Surfing the wave and the big break.

[robwin]

This journal is for my own benefit to look back on trades good and bad and to focus on the rights and wrongs of my method of trading the Forex market. I trade 4 pairs on a 5 minute time frame 6am - 4pm. Feel free to comment, ask questions and make use of this system.

Starting Jan 2011

GBP/USD
EUR/USD
EUR/JPY
AUS/USD

 

[tomorton]

Welcome. Good idea to keep a journal, I started this year after several false starts and it has really helped focus.

Will your trades be on specific patterns (e.g. pin bars) or more general price action, trend, support/resistance etc.?

 

[robwin]

Thanks tomorton yes a journal I think will help focus and will also keep me from entering trades that don't qualify as to the rules of my system. These trades have always cost me dear in the past but it's a habit hard to break, this journal I hope will help.

Best way to explain my system will be by posting charts showing where I entered and giving reasons why.

 

[robwin]

The markets will be closed for Christmas which gives me the time and opportunity to fully explain my method of trading. I think going right back to basics is the best place to start.

Surfing the wave and the big break.

Let’s start with the big break, what exactly is it? Every trader of course is aware of support and resistance levels so it’s nothing new but it is an important part of my method as it gives me a confirmation of price direction.

1) The Big Break.

a) The big break is the breaking of an ascending support line at the top of a move in price. The support line forms and is then drawn in manually only when a level has been hit at least three times before.

b) The big break is also the breaking of a descending resistance line at the bottom of a move in price. The resistance line forms and is then drawn in manually only when a level has been hit at least three times before.

It sounds a little complicated so let’s look at some charts (when I can figure out how to paste them) and you’ll get it right away. These examples are all naked charts with all indicators removed.

 

[Splitlink]

Put it on "Paint", where you can write text, or whatever, then archive it with JPEG, it seems best for me to save it on desktop, where it is easier to find, then follow the instructions below your post under "manage". After posting it to T2W, you can move it from desktop to another archive, or erase it, at your leisure.

 

[robwin]

 

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[robwin]

All simple and obvious but I did say I would start from basics. You may also think I’ve been cherry picking and to an extent you’d be correct but these support and resistance levels do occur all the time on the charts it’s just a case of recognising them when they appear. Also I have to add this is just a part of my trading method I don’t actually use it alone, these are naked charts with no indicators and I’m just showing the bare bones, there is a lot more to come!

 

[robwin]

So that’s the Big Break referred to in the title of my journal, a simple to understand breakout method that if traded on its own with sensible risk management would I think make good profits over time. Simply wait for a big move up or down look for multi-touch support and resistance levels and enter on the break.

The problem with using this as a standalone method is that lots of good trades would be missed because these support and resistance levels are not guaranteed to appear at the top or bottom of every move, also there would be a fair number of losing trades due to fake breakouts, something I do not like! But as I’ve said I only use S/R levels as a directional indicator that confirms other major indicators that I use.

 

[robwin]

Right let’s look at my charts with all my indicators added. I have a 50 ema channel with a 15 ema blue line running around it and at the bottom a MACD window giving a longer time frame, and that’s it everything I need for my trading!

 

[robwin]

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