Greg's Forex Journal

Quote from tom123:

Nice charts to look at. I think cutten makes a good point about the importance of fundamentals. witness the recent things happening with the eur/usd. interest rate cuts etc... fundamentals have to be taken into account no doubt.
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I agree that fundamentals are important, and from what I can tell with macro traders from my book is that their strategies are based mainly on interest rates, and trying to determine when they will be cut before their cut. It's all very interesting to me, but I figure I will get better knowledge of this in my major (investment finance), and for now I would like to focus on making consistent little profits with intraday PA.

So for now, when a news announcement comes and spreads and volatility go through the roof, I go and turn on the tv. :)

Greg, I spent about 20 minutes studying that chart you posted .... those few lines you drew looked good to me, ...for my style of trendline analysis, I would freely draw many lines as I see them, on many time frames,as well,

I try to keep as few trendlines on my chart as possible, and actually I was getting a little annoyed on my EUR/JPY because there were too many. I have a separate chart I look at for the daily and usually also the 3 hr because the trendlines overshadow the last few bars, but I actually couldn't even look at the hourly trendlines there.

As for different timeframes, I have TLs on every timeframe from daily to 15 min (Oanda has no weekly/monthly, but I have on my to do list to get charts up on thinkorswim for that asap).

The problem is that it is very difficult for me to keep a ton of charts up on one monitor, and harder to keep them synchronized - if I am looking at a 15 min chart sometimes I forget about hourly things - mistakes I made when had a bunch of EUR/USD charts up.

theres another tool in the box, the fib arc, interesting tool. I played around with it a while back. has something to tell,I think.

I looked over it for about 20 minutes and I think you're right - continuations vs. reversals. I have experimented with nearly all the fibs except this one actually (time, retraces, spirals, fans, etc.) . They all have little charms, though for now I am trying to take as much off my charts as possible. What I do, however, is put a good example of them in my screensaver, so that I remember how they work and may eventually go back and look at them - I do it with all the fibs, pitchforks, all that stuff.

About the 15 min - it is often unclear, and I would like to merge it with 5 min analysis eventually, but I think it is important to have. It just seems sometimes that market movement is in sync with different timeframes - sometimes trends are best represented with the 15 min, sometimes the 30 min, often the hourly, sometimes the 3 hr, etc.


the chart you posted, looked at that moment to be at a 'crossroad' ,holding,with 50/50 energy either way,needing to break out thru s/r points...wasnt easy or possible to 'foretell' at that moment....but my thought would be to go and see what it looks like in the 5 minute, and the 1 minute, and watch PA on those time frames,as well as the 15 min. that would be how I use the 1 minute time frame along with the others. As you mentioned not wanting to focus on the 1 minute yet too much, I think you can do it, but within this sort of context....

At this point, I still think the shorter TFs will still be confusing me; I would like to work toward perfecting what I have before I begin moving on.

At this crossroads you are talking about, I was confused because of the support TLs, resistance TLs, falling wedge, and overall PA vs. time, and a little part of me wanted to take the breakout so I didn't miss the move - amateur thinking. I am progressing but still have some work to do
 
I thought I would post this separately because I think it is extremely important.

When it comes to trendlines, I have found that there are three stages of trendline time definition.

The first and worst is the "classic" trendline connecting extreme lows to extreme lows, etc. The problem can be explained with an example of the hourly. Say you have an hourly low wick produced 8 minutes into the bar, and you connect it to another wick later produced 54 minutes into a later bar. The two are clearly not synchronized with time, and are several degrees off as they only very poorly represent the trend. It is also important to note that wicks can be anomalies.

The second is something I found that I named the LOBF or, as I called it in that first EUR/JPY top image, an "aggressive" trendline. This tries to capture, essentially, the Line of Best Fit. I ignore spikes that seem either insignificant or an anomaly to the trend. This defines time much more accurately by capturing the meat of the PA. But, don't expect it to take off when PA touches it - it usually gauges time only (so when I said "price established above aggressive TL" you can infer that the initial trend is changing). It's an abstract concept, but I still use it at times and it takes time to get a feel for.

Lastly, there is what yoohoo calls the EMTL. This usually uses closes and opens with definite "time stamps" on them, but actually is defined by using the most "points of significance" (as I term it) which can also be wicks at times (especially things like tweezer wicks). I am not as advanced at these as he is, but they do rather extraordinary things.

I remember when I was first reading about the EMTL and thought I had discovered it on my own in the LOBF, but in reality I only solved half the puzzle. They are inferior to the EMTL, but they have their own significance. For example, in the first EUR/JPY top image, I ignore the spike with a close above my LOBF - this spike actually included an hourly close, but PA spent no time there so I defined it as an anomaly and drew my line right through it. In fact, the break of the LOBF in time helped show the market was not ready to decline.

Experiment with them all and the market will tell you what is important and what isn't.

Edit: implied but forgot to tie up that classic trendlines are poor in time and trend definition, LOBFs are decent in trend and time definition, and EMTLs are the highest stage of both trend and time definition.
 
Overall didn’t accomplish much today. I did finish going through the rest of my bookmarked threads for useful attachments (found a couple), finding some new resources that might show new PA patterns, and wasted a decent amount time trying to figure out what a Ross hook was before going through his ebook and figuring out that it was a “pointy thing in the market.” Awesome.

I did not trade today as I have to get up early tomorrow and have to get to bed only an hour into London. I don’t like to trade Sunday into Monday anyway because Sunday PA is not great and there is not much to go on besides the gap (if there is one), which doesn’t really interest me.

I have also decided that my next step in strategy is to find a variety of bar patterns and see what they look like on a variety of timeframes. I have done this a bit but not as much as a should have. Didn’t make any new charts today; I will probably only post them on trading/watching days.
 
Decided to start making a list of rule-based bar setups that I can start trading as long as they have good R:Rs and fit in with at least some sort of sense of direction. Also decided to time my screensaver to see how fast things went – ended up going solidly through 50 images in almost exactly 10 minutes. If I end up approaching 1000 (I have maybe 300-400 now), even with periodic cuts, 20 minutes per day will still get me through the majority collection in 10 days – not bad! I also spent time watching and making charts (only a few, however).

I had a pretty good idea today. I think I may print out some bar charts of a pair, and just start tracing both the individual bars and overall swings with a pencil, and do it also combining timeframes. I might do this with the EUR/JPY since I have a lot of screen time with it already. I like to trace the bars with my eyes, which is one of the main reasons why I’m not planning on using a candlestick chart again.

Attachment: was considering posting this chart earlier, but considered it too important and something that originally took me a while to figure out. Decided to anyway. During the formation, I was about 80% sure that I was seeing a bull flag, because I was keeping an eye out on the 3 hr, but the last half or more of the formation was the dry Asian session. So bull flag = down volatility and volume, but did it really mean anything when neither of the currencies’ countries were in business hours? I was bullish before the lull, it didn’t look like a reversal, and I was overall about 80% sure that it was a bull flag – one of the things I’ve called well in real time lately. As long as the R:R is good, I’d take it every time.

Yes, I do have better things to do with my time than put Santa’s on my charts, but I have decided to take the next three days off (Tuesday, Wed, Thurs – this still counts as Monday night for me). The only thing I see myself doing is screensaver time. Happy Holidays!
 

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I lied I couldn’t stay away today; I finished doing Christmas stuff early and ended up dabbling on ET and watching my screensaver to the point at which I was seeing the same images for the third time and was rarely getting a new one. So, I decided to do some little work. I read a chapter or so of my book (I’m a slow reader, this is an accomplishment), found a great free pdf download site and went to town, and began looking over and editing some images.

Attachment: this was the main edit. I have been having the “did I miss something?” and “is that trendline right?” feelings for the EUR/JPY top since I was originally watching the thing form. Problem is: I began to get on the line of thought that the parabolic nature meant the TLs would not work out right and would fall a little lower than they should (I didn’t really spend time actually reasoning this, I just always have a little thought or two going through my mind at all times). It didn’t take me until seeing the chart four or five more times until I saw the odd 15 min PA in the corner of the first chart I posted. I had the wrong trendline! It’s a shame, too, because I am usually very quick to cut away trendlines in this manner. :(

Live and learn.

I will not be back tomorrow or Thursday.
 

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Working today because the family has left and everyone is asleep. I have decided to unsubscribe to all my threads on ET that weren’t serving any purpose. The ones left are this thread, two asking about advanced PA and TA, one asking about the 3BR pattern, and one that I am just finishing up something. The goal of the three TA threads is that I am always looking for new resources (and based on some things I find here and there I’m glad I do), and I am not engaged in them anymore at all. I would simply unsubscribe, but I did randomly start getting a ton of replies on a thread on options I haven’t been on in four months, so why not? The goal of this is to cut out unnecessary time around my trading, as I tend to get distracted with things like this.

As for perusing through forex and TA threads, I think I am done that as well for the most part. I see myself at or very close to the point at which I am learning more on my own than the occasional golden nugget I find in a thread. I will start going through the attachments in the new price action journal, but that’s it. I still have many ebooks/pdfs and regular books to go through, but I will tackle these over time.

I would like to say that, as I go through chart after chart in research, it is extremely fascinating to hear how certain traders have innovated classic patterns to do things like increasing R:R and refining signals. Some do it by increasing profit potential by preempting signals with another signal, others do it by waiting for a bar retracement so that the stop can be tightened (lagging the signal), some seem to have their own names for common patterns (showing they came up with them on their own), and some actually just seem to come up with new signals in general.

I believe I have done this in some of my rule definitions to lessen signals but increase profitability, but their line of thinking and innovation is far more advanced than anything I have done. I have how they went about this written in my to do list document (long term), so I can use and build on their techniques once I become more experienced and have more time. My basic idea of doing this would be on paper, to jot down real-time theoretical entries and exits and plug them in excel, but I believe if I had the money / time / programming skills / attention span to thoroughly backtest intraday data and write code I’m sure I’d make a killer system.

I also began thinking lately about what I said were my problems with impatience, but I realize now that it is not impatience at all; it is my lack of composure. I think my progression of maturity through school can capture this very well. Before about eighth grade, I was the quiet smart kid; I was very composed yet too serious so as to show repression (for a kid, I definitely wasn’t a stone though). Then in eighth grade, I turned around and tried to be more like the most outgoing guy in my group, which isn’t me at all. It was into high school that I was exposed to the stresses of golf, the solitude of study, overall normal life, and also trip to France that taught me that form was just as important as function (French architecture, culture, style of life vs. Americans…). Anyway, it was throughout all these things that I always tried to change the levels of expression or control of my mental state in all situations, and I just never found the right balance.

It is both with trading and actually girl problems that led me to this. I think the best way to understand both is with a metaphor comparing the two I read in one of my pdfs. The guy, Rob Booker, explained how he chased and obsessed over his first crush, only to have her pay no attention until, years later, he ignored her in a grocery store and she blew him a kiss. He explained, as I have actually written in my trading rules: Until you are no longer impressed with pips- no longer chasing them, nor frightened nor infatuated nor in love with or simply hating them – you will not consistently get any. He also stressed the importance of a plan.

This was a real eye-opener. Although I have stated dozens of times that I expect my mental success increase and become more level-headed once I get more “comfortable” and “experienced,” I never faced myself with this explicitly – and it was the girl metaphor that led me to do it. The guy went on to describe how things must be learned and approached with a plan, and immediately I knew he was right. The few times I developed a plan and “played” a girl completely level-headed, it worked better than I ever imagined. However, I always felt guilty and decided that I hated the “game” and didn’t like doing many of the things that turned girls on which didn’t fit my personality, and gave it up. As it turns out, I attract the girls I don’t want because I am much more composed and in the “game” around them, and the girls I like slip away.

My trading and girl problems have both proven my impatience, and that I am overall susceptible to emotion that is beyond my current control. Seeing the problems I am facing now, I think it is time I recognize and begin work to finding the right balance – being serious when needed and social and outgoing when needed, watching the things I say and do very closely (been good at this one, actually), having a plan when necessary, and overall increasing my composure - and trading can be either a leading or lagging part of this transition. I now recognize my limitations, and I think having the maturity to face them now shows I have the maturity to overcome them in my life.

Sorry for the run-on, just thought all of this is important to me becoming a trader. :)

Charts: Didn’t make any as didn’t watch or trade today – the only charts in my screensaver are ones I got from other traders, which I don’t think I should be posting
 
Today I finally found out what the 3BR is. I finally found a good chart image describing it in a thread which made me think it was just market structure, but then I also got lucky when someone posted an image of it in the thread in which I asked for a source on it (titled “Any sources for learning about the 3BR?” if you’re interested).

Interestingly, it is a variation of the simple reversal and Suri Duddella’s 3-bar pattern in which he trades above the high of the last trending bar (bottom reversal), while the 3BR strategy is to trade above the high of the first reversal bar – a very interesting innovation that I will have to watch carefully, and of course it has a spot in my screensaver. With this knowledge, it means I unsubscribed to my last threads except the Advanced PA and TA threads (which I am not involved in and don’t really expect to get posts) and this one. I additionally removed my subscription to the forex trading section I just used to look for the occasional good idea. I no longer want or need any of it; less distractions, more time trading.

I am also playing with the idea of doing a little longer intraday trading. I figure that, while in school, I may only have one or two solid trading sessions per week to trade, which will make it difficult to make enough to support myself just based on intraday sharpshooting (especially if I spend more time on innovation and such as I’d like). Part of the solution may lie in my current plan, in which I study charts and trade mainly for 15-20 minutes at the top of the hour, and monitor any positions and do work in between. However, it is difficult to foresee how or if I would be able to integrate this with everything else I’m doing. Instead, I think I could run a few positions per week on the 3 hr charts. This way I think I have several advantages:

1. I will be able to monitor them better, as they will need overall less work per day.

2. I will always be able to trade. An 8-9 hour sleep will only miss three bars, and I will surely have stops and targets in place during this time. Even so, if I wait to trade until Monday night like I’ do now (which is in no way decided for this) from 4:00 Monday to 4:00 Friday will still be 32 bars of play, which is plenty for most PA-based strategies to work out if I have several pairs to work with (still no point in holding over weekend).However, this will probably also mean no new trades after probably at a certain point Thursday or Thursday night.

3. The Asian session will actually be tradable. Not because I want it to be for convenience (past attempted scalping), but because it actually will be – every timeframe will be tradable.

4. This will give me valuable insight into the 3 hr and daily that will surely help me with my normal trading. I will also legitimately be able to work in the weekly charts in my analysis.

5. I will be able to reduce sizes and just use it as a source of additional income

6. If I use pairs separate from what I am currently trading, it will not interfere with my normal trading – slightly higher spreads are a necessary sacrifice, and they will mean far less as my targets will be much higher, etc.

I have to come back and say that Joe Ross does have a good idea about preempting the 1-2-3, and you can see it on his free law of charts ebook on his site. Who names a simple reversal bar after themselves though, I mean really? Ridiculous.

Today I went through a document someone prepared of an ETer’s most helpful posts, which was a bit enlightening, and I took several things out and put it in my observations document (which is now 3 pages again, I need to take care of that). I also worked a bit on the new Price Action Journal thread and went through a few more pdfs, although I was very busy and only had time for just maybe three hours of work.
 
1-2-3's can mean that you're late for the party (depending on the TF )...if you don't like taking "heat" on your entries.
Personaly, i think catching the end of the retracement on a fast TF ,should be superior way to trade, rather than, break of lows/highs, and there are many ways to do that.
 
Hello Greg!

I have been spending a lot of time in the last few days reading your entire thread thoroughly. I've finally gotten through it, and I can confidently say I am a Trader Greg expert haha!
I've just seriously started following fx (or so I think), and your thread has been extremely helpful. It has helped me think about what my next step should be in terms of learning the market, which has always been a problem for me. There's so much to learn out there and it can feel overwhelming (especially with school going on)!
Thanks for becoming a valuable member of this forum and hopefully the day comes where I can contribute meaningfully in a discussion.

Some questions:

1. In Suri's book, what did you find were helpful and not helpful? You're absolutely right about his editing...just awful!
2. Have you given any thought to ATS and programming? I just took a course in computational finance and it's opened my eyes as to the usefulness of this type of stuff. Unfortunately, I'm an awful programmer (evidenced by the FOUR times it took me to pass intro to programming lol), and I'm not sure I have the mental capacity a lot of these financial engineers have.
3. From what I've read from your thread, I thought maybe a book you may have grazed was technical analysis of the currency markets by schlossberg. I thought the book was helpful, although his credibility seems to be borderline. What do you think of the dailyFX crew? Seems like not too many people are big fans on this forum
4. What sort of computer station setup do you have? I've got 24 and 22 inch monitors setup to one computer and I still don't find it enough to put up a bunch of charts at once.
5. What would you have done differently about your trade journey knowing what you do now? (Aside from cutting out the trading on the 1min chart in the very beginning - I completely understand your reasoning for trying it though).
6. Aside from the TA and PA threads, what were some others that you found were useful (either here or on other sites)?

I know it's a lot to bite off, but I just consumed 3 months of your journal so...I've actually got a lot more to ask too lol.

im eddie btw...the handle here is just my middle name. It's nice to meet you =)
 
Quote from baron193:

1-2-3's can mean that you're late for the party (depending on the TF )...if you don't like taking "heat" on your entries.
Personaly, i think catching the end of the retracement on a fast TF ,should be superior way to trade, rather than, break of lows/highs, and there are many ways to do that.
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I understand I could be late with the play, but I'm not sure I have the expertise yet to get the reversal before it happens all the time. It's just one of many signals in my arsenal.

I'm not sure what you mean completely on the rest. Are you suggesting a trend-following strategy in which you try to catch the next wave after a retracement? Also are you meaning the breaks of swing lows and highs - because I'm not a breakout trader
 
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