thalestrader

You must first explain where you are seeing a contradiction. Best Wishes, Thales

I made a post a week or so ago about one particular bar that Kiwi referred to as a pin bar. In that post (I'm sure you can find it) I mentioned that if the low of that bar occurred first, followed by a rally t0 the high of that bar, followed by a pullback into the bar's close, I would perhaps have bought a break of that bar's high. I mention that here because in real time, whether I am watching a tick chart or a daily chart, I can see what price is doing. And so can you. However, when discussing dead charts, i.e. discussing price action that occurred in the past, most bar charts give you only a OHLC, and while you know by definition that the open happened first and the close happened last, and you know the range of price during the period of that bar, you do not know anything as to how the market really behaved during that period of time. Since I was discussing a dead chart with MidK, I referred him to the one minute chart of the EJ so that he could, in effect, "reconstruct" the path price was etching out at the time. I know that DbPhoenix has made this point in his threads, and I have reiterated it myself a number of times: Price arriving at an anticipated support level is not in and of itself a buy signal. What matters is what price does when it gets there, how the market behaves. If you go back to last Sunday's open on the EJ, you will see that price pushed down to test the prior day's low, and then rallied, pulled back but held above the session low, and then continued to rally to a new high. This is not the case of "forcing a trade" or looking for "any reason to get long." This is watching price for indications of whether it will hold a support level or break below it. MidK asked in one of his posts why I was not concerned about the "overhead resistance." Well, so long as there is enough daylight between my entry point and that resistance level to allow me to exit either with a profit or at least with a break even stop, and the amount of daylight is equal to our greater than my initial stop loss, then there is enough daylight to cause me to trade so long as that is what price indicates I should do. MidK further commented that if I were concerned about that resistance, I should have been looking for any reason to get short. I never look for any reason to get short or long. I just wait for price to indicate whither it will go. If price rallies strongly into resistance and then trades sideways, I am not thinking short. If price rallies strongly into resistance and then sharply reverses down, I will then start to look for an indication to get short, i.e. a rally that fails to carry higher followed by a resumption of the decline from the high printed at resistance. The point of all this is that time frame doesn't matter. What matters is what price is doing. Price is not invisible, but we seem to make it so. We cut it up into "bars," and we reduce it through mathematical equations and we overlay and occlude it with lines representing not itself but the products, sums, differences, and quotients of our attempted reductions. All you need to do is watch, and by watching you will learn to see price for itself, rather than for what you currently think it is. I have suggested many times now that anyone who wants to learn to trade ought to pick one market, and for one week, maybe two weeks, certainly no more than three weeks, do nothing but watch price action unfold tick by tick on a fifteen minute chart, marking off highs and lows (or what you believe to be highs or lows at the time). Do not trade, just watch. If you do not do this, and you are struggling to understand what I am doing, I can do no more to help you. At some point, you have to help yourself. Do for one week what nearly no one, apparently, is willing to do, and then, if trading is indeed for you, you will find yourself able to live the rest of your life as nearly no one else is able to do. 1) Well, there are certain times during which I will not trade. My approach is technical, and we all know that technical analysis only works in freely traded, liquid markets. As such, I do not trust price's indications during times of relative illiquidity as I do when many more participants are trading, looking to make their daily book. Thus I avoid trading currency futures during the time between the NY close and the Tokyo open. For stocks, I like to initiate most of positions within the first 20 minutes of the open, and while I do occasionally open a trade between 11 AM est and 1 PM est, I generally avoid doing so. Is that filtering trades, or just trading smart? 2) I do distinguish between price moving impulsively, making a clear and clean succession of higher highs/higher lows or lower lows/lower highs, versus price chopping around, with a lot overlapping activity. I prefer to trade in the direction of the impulsive moves and I avoid entering during sideways, choppy, overlapping periods. Is that filtering trades, or just trading smart? 3) I watch price moves through its levels without regard for the bar or candle being printed on my chart. What matters to me is where price is relative to its most recent high and low, and whether it is breaking to new highs, even within a bar, or breaking to new lows, even within a bar. Is that filtering trades, or just trading smart? 4) I do try to enter after the first reaction off of the initial turn from an anticipated support or resistance level, rather than initiating a completely new position after price has already moved 50 or 100 or 150 ticks through a succession of important levels. Is that filtering trades, or just trading smart? 5) I trade based upon what I see on my price chart and not upon what my personal opinion concerning the state of the economy, the "value of the market," or what I expect China might do tomorrow. Is that filtering my trades, or just trading smart? All of which, each and every point point, I have stated and demonstrated here in this thread (by the way, Gabe, I was only discussing the GJ because that is the market MidK traded, and I was not suggesting that I watch the EJ and GJ and compare them to make trade decisions - I do not). Finally, MidK has said that the L-H-HL/H-L-LH sequence trigger is, on its own, of not much value. I may be mistaken, but it seems as though he bases that assessment upon a scattering of trades across a number of markets. When I first posted that chart that showed the H-L's and everyone had this "Ahaa" moment, I said that if you simply pick one market and trade every single one of these sequences, using an fixed 15-20 tick stop and a 20-30 tick profit target (I cannot remember exactly the random numbers I used but you get the idea) that you would, over time, be net profitable. The takeaway, of course, which despite my repeated pleadings has been largely ignored, was to focus on one market. Again, I may be mistaken, but MidK seems to have applied himself to trading a sequence or two here and there on multiple pairs. Learn it on one market, and the ability to apply it to multiple markets will follow. Try to learn it on multiple markets, you will likely fail ever to be successful at aplplying it at all. I never said that there would not be losing trades, break even trades, and merely marginally profitable trades, but such an application as Midk's raises the odds of finding a disproportionate number of unfavorable trades. That is, if you take one AU trade, rather than every opportunity the AU presents, will yield a random outcome. I do not want to appear as though I am picking on Midk, and I very much appreciate his sharing his experiences here openly and honestly. Of the seven losing trades he posted, three occurred on the same market (GU) in the same direction (short) while price was making a 150+ pip decline. I've been there. I know exactly how that feels. I have done it more times than I can count. Let me tell you what I learned - if you are repeatedly shorting a falling market and you are still losing money, you are doing something wrong and you need to stop yourself. Finally, the ability to understand the mechanics of reading price action are a necessary but not a sufficient condition of trading success. The ability to do so will mean little without the emotional discipline required to deploy that skill and make a profit. Furthermore, the ability itself will likely remain elusive without the discipline required to sit on your hands and watch and study price action sufficiently. It doesn't take long to learn, but it does take patience and the ability to watch and observe without trading. Here is an excerpt from a post I made not long ago on how I approached the task of teaching my daughter to trade: The only way for you to come to know price itself from all that you think you know about price is to stop trading and start watching price in a very concentrated and focused manner with the purposeful intent of learning to understand how price behaves, rather than the purpose and distraction of earning an immediate profit. She was very eager and quite willing to to do what I suggested, to read what I suggested, and to sit and watch, and watch, and watch. Furthermore, though I introduced her to the GU and EU initially (as these are the markets I trade, i.e. 6B & 6E), she very quickly established and affinity for the EJ, and a look back at the trades she took that I posted will show that she must have spent a large percentage of her time focused on that one market. But she is only nine years old, and unlike we "older and wiser folks," she did not already come to this "knowing so much that isn't so." This brings me finally to this week's edition of Weekend Reading, which I will post shortly. Best Wishes, Thales

I thought MidK's chart was from Interactive brokers, maybe he uses IBfx. At any rate, his data appears to show a low tick that stopped him into a trade that would not have triggered at at least thre other brokers. Best Wishes, Thales

The above refer to your GJ short. Of course I took note of the potential resistance, but that is what a break even stop is for - to protect a profit from turning to a loss due to a sudden reversal. But consider my profit targets. What are they but potential resistance in the path of a further rally. So while you suggest that I should have been looking for "any reson to get short," I'd respond by saying that price has indicated in wants to go higher. I will watch price for indictations to the contrary and act acordingly. As far as reasons to get long (of which you say I had little reason to get long, I'd say that I had very sound reasons to get long. The EJ, which is the pair my daughter and I traded, tested support from the prior day and started etching out a series of higher highs and higher lows. The GJ gapped open below the prior days low and quickly reversed higher, a situation some would refer to as an "Oops" trade as named by Larry Williams years ago. Now, the first entry, which I posted in real time on the EJ, you say you do not see. I would suggest you put up a one minute chart, and see if you see it then. You say that the second long entry isn't obvious. I would suggest that if you think that that long is not obvious but that your short entry was obvious, then I do believe you would benefit from taking a week, stop your trading of this approach, pick one market, and follow a fifteen minute chart tick by tick. Best Wishes, Thales

Hi MidK, Interesting note on your short Aussie trade - my data does not show the slightly lower low that IB shows. So, this is one case where your broker's data triggered a trade that would not have been triggered at another broker. Even so, I see what you are doing, and I'd even agree with the entry (though I would not have traded it), had it occurred sooner. But price really fell into a little chop zone. In other words, I see what you think you were seeing, but what you think you were seeing wan't in fact what you were seeing. That sentence just gave me a migraine putting it together, so I'll leave it up to you to try to puzzle that out. Best Wishes, Thales

Hi MidK, This is your USDCAD trade. This approach works fine on the USDCAD/6C, but as a rule,I typically use the 15 minute sequences to enter if I taking a posiiton off of a big picture S/R level. I like to identify these on the 240 minute chart, and then use the 15 minute to fine tune my entry/minimize risk. I have a few USDCAD trades posted throughout the thread. If you search for them I think you will see what I mean. I can't say this was anything obviously wrong here. This was just a loss. They will happen. Best Wishes, Thales

Hi MidK, See the notes on the chart. Best Wishes, Thales

Hi MidK, You can see my notes. This trade was a short entry you made on the GU on the same night as the other short I have already discussed. Other than you entry being rather late in the decline, it was not unreeasonable, and I think you did a good job of cutting your loss. Best Wishes, Thales

Hi MidK, Here is your last EURUSD trade. I didn't like this when I first saw your post, and I still do not like it. One thought I'd add here, in addition to my chart notes, is that if you are going to place a trade based upon a longer swing in terms of time, it must also be sharper and longer in terms of extent. Best Wishes, Thales

Hi MidK, I'm just now getting around to looking at your traders. The first one I am looking at is the GU short you made were you exited with a -6.5 pip loss. I have included a chart I posted a few hours prior to your trade, as well as a copy of your chart and a chart of mine with some additional notes. One point I make on the chart was made here by Kiwi recently: Round numbers have a certain "magnetism" in general, and not just in currency trading. The relevance of Kiwi's post here is that he would not have objected to your short entry, but he would have suggested that half profits be taken at the round number, and I presume a break even stop at that point. Other than that, I hope my notes on the chart explain my interpretation of price action at that point in time. Best Wishes, Thales

Hi Don, I was not watching today at that time, so it is difficult to say exactly how I would exited those trades, or even if I would have taken them at all. However, drilling down to a one minute chart, I think that what I have attached here would be a fair depiction of where I would have taken my losses. Each looks like it would have been about a -10 tick loss if no slippage on the entries and exits. Best Wishes, Thales

Hi Folks, The GU this morning beautifully illustrate the point Blowfish made in the above post. I have attached three charts: 1) Identifies the swings that indicate a long opportunity 2) Identifies the swings that indicate a short opportunity 3) Shows how price chopped around before it decided which indication it would follow. Best Wishes, Thales

Hi Folks, The long side triggered, and price has now consumed 70 ticks of range between entry and PT, with 60 ticks to go. Nothing says price has to reach that PT, as it has now reached into an anticpated zone of resistance. The PT shown would typically be a PT2 level, but given the volatility, I would anticipate a better than usual odds of hitting that level. Of course, better than usual odds of continuing does not preclude a sudden and sharp reversal, so if I were long here from the entry point identified, my stop would be a break even or better. I am going to clean these charts up for a separate post, as I think this illustrates an important concept. Best Wishes, Thales

That, and it leads folks to focus upon what price is doing over a very short period of time while often causing them to lose sight of where that small moment fits into the last day, week, month, and year. I once wrote here that "not every breakout is a reversal, but every reversal can be traded as a breakout." Similarly, every major trend reversal will have evident "123" sequences at multiple degrees, but most 123's are not reversals of larger trends. Which leads, of course, to yet another old saw of market wisodn - "take what the market is willing to give." Best Wishes, Thales

Hi Taq, Thanks for the charts. For that sequence you show, I come up with initial breakdown targets at 1064.25 and 1035.50 (basis the Dec es). Make sure as you focus upon the H-L-LH sequence you do not lose sight of the larger trend that carried price into what you see as a possible top. It is a top, but of what significance? Here we are, 15 minutes before the US equities open, and the ES put in a low just a few points above the first PT level. That may be the extent of the decline, or the decline may resume and ultimately carry down to test the March 2009 lows. Who knows? I don't. I would also suggest that you check the steep trendline you have drawn. That line was very steep and as such indicated an unsustainable pace. To see how steep that pace was, you need to shift your trendline back to the prior low. You want to strike your uptrend lines by drawing from the lowest low of the trend in question to the low preceding the highest high. You drew across the low printed after that high. Price is thus actually looking to set a new pace. Referring back to the importance of not losing sight of the big picture, you should also cast another line lower that would define the larger overall uptrend. Best Wishes, Thales

Hi folks, Perhaps we are back to the "Good Ole Days" of 2008 where 2%+ daily moves become the norm. Time and the markets will tell. Here is a current look at the GU. The long has a PT of about +130, and the short has a PT of about +60. We're not trading today, but we'll be watching from time to time. When I came downstairs this morning, my daughter was already up, and she had CNBC on on the television (muted, God Bless her, how quickly she learned!) and she was scrolling through charts on the family computer. She is amazed at the size of the recent moves, and she finds it quite exciting, so I don't see how I will be able to keep her away from at least chacking in from time to time. Best Wishes, Thales

Stop on the second half is +178. Best Wishes, Thales

I had a -40 tick stop on this trade. If you want to trade without a stop, go ahead, its your money. I'm not sure why you appear as angry as you do, but I would refer you to the following two posts: 1) 2) The second half of this position is still open and still holding for PT2. And here is the chart I posted of the GBPUSD trade that you attached to your post. I would think that anyone who has both read and paid attention to my posts in this thread from the beginning would agree with me in saying that I am extremely consistent for a discretionary trader. -Thales

Hi folks, I am going to be shutting down for the day soon. It seems as though some folks are struggling a good bit with this approach while others are getting along well. I'm sure we have folks scattered at various places between absolute struggle and smooth sailing. I want to point out a few posts that have some valuable suggestions. If you are not where you want to be with this, and if you wish to continue, then why not take some time and ponder the points made in the following posts (These are all snippets, so click on the quote and read the posts): And last, but not least, are these diagrams contributed by Jon the other night. I for the life of me cannot figure out why I am the only one who thanked Jon for posting these diagrams. Yes, as he notes himself, they are simple. But these diagrams are what you should be looking for with this approach. If you are struggling, you should print these out and hang them by your work station. If you think you see an opportunity, and you cannot "overlay" these diagrams over your price chart to make a fit, then do not trade it! I'd like to thank Jon again for putting these together. My daughter actually saved them and configured them as her desktop wallpaper. And you know, she has an eye for these things. Best Wishes, Thales

Hi Gabe, You and I were short the same market but trading from different places. I have attached a chart that should clear things up for you. I was trading off of a swing sequence of which your sequence was but a small part. I used your trade to gain a more favorable entry (perhaps Blowfish would call it a "Trader's Trick Entry" per Joe Ross). For your trade, my BE move would have occurred at 1.6676, and my PTs would have been 1.6664 and 1.6628. I did have a BE level for my trade. It was 1.6620. Price looks as though it barely paused as it broke that level. And let's not forget that went to bed soon after this trade triggered, so I was not in a position to move my stop manually. As I say on the chart, this trade was basically PT or bust. I chose my profit targets as I always do - I use S/R zones to show me where price is likely going, and I use fib levels that fall within those zones to tighten up the orders. I know I have stated this several times during the course of this thread, right? You had a good trade it seems. And in spite of similar entry points, your trade and my trade where coming from different views, using the same approach. Best Wishes, Thales

As has been pointed out, you posted what you referred to as an "interesting" set up, but you said nothing about a trade - no entry, no stops, no targets, no plan; nothing, that is, until after price had made a move and you then show up hours later and tell us how well your subscribers did. As you can tell, there is no credibility to that sort of thing here. Let me give you an example. You click the linked quote below and find a trade I posted last night in another thread here at TL. I'll include the charts here. You can go and visit that thread to see that everything was posted in real time and before the entry was triggered. Anyone subscribed to my free thread here on this free forum would have received a free email notification instantly of this trade opportunity. On my chart, anyone of these subscribers to the free thread would have been able to see a chart with entry, stop, and targets printed on the chart. Blue line is entry, red line is stop loss, green lines are profit targets. That is how a trade is "caught before it happens." Did I mention that here at TL, it is free to be a member of our community? If you are going to shill for a paid service, and you are going to claim great calls, then you ought to have the b*lls to make the calls in a usable, understandable way before the trade triggers, not a day after you are supposedly sitting on your fattened wallet. Best Wishes, Thales

Hi Folks, We are up and at 'em early here at the Thales' Home this mornng (though it will be back to bed time soon). The GBPUSD trade plan worked well. First PT filled for +130 ticks, Price dropped to within 41 ticks of my second PT. The bounce from those levels has generated a potential long opportunity. I am holding the second half short, with a stop at +50 on the remaining position. For those who are having a tough time with this approach, perhaps a step back from day trading the small degree swings and a shift of focus to a larger degree swing such as this trade was based upon would be useful. Best Wishes, Thales Best Wishes, Thales

Good questions, and I'll answer you tomorrow or Friday or Saturday. I'm too tired to put my thoughts together right now. Best Wishes, Thales

-40 initial stop for a +130 PT1 ... I wasn't going to trade, and the market will probably punish me for this, but I'm in at 1.6688 short for a 1.6558 PT1 and 1.6458 PT2. Best Wishes, Thales