Sackie's live trading experiment

I agree there is much of TA which doesn't work but to be fair, most traders fail their own analysis most of the time.

My opinion, I think price action coupled with very strong risk management and a system which utilises probabilities has the best chance to yeild profits long term.

 

Mark Douglas changed everything for me once I embodied his philosophy and applied it in a practical sense.

 

Here's a fresh example of how to take money from TA traders from last night.

TA = 4hr chart, price makes high, tests high 3 times and that is now Resistance. If it breakes resistence buy.


I put my sell there instead. Result below, 30m chart. Did it 3 times last night. 30pips a hit.



Most of what is called TA is the same as seeing animals in clouds i reckon.
And hardly anyone presenting it can trade it. And then there's Elliott waves, taking it to a whole new level.

 

But what you are doing is a form of TA using price action. Which is similar to what I do.

 

OK, so this is the set up/strategy in more detail. Probably only understandable to traders... See example below illustrated.

1. Look at a higher TF to see trend. So in this example I am executing on the 15min chart so i'll look at the 1h chart first.
2. Once general trend or bias is confirmed on the higher TF, open up the lower one. Below is the 15min chart.
3. Look for a divergence which confirms the bias of the higher TF. So lets assume the 1h TF is saying 'look for buys'.
4. In the chart below, you can see a clear divergence with price and the Relative Strength Index. Price is getting lower but strength overall is increasing. Wait for the end of the divergence to go back above the 30 line.
5. DO NOT take the buy trade until or unless price action shows buying strength near the divergence. I have circled the two candles which to me show buying strength and you could have bought long after either one of them with a SL below the candle. Strong PA I look for is an engulfing candle to engulf not just 1 candle but a whole small level. Also strong wick rejection candles at the divergence level is acceptable.
6. Money management/probability principles apply to all trades. My back testing showed a very good RR. After 30 trades well see my ROI and RR.

 

Trade 3 closed.
Risk to reward: 1 to 7.
Current balance: $355





Running Return on Investment since starting: $105/$250 X100 = 42%

 

Update: Currently in trades 4 and 5, Will post them at the completion. They are EURGBP sell on 30 mins. USDJPY buy on 30 mins.

 

Sneak peak at my usdjpy trade at present.

 

Yes, definitely price action. Though I use time as well. I watch a number of other factors too.
And what I do breaks many rules that most books list as " unbreakable rules for trading".
15yrs ago I could trade with 2 MAs and make it work for carry trades. Is that TA? Price? FA? Dunno, it just worked for me.
I had an feeling you used RSI, and I do too, in a different way. For me RSI works well for finding extremes.

There is an element of FA like interest rates as well. They made a big difference and caused some huge moves as they evened out 10 or so years ago.
When the rest of the world was at 2.5% or lower and Au at 4.75% and NZ higher it was just a matter of time for things to even out. And a drop from $1.05 to 60c.
Au and NZ dropped the rates and fried the carry traders and Japanese house wives who thought they found the money fontain.

Some may find it a little strange but I did get a lot from a couple Gann books. Not the fancy stuff, just the basic price, ranges, time and swing charts.
When I look at charts I see swing charts. I have drawn so many they're just ingrained.
And when it comes to forecasting nothing seems to come close. The original books though, not those writing about him which me seem like very different versions to me.

edit:
I'm long A/J, C/J and E/J. Took profits on G/J.

 

I like some of gann stuff too, especially price ranges.

 

Do you have a method to increase reliability of the reversal? Because in strong trends, the RSI will often show 'overbought' or 'oversold' when really it's indicating a strong trend.

I find using divergence confirmed by price action quite a strong strategy. I use divergences with a few other set ups too and find that if you can filter the divergence to increase the reliability of a reversal, it's really powerful offering tight SL ability with good RR.

 

Yes I have a few other indicators like the lines on the pics and or a breakout in the oppostie direction. Then occasionally there's "time by degrees" but that's a can of worms.
The accuracy and trade infrequency increases with the higher time frames. I trade very small and hopefully that leaves room for error.

As you say RSI of often an indicator of a strong trend, though just enough or a bit more to squeeze out the TA crowd.
Anything shorter than a 4hr chart is useless and anything inside 20-70 I won't even put on "watch".

 

Trade 6: EURCAD

Currently entered this trade but may need to get in a few times if SL is hit due to trying to keep a very tight SL. Some explanation for my entry:

Daily chart: Bullish divergence after a long base is formed. This also happens to coincide with another major support area to the far left of the chart (not visible in the pic sorry). Moderately bullish candle formed possibly suggesting the beginning of an upwards trend.



4h chart: Execution: I am trying to keep this SL very tight and looking for a big RR. If i need to re-enter a few times I will give it 3 attempts: You can see price breaking above the top range then coming back to re-test that range. Given the daily has a BD, I entered on the re-test on the 4h. Very tight SL. May get stopped out and need to re-enter. But the RR possibility is huge offering asymmetrical risk to reward.

 

Just interrupting the transmission to expand on a previous reply.

This trade currently in progress.
RSI goes down to 4.6 on a 30m chart, 9 on 1hr chart, 22 on 4 hr chart.
Price makes 3 bottoms, and establishes "resistance". Then breaks resistance lower signaling a TA down move, and is now coming back up catching the TA shorts.
Of course in hindsight you can find reasons to go long, hammer candle, didn't break resistance by much, etc.
In real time where that buy line is, not many reasons to go long other than knowing my odds are about 80%.


PS this is not std RSI and ZigZag.


Here's the exact entry on the tick chart

 

Very interesting, thanks for sharing!

 

+1! I like analysis to a certain point...then it becomes paralysis or too much analysis for me.
Hence can only play with minor amounts not major and prefer to spend time on other things.

 

In everything I've ever done, the best profits came from the simplest stuff.
With trading it's hard not to fall into the abyss of tedium in the early days.
A simple plan with max 3 indicators seems enough to do ok.
I also like smaller amount on a longer time frame and for me longer TFs are more predictable and less risky. If I'm trading 0.01 on daily charts stops can be placed far away and 100 pip move overnight is no big deal.
Do you use any method in particular?

 

I love using weekly for direction and daily for execution. The reliability is very good. Most of my trading uses these timeframes .

 

I think I prefer longer timeframes and slightly larger amounts but where I may go astray is with too many indicators, too much analysis, and then pull out too early for capital management preservation. Would have had some nice runs if I didn't exit too early, but I just play.
No particular method I think I am too emotional hence unsuited for trades? The same way I concluded golf is not for me as I bend/flex too much and try to hit the ball with all my emotion rather than a technique.. if you know what I mean?