thalestrader

Hi Folks, Here is the weekly PnL for Thales & Daughter's little forex account. Best Wishes, Thales

This trade would have had 1/2 at PT1 for +28 and the stop on the second would have just moved from BE to +14 Best Wishes, Thales

This GBPUSD is identical to the scenario that played out in the USDCAD. I moved the stop from BE to +7 when price pulled back from the high following the bounce from PT1. That was also a long entry. I did not take that entry. But it did reach what I would have set as PT1. Why did I not take it? A combination of factors, including paying too much attention to this thread. Best Wishes, Thales

Second 1/2 out at +7 Best Wishes, Thales

I would add that if you only are day trading, it isn't necessary. William O'Neil's CANSLIM method, outlined in his book, How to Make Money in Stocks, is exactly what you are asking - using a combination of fundamental and technical information to screen for long stock candidates. William O'Neil's CANSLIM is a formalization and expansion of Nicolas Darvas's Technofundamentalist method that he demonstrated in How I made 2,000,000 in the Stock Market. Though I am a big fan of both of those gentlemen, I pay no attention to fundamentals at all. If it is going up, I'll buy it. If it goes down, I sell it. Not so different from being a Will Rogers technician - "Don't gamble; take all your savings and buy some good stock and hold it 'till it goes up, then sell it. If it don't go up, don't buy it." You see, you can buy stock in a fundamentally soundcompany. If no one else is buying it, it will not go up. So, I wait for technical indications that buyers are buying and price is going up. Why hold stock in a fundamentally sound company whose stock price is going to be the same next year asit is this year (without a nice intervening rally into which to sell in the mean time)? Best Wishes, Thales

Hi Forrest, Overlapping price action is certainly be a signal to be cautious. Periods of price overlap create chop zones. These areas are often consolidations prior to a trend continuation. They can also be areas of distribution or liquidation at the end of a rally or periods of accumulation after a decline. If you look at the chart in my post #1136, you will see that the character of that particular over lap led me to suspect that at least a temporary change from up to down, or at the very least from up to sideways, was imminent. The GBPUSD was presenting a series of marginally HH's and HL's, with each new high immediately resolving back into the range. This is not bullish, as it is a form of "wedging" higher along the lows as price is finishing a rally (on the other hand, if you see price wedging higher, and then break higher, that is often very bullish and leads to an extremely strong, nearly parabolic move higher). Best Wishes, Thales

Price bouncing after tagging PT1. Best Wishes, Thales

I am hesitant to show this chart, because we already have a few budding geometers among us, but this is not a triangle. This is price wedging into its lows. Do not focus so much on the "trendlines," rather concentrate your attention to the overall presentation that price as it is skipping along the bottom compared to the swift, impulsive move down. I know I have mentioned this before, but William O'Neil's book, How to Make Money in Stocks, especially his latest edition, is one of the best sources you will find on learning to read price action. Though he focuses solely on daily and higher time frames, price action repeats itself at all degrees of trend. I recommend his book, especially those sections on chart reading, without hesitation. I have one other source that I will recommend, though I am very hesitant to do so. I will post it later today. I want to wait because I know that this book can do more harm than good, especially if one reads the entire book. The authors did, however, publish a free .pdf pamphlet containing hwat I consider to be the only important technical aspects of the whole book. I do not possess that .pdf myself, but I know a few of my friends do have it. I will email them, and once one of them sends me the .pdf file, I will upload it here. That will be this weeks' "Weekend Reading" installment. Best Wishes, Thales

Hi Gabe, It looks fine to me. In fact, my good friend the currency trader emailed me a chart yesterday showing he took that exact entry. I marked my chart to shows price "stepping" higher into your entry. I also show a current short entry on the GBPUSD, though R/R is +32 to first PT and -34 to initial SL. Best Wishes, Thales

One of the hardest things for me, even now, is that once I am in a trade, I often times fail to see that price is showing me the move is over and ready to reverse. I get so intent on focuing upon my PT's and my BE stop, that I miss the real SL, or even a Stop&Reverse. Here is another view of the USDCAD. I do not know, had I been watching, if I would have taken the long entry that I show, but I do believe that had I been short from your entry, I would have been out at that long entry. First PT on that long would have been right around your short entry, and price now looks as though it might be setting up another short. However, the USDCAD is right in the middle of a prior chop zone, so unless is breaks back above 1.0468, I am not too interested in anything it has to say to me. On the GBPUSD, your short entry created a Low (undercutting the previous low stopping point and thus entering you into a short position). Price immediately reversed and rallied to a new High. This, by the way, should be the only time an initial stop loss is hit for a full -R loss, i.e. when price immediately reverses from entry and takes you out. This is a "worst case stop" and this is, indeed, the worst case. Once price took you out, especially as it made a new high in the process, you could have looked for a pulback into a HL, and then traded from the long side. Of course, this all smacks of "Monday Morning Quarterbacking," but I thought that it was worth bringing up that if what gets you into a trade is a H-L-LH sequence, then price presenting you with its counter-part (L-H-HL) ought to get you out, if not get you reversed. In other words, do not be married to a trade or your profit targets if price gives you indications that it has changed its mind. While it is wrong to cut your profits short at the slightest reaction, e.g. in the case of the USDCAD short the rally into the point I marked with an "H". But, having reacted so, and having started to move down again, it would be prudent to move your stop loss down to what would essentially be a long entry and thus signal a potential reversal. Best Wishes, Thales

Hi folks, The GBPUSD is exhibiting price action that often indicates at least a temporary end to the last move. Best Wishes, Thales

Hi Gabe, Just count the bars/day. There are 6 bars, so 24 hours/6 bars = 4 hours/bar. Best Wishes, Thales

Well, look at you! I'm not a "candle" kind of guy (not that there is anything wrong with being a "candle" trader), but everything else sounded like poetry. You've come a long way over the last six months or so. Until the Browns post a winning record, he's Brownie to me. Best Wishes, Thales E-A-G-L-E-S EAGLES!

I have pirated this post from Db's "Support and Resistance: Trading in Foresight," thread. This is an excellent post from an excellent thread. I think that Forrest does a good job of applying himself to working up a trading plan - knowing ahead of time where he will be looking to buy and sell. As I have said, you should not trade the approach I have shared here in isolation from S/R considerations. I hope Db does not mind me "borrowing" his post. Thank you, Db. Best Wishes, Thales

Here are links to two posts by bakrob99 from a now closed thread that might be of interest: http://www.traderslaboratory.com/forums/f229/idea-850-two-1-tick-trades-6862.html#post76559 http://www.traderslaboratory.com/forums/f229/idea-850-two-1-tick-trades-6862.html#post77616 Best Wishes, Thales

daedalus is doing the same thing you are, Forrest. However, something tells me this is not his first go-around with this approach, as he acting at a much more "micro" level and his H/L/HL's and vice versa are sometimes far more subtle than what I usually post here using time based charts. In some cases, the entire sequence for daedalus plays out in just two bars. Fortunately, he is using candlesticks, which, if you know how to read a candle, should enable you to see the subtlety of his reading of price action. Best Wishes, Thales

I agree. Two traders, both trading identical approaches, often have vastly different results because of the different manner in which each manages his or her exits. Excellent work, daedalus, thank you for sharing! Best Wishes, Thales

Hi Folks, Last trade on the USDCAD did make it to each of the three PT's, though we were shaken out, and then failed to act on a new long entry. Price has now pulled back to prior resistance, and seems to finding support there. Here is the current view from the four hour and daily chart. Entry here on a stop above 1.0540, with a stop loss below 1.0520. Targets are approx. +500, +900, +1500. One could also wait for a break above the 11/01 high (entry above 1.0840). Best Wishes, Thales

Funny how S/R levels "picked at some point" have relevance at this point. The market has a better memory than we do at times. Best Wishes, Thales

Hi Midk, I understand your frustration. I have suffered my share as well over the years. You can continue to be frustrated, or you can identify the source of the frustration and eliminate it. I assume that you would rather eliminate the source rather than continue to be disappointed, so I have some thoughts you might want to consider. With respect to your GBPUSD trade, It looks like your initial risk on that trade should have been about -29 pips. With an MFE of 30, why not have taken 1/2 profits at 1R, then move the stop to break even, especially when that MFE level was at what one might have anticipated to be support? I do. If you do not have 1R between entry and the first profit target, why not skip the trade? I do. When you have a second profit target, why not take off the other 1/2? I do. When you have three profit targets, why not take 1/2 at PT1, 1/4 at PT2, and 1/2 at PT3? I do. In an earlier post, in response to a question regarding trades reaching PT1, I wrote the following (I know it is a long post, but please read it in its entirety): I started that post with this paragraph: Why not work on taking 1/2 off at PT1, and accept the fact that the other 1/2 will be stopped at break even more often than it will "follow through," to PT2? Why not work on only taking trades where there is a legitimate 1R spread between entry and PT1, and accept the fact that there will likely be a few trades that end up running to PT2 but you sat out because PT1 did not meet the 1R threshold? As far as "follow through," targets beyond PT1 will be especially elusive during times such as these where, as Kiwi noted, the market has been trendless and choppy. Once an identifiable direction returns to the currency markets, you will find that trades in the direction of the trend will very often "follow through," while counter trend trades are best taken out entirely at the first PT. The good news is that this approach works regardless of the market, but your epectations must match what the approach will give you based upon what the overall market is doing. And accept the fact that you will succeed at this only by doing and doing and doing. I still believe that with hard work, study, diligence and patience, you will get to where you wish to be within weeks or months, rather than years, but accept the fact that it will be weeks and maybe moths, and not hours or days. I think that anyone following this thread can see that it is relatively easy to understand the mechanics of what I do. I think that many reading this thread also see that very few of the problems folks seem to have is not with the mechanics of the approach, but with things extraneous to the approach. I see folks trading with 27 profit targets instead of 1 or 2, I see folks drawing triangles and tetrahedrons rather than waiting for price to reach an actual and observable, i.e. empirical support and resistance levels. I see people letting a trade run to within 3 ticks of PT1, only to watch it run 30 ticks back to entry and another 30 ticks to the initial stop loss, in effect, they take a -60 tick loss for the sake of hoping for an additional 3 tick profit. Imagine that, a .05 R/R. As my daughter would say, "Yikes!" Finally, I have said elsewhere here at TL that for every "rule," or "guideline," or "I do," that I post, I have a bushel basket of trades in which I have violated one or more. But, when I first got serious about this appoach, I learned quickly to develop those money management guidelines, and I stuck to them for quite some time before I ventured to violate them. It might be helpful to you if you were to try them for a little while and see if they do not help you overcome that which is causing you such frustration. I am sure you are not alone in feeling as you do. And anyone else here who is likewise frustrated might also consider adopting those guidelines for a while to see whether or not they offer a good fit. Best Wishes, Thales

EURUSD ready to go the other way? We'll see. Best Wishes, Thales

And that takes it to the breakdown point noted by eNQ earlier today (that's yesterday for Kiwi). Best Wishes, Thales

EURUSD wants to go a bit higher from the looks of it. Best Wishes, Thales

Have you ever heard of a Forrest Range Breakout? Best Wishes, Thales

As I mentioned to Brownie in another thread, while trading the HH/HL is probably robust enough to yield a profitable mechanical system over time (Kiwi would be more qualified to comment on this than I), I would not recommend that a discretionary trader trade this (or any) approach in isolation from S/R considerations. In this case, as price had rallied into anticipated resistance, longs, for me at least, would be off the table until price either 1) breaks out above that resistance or 2) declines to a potential support level of comparable significance to the resistance level that turned price away. I was unable to be at the screen today. But I did not see that L/H/HL sequence until you pointed it out. I may or may not have seen it if I had been watching in real time. Had I seen it, I would not have been interested in a long, though it may have shaken me out of my initial short. Had I been shaken out, I would have re-shorted at the point eNQ pointed out in his post #1063 (do we realy have over 1000 post in this thread?) They say that hindsight is 20/20, though at times like this, telling you honestly how I would have acted in real time is impossible after the fact. I do not know how price was moving (it had settled into a little range, was it chomping at the bit to make a break or was it tentative and meandering? Was news pending? If so, I would have held the short with my initial stop. No news expected? Maybe I would have moved my stop on the short to just above that little high.) When I look at the chart, I can say unequivocally that I would have wanted to be short. But, looking at the chart, who wouldn't have wanted to be short? After the fact, in this case, is very difficult. The fact that it is so difficult leads me to feel that I would not have acted at all to that sequence and I would have held my short. I say this only because the short to me was clear this morning before it triggered, and it is clear to me now. The long entry you point to does not look like anything but noise to me. When I take a trade, even when it results in a loss, it is very, very clear to me. I see exactly what I want to do, where I would know I am wrong, and where I want to take profits. I do not see anything like that at that point today. But again, this is after the fact. All that being said, if someone were to simply trade these sequences mechanically without regard to S/R, then it would have been two losses -5 ticks and -23, and then a winning trade with target at +34 (short at 1.5010 for a 1.4974 target) for a net +6 +/- a few ticks. Best Wishes, Thales