Tuesday, April 29, 2014

PREVIEW: FOMC Decisions - 30th April 2014

DAX trade - trapped traders

Here's a nice little trade, involving R3 again.

I posted earlier today that it was always worth a shot at fading of R3. Well, in this case, it wasn't (or at least I didn't think it would fade). Price was breaking out of a range too close to R3 - it popped right through. So instead I tried to go with the break by buying the pull-back to R3. Unfortunately, this didn't work out either and I took small loss.

However, price then turned around again and started to go higher. However, this time I was ready for the fade. All those people who went long at the initial break of R3, or (like me) who tried to trade the pull-back now realise the trade has failed. These are the trapped traders. They are only too glad to cover their position at or near break-even when they get a chance, and this is what drives price down again. This time, I was on the right side of the trade, and took a nice quick profit for 15 pips or so.

You have to be nimble when trading the DAX.

Currency Strength Meter 29/4/2014

CAD is strong on 4H, as is AUD, and GBP not far behind.

Currency Strength Meter can be purchased from this blog, or on FXCM Apps.

FTSE morning trade

It seems the Ukraine risk-off mood from Friday seems to have passed (at least for now). FTSE100 gapped up and kept moving, no pull-back to take, so took fade at R3 instead. R3 is always worth a trade - not sure what the % probability is, but it is fairly high - especially when over-extending / exhausting a move up.

I took the short, and scaled 1 lot quickly to cover the cost of the stop. It was basically a free trade from then on. I closed a portion of the trade near the open, keeping final runner, but also closed this too when it looked like there would be no continuation. UK GDP later this morning, so wanted to be flat before that.

Monday, April 28, 2014

RANsquawk - Week Ahead - 28th April 2014

Currency Strength Meter (28/4/2014)

A look at the Currency Strength Meter chart at the start of this week. Some big news items later in the week, including US GDP, US interest rate decision and finally NFP on Friday.

Sunday, April 27, 2014

Metals, Energy and the Ukraine situation

I created a template for Multi-Compare showing the major metal markets, oil and gas. Risk-off in recent days has seen gold rise. Also, palladium rising sharply last week (Russia is worlds biggest supplier of palladium).

XAUUSD = gold
XPDUSD = palladium
XAGUSD = silver

Value Area computation

Value Area is trying to represent 2 standard deviations of the normal distribution. That is approx 68% around the mode of the distribution. The mode is the POC (or VPOC if using volume profiles). Often 70% is used rather than 68%.

The usual algorithm to compute it is something like this:
  • Starting at the POC we add together the TPO's by moving in the direction of the closest price (higher or lower) with the most TPO's. We do this by moving in pairs of prices.
  • If both "next" prices have the same number of TPO's we choose the higher price.
  • We stop when the cumulative percentage of TPO's breaks 68%.

There are some variations. For example, if volume profiling Value Area is used, then the VPOC is the starting point. The VWAP has also been suggested as the starting point (this was also implemented in the latest version of the indicators).

The Value Area only really applies to a normal distribution, if the profile was a trending day, then there wasn't any "value" and any Value Area calculated by the above method should be ignored.

Saturday, April 26, 2014

ShadowTrader Video 04.27.14 - Neutral, but some ideas out there...

Zig-Zag Indicator Update

Minor update to the Zig-Zag indicator.

Release 4:
  • Time mode can be set to display bars or minutes
  • Added displacement option for labels

Existing users can download the latest version from the download site for free. The indicators can be purchased here, or drop me a mail if you want to take a free trial version.

Market Profile Indicator updates (Profile, Composite Profile and Candle Profile)

I have made a number of changes to my Market Profile indicators (Profile, Composite Profile and Candle Profile). The changes are now complete and uploaded on the download site.

Profile (Release 15):
  • Value Area can be computed from POC or VWAP

Composite Profile (Release 13):
  • Start time can be specified for “Current day” and “Previous day” modes
  • Addition of Median and VWAP
  • Value Area can be computed from POC or VWAP
  • Legend colour can be changed
  • Fixed issue with profiles using tick data
  • Using “extendHistory()” to allow greater than 5000 ticks or 15000 bars

Candle Profile (Release 9):
  • Value Area can be computed from POC or VWAP
  • Legend colour can be changed
  • Fixed issue with profiles using tick data
  • Using “extendHistory()” to allow greater than 5000 ticks or 15000 bars

All these indicators can now compute Value Area based on POC or VWAP. Actually, in many cases the end result will be similar due to the way Value Area is computed. However, in some cases, when VWAP and POC are in very different parts of the distribution the Value Area will be different. I don't know which one is "best". The POC-based Value Area is the traditional version.

Candle Profile and Composite profile can now work with longer history than 5000 ticks or 15000 bars, which was previously a limit due to FXCM server, which I have managed to overcome. However, please note that creating very large profiles with low timeframe data (e.g. 1min or tick data) can take a long time to load. In general I would use 1min data for anything up to 10 days, and 5min data beyond that. For very long profiles (e.g. multi year, then even 1H or greater might be necessary).

Existing users can download the latest version from the download site for free. The indicators can be purchased here, or drop me a mail if you want to take a free trial version.

Thursday, April 24, 2014

S&P500 trade

Last night after the close Apple released their earnings report and the overnight market rallied. When S&P opened today they sold it - all those weak late longs were stopped out, and they took the S&P down to take out the sell stops on the lows and then bought it from there.

As Mr TopStep Danny Riley says "No stops go untouched on the S&P".

The opening drive was a strong one, but I eventually took a long trade on the "shelf" on the weekly volume profile. Scaled out at 65 pips and 102 pips, 1 lot remaining as a runner.

Tuesday, April 22, 2014

S&P500 trade today

I was expecting some more weakness at the open but it moved very strongly upwards shortly after the open. No decent pull-back to enter long. Eventually entered short at R3, took a little heat, but eventually covered into the closing swing (back to the VWAP and IBH).

Thursday, April 17, 2014

Keep lines synchronized across multiple charts

I developed a tool called Line Sync for synchronizing lines (such as support/resistance lines, key price levels and trend lines) across multiple charts. The idea is that you can draw lines one one chart (e.g. 4H chart) and they will appear on a completely separate chart (e.g. 5min). You can use the indicator across multiple charts of the same or different timeframes, even different symbols.

The indicator can be downloaded here.
30 day evaluation license key for Line Sync (valid until 2014/05/17): 9BA659BDBA66534A613D3CE4
Permanent license key can be purchased here.

Tuesday, April 15, 2014

Volume Profile on FXCM Apps Store

The guys at FXCM have approved my Composite Profile indicator for the FXCM Apps Store. For the store, I have renamed the indicator "Volume Profile" - since it is easier to understand its purpose from this descriptive name.

As always, FXCM spent several weeks testing and verifying the indicator and finally approving it for their site today. I'm really pleased to have another one up there (Currency Strength, Multi-Compare and Candle Profile are already on their site).

The indicator can be found on FXCM Apps Store, as well as on this blog. There may be some slight differences, generally the version on this blog will be the most up-to-date version due to the length of time it takes FXCM to do their compliance checks.

Another down day for the equity markets

Yearly comparison of stock markets, plus gold, oil, USD.

Here's today's chart.

Multi-Compare can compare up to 10 instruments on a chart, showing % gain/loss.

DAX and FTSE morning trades

DAX opened near yesterdays high, which was broken but with no follow-through. That was a bearish start. News due to 9:30 and 10:00, so wasn't expecting any major move until then.

A number of trade attempts, but didn't really get the reaction I was looking for, and closed them for small loss / small win. Eventually, managed to take a nice trade on the DAX. The daily pivot level (PP) was initially broken and then held as resistance, but was later broken again to the upside. I bought the re-test, and scaled for 12 pips and 36 pips.

A similar trade on the FTSE, this time the open price had been acting as resistance, and had been tested multiple times. I felt it would go on the next test. This time, I went long pre-breakout (on pull-back) and scaled for 5 pips and 15 pips.

Monday, April 14, 2014

S&P trades today

I made a number of trades on the S&P today, catching both the top and the bottom of the day. Yesterday's close proved to be a magnet in the final hour of trading, and once tagged price went higher.

RANsquawk - Week Ahead - 14th April 2014

Thursday, April 10, 2014

Big sell-off in equities!

I have no idea what happened today. I just came home from a trip abroad and found NASDAQ down 3% and other equities down by large amounts too!

Wednesday, April 9, 2014

Gap Fix Indicator

I use an indicator that I developed called "Gap Fix". It was developed to fix a very simple problem with the FXCM data feed on the MarketScope platform. The problem is that FXCM does not show the proper gap on session breaks, such as stock indices CFDs like DAX (GER30), FTSE100 (UK100), etc.

The indicator is quite simple. It loads the tick data stream on session break bars, to determine the actual starting tick price. Loading the tick data takes time, and so I would only normally recommend using this on a small timeframe chart like 5min, 15min, 30min, etc. There is no need to use it on 24 hour markets like forex, since there is no session break as such.

Here's a comparison of today's FTSE100 (UK100). On the left it used the "Gap Fix". Hopefully, the benefit is obvious.

The output of the indicator is proper "bar stream" which means that you can also use it as an input to another indicator. In order to do this, use the "Data Source" to set the source of another indicator. In the following chart I have used it with my "Session Lines" indicator. This is really important for things like Initial Balance and Opening Range.

Edit 19/9/2014: Here's a short video showing the Gap-Fix and SessionLines indicators working together on a big gap day due to the Scotland referendum result.

The "Gap Fix" indicator can be used stand-alone. It is available on my download site (here). It is free, but donations are welcome.

Download "Gap Fix".

PREVIEW: FOMC Minutes - 9th April 2014

Friday, April 4, 2014

EUR/USD and GBP/USD Volume Profile and Support/Resistance Levels

Less than 30 mins to the NFP (4/4/2014), here's the Volume Profile for EUR/USD and GBP/USD, showing the High Volume Nodes (HVNs) and Low Volume Nodes (LVNs).

NFP usually has some big moves, and I have no idea whether it will be up or down (most likely both in the short term), but the high volume areas either side of current price will often get a visit.

Currency Strength and Major Markets prior to NFP

Quick look at where the currency strength and major markets are with less than 30 minutes before the NFP release (4/4/2014).

Advanced scaling-in the markets

Webinar on advance scaling-in techniques from FXStreet.com.