bredin, I get your pain and anger with what you consider to be misaligned beliefs, and your passion in setting it out like you think it should be, I really do. But...cable moving 1000 pips from its current level within the next 12 months is not a fact, it is a high probability event, but not a fact. And as for asking folk what they might think when it gets there, when? Will they think back to this post? NO. Will they have put on a position now to capture that very real probability? Probably not.
If however you said, cable is at 4960. Within the next 12 months it will either hit 5960 or 3960 then I suspect you would have a bunch of people asking, at what point do we place out limit buy or limit sell orders? You are possibly one of the few that will have grasped the necessary detail to have already placed both of those orders.
I don't take pity on fools either, but throw them a lifeline when you can.
About 5 years ago I did some analysis on candle formation. Its horribly dull stuff but I was curious to see if I could reasonably predict how a candle would form, particularly big timeframe candles.
The short version (ie findings) is this:
about 80% of all long (ie close > open) candles form O-L-H-C, while short candles form O-H-L-C.
All failure candles are small bodied: the body comprises less than roughly 1/3 of the range.
I called this observation "Opposite Extreme First" (OEF).
One thing this does is allow me to "see" price movement iside candles, without changing tf's on my charts, or having a smaller tf chart open cluttering my screen.
I also have no idea if anyone else has ever conducted such a study, if anyone knows of one I would appreciate getting pointed in that direction.
From this study I observed that at some point price
must travel from the high to the low (or vise versa) without forming a new high (or low). Thus ranges become a good measure of potential profitability. Not exactly a revolutionary idea in itself, but links nicely with a very powerful trading idea - that of trading from* an extreme.
Theres quite a bit of other, related stuff, but is more or less extraneous at this time.
So now comes the "where do i put my limit orders to catch this amazing move?"
Near a high timeframe extreme.
Work at catching a yearly extreme and you're good for 1000+ pips, with plenty of opportunity to become aggressive with OPM.
*"from an extreme" is not the same as "at an extreme," and thus I do not mean picking tops or bottoms. Thats merely the effect of the idea, not its goal.
Heres an example markup
things to see:
first is the marked pivot on the down section: note now price behaves the same way when crossing the pivot (same =/= identical) in both directions.
the line marked "Going Here" is the 'pause n go' before the momo, a really nice piece of supply to trade back into. Additionally momo usually means theres not a lot of orders stopping price moving back to where it came from.
the 'lots' could be micro, mini or full. It makes no difference to the final %gain of the account.
the initial entry is actually off the H4 and is during the doji wick at the formation of a reversal pattern. If you want to see it, go look for it. Additionally all other re-entries are executed in the same manner.
a stop is placed at the Original Position for each adjustment. the area between the entry (Adjustment Price) and the Position is called "Space." We would not allow the stop to be taken. There would be some criteria for exiting or expanding space based on price closing over a line, well inside the position, allowing for bad timing. We can always try again if price closes back over our line (specifically called a "FatCat S/R" which also happens to be a wick on a larger timeframe).
the blue-grey line is the exit line of all positions, and is very rough. better places could be picked, if one were so inclined.
we use fibs as a convenient way to adjust lotsize and know where position moves to, without doing any math.
the last entry, after the pivot, is deliberately horrible, and you'll note that its the only one where position is allowed to come inside the longterm extreme. the 987 lot position is probably too aggressive, the 377 lot position is "triple safe." When I said a few posts back that knowing where price cannot go was more important than knowing where it could go, this is what I meant (Its also apparent in the initial position).
So if we assume that the initial space included 5% of accountsize as risk (5% (or 34 lots) over 230 pips of space) we can see the triple safe final space is 377 lots over 780 pips for a R:R of 37.6:1, which would equate to a 183% account gain in 77 days making 5 trades, and taking about 1 minute of activity per day.
I'll leave the other 2 returns for others to calculate.
There was never more than 5% of my capital at risk (and requires a carrinton-type event to actually lose it), additionally we could have removed our capital from the Risk any time after the first add, meaning that after the first add the trade could have been risk free (trading with OPM).
Additionally we still havent even hit our real goal yet
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Back when I started trading in 2008/9, I had a job. I started at 7am and only had a few hours in the evening to trade (basically the start of the London session). What I discovered was that, in this limited time, I would try to force trades that werent there just because that time was dedicated to trading. It became apparent that I needed to find a trade method that my job would not interfere with. H12 (or higher) charts provided the answer, along with basing me decisions on price closing over, or failing to close over "something." Something is merely a line I believe should not be crossed if price is to go to where I thought it should go to.
After this I needed to work in a way of not losing much money if I was wrong, since price can go a long way in 12 hours, but still allow me to make lots of money if I was right. Space filled that role. I will explain space in more detail later, since its not specific to the S/R methodologies being discussed here. For now consider it both sword and shield of my capital.
B.
