Sociable

Catching a Movie or Catching The Move


I was playing around with my charts this morning and I never thought to kick my existing charts up to weekly and monthly time frames because many of the indicators I use don't calculate that far back. I have been saying alot how the Chandeliers stop indicators catch bigger moves the higher time frames you go, thats a given, but I'm inclined to want and try to take longer term trades now based on what I see. When I first started out I thought I wouldn't be able to handle large swings and trade on an interday basis. But it still may be a good idea to not just give them a passing glance, but to base your entire approach of whether or not to go long or short on what your longer time frame chart says the trend is on a yearly basis. This is what I am referring to when I ask, do we want to catch a move here and there, or do we want to catch THE move that the big money goes after? I should ask, do you want to be on the grind day after day, or do you want to enter a trade and live your life knowing you're money is working for you?



As you can see in this example, between July and August of 2007, GBPJPY had gone up all the way to 250.00 with a green chandelier that lasted at least one year. So you see these chandeliers on the highest time frame charts will last you a LONG time, keeping you in the trade in the direction of the trend which is nothing new. But what I'm interested in is the inception of THE moves that the big banks and big traders are going after. So, the green chandelier turns to red on 8/24/2007, but this is not a magical entry point finder that will get you into a massive winning trade. If you notice, there are slight pullbacks (it seems) on this chart, but represent hundred pip moves (against us) that would wipe most of us out.

Trend lines really help in this regard, as you can see the yellow dotted lines are drawn underneath the upswings in this downward moving pair. If we enter at the exact moment these trend lines are broken, that all but eliminates the need to withstand huge losses before price went our way. 

How I would approach this, is keep on scalping, looking for entry points but only in the direction of the weekly chandelier, draw the trend lines above or below the short term trends, and wait for crossovers of these levels to go back to your 5 Minute or 100 Tick charts to look for the proper entry levels on the shorter term time frames. But always exit the trade break even when it goes against us too far. Re-enter when shorter term indicators tell us things may go the way of the longer term trend again. 
    


That's why I think it's wise to have a short term approach that turns into an longer term strategy when the right move is caught. It's one thing to just enter when the indicaotrs flip having to withstand hundreds of pips of swings up and down and knowing the LONG term trend has changed and trading in that direction (getting out when small swings down occur) until you get it right which could save your account from getting margin called. Patience is key with longer term strategies, and always think about the rollover, I have no idea what the fee would be for holding on to GBP/JPY for an entire year, but it can't be good. 

So as always please use caution with any method, this is not magic like I said, but is a good way to incorporate longer term charts into your daily strategies, whatever they may be.

No comments:

Post a Comment