Price Action Swing Trading - The PAST Strategy

[Nigel Price]

Hi Guys, just in case you were wondering, here is my latest chart of GBP/CHF.

A frustrating week all round really, it was pushed up against the underside of my trendline all week, but looked in a good position for an eventual fall.

Unfortunately we broke higher on Friday though, and that has taken the immediate bearish pressure off the market.

We are now testing the down-sloping trendline - although I still have my original break-even trade open, it will not take much movement above that trendline to prompt me to close it out for a smaller profit. Somewhere around 1.5250 would be the most I could stomach I think, before admitting that that bears have lost their chance here.

Hope everyone is having a good weekend. Watch out for a report tomorrow, and see you in here next week.

Click for large view - Uploaded with Skitch​

 

[stuart1984]

Hi Guys, just in case you were wondering, here is my latest chart of GBP/CHF.

A frustrating week all round really, it was pushed up against the underside of my trendline all week, but looked in a good position for an eventual fall.

Unfortunately we broke higher on Friday though, and that has taken the immediate bearish pressure off the market.

We are now testing the down-sloping trendline - although I still have my original break-even trade open, it will not take much movement above that trendline to prompt me to close it out for a smaller profit. Somewhere around 1.5250 would be the most I could stomach I think, before admitting that that bears have lost their chance here.

Hope everyone is having a good weekend. Watch out for a report tomorrow, and see you in here next week.

Click for large view - Uploaded with Skitch​

Evening Nigel

I agree the bulls have been stronger than I would have liked. Very interested to see what happens around current levels. If I begin to see some weekness, I will possibly look to add to my position.

If I see much more strength, I will probably exit too.

Stuart

 

[stuart1984]

As for the weekly charts, pretty much nothing new taking my fancy.

I am still watching GBPCAD with interested as per my post last week, other than that, I am sticking with the positions that I have currently open:

Short GBPUSD, Short GBPCHF and Short EURNOK.

Happy trading for the week ahead, remember we are at the end of the month so a look at the monthly charts tends to be a good idea.

Stuart

 

[Nigel Price]

Morning All!

Happy Monday

I got knocked out of my GBPCHF short this morning at 1.5255, 5 pips above where I said I didn't want to see price above.

It was an 88 pip profit, but I have had a few losers on GBPCHF too, so realistically it is much more like a break-even trade, altogether, than a profitable one. Perhaps even a small loss, I haven't done the exact numbers.

Now, I want to be very clear about something - this is NOT water off a duck's back for me. The GBPCHF trade went from looking extremely promising last week to looking decidedly like a coin toss now. With that change in fortunes, I have watched a significant floating profit pretty much disappear.

That hurts, that annoys me, it is not pleasant.

You start to say - "agh I should have closed out earlier, taken profit when I had it, etc."

That is the natural response, but like so many things in trading, the natural response is the wrong response.

By thinking like that, you must think that you somehow know when price is going to turn around. We can all point back to a chart in hindsight and say "that was the best place to take profit". It's not so easy in real time. There is never any shortage of hindsight traders around, telling what you should have done.

But us PAST traders, i.e. REAL Traders, acknowledge that we don't know the future. All we can do is look at the price in real time, assess whether bulls or bears have control of the market, and try to align our trading in that direction for as long as that control lasts.

Sometimes those swings will last a long time, but more often they will not really develop at all. But until we learn a way of predicting these swings (and I'm certainly not going to waste any more of my time trying) we just have to make the most out of what we can control i.e. (our trading) and leave the amateur fortune-telling to the mouthpieces on CNBC.

 

[Nigel Price]

Quite a lot of GBP strength out there this morning! GBP/JPY has broken a trendline to the upside too. Bears could be ready to take a breather for a while.

The other thing I wanted to suggest this morning -

as many of you will have seen, Stuart wrote, starred in, directed and produced a great video which he posted in here last week. He also took over the reins of the PAST report there at the weekend, and spoke a little about the video and what he learnt etc.

I am going to do a longer post later on in the week about the things that stuck out for me while I was watching the video. If you haven't watched it, I would definitely recommend you take a look at it. It's an hour long, but there is a lot of good material in there.

Did anything jump out at you from the video? Did you learn anything? Any questions or comments? Post them in here and we can discuss them. I would be really interested to know whether there are any common themes on what we all took from it.

 

[Nigel Price]

One thing that I have been thinking about recently about GBP is the upcoming Scottish independence referendum.

It seems as though the market has almost completely written off the possibility of the "Yes" side winning the referendum. Anything I've read from a financial markets perspective has been that a "Yes" vote is pretty much going to be a non-starter.

Whenever there is such a consensus like this, I am always sniffing around for the opposite view. While there is no doubt that the "No" vote is definitely the favourite, I'm not sure that it's quite the done deal that I have been reading about.

It's not just a normal referendum about picking politicians, it's about quite a bit more than that - questions of identity and so on don't arise in normal elections.

Plus there is a huge interest in the referendum, which could result in a very high turnout, a lot higher than you get in normal elections. If you have a lot of people voting that don't usually vote, that can turn the usual voting patterns (upon which the polls are based) on their head.

I think it could be a lot closer than the markets have priced in, and I wouldn't be surprised at all if the Yes side nicked it. Stranger things have happened. If they did, there could be a lot of volatility in GBP.

 

[stuart1984]

Morning All!

Happy Monday

I got knocked out of my GBPCHF short this morning at 1.5255, 5 pips above where I said I didn't want to see price above.

It was an 88 pip profit, but I have had a few losers on GBPCHF too, so realistically it is much more like a break-even trade, altogether, than a profitable one. Perhaps even a small loss, I haven't done the exact numbers.

Now, I want to be very clear about something - this is NOT water off a duck's back for me. The GBPCHF trade went from looking extremely promising last week to looking decidedly like a coin toss now. With that change in fortunes, I have watched a significant floating profit pretty much disappear.

That hurts, that annoys me, it is not pleasant.

You start to say - "agh I should have closed out earlier, taken profit when I had it, etc."

That is the natural response, but like so many things in trading, the natural response is the wrong response.

By thinking like that, you must think that you somehow know when price is going to turn around. We can all point back to a chart in hindsight and say "that was the best place to take profit". It's not so easy in real time. There is never any shortage of hindsight traders around, telling what you should have done.

But us PAST traders, i.e. REAL Traders, acknowledge that we don't know the future. All we can do is look at the price in real time, assess whether bulls or bears have control of the market, and try to align our trading in that direction for as long as that control lasts.

Sometimes those swings will last a long time, but more often they will not really develop at all. But until we learn a way of predicting these swings (and I'm certainly not going to waste any more of my time trying) we just have to make the most out of what we can control i.e. (our trading) and leave the amateur fortune-telling to the mouthpieces on CNBC.

Afternoon Nigel

I took a slightly different tactic with this scenario this morning. I have a had stop in play at 1.5310. price reached a zone this morning that I felt could be the end of the bull run and so I entered short after the 9am bear candle.

I used the protected capital from the first position as risk capital for this super aggressive trade.

I may very will live to regret this decision but it is pretty much in line with how I wanted to trade it.

Well done for taking your trade off the table, this will probably end up being the more sensible choice.

Stuart

 

[stuart1984]

One thing that I have been thinking about recently about GBP is the upcoming Scottish independence referendum.

It seems as though the market has almost completely written off the possibility of the "Yes" side winning the referendum. Anything I've read from a financial markets perspective has been that a "Yes" vote is pretty much going to be a non-starter.

Whenever there is such a consensus like this, I am always sniffing around for the opposite view. While there is no doubt that the "No" vote is definitely the favourite, I'm not sure that it's quite the done deal that I have been reading about.

It's not just a normal referendum about picking politicians, it's about quite a bit more than that - questions of identity and so on don't arise in normal elections.

Plus there is a huge interest in the referendum, which could result in a very high turnout, a lot higher than you get in normal elections. If you have a lot of people voting that don't usually vote, that can turn the usual voting patterns (upon which the polls are based) on their head.

I think it could be a lot closer than the markets have priced in, and I wouldn't be surprised at all if the Yes side nicked it. Stranger things have happened. If they did, there could be a lot of volatility in GBP.

I have been meaning to ask you about this for quite some time but it has slipped my mind each time in the forum.

I do think there is a possibility that the Yes vote may go through. People are chopping and changing their minds like no bodies business here and as you say, there will probably be a huge voting turnout which could very well swing it for a Yes.

Time will only tell but I have no idea what either outcome would mean for GBP as a currency.

Stuart

 

[Kimbo4x]

It took me a while, but I watched your entire video on you tube. Very convincing! Many, many losses (break even or small) but the 1 winner resulted in 45%+ increase in equity

It looks like you were using 90 pip s/l on the GBPJPY. Was that based on size of pinbar, or your preference for this pair?

I woulf love to see the MT4 Stat sheet in greater detail to analyze what would have happened if you took 1/3 or 1/2 off every time you moved to break even

 

[Kimbo4x]

Monthly bars

we are at the end of the month so a look at the monthly charts tends to be a good idea.

Stuart

This is what I got out of monthly charts. I am new here so take it for what it is worth ( I have been trading for 8 years, however):
Monthly:
Yens are headed up?
UJ long- bullish pin bar following last month's close above last bear bar open.
CADJPY long - bullish pin bar following 6 bull bars , might be too late
CHFJPY long - small bull pinbar/doji, end of small pullback?
EURGBP short - bearish pin bar, 5th bearish bar = might be too late to the party
CHFNOK short - bear bar following bearish doji, monthly bars forming double top, and stochastics favor move to downside (I have never traded this pair)

 

[stuart1984]

It took me a while, but I watched your entire video on you tube. Very convincing! Many, many losses (break even or small) but the 1 winner resulted in 45%+ increase in equity

It looks like you were using 90 pip s/l on the GBPJPY. Was that based on size of pinbar, or your preference for this pair?

I woulf love to see the MT4 Stat sheet in greater detail to analyze what would have happened if you took 1/3 or 1/2 off every time you moved to break even

Hi Kimbo4x

Thanks very much for watching the video, I hope you found it helpful in some way. I will need to upload the data for gbpjpy and usdcad again as I have moved on to test some different pairs.

I currently don't have access to the data sheet but I will post these results when I have them. Hope this is ok.

Stuart

 

[stuart1984]

This is what I got out of monthly charts. I am new here so take it for what it is worth ( I have been trading for 8 years, however):
Monthly:
Yens are headed up?
UJ long- bullish pin bar following last month's close above last bear bar open.
CADJPY long - bullish pin bar following 6 bull bars , might be too late
CHFJPY long - small bull pinbar/doji, end of small pullback?
EURGBP short - bearish pin bar, 5th bearish bar = might be too late to the party
CHFNOK short - bear bar following bearish doji, monthly bars forming double top, and stochastics favor move to downside (I have never traded this pair)

Thanks for this analysis. I am just in from 2 x 16hr working days but I am off tomorrow so I will have a look through your suggestions tomorrow.

Stuart

 

[stuart1984]

Afternoon Nigel

I took a slightly different tactic with this scenario this morning. I have a had stop in play at 1.5310. price reached a zone this morning that I felt could be the end of the bull run and so I entered short after the 9am bear candle.

I used the protected capital from the first position as risk capital for this super aggressive trade.

I may very will live to regret this decision but it is pretty much in line with how I wanted to trade it.

Well done for taking your trade off the table, this will probably end up being the more sensible choice.

Stuart

Morning folks

It looks like luck was on my side on Monday when I aggressively added to my dwindling GBPCHF trade. I didn't manage to get to BE before I went to bed which was not ideal but I left the trade open to play out and reassess in the morning yesterday.

The trade started moving swiftly in my direction yesterday morning and I was able to get to BE and the trade is now up about 115 pips and my original position back up to 210 pips.

This was an aggressive play and one that I was in 2 minds about taking. It has worked on this occasion but might not next time. Anyway here is the chart:



Thanks

Stuart

 

[stuart1984]

It took me a while, but I watched your entire video on you tube. Very convincing! Many, many losses (break even or small) but the 1 winner resulted in 45%+ increase in equity

It looks like you were using 90 pip s/l on the GBPJPY. Was that based on size of pinbar, or your preference for this pair?

I woulf love to see the MT4 Stat sheet in greater detail to analyze what would have happened if you took 1/3 or 1/2 off every time you moved to break even

Hi Kimbo

Sorry, I meant to address your question about SL size in my last post but forgot. Yes I think the SL was about 90 pips on gbpjpy. This is larger than I would have liked but for me it was relevant to the local price action. I was not trading in 2009 but it looks like the daily ranges and hourly ranges were much larger than they are today, hence the reason a bigger stop loss was needed.

With regard to taking part of the position off when I move to BE. It is something I have considered doing but decided against for the following reason; if I take half my position off at 1:1 RR (this is the point I usually move to BE) then I would need to be getting to BE at least on half of my trades just to tread water on half my positions, I would then only have half the position open for those trades that do turn into a big winner. Yes this would probably protect the account from drawdowns a bit but it would also reduce the overall gains I can achieve in the long run.

That being said, I would be interested to run some numbers on taking part of the position off at about 1:5 RR. I think this would have a much better effect on the account in general.

As I said, I don't have access to the data sheet for the testing I did on the video but I will be doing another session soon and will gladly upload the stats to the forum here so that you can have a look.

Stuart

 

[stuart1984]

Hi guys

A quick update on EURNOK. The downwards momentum has been struggling now for a few days and we are at an area where I would anticipate there to be demand for the pair. If todays candle closes above the descending daily trendline in my chart below I will be closing all or at least a large part of my position with the intention of getting back in again at higher levels.



Stuart

 

[stuart1984]

Hi traders

Following my post yesterday on EURNOK. I exited my full position last night based on the big daily bull candle. Price today has reversed again and I am left wishing I had kept my position open. However, I had a plan and I stuck to it and exited the position with approx 17 x my initial investment and therefore I will chalk this one up as a success.

The ECB announcement this afternoon that it is cutting interest rates further has played havoc with my GBPCHF trade and it is looking like the trade I added on Monday is going to be stopped out for BE. My BE stop is at 1.5259 so I will wait and see what happens. If that trade is stopped out I will accept the bears have lost all control and will exit my initial position at the market.

Hope everyone is having a good week.

Stuart

 

[stuart1984]

So there it is:

Stopped out at BE on Mondays GBPCHF trade and closed out my original trade for approx 95 pips profit.

All in all, this has been disappointing after how promising the trade was looking before last week. As Nigel explained in his recent post, I could sit and wish that I had taken off the trade at the bottom and not held out for more but we will never know where the bottom is.

I experienced a few losses establishing positions on GBPCHF and so it has worked out to be roughly BE for all the trades combined.

Chin up and carry on, keep testing the water and we will succeed.

GBPUSD still looking good, currently up about 570 pips.

Stuart

 

[Abercrombie]

Stuart,

I thought the course of action you outlined for EURNOK was sound. You executed your plan - and I think that is the real success. The market just happened to tip the other way. But is this reversal only momentary, or will it be long-winded? There is really no way to know. And does it even matter? We can only base our decisions on the information we had at the time of the decision. And second-guessing ourselves only damages our psyche. Hindsight is always 20/20.

If only we could peek ahead into the future to find the tops and bottoms. But without a functioning crystal ball, the best we can do is have a solid plan and stick to it. (Or else spend a lifetime chasing the crystal ball.)

I'm not saying anything we haven't heard before, but I think it has been said so many times because: 1) it is important to remember, and 2) it is easy to forget.

I'll get off my soapbox now. Hope everybody is trading well.

Abercrombie

 

[stuart1984]

Stuart,

I thought the course of action you outlined for EURNOK was sound. You executed your plan - and I think that is the real success. The market just happened to tip the other way. But is this reversal only momentary, or will it be long-winded? There is really no way to know. And does it even matter? We can only base our decisions on the information we had at the time of the decision. And second-guessing ourselves only damages our psyche. Hindsight is always 20/20.

If only we could peek ahead into the future to find the tops and bottoms. But without a functioning crystal ball, the best we can do is have a solid plan and stick to it. (Or else spend a lifetime chasing the crystal ball.)

I'm not saying anything we haven't heard before, but I think it has been said so many times because: 1) it is important to remember, and 2) it is easy to forget.

I'll get off my soapbox now. Hope everybody is trading well.

Abercrombie

Thanks Abercrombie

I totally agree.

Stuart

 

[stuart1984]

Good evening PAST traders.

GBPUSD looks like it is going to open the market with about a 150 pip gap to the downside!!! I can't see a candle yet on my platform but my mobile app shows price currently trading around 1.618.

Stuart