The Captains Chest - Naked Trading & Other Stuff

[Captain Jack]

Cool. Looked like CJ was making sense of it. But not having access to fxaw... i was completely lost. Thanks for the clarification.

He is reference is to a method of trading I put forth at FXAW. It is based on Tom Bulkowski's Bump and Run Reversal formation that is used in the equity markets. I adapted it's use to forex and it is a highly profitable method of trading.

In essence, price will be rising on a trend, volume will be normal or low. Volume will pickup and price will rise quickly, forming a "bump" It is a price/volume exhaustion model, that finds reversals in trend.

3-10-2013 3-59-18 PM.png

I call the pattern a Bump and Run Formation, BARF and the thread at FXAW was titled, "BARF your way to profits".

EURJPY has presented a BARF, the entry was the 1st time price retraced and broke the trend line. Price has since retraced to the original entry point, giving a 2nd chance for entry.

CJ

Love your thread, hope to be caught up by tonight, on page 18 now. Question are there a range of degrees for these runs that are fairly standard. I have seen them and wanted to test them at some time in my life but never got around to it. So is there a theory that runs will be 30% but when they reach 33 or so look for the 40%+ run or anything like that?

Thanks for the kind words, Bob.

Here's Tom's site:

http://thepatternsite.com/barrt.html

I believe he developed the pattern in the equities market. I adapted it to the forex market and it works well. I'll get into this a little deeper as soon as I have time. It's a massive thread at FXAW. There are some basic rules to follow, concerning volume, and tick volume can be used. The problem with tick volume is that it is so dependent on each broker platform.

Stockcharts also does a nice presentation of the formation here:

http://stockcharts.com/school/doku.php? ... n_reversal

The trend line angles are close to the same, however, they "dirty" the patterns in the forex market to make them harder to see. They still repeat and it's a great method for longer time frame trading. I've used this to catch many great runs in pair like GBPJPY and GBPNZD. It's one of my favorite patterns to use with pyramiding of orders.

There is an example of one of these formations on the EURJPY chart posted a few pages back. Safe entry is taken when the highest high is tested, the test fails and price retreats and breaks the bump trend line. Early entry can be take in the "pins" of the highest high, with vary small SL, 15-20 pips, and R:R values of 10-15+ and higher.

On the EURJPY chart, price has retraced back to the entry point. I will be looking for entry this morning, perhaps early NY session.

CJ

[mjws00]

I am ruined Captain. Can't see nothing but these foxes trapping, and sit there waiting for them to shift the zone and lock more in. Been a fun weekend doing homework. I could use a little feast on EUR bulls. But they just tease.

I am gonna have a fun week this week.

[mjws00]

It is possible I like the English as well. Won't know till later.

[pips400]

Hi CJ and Mike, we're looking at the EURJPY pair for a BARF entry, I just have a couple of questions. I'm also running with Bob's 10.4 system here so this would be counter trend, (which I have no problem with in the right setup). My questions are regarding stop loss and entries. The attached pic shows two possible places for SL, which one (if any) would you take, either 1 at the previous swing high, or 2 at the most recent, and secondly, with the 10.4 system we would wait for entry at the WP, but it would be a much higher RR if entry was taken sooner. So if entering sooner, what would be your signal to do so?

Many thanks,

Pips400

barf-eurjpy.jpg

[mjws00]

I don't know BARF all that well. So will defer to the great one. But. We have a pretty good chance of testing WMR1 as there are lots of bulls long around the top of that candle in there. There are stuck bulls and weak shorts that sold into 126.00 that haven't been tested.

So either they have enough volume up top, that they just continue this leg down. We get to consume weak bulls. Or they will go up and take the stops at 126.00 before knocking this sucker back down. Right now they are just chopping and not showing their hand. They could drive it up and turn it around NY open. They could also leave us hanging for a day, and turn it later.

Two bits, but I am watching this pair, as I'd love an entry if they were to trap breakout traders above 126.00.

Mike

[pips400]

Ok thanks Mike, I've removed my EA on this for now, and will wait it out a little longer. On the daily this is at a lower high and close to overbought (but could go higher) so would definately be looking to short at the optimum point. Well watch the paint dry on this one

[madpipa]

Standard opensource autosessions indi. You have to tweak hours yourself. I tweaked this one to GMT (Cowboy IBFX). I like to show from an hour before Frankie (White) based on Dibs from many years ago in FF. So don't let that throw you off. Asia, LO, NY are normal.

Thanks Mike. I have seen others about but not this one. Just looks cleaner - the better to see the crafty foxes .

Cheers,
Mick

[mrelectron]

Hi:

I was just looking at these 3 pairs CADJPY, CHFJPY, EURJPY on a 4H chart and they are all remarkably similar in appearance and also have the RRT pattern.

Is there anything in this with regards to fox prints.

3-SIMILAR-PAIRS.png

Thanks
Mark

[mjws00]

It just shows that yen is driving that bus.That is pretty much perfect correlation. Neat to see how they tapped the stops short harder in EUR and CHF after that big pin/rrt. All consolidated off the high so they would be set up for the next move. If you watch closely you'll probably spot one of the crosses lead out when they start to move Yen again. It will be subtle but is usually visible. It is kinda cool when you start to see how they work each pair to influence the aggregate, leading, lagging... then sucking them all in.

[mjws00]

Them GBP foxes are letting me down. Although they are the only ones that really got anything done today. What a poor effort. C- guys... I know you can do better.