, i.e. they give ABOVE 4:1 win/loss ratio on pips won/lost, and 70-90% win/loss ratio on trades. There is no tendency to have repeated losses as all trades except one happen once a month so there no issue with "wrong market phase".

I really expect that it will be possible to trade as much as 5% of account with this strategy and consider it low-risk, in this case it will give a steady 25% account gain monthly.

This type of trade does not rely on trends, ranges or anything familiar from technical trade and exploits a very core feature of market mechanism which is impossible to eliminate. Strategy can be traded on any broker with small spreads and fast execution, typically any ECN MT4 even "ECN" (pretender), and as it trades AFTER news release (from 1-5, to 15-30 minutes after) there should not be issue with spread or slippage.

I plan to start testing it live this week manually and trading EA development will get started this week too. Wish me luck!