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Synthesizing Tharp and Alexander
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Synthesis and application...
The foreign currency pair market has been relatively dead (in my estimation) during the last eight to ten hours, which might have been of benefit to me in that it seems to have guided the refinement of my chart configuration such that I am now better able to take advantage of subtle price fluctuations between the "banks" of opposing "shorelines." The changes could also perhaps make it easier for me to recognize intermediate reversals in the intraday trend...
The foreign currency pair market has been relatively dead (in my estimation) during the last eight to ten hours, which might have been of benefit to me in that it seems to have guided the refinement of my chart configuration such that I am now better able to take advantage of subtle price fluctuations between the "banks" of opposing "shorelines." The changes could also perhaps make it easier for me to recognize intermediate reversals in the intraday trend...
The results of trading using the modified configuration seems to support Al’s contention that there are reasons to buy and reasons to sell almost every minute of the day, meaning that if you know how to read the charts, you can structure a reasonable buy and a reasonable sell at almost any time, even when the market is extraordinarily range bound...
However, AUDUSD made it clear to me that it is still safest to limit the positions I enter exclusively to those that are on the “right” side of the broader trend, even when intraday price action is neutral.
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Synthesis and application...
I spent maybe 30 minutes managing positions (scalping) this morning before finally having to get on with my day and go do other things...
But the point (to myself) is that I now have all the instrumentation I need so that there really is no reason for me to ever be losing money, God willing, provided I am dedicating all my time and attention exclusively to trading.
It should probably also be mentioned that whenever this is the case, my returns per trade should increase exponentially because I will be exiting positions when warranted by price action as opposed to exiting via predetermined targets, as I was forced to do above (due to dividing my attention between trading and two other tasks).
I spent maybe 30 minutes managing positions (scalping) this morning before finally having to get on with my day and go do other things...
But the point (to myself) is that I now have all the instrumentation I need so that there really is no reason for me to ever be losing money, God willing, provided I am dedicating all my time and attention exclusively to trading.
It should probably also be mentioned that whenever this is the case, my returns per trade should increase exponentially because I will be exiting positions when warranted by price action as opposed to exiting via predetermined targets, as I was forced to do above (due to dividing my attention between trading and two other tasks).
I have access to three books by Al Brooks, one on trading reversals, a second on trading trends, and a third on trading ranges. Today I took a look at a section in the one on trading trends in which Al wrote...
"All trends contain smaller trading ranges, and all trading ranges contain smaller trends."
But this is literally impossible! (Unless I suppose one is able to trade at the microscopic level.) At some point ranges become so narrow that, for all practical purposes, they no longer contain trends within them. The next sentence Brooks wrote was...
"Also, most trends are just parts of trading ranges on higher time frame (HTF) charts, and most trading ranges are parts of trends on HTF charts."
This is a much more reasonable statement because here he thankfully includes the word "most."
Brooks goes on to state that an important point to remember is that "the market constantly exhibits inertia and tends to continue to do what is has just been doing. If it is in a trend, most attempts to reverse it will fail. If it is in a trading range, most attempts to break out into a trend will fail."
I would not disagree with this, but I look at it a little differently. I would say that if the market is in a trend, most attempts to reverse it that occur during periods of low liquidity/volatility and within the central regions of the asset's typical price ranges as established by historical price behavior will fail.
However, it is my experience that attempts to reverse that occur during periods of high liquidity/volatility near the outer regions of the asset's typical price ranges are moderately to wildly successful a statistically significant (high) percentage of the time.
Likewise, if the market is in a trading range, most attempts to break out into a trend during periods of low liquidity/volatility and within the central regions of the asset's typical price ranges as established by historical price behavior will fail.
But once again, it is my experience that attempts to break out into a trend during periods of high liquidity/volatility which are initiated from the outer regions of an asset's typical price ranges as established by historical price behavior will again be moderately to wildly successful a statistically significant (high) percentage of the time.
I apply this outlook to trading foreign currency pairs, but I've used it successfully trading U.S. indices as well. However, a critical factor in seeing it lead to positive results is being able to distinguish between insignificant price fluctuations verses confirmed launches in a new direction.
"All trends contain smaller trading ranges, and all trading ranges contain smaller trends."
But this is literally impossible! (Unless I suppose one is able to trade at the microscopic level.) At some point ranges become so narrow that, for all practical purposes, they no longer contain trends within them. The next sentence Brooks wrote was...
"Also, most trends are just parts of trading ranges on higher time frame (HTF) charts, and most trading ranges are parts of trends on HTF charts."
This is a much more reasonable statement because here he thankfully includes the word "most."
Brooks goes on to state that an important point to remember is that "the market constantly exhibits inertia and tends to continue to do what is has just been doing. If it is in a trend, most attempts to reverse it will fail. If it is in a trading range, most attempts to break out into a trend will fail."
I would not disagree with this, but I look at it a little differently. I would say that if the market is in a trend, most attempts to reverse it that occur during periods of low liquidity/volatility and within the central regions of the asset's typical price ranges as established by historical price behavior will fail.
However, it is my experience that attempts to reverse that occur during periods of high liquidity/volatility near the outer regions of the asset's typical price ranges are moderately to wildly successful a statistically significant (high) percentage of the time.
Likewise, if the market is in a trading range, most attempts to break out into a trend during periods of low liquidity/volatility and within the central regions of the asset's typical price ranges as established by historical price behavior will fail.
But once again, it is my experience that attempts to break out into a trend during periods of high liquidity/volatility which are initiated from the outer regions of an asset's typical price ranges as established by historical price behavior will again be moderately to wildly successful a statistically significant (high) percentage of the time.
I apply this outlook to trading foreign currency pairs, but I've used it successfully trading U.S. indices as well. However, a critical factor in seeing it lead to positive results is being able to distinguish between insignificant price fluctuations verses confirmed launches in a new direction.
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Al Brooks synthesis and application...
The results of substituting my proprietary adaptive price range envelopes with the closest matching Donchian channels (to save memory) suggest that from the perspective of a day trader, exchange rates typically establish intraday price ranges within two distinct time frames, usually taking [xx] minutes and [xx] minutes to complete the part of a price cycle extending from the crest to the trough of a given wave (and vice versa).
Exactly where the SELL should be executed will be determined by the level at which new candlesticks are forming in relation to key moving averages.
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The rate came extremely close to the anticipated SELL zone, but did not quite enter it...
Most of what I am seeing in Al Brooks' publications don't apply to me, either because I don't do the things he describes that cause problems, or because I already have my own way of accomplishing the things he describes that work.
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On the pages I've glanced at so far, Al Brooks seems to devote a lot of text to explaining how to interpret different types of bars (i.e., outside bar, etc.). But the obsession with learning how to decipher what a doji, hammer, morning star, or other type of candlestick is communicating has never made a great deal of sense to me, to tell you the truth. Personally, my preference is to simply drop down to a time frame low enough to actually see what is going on, and move on from there.
After reading a little snippet of his book on trading ranges today, it struck me that Brooks devotes a tremendous amount of text to describing how prices behave in the markets, which provoked the thought in my mind that the reader might as well just paper trade and he or she would gather the exact same information.
I suppose by reading about it in advance, once an individual was actually trading, s/he might have repeated, "Oh, that's what Al was talking about!" experiences. But, if that's what Brooks was hoping for, if I were a newbie, I would have preferred that he simply include an example/image of each behavior as he described it.
I suppose by reading about it in advance, once an individual was actually trading, s/he might have repeated, "Oh, that's what Al was talking about!" experiences. But, if that's what Brooks was hoping for, if I were a newbie, I would have preferred that he simply include an example/image of each behavior as he described it.