Bettleboxs Breakdown of Zlines and MoMos

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Humble
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Don't forget the Z/Lines

Postby Humble » Wed Apr 04, 2012 12:29 am

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Is price closing higher or lower than something? Simple yet powerful question. ..MO

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Postby bettlebox » Wed Apr 04, 2012 5:38 pm

Humble wrote:If you go a few pages past page 149 of NLA, there are some posts of MO's to questions raised by Razor, well worth a read.


[highlight=yellow]Hi Hmble are you referring to this particular post by MO:-[/highlight]

http://kreslik.com/forums/viewtopic.php?p=13539#13539

QUOTE
Well you definitely gave this a lot of thought Razor!

First thing I would like to respond with is the method I use for SL:

I use TRO_RANGE_COUNT:

I just drop to the 5 minute chart and check the last 288 bars (1 day) for a candle size that is not made 90% or more of the time and use that as my SL size.

For the EURUSD a 5m candle is less than 20 pips 99% of the time.
For the GBPCHF a 5m candle is less than 40 pips 95% of the time.
For the GBPUSD a 5m candle is less than 30 pips 93% of the time.

I would use: 20SL for the EURUSD, 30SL for the GBPUSD, & 40SL for the GBPCHF.
Risk any more than these numbers and you will have a hard time making a decent profit during your trading session.

I would caution against using less than 5m bars for short term picture all though when considering a continuation of a trend as a close above an extreme then I have no objections with using a 1m candle close beyond a 5m bar.

Consider this:

What is the one thing, when using a mental SL, that if it never happened would lead to a 100% success rate?

The answer is a CLOSE in a negative direction beyond your entry point.

Your only goals aside from deciding upon which way to trade is figuring out how to get "wicked in" to the market similar to how traders are getting "wicked out" of the market and knowing when to just enter.

Price can only move so far so fast statistically and that is why we use this information.
In a profitable burst of momentum to the up side price will not overlap the previous bar by more than 30% and if it does then expect to go long as price nears the lows of green candles and short as price nears the high of red candles.

Most wildly profitable day trades are based not on what the market did, but on what the market DID NOT DO!

If the market breaks higher on greater range and:

Wicks any ZL on a red and fails to close beyond it: go long

Shows a red candle with weak range and makes little attempt to move to the ZL: go long

Price closes above the ZL and then closes a weak 5m bar or a 1m bar beyond the extreme of that close: go long

Massive profit is made through bold decisions.
There is no confirmation until after the fact so act now!

Most of the time if you are wrong you can get out with little to no damage!
Especially if your risk is based on a 5m range that statistically happens 10% or less of the time.

Be confirmed wrong when price closes against you...
and even if price should close against you did it fulfill one
of the above reasons for entering based on this new information?

Exit when you are confirmed wrong
(the fact you must take your loss or die! That there is no other option available; there is no new trade potential)

Find what the market did not do and do the opposite.

It broke above 1H extreme but did not show increased momentum
It broke out and did not make an honest attempt to move back to the extreme.
It broke out above 1H extreme, closed, and then it DID NOT CLOSE a candle below that extreme (is it going to continually close higher? Will there be a massive up spike in momentum soon? Who knows, I'm IN!)
It wicked the ZL based on the time frame in question and it did not close below it (price will close above it? Is a bullish move in the making? Who knows, I am IN!).
Bold decisions based on fact (what did not happen) and that laugh in the face of the need for a security blanket in the form of confirmation.

It is all exploration into the unknown and eliminating risk as it presents its self.
Resist the temptation to be scientific and surrounding your self with rules.
Make general observations and then trade those observations boldly.

Only a fearful heart fails to be profitable.
Only a fool and his money are separated.

And you Razor are no fool
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Postby bettlebox » Wed Apr 04, 2012 6:39 pm

Humble wrote:If you go a few pages past page 149 of NLA, there are some posts of MO's to questions raised by Razor, well worth a read.


HI Humble this how i visualise it works and when to start trading into held profit area. Of course the shaded blue area in pictures would be a higher timeframe held profit. The green shaded area would be a lower timeframe new held profit. But you get the idea how it works .


This how i see action reaction and where and when to trade??
Is this right.??

PAGE 1


PAGE 2


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Postby Humble » Thu Apr 05, 2012 2:22 am

In answer to the first question after my last post - yes, it's pure gold.
Razor sure was no fool to be able to draw that sort of reply from MO.

In answer to the question just above this post, (IMHO):
Memo is down.
When the held profit from that memo bar is "zeroed out" price will be free to continue down.
Target would be the base of the held profit from long traders off the previous up move.
Is price closing higher or lower than something? Simple yet powerful question. ..MO

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Postby bettlebox » Thu Apr 05, 2012 5:08 am

Humble wrote:In answer to the first question after my last post - yes, it's pure gold.
Razor sure was no fool to be able to draw that sort of reply from MO.

In answer to the question just above this post, (IMHO):
Memo is down.
When the held profit from that memo bar is "zeroed out" price will be free to continue down.
Target would be the base of the held profit from long traders off the previous up move.


Thanks Humble.

What im trying to do is realise this statement by MO "Bold decisions based on fact (what did not happen) and that laugh in the face of the need for a security blanket in the form of confirmation."

As MO says demand the best price for your trade.

So im hoping that through visualising the cycle of held profit and enlimination of that profit. Seeing it in my minds eye, perhaps will give me a deeper feel of the markets, instead just looking for MoMo candles.

Then i hope this process will allow me to unlock MO's statement.

Don't know if it will or not but i will try.
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Postby bettlebox » Thu Apr 05, 2012 5:52 am

Here is a live example of 1hr chart from Eur/Usd 5th april 6:30 am gmt. Yesterday price re-acted off a 4hr mightyzone and produced first sign of action as the new profit starts to eat into the held profit.

Image
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Postby PTG » Thu Apr 05, 2012 8:06 am

bettlebox wrote:What im trying to do is realise this statement by MO "Bold decisions based on fact (what did not happen) and that laugh in the face of the need for a security blanket in the form of confirmation."

As MO says demand the best price for your trade.



This is my new signature: "new signature".

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Postby bettlebox » Thu Apr 05, 2012 9:09 am

[highlight=yellow]Thanks PTG.

Its interesting and most difficult aspect of trading im experiencing. From MO's explaination below, wicking is the key. Even MO doesn't take a line before wicking has occurred, he then says he throws orders out 00's and 05's level closes to the line.

MO's post on how he does it :-[/highlight]

http://kreslik.com/forums/viewtopic.php?p=14151#14151



Wicks in the direction of loss and closes (bodies) in the direction of profit.

Starting with that solid yellow line you can see a weak breakout short that you would normally not be very interested in.
Price then closes on each side of the line and then finally ends by wicking the line as shown by the first "what is this."

That would be the first indication that a rise was soon to follow.

I then trail limit orders from the long solid yellow line on 0's and 5's until I catch a fish.

The other yellow lines show zero lines:

Zero lines are a way of seeing held profit without actually knowing for sure what is going on

How do you profit?

Price has to move

How do most traders enter a trade?

They wait for price to move

How much profit do traders make the majority of the time?

Negative, BE, or 5 - 10 pips.

So if you assume that traders have entered from the close or extreme of the prev. bar. and are either sitting with a SL, BEO, or a small take profit then you can guesstimate where to place your limit orders.

Note that it is assumed that they wait for price to move. There could have been a RET and a move toward the prev. close or extreme or they could have entered beyond the extreme...whatever.
Price then makes some sort of decent move and closes so that they are sitting with a profit and that is when you take action.

That said, when all else fails use a b/s stop:

If price is not making an attempt to move to your limit orders and and a candle is drawing to a close my last attempt at a better price would be to see if price would make some sore of quick RET to the nearest 0 or 5 below price.
If that doesn't work then I would just place a b/s stop on the nearest 0 or 5 above price.

Alright, I am done yapping

PTG wrote:
bettlebox wrote:What im trying to do is realise this statement by MO "Bold decisions based on fact (what did not happen) and that laugh in the face of the need for a security blanket in the form of confirmation."

As MO says demand the best price for your trade.



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Postby bettlebox » Thu Apr 05, 2012 10:08 am

I just added this picture to clarify the above post


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Postby bettlebox » Thu Apr 05, 2012 1:46 pm

MO's Quote
"It is all exploration into the unknown and eliminating risk as it presents its self.
Resist the temptation to be scientific and surrounding your self with rules.
Make general observations and then trade those observations boldly.
"


What this means to me?

The only 2 tools i have when i step into a position:

1). My ability to control how much i lose in a trade.
2). My observation skills, seeing when price is not doing what i expected.
IE what is/isnt price doing will determine weather i exit or not.

There is 3rd component:-
Trust in myself to do the right thing at the right time.

I need to trust myself to control my lose and to act on Price Action as it appears. This component of "trusting in ones self", can not be learnt from a book. Its case getting in there ,getting hands dirty, messing things up and learning and growing.

Just me talking to myself getting my thoughts out my head. Its helps me :D.

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