One question is on labeling stops and setting price alerts….are you doing this on ALL 28 pairs? Or just the USD majors? Also, I am wondering…why is it so important for you to know when the stops are going off? To just signal that the market is moving making new highs/lows and potential trade (or at the very least, to see what is going on)? And I am assuming that you already have a bias to go long or short…and that when the stops are triggered you then determine if it’s an entry in your bias direction or not?
I have price alerts for at least 13 pairs. EUR/USD, GBP/USD, USD/CHF, USD/JPY, AUD/USD, NZD/USD, USD/CAD, EUR/GBP, EUR/JPY, GBP/JPY, EUR/CHF, GBP/CHF, EUR/AUD.
Then I can add in some other currency pairs sometimes like CAD/JPY, EUR/CAD, GBP/AUD, etc.
Usually I am going to avoid something like AUD/CHF or AUD/NZD.
So I would start with those 13 pairs first. And then you can add in other ones later.
If you have price alerts on so many currency pairs, then there may come a day where so many price alerts are getting triggered and you may initially start to feel overwhelmed. You may feel rushed to make a decision as to whether to place a trade or not. This is where the rest of your daily habits and growth as a trader come into play. You should be able to have a particular macro bias, some of the time. You can’t have a macro bias all the time, because no one is perfect and the market does not drop clues every day.
As Jesse Livermore said:
No man can always have adequate reasons for buying and selling stocks daily – or sufficient knowledge to make his play an intelligent play.
If it starts to feel overwhelming, you can try some of the following:
- Grow in skill, and learn how to consume the increase in information flow and grow as an intraday trader (my favorite and preferred method as it leads to personal and professional growth if you aspire to have intraday trading as part of your repertoire, or trading many different currency pairs, stocks, futures contracts, etc.)
- Drop the number of currency pairs that you put price alerts on. So if you set price alerts for 25 pairs, try only setting them for 20 pairs or 15 or 10 pairs.
- Only choose to use the big daily chart stops on some or all of the currency pairs. Instead of labeling the stops using 15 min or hourly charts, only choose the big stops on the daily/weekly charts.
- Only choose to set the price alerts once per day – at the end of the day and do not re set them as the intraday moves happen. If you are constantly resetting the stop losses intraday as the market moves evolve, and you are feeling overwhelmed, then only set them once per day – when you do your daily habits. Then clean up the price alerts and reset them the following day when you do your next day’s habits.
Usually, if I am engaging in intraday trading on that day, I will reset the price alerts as the market trips stops and makes new highs and lows.
If you want, you can choose not to do that if you feel overwhelmed. You can just do your end of day analysis and set the price alerts, and then you just rest them in 24 hours when you do your next day’s habits.
It all depends on what you are trying to do. If you are engaging in heavy, leveraged intraday trading, then it is a good idea to keep updating the stops throughout the day as prices change and the market forms new highs and lows.
Setting the price alerts I feel is important because I don’t always want to be staring at my screen all the time. Sometimes I am interpreting some information flow, sometimes I am reading a book, sometimes I am on the phone, etc. So once a price alert gets triggered, I can investigate further to decide if I want to go with the move, fade it, or do nothing.
Price alerts at stop points are nice because they:
- Alert you with audio/visual signal that the market has hit a key level/stops. When a price alert gets triggered for me, I hear a sound in my speakers, and I also see a visual alert on my platform. That alerts me that the market is doing something interesting, and I can focus my attention on that market for the next few seconds or minutes as I figure out what needs to be done.
- Can set up fresh trading opportunities. Playing the breakouts and fading stop losses are very nice forms of trading opportunities. People think breakouts are just chart pattern or price pattern breakouts. I take it a step further, and say they occur because the stops get hit and there is a sent/psych shift with news/sent/fund/macro scenario supporting the trade.
- Can help you liquidate existing trades at a better profit.
- Can get you out of trades where you have a mental stop on. You set a price alert at the mental stop point, then if it gets hit, you just get out of your trade at a loss.
Sometimes I do have a bias to go long or short and just waiting for a level to get hit so I can manually execute my order – either to fade the stops or go with the breakout.
Sometimes I already have the limit order placed to fade the stops or the support/resistance level.
On rare occasions, I use buy/sell stops as entry orders.
Other times if I think it will be a sent/psych shift, after the price alert is triggered I will watch the market for a few minutes or hours to see if it will run a bit further. For example with USD/JPY on June 12/13, 2013, it tripped stops below 95.00, but it wanted to run a bit further down to below 94.00 before bouncing.
I try to follow my bias I have written down in my currency master files, unless I feel something has changed during the day. For example, over the past few days, I have written: Do not buy the highs in EUR/USD (Which I also have typed on my EUR/USD chart for the proper macro model). Which for me means, do not buy the topside tripping of stops. And do not buy near the highs in EUR/USD. So when my price alert for EUR/USD gets triggered to the topside, I know not to try to buy into that market, because my habits and analysis have told me it’s a bad trade from a reward risk and win rate standpoint. The market reaches some macro exhaustion and struggles to continue higher. So, if I am long EUR/USD, I know to sell into the topside stops. If I am flat, I could consider shorting after the topside stops have been tripped.
I try to apply the proper macro model for a financial instrument on that given day and moment in time.