CrazyIvan Order Flow

If you are new to CrazyIvan then the way the messaging works may take a bit getting used to. There’s no better way to illustrate the order flow process than via examples. Let’s start with the CrazyIvan.360 and later provide one for CrazyIvan.30 which is a little different.

CrazyIvan.360 Example Order Flow

<<<<<<<<<<<<<<<< 11:00 pm Alert #1 >>>>>>>>>>>>>>>>

CURRENT MKT POSITION: Flat

ACTIVE ENTRIES:

LONG SIGNALS: IP-L
IF BUY AUDJPY STOP @89.51.
THEN SELL AUDJPY STOP @89.145.

SHORT SIGNALS: IP-S, RTV-S
IF SELL SHORT AUDJPY STOP @ 89.145.
THEN BUY TO COVER AUDJPY STOP @89.51.

RISK: 36.5 pips.

EXPIRES:
New York: 8/14/2013 5:00:00 AM Eastern Daylight Time
London: 8/14/2013 10:00:00 AM GMT Daylight Time
Tokyo: 8/14/2013 6:00:00 PM Tokyo Standard Time

<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>

This is what we call a pre-alert – the idea here is to advise you of currently active entry opportunities and to give you an opportunity to get positioned ahead of time and thus avoid unnecessary slippage (and stress). Pre-alerts are always sent at the roll-over to a new candle. In this case the alert was sent at 11:00pm, which is the beginning of the 5:00am candle on the 360-min chart. Let’s dissect the alert:

CURRENT MKT POSITION: Flat

This shows the current market position – which in this case is flat.

ACTIVE ENTRIES:

LONG SIGNALS: IP-L
IF BUY AUDJPY STOP @89.51.
THEN SELL AUDJPY STOP @89.145.

SHORT SIGNALS: IP-S, RTV-S
IF SELL SHORT AUDJPY STOP @ 89.145.
THEN BUY TO COVER AUDJPY STOP @89.51.

This is the meat of the alert – the active entries. In this case we have both short and long entries – either of them may trigger during the transition of the current open candle. As you can see we have both an Inside Period long and an Inside Period short setup at hand – either of them may trigger but we don’t know yet which one. There’s also a Retest Variation Short – so in fact we have two valid short triggers.

There are two sets of instructions here – we call them the long leg and the short leg. let’s look at the long leg first:

IF BUY AUDJPY STOP @89.51.
THEN SELL AUDJPY STOP @89.145.

The fact that there are two stop orders may be confusing but if you think about what a stop order is then it makes more sense: Very simply – stop orders are placed above or below the current market price – once their trigger price gets touched they convert into a market order. They can be used as stop loss orders but they can also be used as entry orders. Let’s assume the market is currently at 89.3 – by placing a buy stop order @ 89.51 we expect to be filled long as soon as the market touches that trigger.

The second part of the long leg is yet another stop and in this case it is a stop loss order – it will only become active once your first order has been filled. Depending on your trading platform you will submit both orders as one conditional order – they are also known as IF/THEN orders. As the name implies, IF/THEN orders consist of two entry orders. If and only if the first entry order is executed will the second entry order be placed. Once the first order has been filled you will have a position in the market and a separate order (your stop loss order) that was placed. Again, your broker or your trading platform may call them a conditional order.

SHORT SIGNALS: IP-S, RTV-S
IF SELL SHORT AUDJPY STOP @ 89.145.
THEN BUY TO COVER AUDJPY STOP @89.51.

Which brings us to the second leg. The idea here is the same – only in this case we set the first stop below the current market price of 89.3 – it will only execute if the market touches 89.145. If you paid attention then you may have noticed that this is also the stop loss trigger of the long leg. In this case the stop loss for our short leg is at 89.51 (the buy trigger of the long leg).

It is possible to place both sets as an OCO – meaning one cancels other. This way if your long side gets triggered the short side will be automatically cancelled and there is no manual interaction required. If that is not possible via your current trading platform then you will have to remove one of the legs manually later if one of them becomes active (i.e. remove the short leg if your long leg was triggered).

RISK: 36.5 pips.

Managing your risk is an important part of CrazyIvan. This shows the risk you are about to assume in full pips (or ticks on the futures side) – in this case your risk (calculated by our Protect R logic) will be 36.5 pips. Before taking your trade you may now use our handy Forex Risk Calculator to accurately compute your position size. It’s a rather nifty little utility I hacked up that may become handy to your discretionary Forex trading as well.

This example assumes that your account currency is in USD – if not then change it via the very first drop down and RCalc will make the necessary adjustments automatically. The second field is your account size – in this case we assume a simple scenario of $100,000.-. The risk ratio is set to the recommended 1% – you can change that to whatever you want but we caution you to not exceed 2% max. Each additional integer above 2% increases your chance of account loss exponentially. Any trader worth his/her salt will choose a risk ratio between 1% – 2%.

The third field is the stop loss in pips – and that is the number we provide with each pre-alert (and also with the actual entry alert shown further below). The fourth field is the currency pair you want to trade – here we select the AUD/JPY. You don’t have to worry about picking the right currency pair to convert the AUD/JPY to your account currency – in this case the USD/JPY. All that is done automatically for you – it even will pull a recent quote from Yahoo finance – once again saving you a lot of time.

As a further convenience the account currency, the account size, and the risk ratio will be written into a cookie. This way you don’t have to type them in several times a day – it’ll also prevent you from making mistakes in a rush. Obviously as you either earn or lose money you will have to adjust the account size field occasionally – we recommend once a day. It doesn’t have to be accurate down to a Dollar obviously but the closer you are the more precise your risk management.

Next you press the ‘calculate’ button and you will see the results displayed in the last three fields. Here’s your risk in Dollars – $1000 as it should be if you want to risk 1% on a $100k account. The units field is for brokers that allow you to take fractional FX position sizes (e.g. Interactive Brokers) – if not then you will have to either round up or down the standard lots shown in the last field. It is up to you to figure out how orders are placed with your broker or platform – some allow you to place in mini lots, micro lots, and some only in full lots. Standard lots = 100 000 units – Mini lots = 10 000 units – and micro lots = 1000 units. So here we are taking either 2.69 lots, 26.9 mini lots, 269 micro lots, or 268959 units. Either way your risk will be limited to $1000 (not considering slippage of course).

EXPIRES:
New York: 8/14/2013 5:00:00 AM Eastern Daylight Time
London: 8/14/2013 10:00:00 AM GMT Daylight Time
Tokyo: 8/14/2013 6:00:00 PM Tokyo Standard Time

The final part of the pre-alert is the expiration – a 360-minute candle goes for six hours and since this alert was triggered at 11:00pm EDT it will be active until 5:00am EDT. For your convenience London and Tokyo times have been provided as well – allowing you to convert it to your own time zone a bit quicker without looking up timezone tables and doing math (especially late at night when you are tired and may make mistakes).

<<<<<<<<<<<<<<<< 11:56 pm Alert #2 >>>>>>>>>>>>>>>>

SIGNALS: IP-S, RTV-S.

TRADE: SellShort at 89.145.

STOP: BuyToCover at 89.51.

RISK: 36.5 pips.

<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>

At 11:56pm you received alert #2 informing you that the short leg has been triggered. If you followed the instructions above then there’s nothing for you to do. Your order should have been executed already and this alert is simply being sent as a courtesy.

<<<<<<<<<<<<<<<< 1:46 am Alert #3 >>>>>>>>>>>>>>>>

STOP REMINDER: BuyToCover at 89.51.

<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>

Unfortunately the trade went against us and the stop loss order was executed at 1:46am (probably while you were sleeping).

<<<<<<<<<<<<<<<< 1:46 am Alert #4 >>>>>>>>>>>>>>>>

SIGNALS: IP-L.

TRADE: Buy at 89.51.

STOP: Sell at 89.145.

RISK: 36.5 pips.

<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>

A few seconds later the long leg gets triggered – once again there is nothing for you to do as we had placed both orders previously. The risk is identical and it is simply the inverse of the previous short leg.

To be continued as the long leg is still open – this will become a separate page under the CrazyIvan menu item. But as this market is cutting everyone to pieces it may be more productive to familiarize yourself with the order flow, assuming of course you are interested in subscribing to one of the CrazyIvan packages.

Cheers,