thalestrader

Hi folks, I thought I'd make AKS pay me back for the loss it handed me yesterday, but it had the last laugh and threw me off for -19 pennies. That was and is likely it for me today. My daughter had two trades: breakeven on a short USDCHF and +85 ticks and change on a short EURJPY. As of right now, she is +18.82 for the day, and closed equity is $141.57. She definately has an affinity for the eurjpy. An interesting development today: She shorted the USDCHF on a break of support. That is how I taught her. However, she shorted the EURJPY as it failed to break through resistance. She did ask me if it was ok. I asked her why she would sell it there, and she said that if it didn't go higher there, it would probably go back down to the last support, where she would put a limit order to take profit. Well, its not the way I trade, but who am I to argue with sound reasoning? We're all heading out for lunch, and it is doubtful there will be anymore trading this week at the Thales home. Best Wishes, Thales

I would suggest that such thinking usually (if not always) leads to disappointment, if not ruin. Focus on learning to trade price action, focus on risk/reward (which means focus on position size relative to account size relative to the risk of the trade if you are stopped for the maximum loss), and the profits will take care of themselves. I wish you well, Thales

I found Mike's book very useful for the stage of development I was in when I was introduced to his work. His use of support and resistance really opened my eyes to using S/R, but he also relies quite heavily on "set-ups," and indicators.

I don't think of what I do as a method so much as an approach. I do trade currency futures from time to time, as the approach works on any market. Thank you for the kind words, Best Wishes, Thales

My wife and I both got a good laugh from your post imorgan, thank you.

I am proud indeed, and a bit surprised at how seriously she has applied herself. I shouldn't be, for she is a very good, highly motivated student at her elementary school. She has just gone off to bed. Each night, she has me print out a few charts for her, and she traces out the highs and lows, identifies support and resistance levels, and identifies any potential opportunities. On the nights that she finds one, we place the orders in the MT4 Demo account, and then in the morning, she hurries to check what, if anything, happened overnight. Eventually, I may have her place trades in her real account, as she has, on balance, done well with the demo trades. I'm just afraid that if she had real orders placed at night she may not get any real sleep! It will be interesting to see how she responds tomorrow. Today her profit was more than her starting balance was just a few weeks ago, and all of a sudden, I can see that she now feels that this is real money. And I'm happy to hear that you found the divergence posts helpful. The most exciting thing for me as I developed my ability to trade price only, with no reliance whatsoever on indicators, was the realization that I have the ability to trade any market, anywhere, at anytime, and on balance come out ahead. I'm sure you are starting to realize the same about yourself. You take care of youand yours, and as Motel 6 says (or used to say) "We'll keep the lights on for you." Best Wishes, Thales

Hi Folks, We finally had a day with more than three or four candidates offering the type of opportunity for which I look. COG +92 pennies/share, WYNN +119 pennies and AKS -31 pennies for a total of +$1.80/ share traded. My daughter was two for three today. She had a losing EURJPY and a winning long EURJPY that ended up netting just over +30 ticks, and a winning long GBPUSD that netted +100 ticks even. Trading at approx. 20 cents/tick (two microlots), her total profit was $27.16, and as she goes to bed tonight, the microlot account has a closed equity of $122.75 Best Wishes, Thales

Ok, no problem. If the mods want to delete these posts it is fine with me. Best Wishes, Thales

Well that is not surprising at all, as there are significant differences between Brooks method and that which my daughter and I use. For example, each has a very different risk:reward profile. There is a big difference between an approach that seeks to trade 1-2 times/day aiming for 50+ticks average profit/trade with a 20 tick average risk (all while having time for visits to the playground, bike rides, and ice cream) and one that trades 4-8+ times each day looking for perhaps a 4 tick average profit/trade with perhaps a 4-8 ticks risk). I try to make my posts useful and interesting, even when they seemingly stray somewhat from general course of the thread. I am interested in Brooks method, though I will never be a devotee to his method. He does make some useful and interesting observations. You could have made your above post both interesting and useful had you included at least a description of how a Brooks trader would have approached the EURJPY, and maybe even some charts. I would have greatly enjoyed that post. As it is, it just comes across as being mean spirited. Best Wishes, Thales

From the tone, character, and content of your post, I would say you have everything necessary and know just enough to do yourself a great deal of financial harm. If I were new to trading, and if I wanted to trade stocks, and If I did not have access to an experienced trader in my family or circle of friends to whom to turn (and it must be a person with whom you have a pre-existing relationship of trust, not, for example, a paid internet "mentor"), here is what I would have wanted someone to advise me: First, read, the following in this order. Do no trading until you have read these books: Nicolas Darvas, How I made 2,000,000 in the Stock Market Edwin Lefevre, Reminiscences of a Stock Operator William J. O'Neil, How to Make Money in Stocks (get the latest edition for the 100 pages of historical stock charts added to the beginning of the book) Then, I would hope the next piece of advice would be for me to subscribe to Investor's Business Daily (either the print or the digital edition). Read the Big Picture column diligently. Study the stock charts in invesors corner. Pay attention to the stocks on the move. Do not trade until you have followed IBD for at least 6-8 weeks. Then, once I had read those books and then diligently studied IBD on a daily basis for nearly two months, I would then alow myself to make my first stock purchase. But only if I agreed with myself to commit to only buying stocks on the IBD 100, and only buying them as they surpassed proper buy points, and if I committed to always cutting my losses at no more than 8% from that proper buy point. Also, I would never ever, average down. I would not add to a position unless the initial purchase already showed me a profit. And I would only buy any new position if, according to the IBD Big Picture, the market were in a confirmed rally. If the general market is in a correction, I would not initiate new longs. It may not be what you want to hear, but that is exactly the advice I would wish to recieve if I were where you are at right now. I wish you well, Thales

I've been planning just such a thread. I am working on an opening post to help serve to organize the thread's objectives. Many of the pertinent points that I will include in the opening post have been shared here in this thread. If no one objects to such a thread, I will get an opening post posted to TL this weekend. I would hope that other S/R traders, whether they swing for the day or swing for the long pull, would share some of their analysis. Best Wishes, Thales

I truly do not mean to divert this excellent thread on Brooks Methods. I do hope the S/R discussion adds some value to those working on learning and deploying Brooks methods. Now back to my regularly intended post: I am not comfortable with the notion that this is "guessing." Others here on TL have noted that successful trading is organized in terms of probabilities, and I share that preference as well. I sometimes feel as though I have guessed myself into placing a bet, and the moment I feel that way, I reach for the flatten button. I do not feel comfortable organizing my trading activity around rules. Rules imply rigidity and universality and absolutes. Rules make it difficult to respond to the particular case. Rules have their place with respect to risk management. But price does not know any rules any trader may dream up. Price action won't follow your rules. You must follow price action. That being said, here is a reminder from an earlier post I shared on this thread that may help: Let me give what I think is an excellent real life illustration of what I am trying to communicate. This involves two trades from today, one a small loss, the other a nicely profitable and still open trade. I posted a chart elsewhere this morning where I was copying my daughter's analysis from her chart of the EURJPY. I repost that chart here (see the first chart). She was stopped into a short trade. Price initally and immediately moved in her favor dropping nearly 40 +/- ticks from her entry, and then rapidly retraced back to about 30 ticks above her entry point. Price again dropped below her entry point, but held above the low reached on the inital decline. She now had a low, a high, and a potential higher low. She moved her stop to 3 ticks (to account for the spread) above that reaction high, and doubled the size of the order. If price again retraced that high, she would be stopped out of her short with a relatively small 30 +/- tick loss, and stopped into a new long position. That is exactly what happened (see the second chart). The dark green lines are her profit targets. As you can see, price has hit her first profit target for a profit on 1/2 of her position of somewhere around 80 ticks. Her stop on her second half is either at breakeven, and she is holding that second half for the second profit target which is approximately +145 ticks from her entry. I have her draw the swings she is seeing (those are the lime green lines). It is an interesting and useful excercise I learned from an excellent thread over at Forex Factory some time ago, and I thought it would be a good practice for my daughter as she learns to trade Price Action. One way to look at the issue is this: Highs and lows are the building blocks out of which support and resistance are constructed. Higher Highs and Higher Lows and Lower Lows and Lower Highs is how price both moves from Support to Resistance (and vice versa) and also how Support and Resistance itself is contructed, demolished, and rebuilt, sometimes at new sites and sometimes on old familar ground. My humble suggestion would be not to guess, and not to think in terms of rules. Keep it simple: Think Highs and Lows, Higher Highs and Higher Lows, Lower Highs and Lower Lows. How simple is it? For those who do not know, my daughter is nine years old and has been studying price action for about six weeks and is in her fourth week of live trading. Best Wishes, Thales

Hi Folks, Here is current 15 minute EURJPY worth pondering. Best Wishes, Thales PS Courtesy of my little girl - she loves the "EuroYen"

Some breakout traders might suggest that the reason so many feel that breakouts are unreliable is because, as DbPhoenix might say, they tend to see breakouts everywhere, even out "in the middle of nowhere." The "middle of nowhere" is a dangerous place, and price spends most of its time there. But it is not the whole of price action. Price action is the entire universe composed of both support and resistance levels as well as the gaseous and vacuous middle of nowhere. A candlestick, a volume spike, or a pullback to a moving average is not Price Action any more than a comet, a moon, or a nebula is the Universe. This does not mean that important information may not be derived from such phenomena, but it would be a mistake to extrapolate a general conclusion about the whole from an observation based on an isolated part. It would, therefore, be in the would-be speculator's interest to learn the difference between bona fide S/R levels and the the amorphous middle of nowhere. Even if the trader decides that trading breakouts is not for him, an understanding of what constitutes a breakout would presumably help that trader to distinguish between a genuine breakout and a mere hiccup in the middle of nowhere that might be safely faded. Best Wishes, Thales

My daughter trades a little micro account at FXCM. I haven't seen anything that would imply that they are "bandits."

As I've posted elsewhere, I am in no hurry to have her actively post on any internet forum, especially one where the other participants are nearly 100% adult males. She marks her charts up very simply, identifying S/R, Highs, Lows, etc. She does not have email on her computer, so I'd have to mark them myself or set her computer up with email. I'd prefer to re-do her charts myself on my computer. As she usually only take one or two trades/day, this shouldn't be muchof a problem. I'll try to start doing this soon, if not today.

Who's your daddy? lol But seriously, all she is doing is applying the basic s/r that I have posted here at TL on many many charts. So do you think I should pull her out of school, or should I let her continue into the fifth grade? I think FXCM Micro cuts you off at $5,000 or something like that, and as I've said before, she is on a very good run. I assume eventually her equity curve, like any market, will go into a correction. Though I have to admit that the thought of her earning enough from trading over the next seven or eight years to pay for her college education gives me fleeting moments of joyful expectation. I have made a deal with her: If she finishes the summer with $250 or more in the micro account, I will take $250 from the micro account, and add another $2250 to fund a futures account in which she can trade one lots next summer. Anything over the $250 is hers to keep. At any rate, we are both done for the day. No stock trades again for me today. These transitions betwen bull and bear swings often lead to a few days and even weeks where the opportunities I like to trade are few and far between. I did trade the 6E, and made 40 ticks on two contracts and 41 ticks on a third. I also did a short on the ES, but closed it with just a one point profit. I felt like I had chased the short and I don't like that feeling, so I just quit the trade. It is the only time I let my feelings trump what I am seeing on the charts: If I feel I entered on emotion rather than technicals, I jsut get out and forget about it. My daughter had a short EURJPY trade that she exited with a pre-set profit limit of 90 or 100 ticks. Too bad, because it ran for about 300 ticks and counting from her entry. She will go to bed tonight with a closed equity of $89.64, up $10.78 from last night's close of $78.86. As you will see in her equity run, her trade yesterday must have closed after some elusive cut off time, and so it is included in today's equity run. Thus, it shows a total profit of $22.48. That is a two day total for her. Best Wishes, Thales

This morning she was sitting at her computer watching her charts (the first thing she does when she gets up is turn on her computer and open her charts - she is usually in the office before me). I knew she wasn't going to trade this morning, becasue she was going out to a movie with my wife and our other children. Next thing I know, I see her entering an order. "What are you doing," I said. "I'm entering an order to sell the EuroYen." "I thought you were going to the movies." "I am," she said, "don't worry, I'm entering an automatic stop loss and a take profit order too." "What happens if you were to get stopped in while you are out but price doesn't reach your profit target before reversing?" I said. She laughed and said, "Why wouldn't it? Of course it will hit the target, look at the chart, there's nothing to stop it!" Well, she is still at the movies, but I see that she also has made a nearly 100 tick profit on her EURJPY short and she is out of the market. They say that people learn foriegn languages better if introduced to them at a young age. Perhaps learning to read price is no different. But I have a feeling that much of her success is that she is psychologically immune at this stage of her life from the fear of loss that cripples so many from doing well at trading. Also, she has a lot of confidence in what she is doing, because her daddy taught her. I could teach an adult trader, with whom I have no prior relationship of trust, the same way I taught her, but he would likely still desire the "security" or "confidence" that is sought in "confirming indicators." Who knows? She is having a blast, and her momma and her pop pop (a long time trader himself) are getting the biggest kick out how well she is doing. As for me, I am as proud of her as I could be, but then again, I have been proud of her from the first I saw her.

As you mention using Omnitrader, I might assume that you are looking to trade stocks primarily using end of day data, not real time intraday data. I would highly recommend Telechart from worden brothers at WORDEN TeleChart 2007 & StockFinder 4.0 It is free for 30 days, and 29.95/month after that for gold membership. With your goldmembership, you will also get a free upgrade at freestockcharts.com to the premium version of freestockcharts.com which will give you the ability to scan in real time with free real time data. As for end of day scans, telecharts is tops in my book, as it gives you the ability to code your own pcf's and compose your own scans. Best Wishes, Thales

I don't know that I'll let her post anytime soon. I do let her read my posts here, as well as some of the other participants posts after I have previewed them (she is a fan of DbPhoenix, although this may have more to do with his avatar than his posts; and she does enjoy his blog), and I did register a user name for her here at the forum. However, I have obvious concerns about allowing her actively to post on any internet forum, let alone one where the other particpants are nearly 100% adult males. As far as her trading goes, she has been showing me up lately. Best Wishes, Thales

Something about the way you say that makes being a "break out trader" seem rather unseamly (nudge nudge wink wink) I realize that now. I somehow had a different notion of what his book was about when I first posted here in this thread. I did read his article in Futures magazine, but not until after I had begun posting here. As Db points out in an excellent post, trading "bar by bar" is not the same thing as trading price action itself. I meant no disrespect to Brooks, nor to those endeavoring to learn to employ his method to their trading. My only comment after having viewed the annotated charts posted here by the various Brooks Method Traders is this: It seems like a very difficult and stressful way to trade. It obviously suits some folks just fine. As for me, I think I'd feel rather frantic very quickly as I concentrated so closely on each particular bar. I prefer to trade less frequently and hold for a bit larger swing than to trade many times for a few ticks each time. This is a personal observation regarding my own preferences and not a judgement on those whose preferences differ from mine. Best Wishes, Thales

If you are trading off S/R, then time frame should be irrelevant for the intraday trader, or nearly so. If you are trading the EURUSD and price develops support at 1.3900, then that support will be identifiable on a 1 minute, 5 minute, 15 minute or 240 minute time frame. If you are trading S/R, then your stop must be placed below support for a long position and above resistance for a short trade. The wide and variable spread does need to be taken into account, as all it takes for your stop to trigger is that the stop price appear as the bid (for a sell stop) or as the ask (for a buy stop). This is what takes folks out of their positions without price actually having traded at that price outside of the firm (and without that transaction being printed on the "tape," so to speak. To compensate for the spread, my daughter typically places her stop at a point twice the size of hte average spread beyond support or resistance. If she is at her computer when price gets near the stop, she will exit on a market order if she sees price actually trade at or beyond her "ideal" stop loss; and if she is away fromthe computer, her stop will be executed, but her loss will be a tick or two or three larger than it would be in a 1 tick spread market. This small additional loss she calls "slippage." As far as the spikes are concerned, again, proper identification of support and resistance, and placing your stop safely beyond those levels should keep you from being shaken out of your position unduly. Best Wishes, Thales

The USDCHF is up against resistance. If it gets above resistance, then price likely heads for a test of 1.0954. If price instead prints a low and a lower high, then a test of 1.0869-77 would be likely. I'm not trading it, just making an observation.

I bought this years ago when it was priced much much lower than it is today. I have all the updates, however. From what I understand it is now $2500? Let me start off by saying that if I were you, I'd use that money to fund a small forex or futures account, and learn to trade S/R with 1 mini lot or e-mini. If you do feel compelled to purchase it, I would still recommend that you give s/r serious study. The TS signals are very good when they occur at a S/R level. But, since it is primarily a fib-based program, it will fire off signal after signal in the middle of no man's land. The "Decision Point" function is very useful, but you can draw these yourself with a simple fib extension tool. The "draw pivot" function (swing pivots, not "floor trader pivots"), where the software will display minor, intermediate, or major pivots is useful when you are learning to identify s/r levels. However, I suspect that such a pivot indicator is available for free for most charting software packages, e.g. ninjatrader. What is worthwhile is the MTPredictor trading course, especially those portions that discuss risk/reward and position sizing (though I read the old edition, and I do not know if the new edition is as worthwhile as the old edition). All in all, of all the software, systems, and indicators that I spent money on, I would have to say that MTPredictor was the most worthwhile. However, I paid about 40% of its current price, if I paid that much. So, if I had to do it all over again, I would save my money.

I may be wrong, but isn't trading retail forex through any of the available dealers essentially spreadbetting?