Have a look on today Dow Jones chart before 14:30

You can see that in 12:30 the high was 10451 and low of 10420. The next bar the high was lower and the low was higher which gives me some indication that a strong move is on the way. Nothing is really happening on the next two bars.

So how do you trade this? there are two options:

1) Go with the trend.

2) Ignore the trend.

In option one we switch to a different time frame to check the trend. I just multiply the current time frame by 4 or 5. So if I am using 30 minutes chart I will switch to 2 hours chart and if I am using daily chart I will check the weekly. Now that I know the trend (in this case it is up) I will put a buy order a bit above the recent high. In this case it is 10451 so I will put my order level at 10455. Because the trend is up I will ignore the down side.

In option two I don’t really care about the trend. This is more for quick trades where you try to catch a small movement and you don’t care if it is correction or changing of direction. In this case I will put an order to sell at 10415.

Target & Stop loss? it is 30 minutes chart so the target should be quite small and so the stop loss. But the stop loss shouldn’t be very tight because you can stopped out and miss the move. In this case I would put 30 points stop and target of 40.

and look what happened at 14:30:

You can see that in 14:30 there was sharp movement down which broke the 10420 level. This trade would have been successful if you were using option 2 and ignore the trend. If you were using option 1 and stick to the trend nothing would have happen for you today.

Have a look on this 30 minutes chart of the EUR/USD

The pair were stuck in sideways channel with top of 13514 and low 13487 for almost 4 hours. So I put an order slightly above the top at 13518 hoping to catch a strong move up. My stop is the lower boundary, so it is quite tight. In fact I think that if my stop will be triggered I would change direction and short the Euro.

My target is 50 points. At the moment it is still quite and the price is around my entry level.

Update - I’ve been stopped out. At the beginning I gained 30 points but then the direction has changed. The lowest it went (at the moment) is 13483 while my stop was at 13485. It is now around 13500 so there is a good chance that my stop was too tight.

Well it went no where. BP didn’t manage to have a real run today. So once it climbed the barrier of 575 around 9:15 it stays a bit above it for the rest of the day. The share picked at 578.60 and I kept it till the last minute and closed the position at 577.7 for 2.7 points profit but after commissions (I used CFD) it is just 0.7. Not the best trade!

But at least it is not in the red…

Have a look on this 30 minutes chart of BP.

The share opened high and reached 574.8 and the went down to 571.5. The next bar the high and low were in between the first bar. So I put an order to buy at 575 with tight stop loss of 571. On the third bar of the day BP has climbed above 575 and my order triggered. My target is 582 but as it stands now it seems that the share can’t break above 577.  To break even with the commission I’ve payed I need the price be at least 577.

No mater what because it is an intraday trade I will close it at the end of the day. I will keep you updated on this one.

I’ve tried their system using the £200 cash back.

It is easy to use platform with ok spreads but I found it has lack of one important feature:

The ability to set an order with stop loss. You need to open a position in order to set the limit and the stop. Another thing that I found very confusing was the way the system closes positions when the stop loss is triggered. It takes 5 minutes before the actual position taken from your open position page, which makes you think it is still open… not really good.

But their customer service is good and they did give me back my £200 (my trades didn’t go right for me…)

The good thing about them is that they gives you a £1000 credit. So you don’t need to deposit any money. I like that

When I do day trading I am using tight stops. For example on EUR/USD I use 25 points stop loss.

Now have a look on today 30 minutes graph. It is very choppy and it goes from one side to another. That’s why I stayed a way. Otherwise I will be stopped out 5-6 times today and maybe hit my 50 points target twice. So I would be 50 points down…

If you use tight stop loss stay a way from choppy market! and if you use tight stops don’t even think to trade oil. It can jump 100 points in no time to each direction.

For weeks Shares magazine forex section  recommends to go against the flow and but the $. Each week their bottom line is buy the $ at 1.43 but the $ at 1.45 and so on. But the Euro had some other ideas and went all the way up to 1.51 but still shares magazine recommended against the Euro.

I don’t feel in a position that I need to catch the turning point. My idea is let it change and then jump on the new trend. But I do feel that something has been changed for the last 3 days.

Since Friday the Euro has lost a lot of ground to the green bucks and although the weekly chart is still positive the daily is already changed direction. Add to that a correction in the market and it seems that the direction is down for the Euro. It is too early to call but if the weekly chart will indicate that the trend has changed I am on!

Sorry for the off topic subject but it is amazing. From my window you can see airplanes coming to land in London City Airport. For those who don’t know this is the windiest area in all London.

Watching the wind throwing these poor airplanes in the air make you feel sick and lucky that you are not on board. I feel that a big acciaident surely will come. Don’t be on that fight!

For me this was the most difficult question. Many time I opened a trade with a stop loss too tight only for the stop order to trigger and then bounce again leaving myself upset!

The idea is to setup a stop loss not too close but not too far either. So how do you set your stop?

I take this idea from ‘Come into my trading room‘ by Alexander Elder. It calls ‘The chandelier exit’ and it helps you to setup a stop loss out from the market noise.

The formula is very easy:

(Highest value of the last 22 bars-3)*ATR(22)

for shorting is the same but with the lowest value of the last 22 bars.

The idea is to move your stop loss forward as long the trade goes in your direction. But Never move it down!

The code that I use to add it to IG index chart packaging is this:

RETURN highest[22](High)-3*AverageTrueRange[22](close)

and for short:

RETURN lowest[22](Low)+3*AverageTrueRange[22](close)

this really works well for me and saved me many time from being stopped out!

That’s why I had a quick trade today on Rio Tinto and run a way after a quick profit. I know bought it at 3040 and sold it on 3060. I know it could easliy end the day around 3200 but on the other side it can finish around 2900. Yes I can use a stop loss but if I need to carry the trade to next week the stop loss could worth nothing if the market opens sharply lower.

It is the same with oil and EUO/USD… I am waiting to see. No mater what I won’t trade in the first half hour. If by then I will see a sharp move I may jump on the train (hopefully it would not be too late!)