Ed Ponssi from Online Trading Academy had the following to say:
7 a.m. GMT to 4 p.m. GMT (Greenwich Mean Time, which is the standard measurement of time in the Forex market) is an excellent time for high volume trading, because these are the hours during which traders from London and Europe are most active. Make no mistake about it, London is the world's capital of Forex trading, and is responsible for about 30% of all Forex volume. To be even more specific, the open of the U.K. session (between 3-5 GMT a.m.) and the beginning of the US session (11-13 GMT) have really high volume, as these are the most liquid times of the Forex trading day. I would give respect to breakouts that occur between 7 a.m. GMT to 4 p.m. GMT, and also (to a lesser extent) to breakouts that occur in the early part of the Asian session, around midnight GMT. On the other hand, breakouts that occur during a time of day that is notorious for low volume (late in the U.S. session or late in the Asian session, for example) can be ignored or even faded, because these breakouts tend to occur on relatively light volume.
How about Fibonacci on Forex?
Fibonacci works in Forex trading because it is a part of the Forex trading culture. [Only fib lines no other esoteric fib stuff.]
Basically, I want to use what the institutions use and see what they see, and I want to avoid analyzing anything that institutions do not use. Since institutional traders are the ones that move the market, we want to align our analysis with theirs.
For me, the bare minimum time frame for a Fibonacci retracement would be one day, but when I draw a retracement usually I am covering a period of weeks or months. Again, try to pick the one that seems most obvious...which one really sticks out? That's the one that most people will use, including the institutions and hedge funds, and therefore it is the one that is most likely to work.
NOTE: I Have the e-mail of this guy.
Showing posts with label Technical. Show all posts
Showing posts with label Technical. Show all posts
High Volume
Ed Ponssi from Online Trading Academy had the following to say:
7 a.m. GMT to 4 p.m. GMT (Greenwich Mean Time, which is the standard measurement of time in the Forex market) is an excellent time for high volume trading, because these are the hours during which traders from London and Europe are most active. Make no mistake about it, London is the world's capital of Forex trading, and is responsible for about 30% of all Forex volume. To be even more specific, the open of the U.K. session (between 3-5 GMT a.m.) and the beginning of the US session (11-13 GMT) have really high volume, as these are the most liquid times of the Forex trading day. I would give respect to breakouts that occur between 7 a.m. GMT to 4 p.m. GMT, and also (to a lesser extent) to breakouts that occur in the early part of the Asian session, around midnight GMT. On the other hand, breakouts that occur during a time of day that is notorious for low volume (late in the U.S. session or late in the Asian session, for example) can be ignored or even faded, because these breakouts tend to occur on relatively light volume.
How about Fibonacci on Forex?
Fibonacci works in Forex trading because it is a part of the Forex trading culture. [Only fib lines no other esoteric fib stuff.]
Basically, I want to use what the institutions use and see what they see, and I want to avoid analyzing anything that institutions do not use. Since institutional traders are the ones that move the market, we want to align our analysis with theirs.
For me, the bare minimum time frame for a Fibonacci retracement would be one day, but when I draw a retracement usually I am covering a period of weeks or months. Again, try to pick the one that seems most obvious...which one really sticks out? That's the one that most people will use, including the institutions and hedge funds, and therefore it is the one that is most likely to work.
NOTE: I Have the e-mail of this guy.
7 a.m. GMT to 4 p.m. GMT (Greenwich Mean Time, which is the standard measurement of time in the Forex market) is an excellent time for high volume trading, because these are the hours during which traders from London and Europe are most active. Make no mistake about it, London is the world's capital of Forex trading, and is responsible for about 30% of all Forex volume. To be even more specific, the open of the U.K. session (between 3-5 GMT a.m.) and the beginning of the US session (11-13 GMT) have really high volume, as these are the most liquid times of the Forex trading day. I would give respect to breakouts that occur between 7 a.m. GMT to 4 p.m. GMT, and also (to a lesser extent) to breakouts that occur in the early part of the Asian session, around midnight GMT. On the other hand, breakouts that occur during a time of day that is notorious for low volume (late in the U.S. session or late in the Asian session, for example) can be ignored or even faded, because these breakouts tend to occur on relatively light volume.
How about Fibonacci on Forex?
Fibonacci works in Forex trading because it is a part of the Forex trading culture. [Only fib lines no other esoteric fib stuff.]
Basically, I want to use what the institutions use and see what they see, and I want to avoid analyzing anything that institutions do not use. Since institutional traders are the ones that move the market, we want to align our analysis with theirs.
For me, the bare minimum time frame for a Fibonacci retracement would be one day, but when I draw a retracement usually I am covering a period of weeks or months. Again, try to pick the one that seems most obvious...which one really sticks out? That's the one that most people will use, including the institutions and hedge funds, and therefore it is the one that is most likely to work.
NOTE: I Have the e-mail of this guy.
Pull-backs
About 40% of stocks will pull back at its initial investment point. Sometimes even on big volume (scary).
Is is important you have a planed stops. And you use those stops.
Again, this is a game I would play differently on Forex.
Is is important you have a planed stops. And you use those stops.
Again, this is a game I would play differently on Forex.
Pair Trading
Pair-trading is opening opposite position in different currencies that have some correlation like CHF with EUR against USD.
Exiting the trade when we get profit. Risk is limited by the fact the currences are correlated.
Exiting the trade when we get profit. Risk is limited by the fact the currences are correlated.
Notes on Gap Strategies
Idea or Myth: Gap in Stock Index Futures close on the same intraday.
After comming down for several days a more than 3% gap is formed. At this point, it cannot be determined if this is an exhaustion gap (will move up) or a continuation gap (will move down). It is good idea to use entry filters like avage daily volume above 250.000 and price above 20. Stop is 20% below entry price, looking for exhaustion gaps.
For intra day gap trading: If after open tha price reaches back to its open price. Buy. Stop is placed at open price.
After comming down for several days a more than 3% gap is formed. At this point, it cannot be determined if this is an exhaustion gap (will move up) or a continuation gap (will move down). It is good idea to use entry filters like avage daily volume above 250.000 and price above 20. Stop is 20% below entry price, looking for exhaustion gaps.
For intra day gap trading: If after open tha price reaches back to its open price. Buy. Stop is placed at open price.
Volume on Forex
I was worried that since I have no volume information available on Forex, I am at considerable risk following only chart signals.
However, it seems that Dr. Alexander Schwarz, one of my favorite system trader, is not using volume after all in his strategies. Simply, because he did not find the statistically relevant.
There is a light after all at the end of the tunnel.
However, it seems that Dr. Alexander Schwarz, one of my favorite system trader, is not using volume after all in his strategies. Simply, because he did not find the statistically relevant.
There is a light after all at the end of the tunnel.
Why Fundametal for Technicals?
Technical analyses is like flying an airplane with the instruments. It is very reliable.
However, it is good to know if the fundamentals are unchanged: is the airport still there?
However, it is good to know if the fundamentals are unchanged: is the airport still there?
3 close price pattern
TODO: The following is simply enough strategy to try no Forex, easty to backtest and implement.
Close of today > high of 2 days ago and close of 2 days ago > close of yesterday.
A possible rule in full: High > close & high of 2 days ago > high of yesterday & high of yesterday > low of today & low of today > close of 2 days ago & close of yesterday > low of yesterday & close of 2 days ago > close of yesterday & low of yesterday > low of 2 days ago.
And various various of this using 3 bars and different time frames and less strict or variations on these rules using different locations of 2-3-4-5 bars.
Close of today > high of 2 days ago and close of 2 days ago > close of yesterday.
A possible rule in full: High > close & high of 2 days ago > high of yesterday & high of yesterday > low of today & low of today > close of 2 days ago & close of yesterday > low of yesterday & close of 2 days ago > close of yesterday & low of yesterday > low of 2 days ago.
And various various of this using 3 bars and different time frames and less strict or variations on these rules using different locations of 2-3-4-5 bars.
Finding New Patterns
1. Analyse the pip level history data for deviation, randomness and similar characteristics
2. Find opportunities if traded would result in > X pips win.
3. Analyse these opportunities if any pattern emerge. Backtest suspected patterns.
Contrarian Idea of Point 2
Trader's eye naturally pulled to big moves. So why not develop my system where there are no big moves and profit from small moves.
2. Find opportunities if traded would result in > X pips win.
3. Analyse these opportunities if any pattern emerge. Backtest suspected patterns.
Contrarian Idea of Point 2
Trader's eye naturally pulled to big moves. So why not develop my system where there are no big moves and profit from small moves.
Seasons
Various seasons have different impact on prices. See various charts on www.seasonalcharts.com
Oil is cheaper in the summer. Heating prices in the winter.
Dividend payments improve mood of people.
Before holidays, people are in better mood.
Here is the Graph of IBM. So now, understand why managers are so gloomy at the moment at IBM where I worked as a consultant.
But appart from the joke. Below is the real price chart of IBM for the last 1 year. In beginning of January trading just above 96.
Bond market changes opposite to shares. As months progress forwards intrest return is nearly lineary increases. And the price swings. Well, check the website.
Obviously, Bonds are best bought in May. Since bonds are opposite of shares. Poeple invest in bonds when they don't invest in shares. End of May is bad for the share market and you can see that in the Dow Jones seasonal avarage. This is where the saying comes "Sell in May and go away".
In fact, people who follow this strategy improve their result considerably according to statistics.
Fundamental Reason
There are fundamental reason for patterns. Such as the end of year really. Starting from 12 th of Dec till 7th of Jan.
By the way, in Hungary the rally might end on mid of February on the day when the bear comes out from the cave to check if the winter has ended. I think the Hungarian market quite sensitive to bears. I wonder if this is a coincidence or people really think about this old story that every children in Hungary knows.
Now, let's see my favorite currencies.
JPY avarage from 1971-2004. EUR from 1971-2006.
WARNING: These seasonal charts must be incorrect!. Beginning of January should match up with end of December, there are way too big gaps in between. Another problem is that the website did not publish divergence data from avarage - without that information a mere avarage is quite useless as it can be just a random result nothing to do with patterns.
However, it is true that end of the year or certain quarter have impact on the companies as they must pay for the products they bought and they need to balance their books.
Let see:
So according to this EUR should raise in the end of the year. Obviously, it did not work last year, as shown on the chart's left and worked during this year as shown in the right side.
Elections Cyecles in the US
During election years the stock market is weak (shouldn't it be strong???). And it is usually the srongs during pre-election.
TODO: check this data.
Bond markets are weak before an election (so this checks out, opposite of stocs).
Do Seasonal Patterns Change?
Yes. E.g. new technologies developed in agriculture.
Anti-trend Trade
I have noticed in my trading that Forex is quite likely not to follow the trend channel. Probably, because people take profit early in their trades or simply Forex market just works like that.
Here is a possible way to trade this set up, long or short.
1. Wait for deviation.
2. Possible that a second trendline can be drawn. It kind of helps to find an entry point.
3. Wait for MACD trend-weaknesses. E.g. around 0.
Do the trade when 1 - 3 met. Target the old trendline.
TODO: Test the above theory
Flag Poles
Flag pole pattern shown on the picture. The distance from the base to the top
is equal to the distance of profit taking. Or at least we should have a stop there in case it moves further out.
TODO: check the relevance of this pattern of Forex.
Eliott Waves
The Elliottician.com publishes a statistics that 65% of stocks gives bad result using Eliott wave theory.
However, Elliott waves work well with high liquidity shares where the crowed (fear and greed) reaction is also present.
Also Elliott Wave Theory (EWT) works with higher probabilty if the past lows of the share are followed by the right patter of the EWT theory.
Note: it requires considerable study time to use the program they provide, though. There are easier to use softwares also.
However, Elliott waves work well with high liquidity shares where the crowed (fear and greed) reaction is also present.
Also Elliott Wave Theory (EWT) works with higher probabilty if the past lows of the share are followed by the right patter of the EWT theory.
Note: it requires considerable study time to use the program they provide, though. There are easier to use softwares also.
Olson's Moving Avarage for Forex
Olson, one of the founders of Oanda, suggested the following :
First calculate the avarage daily move.
And the today move is weighted by how much the currency moved today. If the avarage is 100 points, and today move was 300 points, it is calculated as "3 days".
The purpose of this calculation is to "slow down time" when there are important events on the go.
First calculate the avarage daily move.
And the today move is weighted by how much the currency moved today. If the avarage is 100 points, and today move was 300 points, it is calculated as "3 days".
The purpose of this calculation is to "slow down time" when there are important events on the go.
Stochastics/RSI used backward?
The following is from Trader's magazine. Is this useful?
Stochastic indicator shows new high (strength), however, the it is not confirmed on the index or price. Can this be used to indicate the market is declining?
Stochastic indicator shows new high (strength), however, the it is not confirmed on the index or price. Can this be used to indicate the market is declining?
RSI can be used similary.
RSI and price forms lows, higher lows, highs, higher highs, double bottom, double tops. It can have a divergence. Some of the divergencies can be ignored as not so strong, whilte others are strong indicators. SOmething to look into it.
Momentum indicator can also be combined with the aboves
Momentum indicator measures how fast the price changes in a direction.
Triangles
Triangles, help us predict price direction. The triangles on the left are easy to understand: somebody does not let the price go over the limit.
The triangles on the right are undecided, although, they tend to break out in the direction of the previous trend.
What if the support/resistence above under the triangle breaks? New channel might form parralel to the leg of the triangle line:
Pivot Point
Pivot trading is useful for trading days when there are no important market news released.
If you look at price data, it has:
If you look at price data, it has:
yesterday high
yesterday close
yesterday low
Pivot theory beleives that the price will only move as much today as it moved yesterday. Opening price is disregarded (in trading shares opening prices can falsly gap due to the market maker decision).
So the price today start at yesterday close. And it can move as much as much down as yesterday it moved from the high to the close (support 1 or S1) or it can even move as much as the distance between yesterdays high and low (support 2 or S2). The same is true if the price move upward.
Pivot Support and resistance prices:
Actually drawing it would be much easier than understanding counting...
PP = (high + low + close)/3
S1 = 2PP - high.
S2 = PP - high + lowR1 = 2PP - low
R2 = PP + high - low
Usualy price moves between S1 and R1. If even the second support is broken, we can assume that the price is going to trend further.
Variations on Pivot
I would also use the intraday moving avarage instead of the close price. In a 24-hour market, deciding in an arbitrary close value is not so reliable. Which hour do you choose as your closing hour?
Another strategy that I would try is to use is the current price:
- 24-hour previous high
- current price
- 24-hour previous low
However, no need to become too mathematical about this as you can see with the bare-eye which direction the price is likely to move and how much on the graph.
Practical Application
The pivot point and the other lines can be used to calculate the probabilty of price moving between the limits. It is a strategy that can easily and perfectly backtested!
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