I've received several PMs on how I trade. As opposed to clogging up the existing trading threads, I'll post my method to the madness here (with permission granted from DcifrThs, cwar, & ahnuld - cheers guys, thanks).

Intent

- Provide value & spark interest.
- Involve some of the technical traders out there that may trade in similar fashion
- Provide basic direction to new traders/2+2rs looking to venture into a related field via my weekly outlook & live trades.
- Build a rep within this community. As mentioned in a couple of previous posts, I'm interested in joining a poker house down the road. I've been inspired by many of the travel/location independent threads here at 2+2.

I do encourage questions & contributions. While I exclusively trade FX, support & resistance trading applies to just about everything out there.

I don't encourage the posting of other methods, theories, fundamental interpretation, etc. This is not a macro econ thread and we don't concern ourselves with trying to understand how news release XYZ impacts market ABC.

Acronyms that I commonly use

FX = Forex
S&R = Support & Resistance
FTB = First Time Back (to a broken support or resistance level)
TP = Target Profit
SL = Stop Loss
BE = Break Even
FTA = First Trouble Area
DD = Draw Down
TF = Time Frame
SG = Sunday Gap

How I trade S&R

1) Find area of support or resistance (daily, 4hr or 1hr charting)
2) Wait for said support or resistance to bust
3) Wait further for price to return back to busted support or resistance
4) Trade in the direction of the bust.

Pre-Trade examples below











Post-Trade examples below

How I trade Sunday Gaps

Sunday Gaps will occur from time to time when the FX market opens (Sunday) after the weekend close.

Basics

- The commonly quoted figure is 80-90% gap closing rate.
- Trade gaps as they back up into S&R zones
- Don’t trade gaps when there is a major fundamental reason for the gap (War, 9/11, Elections, etc)

How

1) Ensure no major weekend fundamental releases prior to Sunday market open
2) Scan for gaps 30-80pts
3) S&R near? Trade the gap in the direction of the close with stops behind nearest major S&R.

Gap charts coming soon.

Examples of Sunday Gap Trades

Subscribed, interested to read more

Ty Sam

My Broker & Following Along

I trade with Oanda and have for nearly five years now. Solid broker, good support, basic but dependable platform.

For those interested in following along, I encourage you to open a demo account. Reading blogs, trade journals, attending seminars, paying for coaching, etc is all great but if you're not implementing on a consistent basis, it's worthless. I still keep a demo account to this day and use it constantly.

I'm most familiar with the Oanda platform. You can sign up for a free demo account here: http://fxtrade.oanda.com/trade-forex/demo/

I've also traded with FXsolutions, both their US & UK branches. Higher spreads than Oanda but those spreads generally don't change. You can sign up for a free demo account here: http://www.fxsolutions.com/learn-to-...-accounts.aspx

I travel often and both of the above brokers offer a web based platform & decent mobile platforms as well, which have been invaluable to my trading.

While I'll try and keep general broker questions out of this thread, if you're new to trading, please perform due diligence when selecting a broker. Researching the broker's capital is a good place to start.

2011 date here

2009 data below...

Can you take a step back and tell us who you are and what your trading background and results are?

Can you release your trades for the last year, or whatever?

These sorts of screencaps are easy to do after the fact when everyone knows which direction the market went. To me, they mean nothing and I'm not sure why so many traders post them up...

I'm curious what you would say to those who argue that forex is a suckers game and unbeatable long term for individuals. I really know little to nothing about it but I've been advised to stay away because of the knowledge asymmetry compared to the big boys.

Also what sort of sample size is needed to determine your edge? Is it like poker in that by the time you get a decent sample your win rate is pretty meaningless since the games and edge changes?

Thanks

How is the S&R line/zone determined before the fact?

background and results plz so we can determine if its legit/worth the time. I hope so tho, looks interesting.

Trading is not poker you won't define your edge the same way, forex most defintely *can* be profitable. It's not the greatest if you trade intraday because the spread you pay would be quite larger compared to say forex futures for example (1 tick spread). Forex I think is ideal for 60min bars at the minimum but I've seen smaller done profitably.

OP, I would be interested to see examples of entries + exits based on your methodology and explain the rational for why you entered/exit when and where. Bonus points if you can can show the hard right edge when you got in (or would get in) and then the resulting exit.

Sam I am. I've been trading forex live for 4+ years.

I'll be posting live throughout the thread. It's the weekend, the market is closed. With the amount of hindsight-harry "traders" out there, I applaud your caution. I've been posting setups in the March/April/May trading thread but most of posters are stock oriented and I see little relevance.

I eeked out a 15% return in 2011. I'm at 18% roi for 2012.

I encourage you to get a demo account and I'd be happy to review my trade setups with you tomorrow.

I think with a lot of things in life, when people can't do it themselves, they revert blame to outside factors...anything or anyone but themselves.

FX is a tough gig, especially for those who don't understand it. Is it more difficult than trading stocks, futures, etc? Perhaps. I originally went to FX because I couldn't get around the pattern day trader rule w/stocks (min. 25k account size).

Regarding sample size, it isn't as big of a factor IMO. There are a ton of methods out there that you can trade and are profitable. The mental hoops that you need to get through to stick to said edge is the most difficult aspect.

The S&R lines are pretty standard. If you know what support and resistance is & you take a look at the charts posted, it should be pretty obvious. If you don't understand S&R, I can't help you right now but as the week progresses, you'll see the levels I'm picking in my charts.

These are no-brainer levels that can usually be spotted on the 1hr - daily charts.

**If anyone doesn't want to go through the demo process but still wants a quick look at the charts/setups I'm looking at, visit: http://www.fxstreet.com/rates-charts/live-charts/

I use these charts when I'm on the road and/or need a quick look. Good stuff.

Patience guys, please. If I could go back and modify my original post, I would organize things a little differently and include clearly that I will be posting throughout the week as the market is open.

As far as determining if this is legit and/or worth your time via my account balance, PnL, etc, I can't help you there.

Keep reading though, I think you'll find the thread interesting & worth your time.

As posted above, this will be coming. The first few posts will be helpful when the thread gets rolling & new readers are coming several pages deep and wondering what a setup looks like, etc.

I'm not going to lie this comes up in EVERY single technical trading thread. Even further is that it's not really proof to show your PnL blah blah on the internet and I wouldn't expect anyone offering free info on their system to let themselves be grilled to the extent where it would become proof.

I say this as someone who has spent over $10k on trading training without asking for any verification of results (with fantastic results). It's quite doable to figure out if someone is a profitable trader and teach it even if you don't have the knowledge (I did this).

So my recommendation is, take this for what it is something you might learn a bit from and get a starting place or take away an interesting idea or two run with on your own. Demanding lots of info that will never be provided nor provide proof just guarantees no tech traders post. If you want to figure out if OP is 100% legitimate do your own research please.

Nice thread (so far!) most TA threads get all nitted up and die. Actually most BFI threads disintegrate because the community has detoriarated so badly in recent years which is why I don't hang around here much anymore.

But I will follow and particpate if I can. I don't trade FX at all but am an interday futures trader. I rely exclusively on support and restistance methods and find them to be the best approach to daytrading.

My first question is what kinds of stops do you use? How much heat do you take per trade. And do you have targeted exits in mind? I trade mostly breakouts as opposed to reversals and will typically use a trailing stop exit rather than a target but it depends if the breakout was into virgin territory or someplace with reasonble S&R spots where targets would make more sense.

So, I'll bring you a reality check:

Trading Fx spot through Oanda and FXSolutions is a joke. Anyone trading 4+ years trades through a prime brokerage via Icap EBS or Thomson Reuters. Even if you don't have the capital for that (right, because it goes low as 100k) you can get access to tier 2 aggregate platforms via prime brokerage like Integral, FxAll etc. for 10k+.

Don't know what this guy want's but all this about S&R lines you can find on any retail brokers advertisement pages. Or on any FX noob forum.

Fixed spreads, nice joke OP.

What futures do you trade?

I'd really like to move over to YM & 6E eventually. I'm mostly a London trader (I work a day job PST) so trading the entire NYC is not possible at this time.

I'm huge on risk control. I worked out most tilt issues very early in my career. Most trades have a risk of 1.5% and I scale from there depending on how confident I am in the level. I would have a very hard time risking more than 5% on a trade...in fact, I can't remember the last time I risked more than 4%.

Post up an example of your ideal setup, I'd be interested in seeing it.

- I make money trading spot fx.

- I trade very closely with other traders money trading spot fx.

- Fxsol does have fixed spreads

Again, I'd like to ask for some patience as this thread rolls out. An alternative would be not to read it. As for protecting 2+2 against scams, unauthorized sales of the holy grail, or giving out free "reality checks", the mods have a good lock on this thread and will do so in your stead.

I'll running through the charts soon and post up what I'm looking for. Sunday afternoons tend to be exciting with the possibility of gap trades.

I have only traded forex futures so I don't really know what this means. Can you elaborate what the differences are? Speed? Spreads? Depth? What?

While Fx spot is decentralized most of the volume of G10 is cleared through EBS and Reuters. If you want your orders lifted (or have a big chance to be executed like a true limit order) like in the futures market you need to post bid/offer on only those two exchanges. This is commonly known as a tier 1 and the movement on those two exchanges essentially moves the market on all other exchanges. Banks quote on multiple ECN exchanges and STP aggregates like Currenex, FxAll, Hotspot etc. but they update their bid/offers mostly based on tier 1 price movement.

OP trades through market makers that make a wider fixed spread and while Oanda is a reputable market makers they will not take the other side of your trade if you are profitable but route it to the banks (most likely via EBS). So in essence you will get longer routing, bad fills, bigger slippage, won't be able to get filled on the size, smaller book depth etc. (Example Oanda has a fixed spread on 1,2 pips but will widen the spread to 5+ on any major news announcement - so trading news is a big no no).

Most of the traders (all that I know) that trade Fx spot have a prime brokerage deal and get their orders posted on large exchanges or directly to EBS. There is a lot to be said on the low transparency in FX spot on the banks side but "retail" brokers like MB Trading, ******, Interbank Fx etc. will all charge you a big commission price, you won't trade on a true exchange etc.

Since you can get prime brokerage deal depositing 10k or more and low commission OP looks silly mentioning he's trading Oanda and FX Solutions.

Rikers posted some good info here.

Oanda spreads are an adventure in their own right, especially trading Sunday gaps like I do. 5-10+ pip spreads on the majors isn't uncommon in the first couple hours. During major news, ha...let's not even go there. They do however allow for a slightly earlier entry into Sunday trades than other brokers. Again though, you'll pay for it in the spreads.

Spot/retail fx is the wild wild west of trading, make no mistake. Rikers is spot on.

Broker discussions tend to be very common in trading threads, hence I created a post regarding my experience. I've traded with Oanda & FXsol. Those are the only two brokers I've ever had cash with over my trading career. That's all I was stating.

Are there better options out there? I'm sure there are. Again, the thread title is "S&R & Gaps: How I make money trading FX"; I use Oanda to trade S&R & Gaps. End of statement.

What I'm looking at this week...













Some early movement in the euro too, should be interesting to see if any gap trades present themselves.

I was on the buy side of the FX market for a fortune 10 company for years and even with a Bloomberg pro and access to market makers I would bet my bottom dollar that trading FX is -EV.

I have traded just about everything at one time or another. These days I trade mostly Crude Oil futures and Gold futures. I do wheat and beans sometimes too but lately its been mostly crude and gold. Currencies are looking interesting again though and I may start sniffing around the euro (6E).

My support and resistance levels are very liberal since I am an interday trader and I often trade 100's of times a day. I am probably more of a momentum player than anything else since my S&R are very loosely defined.

My basic setup is uses fast moving tick charts that show momentum the fastest. Then I use a 2 channel breakout approach. I enter as we violate the wider channel and I trail a stop along the narrow channel. I also use a very tight initial stop. If it doesn't go immediately then I am out and see if it goes the next time. Pattern is typically chop chop chop homerun. Some days it never goes and it sucks and some days (like Friday) it goes all day long in multiple markets and those are the days you live for,



This is an example of a homerun from Friday in the Gold market. You enter (on stop limit) as it breaks above the white line (wide channel) and exit as it breaks below black line (narrow channel). Friday was particularly wild and opportunisitic in both the gold and crude markets as they both made some nice rapid swings. This particlar trade made about $13.50 ($1350 per contract) in about 10 minutes. You can also see that the next trade was an immediate chop out loser.

Thanks for the explanation.

I took your chart, compared it to what I see on my cheap free gold charts (no tick data) and below is my interpretation of what you're doing. Is it about right?

I prefer no indicators and it looks like your indicators simply make the S&R level more obvious?



If anyone hasn't figured out, I use the term S&R very liberally. Anyone who trades or stares at a chart long enough should be able to see what I'm talking about pretty clearly.

Nice work on Friday. Last week was absolutely insane, Sunday to Friday, non-stop.

Now I don't trade gold minus a couple of small trades as shown on the below chart...but the current level was an area I was watching for a couple of weeks back. It's not as clean as I'd like but certainly something I would fully anticipate kicking off the 1630 zone. I'll likely take a position here.

As you trade tick data, you may be hardly concerned with this level...I'm not sure. I am curious to hear your feedback.

And we're game on.