walterw

Ant... I think you are not really understanding the overrall Idea... as I stated on the first posts this technical aproach can be done on the speed universe you feel confortable... it can be 22T or 220T... doesnt matter, when I refer to M its all off them M and W... if you watch slowly at the M pattern formation excel spreadsheet you will notice that when the price "crosses" the triggers ("1rst intention") at a key level ( in this case Outerbands / midbands) you can use MP levels, pivots, fibbonaccis etc... when we pullback to this triggers, we got an RRR oportunity.... it may work, it may fail... BUT you got a RRR about 1:5 most of the times... so if you get 50% of the time cooked... you still make money thanks to the RRR that this entry provides... one more thing you pointed out on trending conditions is that you dont want to trade a refresh trade from the outerbands when market is trending... you must clearly detect signs of a cycling market to take a refresh trade... Refresh trades are countertrend so you dont want to take them on trending conditions... About noise: it took me 2 years to understand the fact that when you decompress data and use decompressed data for your entry and then you trail your exit with compressed data you got a tickett to an excelent RRR.. My entry vs my stop is in 22T.... but my entry vs my exit is in 110T ... that makes a great difference on RRR... believe me... lets say you are confortable with a 30min chart ok.... make your enrty on a 5min chart and trail it on a 30min... and see what RRR you got... let me share an example derived from a fixed level... and let me see if I can make it more clear... thanks for interacting... makes possible to enter on the details that a monologue cant make...

screentime, screntime, screentime , monday to monday and monday to monday plus RRR (RISK REWARD RATIO) ¡¡¡ you need to make good gains and small stops... cant get out of a trade winning little, cant afford to trade with such great big stops... so screentime, screentime, screentime.... it is possible... really doesnt matter much wich technique, its important that the technique you choose has a good RRR included on its plan.... maybe... after 6 months of succesfull paper trading, you can start thinking of real money trading....

Ant, I really dont use the 110T chart as I trade, I am only showing the trendbands that come from that scale, and the concept of refresh and reject... I actually just focus on the 22T chart for my trading... (the trend bands on 22T are the same from 110T ) M and W are all over the chart... I really dont look for M`s Its too tricky to do so... the "1rst intention" (I call it) its what gets the pattern started... and that is the "crossing" of the trigerlines (blue/red) near to a dynamic level...(outerband,midband) so its not just looking to all the M`s that get formed, you can loose your mind trying to do so... now once you had that "1rst intention"... the pullback to the area off the triggers gives you an excellent entry oportunity... I like your feedback and I would like to get more feedback on this formation, always taking into consideration the RRR as the central topic... remember RRR = live or die... you cant survive on this bussiness if you loose the same that you win...

Well... systems is like Formula 1 races... if its raining you need certain types of tires if not other types... thats also true with systems... you design a system for a market climate... if you are good analist you even design an alternative system for a diferent climate.... the big problem comes in discerning wich climate are we having and wich sistem should be implemented... thats where discretionary traders have an edge... they do know and feel the climate in order to adapt to it... systems dont discern market conditions.... some naive traders put conditions to their systems to filter market climate ,believe me there is no rule , no specific hours, no nothing to market conditions... market can go wild on lunch hour as it can get sleepy on the first 30 minutes before a news... or be wild without news , there is no parameters as to market climate, only a seasoned trader in front of his screen can tell you the market conditions an wich of his alternative techniches can be applied in that conditions...

Tingull, you can take a look to my aproach on Technicall trading thread :"my entry vs my stop vs my exit" unfortunately I dont plan to keep using deltas... I just experimented with them and didnt find more edge than I have actually... any way I would aprecciate your feedback to my aproach on that thread... cheers Walter.

So... how do this M`s get formed ?... well believe it or not... I need noise for this¡¡... noise can be very handy for this setup... so I use a smaller time frame to get this noise and start to see this M formations... I attach the theoretical formation of this M on 22 T chart and example charts... On the first example I pretend to refresh from the outerband to the mid band on the 110T chart, now you can notice its hard to see an M formation on the 110T chart because information its too compressed there... as I decompress information to a 22 T chart I can clearly see how this M gets formed and how it can help me to get a competitive entry in order to have a good RRR... more examples attached... cheers Walter. M Formation on 22 T Chart.xls

Ok.... I keep presenting my aproach that leads me to a good RRR.... and this is M trades from my dynamic levels... I previously presented the advantage of M patterns in order to have a good RRR and I did present what levels I take into consideration (Outerbands and Mid Band) and what I do from there (Refresh to the mid band, Reject of the mid band ) now I present how I combine M patterns in this entire context.... I attach a Theoretical explanation... What we basicly want is this M formation at the outerbands in order to refresh to the mid band "Refresh Trade", and we want this M formation at the mid band in order to reject to the outerbands "Reject Trade" .... M Trades from Dynamic Levels.xls

Fatdog, in order to keep the spirit of this thread, could you refer with more detail how would you manage Risk Reward Ratio on this setups you trade ? in this thread we are VERY interested about having tight stops vs large profits... doesnt care much wich technique you use... we believe that any technique properly handled should gives a good RRR... so please refer more clearly to this RRR topic on this thread... thanks Walter.

Thanks Scalp for contribution, you will see on the next posts ahead as I explain my aproach that I take much smaller M`s than the ones you mention... any way we must always have in mind that technical analisis is the same in any speed universe... (so we must trade on the speed universe that we feel confortable ) this method can be applied from tick charts all the way to weekly charts if you wish... Ok... now that I explained the theory of the M pattern I will now explain the LEVELS I use for my trading and how I trade from does Levels... In terms of levels you can use fixed (mp, pivots, fibonnacci, etc) levels or dynamic (bands, market thresholds,etc) levels... in my experience dynamic levels became much easier and flexible than fixed levels... I DO believe in fixed levels but some of the drawdowns of fixed levels is that it leaves lots of good oportunities on the table because you didnt have any "reference level" in that place to trade, for example, an MP level derived from yesterday action that is too far from todays price action becomes useles on todays session, or you got a pivot too far from this actual excellent oportunity... so I do believe in fixed levels, but I simplified my life to some very simple and straightforward dynamic levels that really perform very nice... My methodology was originally inspired on John Novak (nexgen) aproach, I never was able to purchase his software because it costs 9k , but they are enough generous to share a lot of educational material for free... their site is Fibonacci Day trading software - NEXGEN Software Systems now apart from his fibonacci indicator (propietary) I did find that the rest of the indicators are of public domain (averages, bands, etc.. ) so I did build my own (very similar) and began re-adapting a method of my own based on some good sound principles being thought by Novak... I Think I got something that its not the same but works pretty good... My base speed universe is 110T on russell emini... (same as Novak`s) the curious thing and maybe new for most of you is that I use a 22T chart and a 3T chart ¡¡¡ (this guy is crazy) i:confused: yes I am... but you will find out that the spirit of the trade is at 110T chart... amazingly I discovered that noise some times can be very Usefull ¡¡ :rolleyes: now lets leave that for other post and lets get back to the level topic again... I attach a Chart of a 110T russell with my dynamic levels (Trend Bands)... and I attach also a theoretical explanation of how I use this dynamic levels... in further posts we will get inside the M aproach with detail... cheers Walter. Trades from Dynamic Levels.xls

I will present one of my basic aproaches to trading... non different to the ones presented here on this site... I call it: Happy M Trade just about any tradeable instrument is plagued all over with M`s , this formation responds to a major concept related to the psicology of the masses, but we dont need to get in to deep on does details, just open any chart, start spotting M`s and you will find hundreds of them... now M`s by them selfs dont mean nothing... but M`s at key levels they do mean a lot... I became obsesive with RRR some time ago and started to find the best way to really have a ultra competitive RRR on my trades.... I thought this : I am not a good analyst, I dont have good setups :o well lets try being a good RRR `ist and find a simple or maybe stupid setup that will at least have an extraordinary RRR... so M`s came on the way ... and they DO THE JOB ... this M`s formations have the virtude of giving a terrific RRR on trades... even if you get cooked 50 % of the times still you can survive thanks to the RRR in this pattern. I attach a theoretical explanation, I do trade the anticipatory pattern, first the theory later the charts... cheers Walter. Classic M.xls

Great feedback Guys ¡¡¡ thanks ant for those quotes, very good stuff on confirmation vs anticipation... for torero : it is obvious that you need some basic level of confirmation... when I say confirmation, I mean a great level of facts on the table that made us loose the best spot to get in the market... now I would refer to PRE-CONFIRMATION , it is a hint that this or that will happen... and I will react previously (anticipation) on this premise so I can have a competitive entry... we dont want to get stabbed with a knife or hitted by a train... we are talking of being "wise" in anticipating our technical argument... if our argument WILL work then where is the best spot to get in ... any way if my argument was going to FAIL... then I prefer to loose less... many times we get confirmed just to find out our trade (technical argument) was going to fail... it would be better to fail (anyway) in the smallest risk... thats what this "anticipation" can do for us..

Coming back to "Intraday Technical Patterns" what I said before about whats behind the pattern I believe it is Support and Resistance.... and the performance both have as they are tested or breaked... The example above is very clear, a support got breaked... then this support became resistance and DID hold.... I call this "break and Hold" and will expand the topic on a diferent thread ... about scalping or trading.... its the same... they are in diferent speed universes... a bank can be a scalper on weekly universe... ALL technicall aproaches are just about the same.... we can vary on our speed universe... but all technical concepts are common for scalpers as to traders...

I want to start this thread in order to bring some light on the RRR issue I did start on some other thread.... I hope we can all interact and help in this true enigmatic topic... Where is my Entry in relationship with my stop... and where is my entry in relationship with my exit... Obviously that relationships should give me my RRR.... BUT its not just a RRR math... its a STRATEGY.... Let me start with the "type" of entry a succesfull trader should use : confirmed entry vs anticipatory entry... if you "wait" for confirmation on your entry... (lets say crosovers, etc...) most probably you are going to be to far from your stop... so you got a bad RRR from your stop... if you "anticipate" in a key area that happens to be very near (tight) to your stop... then your entry its getting more Happy... on the other side... is there any technical room for my target ? can I expect a good move on this trade ? or is it to near to a S&R level that will stall my trade ? Anticipatory action on key areas with very small stops vs large potencial moves makes trading a very diferent experience... Waiting for confirmations.... by by by by your oportunity just took the train... thats why some traders got divorced from indicators... because they thought that indicators where to be used as "confirmation tools" to take a trade... well WRONG. Indicators are VERY USEFULL to give you a road map for you to "anticipate" whats gona happen... and trading should not take place on the "confirmation" arena but radder on the "anticipation" one... so areas make a great job on the anticipation job... and they can be clearly derived from technical indicators or x levels like mp levels, pivots etc... Do you want to have a good RRR ? well dont be a "confirmed trader"... be an "anticipated trader".... Later I will share some charts, before I would like to hear some feedback... cheers, Walter.

Well, I want to make some comentaries on this thread topic I did start some days ago on RRR (Risk Reward Ratio). On my personal experience, and I think most traders have the same tendency, we get to much enthusiastic about a technical aproach and become some how very "loyal" to it... the true fact after 11 years on trading I came to the sad conclusion that just about any trading aproach has 50/50 technical performance... there is no such 70 or 80 % performance as some "gurus" tell they have... when you trade with the real thing you come up with 50% success and 50% non-success trades... if you are having less than 50% success, then you are on "School mode" yet... you need the 50/50 to consider yourself a good trader... now, dont be mean on yourself trying to get that fantasy 70 or 80 % success... you will loose precious time... the key is RRR applied to the 50/50 performance, thats my story, and I can say now that I am happy with my 50/50 performace... So... what REALLY is this RRR thing ?... well in my experience its not just a ratio, its more than that... its a STRATEGY that has to be embeded on your technical aproach.... where in simple words you have tight stops vs long runs.... so we are talking about "closing positions" more than opening.... HA¡¡¡ dont you spend hours thinking and studing how to "open positions" ? well thats fine but after you got a plan you say in lets say 10 minutes : I will close my position such and such... or I will see as it happens... well there you go... thats where any "analist" work goes to the toilet... well, this trader NEEDS a change of mind, when you study so many hours where you are going to "open" your position you MUST include in this study "simultaneosly" where are you going to place your stop and where is your aproximate target... thats more than chart reading or a simple RRR math... it is formulating a Strategy on your trade that will keep you alive during this very dangerous journey of being a trader.... where your fellow traders are big dinosaurs with thousands time more money than you, with greater technology and the worst.... they DO have a technical aproach with real RRR on action.... so RRR should be the center of your ecuation... doesnt care what technique you use, if its trendwise or countertrend, if its based or not on indicators, if it uses old fashion stochastics or new fantastic deltas.... doesnt matter, ALL of them eventually have a 50/50 performance... RRR inside your technique will make the diference to make you profitable...

I think that more than patterns, you should be aware on what MAKES the pattern... thats more powerfull... looking inside a pattern and what forms it... not just a pattern by itself but what its behind... cheers Walter.

Well Chris I must admit that I am experimenting with delta... I am very new to it and must say that from an intrinsic concept it does make sense... I do trade delta divergence setups, you can see them at charthub... with names er_110t also er_22T and some other experiments (green background) I was very inspired by the charts of "5pillars" (elitetrader) also lots of charts from him on charthub as es_317_VB he trades es ... My hardtime on this is that I am more a "Trend Trader" and delta divergence trades are countertrade... so it makes it hard to detect when market shifts from trending to cycling and viceversa... actually Delta Divergence Trades (DDT) realy work fine on cycling markets.... but will make you get run over on trending situations.... I am working in a method to "clearly" detect the change from trending to cycling... maybe we could aboard that topic on this thread.... I would like to interact on the issue, I believe that if you have a clear method to detect those shifts on the market stage would be very great... I did look your post here Chris and I find them very nice stuff... mp levels are so predictible.. combined with delta... you got a powerfull combination... hope we can keep interacting.... cheers Walter.

RRR (Risk Reward Ratio) = live or die Risk= how much you risk on a trade Reward= how much you expect from a trade without good RRR cant have success on trading.

I dont trade forex myself actually, I am trading futures (eminis)... I plan to trade forex some time second half 2007... any way I always sniff around to see whats new on technical resources for forex... I personally on my experience find harder to trade forex than futures (did trade forex on 1998-2002) not very happy with performance, doing well actually on futures and being more enlighted thru some of soultrader techniches . I want to share with Galvestone a site I came around and find it atractive from a technical stand point of view also from a RRR point of view (KEY TOPIC) and is LeverageFX Foreign Currency Trading Software and Brokerage they are topgunsoftware version for forex... very good stuff they have some videos too explaining their aproach... even looks like you can have free data and software if you open acct with some x brokers.... I did trial topgunsoftware some time ago... nice stuff... any way I am with linnsoft now and really once you trade with delta its adictive the win ratio you have.... maybe I will create a new post with my aproach some time later... but forex traders, Galveston and other folks keep up that work ¡¡¡ hope this helps to this thread. cheers Walter.

In general terms trading is a bussiness of RRR (Risk reward ratio ) where your risk has to be at least 1/3 of your winning potencial.... so when you take a trade you have to take into acount where is your stop vs where is your "basic" target... if technically your target is small in relation to your stop level then you dont have a good RRR on your position.... many people loose money because they dont understand the fact that there was no enough potencial on their trade vs their risk... taking small stops its not a problem if you had Potencial of gains on your trade... the problem is taking 1,2,3,4 uuups small stops and then when you take a good trade you win the same you lost on 1 stop.... there you have a big problem you are -3 on your performance... :p now... just about any techniche has whipsaws included on their trading plan... like it or not even the holy grail has whipsaws... so you have to get cool and friendly with the whipsaw fact and complement that having a good trailing sistem for your good trades staying inside as much posible.... does trades will finance your whipsaws and hopefully will make you a + diference... (maybe the 15 pips) if you dont trail a good trade you are most probably not going to make it.... cant finance your business with so small profits... need good trailed trades to make this bussiness posible... now good news the market does trend.... so if you have good tren definition plus good timing plus good trailing + +++ dicipline, actitude , perseverance, patience, dilligence, technical skill, trading skill, etc etc you can make possible what our friend herewants to make.... 75 +net pips per week.... not imposible... just remember the fact of RRR on the entire picture... its live or die... non-experienced traders dont loose money on one trade... they loose in too many stops vs to small gains on some good trades, what is needed is : several stops vs several great trades... thats how it works.... cheers Walter... and yes you can make finally 15 pips to a fortune ¡¡¡

From a mathematical stand point of view sounds good, but from a RRR (risk reward ratio ) its not practical... you have to aim more gains when it comes to good trades in order to be able to get a good promediation on your stop losses... so lets say you take a trade and you can have a 50 pip potencial, you should take the entire potencial and not condition yourself to a low daily target.. any way your objective is a good concept...having objectives is good... I think that would be wiser to take that objective to a week... for the entire universe of a week you should aim x amount of pips.... that will give you more flexibility to take only the best trades and also have a good RRR strategy... I have done some proyeccions... and if you do 35 pips per week you will make in two years a humble climb from 10.000 dollars to 300.000.000 and if you dont want to go any bigger.... with 300.000.000 you can make at a pace of 35 pips per week 150.000.000 per month , not bad to pay your bills... now the truth is other... you have to be a very well focused trader to finish every and other week with 35 pips... most probably that will not happen, becouse from a RRR stand point of view you will need to make more than 35 pips per week in order to absorb all your future and past stops.... so in other words... just trade with good money management (RRR) and you will make the "equivalent " to that money or even more, but dont get yourself conditioned to making certain money in certain time.... you cant tell the market do this or that... just take in the proper fashion what he (the market) can give you and you will be surprised on the results.... I still like your positive spirit, that will take you to good results, just dont think to much on the money.... think on trading well, money comes alone... cheers Walter.