Capítulo 4 Propuesta de Solución
4.2 Aplicación de Benchmarking
CJ
Let me try to summarize a bit. This is a mix between CJ method & Steve Mauro. Used on M15.
1. Grab the asian range. Generally between 15 to 50 pips. This is the accumulation phase on low vol-umes.
2. Around London open, mark the asian hi/low range.
3. Wait for the asian breakout, no matter if it is to the upside or downside, you don't care 4. After 30 to 90min, mark the LOD/HOD (low of the day, high of the day).
5. Price will retrace a bit, now look for "M" or "W" patterns.
6. Enter short at the top, long at the bottom at the second retest. Look also for patterns like pin's, rrt, hanging man, etc in the M & W zones.
7. If all is ok you should be in profit.
8. Breakout traders are trapped in their breakout thing. They are now hoping the price will go at least at their entry price to exit at BE ... but price is now ranging, they are stuck ...
9. One hour after, the trend will resume and the price will be begin to drift in your direction forc-ing breakout trader to close their order, this will also accelerate the move.
Be careful between London & NY close, there should be a pullback if the range was big. This keeps a bit a the volume and money for the next day.
So, take your short position from the HOD and long position from the LOD after a M or W pat-tern. Stoploss should be above the highs or lows (give enough room to avoid getting trapped by broker spread widening)
If the price sky rocket to the upside or downside & you don't see a pullback nor a M or W after the breakout, too bad for that one. Go hunting on another pair =)
How about this Lio? Looking familiar? Will they "dirty" it up a bit on the "LH" side like the did the front side with the sideways movement?? Keep an open mind and look at what they are telling us. CJ
llhDT wrote:
Quickly run trough a couple of charts. Here is what I find. Comments welcome.
Captain Jack wrote:
You need to consider where in the levels price is located on each time frame....I would not count on all those going higher....what if the "W" that is presented is only the pause between the next level? Could it not rise to consolidation, then continue the current direction?
Take a look at the daily chart....how many levels of drop from the high? Is it currently in a previous consoli-dation zone, or is there nothing but air to the left?
"W"'s on a drop could indicate an area to close shorts and then reload on the pull back and consolidation phase. Short orders can then be place if the drop continues.
Moves on the 15M can go either way, within a larger trend. Knowing where you are on each time frame is very important.
CJ
hDT wrote:
Alternative scenario is indeed a drop, this should be 2nd drop cycle to around 94.40 which is the next sup-port level. To complete the 3 legs, it then should drop around 93~92.80.
But within M15, I would love to see a bull/reversal candle within a strong uptrend.
You will get 8-1H candles just in the Asian session....that's 32-15M candles....keep your eye on the picture that fox is painting and make your move when the time is right....
This is the "homework" we should be doing on each pair, over the weekend, between sessions when trading is slow, etc. Keep a notebook and write it all down. Another good idea is to use the text and label tools within MT4 and place level, step indicators on your charts. It's a good visual reminder. When I'm stacking trades, I'll place lines on the charts at times. These are break or take lines. Places I look for a retrace or break. On a break, I'll add more orders. On a retrace, I'll take my profits and look to place new orders.
A lot of "W"'s were printing Friday, so I went into "take" mode and booked profits. I'll look to re-enter or take new positions Sunday night.
When the fox turns tail, go with him, don't run the wrong way with the rest of the hounds....
Well done Lio. Your write up might make it easier for others to see this on the 15M time frame. I'll add a cou-ple things.
Ideal Asian session is 40-50 pips. This is usually dependent on the volatility of the pair. Some may range 25-30...but look for around 40 pip range.
After the range is set, the next thing they do is expand the range. This is what trips the breakout trades.
After this range expansion, price should move 25-50 pips above or below the Asian range, this is where the stop hunt occurs. The stop hunt takes out the breakout traders. This move to the stop hunt may happen over 3 candles or 3 "pushes". This is where some confusion comes in. The 3 push move to the stop hunt is different than the 3
pushes of the actual move itself.
Once the stop hunt is complete, look for the "W", "M" or straight away moves.
These moves may have 3 levels up or down.
Trades over...look for another.
You can have a 3 day cycle of either rising or falling price. After this 3 day cycle completes, you may have a revers-al into another 3 day cycle.
Many times, price will reverse in or near the NY session. This is the last session of the day and week. When price is rising, it must reverse and drop for them to take their profit. When price is falling, it must reverse and rise for them to take their profit.
These observations apply to the 15M time frame.
HOWEVER, these same patterns apply to higher time frames. Learn them and use them as a guide for price direction as well as longer term trades.
You might not want to set in front of the computer and wait for these trades to hit on the 15M time frame. That's fine. Look for them on the 1H, 4H and D1 time frames. They are there and you can take low maintenance, long term trades based on these pat-terns. Take a look at the chart Lio used as an example....it's a 15M chart. Compare it to the one I add here.
A light should have just come on for you!
CJ
Angat wrote: Seems like I missed some action, good call in nipping it in the bud. This is an awesome thread thus far, dont want it ruined.
Couldn't sleep kept thinking about charts, and asian expansions. Anyone know if there is a way if the asian range is tight to measure/predict the amount of expansion perhaps based on the ADR or I have seen that it might be possible to use fibs? Can it be done?
Take a look at some of the Asian ranges that formed on Friday. There was some really low, tight ranges....
so what's that mean? It means that the spring is compressed tight and something will probably "pop" in one direction or the other.
The session indicator that Mike posted can help you see this "range box" if you are having trouble. These compressed ranges tend to form more towards the end of the week, Thursdays and Fridays. Even Bob men-tions in his thread that the larger moves tend to be towards the end of the week. Reason being is that the fox needs to take profit and tends to make larger and more volatile moves near the weekend. They will do it in time, with size, to make their money and bring price back into a "ranging" area for the weekend.
Next week, starts out slower with wider Asian ranges as they have more time to work the zones and build positions....end of week rolls around again, look for the compressed range and the larger moves.
Since they can only move price so much in any given day or week, ADR plays it's part. Find a pair with a com-pressed Asian range, price near the HOD or LOD and it should be gold. They would have the entire range to push price, then bring it as far back into the range as 50%...validating the fib and S&R values....trade both ways.... CJ
Pueo wrote: It's so great to finally get my head straight on so many parts of trading all at once!! I've been learning from Steve Mauro as well and the lightbulbs are really coming on. Finally, after 5 years of strug-gling, now its time to have some fun. I like his song, "the world's your candy shop, don't trade until they hit the stops".
I'm really happy with how I've got my template & I thought I'd share it with anyone who's interested. The time zones are all arranged for IBFX. For simplicity I recommend just get a ibfx demo and then you don't have to change anything. Thanks to Mike for the Auto Sessions!
You'll notice the dark green consolidation boxes, this is set for "euro sized" pairs, you would need to change it from 28 to around 50-60 for big movers like g/j. I find those boxes helpful to identify the asian consoli-dation zone. Sometimes the time box does the job, other times the cz box is great. Credits to fxhard at ff for his cz indicator.
Looking good Pueo and thanks for sharing your setup with us.
I've got a veritable library of hardback, softback, ebooks, dvd's and training materials here, that I have accumulated over the years. My iPad is full of reading material...too bad those didn't come out earlier, would have saved some space! Some of the better stuff is by Martin Cole, Steve Nisson, and Tom Bulkowski. David Elliot, of WallStreet Teachers, who passed recently was of great help when I traded equities.
Steve Mauro's stuff was always out of my price range while I was 'educating" myself. I've always wondered if it was worth it. Have you attended his seminars Pueo? I believe he also has a monthly service you sign up for. Perhaps one day, I'll get a chance to attend one of his presentations. I'd be interested in hearing what his thoughts are as I have seen some of his promotional material. Looks interesting but I believe he stays to the 15M time frame only.
I'm glad the "lights" are starting to shine for you, maybe we can get a few more bulbs turned on here at Steve's place.
CJ
by pips400 I've been quiet for a while, getting my head around all of this, and then last night I found myself on the other side of the screen, and wow, makes me wonder why I never saw it before, it all seems so clear and obvi-ous now, I don't think I'll ever look at a price chart the same way ever again. I've come too far now, there's no turning back.
When you're doing a large jigsaw you get a piece and it looks like it's supposed to fit in a particular place, and so you make the fit, only to find out later that actually it fits somewhere else. And then, sometimes when you get one correct piece in place, it leads to many others fitting into place because you just needed that key piece.
In a former career, I was an accountant with my own business, and if there's a core accounting principle it's that for every debit there's a credit and vice versa otherwise the books don't balance. Well the same principle applies here in Forex. For every transaction there's always another side, so if someone's buying, someone's selling, and if someone's selling then someone's buying. Nothing new here, and we've read it all before, but then it clicked into place. If the fox want to sell, then he need buyers, and if the fox wants to buy he need sellers. So how does he do this - he manipulates the market to create "bias" or pressure for retail traders to take the opposite direction di-rection, it's as simple as that. So this is in accummulation phase, and then the stop hunt. There are two things that need to happen here. First if fox has been going long, when he's accummulated enough "unrealised" profit, he needs to bank that profit, by offloading his positions and sell what he has. So on one side of the equation, fox is selling, that means he's going to create buying pressure/bias in the market for retail traders to buy. During this phase you'll get the false breaks above, pinbars etc anything to entice buyers into the market, so that the fox can close out his position, so fox just need to trap enough traders going long. Secondly, when foxy wants to play again, he'll manipulated the markets once more, go through the stop hunt to entice traders into the opposite of where he is going to take price.
That was a huge piece of the jigsaw that just fell into place for me last night. And then another piece fitted im-mediately after - market cycles go in threes (a generalisation, but enough of an edge here). So we're looking for the accummulation/manipulation/stop hunt phase first. Then there will typically be three moves either up or down with pullbacks/rallies in between. On a larger time frame, this will typically happen over a week, with three or pos-sibly four days movement, and a day or two days back into the range, as fox offloads his position and setsup for the next run. To validate a move, there should be enough pips approximating the ADR, otherwise it may not be a valid move. This gives us the heads up on which way the fox is going to go next. After the three moves, we're ex-pecting accummulation again so beware at this stage and wait. All of this happens on an intra day cycle as well, which is where we'll drop down to the 15min (or even 5min charts). Where as a generalisation we're expecting 3 moves. Typically the asian session will be accummulation, setting the high and low so far, but then fox is going to want to play, and so will begin to break out during London session, which is where we're looking for his tracks, the Ms and Ws, double tops/bottoms etc. But remember fox purpose here is to create selling/buying bias the opposite way he wants to go because the balance equation must hold, even the fox can't change basic mathematics. So once we know which way fox is going to go, we can tag along and follow his lead.
On the intra day, we can also look at the higher/weekly cycle to give us a clue as to which way this is going to go.
For instance, if we've only had the first leg on the daily run, then after the asian session we're expecting the sec-ond leg in the same direction as the first. So if that was long, I'd expect to see stop hunting going short around the franky/london open, before heading long again.
And the final piece for me was reversals. If during any session, we've already had the three phases for the entire run, and ADR is reached (approximate), then I could be looking for a reverse. For instance, if during London, all three phases complete say going long, I'm looking for a definate reversal around the NY open, although it can hap-pen later (or sooner). So CJ/Mike how does that sound? I new to this, so hope I'm not too far off the scent here. It feels right to me, and I think I'm ready to strip my charts naked. What do you think?
EDIT: I forgot to mention. During the stop hunt and say there's a large pinbar dropping south, this will do two things. One - it will trigger sellers, playing breakout strategies, ema strategies etc, and two (which is the missing bit I needed), when a long position is stopped out, at that point he is forced to sell to close out his buy. So either way whether it's new shorts or stopped out longs, the overall effect for the fox is the same - more sellers so he can go long. - He's a crafty devil Put it another way, when your new long gets stopped out you've been robbed by the fox at that price. Youre position is sold to close you out, and he's buying, exactly the way he wants, on his terms, at his price. No wonder CJ doesn't use a SL, why give the fox anything unless you have to