Some Setups On Singapore Stocks

Just for fun I decided to scan through some Singapore stocks and see if I can spot any setups. Did manage to find some, will monitor them in the coming weeks/months to see how they turn out.

GLP

Neratel

SIA Engin

Tat Hong

AUDNZD Compression + Liquidity Spike Trade

Just want to share an interesting trade I just took on demo. It is based on compression followed by a liquidity spike, similar to the pattern I mentioned in a previous post.

AUDNZD M15

AUDNZD M1

I'm happy because the setup worked as expected, and a little peeved because I got stopped out by the 15 pip spread caused by NFP. Its cute when you see it on the charts huh? Price didn't even come close to my SL but I got stopped out. Thankfully its only on demo, really wonder what I could have done to avoided it though, probably nothing. It doesn't make sense to set a extra wide SL just to cater for news based spread widening.

Anyway, I've been going through a very reflective period, and some events have really led me to feel very blessed. Some conversations with Mark (http://www.thetradersguild.co.uk/) as well as deeper study of his material has really opened a whole understanding of what price action really is, what most traders (including myself) have got wrong in their approach to trading, and how much more there is for me to learn and practice. It is really humbling, and yet I feel so motivated and excited to learn more and get better at my price reading. So Mark if you're reading this, thanks a lot for everything, truly appreciate it!

Accumulation Pattern And USDCHF

I like to study and save charts of repeating patterns I observed with the belief that over time I'll get better at spotting them and anticipating a move. Here is an accumulation pattern that I've noticed many times. Again I don't know what to call it. The pattern formation goes something like this:

1. Huge spike down - Selling climax in VSA?
2. Price subsequently tries to make 1 or 2 more stabs down but fails to make significant lower lows. This indicates a weakening in selling pressure and often shows up as bullish divergence. The stabs down might also stop hunt previous swing lows, allowing pro money to load up longs.
3. Price then breaks out of the pattern

Here are some chart examples:

It would be good if this pattern takes place at a HTF demand zone. It is also similar to a falling wedge pattern.

And now... I think I'm seeing something similar on USDCHF H1. It is still a small distance over a significant demand zone (blue area) so I won't be surprised if it takes another stab down into the zone first.

USDCHF H1

And here is the anti climax -  I don't know how to trade this pattern! I guess some ideas might be to trade PA bars at the 2nd or 3rd stab down (aggressive), or trade the breakout (in which case I don't know where to put the stop). 

Just something which I thought might be interesting!

AUDCAD - Watch To Short

AUDCAD Weekly

AUDCAD is approaching a very major level where there is a nice confluence of factors. If this was a H4 and below chart,  I would without a shadow of doubt place a sell limit to short the supply zone. However it is a weekly chart and to do so would incur too wide a stop loss. My plan for now is to wait for price to form new levels of H4 supply within the weekly zone and then short those.

Just thought I would post this because it is such a clear as day level that I believe every trader would be watching it no matter what system he is using.

Perils Of Unregulated Spot Forex

Spot FX is unregulated, and as such traders are at the mercy of their brokers. Unscrupulous stop hunting is one of the biggest complain (the market makers know where their clients' orders are). I just want to point out what this problem really looks like on a chart.

The top chart belongs to Broker A whom I'm so tempted to shame, the below chart belongs to Broker B. Ironically Broker A is one of the most reputable spot FX brokers, which is why I'm shocked at the blatantly obvious stop hunting that is going on. Now I have many MT4 platforms, and it only takes a couple of minutes to verify across a number of brokers that the problem indeed lies with Broker A. No other broker has those ridiculous spikes. And mind you this is not a rare occurrence, 10 in one screen and on a major pair on a relatively high time frame is a very serious matter! I've been observing this broker's charts and know that this is a very common occurrence. I don't see how it even manages to keep its clients.

So in conclusion, it is very important to select a good spot FX broker. Sure low spreads are important, but factors like execution speed, integrity of charts, ease of funding, technical stability are equally important. I used to neglect that until I experienced platforms that keep disconnecting, or orders that hang and refused to be processed so you cancel them and reenter a new order, only to end up with a duplicate position. In spot FX we have the luxury to try out demo platforms for free, take full advantage of it and at least trial a platform for a week or two before committing to the broker.

Some Trades Based On Fakeout With Compression

Refer to my previous post where I shared about the double top with compression pattern. Here are two recent trades I took based on a similar logic.

NZDUSD

GBPCHF

Cool eh? Zero draw down on both trades, caught them nearly at the top, exited right before price turned. Multiple R trades. Do charts like these make me seem like a pro?

Now here is the thing. Those trades are real, so are the reasons for entries and exits. But here is another thing:

1. Those trades are taken on a demo account. Even for demos I have a serious demo where I track everything and trade according to rules, and another casual demo where I try to test setups and trade random lots. These trades were taken on my casual demo.
2. I took a risk with the ultra tight stops. Yes we have fake out bars which closed with an upper wick, but those are not strong rejection bars like a big red bearish pin. Especially for GBPCHF, who is to say price wouldn't want to go deeper into the zone?
3. I traded these with very small lot size. So while at first glance those might seem like multiple R trades, in reality the profits were very small.
4. Those were actual partial closes. For both trades I was actually trailing the remaining position, both of which got stopped out at a higher price. But if I included the trailed positions in the above charts, I'll lose the "exit at the very bottom" guru effect right? I wonder how many of the forum posters are utilizing this same trick...

Now here are some other scary facts. I could have placed sell limit orders at various logical places (M1 supply zone, S/R flip etc). Some of those orders would have worked out while others fail. I could easily select the order with the lowest draw down and post it, appearing as though I managed to nail the trade to the pip. People will believe me because I did have a reason for the trade - the M1 supply zone, S/R flip etc. What they don't know is that there might be 10 other logical areas which failed. Oh and did I mention you can actually adjust the trade markers on the chart? Anyone can be a M1 god of trading. 

Oh ya I recently came across another "trick". There is this guy who is pretty active on FF, he sometimes post trades before the fact, and with pretty good results. I was pretty impressed by him and yet I don't understand why he took those trades. Few weeks ago I saw him post a trade during Asian hours where FF has the least visitors (Maybe this was unintentional). I followed the trade closely and knew that it was a loser. I went back to check the post, but lo and behold the post was deleted! That taught me another way to manipulate results - Take a scalp trade on M5 or some very low time frame so the result can be known very quickly, post during the dead Asian hours so less people will notice, and if the trade is a loser quickly remove the post. Thankfully that guy started an AceGazette journal, and I know now from his results that he is not as good as he portrays himself to be.

With those points, do you now see how results can be easily manipulated, and how important it is to only study traders who post before the fact, consistently and with explanation? Its a scary world huh?

On a side note, those zero draw down trades and getting out partially right at the turn felt really good. Maybe it is luck but I really took and exited those trades based on logic, it is nice to be able to predict the failure of a breakout. The main key and secret is the compression. That signals the intention of the pro money. I will continue to test my entries, if I'm able to replicate such results consistently, I might bring it live.

Thoughts On S/D Trading

I was actually writing a reply to a comment I received, and realized that it is better to put it up as a post in case it could be useful to some readers.

I've spent many months trying to understand and trade S/D concepts, and quite honestly have been through the same stage of being overwhelmed, frustrated, and cynical.

If you ask me, I would say the biggest problem is that there are so many ways to trade S/D concepts, and most threads/sites don't have fixed rules, so you might have a rough idea of what an engulf, Quasimodo, compression, bearish engulfing candle is but you don't know when they work and when they don't. So you might see posters who take engulf trades or a bearish engulfing bar and those trades turn out as big winners, but when you try to replicate it you get multiple losses and wonder why. Good thing about AceGazette is, after some time you realize many of these posters only have a 40-50% win rate and their equity curve isn't pretty, which means there is a problem with their trades to begin with. There is no reason to study their trades except to learn from their mistakes. In short, simply taking engulfing bars at any S/D zone will not cut it, taking any engulf or Quasimodo which appears in the middle of no where will not cut it, touch trading a zone just because there is compression leading to it will not cut it.

I realized all that through hundreds of failed trades, and from observation of many other journals. Now this doesn't mean that AceGazette, ReadTheMarket etc are teaching wrong stuff, far from it. But there are many nuances which most traders fail to notice and this makes ALL THE DIFFERENCE. Here are some of them:

1. It is very very important to trade with the higher time frame trend and respect higher time frame zones. So for etc, suppose we see a M30 bullish engulf. We try to long the source of engulf when price comes back to it and it turns out as a loss. A very common reason for this is because the engulf is into a HTF supply zone, say H4. Or it could be because we're too high in the curve and the profit margin for longs is no longer there. I've done this dozens of times and seen many people do it too, it is probably the most common reason why engulf trades fail. 
2. Quasimodos are powerful, but I realized they have to be taken at a HTF zone and not in the middle of no where. So for etc we want to long a M30 Quasimodo in a H4 demand zone, not when it is dangling in the middle of no where.
3. Compression can last longer than expected. Just look at the AUDNZD pair, compression is everywhere and many times it is not filled. Compression works best after an engulf (Can can pattern), or if price is compressing up to an extreme and high quality zone. Do not touch trade a zone just because price is compressing to it. Sometimes we see a M30 demand zone and ecstatically buy it because we see price compressing down to it, but we fail to notice that the zone is weak, and there is a much stronger H4 extreme zone underneath which will act as a magnet to pull price to it. 

There are so many such nuances, and the sad thing about AG and RTM is that many of the pioneers/seniors are no longer that active. The legendary and genuinely good traders often post without explaining the reasons for trade (Julexo, Ken etc), and those that do explain are mostly enthusiastic newcomers. Much of their trades and analysis are wrong (the dangerous thing is these sometimes end up as winners giving the impression that it is right), but few of those posts are corrected by the seniors. There is no one to blame, because the forums are free so the seniors have no obligation to correct the young traders, and most people are more interested in trading than teaching. 

So in conclusion, I really believe the methodology of the various sites is good, but you need to have a lot of practice, really understand all the nuances in order to make it work. Once you really understand the markets, you'll realize why some zones are touch trade worthy and why it is safer to wait for PA on others. I'm still far far from being good at S/D trading, but I've managed to eliminate many recurring mistakes in the past few months. It really takes months and probably years of chart time and experience.

As for reliable sources to study S/D, here are some:

1. PriceIsEverything FF thread. Redsword is the man who started it all. Ifmyante, Ken and many others all spawned from this thread. Here is a man who dares to post before the fact, explains his trades, and is consistently and uncannily accurate. A new reader might not be understand the first few pages, but keep reading and after 100 pages or so, you'll notice some recurring patterns (whipsaw engulfing, pins at zones etc). Coincidentally I'm planning to hardcore study the thread from today onwards, with the aim of completing all 1400+ pages of it.
2. Alfonso's FF thread. Again here is a trader who posts before the fact, is able to explain his trades, and has consistently good results. He has managed to come up with a rule based S/D system, and to be honest it is my bread and butter for now. I'm very active on this thread because after months of filtering and deriving my own rules, I somehow ended up with very similar rules as him so I really agree with his methodology. It is actually nothing new, but his rules help filter most of the mistakes that many RTM and Sam Seiden traders make. I know because I have made those same mistakes hundreds of times.
3. Lovejoy's FF thread and his website. Also check out Balhana's posts on that FF thread, he is really good and his posts are full of explanations that make sense. Lovejoy has some fantastic videos, in my opinion must watch videos for any aspiring S/D trader. 

At the end of it all, I feel it is very important to decide on a certain style (touch trade or trade PA bars) and focus on it. It is very very difficult to try to learn multiple styles at once, so master one before starting on another. I have one account for touch touching (which I've tested and am confident in), and another demo account to practice trading PA patterns and bars. Pen down trading rules and strictly adhere to them. Journal every trade and study them from time to time. It is amazing how often recurring mistakes occur, and we'll be oblivious to them unless we journal our trades. 

Hope this post helps!

How To Save Time When Studying Trading Forums/Sites

I just came across this article and man do I agree with it. In fact the third kind - Honest Ninja Guru is growing rapidly and I've seen many such examples in the Singapore trading scene. The thing is, this isn't just limited to gurus selling courses, but also active posters on forums. My heart aches at the amount of time I've wasted trying to understand why certain traders take and manage their trades. Many of these people are very active on the forums, they post mostly winning trades and often go around correcting others. As a result they're highly hailed as expert traders, and due to their connections they're often highly vouched too.

Now recently I had a series of eye openers, which led me to a conclusion I will share about later. I'm so grateful for sites like AceGazette, where trade journals not just have to include the trades, but also the account statement and the reasons for the trade. It is through there that I realized how many of these traders are actually not even profitable. I've also seen statements of traders who multiply their accounts within a very short time only to over trade and blow up another one before long. Their equity curve is like a roller coaster and their win rate is low. There is one common theme: They mostly post winning trades after the fact, and their results are inconsistent. Why should I study such traders? Now I'm not trying to say they're out to deceive or have any ill intentions. But given the enormous and endless amount of trading resources and threads out there, shouldn't I spend my limited time studying the really good and consistent traders? So now here is my conclusion, only study traders and posts with the following attributes:

1. Posting before the fact. This is very obvious, you know a good trader because he posts when he takes the trade and not after the trade has ended as a profitable one. 
2. Able to explain his entries and exits. This is super important. Now if you're only interested in a signal service, you might not care about this, but if you really want to learn, the trader you're studying has to be able to explain his trading strategies coherently, and you must be able to observe from his trades that he does adhere to them consistently. This point alone eliminates many traders who only post their winning trades but are very evasive and unwilling to explain their entries/exits.
3. (Optional) Positive and consistent account statement. This is optional because if points 1 and 2 are fulfilled, I don't really need to see their account statement to know if they're a successful and consistent trader. Nevertheless, an account statement is the best proof. 

There, I've grown wiser based on that criteria, and no longer waste time studying or listening to traders who sound very knowledgeable and are hindsight kings but still lack profitability. 

Double Top With Compression Pattern

I've been going through charts and filing patterns which I've noticed repeatedly. It is so fun to do so and helps increases my confidence in them. In this post I want to share another powerful pattern. It is some what like a double top, but the defining factor is that there is compression prior to the second top, and the second top is often into a supply zone. A bearish divergence is also almost certain. Here are some charts:

This is similar to the CP + LS pattern - compression followed by a liquidity spike. In this context, price first forms a first top. It then drops and slowly compresses up. This compression is the pro money's attempt to remove buy orders so that the subsequent move down is unopposed. After the compression, price spikes up. This stops out early shorts as well as traps breakout longs, providing liquidity for the pro money to go short. A huge reversal then happens. The way to trade this is to wait for a candlestick pattern or rejection wicks at the supply zone where the second top is occurring. More aggressive traders can just take a touch trade at the zone with a stop above.