thalestrader

As I am sitting here sitting on my hands waiting for the flurry of news activity to clear at 8:30 EST, I thought I'd share a few thoughts about TTT, which I have mentioned here in the thread, though for various reason I choose not to emphasize it too much. I have recently received a PM asking about my use of it in relation to I do not want to turn this thread into a commercial for richbois's TTT service, but I would like to show another factor I took into consideration this mornng in moving my stop to +1R on that long 6E trade from yesterday that held through the night. According to the TTT eBook that richbois's service emailed to me last night at 5:18 PM EST, the EURUSD had a 99% chance of making a high at 1.3631 today. It printed a high within 3 pips of that at its most recent high. Here is a screen capture of the relevant spreadsheet line from richbois's report: This does not mean does not mean that the EURUSD cannot go higher, and indeed, the TTT Book also shows a secondary possible high - a 51% chance of a high at 1.3652. And that does not mean that it cannot go higher still. No magic, nothing writ in stone, just basic probabilties. I do apologize for the after the fact nod to TTT, but as it is a paid service, I do not think it would be fair either to richbois or to his other subscribers for me to share the TTT numbers publicly before the level is either traded at or through, or after the trading day is over (I know it has not yet traded to 1.3652, but I do not feel bad about sharing a level with only 51% odds - there is statistically no edge there). While I am now speaking admittedly in hindsight, if I may go into wouldacouldashoulda mode, had I been awake at the high, I'd have exited the trade with a full +1R based upon TTT and the 2B sell, and, in fact, I like to think I would have actually dumped the long for about 1.13R and gone short with size due to the close proximity of the risk point for a short up there. But, all that is pure imagination at this point. For the record, I use TTT as a sort of guide, landmarks, if you will, to confirm or help clear the road map I see unfolding on the chart before me. I am not a pure TTT trader. A pure TTT trader (and there are a few of them, trust me, and they are not pikers) would have been accumulating contracts yesterday between 1.3450-1.3475 and selling them this morning between 1.3571 and 1.3630. Another word about TTT - if you are interested in it, you must read George Douglas Taylor's book about the method. As my currency trading friend says, it is "a tortuous read." To make matters worse, the publisher, Edward Dobson of Trader's Press, included two damaging essays in tthe edition he published - one by George Angell, and the other by, believe it or not, Linda Raschke. Douglas's book is a tough read. The grammar is awful. Because the book is difficult and because Angell was concerned with profiting from selling trading system, he distorted the Method (never really understanding it properly) and published what for a time was the infamous LSS system. Linda Raschke was introduced to Taylor not through direct exposure to Taylor, but through George Angell's essay. So her approach to Taylor was very much colored by Angell (she also tends to use a 2 period rate of change indicator to define the current cycle for her, rather than viewing the cycle organically as Taylor intended). As a result, neither essay is an accurate presentation of Taylor. What has made matter worse, in his publisher's forward, Dobson recommends readers start with the Angell and Raschke essays, and in those essays, each suggests that one can safely read one or two sections of Taylor's book and understand the method without bothering studying the whole! If you buy Douglas's book, rip out and burn the Angell and Raschke essays, and read and re-read the whole of Taylor. His method is simple, but it is made very difficult due to his use (or misuse) of language. Let me give an example of what I mean when I say the essays are damaging: Each essayist claims that at times, the market gets out of synch with the Trading cycle, and that the trader must therefore "shift" the cycle to get back in synch with price action. Not so - and Taylor himself is adamant on this fact - the cycle is a three day cycle. Sometimes it extends. But the cycle remains intact. Taylor explicitly states (in one of the chapters Angell and Raschke tell readers not to read) that once established, the cycle is not to be shifted. Nearly every week I come across a so-called (self-proclaimed) Taylor experts who claims that it is "time to shift the cycle." Usually this is because the market had a big rally on Short Sale Day or a large decline on Buy Day. Well, according to the original Taylor's Book method, those are the very best 3-day cycles, where you get to buy sometime during a Buy Day at tremendously discounted prices and then liquidate and go short sometime during a Short Sale Day at tremendously marked up prices. Many who understand Taylor as he is presented by Angell and Raschke come away believing that the Taylor method is to buy at the open on Buy Day and go short at the open on Short Sale Day, and that therefore, failure of the market to rally out of the gate on a Buy Day or fall out of bed from the start on a Short Sale day invalidate the cycle or invalidates the method entirely. Taylor was a price action trader. The Book method is based upon what and how to act, or more precisely, what one should look for and expect, based upon where the market is in relation to support and resistance - highs and lows, opens and closes, prior highs and prior lows. Its very good stuff. Though, in terms of clarity, it reads as though it were written by my five year old (who just turned five, by the way, so he may as well be four). Best Wishes, Thales PS As readers of this thread know, I love and respect Linda Raschke immensely for what she has shared with me and the trading world, and I owe her more than I could ever repay, but with respect to her Taylor essay, she just does not get the music right, in my opinion.

EURUSD/6R as it looks with a the stop moved to -.51R: And, given the choppy, overlapping structure of the rally, and the fact that it gave what is usually called a 2B sell opportunity at the high, here is the EURUSD/6E trade as it looks with the stop moved to +.5R: Best Wishes, Thales

Never forget that feeling. Learn to recognize it when you feel it coming on. Best Wishes, Thales

Current view of the US Dollar Index - If my 6E long trades to target, then this swing tot he short side on the Buck should trigger (unless the Cable continues to get pounded). Best Wishes, Thales

Long 6E and this is what it looks like: Before the long entry triggered (see above quoted post) After the long entry has triggered: Best Wishes, Thales

Current view of the 6E/EURUSD ... Best Wishes, Thales

Why apologize, BT? I use fibs all the time myself, and I've said so repeatedly in this thread. You should use anything you feel you need to use get you to see what you need to see to get the result you want to get. Let me give you an example: I have been a little remiss about updating my daily charts here in this thread the last few days. But here is the daily chart of the Gold ETF, GLD, that I have used as a proxy for the GC/ZG, as of yesterday's close: I am long gold futures (a trade shown prior to the long entry trigger in this thread), and the two blue lines represent the zone into which I was expecting Gold to pullback. As of yesterday, Gold had pireced the top of that zone. Now here is the chart after today's close: As you can see, Gold continued its decline a bit deeper into that zone, and then rallied nicely, presumably resuming its uptrend. There is nothing magical about that support zone represented by those two lines. All I did was eyeball what I take to be a zone that represents a 1/3 to 2/3's retracement of the rally out of that low. I could just have easily have used a fib tool. Reading price, watching waves, is about nothing more than recognizing the proportion and balance and flow of price. Fib's are an excellent tool for doing so - not because the actual numbers matter so much, but because of the proportionality that the levels represent. So, BT, don't ever feel as though you have to apologize for anything you post here. If you decided that you were going to load your chart with 20 of your favorite oscillators, that would be fine with me (though I'd have to say something, of course). Best Wishes, Thales

+30 ticks which is just over +3R on this trade ... Would anyone believe that since last night I am up +10.33R? I guess it doesn't matter if anyone believes me, though the funny thing about those who doubt what they see in this thread from me and others is that I've not seen one of the critics try to post a trade, whether live or demo or paper or whatever here or elsewhere. The only talent the doubter's have is that of tearing other folks down. Best Wishes, Thales

Futures just opened and my stop is now +5 ticks. If stopped between now and Tokyo it would not be unheard of for a +5 tick stop to reuslt in a BE or negative exit due to lack of liquidity, though I'm showing a 1 tick spread on Globex right now, so slippage should not be too much of a problem unless someone over at the Fed sneezes. Best Wishes, Thales

Look at the 240 minute 6E below: Here is the 240 minute 6E - I wanted to sell a test of the pivot level (see red arrow) and marked by the horizontal line. Why? Well, I have made no secret that I use the Taylor Book method as part of my trading. I have made no secret that I subscribe to richbois's TTT service. Today was a Buy Day for the EURUSD. So, what do we expect on a Buy Day? We expect a decline. A decline, you say? But wouldn't we expect a rally on a Buy Day? Well, that depends upon where price is in relation to its most recent highs and lows of its most recent 3-day cycle. For the most part, on a Buy Day, you should expect a decline, i.e. weakness, into which Pros will be buying. Conversely, on a Short Sale day, we expect at least a rally testing the Buy Day or Sell Day high, and during strong cycles, we expect rallies, i.e. strength, into which pros sell. In general, then I expect lower prices on Buy days, and higher prices on Sell Short days. Again, in general. It all depends upon where price is in relation to its current trading cycle. All this to say the following: According to richbois's TTT Book for the EURUSD, price had a 100% chance of price making a low of 1.3450 today. Here is a screen shot captured directly from the report he emailed me last night: For what its worth, there was a bear flag off of yesterday's 123 short sequence on the 15 minute that broke to the downside last night at about 7 PM EST last night. My short entry was 1.3539, and my profit target was 1.3559 - with 100% odds of price trading to 1.3450, I felt it was a good target. TTT is part of that "rich context" I have been accused of using to plan my trades. I confess that it is. But I have always admitted as much. Anyway, back to this afternoon's short: Price on the 6E made a low at 1.3451 soon after the Frankfurt open (the spot did trade to 1.3450 as TTT called for). My experience has been that when the German and London traders get a chance to buy on the Buy day at or near the projected TTT low, then the NY traders usually do not let the trading cycle rally get its legs until they have a chance to Buy at or near that low, so price often looks for a recently broken pivot low to test as resistance (in this case 1.3531), and then dives for the TTT day low. Sometimes it overshoots (which is what I was playing for) and sometimes, like today, if comes up 10-20 pips short (15 pips, to be exact). Now, had price made it back to the TTT low, I'd have cashed my short out and I promise you I'd be sitting on a long right now. Price did not get back to the 1.3450 level, and so, as luck would have it, I am short from 1.3562 and looking for 30 ticks at 1.3232. I did the trade in the ninja demo account as well (I am trying to do my trades in the Ninjatrader account as well so I can show the chart with fills for those who apparently have made a career out of harassing me and others who participate in this thread). I would like to point out to the few idiots out there who do not know how to read and follow along that that this post is explaining in hindsight the short trade that was called in this thread this afternoon in real time. Best Wishes, Thales

+2R Best Wishes, Thales

My daughter wants to stay in and watch this trade play out, so our snow plans have been delayed. At any rate, the drop to a new low below 1.3577 makes for a new MFE of +3R on the trade, so I have lowered the stop on the entire position to +2R ... Best Wishes, Thales

It just occurred to me that I had not actually placed the profit target order in the demo acount that I've been showing, so I thought I'd better get a pic posted to prove that it is possible to enter orders a head of time... Best Wishes, Thales

I changed my mind and decided to go with a +1R stop on the whole position ... I'm going out to play in the snow with my kids right now, so for the time being, I am holding for either the +1R stop or my +5R profit target at 1.3440. Best Wishes, Thales

Stop dropped to 1.3541, and will go to break even on a print below before 1.3500 ... Best Wishes, Thales

Limit filled at 1.3530... Best Wishes, Thales

Here is something a little different on the current 6E - the "ABC" is meant in general terms and not as an EW forecast - I'm simply looking at tody's PA as a possible three swing correction against a downtrend. I have a sell limit at 1.3530, a stop loss a 1.3548, and my prospective profit target will be around 1.3440. This is shown on a Ninja demo just to show that orders could be placed prior to PA arriving at the short entry. I trust that everyone here at TL understands that when someone posts what he or she calls a "possible" or "potential" trade that all that means is that orders are placed, but orders have not been filled. There is nothing writ anywhere that requires the market to oblige anyone with a filled order, and if filled, nothing to require a trade be profitable. Current price of the 6E as I hit submit is 3505/3506 and the high print of the current rally is 3521. Sell limit is at 3530, though if there is a 3527 print that stalls, I reserve the right to enter short at market for wherever I can get in. Best Wishes, Thales

I left this morning soon after 10:30 EST to volunteer at my daughter's elementary school to help with an ongoing electronics project on which she and some of her classmates are working. At that time, the ES was bouncing a bit off that lower trend line. I fully anticipated that there would be but a bounce, but I also expected that a break would be forthcoming. I come home just now to find this the strangest market I have ever seen. I did not move my stop to BE, because I did think a bounce back to the high might occur before the break. Well, I was stopped for a full -1R loss after having been up 2.77R. Losses do not typically bother me - but this one is not typical. Best Wishes,

I just realized that the demo "fill" was actually 1100.50 - too bad my broker is not nearly so generous in real life. Best Wishes, Thales

Here is the Ninjademo look at the ES. In real life I am short from 1100, not 1100.25, and I have two PT's - 1089.00 as shown and 1079.75. Best Wishes, Thales

I'm not sure exactly what you are asking here, but if you are asking me what I would do if I were just ticked in short, and there was absolutely no follow through, I will often go flat with a market order, and set a new sell stop one tick below the probe that stopped me in. What you have labeled as "old levels" are what I would consider to be the boundaries of a chop zone. Those become entry points (though you should also look for nearby S/R, and as in this case, adjust your entry accordingly), and the stop loss will be the most recent swing pivot against whichever entry is triggered. Here is how it would look in Ninja with 2 lots, two PT's, and waiting to see if the order triggers to set the stop loss (as of the moment this pic was snapped, the stop loss would be entered above the red line. Best Wishes, Thales

Current look at the ES showing where I am trying to sell it (this is Ninjatrader and it is set to demo as I trade off the DOM - I set the order in chart trader for illustrative purposes only). My minimum target was 1099.50, which is right now the top tick, so I may have missed my chance to get filled (price is 98.50bid/98.75offer as I hit submit on this post). 1100.50 is the top of the target zone denoted by the blue rectangle. A break above the upper trend line and I begin to entertain other possibilities. Best Wishes, Thales

Here is how it looks on the 60 minute chart with targets ... Best Wishes, Thales

Current look at the EURUSD (showing the 6E)... Best Wishes, Thales

For all the effort we all who wish to trade put into coming up with methods and systems, performing back tests and forward tests, etc. and so, trying to get our entry "timed perfectly," so to speak, I have nnetheless seen more than one study that suggested that with proper money management (position sizing, trailing stops, etc.) a random entry method would produce a positive expectancy. However, because we sek to control as much as we can, we will persist in our search for the "perfect set-up," which, of course, does not exist. But seek for it we shall. Best Wishes, Thales