TheBramble's Short-Term Spot FX Biases

[NVP]

Hope everybody else is having a good run today. I did say last night I thought I'd not have the capacity to call them live today and it's certainly turned out that way.

wonderful all day ....buy buy buy USD and YEN

N

 

[TheBramble]

I would guess you use Stop entries when significant level/marker is pierced in the direction of your bias?

Breaks through significant levels normally do so with some momentum which often means a lot of the juice will have already gone by the time you get in with that approach. Plus the dynamic nature of a forceful break will sometimes lead to attenuation and the resultant whiplash to which you refer.

My approach is very simple. After assessing the bias (Long/Short) I’m looking to get in ‘at value’. So, for instance, in a down trend, I’ll be looking for the price to pull back up. When the rate of ascent slows (momentum fading), I’ll monitor the price action to determine how much risk there is to go in. If there is a congested bunch of SR (see below) that it has clearly foundered upon and is starting to wane, that’s a good sign. If it stops its ascent on no apparent technical SR, I’ll be interested, but wary. Cessation of momentum up against a brick wall I understand; decrease of momentum for no obvious reason may mean any number of things, including lack of any momentum in any direction; not a good sign as I’ll be in the trade and exposed. Time is Risk - sitting there doing nothing while tying up 2% of my capital.

I don’t use a lot else other than this trend bias (when there is any), pullbacks for a value entry level, change of momentum and primarily the price action around these points. I don’t use technical indicators other than the SR levels.

I got the impression from your old 201 thread that you preferred a tighter SL than you seem to be using now, have you had a major change of strategy?

That was 4 years ago! I’ve had a major change of just about everything other than my underwear in that time. Going from memory I’m sure all the data thrown up for discussion was hypothetical and I’m fairly certain would have been stated as such at the time.

A tighter stop loss for me will result in a larger position size. Which is great… but only if the trade comes home. If a stop more appropriately positioned with respect to local SR levels means a greater likelihood of the trade coming home and if that means a larger stop and commensurately smaller position size, that scores higher for me. Stops must be sensible and relative to TF. Aiming for 100 pips with a 6 pip stop not only sounds ridiculous, it IS ridiculous. I won’t often be looking at a stop more than 50 pips on the m15 and more typically 20-30. Trading lower or higher TFs requires appropriately adjusted stop sizes. You basically just need to look back at the prior to & fro of the price within the existing trend to work out how far out you would have had to have placed your stop to avoid being taken out back then. The hang-up most have with stop size and why it is typically too small is almost always related to Risk:Reward.

The myth of calculating or assessing Risk:Reward prior to any trade is precisely that; a myth. You can only ever determine your Risk ahead of the trade. Sure you can estimate where your target(s) may be, but I found it was madness passing up a trade because it ‘only’ had a 1:1.5 R:R when in reality, I had no idea how it would perform with any degree of certainty. It may have delivered 1:5 or 1:0.25 or a 1:5. So I gave up assessing likely reward and decided if I was offered a trade and all the lights were lit (and if I didn’t have any chimerically ill-defined sense of unease); I’d take it.

The other thing is that I’m quite happy to take whatever is offered. Often my trades are 1:<1. Occasionally you hit a good streak and make wins several factors of risk higher, but I primarily crank them in around 1:1+. Here’s the thing, I’d rather get 9 out of 10 trades with some form of profit on smaller size than 6 out 10 with larger size. I appreciate this is a personal preference, but trading has to work for you on all levels if you’re going to be consistently profitably over the long run.

As for exits I would guess you target S/R levels assuming the trade pans out as you expect, which is probably as logical a place to exit as any.

Yes. I use all the standard SR levels along with Round Number, the FLA levels and (I admit) a bunch of Fibs (but not on the normal datum points). Where two or more of these potential SRs stack up at roughly the same level, I figure I should pay attention to price action around that level. When the price gets there I’ll bring in the stop in to within a few spreads worth of pips off the most significant recent bar’s (normally, but not necessarily the one that has first interacted with the SR level) High/Low to be safe, but I’ll be watching the action the whole time. I am particularly looking for any change in momentum - I read it more as ‘intent’ or ‘commitment’. And as with the entry, if the price starts to ‘react’ to a level for which I have no technical basis for it to do so, I treat it with extreme suspicion. AUDUSD being a case in point right at this moment. I’ve got nothing at 9720. Daily S3 at 9706. So, why is it holding off? I think that’s why ‘intent’ and ‘commitment’ fit the interpretation of price action so well for me. I’m still in, but with extreme prejudice and a stop lowered to 9748.

I’m sure I’ve forgotten a whole bunch of other stuff I do/don’t do around entry and exit. And then of course, there is also the stuff I don’t know I do/don’t do…

 

[TheBramble]

how is this list determined?

These days it's done algorithmically. I used to do it manually. Although the algorithm has sh!t-loads more gubbins involved (probably to justify some techie quants existence), I did parallel tests for months against my old method and the variation was minimal.

So pull up a chart for each combination of the majors. Against each of the individual currencies you are going to write a +1 or a -1 or nothing for each occurrence it has as either base or counter in any given pair. It’s important you get data for all the combinations of the majors that are traded.

For chart #1 (say it’s AUDJPY) you look at the slope. If there isn’t one you move onto the next chart.

If it’s sloping UP that mean AUD is stronger than JPY. You enter a +1 in the AUD column and a -1 is the JPY column. If it’s sloping down, you do the opposite.

Carry on and do that for all the pairs and then total up each individual currency’s score.

Sort High to Low on score. That’s it. Strongest-to-Weakest.

Sounds rough & ready and it is. But it’s good enough to do the job.

 

[TheBramble]

I would love an insight into your Exit strategy B....but most Traders still think the holy Grail is in the entry point...so dont upset them !

Entry and Exit explained in my response to Vorbis above.

It will be highly mechanical or highly Subjective....i'm guessing you lean towards subjective ....as its much more fun that way !

Sorry to disappoint you as it’s a bit of both. See reply to Vorbis above.

 

[tar]

These days it's done algorithmically. I used to do it manually. Although the algorithm has sh!t-loads more gubbins involved (probably to justify some techie quants existence), I did parallel tests for months against my old method and the variation was minimal.

So pull up a chart for each combination of the majors. Against each of the individual currencies you are going to write a +1 or a -1 or nothing for each occurrence it has as either base or counter in any given pair. It’s important you get data for all the combinations of the majors that are traded.

For chart #1 (say it’s AUDJPY) you look at the slope. If there isn’t one you move onto the next chart.

If it’s sloping UP that mean AUD is stronger than JPY. You enter a +1 in the AUD column and a -1 is the JPY column. If it’s sloping down, you do the opposite.

Carry on and do that for all the pairs and then total up each individual currency’s score.

Sort High to Low on score. That’s it. Strongest-to-Weakest.

Sounds rough & ready and it is. But it’s good enough to do the job.

I don't understand why do it manually , why not compare currencies indices to each other ( you can use different time frames ) :

Currency index

 

[TheBramble]

I don't understand why do it manually , why not compare currencies indices to each other ( you can use different time frames ) :

Currency index

I don't do it manually. I was explaining how you could do it manually.


Actually, I occasionally do do it manually, but that's normal, right? Everyone does now again, don't they?

 

[TheBramble]

Currency index

Never seen that before. Maybe wasn't around when I was doing my stuff - I am going back a bit. Looks a bit like the stuff NVP does with his ind.

 

[NVP]

I don't understand why do it manually , why not compare currencies indices to each other ( you can use different time frames ) :

Currency index

their throwing those nasty Strengthmeters at you again b ....cant stand them myself .....hahahaha .

 

[tar]

their throwing those nasty Strengthmeters at you again b ....cant stand them myself .....hahahaha .

That's what currency index for . For real time daily performance of each currency index check here ( different link ) :

Currency index

 

[TheBramble]

That's what currency index for . For real time daily performance of each currency index check here ( different link ) :

Currency index

I need to know what the fundamental underlying strength of each currency is.

The Currency Index graph changes the relative strengths of the currencies depending on which TF you ask it for. I suspect it uses a fixed MA or something like that in whatever TF you’re looking.

When I’m watching AUDJPY in a downward trend, I’m waiting for a pullback up to get in at value.

When my AUDJPY is pulling up within the down trend this graph is going to show AUD stronger than JPY, which it is temporarily, but I can get this information just by looking at the last few bars on my chart, I don’t need a graph to show me that.

I need a line in the sand, not shifting sands.

 

[NVP]

Trading pure strength meters (in my world) is a completely dynamic experience and actual pair prices are irrelevant .........its a totally uncomfortable process and you need to continually disassociate yourself from the mainstream Trading rules and systems that most people use

horses for courses everyone ....horses for courses....

Hey B ...can I call my 4hr TF signals on here or would you prefer me to open a new Thread....I will limit the posts to only a few a day tops when I can....

N

 

[tar]

I need to know what the fundamental underlying strength of each currency is.

The Currency Index graph changes the relative strengths of the currencies depending on which TF you ask it for. I suspect it uses a fixed MA or something like that in whatever TF you’re looking.

When I’m watching AUDJPY in a downward trend, I’m waiting for a pullback up to get in at value.

When my AUDJPY is pulling up within the down trend this graph is going to show AUD stronger than JPY, which it is temporarily, but I can get this information just by looking at the last few bars on my chart, I don’t need a graph to show me that.

I need a line in the sand, not shifting sands.

The second link is different than the first one , it shows the daily performance of each currency index isolated , could be used for ranking purposes , that's the whole idea ...

 

[NVP]

I need to know what the fundamental underlying strength of each currency is.

The Currency Index graph changes the relative strengths of the currencies depending on which TF you ask it for. I suspect it uses a fixed MA or something like that in whatever TF you’re looking.

When I’m watching AUDJPY in a downward trend, I’m waiting for a pullback up to get in at value.

When my AUDJPY is pulling up within the down trend this graph is going to show AUD stronger than JPY, which it is temporarily, but I can get this information just by looking at the last few bars on my chart, I don’t need a graph to show me that.

I need a line in the sand, not shifting sands.

Hey B

Pulling back and buying at "wholesale" instead of "Retail" price (where most of us pile in at) is a great trading style and very unnatural for most to understand.....as Traders always want to see that momentum going full on instead of impulse power ....

N

 

[NVP]

That's what currency index for . For real time daily performance of each currency index check here ( different link ) :

Currency index

thanks T....i'm pretty familiar with them

 

[TheBramble]

Hey B ...can I call my 4hr TF signals on here or would you prefer me to open a new Thread....I will limit the posts to only a few a day tops when I can....

No problem.

 

[TheBramble]

Short term (m15) FX Bias

AUD Short
EUR Short (except EURUAD which is flat to Long)
GBPCHF Long (technically, but messy)
GBPJPY & GBPUSD Short
USDCAD Long
USDCHF Long
USDJPY Short

Independent Single Currency Rankings (STRONGEST TO WEAKEST)

JPY
USD
CAD
CHF
NZD
EUR
GBP
AUD

As at 05:34 London

 

[TheBramble]

Trades of choice today likely to be Short GBPJPY followed by Short GBPUSD.

AUDJPY & AUDUSD shorts also worthy of mention.

All of which are pulling back nicely to provide a value entry. They could also, of course, be reversing.

Won’t be taking any positions until Frankfurt has shown its hand.

 

[TheBramble]

German employment data in an hour and Italian consumer prices data at 10:00 (London). I’m still Short EUR (excl. EURAUD) on a technical basis and I’ll take solid entry setups, but my focus is on AUD, GBP & USD counter pairs.

USD base pairs bias as earlier, but probability of consolidation, quick moves and fakes and fades more likely than bankable runs. There’s a sledge of USD data release all the way from 13:30 to 16:00 (London). As good a reason as any to stand back.

 

[TheBramble]

GBPJPY Short at 121.89. Stop 122.41. Risk 52 pips .

 

[TheBramble]

GBPJPY if it makes it down through the 50 level it’ll be a fair target for 121.00.