thalestrader

For example, I have shared here in this thread and elsewhere on TL exactly how I daytrade stocks. I have sent detailed emails and pm's to a good number of folks here at TL explaining it further (and anyone of them reading this can vouch that at no time did I ever ask for or imply that any compensation was desired, expected, or anticipated, or whatever in exchange for the information). I have personal friends with whom I have shared the method. I beleive I could publish an article detailing exactly how I day trade stocks in S&C magazine, and it would not change the effectiveness of that method at all. Some of those traders with whom I have shared it with are doing fabulously well with it. Some others have tried it and abandoned after a period of time, some quickly, and others anfter painfully long self-punishment attempting to implement it. And yet others take the same entries on the same stocks as I do, and yet they finish the day with a loss and I finish with a profit. Why? Because the mechanics of trading are easy. Self-control is difficult. I have mentioned my good friend the spot/futures currency trader, who is fond of quoting Jessie Livermore as saying something to the effect that most men lose on Wall Street not because they don't have brains but because they can't sit tight. They cannot control themselves. The cut profits, and let losers run. How many times has it been said that the Holy Grail exists, and to find it you have only to look in the mirro, as the Holy Grailis within each and every one of us. It is up to each individual to access the grail or not. Best Wishes, Thales

Richard Dennis once said that he could publish his trading system in the Wall Street Journal, and it would not attract enough adherents who applied it properly and consistently enought to change its effectivenes. I think he is absolutely correct. There is not a winner for every loser. For every winner there are many losers! And there are more than enough losers (witness Mightymouse and his many daytrading friends) to fund the few who win consistently. The only enemy you need to conquer is within your own soul. I was helped by a few folks, and none of them have suffered for it. I like to think that I have helped a few folks in turn as well. I have not suffered any ill as a consequence. Best Wishes, Thales

You don't really believe that, do you? The only person you have to beat as a trader is yourself.

I avoid it like the plague because it attracts mostly folks with an attitude similar to the one you displayed in your initial post to this thread. You know the old saying, "Birds of feather ..." and of course that other old saw that "Misery loves company." Seems to me you'd fit in better over there. No need to bring your miserable suspicions here. I have not seen one person posting here in this thread attempt to sell anyone anything. If someone were to do so, then we'd react. You, on the other hand, assume us guilty until proven innocent. Again, that is the ET mentality, not TL. The fact that you, and apparently all the day traders whom you profess to know have yet to learn to trade consistently is no fault of ours. Don't expect us to wear your black eyes.

I have a close friend who trades currencies only (spot and futures), and he too applies the 34 ema in a similar manner to his trading. Best Wishes, Thales

It is interesting to compare Zen's and Gabe's trades, both short, both in the same base currency (EUR), but one quickly and decisivly moved to a reasonable support level (profit objective) while the other, while moving down, has done so reluctantly, more drifting than swinging, ultimatley causing the trader to abandon the trade for a small loss. Zen traded the EURUSD. I am not sure, Zen, how you identified what you thought to be a "good resistance line," but as you determined on your own oncein the trade, you had thought that line or price level was more important than the market did, as price acted as though crossing that line was a non-event. Gabe traded the EURJPY. EURJPY had a clear breakdown point from which one could expect that price would at least decline to test the first prior resistance level as support. Of course, price doesn't have to do anything of the sort. One may anticipate that price will so decline and reach that target, but it is free to reverse at anytime, and it is precisely that possibility for which the stop loss was created. I have found it useful, in trading support and resistance, not only to recognize where price is, but also how price got there. That is, the trader will help his or her cause if the trader learns both to recognize support and resistance (while distinguishing those important levels from the vast middle of nowhere), but also studies how price is moving as it makes its way through the space between these levels. Is price moving in clear and distinct swings or is it simply meandering, drifting seemingly without purpose? Is price marching with purpose, spending little time at any particular price before mounting its assaults on subsequent levels, or is it coiling around itself, overlapping again and again, making no headway one way or the other? I have attached a chart of each pair. In each case I have used heavy purple lines to trace out what I consider to be important swings. Thick blue lines represent entry points, thick red lines represent stop loss levels. As you can see, the EURJPY has traced very clear, distinct swings, offering what I consider to be two very good entry points, one long, and one short (the short is similar, I presume, to Gabe's entry). The EURUSD also shows what I consider two good entry points, both long. Price may indeed decline from current levels, possibly significantly. But as yet, I do not see what I would consider a safe entry for a short. I have traced out price action on the EURUSD since yesterday's high with a thinner purple line, and added a "?" label to the end of that line which is at the current price. That is because I do not yet consider the price action subsequent to that high as a complete swing. In fact, it barely qualifies as a separate swing from the swing that carried price into its high. Certainly there are many overlapping swings visible within this downward drifting sideways movement, but none of these, individually, constitute the creation of a tradable point (S/R) in price action. Why call S/R a "tradable point"? Because S/R represent a price level at which the market has made a decision in the past to change direction. Upon revisiting that level, a tradable moment occurs as price will decide either to reverse again at that level, or break that level and continue to the next recent S/R level. Watching the manner in which price is moving will help you to distinguish support and resistance froom a mere course adjustment out in the middle of nowhere, as can be seen from these two trades. Best Wishes, Thales

The EURJPY long would have been stopped for a loss.

Hi Gabe, Either the charts are blurry, or I have to get my eyes examined. Perhaps it would be better if you zoomed in on sections and perhaps made a few notes, either in the charts themselves or in the body of the post. I think what you are doing could be a very useful excercise, but is not as clear as it might be. Best Wishes, Thales

Hi Folks, My daughter tried a long on the EURJPY. She moved up to a full mini lot tonight (10K). Her buy stop was 135.25, her initial stop loss was to be 134.88, with 50% profit targets at 135.60 and 135.95. FXCM changed the way stops and limits are entered through their platform, and she was not prepared for how difficult they apparently have made the process. At any rate, I had her move her stop to 135.30 when she was up +20 ticks because neither she nor I could figure out how to get FXCM's new OCO order method to work properly (I thought I was beyond basic order entry years ago, but apparently not). She was indeed stopped out for +5 ticks. Looks like she and I will be looking for instructions at FXCM's website on how to use their platform. She does not typically have temper, but she is so angry at FXCM that I had to laugh at her (and now she's a bit angry with me too). If we figure this thing out, she may re-enter as price is now back to her entry. I attached the chart so you can see her trade. Someone had also asked for a shot of her trade blotter. I really don't see what that adds, but I took a shot of it and included it here. I think most folks learn much more from a chart. Best Wishes, Thales

Well, in the end, I was looking for a potential opportunity last night to use as an example to answer a question put to me in another thread. In that thread, I wrote that it was not a live trade, but it was "the closest thing I could find" at that time to what I considered a tradable opportunity. In the end, I would have passed on it, because I would have wanted my stop above yesterday's high. Since the first profit target was only 30 ticks below entry, but a stop above the prior high would have been nearly 50 ticks, I would say that was no trade. I have not had a chance to ask my daughter what she would have thought, but I would guess that the small first target would have caused her to pass. But, otherwise, that was very much the type of opportunity she is looking for. I just got back in from NYC, and a quick look at the USDJPY shows the relevance of those S/R levels used as profit targets even though it took price 10-12 hours to reach them. Also, Gabe, look at how price reacted back to your short entry to retest the breakdown point. If you miss the initial break, selling the retracement can be a good second chance entry point in itself. Your trade looks fine if I am reading your post correctly. You shorted just below 95.41, and it looks like the first profit target was hit, and quite possibly the second as well. Best Wishes, Thales

Rain has changed our plans a bit today, and I took this shot of the USDJPY just as we popped in a few moments ago. As you can se, the technically better stop would have kept you in the trade and both targets would have been hit (though the route price took was not as I had expected). I guess this shows that sometimes, the correct stop, though a larger risk in both nominal dollars and % equity, is often less risk in reality than a tighter stop. Second blue line indicates a possible re-entry for a short, but I only looked at the chart quickly, so I can't say for sure I would have wanted to take that trade myself. And this is, of course, all hindsight at this point. I just thought some folowing along might find an update to be of interest. Best Wishes, Thales

Here is how the USDJPY from last night turned out: I've included a screenshot taken right before I shut down last night, and one from this morning. Price racted back to the entry point of 95.41, and then declied to make a lower low. If I were trading this, (and I were awake!) I'd have moved the stop to 95.42, which is one tick above the reaction high. That stop would have been hit and the result a -1tick loss. If I had been trading this, and I were not awake, then this would have been stopped out for -20 ticks. Someone might ask if a better initial stop, and one which would not yet have been hit would have been above yesterday's high. I would say technically yes. However, this would have resulted in nearly a 50 tick risk for a only a 3 tick first target. Anyhow, that is how we do it. So easy, even a nine year old can do it consistently well. Best Wishes, Thales

For example, ask yourself and answer honestly: If this were your trade, how would you feel right now? How many of you might be tempted to hit the "flatten," "close position," or "liquidate" button seeing that "bull candle" so that you could "lock in some profits"? I can tell you what my daughter would: Not a thing. She'd just be waiting (probably reading a book) waiting to here the alert that tells her that one of two things have happened - either her first profit target was reached or her stop loss was hit. How many here have the discipline and confidence to watch this trade to completion without any additional interference? I am not saying that this is not the beginning of a reversal that would stop the trade out for a loss. But this is a game of playing for profits, not pennies. If you cut every profit short, you will be certain of only one thing: Your average loss will exceed your average profit. Best Wishes, Thales

I have been asked by many folks via PM and by more than one in direct posts to post entries/exits of my daughter's trades. I posted this over in the p/l thread in response to one of those requests. This is not a live trade. My daughter is asleep, and we are both not trading anymore this week. But here is an example of the current USDJPY. This is how 90%+ of her trade opportunities look. She trades for two targets usually (sometimes it is just one). This did not come from me, but from a friend who trades currencies and always uses two targets. She looks for opportunities where the first profit target has a 1:1 or better ratio to the stop loss. Once that first target is hit, then she moves the stop loss to BE or the closest natural stop, whichever is, in this case, lower. This is the trade, and it provides an opportunity 1-3 times each day for her. Many, though not all, reach the first target, many of those reach the second target. A few never reach the first target and she is stopped out for a loss. I think that the focus on R/R, money management, and trade management are as, and probably, truth be told, more important than how she enters and exits a trade. Best Wishes, Thales

Do you mean something like "USDJPY sell stop 95.41, stop loss 95.61, 50%Buy Limits @ 95.11 & 94.81" in real time, or annotated charts after the trade is complete, win, lose, or draw? EDIT: The USDJPY is not a real trade by the way, it is just the closest thing I could find to a real opportunity at the moment to use as an example. EDIT 2: I've annotated and attached the chart of the USDJPY example

I remember having taken a devastaing loss in June 2005. It took months to recover psychologicaly, even after I recovered financially by knocking the proverbial cover off the ball on a gigantic bet, long several hundred Amgen July 65 calls into the earnings announcement. The good news is that it is now but a painful memory. Fight through the fear. You will win out. Best Wishes, Thales

I know, I know ... as I said in my post ... she basically outsmarted me (and revealed my own weakness at the same time). I told her that if she wants to compete that is fine, and I'll let her lever up a bit in the beginning to see how she goes. We'll be discussing a money mangement plan for a $500 forex account tonight over dinner with our friends. I'll let you know what, if anything, we come up with.

Hi Folks, Basically a vacation week for me as two of my good friends (also traders) and our families have met up to see some Northeastern sites. My daughter did trade Monday - Wednesday mornings. One of my friends, whom I mentioned in another thread, trades currencies only (spot and futures). He sat and watched my daughter trade, was delighted to see that she was basically taking the same trades that he would have taken. He laughed himself to tears. He was a lot like me. We were both slow learners. He figures it took him close to four years to teach himself to get to where she is today after just a few months. (It took me longer). I've attached the EOD equity runs for continuity's sake. She traded cautiously as she had a money goal in mind for the week: She wanted to get to $500.00 so she would qualify for the FXCM contest in August. I've looked at the winners at FXCM's website from last month. It looks like you need a 1000% return just to show, let alone win or place. That is alot of leverage! I told her that taking $25 to $500 is a lot different than taking $500 to $5000. She asked how so, after all, $500 is 20 times $25, and $5000 is only 10 times $5000. She's a bit to smart for my own good, I say. At any rate, she is done trading for the week and any free time she has apart from our vacation activities is being spent reading a book called The Mysterious Benedict Society. It is good to take a break from the screen. Best Wishes, Thales

Yes, if you are going to cut the trade short, cut it short with a profit and not with a loss. Otherwise, trail below resistance, that's what its there for (though it is indeed easier said than done!) Looks like GBPJPY is going to make a run for just north of 158.00 (158.22 looks like a good target). It is 157.66 as I type this. Good work! Well, I'm off for a day at the zoo. Good Luck today! Best Wishes, Thales

You asked a question, and you asked us to base our answers on our own personal trading experience. I provided you with advice, based upon my own experience, that I wish someone would have given me many years ago when I was looking for an indicator with just such capabilities as that for which you currently seek. I stand by it. I think it sound. It was friendly advice, and not a demand. If you find it of no value, or incredible, that is fine. By the way, I do find both your recent behavior, as well as the targets you selected at whom to direct your ire rather curious. I trust you believe that you may have found what you have been looking for, and I wish you well with your journey. Best Wishes, Thales

I also do not consider fundamentals about the economy in my trading. A very good thread that I used to read when I was content to lurk here at TL is Firewalker's "All you need is a chart ..." and I highly recommend it and you can find it here: http://www.traderslaboratory.com/forums/f34/all-you-need-chart-3843.html It apparently came to an untimely end, and I would love to see Firewalker resurrect it. Best Wishes, Thales

S/R matters until it no longer matters. I don't mean that to be flippant, but it is true. I remember an article or book by John Murphy where he used the example of IBM stock to show the "memory" the market has for various price levels. I do not remeber precisely, but I beleiev that IBM found support at $40/share some twenty-five years apart. I am likely off by a bit, but that is how I remember it. Probably not the answer you were looking for, and maybe if I weren't so tired I could come up with a more well thought out answer. But off the top of my head, I'd have to say just what I said - An S/R level matters until it doesn't. Best Wishes, Thales

Looks like your stop loss served you well, wouldn't you say?

Not to take away from the rest of your fine post, Kiwi, but the above quote is an excellent point that deserves to be highlighted. Best Wishes, Thales

Unfortunately, the sensible place for me would have been a quite uncomfortable 90 +/- ticks above at then high of the day. If you look at the chart there was no real swing point that stands out as a closer natural stop. As the minimum anticipated move was only 20 ticks, I would not have considered shorting that break other than as a quick scalp, e.g. 20 tick stop 20 tick limit. When I trade the 6E and 6B, I don't mind 100 tick stops if my profit target is close to 100 ticks. I like to have the relationship between the stop loss and the minimum profit objective be close to 1:1 if not better. The break above that high at 155.20 would have been a good long entry, as 154.80 level did provide an ok stop level, and the first profit target would have been 156.85 level, for a 65 tick profit potential versus a 40 tick risk. Right now, GBPJPY is heading into a real thicket of resistance. Unless there is some external impetus (e.g. news) then this rally will liekly remain choppy as it moves toward 157.30-157.60, and subject to reversal anywhere along the way. Should price break and hold above 157.60, then there should be a good bit of no man's land in which to run. Best Wishes, Thales