Kiwi

If someone is looking for an electronic copy of NMW then they might try looking at 4shared dot com a repository of considerable amounts of material.

Cory, You should do the following: a) Get a copy of New Market Wizards out of the library and read the interview with William Eckhardt. I have owned the book since before I started trading and just reread it the other day. Its probably the tenth time and it always tells me something. Then reread what you said above. b) Test it. Go back to the beginning of the period and even allowing for the fact that you know whats going to happen see how it goes when each one is coming at you from the right hand edge. Anyone who is new to trading or considering trading and hasn't yet read Eckhardt's interview would do themselves a huge favor by doing so and by underlining the stuff that seems important. You could also look up a guy who's gone by the name's TheRealThing, Leonardo, and Joel Rensink - his stuff + Mark Douglas's stuff is very important. But start with the big E. For the record I think that MK did succeed in Cherry Picking losers and that Thales examination of them will be useful. I also support Thales suggestion that people narrow their focus to the big 3 or 4 in part because if you only look at them you get to take each opportunity rather than attempting to pick which one to take from a larger selection of pairs. http://www.traderslaboratory.com/forums/208/reading-charts-real-time-6151-177.html#post81985 I don't know how many times I've seen two factors suggested in people finally digging their way out of the losing game that forex is for most people - narrowing their focus to one or a few pairs and/or going up timeframes to a minimum of 4H and preferable 1D.

And Snake Oil salesmen have been around for a while. But, here's a test, has anyone here got moderator privileges ... Nial is from Australia ... is pricetrader99 from Atlanta or somewhere closer to me? He might be; Nial's stuff does have some appeal but it would be interesting to know.

I marked the blue and red dotted entry areas on my chart. The after I'd snapped the picture and added text I looked at it again and could see internal 123breaks I hadn't marked. So I added them with the drawing package which makes thicker, shadowed lines. My whole point is that there is a tendency to: - trade against the flow (natural human tendency (read New Market Wizards, Eckhardt) - cherry pick losers if one isn't careful So one would be better off limiting oneself to the lowest spread (=highest liquidity) pairs and flagging EVERY setup here. Seeing these are the ones that Thales and daughter trade then it would seem that they will be closest to them and you don't spread yourself hunting opportunities in lots of pairs 4 pairs * 1.5 opportunities a day is still 6 trades a day which is heaps. The lines were just to show that there were lots of opportunities with the flow - although an ultratight stop strategy could have strangled some before they had a chance to work and I, personally, prefer to give things a bit more room and take bigger losses if "wrong". But everyone is different.

FWIW ... taking every break with the flow on the other ones (blue bars=while I sleep = us day)

I wonder whether you are achieving what I have done in some of my worst periods of trading Mk - cherry picking losers. I also, am not keen on be too soon but thats my personal view. Cutting back to one pair, the one that's got the smallest spread - for the week. Notice I have a bias to trade only with the flow as defined by breaks of 4 hour bars. Here is a suggestion: Why doesn't everyone practicing here stick with the same pairs that Thales is using - NO cherry picking examples from elsewhere and that includes you Thales :haha: So, given it worked on these pairs for Thale's daughter, why not limit it to 4 and take every trade that sets up properly. EURJPY, EURUSD, GBPUSD, and USDJPY.

For the majors there is more than enough liquidity in the big contracts but not so much (unless its changed very recently) on the small contracts. (Major = Currency vs USD = pretty much the ones that Thales mentioned). Note: Just saw Cory's post which shows that the minis and micros have no volume - so most small traders are sticking with cash forex. Look, stick with the ones that Thales mentioned on Forex and don't worry about futures yet. Forex scalability helps. If you want to compare spread to trade just use average trade which is likely to be less than half your target winning trades. You might consider another broker. Interactive brokers spreads on GU are rather small. But we do pay commission on every trade (so that's added spread in effect).

This is a good question Gabe and illustrates a problem that became clear to me when I started systematizing what I do. You must compare the spread not with your average win but with your average trade. So if your average winner is 60 and your average loser is 20 and you get 50% winners the average trade is (60*.5)-(20*.5) = 20 pips. Compare that with 5 pips spread? And the figures above are for a pretty nice trading strategy (profit factor is 30/10 = 3 whereas most systems operate at 1.5 to 2 profit factors. So, you need to get your average trade well up above your costs. The above gave 20/5 so your costs were 25% of your trade. I think you want them to be under 10%.

I was just looking at it, as it was a couple of hours back and thinking ... yep, and with the trend too. And then I remembered to connect my forex Sierra Chart to the data and I see you're probably very pleased with the trade already. Even looks like its cutting through he 123.44 support. Nice trade TrueBalance.

I've been using Chart trading on Sierra Chart since it was in beta. Its very good. I now combine automatic and chart trading so I guess its flexible too There is also chart dom which midknight seems to like (no disconnect from the chart) but I've never looked at it because one of the reasons I was going to chart trading was to abandon the extra noise of the dom.

Thanks Thales, Gabe. I think people can benefit from those books. Instead of thinking of it as overhead resistance what about reversing that and thinking about it as an overhead magnet. The thing about S&R is that price likes to test it so if there is enough range compared with your stop them when it has another shot at the 6680 area. If it does you'll get half off for better than 1:1 and can then watch to see "does it cut through it like a hot knife through butter?" or push back in which case the second half is be+ or better. Here's a cute strategy that I've not tested. Round numbers are resistance in forex ... but they are also magnets. So when price gets to 15 ticks below a RN (for a long) you go long. You take half off at the RN and have a target on the other half 15 points beyond. You move stop to be+ when the first half is taken. I must test it sometime.

The example was less obviously completely wrong than some. There was some stalling activity before the signal. One of the things I note is that Thales also picks slightly higher timeframe reversals as the base of 123break entries. But if you look carefully at them he is often doing it with an awareness of more reversing activity. The usdchf ones showed considerable time and retests as part of many reversals. Thales has shown some good ending diagonals on 15m - some of those work and some become abcGos when they become what afterwards look like bull flags in an uptrend. But he's doing it in the context of reason to think its reversing. I know I showed a zone reversal on that opening but I wouldn't normally take FIRST test of a zone unless there was a good reason. The good reason on that one was that there was a gap behind it ... so filling the gap would provide some momentum and the probability of getting out be+ even if it filled and then price kept going down. The 123break is a sound entry with momentum and confirmation AT ITS TIME FRAME to give you a small edge. But people need to add edges to become consistent. One is the 123break. Another is exiting half at next 1:1.1 S&R to give comfort/confidence and consistent income flow. Another, if appropriate to the S&R is pulling to be+ very fast. A very important one is trading with the flow of the market (call it trend, call it momentum, call it whatever but the nature of the order filling in forex means that it will be there) and if you're going against it look for real signs that this flow is ending: - three little indians / ending diagonals - test and then retest of S&R (does it have to reach the swing or is zone ok in what you are trading (they vary!) - time in congestion/chopzone and then a break down You see what I'm getting at? A good strategy like Thales and his daughters trading adds edges to get a solid combination. Thales recommended a couple of books on price pattern reading that his girl read before she started. These + his exit approach add to the 123break. Thales, can you recommend the books again? Note1: An example of Thales "possible reversal thinking" and note the ascending triangle within it. If you traded it then you'd be looking at the swing support below for a first exit and thinking (I hope) ... well, once it gets there, lets see if it holds or breaks solidly because if it holds or breaks just a little bit this could form a bull flag before progressing up. Note2: For thinking about how forex works and why trends and retracements are there I find no better thread than an old institutional trader/manager talks at forex factory and the links he provides. I would recommend everyone read William Eckhardt's interview in New Market Wizards - he is one of the smartest guy's I've read in this game even though he lost the bet to Richard Dennis. You need to get past the issues he discusses.

I've been looking at Midknight's trades today and they're the same as your EJ trade TrueBalance. Why can no one go with the flow of capital? The problem with H L LH is that you will often get it against the trend in a good move. You see it on 15m, 4 hour, daily. It becomes H L LH LL >>> liquidity has now been gained >> rocket like trend resumption fueled by all the people who bet on reversal. IMO (and this may be against the spirit of this thread) you need a good reason to go against the flow/momentum/trend/ whatever words you wish to use to describe continuation. I was looking at USDCHF while discussing it and marked up what seem like good reasons. Tests and retests of S&R or a very strong single rejection would seem to me to be the minimum without some other good reason. 123break is a "go with the flow entry" but it seems to be being used to justify going against the longer term flows when I personally don't think it is a big enough reason by itself. OK... RANT over.

1. No, it wouldn't for the discretionary application because you had a S&R setup on 4H driving longs in that zone. 2. "Avoiding taking losing trades" is something you do automatically as does every experienced successful trader. You can see when the structure is poor and you simply don't take trades that someone who doesn't yet get it would take. In my case I'm automating so things so "seeing context" is a process of figuring out how to get the computer to trade when you would perceive context as right and skip when wrong, more often than not. The picture shows how 4 hour forms a slightly higher bottom on Friday and then retests on open ... going far enough into the support zone (highlighted yellow) to justify taking the risk of the 15m trade. Note that unless you can build that perception into a program it wouldn't go long until something trend or break orientated "told it" that trading long was valid. In this case, because the labeled waves involve such short pullbacks on 15m it wouldn't have turned until the "wave 5." This illustrates the advantage that human's have in reading S&R patterns over machines I note though that Wave 1 through 4 all fall into the Chop Zone (shown in blue highlight) that a less experienced user might have defined as price swings repeatedly fell within the larger swing on Friday. If one had taken that view then you would have waited for "wave 5" which broke out of the chop zone before entering anyway. .

A while back Thales posted an elliott document. But the important thing in that post was that he showed how he tries to get in at the end of wave 2 and having taken a partial profit, hold for a longer run. My peewee system should do that too. In the hsi version it doesn't quite and gets quite a few "bad" trades but overall it works sufficiently well that I left it alone. I'm now doing one for forex and those who know me know that it bases the start of the trend on price crossing over a couple of ma and staying there for a few bars, thus dragging the mas over as an elliott 12 will do. It's a trend progression system which requires more an more complex retracements before an entry will occur after the first one (the first pullback in a new trend is both the easiest and most profitable -- so further pullbacks need to be better qualified). When trading thales 123b's it would pay not just to consider where support and resistance are but also how old the current trend is (and thus how close to probable failure it is). And here is the funny thing and the point of my post. I set my 4hr charts up to run from Globex open (because London midnight and Globex open are the 2 times most likely to be used by the most traders as midnight and thus the start of a new day (all gobex futures contracts start their day when globex reopens each afternoon)). I was thinking about doing some discretionary trading but decided I wanted no emas on the chart. So, how shall I decide that trend is up or down for the 15m I asked? I'll use 4 hour bar breaks and S&R and trade in the direction of the 4 hour bar breaks or off really nice 4H S&R patterns... ok ... looks pretty good and progressing hs and ls seem to agree as do retests. So I wondered how it compared with the mas that I was using to build FxPeewee - and here was a surprise. Most of the time the mas and 4 hour bar breaks signal a trend change within 4-5 15M bars of each other - and the first one to signal is right. Why? Because the mas respond faster to a slowly rising price pattern ... but the 4 hour bar break responds faster to an impulsive pattern. My point for discretionary traders using Thales 15m system? Trade in the direction that 4 hour bars are breaking. You will get better follow through and fewer failures IMHO Here is a picture (not cherry picked ... its the last days of my development data set for usd.jpy and I've circled some failures that would have been saved although some entries wouldn't have been taken unless you'd decided that it was 4H timeframe bounce off s&r. .

I would also observe that you have dropped one layer into more noise. If this was a 15m chart you might not have lower highs and lows. Not saying its "wrong" just that as you drop down the timeframes significance may drop and as a non-forex expert I've seen a lot of "lower timeframes = less reliable signals" comments.

I suspect its dead thales. It looks really really good until you realize (as the thread originator over at FF hasn't, nor have the followers) that there is a fundamental look forward error in it. The idea is called "Simple Pips Generating Machine" and for anyone looking at it the error is this: The comparison is between a 5 period SMA of the close and the decisions are made at open. This means that things look better (and should you be fooled, test better) than they really are - to find the truth I had to create a 5 period SMA of close but for the last bar recalc it for the open price (where the decision is made). This is a classic error where "future information" is eyeballed into the decision when visually backtesting. A successful entry will move in your direction so the close will be further that way than the open ... and the ma will be pulled along with it. http://www.forexfactory.com/showpost.php?p=3250223&postcount=1365

Excellent post Thales. Although I think Giving is easier than Trading. Its been a good thread with some interesting elements developing for a variety of styles. I found a weird system over at forex factory that uses two timeframes and a single ma on each with a couple of price pattern entries which I'm going to investigate this weekend. I'm thinking that if it is as good as it looks (it looks to simple to be as good as it looks) I might post an introduction to it and then post trades it generates on a couple of pairs. I'm looking at 240/15m for timeframes so its the same as the S&R/Trend/123b trades generated here - but thats might be the end of the similarity. Can I post them along in this thread or do you think it'll take away from the thread?

gbp.usd closed first half 25 second half 84 initial risk 25

I like the look of gu so much that I moved the second target to daily resistance below ... looking for a breakdown of the current zone. Stop to last swing. We shall see

Commenting on picture 3. It is my experience over many types of contracts that breaks of formations or bars will be tested .... perhaps 66% of the time. This is probably the reason I've always hated be stops - when I was first told to use them it was before I understood the backing and filling that is required for bigger players to get filled. So I used to go to be and ... wow ... stopped out again. Now I wouldn't put a stop in at an untested break until there was some form of lower (or this) timeframe formation to hide the stop behind. But I'm not sure what Thales does. As always its horses for courses and perhaps his entries give better odds or perhaps he's a little slower to tighten than it seemed from some of the diagrams - but your picture clarifies the issue Mk. What do you recommend Thales?

Short GU. See pic. Currently price is a little over my entry point. Edit: 15ms later and it has dropped and broken recent 123 low to give 123break. So moved stop down to 1.6677 over highs. Edit: 35ms and tp1 has been taken after an hourly break.

I liked what Thales did with the pinbar so much I used my pinbar indicator to find a few and broke the (very good) 15m pinbar down on a 1m chart. See below On price bars vs continuous price: Bars, like moving averages are an indicator. A 15 ema of the 1m prices I show would have given me 1 point a little below the close of the 15m bar. A 15m bar gives you 4 points, OHLC so "can" provide move information like showing that a test "might" have occurred during the 15m bar. Thales pointing out the difference between a good and bad pinbar shows that the longer timeframe bar is just a summary. One version gives a 123 break. The other version (making the high first) would have perhaps given a 123 break down on the 1m chart ... which pinbar would you prefer to be trading. Despite this Price Bars (like mas :boxing:) are a useful way of summarizing the potentially overwhelming information flow that is coming out of the market. A final edit: having looked at a bunch of pinbars ... you really want to find the ones that go down then come back and give you a 123&possiblebreak because 1. the 123break pattern is strong and 2. if they test back before continuation they almost always stop before or round point 3 giving you a stop within the pinbar rather than its bottom! And the nicer looking the internal 123 the less likely that pinbar is to fail.

This picture is an excellent example of clear thinking --- especially the last one. Thales once again applies a 123break philosophy ... to a pin bar ... in a way that would differentiate one that was likely to take off fast from one more likely to backtrack or fail. This logic is something I used to use in sub-timeframe tests to decide where my entry should be and is excellent. I must say, having read it so clearly, I am going to do a little work to show which pinbars meet the criteria and which dont. Food for thought Thales.

An excellent post Thales. This is very much an example matching the right entries and exits in a system. I am almost the opposite. First I never ever use breakeven stops and second I wait a long time before moving them. I think this is caused because 1. my entries can be very good but benefit by being allowed to be wrong a bit because I'm picking the trend right but sometimes getting into a retracement too early and, 2. my style of entry doesn't have a really logical "I got stopped out but here's where I get back in" point. I think your approach may be easier to trade ... and it illustrates the need to match ones exits to ones entries when building a strategy. Get either side wrong and an unpleasant experience awaits the