The original idea behind this thread, a good trader said to me that the first retracement is the best trade. The first higher low/lower high. These retracements provide good opportunites to enter into a move with a relatively small stop loss. A hl/lh confirms a test and failure to follow through at a certain level.
There are several trades to consider:
1)Higher lows and lower highs at extremes from 5 min (also known as 1 2 3 tops/bottoms) are great trades. I want to see some supporting information from the 15 min chart and for the turn to be at a key level ie pivot, round number etc etc. Whilst some entries will be at the point 3 we do look to enter on the X ie the break higher after the first positive close in hl move OR the break lower after the first negative close in lh.
Below is the 123 reversal when the price fails to make a lower low or higher high
1. trend line broken (I don't use TL's)
2. lower high in an uptrend, or a higher low in a downtrend.
3. break below the previous low in an uptrend, or above the previous high in a downtrend
At point 3 the reversal is confirmed and everybody’s brother is getting in. A stop run often follows to re-test the penetration at point 3. Quicker traders may get short at the X.
2)What I'll call 100% system trades that will follow the 1hr and 15 min candles with entry from 5 min higher lows and lower highs. I do not want to see an obvious contra indication from 15 min, e.g. I would not want to be selling a 5 min lh immediately after a high vol hammer on 15 min. I would like to be selling a 5 min lh after an engulfing negative close candle/shooting star with little/no lower wick on 15 min. I'll start showing more 15 min charts, see from page 37. A good example of not wanting to sell a lower high against wrong 15 min candles would be http://www.forexfactory.com/showpost...&postcount=793 on page 53 and again http://www.forexfactory.com/showpost...&postcount=856 page 58. There are always exceptions to the rule, a double top high, lower close on 15 min that fails to go higher would be a good sign of failure to move up. For example, if a 5 min lower high followed a previous 1hr negative close and a 15 min DTHLC I'd consider selling.
3)A 2b reversal trade which is a variation of the 123 top/bottom and is also an indication of a test and failure. Islander has often talked about the trades that go a few pips higher/lower and quickly fail, this is the method he obviously cottoned onto.
"In an uptrend, if prices penetrate the previous high but fail to carry through and immediately drop below the previous high, the trend is apt to reverse. The converse is true for downtrends." [Vic Sperandeo in "Trader Vic: Methods of a Wall Street Master"]
The 2B principle gets its power from the large number of stop-loss orders in the area of the X. Many traders who bought the breakout will have their stop-loss orders there, so if prices fall below the blue line those stops will be hit, driving prices back down with thrust. If you enter a short as the breakout traders are bailing out of their positions, the burst of selling can propel your trade into the green so quickly that, before you can enter your stop-loss order, prices have moved far enough in your favor to set your initial stop-loss at break even. The inverse is equally effective for 2B bottoms.
Another name for the 2B is "spring." Imagine the blue line in the graphic as a rubber band. The bigger the poke above the blue line, the stronger the reversal potential if the breakout fails. This same principle works on failed triangle breakouts and failed trendline breakouts. If you were unfortunate and bought the breakout, instead of putting just a stop loss at the X, consider making it a stop-and-reverse. This pattern occurs at the tops and bottoms of consolidations as well as at major reversals.
I was unable to copy the picture from the website, see the charts here http://www.forexfactory.com/showpost...postcount=2077
4)Between 7 and 9 am gmt where a decent range is around 50 pips, we will look for 1 min hl/lh's at key levels (round numbers, psych 75/25, prior session proven supp/res levels, pivots etc). Closer to the Islander style of trading as numbers show something like 80% of the time these are the London open head fake moves.
5)Both ej and gu like the psych levels 00, 25, 50, 75. In a strong trend you may consider entering or adding to positions on pullbacks between these psych levels from 1 min hl/lh's.
General
Each time there is a stall and turn that extreme becomes the starting point potentially for the typical gu 125 pip session move. This bigger move is more likely to happen after 9.30 gmt than before.
Some knowledge of candlestick analysis is required as you want to be trading the right candles. To help see www.candlesticker.com the James 16 thread and the volume spread analysis thread, http://www.forexfactory.com/showthread.php?t=157629 thanks Shamus Famous, great ways to assess candles and what they mean.
This is not some indicators line up press go system, analysis is required as markets change. Some of the key items are: consider key levels for turns (round numbers, D W and M pivots, some fibs), follow the 1hr, are we above below 1hr 8 lwma, look at 15 min candles, 5 min hl/lh's. A cross of an 8 lwma on 5 min chart gives an easy visual clue of a higher low or lower high in most cases. Once set up on 5 min price should move a pip or so beyond the high low of the set up candle to confirm the trade. The set up candle should have little/no wick in direction of trade eg if buying little/no upper wick.
I have attached my 1hr chart set up. The 8 lwma does a good job in showing the trend.
Traffic Light indicator below
The top line shows whether the 1hr has closed in its upper half, green, or in its lower half, red. The middle line shows the same for 15 min chart. The bottom line shows whether we are above the 1hr 8 lwma green, or below it red. Typical set ups would be all red for sells or green for buys.
See 5 min chart below and post here http://www.forexfactory.com/showpost...&postcount=870 explaining Roystons indi's.
Indi's here http://www.forexfactory.com/showpost...&postcount=871
See template here http://www.forexfactory.com/showpost...postcount=1666
Current set up
1hr chart. 8 lwma on close. Pivots and pivot point multitimeframe.
30 min chart. 8 lwma prev day high low + days open. I use this in conjunction with 15 min to give an earlier indication of a move against the 1hr trend.
15 min chart. 8 lwma and 24 lwma. Prev day hl + open. Better volume.
5 min chart. As per 1hr chart plus sdx sweetspots v 5.2 for round, half, 25 + 75 numbers. #MTF moving average settings 60,8,0,3,0 to approx the 1hr 8wma. V system chart indi 02. Vantage positive close roy 05 setting 60,8,3,20. vantage positive close ry 06 with doji settings 60,60,0.55,0.45, vantage pos close roy 06 with doji settings 15,40,0.55,0.45. See the links above for Roystons indi's and instructions to set up.
I AM Unable to post templates as there is a 'virtualisation' problem between vista/mt4, Royston sent me a possible solution but haven't cracked it yet.
NB Watching and trading the right candles is always important.
Stops: Around 15 pips 1.5% of capital.
Exits: Up to you. Please consider that Mrs V has been inducted into The 20 Pips Bank Hall of Fame and thats something I have to listen to all the time.
7-9 am gmt exits will be taken at key levels due to the small ranges in Frankies hour that typically exist.
After 9 am gmt we will look for the FH/LO range to break (there is typically a head fake move in that time). Once that has happened we will hope to benefit from longer moves.
Src: vantagefx.blogspot.com/
There are several trades to consider:
1)Higher lows and lower highs at extremes from 5 min (also known as 1 2 3 tops/bottoms) are great trades. I want to see some supporting information from the 15 min chart and for the turn to be at a key level ie pivot, round number etc etc. Whilst some entries will be at the point 3 we do look to enter on the X ie the break higher after the first positive close in hl move OR the break lower after the first negative close in lh.
Below is the 123 reversal when the price fails to make a lower low or higher high
1. trend line broken (I don't use TL's)
2. lower high in an uptrend, or a higher low in a downtrend.
3. break below the previous low in an uptrend, or above the previous high in a downtrend
At point 3 the reversal is confirmed and everybody’s brother is getting in. A stop run often follows to re-test the penetration at point 3. Quicker traders may get short at the X.
2)What I'll call 100% system trades that will follow the 1hr and 15 min candles with entry from 5 min higher lows and lower highs. I do not want to see an obvious contra indication from 15 min, e.g. I would not want to be selling a 5 min lh immediately after a high vol hammer on 15 min. I would like to be selling a 5 min lh after an engulfing negative close candle/shooting star with little/no lower wick on 15 min. I'll start showing more 15 min charts, see from page 37. A good example of not wanting to sell a lower high against wrong 15 min candles would be http://www.forexfactory.com/showpost...&postcount=793 on page 53 and again http://www.forexfactory.com/showpost...&postcount=856 page 58. There are always exceptions to the rule, a double top high, lower close on 15 min that fails to go higher would be a good sign of failure to move up. For example, if a 5 min lower high followed a previous 1hr negative close and a 15 min DTHLC I'd consider selling.
3)A 2b reversal trade which is a variation of the 123 top/bottom and is also an indication of a test and failure. Islander has often talked about the trades that go a few pips higher/lower and quickly fail, this is the method he obviously cottoned onto.
"In an uptrend, if prices penetrate the previous high but fail to carry through and immediately drop below the previous high, the trend is apt to reverse. The converse is true for downtrends." [Vic Sperandeo in "Trader Vic: Methods of a Wall Street Master"]
The 2B principle gets its power from the large number of stop-loss orders in the area of the X. Many traders who bought the breakout will have their stop-loss orders there, so if prices fall below the blue line those stops will be hit, driving prices back down with thrust. If you enter a short as the breakout traders are bailing out of their positions, the burst of selling can propel your trade into the green so quickly that, before you can enter your stop-loss order, prices have moved far enough in your favor to set your initial stop-loss at break even. The inverse is equally effective for 2B bottoms.
Another name for the 2B is "spring." Imagine the blue line in the graphic as a rubber band. The bigger the poke above the blue line, the stronger the reversal potential if the breakout fails. This same principle works on failed triangle breakouts and failed trendline breakouts. If you were unfortunate and bought the breakout, instead of putting just a stop loss at the X, consider making it a stop-and-reverse. This pattern occurs at the tops and bottoms of consolidations as well as at major reversals.
I was unable to copy the picture from the website, see the charts here http://www.forexfactory.com/showpost...postcount=2077
4)Between 7 and 9 am gmt where a decent range is around 50 pips, we will look for 1 min hl/lh's at key levels (round numbers, psych 75/25, prior session proven supp/res levels, pivots etc). Closer to the Islander style of trading as numbers show something like 80% of the time these are the London open head fake moves.
5)Both ej and gu like the psych levels 00, 25, 50, 75. In a strong trend you may consider entering or adding to positions on pullbacks between these psych levels from 1 min hl/lh's.
General
Each time there is a stall and turn that extreme becomes the starting point potentially for the typical gu 125 pip session move. This bigger move is more likely to happen after 9.30 gmt than before.
Some knowledge of candlestick analysis is required as you want to be trading the right candles. To help see www.candlesticker.com the James 16 thread and the volume spread analysis thread, http://www.forexfactory.com/showthread.php?t=157629 thanks Shamus Famous, great ways to assess candles and what they mean.
This is not some indicators line up press go system, analysis is required as markets change. Some of the key items are: consider key levels for turns (round numbers, D W and M pivots, some fibs), follow the 1hr, are we above below 1hr 8 lwma, look at 15 min candles, 5 min hl/lh's. A cross of an 8 lwma on 5 min chart gives an easy visual clue of a higher low or lower high in most cases. Once set up on 5 min price should move a pip or so beyond the high low of the set up candle to confirm the trade. The set up candle should have little/no wick in direction of trade eg if buying little/no upper wick.
I have attached my 1hr chart set up. The 8 lwma does a good job in showing the trend.
Traffic Light indicator below
The top line shows whether the 1hr has closed in its upper half, green, or in its lower half, red. The middle line shows the same for 15 min chart. The bottom line shows whether we are above the 1hr 8 lwma green, or below it red. Typical set ups would be all red for sells or green for buys.
See 5 min chart below and post here http://www.forexfactory.com/showpost...&postcount=870 explaining Roystons indi's.
Indi's here http://www.forexfactory.com/showpost...&postcount=871
See template here http://www.forexfactory.com/showpost...postcount=1666
Current set up
1hr chart. 8 lwma on close. Pivots and pivot point multitimeframe.
30 min chart. 8 lwma prev day high low + days open. I use this in conjunction with 15 min to give an earlier indication of a move against the 1hr trend.
15 min chart. 8 lwma and 24 lwma. Prev day hl + open. Better volume.
5 min chart. As per 1hr chart plus sdx sweetspots v 5.2 for round, half, 25 + 75 numbers. #MTF moving average settings 60,8,0,3,0 to approx the 1hr 8wma. V system chart indi 02. Vantage positive close roy 05 setting 60,8,3,20. vantage positive close ry 06 with doji settings 60,60,0.55,0.45, vantage pos close roy 06 with doji settings 15,40,0.55,0.45. See the links above for Roystons indi's and instructions to set up.
I AM Unable to post templates as there is a 'virtualisation' problem between vista/mt4, Royston sent me a possible solution but haven't cracked it yet.
NB Watching and trading the right candles is always important.
Stops: Around 15 pips 1.5% of capital.
Exits: Up to you. Please consider that Mrs V has been inducted into The 20 Pips Bank Hall of Fame and thats something I have to listen to all the time.
7-9 am gmt exits will be taken at key levels due to the small ranges in Frankies hour that typically exist.
After 9 am gmt we will look for the FH/LO range to break (there is typically a head fake move in that time). Once that has happened we will hope to benefit from longer moves.
Src: vantagefx.blogspot.com/