Results, 21 Oct 2005
Hi all, today I will talk less on my trades and more on my observations of yesterdays charts and what method would have been good to trade them. I had very little time to trade yesterday, and so, instead I spent an hour this morning looking at what happened, and where things might be going in the next few days.
The end of the trading day yesterday saw some good moves that could have brought a nice return of pips if the correct method was used to identify it. Just like Thursday, where the simple technique of drawing channels and trading the movements between them would have been successful, another very simple method yesterday could have been used to great success.
The method I am talking about is the "123" method, where you are looking for a change in trend. Rather than go through the theory, here is yesterdays USD/CAD 1H chart that demonstrates what I am talking about, bring it up in a new window and I will run you through it.
Ok, so first of all let's make sure you understand what a trend is when trying to find it on a chart. in the USD/CAD chart, the pair was in a down trend, this is where the price is making a series of lower lows and preferably lower highs. What we are looking for in the 123 method, is an indication that the prevailing trend is ending. In the above chart you can see I have labelled three points, here is an explanation of them.
1: If I was looking at this chart at around 11am on the 20th, this is the most recent low. For the down trend to continue, we would be looking for the next high to be lower than the previous high.
2: Here you can see that price ended up making a higher high, indicating that the trend may be ending. Please realise that it is only an indication of it ending, not confirmation, we now need to look whether the next low is a higher low than the previous.
3: Here you can see that the low was indeed higher than the previous low, giving another indication that the trend may be ending.
What we now want to see to confirm the change from a down trend to an uptrend is in progress, is a higher high (uptrend behaviour is higher highs, and preferably higher lows). The safest way to trade this pattern is to wait for a close above the previous high, as indicated by the red line in the above chart. If the price closes above the previous high, there is a good chance that the trend has changed and a profitable trade will be the result.
You can see after that break, the price continued to rise, without a retracement to the previous resistance line (which often happens and gives you a second chance for entry) and would have been a very safe and profitable trade of around 80 pips currently if you stuck with it with something like a trailing stop.
Have a look at some other pairs yesterday and see if you can identify the same patterns.
Two trades only today for a very small profit, still every bit helps.
Today's result: +5 pips | Overall: +629 pips
The end of the trading day yesterday saw some good moves that could have brought a nice return of pips if the correct method was used to identify it. Just like Thursday, where the simple technique of drawing channels and trading the movements between them would have been successful, another very simple method yesterday could have been used to great success.
The method I am talking about is the "123" method, where you are looking for a change in trend. Rather than go through the theory, here is yesterdays USD/CAD 1H chart that demonstrates what I am talking about, bring it up in a new window and I will run you through it.
Ok, so first of all let's make sure you understand what a trend is when trying to find it on a chart. in the USD/CAD chart, the pair was in a down trend, this is where the price is making a series of lower lows and preferably lower highs. What we are looking for in the 123 method, is an indication that the prevailing trend is ending. In the above chart you can see I have labelled three points, here is an explanation of them.
1: If I was looking at this chart at around 11am on the 20th, this is the most recent low. For the down trend to continue, we would be looking for the next high to be lower than the previous high.
2: Here you can see that price ended up making a higher high, indicating that the trend may be ending. Please realise that it is only an indication of it ending, not confirmation, we now need to look whether the next low is a higher low than the previous.
3: Here you can see that the low was indeed higher than the previous low, giving another indication that the trend may be ending.
What we now want to see to confirm the change from a down trend to an uptrend is in progress, is a higher high (uptrend behaviour is higher highs, and preferably higher lows). The safest way to trade this pattern is to wait for a close above the previous high, as indicated by the red line in the above chart. If the price closes above the previous high, there is a good chance that the trend has changed and a profitable trade will be the result.
You can see after that break, the price continued to rise, without a retracement to the previous resistance line (which often happens and gives you a second chance for entry) and would have been a very safe and profitable trade of around 80 pips currently if you stuck with it with something like a trailing stop.
Have a look at some other pairs yesterday and see if you can identify the same patterns.
Two trades only today for a very small profit, still every bit helps.
Today's result: +5 pips | Overall: +629 pips
This entry was posted
on Saturday, October 22, 2005 at 12:31:00 PM.
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