Fri May 30th

GBPUSD 30m grinded upwards all day. I jumped on a pb for any further push up to frustrate short sellers. 5m entry was a cpbt on upwards MAs. P1 exited easily for +4 and I was going to let P2 run, but decided to take it as a +8 tgt. It turned out to be right at the day's high, a lucky exit, but then again was taken ahead of 56 because of the presence of sellers there prior to LDN Open.

 

EURJPY 30m was also a 30m pb buy as was the reasoning for 5m entry. Again P1 exited easily and I tried to trail P2 or sell it at the DT highs, but all it did was wedge forcing me to trail out P2 at +5. 1m shows how it chopped for an hour before breaking to the upside. That was expected, but the chop didn't enable me to stay with the trade.

Summary: 2W for +10.5.

Wed May 28th - Pitiful Trends

AUDUSD collapsed an hour before LDN Open (no report release). 30m shows a large red bar. The past 3 days looks in a range, but if this was a decent effort to breakout of the box I wanted to give it a shot.

5m shows from LDN Open it retraced to test previous support. The move up formed in 2 legs and the 3rd leg up conveniently failed at downward MAs triggering my short. Entry @ 43 with a P1 tgt of 4 pips taken at the 2:50pm low. Miniscule for a trend trade, but that is what the mkt showed (it seems unbelievable that there were environments where I would enter and the nearest tgt was 20-30 pips away). 1m shows it went in favor but took 30 minutes to reach a 4 pips tgt!!!! It didn't break the 2:50pm low consolidating there for another 30 minutes and then stopped out P2 for +4. My initial stop was 8 pips so I ended up taking a profit half of my risk, but there was no way to earn a 1:1 payout with such terrible momentum - and this was a trend trade!!!

I quit after that because I only consider re-entries if the movement is healthy - that trade felt agonizing.

The next chart shows how the re-entry fared (without me).

It could've paid about the same amount, but it isn't worth the effort trading ranges that can't pay a minimum of 10 pips. The setup was slightly different and confirmed it was a 1-push trend that died into a range.

AUDCAD showed similar setups confirming correlation, but even worse ability to move. From LDN Open it took 3 hours to move from 45 to 25. 5m shows the constant back n forth making it impossible to capture a good share of that range, any of the deep pullbacks would stop you out before grinding downwards.

It is disheartening that trend setups are performing so poorly. That tells me there is no point trading in a range. Perhaps the reports are the only source of momentum?

Result: 1W for +4.

Thu May 22nd - It Feels Random Out There

The report schedule looked promising - plenty of Red Reports involving several currencies. Maybe they could stir things up nicely?

Nope, not a lot of action - no range expansion and no deliberate movement.

Traders face several problems when dealing with reports. The spreads widen, brokers trigger stops, markets move large amounts in either direction (or not much at all), and when the dust settles you can never be sure whether the new chart structures can be trusted. For example, if a resistance level is smashed is it really a higher high? Or is it a probe that failed? Inability to properly define it can lead to incorrect decisions. There tends to be a cooling off period after awhile, but then it needs to be determined if they're bracing to spring into life once again or if they have died straight back to the listless chop that preceded the report.

We have to figure it out ourselves. Nobody can teach you because there is no exploitable pattern. Reports are random to us, but are big money makers for brokers and those with advance knowledge of what the report will be. I choose to stand aside. Afterwards I look for signs of life, some kind of logic telling me there's something to trade.

Today all I saw were pairs moving within their ranges. Below is EURJPY. The circled portion is the period I trade. I marked the bars which red reports occurred on.

It is clear there was some expansion on those bars, but much of the bar is explosive as spreads widen that you cannot cleanly execute at good levels. Many times you are left with where they have taken it to causing you to buy high or sell low. A trader can play for continuation (as I do) or mean reversion, but whichever style is employed you need good execution in order to achieve your strategy's goals. To my eye the moves were random. If I marked other bars as the report bars it wouldn't look any different because the reports didn't actually change anything - they had no significance because it remained in the range.

My stance on reports is that they are fine if they change the picture. Surprises cause trades to have to do something, and the flood of orders coming in usually brings in volatility and continuation. When the reports don't do what I like I have no business getting involved.

AUDCAD. I tried a buy after a report blast held and retained a bullish look. 30m shows the report blast held above previous support. The 3m held above upward MAs forming a HL. I bought @ 88 and it went up immediately, but then it stalled without filling me P1 at +6....and then rolled over.

I scratched the whole position. Looking at the move that followed it appears that maybe I should've stalked a short instead. I can see all kinds of reasons now: the move up stalled at a Fibonacci 50% level, the 30m MAs were downward, etc. But at the time I took my buy the 30m structure was not violated. There was no reason to skip a buy and instead wait for a short because the structure of higher support lows was intact.

After my buy it collapsed at 10pm forming a first LH. Looking at the 3m it went sideways from 10-11pm while still holding the support level. If I felt a short was on the cards I needed a move to the top of the box rather than selling into support (not a smart thing to do). With sufficient volatility I can figure out which way to go, but when the markets are sideways all day it is hard to feel which way they are trying to go. Lately, reports slam things around, but they hold at levels in tiny ranges forcing you to have to violate your rules if you really have to get in. My buy was fine. From the resulting move down I saw I should get short, but it has to be where there's a decent R:R and from a spot I can protect myself. No need to violate or change rules - let this period pass and wait for days with patterns that agree with my method.

Result: 1 scratch

A Tale of Two Trends

The Grindy Trend

AUDUSD is a trend spanning several days. Grindy trends don't feel strong because they take so long, but after 3 days you look at the move and wonder why you didn't just enter at market and hold on. Ah, the benefit of hindsight! In real-time you'd await pullbacks that didn't seem to come. They emerged as narrow range pauses before the sellers hit it again. Shorting means you do so right into support lows. Normally you don't want to get in that habit since any deeper retracement can stop you out. Every method has it's day and in this case it favored the Breakout Players which is not a tactic for me.

When a trend is present I'll initially hold off to see what the buyers can muster. Waiting for more development also provides information about the nature of the trend - it's volatility, the likeliness if the whole move has completed or if I should expect continuation. The pullback also tells me the potential Reward:Risk in place. After awhile it becomes clear buyers are unable to lift the market. Visually the retracements are shallow. Grindy moves don't necessarily mean the sellers are ruthlessly overwhelming the buyers, they might just be slightly more aggressive. The lack of volatility makes trading these trends difficult as the market doesn't seem to move much in favor and keeps coming back at you. Over time it works its way lower, but there is any ever-present risk that any piece of news could reverse the market. I've yet to see anyone enter these trends and comfortably ride them to their destination. Yes there is a trend, but these are not my preferred type.

I will give these trends a shot, but only if it has left a lengthy consolidation. Otherwise they aren't worth the effort. At the point of entry I must regard it as Grindy trend. The distinction prepares me for their frustrating elements - the slow drift and the repeated tests back to my entry price. There is no point entering if I don't allow for a substantial payout. That will only be on my 2nd part, trailed conservatively. Part 1 will be taken as usual and is a necessary step in handling this type of trend. Once my partial profit is taken my stop stays at the original spot (grindy trends have a knack for hitting stops moved to breakeven). I do my best to stay with the trend, but once I have trailed out I won't re-enter due to the worse R:R. In my experience I tend to exit for logical reasons based on clues on the chart, but a day later it shows me there was a lot more left and I had gotten shaken out. It doesn't matter, all that matters is that each effort pays a multiple of what was risked

The Volatile Trend

GBPUSD shows a schizo market - alternating narrow and wide ranges, pullbacks are sometimes shallow and sometimes deep. The structure is clearly HH and HL, but good luck trading this trend. Even if you manage to get onboard and see the blast blow through all resistances it isn't easy to know how to take profits. In real-time the trade seems to be working well so why sell it so soon? But any greedy plans to stay with it sees the deep retracements slam back at you often trailing you out where you give back a chunk of the open profits. Volatile trends are often sparked by reports, but delude you into thinking they are strong. Many times they will be reversed straight back to test pre-report areas. I'm usually not on these types of trends because I tend to be flat prior to reports. However, occasionally if I have entered a trade and gotten a P1 profit I will be able to decide whether to risk P2 profits in case a report pushes further in favor. But whether P2 is stopped out or if I can trail for good profits is just luck. Like I said I can only afford to go for it because I have already taken a P1 gain. Once again, yes there is a trend, but these are not my preferred type. Trading whatever is present gets me involved in these trends, but the entire time I am cognizant I really don't like it. The recognition of the type of trend I am dealing with is what protects me and also dictates my actions - how I trail, how I pick a target, etc.

I don't have trouble with what I consider "normal" trends - the kinds that push in one direction, pull back towards a 50% retracement in a relatively orderly manner and also in a reasonable amount of time before signalling the trend may want to resume. When I see those trends I tend to hit them twice in succession and with little stress. I don't try to milk them for all they're worth - I just trail along as well as possible and am satisfied with my take. Defining what is normal is a tremendous help because it's clear when IT ISN'T WHAT I'M DEALING WITH. Usually what arrives are one of the two ugly sisters mentioned above. When faced with the Grindy or Volatile type I switch to a different mode based on my experience with them. There are probably several more kinds, but I don't need to elaborate on anything else. Highlighting these two other types tends to cover me most times.

Wed May 21st - Scalping in a Miniscule Range

EURJPY 30m was downtrending and had the best look of the Yen pairs so I focused entirely on it. 3m shows 3 trades were taken in about an hour. Trade 1 was an attempt to short as high in the box as possible. The wick bars to the left told me it could turn from there. The entry was taken while the 30m 5pm bar still had 15 mins left (circled). It drifted against me indicating it was testing the top of the box so I cut it at -3.

Trade 2 was for the same tst setup, a slightly better entry and after it showed sellers were taking control. It was on the 2nd 30m white bar and the 3m structure shows 2 legs up to the top of the box. I was concerned by the 12 minute stall so I scratched.


Trade 3. The 25 tick showed 3 legs up testing the last 3m LH so I was confident a re-entry could work. It was the last attempt if the 30m downtrend really wanted to continue. It became a runner, but a small one. P1 took +4 and I would've let  P2 run, but I could already see 2 legs down on 3m. I exited P2 at a +7 tgt. The read was correct as that proved to be the 3rd push failing just shy of the bottom of the box.

Summary: 2W, 1L for +3.5 pips overall.

Tue May 22nd - A Day of ERRORS

EURUSD broke down an hour before LDN Open. I looked for a pb from 3pm, it chopped sideways barely able to pb. Wicks on 30m bars told me I'd have to sell it low. I took a 92 short which started well, got P1 off at +6. Then it came back at me a little too strong. I scratched it with much difficulty. Plus I wanted to be out before the 4:30pm report.

It's always frustrating to get out and see the report take it my way (without me), but the point of exiting is to avoid the wackiness that often occurs. I tried a re-entry much lower and sold into what became a bullish 30m pin. It was never in favor and I cut it at -4.

EURAUD buy triggered as I was exiting the EURUSD trade. This one was missed, a shame coz it was a runner.

USDJPY had a nice 30m downtrend. My over-eagerness to get in had me short @ 29 into the 30m bull pin - the same mistake I made on the EURUSD losing trade. I was not noting the 30m bar times! Took a -5 for my recklessness.

Again I didn't see it in favor at all. I tried a re-entry @31, but it found support and I scratched.

 

GBPUSD compounded my poor performance. Similar to the 1st EURUSD short it dropped immediately from entry.  I was so convinced I was on a 30m 1st LH that I failed to notice I was shorting into the 30m upward MAs. I had a +6 tgt for P1 which was missed by a pip. Rather than hold at the lows and allow me to exit with something less it instead V-turned at me. It went through me and missed my stop, but wouldn't pb to let me scratch. I had to cut it at -4.

Summary: 1W, 3L, 2S for -10 overall. The final trade could've been a win had I not gotten greedy for a larger P1 tgt. The missed runner would've made it a scratch day. The losses all on fof setups selling into 30m BULLISH bars were my downfall. Fortunately it happened 3 times which tells me it is consistently a poor thing to do. I can't recall the last time I made this many mistakes.

 

Using Discretion Over Specific Rules

Each morning I go through the usual preparation rituals. I'll glance at the charts, but I won't actually get in the market unless I see enough range or pace. It doesn't matter if I see patterns. Otherwise, I risk getting in and getting chopped up. I Prioritize volatility over structure accepting a setup or two might be missed - whatever it takes till I am convinced to risk my money.

I never agreed with the saying: "Trade each instance of your method". It sounds like the thing to do in the pursuit of behaving casino-like. Unfortunately, the markets do not steadily pay what we think are setups with an edge. Let's say you trade pullback setups when the structure is HH and HL. When there are HH and HL does buying always work?

I don't think so!

The markets make HH and HL all over the charts, but you would argue it's not always in a trending state. Ever notice ranges also have HH and HL? The books don't point that out. This is why the general definition of what constitutes an uptrend is too vague, actually quite useless - all it is good for is to teach beginners the basics of identifying a trend.

If this was the World Series of Poker you wouldn't hear anybody explain which hand beats which - everyone competing should already know the basics! Yet with Trading we often see people cling on to such rudimentary concepts as though they matter, as though they retain an edge.

Yes, it is good to be a buyer in an uptrend, but you have to be aware of the time of day, the range and whether it makes sense to be trading in it. Then there's also the method you employ to enter. Some traders buy as new highs are created, while some buy on retracements. There are all kinds of variables which can affect how your trades will do compared to someone else even though you're both trading the same uptrend.

Asian session often dies ahead of the London Open. This makes London appear like a sudden burst of activity. If they try to break to new highs I won't buy a breakout pullback (bpb) or short a breakout failure (bof). I don't care about patterns, but the reaction. If it just sits there it means all they did was try to trigger stops with no intention of taking it anywhere after that. So why should I get in? To make money I need to know it will MOVE AWAY. I don't know which way, but I need to see clues there was a purpose to the initial push.

I wish I could begin my day at 3pm, trade for 3 hours and count my winnings. The problem is they don't always start at the same time, nor is the volatility predictable. It is empowering to know trading has a lot of uncertainty and I have the ability to figure it out. Otherwise it would all seem so random. It kinda is, but there are moments of logic out there.

Letting them show their hand first means I will often miss the initial explosive move. But from there I trust I can read the reaction and which way to trade. Does it collapse right back into the range? Or does it pull back orderly and hold? The former tells me to play reversal style and the latter is for trend continuation. Throw in a partner pair and the puzzle becomes clearer. All I can do is piece in the clues until I have a picture in my mind. It will never be perfect. The charts will always look slightly different, but the key is to use all of my experience to know where the edge is. There is freedom in not needing to be accountable to anyone for my choices. In the end what I have deduced will be reflected in my results.

Thur May 15th - Patterns to trade, but miniscule ranges with poor pace

AUDUSD. Leading in to LDN Open AUDUSD broke to new highs. That ended up being a probe and collapsed an hour into the session. I stalked a short on a failure to reach the 0.9392 high. I tried a 76 entry at 4:16pm when it stalled. That refused to drop. I felt I could've cut it when I didn't feel any downside pace, but I stuck with it and got taken out at -5.

Another failure occurred at 4:45pm and just to be sure I waited for another stall, got in at 5pm @ 77. The trade started well, but no volatility - it felt like getting P1 at +4 was a miracle. I considered whether to move the stop for P2, but assumed this was my best shot at a runner if it actually wanted to go somewhere so I risked the +4 to keep the stop out of the way.

It barely tested my entry and then trended for the next 40 mins. Exit was a tgt of the previous 30m DB lows rather than trying to trail it for a homerun.

EURJPY set up a 30m bpb short while I was managing the AUDUSD trade so I didn't catch it - as long as I catch one or the other.

GBPUSD set up a similar 30 bpb 30 mins later.  I was in based on a 3m DT + tst, but missed the actual entry 10 mins earlier, but because the mkt was still there I took the entry anyway.  The trade started well and was +4 in favor after 12 mins, but I wasn't filled so I took +3 instead.

The next four 3m bars tested my entry and could only get 2 pips through me so I looked for decent continuation. By 6:39 it was starting to head back in favor. However, the 6:42  3m bar closed as a hammer and a HL. A quick look at the 30m and the whole move down looked more like a breakout failure - the clue was the strong way the retracement came back erasing the 2 hard 30m red bars that tried to breakout. I scratched P2 and quit.

Summary: 2W for +7 overall.

Wed May 14th - Too many to monitor!

Trades triggering at various times regardless of Report times makes it difficult to catch 'em all.  Obviously if London session had this kind of opportunity more often I'd use 3 monitors and be all over them.  Lately LDN has been dead - there can be moves, but I need to see logic or I won't enter.  Often they grind in one direction for hours without adequate pullbacks to get in at proper Reward:Risk locations.  Then again that's what 9 pairs are for - catching some kind of win somewhere and being done with the day.

EURAUD had a nice short an hour after LDN Open. I missed it mainly because I saw it inside a 40 pips range between 4580 and 4621 (see 30m lines).  The MAs were angled nicely to expect they'd hold for a good short, but I need convincing that the look of the chart agrees with the day's mood. 

GBPUSD was a short view only.    There was a pb short in between them, but seeing 2 red reports an hour apart (blue lines on 3m) made me want to wait out the wackiness.  Unfortunately that meant they moved so much already.

The plan was still to go short, but I needed an upside fakeout to try it...... 

The 6pm collapse on 3m said sellers were still controlling so I stalked a fof short.  In at 80 and out Part1 at +6 and trailed P2 for +10.  Part2 missed my tgt by a few pips.  It sucks to miss out on +20 and instead to take half that amount but that's typical.

NZDUSD was a pb buy in very choppy conditions. 30m lead the way, but it took lots of belief it'd work seeing how choppy the 3m was.  It looks like an easy buy, but it felt like it couldn't even move 5 pips.  In at 55 and exited for +4 which is just as well coz it hit resistance and got smacked down.

Summary: 1W for +8 overall. 3 missed trades mostly due to reports.