The Held Profit Theory REVISITED - (AKA Zeroline, MO, BDP)

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adaseb
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The Held Profit Theory REVISITED - (AKA Zeroline, MO, BDP)

Postby adaseb » Thu Jul 31, 2014 1:25 am

I decided to revisit the held profit concept since it has brought me the most success in anything else I have learnt in trading.

If MightyOne want to comment he is more then welcome but I am pretty sure he explained this hundreds and times in the past and is tired of repeating himself.

The reason I want to revisit this topic is because many new traders here keep taking every single trade that looks like a "MO ZONE" and they end up losing money. This concept is very easy to understand and can make your trading very profitable if used correctly.

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Most traders think that the market moves to stop them out. This is true however there is very little profit in stopping out someone who trades with small lots and only risks 1-2% of his account.

The big money is in taking out the mid/long term traders that are hundreds of pips in profit.

In my opinion there is little or no held profit in any M1-M15 charts. Only on the larger timeframe charts.

Can you imagine placing a trade to profit in a direction where there is almost no money left?

Consider that a professional will risk 1-2% of his account.

This means that when price moves a number of pips that equals ~2% of his account that he is out of the market and NO MORE of his money can be gained by any other trader.

So where do your massive profits come from?

The answer is the medium and long term traders who are IN PROFIT with medium to HUGE stop losses!
As day traders we each take turns filling the gap on these traders while at the same time filling the gap on other day traders using smaller charts!

Support and resistance just means that the money ran out in the direction being traded and for the size of the traders being targeted at that moment.

Think about a glass of water that is 2% full...
Do you want to take that traders drink? Is it worth it?
What about a glass that is over flowing into other cups...
Oh, you want that water now don't you!




Not support and resistance, but a vacuum in which nothing exists to trade to lower/higher prices (traders are zero lined and devoid of profit).
In a place where every one is risking 1-5% the thunderous moves for fat profits are made through evaporating profits not accounts blowing up.




This can be best demonstrated for one of the most successful and largest company on the entire stock market. Apple.

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Imagine how much money you could of made if you anticipated this move. You could of been very rich if you just bought a few calls options. Very low risk and huge reward.

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Postby adaseb » Thu Jul 31, 2014 1:33 am

Consider USD/JPY

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Postby adaseb » Thu Jul 31, 2014 1:50 am

Image


Image

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Postby Jalarupa » Thu Jul 31, 2014 6:24 am

Very nice thread adaseb :D

The advanced study of price action where it related to order flow is always on the top of my list of most valued traits of a successful traders.

I was pondering this exact concept with reference to the USDCAD these past few weeks...

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I was looking at the USDCAD last week and thought there was sufficient held profit for a sell off in CAD... and then Friday the EURCAD popped along with the USDCAD

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Postby adaseb » Thu Jul 31, 2014 8:44 am

Yes the USDCAD is a perfect example because at the end of 2013, it finally broke the resistance from 2011.

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Postby Jalarupa » Fri Aug 01, 2014 5:51 am

Image

This is why large data sets are important...

Data from BOE
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Postby Captain Pugwash » Fri Aug 01, 2014 8:09 am

great stuff here - But I'd expect no less from you two. :D

Now I've got even more shite to do, havnt I! :D
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Postby Captain Pugwash » Fri Aug 01, 2014 8:48 am

This looks interesting
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Postby Hoodlum » Fri Aug 01, 2014 11:20 am

Along with supply & demand, zero lines have been the single greatest concept I've learned that has helped my trading.

However, as mentioned, you can't just trade them blindly. In a strongly trending market, a succession of 4h z-lines can be taken out in a short space of time, with only a perfunctory opposite reaction at each one, before the move continues. For me at least, it is why it is so important to take an overview of currencies as a whole, instead of just trying to trade a pair in isolation.

However, I've got to say - in the case of a 4 year, or 25 year old z-line, I've can't help but think there is another mechanism at play. I find it extremely difficult to believe even the most hardcore position trader would hold on to any profits for 4 years, let alone 25.

Rather, are these not "flip zones" - price levels at which the financial institutions like to place large orders, as buys or sells depending on which side of it the price is on?

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Postby Jalarupa » Fri Aug 01, 2014 11:36 am

Yes, Hoodlum you are correct...

These levels are where institutions sit in wait for price to come to and then step on the gas...

I was trying to show a zero line on a very large scale... 25 years is the biggest I had seen to date/// but is it in fact a zero line or just a price level where stuff looks and is cheap...?

I agree with your observation wholly... Its a demand level
"our deepest fear is not that we are inadequate... our deepest fear is that we are powerful beyond measure... It is our light, not our darkness that most frightens us..."

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