Live Trading Experience - what I Couldn't Find in Trading Books
I won‘t preach much about things you already read about or heard of. I‘m here to tell you those little secrets that you may not find in trading handbooks or hopping to find while paying for various material that are sold by failed traders or clever marketers. I just share what I learned the hard way – by trials and failures. I know that successful trading is achievable for anyone who is trying enough and that is a real way for financial freedom in these volatile and complicated times. Many green pips and good luck for you!
About my trading style and environment where I use my set of rules:
I go for a few 10-20 pip trades a day. Sometimes I leave trades for a run for a bigger profit. Mostly I make decisions on M15 and H1 time frames and use M5 for precision entries and exits. H4 and D1 time frames I use for reference of main trend and to determine important support and resistance areas near by. Mostly I open positions in a direction of a flow after momentum appears or scalp rejections of intraday levels.
- Close all your trades or look for new ones right after new sessions starts or ends. Write it down and put sticky note right in front of your eyes: London opening (08:00 GMT +1 (it changes to GMT in winter when daylight saving time apply)), NY equities opening (9:30 EST), European stock markets close (16:30 GMT+1), also keep in mind lunch time in London and NY – often huge moves appear right after lunch.
- Look suspiciously in to divergences and chart patterns that happened prior London opening – thinner late Asia markets with mini-covering rallies right before Frankie (Frankie is called Germany opening – one hour prior London opening) or right before London opening often produce such things and London starts with fresh bias and often completely changes intraday direction.
- Use London opening price as a pivot too. Often price hangs in a 20-40 pip range for the fist hour or few and if crosses opening level again – it goes for a bigger intraday movie.
- First hour of Frankie session (07:00 GMT+1) often tries to reach Asian session highs/lows – it‘s good place to trade in the opposite direction for at least a dozen of pips. Same with London session – it often tries to cover Frankie or Asia highs/lows or tries to break out of that range. Unlike Frankie session counter trend trading in London I always try to open positions in the direction of the flow.
- If you trying to catch top or bottom at extreme price movement - go for extreme levels too: find the least probable level for that day and wait for it. Good place to look at ATR (average daily range level) levels or beyond them.
- Use few different trading platforms for price inspection .Tick data always differs from one broker to another and especially at volatile moments when news released or when new highs or lows are formed. This means that you should leave a few pips around important lines and don’t judge price action by every tenth of the pip.
- Because of the data difference mentioned on paragraph 6, you should find web pages with alternative pivot (and any other support and resistance calculation systems that you use – murray,woodie and etc.) calculations and mark them on you charts. Here is an example of levels which I use mostly:
- And here is an example of how I trade these same levels (green arrows and text are entries and red arrows are exits:
- Take cautiously numbers/ levels which are too obvious for everyone – historical lows/highs which never been breached in years or months. From fundamental point of view we live in extraordinary times and everything happening that never happened before (Euro zone birth and possible collapse with Greece exit, new US gas resources, China‘s economy switching from production based to consumption and so on) so any historical level should and will breach, from technical point of view zones around obvious levels are places where large speculators look for liquidity and this means that price may not reach it or will pierce it substantially. What you should consider when price reached such a level for the first time is – scalp the reaction, it almost every time rejects when touched for the first time.
- Right before jumping in to the trade – wait for candle/bar to close – M5, M15, H1. Often sharp moves ends with a spiky candles which creates trend change patterns.
- If the reason why you entered trade disappeared or another conflicting reason appeared – you should exit that trade after candle is closed.
- Fibonacci levels are widely used and they get proper respect from the price – they act as support/resistance and as a price magnets. But there are much more then just a standard Fibonacci levels and extensions. Put these deviations too: 6%,13%, 78.6%, 88.6%, 150%, 200%. You can draw them from every top or bottom: swings, daily, weekly, monthly candles and etc.
- Put moving averages on M15 and on bigger time frame charts – these will give you additional levels to watch. You can start with 100/200 period simple and exponential moving averages. I love when both averages occur exactly on Fibonacci or key pivot level!
- Always keep in mind and mark on the chart the mid levels (50%) and 150% extensions of everything: last M15 candle, last session, last swing – these are good places to enter trades or to exit them.
- Focus on EUR/USD pair – it gives enough opportunities to trade intraday and because of the vast liquidity and mix of different interests in play it is the least influenced by central banks and other market movers which means it reflect mass psychology perfectly (most of the times LOL) and traditional price patterns works best here.
- If you believe in holy grail and still looking for it – price/candle patterns at support/ resistance levels and supply/demand zones are the key. Learn them and you will have proper base for your further development as a master trader.
- Regarding paragraph 16 – watch correlated markets too. For a start – put all the same levels on USD/CHF chart when trading EUR/USD pair. When EUR/USD approaching daily pivot and at the same time USD/CHF climbing near monthly pivot for the first time – you know it will be rejected!
- Always mark yesterdays high and low on your charts – price often bounce between these levels and pivots of the new day and/or London opening price.
- During Asia session price likes to make new high/low just a few pips above/below recent peak – often in a range of 20 pips or so. It is a smart thing to leave limit orders in the outskirts of these areas for the night.
- I ‘m still tend to forget, but it really helps to reconsider the possibility of opposite direction of your planned trade. Always ask you self – why someone would do exactly opposite at your entry level? May be your stop loss is someone’s profit target?
- End of the week, month, quarter – should be avoided. It‘s the time when profit is taken - large positions are closing. Unexpected moves in these times appear so unless you see interbank market depth (retail platforms do not have such ability) it‘s better to sit on your hands and watch. Here is a perfect example of last Thursday 31 May 2012 (H1 chart) :
- Always look for momentum candles – these reveal true market intentions. Wait for retracement to enter at better price. Here is a few examples of a bearish momentum candles making lower lows:
- If you still wonder if there is a magic indicator – do not anymore! It is just a profitable myth for marketers. What learned traders use is price action near support/resistance zones for a final decision and some mix of indicators for secondary judgment. Oversold/overbought indicators most of the times are useless as they shows „perfect“ conditions for novice traders to enter in counter trend positions even when strong momentum starts to appear. Do not waist your time trying to master one indicator or another – just learn to read price action and it will give you capability to trade anything and anytime for the rest of your life.
- Price never goes in a straight line. Sooner or later it will always retrace but you never count on that until it happens. Market can be longer irrational than you can be solvent, ones said.. Wait for rejection or engulfing daily candle to be closed for general trend to change and intraday market directional bias to appear.