Tuesday, October 8, 2013

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.

4 comments:

  1. HI Myst,

    Cool. Have you thought to study WRB analysis .

    Any thoughts?

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  2. I tried reading the free reports, it was tormenting. Could be due to my poor ability to understand, but it was way too technical and complicated for me to comprehend. Besides, I figured it would be hard to be able to utilize it properly without purchasing and studying the other reports thoroughly and being active on the forums. Got enough on my plate so don't think I'll commit to that for now, have you studied it before, is it good?

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  3. Been reading. Pretty objective. I have purchased chapter 4 for now to check whether other materials are worth or not. I will let you know soon. Supply and demand never failed to excite me.

    Regarding your first chart, fakeout top , have you notices there is a nice supply in 2 mins TF. I couldn't upload the chart here.

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  4. Just checked, yep I think I know what you're referring to. Interesting how price usually fakes out into a zone huh? I would much prefer it to fake out into a HTF zone rather than a very low one though. Btw this post was written with a tongue in cheek fashion, so don't read too much into the charts! I'm really still practicing these setups, I can see the logic behind why it works (compression removes orders, fake out to stop out shorts and trap bulls etc), but I have trouble determining when to pull the trigger. Now I guess it'll be easier if we get a strong material rejection (as per Mark's FTB setup), but other times like the GBPCHF chart we don't.

    Hope that the WRB stuff will be helpful to you!

    ReplyDelete