Boo hiss boo, I apologize for the cheesy headline. Also, this is the last weekend I will pick on the GBP/AUD as its getting tedious.
I thought we could get some points of view from our readership on what signals they use to enter and exit trades. This could be a great opportunity for some of our more veteran traders to help out the new folks. As well as a way to share ideas.
It is interesting to me how I can take the same trade as someone else but for entirely different reasons. Sometimes when I set up a chart like someone else I can get a different point of view that can help me tweak my own charts. So hopefully there is a good benefit for all on the exchange of ideas. Charts encouraged!
I will start with my own H4 (4-hour candle) chart which I keep very simple. I am typically looking for a 3 wide candle pattern,
- and a break of a short term trend line (to me short term still has at least 3 points),
- and a confirmation by either divergence with an oscillator or a support and resistance line which I use weekly pivots to define.
If you have trouble spotting a trend adding a 100 simple moving average is also helpful on this chart.
Not all signals are created equal!
In the chart below I demonstrate 3 set ups.
The first set up is medium strength:
- 3 wide, short term TL broken, and divergence all there, but the 3 wide is weak
- It did exceed the body of the last down candle, but not the wick on close. Also while there is divergence its not a big slope.
The second example is a strong signal:
- The 3 wide has the last up candle close above the wick of the last down candle, the short term TL is broken (thanks Carney) and the divergence has a much steeper slope. If only they all looked this way.
The last one is the weakest of the three and not one I would trade without getting a much bigger candle close upward:
- The 3 wide is above the body but not the wick, there is a break of the short term TL, there is no divergence (although in a strong trend there might not be) , there is no pivot level to base S/R on.
- Without all the components its just not a viable trade.
Exits may vary:
- I can have a set amount
- I may look for S/R levels that holds price action
- or I can stay in the market until I get the setup in the opposite direction and then take it the other way
- This mostly depends on how long I feel like staying in the trade, or if I know a large news announcement might be coming up and I want out before that happens. Of course tape bombs can happen at any time and sometimes the market moves just because it feels like it. I always stress money management.
My example is below, lets see yours. I know we have some sharks out there just itching to show off.
