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THT Market Education - How to WIN


THT

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LOL - The break from this thread was short lived!

This is the ETF MIDD of the FTSE250 Index

The WEEKLY chart (not shown) is BULLISH, but from an RSI Indicator persepective its in the OVERBOUGHT zone, so at some point in the next few weeks it WILL (the Indicator that is) correct downwards - whether that is in conjunction with price it is IMPOSSIBLE to know or tell in advance, what we do KNOW is a high % of time they operate in unison, but that's not a certainty

The chart below is the DAILY chart

OK, basics:

  1. Our old friend Gann said if a swing comes to a triple top for a fourth time it typically breaks through - that has happened
  2. We contracted into a range for a few months of which we've now broken out of
  3. What's next?
  4. Well I've not got the crystal ball, neither have any other traders, so we HAVE to think of the options available:
  • A = Price just carries on rallying upwards
  • B = As our old friend Gann said 100+ years ago - Buy on reactions to old TOPS - so we could see a pullback to the highs of the triple top levels #1,2 & 3 in green) and then rally (this would suit the positions of BOTH the Daily and Weekly Indicators) - It is possible that price might smidge lower than these tops and reverse
  • C = We've just had a lost motion type event and price could collapse through the old highs and back lower to do something else

What do you think?

Here's what I think:

  • Well actually thought, because I've already employed what I'm about to say:
  • See the bottom chart - that is how you catch the turns - the point to get into this trade to enhance the chances should AB or C above happen was at the swing low #3
  • Price action obviously will dictate in the next week or so

590.thumb.JPG.8593296bf2c7eb7554e6e96708a86855.JPG

This charts below to back up what I thought:

591.thumb.JPG.2a3bacc3c7be99667ffe9fab2cbacd16.JPG

592.thumb.JPG.5c83e31439e6f9048c61fee16a50f85a.JPG

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Remember above all keep trading simple - we can massively overly complicate matters by trying to predict moves, let the market dictate

Here's a classic wash n rinse of stops on GOLD DFB daily chart

Its also a long lost motion Gann trade too - so whilst some people had their stops run, some canny traders would have profited off the move

I missed the trade as I rarely look at the markets over a weekend - these are the shenanigans that happen in markets

So the market could go down further, it could bounce to form a triple bottom - what do we expect from a triple bottom? 

  • If its genuine then it'll take out the prior swing high
  • If its indecisive then it'll bounce around and
  • We know that typically if a triple bottom forms and price then returns to the lows to form a Gann 4th Time Lucky, price typically goes through 
  • So to the long side we'll be looking for a Gann secondary reaction set-up, Some form of wedging Inside price bars or a ABC 50% gann level correction (NONE of these have formed yet!)
  • To the short side - Further price deterioration in the next few bars to lower lows or a gann 4th time lucky (we need more daily price bars to either go sideways or rally and retreat for this set-up)
  • Remember set-ups TRUMP Indicators
  • Both the WEEKLY and the DAILY Indicators are in the oversold zones
  • We're not fussed which way the market goes, we can't control any of that, all we need are our set-ups to appear and then we get orders placed, the next few weeks should reveal much more
  • Just because this most recent support shelf off the old high provided support for swing low #1 - it doesn't have to anymore
  • I posted a month or so on the GOLD thread about relevance of the purple resistance level from the major high of 2011 

593.thumb.JPG.e13f78091481df3001e5544421709467.JPG

I posted previously in this thread about Gann 50% levels, we can see how this one held off the advance over the past few weeks - creates a triple top at the 50% level discussed last week

Look at the RSI Indicator at all 3 minor triple points - 1st 2 were in the overbought zone the 3rd didn't have the muster to get there, a tiny tick up then reversed

594.thumb.JPG.66430328ab4d6e7de361ed6f88d67345.JPG

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On 07/08/2021 at 12:09, THT said:

LOL - The break from this thread was short lived!

This is the ETF MIDD of the FTSE250 Index

The WEEKLY chart (not shown) is BULLISH, but from an RSI Indicator persepective its in the OVERBOUGHT zone, so at some point in the next few weeks it WILL (the Indicator that is) correct downwards - whether that is in conjunction with price it is IMPOSSIBLE to know or tell in advance, what we do KNOW is a high % of time they operate in unison, but that's not a certainty

The chart below is the DAILY chart

OK, basics:

  1. Our old friend Gann said if a swing comes to a triple top for a fourth time it typically breaks through - that has happened
  2. We contracted into a range for a few months of which we've now broken out of
  3. What's next?
  4. Well I've not got the crystal ball, neither have any other traders, so we HAVE to think of the options available:
  • A = Price just carries on rallying upwards
  • B = As our old friend Gann said 100+ years ago - Buy on reactions to old TOPS - so we could see a pullback to the highs of the triple top levels #1,2 & 3 in green) and then rally (this would suit the positions of BOTH the Daily and Weekly Indicators) - It is possible that price might smidge lower than these tops and reverse
  • C = We've just had a lost motion type event and price could collapse through the old highs and back lower to do something else

What do you think?

Here's what I think:

  • Well actually thought, because I've already employed what I'm about to say:
  • See the bottom chart - that is how you catch the turns - the point to get into this trade to enhance the chances should AB or C above happen was at the swing low #3
  • Price action obviously will dictate in the next week or so

590.thumb.JPG.8593296bf2c7eb7554e6e96708a86855.JPG

This charts below to back up what I thought:

591.thumb.JPG.2a3bacc3c7be99667ffe9fab2cbacd16.JPG

592.thumb.JPG.5c83e31439e6f9048c61fee16a50f85a.JPG

Hi THT, i find double/triple tops/bottoms confusing because it seems like one or the other could happen, i.e. either the market will repeatedly hit the support and break through to go lower or it will keep hitting resistance and break out to move higher but on the face of it seems like equal probability of either.  For example on your chart above whenever the support or resistance is hit you might think this could be the bigger move down or up so you're not sure whether to short at the resistance or long at the support each time.  The only bias for me would be that if a market is in a long term uptrend i'd tend to be more likely to go long at support than short at resistance.  I know they say the more the level is tested the weaker it is but both support and resistance are being tested. Where's that confused emoji!

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4 minutes ago, u0362565 said:

Hi THT, i find double/triple tops/bottoms confusing because it seems like one or the other could happen, i.e. either the market will repeatedly hit the support and break through to go lower or it will keep hitting resistance and break out to move higher but on the face of it seems like equal probability of either.  For example on your chart above whenever the support or resistance is hit you might think this could be the bigger move down or up so you're not sure whether to short at the resistance or long at the support each time.  The only bias for me would be that if a market is in a long term uptrend i'd tend to be more likely to go long at support than short at resistance.  I know they say the more the level is tested the weaker it is but both support and resistance are being tested. Where's that confused emoji!

You're asking the right questions

We don't know, we HAVE to step out in front of the bus and make a decision - this can be based on preference, technical info, fundamental info etc etc - People try to rationalise the direction - the one thing I would say is as of YET, the market has showed NO bearish signs, so the probability is firmly in the long camp, until we get bearish signals - for me that would be a trade BELOW the red swing low #3 low

The clues were on the Indicator at the 3 tops - I didn't short because I can't short that particular market inside the vehicle I use to trade it (my ISA and SIPP) So I'm forced by the limitations of the ETF I trade to trade long only

BUT, you're RIGHT - In an uptrend shorting might not amount to much and probably best avoided, as the swings down won't be that big

Of the ABC options available - A or B would be my preferred outlook to actually happen based the expectation of a breakout of a 4th Time Lucky but its not guaranteed as no trader has a 100% win record so option C could happen

As mentioned, I'm in the trade from the RED swing low #3, which allows me not to fret too much on having to make a decision and trade the breakout - the only reason i'm in that trade is due to the market position when it formed, I've seen it over and over and after making multiple R's over time risking 1R is a lot less mentally taxing that when you are starting out/new etc, I understand the reasons to hesitate

Look on the chart left from swing low #3 up to swing high #1 - if we reduced the % swing file size of the swings they would have picked up the sideways range to the left and in the middle of that swing, it was again another 4th Time Lucky set-up but on a smaller market swing - note what the market did on breakout etc

Once it broke out it rallied and pulled back into the range of the range and below the breakout level then rallied again - you just never know in advance what it will do, if the markets bullish it was go up higher, if it was bearish the prior low was being exceeded to the down side

You don't need to be trading long then short, you can still massively outperform the market by just trading long and banking profits along the way

The technical term for this sideways range is accumulation or distribution - the big players in the game are either adding or getting rid of positions causing the market to stall and stutter - they can and do play games like this

Hope makes sense 

THT

 

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Yeah ok I see what you're getting at, the more you look the more you see the same things happening time and time again. Like these ranges that then breakout. You don't even need to catch that swing that became the breakout. Yeah it might go up and up for many R which would be nice but you can do pretty well just trading just each swing up not expecting a breakout at all.

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Posted (edited)
12 hours ago, u0362565 said:

Yeah ok I see what you're getting at, the more you look the more you see the same things happening time and time again. Like these ranges that then breakout. You don't even need to catch that swing that became the breakout. Yeah it might go up and up for many R which would be nice but you can do pretty well just trading just each swing up not expecting a breakout at all.

Yeah - it's like being hell bent on buying a certain make of car in your favourite colour, you'll start seeing them all the time - same with set-ups, which is why I say you have all the tools to make it in this thread

Exactly, I have no idea if the breakout will work, I'm trailing a stop in the hope it will and if it doesn't then I'll make less than just targeting the prev swing high but that's a risk I'm willing to accept

4th Time lucky breakouts are fairly rare, they don't happen that often, so we're lucky ones formed right in front of us

The trick is to understand the formations, but the real trick comes in seeing it before it forms so that you can get on-board it early - this does mean having a thought that often does not happen/materialise but it is the way it is when you're trying to get in as close to the turn as is safe/possible

In the MIDD trade shown as swing down from #3 to #3 was forming I was thinking "OK we've got a sort of possible triple bottom forming here, we've def got a triple top, a triple top is the pre-cursor to a possible Gann 4th Time lucky breakout, lets just watch price action around the triple bottom and if it gives indication of a bottom and turn I'd like to get in on it"

Price held at support, triple bottom and an Inside bar formed, that was my cue to place an order in the market, because if my thinking was right price would be up towards the prior swing high #3 and that trade represented a multiple R value possible return 

We had pattern and the Indicator in near perfect positions for a reversal of trend

I don't understand everything about the markets, the reason for every rally, correction or whatever, but I do know that some patterns form often and when they occur after a decent correction or stall of the market they represent very high R multiple opportunities 

Having physical swing lines on the chart that can be set at a set % amount or whatever, helps me to see the formations clearer too

 

 

Edited by THT
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21 hours ago, THT said:

You're asking the right questions

We don't know, we HAVE to step out in front of the bus and make a decision - this can be based on preference, technical info, fundamental info etc etc - People try to rationalise the direction - the one thing I would say is as of YET, the market has showed NO bearish signs, so the probability is firmly in the long camp, until we get bearish signals - for me that would be a trade BELOW the red swing low #3 low

The clues were on the Indicator at the 3 tops - I didn't short because I can't short that particular market inside the vehicle I use to trade it (my ISA and SIPP) So I'm forced by the limitations of the ETF I trade to trade long only

BUT, you're RIGHT - In an uptrend shorting might not amount to much and probably best avoided, as the swings down won't be that big

Of the ABC options available - A or B would be my preferred outlook to actually happen based the expectation of a breakout of a 4th Time Lucky but its not guaranteed as no trader has a 100% win record so option C could happen

As mentioned, I'm in the trade from the RED swing low #3, which allows me not to fret too much on having to make a decision and trade the breakout - the only reason i'm in that trade is due to the market position when it formed, I've seen it over and over and after making multiple R's over time risking 1R is a lot less mentally taxing that when you are starting out/new etc, I understand the reasons to hesitate

Look on the chart left from swing low #3 up to swing high #1 - if we reduced the % swing file size of the swings they would have picked up the sideways range to the left and in the middle of that swing, it was again another 4th Time Lucky set-up but on a smaller market swing - note what the market did on breakout etc

Once it broke out it rallied and pulled back into the range of the range and below the breakout level then rallied again - you just never know in advance what it will do, if the markets bullish it was go up higher, if it was bearish the prior low was being exceeded to the down side

You don't need to be trading long then short, you can still massively outperform the market by just trading long and banking profits along the way

The technical term for this sideways range is accumulation or distribution - the big players in the game are either adding or getting rid of positions causing the market to stall and stutter - they can and do play games like this

Hope makes sense 

THT

 

Hi @THT, this is great. I like it. Just one question on the technical term for this sideways range is accumulation or distribution, would you be referring to The Wyckoff Method is applied here if you are aware of it ? Distribution and accumulation schematics (Wyckoff events and phases).

MongiIG

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7 minutes ago, MongiIG said:

Hi @THT, this is great. I like it. Just one question on the technical term for this sideways range is accumulation or distribution, would you be referring to The Wyckoff Method is applied here if you are aware of it ? Distribution and accumulation schematics (Wyckoff events and phases).

MongiIG

Thanks - Yeah aware of Wyckoff, he wrote some great stuff in the 1900's

THT 

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10 hours ago, THT said:

Yeah - it's like being hell bent on buying a certain make of car in your favourite colour, you'll start seeing them all the time - same with set-ups, which is why I say you have all the tools to make it in this thread

Exactly, I have no idea if the breakout will work, I'm trailing a stop in the hope it will and if it doesn't then I'll make less than just targeting the prev swing high but that's a risk I'm willing to accept

4th Time lucky breakouts are fairly rare, they don't happen that often, so we're lucky ones formed right in front of us

The trick is to understand the formations, but the real trick comes in seeing it before it forms so that you can get on-board it early - this does mean having a thought that often does not happen/materialise but it is the way it is when you're trying to get in as close to the turn as is safe/possible

In the MIDD trade shown as swing down from #3 to #3 was forming I was thinking "OK we've got a sort of possible triple bottom forming here, we've def got a triple top, a triple top is the pre-cursor to a possible Gann 4th Time lucky breakout, lets just watch price action around the triple bottom and if it gives indication of a bottom and turn I'd like to get in on it"

Price held at support, triple bottom and an Inside bar formed, that was my cue to place an order in the market, because if my thinking was right price would be up towards the prior swing high #3 and that trade represented a multiple R value possible return 

We had pattern and the Indicator in near perfect positions for a reversal of trend

I don't understand everything about the markets, the reason for every rally, correction or whatever, but I do know that some patterns form often and when they occur after a decent correction or stall of the market they represent very high R multiple opportunities 

Having physical swing lines on the chart that can be set at a set % amount or whatever, helps me to see the formations clearer too

 

 

Yeah ok thanks again for the info

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This is EURUSD DAILY chart

OK - step by step LOGICAL technical analysis

  1. Using a 2% swing chart we can see that we are within the RANGE of the LOW bar of the prior swing LOW point #1 green
  2. This is prime Double Bottom territory
  3. Prior swing lows are 100 pips lower "could" find support there, should price continue to decline further
  4. After a prolonged decline there has to be at some point a prolonged rally that is greater than 2% which will turn the swing file UP
  5. BOTH RSI Indicators of differing degrees are oversold

Nothing I say has to happen - we are second guessing the market here and we need to step out in front of the bus to see if we are right or wrong, so:

  • Ultra Aggressive long entry would be using ganns lost motion entry and wait for swing low #1 green to be exceeded and then place a buy order 1 pip above that low should the market bounce upwards into it (Purple line) with a pre-defined stop
  • Aggressive long entry would be to place a buy order 1 pip + spread above the last daily bar on the chart with a stop 1 pip + spread under the low of that bar if entry happens today (Active order in place for THT here), this order is moved to the prev days high until the trade is voided
  • Safer long entry would be to wait for a Gann secondary reaction / Elliott Wave 2 and buy on a confirmed turn near the low of that reaction
  • and a safer long entry would be to buy the breakout of the high that causes the gann secondary reaction / EW 2
  • You get the gist - If the trade triggers and develops I'll mark out these entries after they've formed to show you where I'd get in on each entry
  • or you could just buy an option to suit
  • Target is red Swing high #2 - at present, this can change as the trade develops as future swings could cause us to have to tighten stops but for now swing high #2 is the initial target and this is approx a 15R possible move if it works out as initially thought.

595.thumb.JPG.b85d297618cd1e3b26550d25e0bb73da.JPG

I've drawn the perfect scenario - the market might not comply to our desires and swing high #2 might not be reached (or anywhere near for that fact) - the main thing is:

  • The market is in an ideal position for a reversal - IF a DB is forming and going to happen then the market is going higher following some form of reversal 
  • To what extent we have no idea, if any, but as a trader we have to trade those set-ups when they show
  • I don't mind testing the market for a possible15R return
  • I'll manage the position as further bars show up and the swing develops 
  • Trailing stop will be employed throughout

 

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Here's the Dow Railroads from 1902 to 1909 which includes the great crash of 1907 caused by "Insurance" I think the excuse/reason was

Anyway, This is a monthly chart - note the Gann Secondary Reaction / Elliott Wave 2 in 1903-1906 rally followed by another pullback then rally, then we get a double top and then from 1907 to 1909 another rally - this rally has a Gann Lost Motion from the 1903 swing and (not shown) another Gann secondary reaction / Elliott Wave 2 near the start of the uptrend

These formations are the market, always have been & always will be - just wanted to show you they happen on different time frames AND they happened well over 100 years ago just as they do today596.thumb.JPG.c171c0dfd936c4b789c55152fc3b998c.JPG

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2 hours ago, THT said:

This is EURUSD DAILY chart

OK - step by step LOGICAL technical analysis

  1. Using a 2% swing chart we can see that we are within the RANGE of the LOW bar of the prior swing LOW point #1 green
  2. This is prime Double Bottom territory
  3. Prior swing lows are 100 pips lower "could" find support there, should price continue to decline further
  4. After a prolonged decline there has to be at some point a prolonged rally that is greater than 2% which will turn the swing file UP
  5. BOTH RSI Indicators of differing degrees are oversold

Nothing I say has to happen - we are second guessing the market here and we need to step out in front of the bus to see if we are right or wrong, so:

  • Ultra Aggressive long entry would be using ganns lost motion entry and wait for swing low #1 green to be exceeded and then place a buy order 1 pip above that low should the market bounce upwards into it (Purple line) with a pre-defined stop
  • Aggressive long entry would be to place a buy order 1 pip + spread above the last daily bar on the chart with a stop 1 pip + spread under the low of that bar if entry happens today (Active order in place for THT here), this order is moved to the prev days high until the trade is voided
  • Safer long entry would be to wait for a Gann secondary reaction / Elliott Wave 2 and buy on a confirmed turn near the low of that reaction
  • and a safer long entry would be to buy the breakout of the high that causes the gann secondary reaction / EW 2
  • You get the gist - If the trade triggers and develops I'll mark out these entries after they've formed to show you where I'd get in on each entry
  • or you could just buy an option to suit
  • Target is red Swing high #2 - at present, this can change as the trade develops as future swings could cause us to have to tighten stops but for now swing high #2 is the initial target and this is approx a 15R possible move if it works out as initially thought.

595.thumb.JPG.b85d297618cd1e3b26550d25e0bb73da.JPG

I've drawn the perfect scenario - the market might not comply to our desires and swing high #2 might not be reached (or anywhere near for that fact) - the main thing is:

  • The market is in an ideal position for a reversal - IF a DB is forming and going to happen then the market is going higher following some form of reversal 
  • To what extent we have no idea, if any, but as a trader we have to trade those set-ups when they show
  • I don't mind testing the market for a possible15R return
  • I'll manage the position as further bars show up and the swing develops 
  • Trailing stop will be employed throughout

 

Sorry kind of going slightly off the topic, looking at the earlier part of that chart. I guess previously you can see a double bottom too as shown by the blue line on your chart below that i've attached?  Did you use the same logic for that?  It was a big swing high it turned out. Also the move from swing low 1, no double bottom, no obvious setup for that one?  Can't see really clear support, I wouldn't have any reason to go for it necessarily but it was a big move again up to the previous swing high. I'm just trying to get into the right mind set and i guess you can't see them all

 

image.png.ad9d5148512b0b0d8b7a11ad1543e458.png

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50 minutes ago, u0362565 said:

Sorry kind of going slightly off the topic, looking at the earlier part of that chart. I guess previously you can see a double bottom too as shown by the blue line on your chart below that i've attached?  Did you use the same logic for that?  It was a big swing high it turned out. Also the move from swing low 1, no double bottom, no obvious setup for that one?  Can't see really clear support, I wouldn't have any reason to go for it necessarily but it was a big move again up to the previous swing high. I'm just trying to get into the right mind set and i guess you can't see them all

 

image.png.ad9d5148512b0b0d8b7a11ad1543e458.png

The first blue line yes a DB definitely without a shadow of a doubt - that shows you why you should trail the market up and let the market stop you out as it would have returned a lot more than setting targets of prior swing high etc

Re swing low #1 - No obvious support or DB - but it did enter into the range of the low bar that caused the DB where you've marked blue 1st line - Also the WEEKLY and daily RSI charts were oversold and the leg down was in terms of price and time fairly long/advanced, you'd be expecting a bounce at some point - I was stopped out on the small bounce prior as i stepped in front of the bus at that point too as that bounced off the swing high of the double bottom - I was wrong then, but caught the next attempt

I suppose experience comes in there the only thing I can say is markets don't go up or down forever, there's ALWAYS tradeable swings at some point - When i step in front of the bus I have no idea a move will work for certain, I class then as a test and see type thing, then trail - if I'm wrong I'll soon be stopped out and if I'm right I'll soon have my stop above entry level etc

PERFECT looking set-ups don't happen often - remember we are trading off a 2 dimensional chart, price action isn't moving at 2 D, its doing something else, which is why sometimes things look skewed, off, twisted etc and this is why price levels aren't exact

The rally off swing low #1 within 3 bars gave you a gann 50% gravity centre trade opp to get long, which was also a gann secondary reaction / Elliott Wave 2 trade set-up - as soon as you see that its odds on for  a half decent move

If you look at the swing down from SH#1down to SL#1 - you'd of been looking for a possible DB when the prior SL was neared, no set-up appeared so no trade, then the market powered through the SL rallied and found resistance at the prior SL range, this time it did give a long trade signal but was wrong

The best thing you can do is just observe the swings on a chart over a few years, theres NO order or sequencing to them but you can see that the end point of swings interact with prior ones at times

Easiest thing to do is just trade the safer entry options such as a secondary reaction, Elliott Wave 2 or 50% levels

I'm half expecting to wake up tomorrow morning to an email saying I've been stopped out of my long position - there's probably an abundance of traders short the market too expecting something else based on their short set-ups, one of us will be right

i just know that the market is in a position to possible turn based on swings - it's now a case of it either moves in my favour or stops me out, if it stops me out and the long trade is still valid then I'll be looking to set another buy order when a set-up shows up, if a set-up does not appear then i won't be setting up a buy order and then if a short set-up appears I'll be setting a sell order etc - I'm not randomly entering etc 

Another consideration in my mind is that the SL#1 is a truncated triple bottom, if price had gone lower a little bit more then I would have labelled it as a SL#3 if that is the case then as Gann says 4th time at the same level and it usually goes through, which would mean prices going lower, but for me its not close enough hence why I'm testing long first - time will tell and if I lose and am wrong, then once the next move becomes clear, I'll get my loss back plus some -I appreciate that this might sound loose and cavalier but over the years you gain confidence in expectations and losing 4 or 5 trades isn't the end of the world, which I know it can be when you're starting out  

THT

 

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Yeah its tough, you've only just opened my eyes to these bigger patterns.  I would say i am trading more randomly, although i wait until i see some sort of support but there is potential to be wrong many times meaning when the move does come it not worth much or worse it keeps going against you.  Not had that happen just yet.  The less structured you are in your decisions too makes it harder to believe your expectancy, because one month it may be good but then the next its bad, so consistency in what you do seems to help, but i guess consistently being right more than wrong, just as easy as that hey :)

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EURUSD update:

Aggressive double bottom buy stopped out for break-even

We are still in the double bottom potential zone - either though price has ventured lower than swing low #1

This would "technically" be a Gann Lost Motion should prices swing back upwards

Target initially would still be swing high #2 

As mentioned above, it is perfectly feasible that a triple bottom could be forming as price is in that zone today with a possible pin bar forming [today] 

Entry options:

  • High of a PIN bar break (If it forms at close) (As the close of the daily bar is 12am I ain't waiting up for that!)
  • Previous entry mentioned in the post above 
  • wait for a Gann secondary reaction etc next week

Trade what you SEE not what you think

Also due to the laws and nature of the markets - there will be a rally upwards which will force the swing line to turn green once a 2% rally happens, this and subsequent swings will give us info as to the markets course - at some point

Todays bar [not shown] will force me to add a swing low #3 count to the swing lows connected by the BLACK line as the low is now close enough to classify it [for me] as a quasi triple bottom 

Again logical, reasoning also the 2RSI is highly likely to print a divergence to price action - so although everything looks bearish in Euro world, I'm prepping for a bullish bounce of some degree, with the ultimate outlook of swing high #2 being reached in the week's that follow [until proved otherwise, at which point I will change/alter my outlook if the market says its not going to head to swing high #2!]

599.thumb.JPG.bf5cf8f23254116542f1199dc23aa00b.JPG

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Self-Explanatory from the numerous examples throughout this entire thread:

MIDD (FTSE250 ETF tracker)

Gann 4th Time Lucky worked

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GOLD

V shaped bounces are hard to trade, the point IS, we have a triple bottom! "What do we expect from a TB?" = A Bounce and rally towards the previous swing high, that ones got a minor triple top. "What do we expect from a triple triple top when price is heading towards it?" = A Gann 4th Time Lucky to happen and price to go through it - Also as we have a confirmed Triple Bottom formed, "What do we expect If price declines/falls towards it?" = A Gann 4th Time Lucky to the downside to happen and price to fall through it

That's what we EXPECT, it might not happen, but over the years it happens often enough for us to trust it and make money from it

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FTSE100 Index

Mentioned a lot the Gann 50% gravity centre

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EURUSD

See post immediate to this post - Pin Bar failed to form on last Friday, but we have had a possible reversal trigger - I hate it when Elliott Wavers form the same outlook as me, as it doesn't bode too well! They [EW'ers] are talking about a multi-month rally in EURUSD

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GBPUSD

Long entry triggered for a poss double bottom - look at the short risk range compared to the poss payoff

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Remember we are NOT predicting, we are trading market formations that work off probabilistic maths - we trade what the market forms, NOT what we think its going to do - there's a huge difference

I do try to get smart with the market with my Time Cycle thread, but even with that I wait for formations to show up before pulling the trigger

  

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Hi THT, not specifically relevant to your post but just wonder how traders in general deem that a trade is invalidated i.e. you have a couple of attempts at entry and you get stopped out, when do you decide what you thought might be happening wasn't.  If the potential R/R is high i guess you can afford a few missed opportunities but you do need to know when to call it quits.

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2 hours ago, u0362565 said:

Hi THT, not specifically relevant to your post but just wonder how traders in general deem that a trade is invalidated i.e. you have a couple of attempts at entry and you get stopped out, when do you decide what you thought might be happening wasn't.  If the potential R/R is high i guess you can afford a few missed opportunities but you do need to know when to call it quits.

For the method you are trading there IS/will be a invalidation point, once price exceeds that level trade is not taken - traders need to work out what that point is

Right trade below is GBPUSD DAILY chart:

  1. We can see very clearly this is a DOUBLE BOTTOM trade
  2. I've shown the entry and stop level on the chart - from a logical trading perspective there is NO valid/logical reason to have a stop any lower than the swing low low point @ #1
  3. So a trade below that level invalidates the double bottom trade
  4. for the time being keep it this simple
  5. Notice this price level so far did NOT find support at so called Fibonacci resistance levels - do not get swept up by Fib levels, they do apply to the markets but not as most people think
  6. The R profit potential of this trade allows multiple attempts - If the market is still in a position to trade then let the market take you into the trade (we NEVER buy @ the market, price ALWAYS has to move through a pre-defined level to confirm the trade)

HOWEVER - It is perfectly possible for price to just pip through swing low #1 run all the stops at that level and then  revert upwards (If this happened then it would be a Gann Lost Motion trading set-up)

So you need to be clear and possibly adapt as the price action develops - depending on how you plan to trade

If I entered a trade based on a double bottom then the stop is also based on what invalidates a double bottom - so in the example a trade LOWER than the swing low #1 level would invalidate the trade and exit - in reality I know from experience I can have my stop at the low of the signal bar [as shown on the chart] and it will work more times than not

Then lets say price rallies and pulls back 55% causing a Gann gravity 50% centre trade opportunity to arise, I'll then add another position to the trade based on the parameters of the 50% level

So I'd have 2 live trades - 1 based on trading rules for a double bottom and the 2nd trade based on the rules of the 50% level (as you can have varying trading rules per set-up/method), as the market rallies I would buy EVERY single swing low point too

If you have got the trading rules correct then the market will move into a position where it automatically calls it quits for the trade set-up then at that point you simply don't take the trade - we don't trade blind through guessing, 

Most people fall into the trap of trying to predict the markets next move - its impossible! - even though my set-ups try to do this, they ALL have an invalidation point, but the fact that I'm highly successful shows that there's something to the set-ups and methods making that impossible to predict outcome, well predictable!

Because they are based on the LAWS of the market - the markets are cyclical, but it is near impossible to work out exactly where you are in the cycle in real-time, until after the fact and we can't win or make money after the fact

Lets say a set-up arose and initially it offered you 50R, the market might not go on to make 50r, it might only return 5R and stop out on a trailing stop and then reverses the other direction leaving you with a 5R profit, nothings guaranteed, which is why you need a set-up that actually works (the vast majority of the **** out there doesn't!) and then trade set-up, stopped out, trade and repeat over and over

Hope makes sense

THT

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Yeah i think it does make sense, just seems hard to say if market drops below prior low all bets are off because then you might take your eye off it for it then to rally in the end but i guess that's why you let the market come to you when it validates the move you're expecting.  The only trade type that makes a lot of sense to me at the moment is retracements and trading the rally.  That works on a strongly trending market but wouldn't have the confidence to do on forex as the tred is not nearly as strong it seems to me

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1 hour ago, u0362565 said:

Yeah i think it does make sense, just seems hard to say if market drops below prior low all bets are off because then you might take your eye off it for it then to rally in the end but i guess that's why you let the market come to you when it validates the move you're expecting.  The only trade type that makes a lot of sense to me at the moment is retracements and trading the rally.  That works on a strongly trending market but wouldn't have the confidence to do on forex as the tred is not nearly as strong it seems to me

Trading those are fine, forex does not trend as well as the main markets due to how both are made up trader wise - lot more speculators on forex whereas on stock market you have a combo of traders and mostly Investors

You have to have something that says "trade potential is no more" unless you'll end up placing trades that lose in the desperation to get on board

Remember the most sensible definition of a up trend is higher  highs and higher lows, so price taking out a prior swing low is defying that definition and it could be the start of a new down trend

I just like catching the turn points, I'm an aggressive trader but its why I make 10R+ often rather than just 2 or 3R

As Gann said "A Safer buying point is the 1st pullback and a safer buying point is the 2nd pullback" - which you'll find is my secondary reaction set-up and bullish trend pullback 

When you take a trade you never know if its def going to work or how high its going, hence having stops and trailing stops in place etc

I don't know your make up, you might not be suited to pullbacks you might be suited to breakouts - if that's the case then you need different set-ups/methods

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Yeah seems tough to find that invalidation point at first but i know you're right, takes real discipline though.  Perhaps with your posts i will move onto other markets other than indices as spreading your bets as it were seems like a good idea.  The way to be successful from my experience which seems obvious is to know what's going on in a market.  For stocks its easier, it retraces it rallies repeat, if you know that you can find a way to make it work for you.  Not so clear cut in other markets from what i've seen but as you say due to speculators and less investors etc

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On 26/08/2021 at 09:14, u0362565 said:

Yeah seems tough to find that invalidation point at first but i know you're right, takes real discipline though.  Perhaps with your posts i will move onto other markets other than indices as spreading your bets as it were seems like a good idea.  The way to be successful from my experience which seems obvious is to know what's going on in a market.  For stocks its easier, it retraces it rallies repeat, if you know that you can find a way to make it work for you.  Not so clear cut in other markets from what i've seen but as you say due to speculators and less investors etc

I used to be a Financial Adviser, people think Financial Advisers are Investment experts - they're NOT, they know Investments, but they do not know the markets, easiest way to catch them and find managers out is to force them to Invest in the Forex and Commodity markets because they don't continually upwards like the main stock markets do over time - those "experts" as people think they are, would soon lose peoples money if they tries to invest in the forex and commodity markets

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  • 2 weeks later...

Couple of updates on some the trade assumptions in the above posts:

1) EURUSD - sat on multiple R profits and a 1-2 hundred pip move for an initial risk of only 30 pips! - trailing stop in play - the entry was the high of the LOW bar in the EURUSD example shown above it can be done! Target is still the major swing high 

2) GOLD - so far so good, the break through of the minor triple top hasn't happened, it still could, time will tell, but I wanted to show you that sometimes a quadruple top (very very rare) can form, as you can see that price level is somewhat significant for whatever reason - I'm in a wait day by day view now as it could go either way, so probabilities are much lower now on expectations, the Gann 50% level could work and there's still the triple bottom (major swing) possibility - just let the market show you its hand and if a set-up triggers it triggers, if it doesn't, I don't trade

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3) GBPUSD - DB worked as mentioned, not yet hit target, but we've now had a gann 50% level too for multiple R profits - DON'T be afraid to trade another strategy inside another method, the original method might NOT be right 

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REMEMBER we can't control the market, we can't dictate moves, we anticipate moves and trade accordingly - even governments can't control markets

Go back through this thread, look at the entry, stop positions, think about trailing stops and or profit targets then work out R values - you should be able to see what type of returns are possible per market per year because as you can see these swings are formed many many times throughout a year, not all of them are tradeable, but lots ARE

 

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Hi THT, I wonder if you could explain your thinking a bit more on the EUR/US trade. I've been watching this since you last mentioned the potential double bottom. From what you had said previously it seemed like you had/have a target of the previous swing high on the weekly chart. But then you mention have taken multiple R profit already from this, I assume then that you trailed your stop on the daily time frame and this was hit as the market is now turning on the daily bars. So if I'm correct about that it seems like you're mixing time frames? The target is on the weekly scale but the trailing stop and entries are based on the daily chart? If you stuck with the weekly chart the trailing stop would potentially not be hit yet as it would be lower but looks like it's too late for that as market has turned quite a bit to the downside and looks like a weekly based stop could get hit. If this is the case why do you always read people saying, know your timeframe. It suggests you shouldn't mix them.. Thanks for your input as ever. 

 

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15 minutes ago, u0362565 said:

Hi THT, I wonder if you could explain your thinking a bit more on the EUR/US trade. I've been watching this since you last mentioned the potential double bottom. From what you had said previously it seemed like you had/have a target of the previous swing high on the weekly chart. But then you mention have taken multiple R profit already from this, I assume then that you trailed your stop on the daily time frame and this was hit as the market is now turning on the daily bars. So if I'm correct about that it seems like you're mixing time frames? The target is on the weekly scale but the trailing stop and entries are based on the daily chart? If you stuck with the weekly chart the trailing stop would potentially not be hit yet as it would be lower but looks like it's too late for that as market has turned quite a bit to the downside and looks like a weekly based stop could get hit. If this is the case why do you always read people saying, know your timeframe. It suggests you shouldn't mix them.. Thanks for your input as ever. 

 

Sat on multiple R profits, not necessarily taken them - The trades solely off the DAILY time-frame - although the trade has now hit trailing stop

Its now in a Gann 50% level set-up!

As it stands the last major swing high is still a target, it'll now take another trade to get back into it - we can't expect it to just go straight up although that would be nice - but price action going forward might NOT go any higher, we have to be open to that happening - as the days/weeks unfold the market will form additional swings which will either be upwards, sideways or downwards, which should then give us a clue - right now NOTHING contradicts the original target expectation, but that could change in a day, a week etc

However, if new swings show up that give us other formations we trade then we have to take note and re-assess, it is perfectly possible that in say 2 weeks time price action tells us that the target swing high is no longer an option/in play etc - as a trader you HAVE to be able to just say "OK the original target is no more"

It would be beautiful if the market just went up to that prior swing high top but we can't control that outcome  - just know that as it stands its still in play and that over the years targets like this HAVE worked and produced fantastic profits, but they don't always work

Yeah I didn't want to talk too much about time frames as you can definitely mix them - and when everything lines up they make for absolutely fabulous trades, the below is based off WEEKLY and DAILY time frames but you could trade DAILY and say hourly etc

I doubt most people understand different time-frames (those that write stuff etc)

The stop on the higher TF will obviously be greater than on the short TF

I definitely trade the SAME formations on a WEEKLY timeframe too, in addition to DAILY charts, they take longer to form, but the profit from them is often greater - to complicate matters, it is also perfectly acceptable to be trade 2 different directions 1 long and 1 short on different timescales! As you might have an up formation on one TF and a short on the other TF!

What I would do is master the DAILY timeframe, then look to other time-frames

Look for the other formations not shown on the chart - swing #1 up to #1 - there's gann secondary reactions, a Gann 50%  / swing #2 up to #2 - there's Gann secondary reactions, a Gann 50% / Swing #2 down to #3 - Gann 4th Time lucky  - remember on the weekly charts these moves are of hundreds of pips

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To conclude:

Although when a set-up forms and triggers the target is always the prior swing point in the direction of the trade, its not guaranteed to hit it or get close to it, more swings could print that then invalidate the assumption and you have to reassess, hence why we have trailing stops in play

The perfect market movement is shown in the chart above from swing low #3 - virtually rallies upwards to the prior swing high - markets don't always do that though as swing #2 up to #2 show

The stops would be greater in pips/points on the higher TF than they are on the smaller TF

Set-ups form inside the swing too which can be traded as has been shown on the weekly chart above - these are highly likely to show as actual swings on the smaller time frame chart which as a trader you could trade off that chart and have a target from the higher TF chart etc

You have to be flexible enough to completely change opinion if the market prints price action contrary to what you think/expect - the markets always right, fight against it at your peril or learn to go with the flow and rhythm of it

Every Saturday I load my charts, 1st stop I look at the WEEKLY chart to see if anything is/could be forming, If it is I make note of it and potential target level, then I drop down to the DAILY chart and do the same on there, If I take a trade on the DAILY chart it's targets are set by the DAILY chart and if I take a trade off the WEEKLY chart then its stops targets etc are set by the WEEKLY chart - that's juts how I like to trade to keep it as simple as possible for my little brain! and you might have 2 trades on the same market but on different TF's etc

Hope makes sense - If not ask as I've been interrupted a couple of times whilst writing this

Sounds like you're soaking it all in 

Good Luck THT 

 

 

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Thanks for the detailed response.  Yeah i mean assuming you understand the methods, you can look for the opportunities but i can see that its helpful to use multiple approaches.  I just thought it was interesting that the double bottom was clear to see on the EUR/US weekly chart so you could just have kept on that chart, setting the target to the previous high then use a trail on that but instead you're still seeing that "weekly" target but going for the individual swings within that on the daily time frame. I guess its more profitable if you can cut out the dips but easier i guess to just have the one trade on the weekly chart, although that could be too simple approach.  You want to keep it simple but the markets don't always allow given what you've said about having multiple approaches.

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8 minutes ago, u0362565 said:

Thanks for the detailed response.  Yeah i mean assuming you understand the methods, you can look for the opportunities but i can see that its helpful to use multiple approaches.  I just thought it was interesting that the double bottom was clear to see on the EUR/US weekly chart so you could just have kept on that chart, setting the target to the previous high then use a trail on that but instead you're still seeing that "weekly" target but going for the individual swings within that on the daily time frame. I guess its more profitable if you can cut out the dips but easier i guess to just have the one trade on the weekly chart, although that could be too simple approach.  You want to keep it simple but the markets don't always allow given what you've said about having multiple approaches.

No probs

Easiest way on the WEEKLY would be to buy an option if you're after simplicity 

Then you just buy the option in the appropriate direction and leave until it runs out of time (expires) or gets close to target and just sell it, then you don't have to faff with a trailing stop - but its not quite as lucrative as spread bet as many factors affect the overall price of an option - it is possible to buy an option hit the price target in the time of the options life and only make a few R profit instead of multiple high R profit!

 

 

 

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OK lots happening in the markets this week - not going to have chance to write up every market, so I'll keep on with EURUSD and GOLD

EURUSD:

Minor double top which stopped the advance and stopped out the long from the swing #2 low off the trendline - Price has caved through the 50% level (1st attempt provided small profit) 

Outlook = the 50% level is STILL an active level - we are also approaching and have to consider the prev green swing lows as we are very close to that being a possible triple bottom to bounce from and then we are also near and close to black triple bottom territory - just below the black line is the weekly 50% level [not shown]

So apart from the gann 50% level - looking for potential reversal set-ups around/near the previous lows - for me these long poss trades take precedence over shorting at this stage

On a more higher level, "IF" a swing low forms without the swing low of #2 green being hit or exceeded then it's technically a bullish gann secondary reaction or Elliott Wave 2 formation with an initial target of the prior swing high #1 and the red swing high #2 still as ultimate potential target

also remember that the expectation from a double top is the target is the prior swing low - so if that double top performs to that expectation it will invalidate the secondary reaction option and form a triple bottom

Remember to survive and thrive in this game, if the market changes the outlook you have to change too, unless you'll be left holding positions for reason A when the markets no longer working out to reason A!!!! - This is a huge factor in why people fail to win in this game, you have to have multiple outlooks, no preference and just trade when a set-up appears, most people like to be right and as we can see this market is in a multiple possibility position, which most people can't compute

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GOLD: 

We have had an unusial and rare minor quadruple top, the expectation there was for a gann 4th time lucky to happen, but it didn't, the reason for this was that the double top possibility was stronger than the 4th time lucky potential - market has caved to the 50% level of the prior swing and triggered a gann 50% trade as it rallied back through it - this level is in a tight zone from the previous swings labelled a/A

Outlook:

We have an active 50% trade - the expectation from this is a rally back up to the prior swing high which was a confirmed double top too - I didn't mention this previously, so I', hoping those watching carefully are picking up things (I don't mention everything!) - the DT worked and shorting it to the 50% level IS [was] a valid trade - take 2 mins here and think, long if the gann 4th time lucky trade triggered, if it failed, then we could potentially have a double top which you can short - this is absolutely acceptable thinking - you trade with the market, forming pre-conceived hard and fast ideas can stop you trading profitable trades - remember the market is in charge, we just piggy back along it

OK so if a rally happens from the 50% level, it will form a triple top possibility, so you need to be aware for a reversal at that level - This is NOT guaranteed to happen and price could go straight through and upwards

If price continues to drop then it will approach a triple bottom - again it does not have to do this, but more often than not the following happens, it will form a gann 4th time lucky attempt on the lows and more often than not price goes through that level so the expectation is to short it at that level

and more often than not when price crashes through a 4th time lucky point it then retraces back towards that level for it to then continue down

It is also perfectly possible for the market to create a quadruple bottom as we have seen of the recent highs, a gann secondary reaction / Elliott Wave 2 too - so like the EURUSD market we have to be open and flexible in our thinking and trade only when a confirmed set-up appears

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Like anything don't trade other peoples plans, trade your own methods and set-ups once you fully understand them and have tested them thoroughly

Trade at your own risk and THT cannot be held responsible for other peoples trading

The purpose of this thread is to show you how swings interact and from which very profitable trading methods can be established from those swings of the market

THT

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