Dave from Sydney's Journal [Awarded Title: the Box-Trader]

[Dave]

Must be more diligent with my journal.....

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[immy]

The Concept of The Hot Pair

There is a concept of "hot pair" in the currency markets. The pit traders used to find out which item is hot and they used to trade only the ones that moves. You and Darren seem to trade multiple pairs, so do I, this concept of hot pair could be very useful to us. E.g. do not trade the pair that has not moved in the pre-session or during the start of the session. The famous pattern here gives us an advantage. But not just famous pattern, we can always measure how much has a pair moved since the FO or LO and out of hte 4 or 6 which ones are moving. We can the select which ever is moving , showing trend and only trade those. How many times have you thought "GU will catch up since EU is moving?" it hardly ever catches up. So we shall go with HOT ones the cold ones are dry too! wink wink

I hope it makes sense

cheers

[Dave]

Thanks for the reply, Immy. Perfect sense.
I suppose it then comes down to what defines a hot pair. As M1 traders H1 may be a little high to consider as a filter for entries, but do you see M5 breaking its range as enough to mark a pair as interesting? I suppose this is why I watch 4 pairs. Waiting for M5 to give me what I want and only then going to M1. It's just a shame that with EU and EJ moving well yesterday that they didn't give me the setup I wanted.
Cheers

[immy]

Thanks for the reply, Immy. Perfect sense.
I suppose it then comes down to what defines a hot pair. As M1 traders H1 may be a little high to consider as a filter for entries, but do you see M5 breaking its range as enough to mark a pair as interesting? I suppose this is why I watch 4 pairs. Waiting for M5 to give me what I want and only then going to M1. It's just a shame that with EU and EJ moving well yesterday that they didn't give me the setup I wanted.
Cheers

The only problem is the ranges are too narrow. We don't see the Virticle M1 candles that used to go 30 pips up in 1 second. and the day would end 150 pips up and sometimes, 100 pips up then 120 down and then 150 up again. If the ADR's are 40 then that means you'll be required have even higher levels of precision on M1. Its going to be very very strict. far better than a sniper no room for errors. and that sucks.

To compensate for that, if you change trading time frame from m1 to m5 and get direction from h1 or m30, it will slow down the process but you'll get higher quality setups and you will have a bit more time as well you won't have to be as accurate as m1. whereas on H1, you can be very less accurate and still make money.

I'll give us an example to make you understand this, just in case you or some other reader does not get it when I write about "being accurate". M1 requires extreme precision. Hence we focus on very high quality setups with very strict rules. E.g. if my PO is supposed to be 1.3110 above/below an AIMS level and I don't get it instead i'm getting 1.3112 i will let go of it. Compare that to h1, i wont care. I will go for it even if its like 5 or 7 pips late or away from my aims level. Why? because I know i'm not after 7-15pips average winners. I am after 40-100 pips or more winners. Spread, is also a very smaller proportion. And I don't have to get into the market at the EXACT same candle. Getting out of trades is also more relaxed on higher time frame, whereas on m1 you need to squeeze the most out of it. (hence Grants MM/TM)

So less precision required on higher time frames. E.g. on D1 chart, it does not matter if I enter a trade at midnight, FO, LO NY or wherever , as long as its a PO above or below aims level it would be fine, and if its breaking or broken the level i can get in whenever I want because 10-15 pips up or down really does not matter there. So less accuracy required. Which means M1 is the hardest thing to do but of course there are advantages to it as well which we already know such as very small stop losses, very quick results and HUGE R:R.

so now back to the Hot Pair. since ADR's / Volatility / Density are low, oh and don't forget the "angles" the steepness of impulse waves have disappeared as well. like I said earlier, we don't always see those vertical price movements. Keep all that in perspective, you will have to take at least 15min chart to establish which pair is the hot one and then decide i.e. if you still trade m1 otherwise you'll use h1 candles to decide what direction you should be taking on m5 charts. (this is ofcourse just my opinion based on my observation and I'm no expert or advisor). it sucks to have chosen the pair that moved the least. Remember one thing, never go for "I'll trade swissy because EU is moving and swissy will catch up" do the opposite, EU is moving, trade that one.

more on this later, but for now, I'm tired and must sleep... see you in the am (evening for you)

pls forgive me if I've made any mistakes really dont' have the energy to re-read it. ... tada

[Dave]

All under the banner of the H1 W3 (so a complete wave sequence on a lower time frame)

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[Michal]

Dave i got a question can wave 3 be shorter than wave 1 ? because i dont remember when i was studying elliot waves. I remember it cannot be the shortest but not sure what is it when w3 (we think it is) is shorter then w1. Unless w1 is extended or sth like that.If anyone can remind me that cheers

[Dave]

To be completely honest I count my waves from the eWave, and the biggest peak MUST be W3, so I've marked the impulse before W3 on this chart as W1. Or you can go through this....
http://www.wavemagician.com/rules.htm
:-B ~x( 8-}
It's all part of the larger H1 W3 of course....

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[immy]

To be completely honest I count my waves from the eWave, and the biggest peak MUST be W3, so I've marked the impulse before W3 on this chart as W1. Or you can go through this....
http://www.wavemagician.com/rules.htm
:-B ~x( 8-}
It's all part of the larger H1 W3 of course....

Screen Shot 2014-06-11 at 8.10.08 PM.png

This one is correct.


Wave 1 was followed by beautiful abc, with C making principle C clearly. and then wave 3 down. that lies within wave 3 is the waves of wave 3. and can be further checked by expanding the chart until you have correct number of bars ie. 100-140 candles/bars.

Check below



and projected Wave 3



and Wave 5 of Wave 5 of Wave 3.



Wave 1 Dissection and Anatomy
http://content.screencast.com/users/iTr ... 1_1141.png

[Michal]

wow what a reply ! thx Dave and Immy

[Dave]

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