When it comes to technical trading, we like to "stack the odds in our favour". What we look for are a series of reasons to enter a trade, or why a particular trade set up looked good.
In Jupiter Signals, we look for divergence, where price goes one direction, and whichever indicator we use, another. (Divergence or Convergence). Divergence trading is very simple in technique, and application. The only potential issue is - the market. Will it take this opportunity to rest and retrace, or will it decide to reverse the trend.......or in some cases, decide that the trend is not yet over and continue down.
Back to the simplicity of Divergence trading...Do you wait for the RSI or Stochastics to break above 20, or below 80 for your entry? Whatever signal it is, that's your "get in now" entry signal.
What I really like about technical trading is you can add to that. There are other technical trading techniques that lend their own to your own reason for entering a trade.
Yesterday was just such a day.
I'll let the fact that each picture tells its own story do just that, but also notice how the 1 horu chart is ALSO supported by the SAME technicals on the 4hour as well!
What the heck was I doing at this time to miss such an obvious entry @.@
(Actually I was being stubborn and wanted a true test of the .00 level. You can see we missed it by 5 or 6 pips. Stubbron, in that entries like this have missed me by because I have this thing about 00 flat!)
Although we had no previous tests of the Resistance to be Support, it is a common scenario that the very first retest of such S/R interchanging roles results in a bounce at least. Sometimes we can get caught up in the "perfect" entry, and miss a good trade. Those 5 or 6 extra pips cost me 100 :) But after all that, No trade is a winning trade! (Cause we didn't lose did we?! :) )
Bit of a down start to the morning. Euroyen stopped out at Break Even twice. Second time, kind of over-stepped the target shooting for 20 pips as we saw 15. Thems the breaks as they say.
EURUSD trade was a little premature in signalling. The trade plan did play out though, lending proof to the original analysis applied. Just played the trade a little early. Will see what London brings us. Currently -15 pips for the day..
PreLondon....our 4th and final trade for the day. Stopped out at Break Even. Not too bad, as the trades themselves only fell short of designated goal by a few pips. Better luck tomorrow!
Jupiter is at this stage yet to identify an entry for us.
Just a quick post to show all is well in the land of Jupiter Signals.
Yet again, today, the ASF as I shall hereby name it (Asian Session Feint), provided an entry signal, started to move in the direction of the signal....then promptly died.
From November onward, no signals will be given during the Asian Session (until 3pm Japan Time) until Asian markets pick up liquidity. This constant lack of follow through is cheating us of pips in getting better entries by waiting for European and London opens.
One thing a trader must prepare for, amongst many others, is the fact that not every trade can be a winner. There will be losers. Last Thursday's huge buy in on the carries again broke some serious levels of resistance for the GBPJPY (both 4hourly and daily levels), and also brought the Aussie and Euro -Yens up with it. This resulted in a series of losing trades.
On that point, it certainly reinforces the fact that the FX markets are not just technical. There are MANY different factors involved, and all the more reason why Stop Losses, even arbitrary 50pip or whatever, SHOULD be used in every trade. I'd rather be knocked out at -100 because some Hedge Funds believe the GBPJPY was a good buy at 144 than be sitting deep in -400pips :)
As mentioned in an earlier entry, the Asian markets of late have been 50/50 on whether follow through will occur or not, and what is worse, has mostly ended up as being too early an entry.
What started as a fantastic month with about 800 pips in the bag, is now sitting at approximately 370pips. With still over a week to go for October, this is a bit of a setback, and serves as reinforcement of the idea that GOAL SETTING is important! If you reach your daily/weekly/monthly target, switch off the charts and enjoy life. :)
I'll be releasing a new service for our customers called Pluto Signals. We will need to update the home site first, but just an advanced notification of what it's all about.
Pluto Signals will be aiming to provide 10 - 50 pips a day. Doesn't sound like much does it? But as simple as it seems, a LOT of people are unable to achieve that goal.
We will be looking for a maximum of 4 calls a day, so if our target range is hit, even in just one trade, then there will be no further signals for that day (by principle). This is for several reasons. No one likes being tied to their PC for hours on end (sometimes it feels that way with Jupiter Signals in the current markets @.@).
Goal setting is EXTREMELY important in any endeavour, and especially so in trading. Overtrading leads to bad decisions and burn out real fast. By setting a target goal of pips AND maximum trade number, we are limiting the risk of overtrading.
Risk? Oh yeah that! Basically, it will be straight 1:1 Risk/Reward. This is to help me maintain a timely signally service, and also keep the email message content to a minimum. For example, if the signal comes in :
Pluto Signal is there just to highlight that this is indeed the Pluto signal (as I am sending from jupiter.signals@...). Hopefully this won't confuse anyone. :)
The pair being highlighted, in this case, the EURUSD appears next in line.
BUY/SELL should be fairly self-explanatory.
10pips refers to the target pips for this specific trade.
(1.4880) Is simply meant to be a reference price. Showing the indication price that I am using at sending the email. This does not mean that if you can't get this price, the trade is void. Trading signals are meant to be an aid or supplement to your own trading portfolio. Use your own analysis to determine if by the time you finish checking the charts, that you can still achieve your target. In most cases, however, there will be more than enough movement to cover the initial target pippage and more!
During the Jupiter Trading System, while waiting for Divergence entries to form, other trading chances often appear. Support/Resistance bounces, triangle breakouts, Divergence, any number of opportunities. But as they are not part of the Jupiter Signal Trading System, cannot be sent on behalf of them.
As the final format has not been decided, the [PLUTO SIGNAL] may simply be replaced with the pair in question.
OK, so wew have the signal, onto how to handle it. Everyone has their own acceptable levels of Risk/Reward based upon their own account size and analysis. However, the following is a guide as to how Pluto Signals can be managed.
As you can see in the table below, the idea of this is to mitigate Risk as soon as possible. Once a certain number of pips have been achieved, the trade will either be closed entirely, break even locked in, or in cases where 30+ pips are targetted, Break Even + Profit will be locked in.
Note : Target Pips of 30pips should be Close at +30, not as shown above.
Here is a quick look at the progress so far in the last couple of weeks.
I have been blessed so far with only one loss. But you can see so far how even short targets can add up to decent rewards. Obviously, this is but a couple of weeks worth of data, what is important with any trading plan or strategy is long term results. Even good systems have bad days/weeks/months!
Whenever you go for a weekend trip, or want to travel somewhere even just to meet a friend somewhere, you need to know where you are going. Trading is no different. In fact, it is very important that each trade that is placed, is planned accordingly.
I don't remember who coined the term, but "Plan the trade, and then Trade the plan!". If you don't do your due diligence in any business endeavour (and yes trading IS a business endeavour), how can you expect to succeed? In planning trades, I always ensure that they contain the 3 E's.
Eis forEntry
Where is it that you want to enter the trade? A specific price? A price level? A cross of two moving averages? What is it that says to you, "Hey! Here's the entry!" All trades start with the Entry. It is from this point that the next two E's are derived.
E is for Exit 1 Exit 1, or Trade Exit/Take Profit, is the destination point. Where, in this trade, are you planning to go? 10 pips later, 20pips? Until the two moving averages cross against you? When the RSI breaks below 20 or above 80? Basically this is the point where you will want to close your trade, in full or just partial, and feel good about a successful trade.
E is for Exit 2 Exit 2, is there for when the market, although gave you some good indication your trade plan is going to work, just decides that, nope, not today, and then turns against you. If you haven't already guessed, yes, this is the Stop Loss. You want to protect your trading capital as much as possible. Stop Losses are there for when the trade plan, for whatever reason, just doesn't pan out.
I won't go into it here, but the Risk/Reward of the trade depends upon Exits 1/2. Ideally you don't want to be risking too much, for too little gain.
Jupiter Signals uses initial default Stop Loss values. 80 Pips for the AussieYen, 100 Pips for the EuroYen and 150 Pips for the PoundYen. These stops have been systematically tested to provide immediate coverage. The initial calculation is for approximately 1:1 Risk Reward, utilising two targets.
The initial Risk/Reward Ratio is calculated at targetting Target 2, the farther target. One way of mitigating Risk, is by moving the Stop Loss to Break Even once Target 1 has been reached. Target 1, through systematic testing has shown to hit far more frequently than Target2.
Lately, we have been in some particularly slow or range bound markets, with bursts of liquidity. Although the default Stop Losses are of considerable size (although appropriate or hourly charts) the stops can, and are often suggested to, be moved closer as the trade progresses - aka Trade Management.
Let's take a look at a good potential trade set-up.
There a lot on there but let me summarise below. This would be a VERY good Divergence entry at 143.15 That price level was alreadyan established level of resistance. Going back further you can see it also acted as support.
Divergence has formed twice. Now the orange line on price is horizontal, it is neither moving away from the indicator orange line, nor to it. Remember though, that Divergence (Convergence) is when price and the indicator are doing separate things. If you weren't too sure about that particular bit of divergence, then it was followed up with some more typical Divergence indicated by the red arrow.
So our trade plan would have had an excellent start. Even in the face of the Asian Session coming in, the odds were stacked positively in favour of a short.
The Blue circle is where abouts I opened the charts and saw price. Ideally 143.00 would have been a good entry, and had price retraced to that level, I certainly would have taken the trade. So why didn't I? I missed the boat. It already left the pier. I don't plan on getting wet, so I'm not going to take a running jump and HOPE that I land on the boat as it berths away from the pier (or is it only berth when it is docking?). Trade plans run on sound analysis, NOT HOPE.
Albeit for a system that targets 100+ pips, you might think 25-30pip late start is acceptable. But, let's return back to the 3 E's. Where are you going to now place the Stop Loss? In hindsight now, anywhere above that 143.15 mark is acceptable. But what if the market, from that entry point, then proceded to retest that 143.15 mark? There's a better entry right there, or, if you just jumped in with HOPE, there's -40 pips worth of movement.
Obviously in hindsight now with several hours since having passed and a good 100plus pips of southbound movement there, the whole what if scenario is moot. But each time you plan a trade, you need to take these things into consideration. Your Entry is an Entry for a reason. If you miss that Entry, then too bad. Move onto the next the trade.
Reminds me of another phrase, I think Dustin Pass used to (or still does) say, "Better to be out of a trade wishing I was in, than to be in a trade wishing I was out!". The latter part of that phrase is often what happens to people who miss the appropriate entry for whatever reason, and jump in anyway.
You've read an earlier post about how underperforming the Aussie-Yen has been of late. No doubt this is tied into the increased AUDUSD strength as China and India etc. buy up natural resources to build up their infrastructure. If you weren't already aware, when trading cross pairs, the relative strength of the parents (AUDUSD, USDJPY) is extremely important. It doesn't matter which is the weaker, or which is the stronger. As long as there is a difference, you will have the opportunity to trade.
When the AUD is gaining in strength at relatively the same pace as the YEN, then the AUDJPY pair just sits there in fairly tight ranges. Take a look at the hourly chart. Don't forget that the AUDJPY can typically have a 5-6 pip spread. This makes going for tight range bound scalps pretty difficult unless you are after 2-5 pips. Jupiter looks for 40+.
So, as one should do as part of their trading business, I went back and reviewed the last couple of month's. Why has trading performance been so mediocre in this pair? Basically, two reasons. The AUDJPY was in some very tight ranges most of the time. Which in turn impacted trade call frequency so that it was very few in number. Extending onto that, some of the range breaks often appeared to be divergent at first, but continued through to stops. Successful trading was at the end of these bursts. (If you remember an earlier post, you will see that Divergence doesn't always play through the first time it forms.)
In review, I was thinking what could have been done better? How could I have adapted to these markets in a more pip friendly manor for our clients? There's that mental flexibility starting to work.
I clicked one button....
Wowzer.....Like many a trader is prone to do, even the experienced ones, you stay locked into the one thought pattern, or in my case, the one time frame! When the current time frame you are on is providing unsuitable conditions, step back and take a look at a bigger picture!
Now, I have highlighted some pretty pip targets in the picture. I am not saying every last pip is possible for the taking. I'm trying to highlight the difference between a 1 hour chart (20-40 pip ranges) and the 4 hour chart (some movements ranging from 180-300pips). Surely you can agree that the latter provide far better potential.
Whenever you don't like looking at something, change your perspective of it. You may just find a more pleasing view :)
My goodness what a long day it has been. I cannot express really what I am feeling for the AussieYen of late. :) Emotional trading is a bad thing, fortunately for me I have a system in place.
Let's start off with the AussieYen.
Looking good except it's like 11am in the middle of the dreaded Asian Session. The pair is overbought, our system flags us an entry. Just something about this setup doesn't click for me. System wise, it meets the entry signal. For conformation, let's look at it's parent the AUDUSD.
Things seem to meet up. Both are way overbought, we have our system entry signalling at the same time for this pair.
Hours later and millimeters of chart movement in candle sizes, a nice tight stop of 79.95 finally gets hit. Even now, while writing this, both pairs are drifting sideways in very small candles. The AUD news that came out earlier in the day was pretty good. What I was intending to play on here was some retracement of the impulsive move up. we got neither no retracement, nor any substantial continuation. Please return 9 hours of my life AY!! :)
Trade 2, and where the true Judgement call comes in. The GBPJPY. I miss sending the signal at 142.20. Price receded back too quickly for me to visually confirm that that was a good price level to enter. I get in at 141.85. We see some downward movement, as the GBPUSD is also very toppish at this same time. VERY good factors in OUR favour. The interesting thing with FX is, that it doesn't matter how much everything lines up in your favour, that is NO guarantee the trade will be a winner.
Here is the chart. 3. depicts where the exit at a -30 pip loss (for me, soon after sending the email to exit, price retested 142.00 for a -15 pip loss for some of our subscribers).
9:30pm rolls around and US news comes out not so bad for the USD. I'm no fundamentalist, but right now, we are looking at 2-3 hours of no solid movement in either direction. Even now we are still sitting on the 142.00 level and the original trade call may still end up being a winner.
So why call it CLOSEd? We are sitting on weekly and monthly level support for the USDJPY pair. My guess is at these levels, not many people are too keen to sell into the face of such strong support. No trade is really worth waiting hours to play out unless you are already on 4hrly or daily charts. It works or it doesn't, and after seeing the signal and acting upon it, I'm just not that confident that after London and now NY coming into bat, that 88.25 level of the USDJPY isn't going to break tonight.
Erase 130 pips off that 800pips start to the month :(
Jupiter Signals went live with signals in June. They were opened up to the public via www.signal-haishin.com in the beginning of August. Most unfortunately, August was a very bad month for me, and from what I understand for a lot of people as well. It's all well and good posting charts of the trade that was, but I thought I would post the results so far.
August was quite a volatile month, and as FX traders we love volatility. Unfortunately as a divergence trader, it meant some very strong continuous trends. Divergence forming does not always mean that a retracement or trend reversal will occur right there and then. In some cases Divergence will be flagged as much as three times before the retracement/trend reversal occurs. System trading is about having a systemand sticking to it, even in the face of losses. A lot of the August (and September) losses were due to the low frequency of calls to losses.
Anyway, here is the progress thus far.
This is in no way intended to be boasting, simply publicising the results.
September, my goodness, I almost denounced my nationality over the AussieYen. VERY mediocre performance mostly due to it being in very tight ranges. Perfect for the scalpers among us. On the last day of September the market gave me some nasty losses on this pair driving it to -300pips for the month. Brining the over all service month from 800 pips down to 500 pips over all. OUCH!
Even now, as I write this, the bloody AussieYen is trying to see how narrow it can get.
We are entering some very historical times now with the USD so low. It will be interesting to see where we go from here.
To be honest, I don't really like the Asian Markets for this system. The Japanese have an expression called Chuutohanpa. Half-arsed. It is almost down to a flip of a coin to see if there will be enough liquidity to take a move to its proposed destination or if price just idles sideways until London gets in.
Yesterday was one of those days.
Here is the GBPJPY 1 hour. The entry would be about where the end of the orange arrow is.
The GBPJPY comparatively does have a larger range of movement. And now in hindsight I can see it bounced about in a 100 pip range before continuing. System trading is all about following the system in place. The entry was around the arrow point (technically about where that blue candle closed).
The designated Take Profit area also highlighted. So why didn't I take the trade at the entry signal, or an hour or two later once the top of the range was identified? Let's take a look at the other pairs.
The AussieYen :
No indication of which direction, if at all, it wanted to go. Last thing we wnat to do is step onto a slow moving conveyer only to have it suddenly switched to overdrive as soon as London comes in.
The EuroYen :
Same as the AussieYen. Not in a hurry to go anywhere, and very typical Asian Market movement. Don't get me wrong here, this doesn't mean you can't trade the Asian Markets. There are plenty of opportunities for good trading. Just, I personally don't like an entry signal taking 6-8 hours before the planned trade takes a move.
Back to the original topic...Was this GBYJPY trade the "one that got away?" I'd happily say no. The entry signal was about where the orange arrow on price was. Not the top of the range that formed over the next 6-8hours. Yes, you could argue that that was the price level at which the original trade was planned, but not the entry candle.
I'd say no again, even as I sat there watching candle for candle to see how the markets were going, the Aussie and Euro Yens gave no indication of continued movement.
Trading is about stacking the odds in your favour before placing the trade. This is why a lot of systems have 2-3 entry criteria. Unless all entry criteria are met, no trade is placed. it is a way of filtering out not just bad trades, but also filtering out trades like this that just leave you with too big a question mark as to whether it will play out or not.
As mentioned in the About Me section, the basis of Jupiter Signals is that of Divergence trades. Divergence occurs when a trend is about to run out of steam, or needs to take a break before continuing on. It is a good strategy for trading retracements and/or trend reversals. I made a PDF document, but for the life of me can't see a post file option anywhere so allow me to cut and paste some of it herein.
Introduction.
Firstly, allow me to thank you for purchasing the Jupiter Signal Service and adding it to your portfolio of Forex trading. Whether it be an individual pair, or the package deal, my goal is to help you further your profitable endeavour in Forex trading.
I have been involved in Forex for the past 4 or 5 years and have watched the Forex markets grow from barely a 1.2 trillion dollar a day flow to its current 4.3 trillion dollar a day flow. There is more than enough pips there for all of us to make a comfortable living.
In my effort to learn as much as I could about Forex, I have spent over $10,000 on books, reports, and courses. The market has “charged” me over $20,000 for me to learn that the market does what it wants, not what I want it to. I have also had the wonderful opportunity to coach up and coming FX traders across the globe. One thing I can say for certain is that there is NO Holy Grail to FX trading. There is hard work and effort. There are many systems that can and do work. FX is wonderful like that, there are literally many, many different ways to successfully trade it – scalping, news trading, fundamental trading, technical trading, etc.
Along my travels in this wonderful world of Forex I realized that there is more than enough pips in the market to make a comfortable living without having to try to get ALL the pips. Based on my experiences, I developed my own system and I present it to you through www.Signal-Haishin.com as Jupiter Signals.
Hereafter, I shall give you a basic overview of the system and how to apply the signal calls to your trading experience.
Thank you again and may I wish you constant pippage!
Sincerely,
Jupiter Signals
Jupiter Signals – Divergence Trade Calls
Introduction to Convergence/Divergence
You are driving along the Shuto Expressway, and ahead the Number 2 Highway leads to Meguro. It leads away from your current path, the C1. So Highway 2 is diverging from C1 as it leads away. Further along, you see an Interchange where cars are joining the Shuto Expressway. They are merging or heading to the Shuto Expressway. They are converging (technically with traffic it is called merging.)
Let’s look at some mathematical expressions. The < sign. If we read left to right, we can see that on the right hand side, the two lines are moving apart. They are diverging.
Conversely, with the > sign, again reading left to right, the two lines are coming together. They are converging.
Now, take one step closer to Forex. In Forex we have price action. Whether it be bars, ticks, or candles, price is generally moving up, down or even sideways. So we can designate the top line in both these cases (<, >) as being price action.
So then, what is the lower line of these expressions? Many people trade Divergence by matching price action against an indicator. (Technically it is Convergence-Divergence, but for short, I will continue to reference it as simply Divergence, but in meaning either case.) Some commonly used indicators are, and not limited to, MACD, Stochastics, CCI, RSI.
Let’s have a look at some examples.
In Pic.1. below we can see an example of CCI Divergence. Price is making higher highs, whilst the CCI Indicator is making lower highs. Price and the indicator are Diverging.
Pic. 1. Price and CCI Divergence.
Furthermore in Pic.2. Stochastic Convergence is evident in Price forming lower highs, whilst Stochastic oscillator signal lines are forming higher highs.
Pic.2. Stochastic Convergence
Divergence As A Trend Reversal Opportunity.
Divergence is a good indication of when a trend is about to reverse, or even retrace somewhat before continuing the current trend. Pic. 3. below identifies Divergence that signifies the end of an uptrend, and following on from that, Divergence again that indicate the end of the subsequent downtrend. Leading onto a third Divergence occurrence.
Pic. 3. Divergence as a Trend Reversal opportunity.
Divergence trading is a consistent method of trading. However, Divergence forming does not always mean that price will reverse. Sometimes it takes Divergence to continue building up before the actual market breaks to the divergent pressure. This is identified below.
Pic. 4. Below signifies a time when Divergence forms, but there is no subsequent retracement or trend reversal. No system is 100% accurate 100% of the time.
Pic. 4. Divergence doesn’t always play through to sufficient retracement or reversal opportunities. No system is 100% accurate 100% of the time.
Pic. 5. Identifies an example where Divergence builds up before actually following through. Even then, the market then simply proceeded to range. Had you have been looking for a good opportunity to exit, however, Divergence preceding the range was a good indication.
Pic. 5. Divergence building up before following through.
I hope this introduction on Divergence has helped you understand it more. I personally find that there is too much information on Divergence and people look too deeply into it deriving terms for all sorts of cases. Hidden Divergence, Regular Divergence, Common Divergence, whatever! All you need to know is whether Price action is moving to or away from your indicator! KISS is the best policy - Keep It So Simple.
Trading Advice
FX is unfortunately miss-represented by advertising hype and system sellers who will try to paint a dream of being rich tomorrow. You would probably have better luck going to the casino and putting it all on black and leaving it to the spin of the roulette wheel. Trading is not about luck. Like any business endeavour it requires hard work, effort and persistence. With Jupiter Signals, you are able to utilise that hard work and effort put into developing the Jupiter Signals system to add to your current FX portfolio. If you are just starting out in FX, then you will be able to employ Jupiter Signals as your stepping stone into the world of FX.
Change your pattern of thought from the media brainwashing of getting rich quick, to a mindset of one focussed on capital preservation. Consistency is the key to being successful in FX trading. Consistency in mental attitude, consistency in approach to FX trading, consistency in methodology. This and this alone will bring you consistent results.
It is often said that on should never trade with capital they cannot afford to lose. Many misunderstand the meaning behind this thinking that they can be flippant with their approach to FX trading. The true meaning behind this expression is to trade with capital that you are not emotionally tied to. If you are trying to squeeze every last pip out of the market because last month’s rent needs to be paid, then you are on the fast track to blowing up your account (again maybe?) and emotional burnout. That approach to trading is not consistent (apart from consistently making bad trading decisions!), and will keep you in the 95 percentile group of people who leave FX within the first 6months to 1 year of trying it.
Having said that, it is also important to understand that trading systems and methodologies do not produce positive results 100% of the time. Markets have different phases, trending sometimes, ranging another. Some systems work well in certain phases and not so well in others. August 2009 was specifically a difficult time for Jupiter Signals. Call frequency was low and the volatility often caused stop losses to be hit prematurely before going on to profitable trades. This can and does happen. What is important is the consistently applied methodology or system, does, in the overall picture, produce positive results.
Lastly, on an individual level, never expect to be right. Understand that there is no right or wrong in the result of a trade. The market is uncaring about right or wrong. There is good planning of a trade, and waiting for the market to determine if the trade follows through, or doesn’t. If a trade plan doesn’t follow through, fine. Accept it. Move on. This is why consistent application of trading methodology or system is important. Even though the trade didn’t work this time, you know that your system, in the long term, is a winning system.
I sincerely hope that this introductory guide has been of benefit to you, not only in giving an overview of what the Jupiter Signal system is, but also on an individual trading level as well. With a (currently) 4.2 trillion dollar a day flow through the FX markets, there are more than enough pips for us all to live very comfortably.
Hi and welcome to my little blogspot. This is my first blog so bare with me while I get used to the idea. Jupiter Signals are a FX trade signal service based in Japan. The home site for it is http://www.signal-haishin.com As the signal provider I have had moments whereby I would like to verbalise some trade thoughts and ideas, but did not want to send as part of the service. This blog will serve the purpose of allowing me to unofficially put trade ideas out there, and if people actually start to follow this blog, open the floor to discussion.
If you are into Forex, please take the time to also visit http://smartpip.blogspot.com/ Chris is a very well-informed and experienced trader. His blog is also very informative and enjoyable.
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