The Captains Chest - Naked Trading & Other Stuff

[Reaper]

Hey CJ, did you ever feel you understood what was going on one week and felt a bit clueless the next? Hopefully next week will return to normal. This easter weekend couldnt have come at a more inconvenient time!

[Captain Jack]

[

Hey CJ, did you ever feel you understood what was going on one week and felt a bit clueless the next?

Yes...it's like counting the black dots.....

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CJ

[Reaper]

This is what I should have traded this week, but I guess I'm focusing on either too many concepts (ones mentioned on here and other ideas floating around in my head), and too many pairs.

So what I see on GU 1H is price moved down 3 levels in 3 days in a row, that is the ideal 3 day setup that happened at the beginning of this week. A move like that is very nice and clear.

Wasn't a great M pattern at the top, but I guess it was there with pins on the second leg. It is good if those pins go higher than the first leg to trigger any pending longs that have been placed there. These pins are created by the widening of the spread.

A confirmation might be opening an order screen and observing the spread chart widening. There was reduced volume (trapping volume) and profit taking bars (VSA). This start of move also coincided with a Monday which I guess can be good as the fox likes to start a new adventure at the beginning of a new week.

But I also have to understand that sometimes it may not be a 3 day 3 level move, it could well be 2 levels in 2 days, following by a range (perhaps horizontally or even counter trend slightly), then followed by the final push. Sticking with the same pair GU, midweek, not really seeing a W formation on the hourly or even 15mins. But I would have counted 3 prior moves. There is reducing volume and a pin that exceed the previous 2 bars on the H1 TF.

Prices moves up 1 level, there is a huge 'news' stop hunt followed by the 2nd rise on the 2nd day. Price then ranges for today probably due to the bank holiday, Foxes gone skiing for the weekend. Come Monday we should see a bearish stop hunt (double move to the bottom) with a final push to the bull side. Price then touches last weeks high. Probably closes below, but with a 10 pip or so pin above. Thus creating a giant M.

Anything wrong with my logic? Or anything I can add to assist in my thought process?

[bluedog23]

gbpaud daily.gif

Here's an example of what Captain Jack has taught us about how they widen the spreads and create the pin bars. The spread widened to about 8-9 pips as the last H1 bar of the day formed. It came back to a 4-6 pip range by the end of the bar.

It's also interesting that the low of the last bar did not reach the low of the bar at 06:00 (yellow line) keeping the shorts locked in their positions. They can spend the weekend hoping that the pair tanks on Monday putting them in the money.

Thanks CJ, I see things that went right over my head before. I place trades now with so much more confidence. I realize that I might not always be right, but I am right most of the time.

Hope everyone enjoys the holiday weekend.

[eltax100]

WOW look at the spread can anyone beat this ?????

[SteveHopwood]

WOW look at the spread can anyone beat this ?????

Hehe. Call me Mr Suspicious Picky, but something here makes me suspect that CJ might be right about these pinbar thingies.

I lay in the bath this morning, closed my eyes to reflect on all this, and all I could see in my mind's eye were M's. W's, rrt's and pinbars.

Then I realised that there is no such thingy as a real Retail Forex Trader market. Yes, there is a Foreign Exchange where large banks, governments and huge international conglomerates buy and sell billions of dollars of various currencies. Us little guys only have the Market Makers. In most cases, that is our broker. In the case of a broker such as Global Prime who genuinely sends orders straight to the liquidity provider (i.e. big bank) it is the LP.

Oh boy but the scales have slid from my eyes in the last 24 hours.

I had an interesting experience this afternoon. I am close to a number of my former students - my personality leads to building strong bonds with the kids I teach. Occasionally these bonds hold once they move away. One such student expressed interest in trading before he went to Uni and I fostered that interest.

I funded Gareth's Cowboy IBFX Aussie with a couple of hundred dollars and have been copying my trades onto his account - not always a great favour but it was costing him nothing. Yesterday, I realised that everything I thought I had learned about Forex trading in general was bollocks save for this one thingy that Bob introduced to me: what goes up will eventually come down and what goes down will eventually come up again.

I got together with Gareth this afternoon to explain what I learned yesterday to him - there is no greater incentive to understand something than to have to teach it to someone else. Ok, so I did start out by saying that everything but the up and down thingy that I had learned in the previous 6 years was bollocks, but I will still surprised by what came out of our discussion.

Just to save space and save you all dying of boredom, here is an example. Take the slow movement of the markets in the 3 hours or so leading up to NFP. I have always put this down to low liquidity because traders are sitting on their hands because of the impending NFP news release. Describing to G how news spikes are merely the market makers using it as an excuse to clear out some trades, I described how traders will not trade in the 3 hours or so leading up to NFP.

Then I stopped myself, because if what CJ tells us here is entirely accurate (and I have no reason to doubt him and every reason to believe him and I do) then the markets slow to a crawl in this period because the market makers slow them to a crawl, to create anticipation of an impact when the news is released.

This 'stopping myself' happened time and time again as we discussed perceived market reactions to everything - pivots, fib extensions, time of day, other indicators etc etc..........

Do correct me if I am going over the top CJ and misinterpreting some of what you write.

So, where does this leave us with our 'Official Broker' Global Prime?

I think all this makes it even more important that those of you who can, do sign up with GP.

In the past, a lot of us have seen the video that demonstrates what access a broker has to our accounts and what they can do to manipulate them. Sorry, I cannot post a link but perhaps someone else can?

If your broker is your market maker then watch out. The broker is trying to screw you and can do things to your account that should be illegal. GP sends your trade straight to the big bank; BB does not have access to your actual account and so cannot pull some of the really nasty tricks available to a market-making 'broker'.

I have kept my live account with my market-making 'broker' because it is, in effect' a nano account. I can experiment with trading the pins safe in the knowledge that, when I screw up it will not cost me much.

My main trading account is with GP. Ok, so the BB that takes my trades will be trying to screw me, but at least Jem and his team are on my side - they only make their commissions if I continue trading. The BB's can manipulate the 'market' but they cannot gain access to my trading account in the way the market making 'brokers' can. I am ahead on one score, at least.

Sorry if this has rambled a bit. I had a lot to upchuck and, as they say, better out than in.

[Captain Jack]

gbpaud daily.gif

Here's an example of what Captain Jack has taught us about how they widen the spreads and create the pin bars. The spread widened to about 8-9 pips as the last H1 bar of the day formed. It came back to a 4-6 pip range by the end of the bar.

It's also interesting that the low of the last bar did not reach the low of the bar at 06:00 (yellow line) keeping the shorts locked in their positions. They can spend the weekend hoping that the pair tanks on Monday putting them in the money.

Thanks CJ, I see things that went right over my head before. I place trades now with so much more confidence. I realize that I might not always be right, but I am right most of the time.

Hope everyone enjoys the holiday weekend.

Good example. Watch this happen when they are spiking price during a news event. You will see it widen at the extreme and come back in line when they are ready to move price the other way...

CJ

[Captain Jack]

WOW look at the spread can anyone beat this ?????

There's a lot more going on here on this chart that we haven't gotten into yet. We've touched on the spread widening but mostly in relation to the pins and hitting stops.

Look at the current status of your short trades here. Even though the candle is well below your entry, your trades show you are in the red (-36 and -34 pips). If you are "candle watching", see this and close out your orders, then you've just given your money away.

This is how people in margin trouble are forced into closeouts.....

This is how stops are triggered, putting people into bad trades but not allowing TP orders to close....

If you saw this candle in real time and decided to place an order....look at where a BUY and a SELL order would have been filled here....

What you see isn't always what you get....that's why I talk about spread widening. It happens on all brokers, but not to this extent. It is has less of an effect on fixed spread brokers than on ECN type brokers.

So what else is going on here? Fox tracks everywhere when you know what to look for. So much so, you might even find some fox droppings here...maybe a big old pile of them....

I talk about not using indicators because they don't work in the manner most think they do. 3 of the big ones are moving averages, pivot levels and fibo levels. Who hasn't used, or still uses moving averages? Same questions for the fibo and pivot levels. If you use them, as intended, know they will work when the fox allows them to work. Don't feel bad as you have a lot of company, like the 95% of other traders who lose money in these markets. It's designed that way. If you use them in the way the fox does, congratulations...you are probably in the 5% of the people who make money in this market.

Everybody understands that price creates these levels and that price has tendencies to return to these levels. We all know this. What we all don't know and understand is that it is the fox who controls price to create and validate these same levels and lines. I've touched on this before.

Support and demand areas, pivot levels, fibo levels are created as "meeting places" for the bulls and bears to gather, in order to generate the transactions that are required to move price and generate profits for the fox. That is the sole purpose price returns to these levels.

Back to the chart....I've not done this ahead of time, but if you were to throw some common moving averages, S/R levels, pivots or fibos on the chart, you will begin to see what is happening. When price is brought to a specific area, such as happens during Asian range, support and demand levels are being created or validated. It happens right in front of our eyes yet people seem to be amazed that price returns to these levels. They trade these levels based on their perceptions of them and not the reality of them. It's like the black dot illusion. Even though there is nothing but white dots in front of our eyes, we still "see" the black ones, therefore they have to be there.

This chart is a 15M chart....look at the last 4 candles...can you tell what just happened? Go ahead and toss some MA's on, you know you want to. Use some common ones, 5, 14, 21, 34, 50, 100, 200...or any from the hot systems out there....what do you see??

Switch to the 1H chart and look again....what do you see?

You have to understand that a picture is being painted right in front of you and that this same picture is spread over all the time frames. We will stick to the 15M and 1H for now....what do you see?

Notice also that price has dropped to and possibly just exceeded the last lowest candle....something we have covered many times here....pinning to the same low or high....but this isn't a pin...but may end up as a long set of RRT's, possibly with a star formation thrown in....

CJ

[mobthehop]

In the past, a lot of us have seen the video that demonstrates what access a broker has to our accounts and what they can do to manipulate them. Sorry, I cannot post a link but perhaps someone else can?

Hi Steve, I posted it a while ago here - at least I presume this is the video you refer to

http://www.stevehopwoodforex.com/phpBB3 ... 180#p48180

Surprised that it remains un-commented on since posting it...lol

Cheers

Mop

[hannele]

Hi again CJ,
I have now read and reread this thread...pheww. I think I finally got it. Why I am saying this I went to FXAW to look for new developments there and all I can see is fox tracks. When a signal or indy ( checked out few threads there) pops up your fox had already left tracks where one should go hunting.. this is just amazing.. you must have spent even more time on front of charts than I have in last some years (this is all I do, yeh I have a part time life outside fx). How the hell you figured this out beats me, you must be brilliant. Thank you is not enough but I try, you truly have opened my eyes.
Thank you.
hannele