thalestrader

Hi Folks, Your initial stop loss is a worst case stop loss. What is the worst case? To me it is getting stopped into the trade having price immediately reverse hard and fast against me - you know how it is - you just sold short the high tick or bought the low tick of a move. At this point, it is a race between me and price - Can I hit the flatten button before price hits me for a full stop loss? Your initial stop, if you are doing this right, should very seldom be hit. If you are trading this approach correctly, you will know almost immediately and be rewarded. If you are wrong, you will likely know this very quickly as well. And, because your initial stop is a worst case, and because it will at times be hit, you must plan your risk and your position size around that potential loss. But for goodness sakes, don't sit there and watch price make its way in an orderly fashion to hit you for a full stop. The only reason that that initial stop loss is there is to prevent a devastating loss from quickly getting beyond all hope and repair. It is not there as a punishment for being wrong, it is there to protect you if needed. Its like airbags - you want them in your car. But just because you have them, you don't crash your car every time you need to stop. You use your brakes and stop safely. Best Wishes, Thales

Hi Folks, Just got in, and I see that the USDCAD declined to reach its second target, and added some on for good measure. Best Wishes, Thales

A quick one for Gabe: Gabe, the swing off of which you were trading was tiny and within a larger chop zone. You could trade it, but for tiny targets. Had I traded that swing, both of my targets would have been well within the chop zone, and one would have been hit, the second half taken out at breakeven. I also show a short in progress at the right hand edge. Here are a couple of charts looking at a larger swing, with an entry point taken at the break of the upper chop zone. Size your targets to the size of the swings prior to entry - it takes a lot of energy to move a pair 100 ticks quickly, so taking a leap off of such a tiny swing in the middle of the chop, you really need to ask for and expect much less from the market than 100 ticks. I have to run, so that is the best I can do as far as notes for now. Best Wishes, Thales

Hi Folks, I just came home for lunch, and here is a pic of the GBPUSD I snapped on my way out the door this morning, and the action subsequent to the pic. You may recall a post or two from last week where I showed a price pattern that in Elliot Wave terms is known as an ending diagonal. Funny how this pattern seems to show up at the end of moves. No "wave counting," no "revising a wave count." This is not about using EW to predict and forecast. It is using parts of the theory to recognize and to prepare for probabilities. If you were short the GBPUSD on the break down, and you recognized the ending diagonal, you would have been prepared to cover your short for -7 ticks, while simultaneously entering a long position for two targets +15 and +25, both of which were hit. Net for the two trades would have been +8 and +18. This compared to sitting through a -37 tick loss on a whole position watching price rally through the short's initial stop. See you later tonight. Best Wishes, Thales

I do not have time to go back and find the posts now, but many times (and recently, I might add), I have stated the following: 1) The only time an initial stop should be hit for a full loss is when I am stopped into a position, and price immediately races against me, and it crosses the stop line quicker than I can hit the flatten button; or I place an entry order, with OCO stop and limits, and the trade occurs while I am alsleep or occupied with other business. 2) I always have an initial stop loss, at least one profit target at 1R +/-, and a price level at which I will move the initial stop to BE. Also, I cannot think of anyone whom I know personally, who trades successfully and who does not have a money management regimen that cuts losers small and quick while allowing for average profits larger than the average loss. An edge does not assure profitability. A sound edge can be dulled by money management unsuitable for the nature of the edge. Two different traders can trade the same exact approach (system) and one will be profitable beyond all expectation while the other churns and burns him- or herself to trading death. I may not have explained the nuances of what I do as well as I could hope, but I will try to solve for that over the coming days. But I do believe I have been very clear on the way I trade futures (and now spot). I have also said many times that you should not confuse my money management and stop management on my stock trades to my futures trades, as my approach differs from one to another. Best Wishes, Thales

Hi Folks, Lots of good posts, good quesyions, good observations. I am going to spend some time trying to come up with a better way to communicate what I do with you folks here on this thread. I had an idea flicker a bit last night when I was preparing an initial response to MIdK's list. I will have to work on it. In the mean time, two things: First, here is the current GBPUSD. This is not ideal, because I do see potential support just below what would be a break down point for me. However, the overall presentation of price leads me to at least lean toward this short being a potentially good trade. A quick break and reversal would also not surprise me. As for the EURJPY, I am running a short of time this morning, but the potential long trade I posted last night busted itself up prior to the long trigger. Another long presented itself, though it was for such a small play it may not have been worth while. I went to bed immediately after posting that chart, and I didn't like it enough to do as my daughter does, which is place the order and go to bed. Have a good day, I'll try to check in this evening, but I may be gone for a couple of days. Best Wishes, Thales

What would you think about the EURJPY currently? Best Wishes, Thales

Too bad, I thought your post was quite appropriate given the recent discussion here. Best Wishes, Thales

How's it going for you, Gabe? Best Wishes, Thales

I don't know that I'd characterize 1.666x as higher TF support, but I feel it was a noticeable possible stopping point if price were to resume its uptrend. The HL in the direction of the trend is what I see. As I zoom out, I see that price is in an uptrend, and that price is trading within a zone that I considered potential support within the uptrend. The larger lighter blue rectabgle shows a larger zone, while the smaller rectangles is extrapolated from what I when I look at the most recent activity on the 15 minute chart. It would seem, MidK, as though I may have a more expansive notion of what constitutes S/R for my purposes compared to yours. I will have to give some thought to how I might better communicate what I am looking at when I make my decisions. Best Wishes, Thales

Have I said that somewhere? I'm not saying I didn't, but it doesn't sound like me. I'd like to see the example in which I said that t see why I would have said that. Best Wishes, Thales

That's something for you to think about, perhaps. Well, here is a series of charts of the GBPUSD. I have kept comments to a minimum. You know what the rectangles represent to me when I draw them. What do you think of what you see here? Best Wishes, Thales

Let's see if we can determine the source of the struggle and frustration. Let me ask you (and this is for MidK, Forrest, and anyone else who cares to answer) what do you think of the long GBPUSD trade I posted this morning? Forget about the fact that it was a winning trade. If you were watching, did you see it as I did? Would you have taken it if you had seen it? Why or why not? Best Wishes, Thales EDIT: PS In other words, do not focus on what happened after the trade triggered. Let's focus on what happened before the trade up to the moment of decision.

You may be right. I never really examined it any further than to recognize a few aspects of Elliot that are useful and do work repeatedly, while ignoring the rest. Best Wishes, Thales

GBPUSD has rallied to and through PT2. Best Wishes, Thales

Hi Blowfish, This is after the fact, and as such, it is always difficult to say what I would have done. But this is how I like to think I would have managed this trade. First have limited at at PT1, second half stopped out at PT1. Best Wishes, Thales

Hi Folks, GBPUSD and EURJPY both triggered before I could annotate the charts. Both have rallied quickly to PT1. You can also see similar opportunities on the GBPJPY (not shown). Best Wishes, Thales

Price dropped to about 133.64, rallied to just a few ticks below entry, and then dropped to a marginal new low. That new low after that rally back to the break down point would, in most cases, lead us to move the stop to breakeven. Best Wishes, Thales

A good start to a breakeven effort. Best Wishes, Thales

I prefer futures myself, and I too find that the 6B, 6E, and 6J provide ample opportunities. I always kept an eye on spot prices, but I did not begin active involvement until this past summer while working with my daughter. She started trading with a $25.00 USD micro account trading for dimes/tick, and she has done very well. She came to really like the EURJPY. I have to say, so have I. Best Wishes, Thales

Well, let's see what we got ourselves into now. Best Wishes, Thales

This is the closest thing I see to a short entry on the EURJPY. You shorted because the news was good for the Yen? That reminds me of something President Reagen once said about his political opponents: "It's not that that they are wrong, its just that they know so much that isn't so." You may be right, but let the market confirm your opinion before you put your money on the line. You ought to go and do a search for Firewalker's old thread, "All You Need is a Chart." Best Wishes, Thales

I agree. But with microlots, you should be able to manage risk through position sizing at FXCM as well. You can manage risk well at IB also, except IB does have a minimum trade size. Best Wishes, Thales

We didn't trade it, MidK, sorry if I misled you. Best Wishes, Thales

Now my daughter and I are sitting here watching the Eagles trying to comeback against the chargers, and we did not trade this EURJPY. But, watching the EURJPY make its way to PT1 and then on to reach the PT2 had our attention more than the Eagles attempted comeback. Our trading chances look much better than our chance at a Super Bowl at this point. Best Wishes, Thales