hello


I just want to ask u ,, WHY FXCM REMOVED THE STOP LOSSES AND LIMIT!!!

New regulations required some changes in the way traders do business in the US. FXCM did not get rid of stops and limits as you still have the ability to do this using entry orders. Here is more on the changes:

NFA FIFO (First in First Out) Rules - DailyFX Forum

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With the markets still in strong moves, it can be hard to jump in with the trend and hand on. Ideally, I would rather see a pullback on the 4-hour chart before buying the EUR/JPY, but we can see a place to enter in on the hourly chart for those who have missed this move. I might prefer waiting for the move up through resistance before buying just to make sure that the buyers were once again in charge of the market. That means a protective stop below support. That is a risk of about 180 pips which means that we should look for a gain of about 360 pips for our 1:2 risk:reward ratio. But this market can move that much in a day. We may be in for a bigger pullback at some time here, but reacting to the market and not trying to predict the future usually leads to better trading results.

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ThomaS

Thanks for your post. Would this entry be at the break of resistance or after a full bodied close above resistance on the 1H Chart?

Regards.

Dear Tom,

Are you saying that when you see significant pullbacks, you assume that these are entries along the trend and will continue?

This comment interests me because once I have a clear Daily Trend, I find my self questioning and analyzing the pullbacks. Most times the pullbacks are bound by point 2 resistance/ support in the typical 1234 swing moves. At each swing, I am deterred by these boundaries, and factors like Divergence that often show on lower timeframes when higher timeframe is trending. Its like an analysis-paralysis. It would perhaps be easier to just take all these swings as entries.

Do you question the pullbacks on the 1234 breaks, and Divergences on pullback timeframe? Or you take all these dips and assume price will continue to trend in the original direction despite these barriers?

Thanks,
JForex.

Dear Tom,

Let us say you saw a Daily uprend and entered on a H1 pullback. When do you exit this trade? When the Daily trend fails, or when the H1 trend fails?

Thanks,
JForex.

I think we could ask Tom to add a couple trend lines to his previous chart and that would probably show where he thinks the entries and exits might be.....

The chart he posted is for the purpose of demonstration S&R, I have a hunch he also uses a couple trend lines on his 'work' chart.

This is really a matter of personal preference of the trader. I just buy on a move up through resistance or down through support as I feel that if the market can move through those levels that there is no longer support or resistance present. Some traders like to make sure that there is some follow through so they wait for a close above resistance or below support. Both are valid approaches though and each trader must decide which they prefer.

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I always stick with the trend as long as I feel it is intact. This means I look to buys pullbacks down to support in an uptrend or sell rallies up to resistance in a downtrend. I pick the strongest trending moves I can find on the daily chart and stick with those. I feel that this is the most important piece of technical information we can use in our trading. That means that information from technical indicators take a back seat in my analysis. It becomes a matter of blind faith to assume that the trend is still intact, but trends in the FX markets can last a long time. My bigger concern is the depth of the pullback or rally. Sometimes that pullback on the hourly chart is really just the start of a deeper pullback which may play out on the 4-hour or 8-hour chart. This leads to more losing trades than a major trend change. This is why there are times when I wait for a move up through resistance before buying on the hourly chart. I just want to make sure that the buyers are back in charge before getting back into a trade. It's all about your interpretation of the trend though. Picking the strongest trending move allows everything else we do to fall into place which increases our chance of success.

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If I buy on the hourly, I exit on the hourly. I will typically use a 1:2 risk:reward ratio on the trades generated on the hourly chart. So if I am risking 100 pips, I look for 200 pips in profit. If I enter on a signal generated on the daily chart, I will stay in for as long as I can. Especially if I feel I got in near the beginning of the move.

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On this chart, I did not use trendlines. However, I will use just about anything I can to help determine an entry, to include trendlines. I think that we are in a nice long trending move here on most pairs, so I just stick with buying pullbacks in an uptrend or selling rallies in a downtrend. I will use previous highs and lows (like on the EUR/JPY chart), trendlines, technical indicators or any other method I can think of to help determine my entry. The common theme in my work though is that I only trade the strongest trends I can find on the daily charts. This allows me to be a little more aggressive in my approach when I move down to an intraday chart to find my entry and exit in that same direction. When we choose the right pair to trade, everything else we do can fall right into place.

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Thanks. Do you see a problem taking an entry on the hourly and riding on until the Daily fades?

That might be too much risk on the hourly. By the time we see a change on the daily chart, the market has moved quite a bit on the hourly. Having said that, if you feel you got in near the beginning of the move on the daily chart, then I wouldn't mind trying to stay in longer. I would move my stop to breakeven after the market moved about 100 pips from my entry though. Then I might let it run to see how much I could get.

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That was what I was coming to. This pretty much means that our entry chart should be the timeframe for which we want to HOLD the position.

If I wish to hold a position for a couple of 'Days', I do not think that an hourly chart for entry is correct. The hourly trend will last for those many hours, and might take deep pullbacks by the time the trend appears on the Daily, undoing substantial profit or even negating it.

If I want to hold my position for a couple of days, I think the entry chart should be Daily, and the trade idea chart should be something higher, like Weekly. Do you agree?

Thanks,
JForex.

In most cases, I do agree. What we do want to avoid is getting in on a shorter-time frame chart, having the market go against us and in order not to have to take the loss, convince ourselves that we should make it a longer-term trade and not exit. But there are instances where I see a trade setting up on the daily chart and move down to the hourly to try to cheat on my entry. What I mean is that I try to get in early by using a shorter-time frame chart. So I might enter on the hourly and then exit on the daily. There is a big difference between planning to do that before entry and trying not to take a loss after your entry. Since I always trade in the direction of the trend on the daily chart, I can find myself on many different time frame charts to identify entries in that same direction. This is quite different from only use one time frame for your trading. In that case, one should use the same time frame for entry and exit.

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