thalestrader

This would have been a breakeven for us as well. What you might find yourself having to do, Cory, is setting your "break even" stop loss at a point that is entry +/- the rounded up spread, e.g. a 1.4395 short entry with a 1.7 tick spread perhaps you would want to use 1.4397 as your BE stop. Otherwise, you will have to live with getting stopped at BE when price never shows a trade anywhere at that price except for in your own account. Of course, once price comes back and threatens our stop and then goes in our favor again, we would move to a true breakeven or better, depending upon where the adverse reaction ended. That is why we have a large number of trades that fall between +2 ticks and -2 ticks in the micro account, while my futures account is usually many +1-0 trades. That bucket shop spread, no matter how thin, is what makes futures much cleaner to trade and manage with swing point +/- one tick stops. Best Wishes, Thales

It seems as though the thread title still autoformats the first letter Cap, with all others lower case. Did I miss the follow up where it says this cannot be changed? Or is it possible to have a thread(post) title with all caps. e.g. "RIMM Research in Motion," instead of "Rimm research in motion"? Thank you, Thales

You can see how price is trading between the resistance level you note at the highs, and the break down point for the short entry, which near term as been acting as S/R. Best Wishes, Thales

I think a case could be made for this (paper)trade. I would caution against putting too much stock in TL breaks of the type you have drawn. If you were to start tracking such things, I think you will find that breaks of prior swing points preceded by the proper sequence (H-L-LH) will be more reliable. In the absence of the proper sequence, a TL break is nothing more than a warning shot of a potential for trend change, but is itself not a change of trend. Often, the sequence completes after the trend line break with a test of the trendline as S/R followed by a Lower Low or a Higher High. Best Wishes, Thales

I'd only add that 132.35-132.85 was the breakdown zone off of the last important high, and therefore, as Cory noted, I wouldn't be "surprised" should price find resistance enough there to cause a tradable decline against this rally. Would I be surprised if price blew through those levels and challenged the 134.50 level? No. In this age of endless rallies, shallow pullbacks, etc., nothing surprises me. I also would not be surprised to see the currencies trade in a very, very narrow range between now and sometime next week. For example, it would not surprise me if the EURJPY makes no further headway toward the 132.50 level while managing to hold above recent near term support levels. This is not a week to put much faith in your technical trading. Technical analysis requires liquid markets, and this is not a week known for great participation. In other words, do not be surprised if breakouts fizzle, continuation patterns reverse, etc. This is a good week to take off. If you are like me and you just can't pull yourself away completely, then at least hide the keys to your trading platform. If you have a paper trading or demo account, this would be an excellent time to play in it. Best Wishes, Thales

Well, I'll see if anyone wants to take a crack at it overnight and I'll answer in the orning. Here is how it loks to me. Again, this is all "thought experiments" at this point and these charts do not represent actual trades/orders on our part. Best Wishes, Thales

I'm gnawing my fingers off watching the Eagles try to cough up this game to the Broncos. Why don't you take a crack at it, and then I'll give yo my answer a little later. Best Wishes, Thales EDIT: Eagles won ... take a look at the chart now that I have taken some of the lines off.

Hi Folks, We'll not be trading 'til after the New Year, but someone is out there trading. Here is the current EURJPY. If I were a betting man, and I were inclined to bet, I'd be looking for the EJ to continue toward 132.50 and possibly higher. But for now, I'm content to watch football and plan for next year. The more I look at this, the more it looks to me as though EURJPY should breakout to that 132.50 level, at which point I would not be surprised to see price retrace 1/3-2/3 of last week's rally. That is just the way it looks to me, and I have been wrong a bunch of times, and I am not trying to predict, nor even anticipate that any of this will happen. I'm just looking at it and writing out what I see at the moment. Best Wishes, Thales

He didn't, but one of his traders did. Here you go. Best Wishes, Thales turtlerules.pdf

You might the attached article to be of some interest when considering this subject. I wouldn't let myself get caught up in calculations of % returns, roi, etc. I posted abut this subject elsewhere at TL in the past: Best Wishes, Thales Trading for Infinite Yield.pdf

By "trivial," I presume you mean "easy." None of this is easy, though it is all simple. There is a tendency (bias) towards thinking that trading should be easy. It is not. We all know the old saying that if making money was this easy, everybody would be doing it. That is likely true. Witness the near mania of the internet bubble, when even my grandmother (My grandmother!) was day trading Yahoo and Qualcom! Jeesh! I'm not kidding. She was 74 years old and dieing of pancreatic cancer and managed to make more money the last three months of her life than she and my grandfather had made during any single decade of their working lives combined! I was with CIBC Oppenheimer at the time, and I have to laugh out loud when I recall my grandmother telling me how smart she thought I was to have picked such an "easy" way to make money for a living! Now, let me ask you this, Gabe: How long did you study and what was your preparation prior to being hired to design electronic circuits? I'm sure it involved a non-trivial level of study. Let me then ask you this: What was your risk in any given design task? Really? Perhaps you could really screw things up and get fired. But another job would likely have been waiting in the wings for you. But what was your real conscious risk? Was there any? Not likely. You have settled on learning to do something that is not easy and carries with it a very real, very palpable financial risk every day. So you are finding this difficult. Join the club, my friend. Why should what others have chased for years, often never achieving before failure set in, come easily to you? Keep working, keep studying, keep practicing, and eventually, you will get it or you will give up. I should have given up long before I finally got it. But I didn't. I risked everything I had before finding my way. Stupid? Yes. Reckless? Yes. Worth it? By the grace of God, and only by His grace, yes. I'f you want to make it as a trader, be the frog ... Best Wishes, Thales

1) The tendency to not enter a trade even when a defined opportunity presents itself out of fear of loss, lack of confidence, etc., 2) The tendency to double up position size or increase leverage after losses to "get it all back" or "get back to even," 3) The tendency not to wait for defined trade opportunities after a series of losses in a hurried attempt to get back to even, 4) The tendency to move or remove one's stop loss in order to avoid taking the loss, 5) The tendency to cut a profitable trade short out of fear that the open trade profit will be lost, 6) The tendency to add to a losing position (average down a long or average up a short) hoping that price will move favorably enough to let you out at even, 7) The tendency to allow a bearish opinion to lead one to skip technically sound and strong long trade opportunities or vice versa, 8) The tendency to believe that after a string of losing short trades, the nest trade must be w iner, or vice versa and its related tendency to believe "my luck has gotta turn soon" (it doesn't have to do any such thing) ... Does that help at all, Gabe? Best Wishes, Thales

Hi Cory, She was trading "Super Crazy Rodeo Clown" leverage in the beginning. She started with $25, so even on a microlot trade with an initial risk of 50 ticks she was risking 20%. As the account has grown, her % risk has steadily decreased. She now risks a maximum 2% per trade. Our little account now has almost 1000 times the capital she had in the beginning, so 2% means our bet size is up to $400/trade. So we have a larger bet size than she had in the beginning, but much smaller risk as a percent of trading capital. I think for a small daytrading account 1-2% is a good risk parameter, though .5% is probably ideal. As I said in the post you quoted, the smaller the account, the larger your average risk/trade will be, especially if you are trading futures at $6.25 - $12.50/ tick on a single contract. Best Wishes, Thales

How does it work if we insert the stock symbol into the "Title" of each post? This way, scrolling through, we can easily identify related posts. If the post is of a general nature, then we can leave the thread title in the title line. Just a suggestion - its your thread, of course. I'm just trying to help. Best Wishes, Thales

No problem! I hope you find it helpful. Best Wishes, Thales

My own opinion is close to yours. I have often said here that I find sim trading to be of marginal usefulness. I believe it is useful to practice identifying your selected trade opportunities, practicing entering orders, setting stops and targets, and other mechanical aspects of trading. But once one is comfortable that he or she is identifying the opportunities, and is comfortable in his or her ability to enter the orders, etc. there is no substitute for live trading with money on the line. I myself have never once revenge traded while on a sim account. Ever. Yet I fight the urge to do it every time I have a few losses on my trading account. I know I shouldn't do it, so I wrote a mechanism into my trading plan that "pulls the rip cord" on me during the trading day so that I land safely to fly tomorrow. Thank you for your contributions to this discussion here. I hope you continue to share with us. Best Wishes, Thales

First, you have to be aware that you have the biases, which is itself most difficult. That was the point of my submitting Plato's Cave for one of the weekend readings. Most of us live much or all of our lives viewing a world of shadows that we are convinced is real. The first step is to recognize that the shadows you have taken for what is real and true are in fact mere images of what is real, and often times false images of what is real. Best Wishes, Thales

I think there are a small number of large difficulties that exist for human creatures who wish to trade well, and different individuals will be effected by these to different degrees. For example, some folks are paralyzed to the point of not being able to pull the trigger when they see an opportunity or one of their "defined set ups." Others have trouble taking a loss. Others may find themselves quick to exit with a few ticks profit the momentthe market looks as though it is going to have a small reaction against their position. My own personal demon is revenge trading. I have on more than one occasion in my trading life burned through thousands (and I mean thousands) of dollars in just a few hours trying to "get back to even for the day." I still fight it, so I quit after two losses. Other folks pretend they want to be technical traders, but they allow "fundamental" biases to prevent them from trading as the charts tell them they should be trading. ET and FF are full of posts that read like this: "I see the market going up every day, and my indicators are bulish, and price is making new momentum highs, but I think this thing is over bought, so I am not taking this buy signal, in fact, I'm going short." You must have an entry point and an initial stop loss and at least some idea of an anticipated minimum profit level before you place the trade. If you do not have that, you have nothing. If you do have that, then position sizing as a % of account equity becomes relatively simple. For example, if you are trading a 100k account, and your risk is 1% of equity/trade, and you are trading the ES, and a particular opportunity has a 3 point stop loss, then on that trade you can trade 6 contracts. If the next trade has a 5 point stop loss, then you need to cut your position down to 4 contracts (three if you account for commish and possible slippage). Traders with smaller accounts will obviously have a higher % risk/trade in order to participate. You have to work out how you define your trade opportunities. While the initial risk may be different on each trade, the manner in which it is determined should not vary. For example, my entry for a long trade is a tick or two beyond the last swing HH, and my stop loss is a tick or two below the HL. My stop loss goes to BE once price trades at a point greater than 127% of the first swing L to H or a 1R profit level, whichever is hit first, and my initial profit target is at the first S/R zone that coincides with a significant fib level or cluster of fib levels. This way, I can always say for any given trade "my first profit target is equal to 2.1 or 3.8 or 1.2 times my initial risk." Once you have that level of clarity in your trading plan, then you can concentrate on trade management, stop management, rip cord pulling, etc. Best Wishes, Thales

Some folks are struggling simply because of lack of experience. Like any skill, practice will improve one's abilities. Money management torpedos a lot of traders, but I do not know whether the difficulties experienced by folks here is due to money management. In the end, I would think that most problems folks find with this approach is similar to what keeps most folks struggling regardless of the system/method/approach - there is bias, probably emotional, possibly intellectual, frequently both, that is standing between the trader and successful execution of a trading plan. I have tried throughout this thread and through many of the Weekend Readings to keep the psychological/emotional issue in plain view. This approach is really based upon the very basic structure of how price moves in a freely traded, liquid, auction market. The fact that it is simple and basic does not make the fear and greed and hope with which we human creatures contend any less difficult and dangerous. Best Wishes, Thales

Hi Chris, I don't want you to think I'm trying to change our mind at all, I just wanted to post a thought of my own. I'm sure you've read the Richard Dennis interview where he stated he thought he could probably publish his trading system in the Wall Street Journal, and it would have no adverse effect on the system. I agree with him. I think you could outline your best trade right here with all rules, guidelines, parameters, etc., and not one of us (and I include myself in that) would be able to trade your method as well as you yourself do. at least not initially. Most would likely find they'd trade it to an overall net loss. Why? Because the method is really a small part of trading success. The largest part is, as we all know, is the emotional control necessary to succeed at this. You have it. No matter what you post, you can't give it away, and you cannot lose it. Thank you for sharing all that you do, I continue to enjoy your posts. Best Wishes, Thales

Whether you win or lose, and how much you win or lose is a function of your exits. Most will admit that two traders trading the same system/method/approach may have two vastly different profit factors. In most cases, the entries are easy, and both traders are taking the same trades. The difference comes in the differing abilities of each trader to do what is easy to say, but difficult to practice - cut your losers short abd let your winners run. I use S/R to exit. But I have long known that taking my entries as I do, if I were instead to use a trailing volatility/ATR type exit, my profits would be larger but my win rate would be lower. I am willing to sacrifice higher profits for the comfort of a better winning percentage. But it is a sacrifice. In the end, it is the exit, not the entry, that provides the larger balance to your trade results. Best Wishes, Thales

Hi daedalus, I've used range charts myself, and with Ninjatrader I have experienced none of the issues you seem to have with your data (you can see some examples in the "Reading Charts" thread, especially from June. I do know that not only do I need to adjust the range to the instrument, I often will need to adjust the range for the same instrument over time as volatility changes. For example, over the last two years, I have used ranges from 10 ticks on the small end to 40 ticks at the high end for trading the 6E and the 6B. I don't know if that helps, but if not, it at least should do no harm. Best Wishes, Thales

There are a bunch of used copies available at Amazon for less than $40. I've been going over the first few chapters, and I have decided to pick up a used hard copy for my daughter (and I just might borrow it from time to time myself). Reading through this book tonight, I can say that had I attempted to learn to trade price action based upon what he teaches in these pages, I'd have cut years of struggles away from my trading. I'd have saved thousands upon thousands of dollars buying software, books, seminars, etc. This is as solid a piece of trading instruction as I have seen. I've attached some screen captures of a few gems from this book that ought to be familiar to anyone who has been following this thread. As I have always said, I am a very unoriginal trader. I am so unoriginal, that I apparently found a book very early in my trading career that had almost all of the answers I was looking for, but at the time I failed to see them. How is that unoriginal? Well, that seems to be the way most traders progress, is it not? I can sit here and bang out post after post and trade after trade and chart after chart, but many will read a few posts and scroll on by, continuing the search for the elusive grail, which each will readily admit does not exist, yet most continue to seek for anyway. Eventually, most will cease to seek when they cease to trade. Those who survive to trade, will likely have finally seen these simple truths with their own eyes; and though they will have been shown these truths countless times before, on that day that they finally see, it will be as though for the first time. Merry Christmas to you and yours and everyone! Best Wishes, Thales

Weekend Reading Hi Folks, Another thread about favorite trading sayings led me to recall this "little" book by John Hill of Futures Truth with the modest title of The Ultimate Trading Guide. In the course of skimming through it looking for the two quotes I had in mind, I saw that this little book that I read so long ago seems to have had a far more profound impact on me than I had been aware. Some of these charts and concepts will look very familiar to readers of this thread. While it did influence me, it did not do so immediately. I remember reading this book a long time ago, perhaps a decade, maybe more (I'm not sure when this book was first published, and I am not at all certain that this .pdf file is the same edition I read as I had a hard copy, long since lost). At any rate, I had the feeling as I quickly flipped through this book that it had been a missed opportunity on my part. Simple truths clearly presented, but laid aside by me in favor of a more complex (but less true) path. I feel almost as though I ended up right here in the pages of this book, but that I had to do so on my own, after taking the road more travelled, which is both long and winding. The better part of this book, as in the absolute best part, ends on page 138 of the actual text (page 148 of the .pdf). If I could just post from the preface though the end of the first 6 chapters and elave out the rest, I would. Well, I can't. So here is the whole book, though my suggestion, at least for those looking to trade the approach I have been presenting here in this thread, would be to stop reading at the end of chapter 6. You can download from this link at acrobat.com: https://acrobat.com/#d=zie2bGWiEJ9SN55KRnFR6g Best Wishes, Thales

AIXG paper trade as of end of week, long at 34.13 (theoretical) stop loss 32.46 Best Wishes, Thales