thalestrader

Well, in that case, I am having one helluva lucky run. Best Wishes, Thales

Great advice, Kiwi! I do this every day. I have found it especially valuable when I start to see and hear a lot of folks talking bullish and I am bullish too, or conversely everyone is talking bearish and I'm bearish as well. We are all probably wrong. I think it was Bruce Kovner who said that his success in large measure is due to his ability to imagine configurations of the world vastly different than the current one. This is sort of like that, but on a very, very very .... very small scale.

Hi Folks, Current look at the EURUSD. Best Wishes, Thales

I agree. Before participating here in the thread, Rustie had sent me several PM's, all of which show that he has both the confidence that he can do this but also the requisite self-acknowledged humility only the market can hand us. I hope you continue to share with us Rustie. Even if you do not choose to trade the approach I have presented here, it likely will still prove helpful to you to put into words and communicate to others what your are thinking and how you are making your trading decisions. I know I have been helped immeasurably by the exercise of putting into words a (hopefully) clear account of how I read price action as I make my way through this thread. And at least here, the only cost is your time and your trading losses (which youwould have anyway), rather than wasting more money paying for a mentor. Best Wishes, Thales

The way I trade, I would already have been long on the initial break when price retraced back to my entry, which you label point A. If I had missed the break out, I would perhaps consider buying there with a limit order. But, if I were already long, I'm not going to "double up" at break even. Now, I do not have my charts open yet to show, but at point A on the 60 minute chart, if you were to change that to a 15 minute view, you will see, I beleieve, a 123 in the direction of the rally. Not as low an entry as buying at the previous BO loevel, but a more certain trade in that you should have a chance either to get out with a profit or at break even if price does not continue the rally. Buying right at a prior pullback level does not guarantee that you are indeed buying a pullback rather than getting suckered into buying into a new bear trend. In the ned, Gabe, you can chose to trade anyway you wish. The way I do it works for me, and it may or may not work for you. As far as which is better, I prefer breakouts, whereas Wyckoff would think me foolish for trading them. Best Wishes, Thales

Continuing to track the EJ ... Best Wishes, Thales

Hi Gabe, I can see why you might have wanted to short there. I would say that it could be done but with a very aggressive stop management, e.g. at + 5 ticks go to break even. The reason is two fold: 1) Between the NY close and the Tokyo open, price action is typically uneventful, and of very little value. This is generaly true, though it is not without exception. In this case, price drifted sideways to lower, and thus, it would have been better to wait for volatility and better defined swings to return, and await a more clear indication of where price was going to head; and 2) Price had basically broken out above its prior range (base) and then immediately formed another base right on top of the prior base. So, a short where you suggested, while anything is possible, was facing tough sledding as the "break" you sold was really a test of the top of the prior range. In other words, the comments I made to Cory would apply here as well. You can see in this look at the EJ that price is stair stepping high forming a succession of higher bases on bases (William O'Neil's term) or a series of Darvas Boxes. At some point, price will produce a tradable retracement of the rally, but it is best to wait for an initial impulse down that cracks a base, then a reaction high, followed by an impulsive break to a lower low. Ideally, for a short, price will break to a new high and extend for a bit before basing again. That way, once a base for distribution forms, there will be room for price to run after a short entry and prior to reaching first support. Right now, these bases are forming a thick zone of support. A decline of any consequece will likely need to break through at least two of these levels to gain traction. Best Wishes, Thales

Hi Cory, This is a good example of impulsive price action (the rally) versus corrective price action (where you se a potential 123). A short as you suggest may, if triggered, decline for nice profits. However, I would consider this to be a low probability short. I would add that I have been wrong many, many times. However, until I see a decline that moves in an impulsive manner, I am only interested in rising prices. Here is my chart showing how I think this may play out over the coming hours. Though this is a 60 minute chart, I would be looking for a short indication at the upper resistance zone using the 15 minute for trade entry, should price follow this path. Best Wishes, Thales

Hi Folks, Price did decline to the noted support zone, and has rallied to session highs. Best Wishes, Thales

I mean that in a far more positive way than that original post sounds. The point is this: When you are losing money by trading poorly, the first thing to do is stop the bleeding. You should have some sort of safety switch that shuts you down at some point, if for no other purpose than to prevent revenge trading and other self destrucitve tendencies. Best Wishes, Thales

So how bad does it have to get before you stop trading and try to figure out what you are doing wrong? Best Wishes, Thales

Hi Folks, I'll not be trading again until 2010, but I still like to watch my charts. Here is the current hourly look of the eurjpy. A little short, probably best managed on the 15 minute, should take price down into the lower support zone represented by the large blue rectangle. Should price indeed find support there, a decent target for a continuation of the rally would be the small rectangle in the vicinity of the 12/11/2009 high. Please note, this is neither prediction nor anticipation. I am simply having fun. Best Wishes, Thales

Well, I really didn't bring up indicators. I simply showed some charts that showed some of my trades that were several years in the past. The main point of those charts was not the indicators, but that the approach itself, trading the 123's, has endured through bull and bear, through extremes of both low volatility and high volatility. Best Wishes, Thales

Hi Dinero, I'm still not looking to initiate any new longs at this time, but I still like this action on SRLS. Buy stop is 3.84, as noted a week ago. Buy stop has not yet triggered, but another pullback to 3.50 occurred. Best Wishes, Thales

Absolutley. Best Wishes, Thales

Forrest, This always seemed a bit "gimmicky" to me, and it is probably the best indication that while Joe Ross may be able to teach folks how to trade, he himself likely does not trade. When I day trade stocks, I am almost always all in/all out, and I use a trailing stop, not profit targets. I typically trade the ES the same way, though I will at times try to apply a scale out PT's to an ES trade (and almost always seem to regret it after the fact). I am much more comfortable adding to a position as price moves in my favor, and keeping a trailing stop on the whole position. For currency futures, I usually am all in on entry with usually 2 profit targets based on S/R and fibs. I trade them this way because in my experience, it works best for me. I think trading an extra contract to cover your commission is, frankly, stupid. I just do not see what benefit it has. Maybe back in the days of $50/round turn commissions one could have made a case for it. But why take on the added risk to cover what is essentially less than 1/2 of a tick? I know you already seem to intuitively grasp this, but I just thought I'd share my opinion with you, as it may confirm what you already suspect - this is more a gimmick to impress the gullible rather than a sound money management approach. Others may disagree, but I it seems to me you are risking dollars in the hopes of covering dimes. Also, why trade for 2-4-6 ticks? My goodness, if you trade this approach on the currency futures, you should rarely have a trade that initially moves less than 10 ticks from your entry before a stall and reverse. Why take 2 ticks without first trying for the 10? 2 ticks for me is a break even trade. Best Wishes, Thales

Hi Marko, Your points concerning the lagging character of indicators is well taken. I would hope new traders who find themselves here would likewise take heed of your warning. However, I would like to add a couple of cautions for folks like you and I who do feel strongly that indicators take more than they give in terms of benefits and harms to the trader's ability to read price action. I'm not sure to which post you are referring when you say the search for indicators has arrived. I know Kiwi is doing some work with this method and he is applying various indicators as a mean for writing computer programs to autotrade. I'm not sure how one would write such a program without attempting to reducing price action to set of mathematical formulations that the computer can understand. I know a few other of our friends here, for example, daedalus, has shown how they have found an indicator or two to be helpful to their decision making. I myself have shown charts from as recently as two or three years ago where I still was using a CCI along with this approach. I think the process of which you speak whereby one trains his or her brain to apply this approach is correct. But, most who happen by this thread are not starting with a blank slate, and we should expect that for some, the process may be made somewhat more comfortable if each is allowed to wean him or herself from these supports at their own pace. I, like you, do think the process would be easier and quicker if one were to go "cold turkey" and lose the indicators from the get go. And certainly, if one is a new trader, and is therefore a "blank slate" without a whole library of "favorite indicators" in tow, I would hope one would keep it simple and clean as TradeRunner, zeibarf, Cory, Forrest, Gabe and MK have done. Remember Plato's cave - the transition from the shadow world of the cave to the bright light of the sun is a painful one, and one that can cause a paralyzing fear and anxiety. Thus, exercise care and patience with those in the process of becoming free as they endeavor to be free. We wouldn't want to discourage someone from trying at all because he or she did not yet have the confidence to go it without an indicator or two. Best Wishes, Thales

Sure. "Always make more money than your wife can spend!" Best Wishes, Thales

Weekend Reading Hi Folks, After the lengthy Joe Ross pieces I heaved at you during the last week, I thought a few shorter pieces would be in order. The first is an article by Chris Terry, a Linda Raschke protégé, call "The Trading Game." This is a piece that focuses on the importance of determining a trading plan that fits your personality. Many who try and fail at this game do so no doubt because they are trying to day trade with a position trader's personality, or day trading with a scalper's personality. At any rate, I find this an interesting article, and worth sharing with you. I have also attached a short article by Linda Raschke called "Tape Reading." Of all the seminars, courses, lectures, etc I have attended or otherwise seen and heard over the years, Linda Rashcke's is one of two that really stand out as having had a lasting and meaningful impact on my trading (the other beng a lecture by George Lane). I hope you enjoy these. Have a good weekend. Best Wishes, Thales Trading Game - Chris Terry.pdf Tape Reading.doc

For anyone confused by Cory's post, this is a continuation of a question I asked him in response to a PM he sent me. I mentioned a trade my friend made today, and I asked Cory to see if he could figure out where he might have entered, and to post the chart here in the thread. Cory, you are correct. His trade was on that downswing, and the reason you can't figure out his PT is because you are looking for what you know I to use for PT's. My friend uses something that to me is quite artificial, and yet it works for him surprisingly often. As I said, he sold it on the down move with a sell stop at 1.4339. He, like myself and daedalus, owns a fib/EW software called MTPredictor. It had a function called a "DP" level, which is essentially a 1.10-1.27 fib off a prior swing reverse engineered yada yada yada. It worked for him, what can I say? Best Wishes, Thales

Ok Best Wishes, Thales

edit delete Sorry Brownie Best Wishes, Thales

Quiet whispers ... shhhhhhhhhh. Quadruple Witching - everything expires tomorrow, futures, futures options, stock options, stock futures. Best Wishes, Thales

Well, I never said it was completely and utterly useless. It does as its place. But, once you have the mechanics of when you're going to be in the market and how you are going to get out in place, there is no substitute for trading with the very real prospect of gain and loss, no matter how small one is trading. That is why I like the micro forex accounts (who knew I'd find it as useful as it is). Such accounts let the new trader (or even a not so new trader who simply wants to try some ideas out) an opportunity to do so in a real market with real money under the most adverse conditions imaginable, i.e. bucket shop broker. Best Wishes, Thales Thales

Hi Gabe, It is up to you, of course, but when you quot someone with embedded charts, or any lengthy post for that matter, you can delete the images or some of the text from the quote to save screen real estate and forum pages. Best Wishes, Thales Here's an example using the post you quoted from Brownie: