The Captains Chest - Naked Trading & Other Stuff

[zentauro67]

EURCAD 4H

M´s second leg could be appearing on a critical level (double top), but I can´t see the previous levels, just a chaotic range action last weeks where is not easy to count the pushes. Once the pattern failed some weeks ago, do you always restart the counting until three? I´m temted to short that baby but I´m fearing one (or even two) level is missing.

Imagen 1.jpg

[Lara]

WOW - 104% gain!!!! Well done Banteka. I think this only goes to prove that even if you have your own style of trading, adding CJ's methodology just makes everything come together so much better.

Lara

[Captain Jack]

Let me set a few things in order here. Volume is not a measure of "orders". Volume as presented to you by the platform, is nothing more than "activity" in a pair. It is indicative of "price ticks", be they up or down. Nothing more and nothing less. It is local to your chosen broker and varies with each, unless they are a "white box" or branded server on a larger net.
CJ

Hi CJ,

I have a dilemma that I hope you can at least make a contribution to in the hope of finding a solution.

So, the term "volume" is really a misnomer, and should be more appropriately described as "Tick Volume" because it measures the number of entries into the market rather than the sum of the liquidity each entrant is bringing into it.

Now we know:

1. That Market Makers do not come into the market in large numbers
2. That stop-hunts are carried out by MMs when they are on the hunt
3. That "volume" ALWAYS increases when stop-hunts occur

My dilemma is this: Why does "volume" ALWAYS increase in stop-hunts when MMs who are responsible for it come not in large numbers but with sizable liquidity?

VOLUME

noun
1. a collection of written or printed sheets bound together and constituting a book.
2. one book of a related set or series.
3. a set of issues of a periodical, often covering one year.
4. History/Historical . a roll of papyrus, parchment, or the like, or of manuscript.
5. the amount of space, measured in cubic units, that an object or substance occupies.

This essence of this thread is deception and deceit. VOLUME is nothing more than another basically useless indicator "pushed" onto traders. There is no place in Forex for "volume" as defined above. Volume is a measure of space. How much space does a .0001 cent move in price occupy?

Think about what I posted about "tick volume" and you will have your answer - Stop hunts, especially during "news" events are the "tools" the Fox uses to move price greater distances, in a shorter time than would normally be possible.

Tick volume absolutely does not represent entries into the market. Your broker "filters" the price ticks anyway so you have no idea how many ticks are taking place. A price tick is a movement of price, either up or down. And that is all it is. The reason the number of ticks increase is because price is ticking higher or lower or higher AND lower more frequently than normally would occur.

MMs are ALWAYS in and control the 1st and 3rd day of the 3 day cycles. The 2nd day of the 3 day cycle is normally ALLOWED to be controlled by traders or "the hounds" who have jumped on the false trail laid out by the Fox. The Fox may step aside and let human nature run it's course. Recall that the Fox needs transactions to occur and the largest number of transactions WILL occur at areas of interest for both buyers and sellers. Tick volume can be extremely high while price remains stagnant. Price can also move a great distance while tick volume is very low.

Volume as presented to you by your broker is just another way to get you to look to the East as the Fox exits West...

CJ

Thanks, CJ.

Don't you think that big volumes can be used to identify fake moves, to verify that the fox is doing his work?

GU 1 min

90.png

fok

The spike below is just a smaller version of the chart above and adds nothing to what I see on your chart. For the last time, the spike that is diverting your attention away from price is merely caused but the number of price ticks that created the rise in price. The chart above shows an increase in price and the indicator below shows an increase in price ticks. The pins tell me what I would need to know. Volume adds no value for me.

Any further discussion on "volume" should be confined to a thread related to it's use, with the concepts put forth here, in a separate thread.

CJ

[mjws00]

Here are some simple ones from yesterday. Just focused non-correlated ideas. Not all 7 pairs against the single currency with news. No flash just simple PA and context.

You'll also see a 20 pip take profit. It is simply an experiment. Most of the time on 15M we can take 50ish. For me to take that, I need multiple entries. As I am (currently) never adding to a loser, a winning runner ends up being MUCH larger which is good for my balance. Lots of times I don't get a chance to add or I just take the money and run if waiting for a retrace etc. Stops are mental, but tight.

I'll point out the warts as well. Because that is a great way to improve.

EURJPY. Two pretty strong RRT. In Lon and after London close. Price consolidated at bottom and didn't pull back into the range. Just kept hitting the bottom and looked to be breaking down. I sold the weakness, and breakout short.

Why sell in the dead zone, ill liquid, quiet period? Why sell a breakout not an M or W? Didn't you get trapped on the next candle?

JPY and AUD have been moving very nicely during Asian session. Tons of longs trapped above (RRTs) with their stops to drive this south on Asia open. Stops at Big Round Number in range for MM's. Larger TF has room for another Leg and has not put in a bottom or started trapping shorts. The chance they will need a Hunt to drive it further are low and capped by that consolidation @ 130.50. If we are wrong and this is a larger turn they will likely retest our sell on a W (or close.)

Asia opened. They stole money from trapped longs, and 130's to pay us.

Mike

[Captain Jack]

I've been following the debate with interest but imho we are omitting a useful weapon in our fox hunting and that is the spread surge. I posted a trade a few days ago which showed how I use this to spot a good entrance. Like so many aspects of my current trading, CJ (AGAIN) opened my eyes to this very useful and effective trading tool. In my GBPUSD trade below, I entered a short right at yesterday's daily high. Note how the first spread surge (bottom window) occurred approx 15mins before the second which coincided with the spike. Okay granted you need to have been inebriated and on CJ's special brand of Moonshine (helps sometimes in forex ) to have missed the beautiful spike, but the spread for me just added to the confirmation of an imminent reversal and was the closer.

I wouldn't bother with this if you are using a fixed-spread broker, but, if you are with an ECN broker, what a way to see that the fox is in da house. Think of this analogy - sweet-toothed foxy is in the candy store and is stealing the candy off the shelves (our open orders) and then he s t r e t c h e s over the counter and takes all the candy there (our stops and pendings) before making a quick getaway out the door. The more technical amongst us can argue that the LPs do this by reducing liquidity to the brokers but however foxy does this the spread spike is a sure way to trigger our stops and pendings. In a previous life I used to lay ALL the blame at the door of the @&^%)* brokers .

Obviously, like everything in forex (damn ) this does not reflect a reversal ALL the time. But if used at the major candy stores - pivots, daily high / lows, first push of the M or W patterns and major
S & R levels, to name a few of the bigger stores, it comes in very handy as an ADDITIONAL confirmation.

Anyway that's my 25c worth. I DO NOT WANT to detract from the thread; in fact I commend CJ's no-nonsense approach to anyone wanting to clothe us naked ones with indicators . I offer this only as a reminder of an aspect that CJ himself mentioned - but there again CJ must feel free to delete this post if he feels its off topic.

May you skin many..........

Lara

GBPUSD 06.08.13.jpg

Excellent post Lara.... Spread widening usually occurs at the turn in price. It will occur where large number of stops are placed. WE can not get our orders executed within the spread, hence it widens, limiting where we can buy or sell.

Spreads are widened to hit the stops and lock people into the wrong position. Spreads are widened to prevent TP stops from being hit, limiting profit and when price falls quickly after, reducing profits to those whose TP order was never tripped.

This has the effect of creating "false support" and "false resistance" areas. All those pivot points and levels are created in this manner. People only see the high or low price, but the real price is never the same, due to spread widening.

Spread widening has nothing to do with tick volume.

CJ

[mjws00]

AUDJPY. Super traditional entry. The play is the pullback after the news spike. There is lots of opportunity for MM's in and around these spikes. Wait for the pattern. Hit it. Profit. WAY WAY WAY more on the table than I took out.

I missed my add-ons. Didn't feel like sticking around. Just ended up going to bed.

Mike

[mjws00]

Here is one that is a little different. My bias is short coming out of the peak high. Eur was showing weakness. Aud strength. We know there is a possible rate cut coming. I didn't feel like gambling and putting the position on before the move. Banteka caught this almost perfect.

My strat was, wait for the spike. Watch PA on the pull back. Decide if it was going to run or turn. Sometimes when they run, they can go the whole session and move a 2x ATR. Case in point was NZD the other day.

On M1 and M5 you can see the pullback I was evaluating. We are watching them pin it low (brakes). And then looking at the formation afterwards. This is a failed W i.e continuation.

This trade is tricky and there is a lot of momentum in play. But the idea is to get on board instead of missing what often turns into a spike channel (big) move. I entered early. It pulled back on me instantly. I mocked myself for almost selling the low, and waited to see what the pullback would look like. The nano second spikes with HUGE spread are a disaster waiting to happen. These aren't bad.

I actually take quite a few momentum style trades like this based on MM evaluation of what has happened. I can't always catch the top of that second leg, so I occasionally get in on the ABC, or a pullback into the second push. The R:R is not nearly as nice as CJ's perfect entries, but there is still meat there to be had if your analysis is right.

Mike

[mjws00]

Sometimes things don't work out.

Sold this pretty RRT on London open. It was a failed breakout of the prior days high. Looked like they were trapping BO traders. They snapped it around on me and I had to punch out.

I'm sure there will be more this month, I have to keep them tight as profit target is tight.

I'm only looking for 3 or 4 opps in a night ignoring NZD, CAD, CHF for the most part. Stack em up like a mofo when they run. But I haven't caught a deep one yet this month.

I'm finding the small fixed targets a very relaxing way to trade, and quite well suited to this somewhat choppy and rangey market.

Mike

[FlyHighDrifter]

Always educational to read through other peoples thought process. Many thanks for taking the time Mike,

Regards,
Fly

[ciliano]

Really Just a bit of guess work here, but CHFJPY on the m15. Long in a little bit after the 105.00 orders get popped?

Flag.PNG