walking through a trade
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Permalink Reply by Mister H on
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Thank you for posting this 'walk through trade' example. I think this is just exactly what a lot of people want to see. I have a couple of questions for you though......and I understand that trading can be just as much of an 'art' and it is a 'science'.
You mention that you "Enter the trade at or near trendline support", however, it appears to me that at the time of entry (indicated by the ' X ' on the chart) that the lower trendline you have drawn had actually only been hit in one area previously. The trendlines become very clear and obivous in hindsight, but how did you manage to anticiapte where the trendline would be with only one real area to draw it from?
Also, at the time of entry it looks like the MACD was very flat, and the Stochastic in an overbought position. I can see how they opened up nicely after breaking resistence, but were they considered at all during the time of entry? If not, why not? Did you use anything else to confirm the trade upon entering?
Hope these questions make sense......eagerly awaiting your response!!
Thank you!
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Curious if you used any indicators to confirm this entry? I can see the trendline support where you entered the trade and perhaps thats all you needed. However, although MACD is in bullish territory above the centerline, it appears very flat at this point in time (when prices are near trendline support near the "X" on the chart). Also, stochastic remained quite high as well. Could you please elaborate or comment? Much appreciated!
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Permalink Reply by Adam Horak on
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Mister H said:
Great questions… however trading is never an art, its is exacts if at any time it does not meet your exact criteria; walk away.Thank you for posting this 'walk through trade' example. I think this is just exactly what a lot of people want to see. I have a couple of questions for you though......and I understand that trading can be just as much of an 'art' and it is a 'science'.
You mention that you "Enter the trade at or near trendline support", however, it appears to me that at the time of entry (indicated by the ' X ' on the chart) that the lower trendline you have drawn had actually only been hit in one area previously. The trendlines become very clear and obivous in hindsight, but how did you manage to anticiapte where the trendline would be with only one real area to draw it from?
Also, at the time of entry it looks like the MACD was very flat, and the Stochastic in an overbought position. I can see how they opened up nicely after breaking resistence, but were they considered at all during the time of entry? If not, why not? Did you use anything else to confirm the trade upon entering?
Hope these questions make sense......eagerly awaiting your response!!
Thank you!
To answer your first question you can see the new trend developing when we create the cup formation after the old trend going back to the base that was created from 8am to 3 pm we did not create a new lower low in fact we did create the first higher high at 9pm then pulled back making the first lower high at this point we can see the development of the channel. We can see the linier level of resistance at the mean once it tested it and failed the first time. Followed by the pull back to support creating an ascending triangle and the entry point. If you look at where the first linier level of resistance starts and see that it simply touched the next higher high and extended it out then cloned that line 2x and put it in the channel touching the first higher low and one in the middle at where the mean held up the first time its easy to see the channel at that point.
second; The MACD has good divergence and was above the signal line indicating an upward trend the stochastic was at the time just below 50 and turning higher indicating that there was more room to the upside then the down side for this trade.
As always I used a minim of 1-2 risk to reward ratio if you read the notes and look at the account info at the top you will see that I put a half percent at risk and made one and a half percent giving a 1-3 risk to reward ratio. If you get a chance read the notes on the screen shot it outlines some of this.
I hope this helped.
Adam
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Mister H said:
This was a trade set up using fundamental analysis for market direction, technical indicators, candle formations and money management to enter and exit the trade.Curious if you used any indicators to confirm this entry? I can see the trendline support where you entered the trade and perhaps thats all you needed. However, although MACD is in bullish territory above the centerline, it appears very flat at this point in time (when prices are near trendline support near the "X" on the chart). Also, stochastic remained quite high as well. Could you please elaborate or comment? Much appreciated!
Every part of the trade was confirmed with technical indicators. if you look at the stochastic at the time of the entry, you will clearly see the stochastic was below the 50 line and had just turned upward from its downward move indicating a retest of the oversold area also letting me know there was more room to the upside on this trade then the downside and the trade had strong upward momentum.
As for the MACD it had convergence prior to the entry and the MACD line was above the signal line indicating an upward trend, at the time the trade was entered the fast and slow were showing angle and separation indicating the move higher, this is also confirmed with the test of the linier level of support.
Hope this clears up your questions.
Adam
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Sorry......but I'm still not seeing it. I'm assuming you entered the trade at the price and time that's indicated by the " X " you drew on the chart. That's what it looks like according to your notes. Is that correct? Stochastic deifinitely appears overbought to me at that point in time. Please help me understand......would you please go have another look at the chart? I can't figure out why this is so confusing to me.
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Mister H said:
the x on the chart is where the trade was placed and where profit was taken... if you follow the line down form the x you wil see the low spot on the stochastic at that point it was under the 50 line. it may not look clear to you on the smaller chart but I asure you that if you look closer at the stochastic you will see it was just below 50 at the time the trade was place showing more upward potential on the trade then room to the down side and the cross by the fast and slow confirming the push higher.Sorry......but I'm still not seeing it. I'm assuming you entered the trade at the price and time that's indicated by the " X " you drew on the chart. That's what it looks like according to your notes. Is that correct? Stochastic deifinitely appears overbought to me at that point in time. Please help me understand......would you please go have another look at the chart? I can't figure out why this is so confusing to me.
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I've tried to blow up the charts a little, and I drew a red line vertically down from the " X " where you entered the trade. On the second chart, I cropped out the data after the " X ". Is this what the charts and indicators looked like when you entered the trade? I realize it is difficult to print out these charts clearly.... Sorry if it feels like I keep bugging you on this. I'm still trying to learn.
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the trade was entered about 1 time frame to left from where the red live was drawn... if your question as about the place of the stochastic remember what you see in printed in the chart is the close of that time frame. at the time the trade was placed prior to the end of the 15 min candle the stochastic was a little lower just under 50 and beginning to converge on the slow moving average. where the close is at is not always where it was during that entire time frame when your dealing with a live market trading you don’t have the luxury of looking at the closed time frame to see where price or a indicator ended traders have to make there decisions with the information we have at hand. At the time the trade was place the stochastic was under 50 and had just turned higher confirming the entry point at that time.
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Ok, thanks for trying to clear that up. I guess MACD probably looked different too. Since the indicators are changing all the time as the markets develop, I suppose backtesting ideas would be difficult or potentially mis-leading? Any thoughts about that? If you could post any more example trades where the indicators actually line up, I think that would be great. I really think it could help a lot.
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that is true to a point... any indicator is a constantly changing entity as it moves through price and time. The only time it becomes static is when the time frame actually closes. back testing will give you a rough idea and needs to be implemented into an actual proven strategy used live real time in the market, this is why traders using EA and Robots to trade get killed in there positions, they back test a number of strategies that look at the close of any time frame but are not able to take into consideration the nuances of the market. if you look at some of the groups i post trades in there... if you have any questions please feel free to let me know.
a better tool maybe for you to place some trades and take a few screen shots and post them on FDFN we can take a look at them in order to see if there are any areas of opportunity.
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Permalink Reply by David L. Miner on
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Adam --
I am new to these forums, and obviously so. I look at your graphic above and somehow believe that everyone who looks at it understands it -- all except me.
I see 3 parallel lines that seem to be arbitrary with no specific points that require the lines to be placed in those exact positions. General data points, yes, but the curves are totally off, and the lines were drawn in those specific three positions to make them parallel rather than to point out specific data points that demand, or even lead, to a specific line position.
In other words, this looks like an explanation of what actually happened with nothing usable as a predictive tool.
Now, what has my ignorance missed?
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Permalink Reply by Ram Parkash on
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Adam,
Please see the attached Chart, its as above. I can nnot make out your notes that you have wriiten on the chart. Would you be kind enough to enlarge the notes so that i can read the notes.
I appreciate your help in this matter.
Ram - Attachments:
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2009-07-21_190943.png, 445 KB
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