Entries, step by step by Chartology

Another one from the Babypips pool of great minds, Chartology.

I've always tried to communicate the entry strategy behind the trades and set ups I post here. So in the interest of that - and because I have not done this in a while - let's break down how I consider entries, Step by Step. Here are the broad strokes...and I will follow up this post with more detail and charts in my next update.

The first step of any entry is to ascertain the direction of the market. I call this market stages or phases or cycles. The correct terminology is stages or phases but I care less about terminology and more about meaning. The market can either trend up, trend down or move sideways. Determining which it is doing on the daily and also on the time frame you are setting up for a trade is always the first step.

The next step is to determine if price action is in an actionable price area. What's the clarity of the market trend? Where is (if any) the momentum? Some price areas on a chart are best left alone until the market sentiment, momentum, and trend are clear. Knowing when to leave the keyboard and mouse alone is more important than ever in an age of lightning fast executions and tick by tick price updates.

If you've made it to the third step that means that the market stage has been identified on the time frame you are trading, you are clear about the prevailing trend of the market, and that price is in an actionable area. Now it the time to focus on sentiment, momentum, and trend. Depending upon the market stage you could be waiting on a trend correction, trend continuation, trend reversal, momentum or exhaustion. The first three considerations are of course applicable to when the market is moving in an uptrend or downtrend. The last two are considered when the market is moving sideways within a range.

This third step is when you begin to consider the entry level, Point of Validity*, and the potential for follow-through. I think a lot of traders skip the latter part of the this discussion: follow-through. A great entry with too many obstacles in it's way is really not such a great entry. In order to realize a profit, prices must be able to move in the direction of the current momentum and/or trend. Are there levels in the way? If so this could effect your risk to reward ration and make the trade more expensive/risky that the it's worth. Even if you've made it this far, if the risk of entering the trade is not at least equal to the potential reward, the trade can't be taken.

*Point of Validity is the term I use to determine where the entry is no longer valid. It's not just a stop-loss but a consideration of where I'm wrong...NOT based on dollars or a percentage but based upon why I thought the trade was valid in the first place.

In the coming posts I will examine how to accomplish each of these steps with a number of charting tools both discretionary and automated.

What the heck is Consumer Confidence?

This is from another blog post from Piponomics...

Consumer Confidence is a survey of consumer attitudes concerning both the present situation as well as expectations regarding economic conditions conducted by The Conference Board. Five thousand consumers across the country are surveyed each month. The level of consumer confidence is directly related to the strength of consumer spending.

Consumer confidence and consumer sentiment are two ways of talking about consumer attitudes. Among economic reports, consumer sentiment refers to the Michigan survey while consumer confidence refers to The Conference Board's survey.

Consumer spending accounts for two-thirds of the economy, so the markets are always dying to know what consumers are up to and how they might behave in the near future.

The more confident consumers are about the economy and their own personal finances, the more likely they are to spend.

With this in mind, it's easy to see how this index of consumer attitudes gives insight to the direction of the economy. Just remember that changes in consumer confidence and retail sales don't move in tandem month by month.

Ichimoku Kinko Hyo, Renko chart and RED

I've met RED when I'm learning Ichimoku system, Red uses this system in forex trading and gradually added renko chart to his fx arsenal and continuously sharpening his forex trading saw.

Still single, worked with some BPO companies like Accenture and Baker and Mckenzie (DSC). Left his full time job a year and half ago to trade full time (I'm looking forward for this time to come to me). 

Uses the following in making all the PIPS: 

Renko chart 
Alternative Ichimoku 
Ichimoku 
Oanfx 

The same with most of the fx noobie he also blew several accounts before learning to respect the market.  Learned that this is not a quick rich scheme, it will take you a lot of time, effort, patience and discipline to profit from the market. Profitable but still consider that there are still a lot of pips to get &  keep and if he's still on this business in the next 3.5 years then he'll consider himself successful . From RED "This is like a marathon the longer you are in the business the better."

Trading rules he live by: 
1. Protect capital at all times. 
2. No signal = no entry 
3. Stop on 2 consecutive losses. 

Aside from the above, of course he consider money management as very very important. 


Here is a tip from Red:
Manage your risk/losses and do not be greedy. Have a defined entry and exit. You can always re-enter in the market. Continue reading articles and materials to keep you motivated. 


You can follow Red at Traderspizza, forex trading forum http://traderspizza.com/viewtopic.php?t=288&start=615

Chart Pattern and Forex Signals cheat sheet from Babypips.com

Chart Patterns Cheat Sheet

Like we promised, here's a neat little cheat sheet to help you remember all those chart patterns and corresponding Forex Signals.

We've listed most of the chart patterns, when they are formed, what type of signal they give, and what the next price move will be. Check it out!

Chart Pattern	Forms During	Type of Signal	Next Move
Double Top	Uptrend	Reversal	Down
Double Bottom	Downtrend	Reversal	Up
Head and Shoulders	Uptrend	Reversal	Down
Inverse Head and Shoulders	Downtrend	Reversal	Up
Rising Wedge	Downtrend	Continuation	Down
Rising Wedge	Uptrend	Reversal	Down
Falling Wedge	Uptrend	Continuation	Up
Falling Wedge	Downtrend	Reversal	Up
Bearish Rectangle	Downtrend	Continuation	Down
Bullish Rectangle	Uptrend	Continuation	Up
Bearish Pennant	Downtrend	Continuation	Down
Bullish Pennant	Uptrend	Continuation	Up

You also might want to add this page to your bookmarks in case you need to double-check those chart patterns' signals before you risk your hard-earned cash on a trade.

You never know when you're gonna need to cheat, hah! Bookmark this thing yo!

As you probably noticed, we didn't include the triangle formations (symmetrical, ascending, and descending) in this cheat sheet.

That's because these patterns can form either on an uptrend or downtrend and can signal either a continuation or reversal.

Like we mentioned, it's tough to tell where the price will breakout.

What's important is that you have your entry orders ready so that you can be part of the action either way!

Long EUR/USD trade - in the making

I'm looking at EUR/USD 15min chart and it seems the stochastic is about to cross below the 25 line and will soon give a long signal as the price reverses from the support line. This is the same thing with the 15m MACD which is about to generate a buy signal.



I'll enter long once I have the signal on stochs, MACD and 5/8 crossover. Lets see if this materialize.

Stocks & Forex trader

Here's a well known stock trader, I have followed him as he provide technical analysis on the local stock market and later found out that he is also a forex trader.

Check out his profile I got from another well known stock trader & tsupitero.

Hernan F. Segovia a.k.a. Spyfrat

A pure-blooded technician. That’s how Hernan Segovia describes himself. Commonly known in different stock forums in the Internet as Spyfrat, Hernan’s love affair with the stock market began in his high school days and progressed through his college years. Self-taught and resourceful, Hernan was able to learn technical analysis by using the Metastock’s help file and through various exchanges and collaborations with foreign brokers and analysts. Although he is a licensed Electrical Engineer, Hernan took the road less travelled and opted to dive into the exciting world of stock market investing.  He joined Summit Securities in 1995 and is with this firm ever since. Hernan has won several stock market competitions both here and in the United States. A Central Philippine University graduate, he is often seen in Ilo-ilo giving lectures and seminars related to stock market investing. When forced to stay away from the market, Hernan spends his time composing songs and playing the guitar. His daily posts can be seen at the Phisix Manila forum, Philstocks.net and his web site, Spyfrat's Call.

I've also have his fx perfomance for he 1st quarter of 2010.

easy-forex Currency Trading & Forex Signals seminar

By very popular demand, our Chief Dealer from the Sydney Dealing Room will be back to run another seminar on Saturday, November 13, 2010. You are invited to attend our latest free seminar on simple but effective trading approaches and how to get the most out of our Forex Signals services. The key speaker is Mr. Francisco Solar, Senior Dealer at the easy-forex® Sydney Dealing Room since 2007. He heads up the Asia-Pacific Dealing Room operations and holds Bachelor of Economics and Bachelor of Science degrees from the University of Sydney, Australia. Prior to joining easy-forex®, he worked in import/export and commodity broking. We will also take this opportunity to present to you our new and exciting trading products and highlight the latest features on the easy-forex® trading platform . Let us share insights together Learn new trading techniques Learn how the Dealing Room service helps traders Learn about Zulu - follow live trading signals from professional and talented traders COST: FREE for easy-forex® active traders* For Non easy-forex® Users - 4,000 pesos to attend the seminar. Manila, Philippines Date: Saturday, 13th of November 2010 Time: 8:30AM - 3:30PM Venue: The Makati Shangrila Hotel, Paranaque B Function Room, 3rd Floor To reserve your seat, kindly email ted@easy-forex.com (please provide your Username). The seminar is LIMITED TO 50 participants only Bring your Laptops, free wi-fi in the hotel. See you on the 13th of November 2010. *Active trader –at least 1 open position since 01/01/2010. Kind regards, The easy-forex® Team

Are you a trader or gambler?

Some might have notice that when there is risk it can easily be associated with gambling...

Is there really a difference between an fx trader and an fx gambler?

Why do you trade forex?

Let me guess...

Because you want to make a crapload of money and be able to buy anything you wish?

While this is a perfectly valid reason, it will most likely lead to excessive greed and ultimately lead to your trading account's destruction.

You might as well take your money to Vegas instead, and gamble it away.

Once your money is all gone, at least it was entertaining.

Greed is the worst motivation for trading. The market will always punish greed and will always reward moderation.

Never try to make all of your money on one trade.

Never try to make all of your money on one trade.

If you do, you are not trading, you are gambling!

There is a fine line between traders and gamblers. When there is real money on the line, there are always those who take blind chances.

If you want to be a successful, do NOT think like a gambler, do NOT take blind chances and do NOT solely rely on luck.

Luck comes and goes just like the gambler.

It's the trader who remains.