thalestrader

Hi Folks, GBPUSD looks like a decent short at 1.6755, with targets at 1.6720, .6693, and .6643. Best Wishes, Thales

No, nothing at all wrong with that entry. It looks a lot like this short on the 6J I posted a while back. As you noted in your post yesterday, these patterns occur over and over and over, and I believe that they are relatively easy to learn to recognize. Best Wishes, Thales

Here is a similar situation on the EURUSD from 10/29/2009. Best Wishes, Thales

Great post, Kiwi! The desire to be right is perhaps the most pernicious to the trader. Your above paragraph has been duly copied, pasted, and printed, and now occupies a place in my notebook. Best Wishes, Thales

The targets are fine, but like Forrest and Gabe, I do not see this as a short, at least not yet. That does not mean that price cannot or will not simply break lower and reach the targets. But if it does, it will, at least at this point, have to make its way without me. I have mocked up the current EURUSD to show what I would like to see prior to getting short. This is not a prediction. Another scenario would be a poke to a higher high with a reversal down (see the GBPJPY chart posted in post #946 of this thread). Best Wishes, Thales

I tend to be of the opinion that price is price, no matter how it is bundled. For example, I have and still do use range charts when trading currency futures. I do agree with Kiwi that if you are using tick data from a bucket shop you are opening yourself up to trading on "bad" information. I may be wrong, but I think daedalus may be trading futures, not spot, and tick counts on futures should be accurate versus "tick counts" at a bucket shop. Also, what is more important than the particular "price bundle" being used is the manner in which the trader identifies opportunities in and around potentially meaningful price levels. I myself do not use tick charts at all, but I would not discourage anyone else's use of such charts here. At any rate, I would like to keep the thread open, and I would like to encourage daedalus's continued participation. One never knows from which direction inspiration might strike. Best Wishes, Thales

Hi Gabe, Thank you for sharing. So what is your total PnL in ticks/pips between the two trades? The short EURJPY was fine, it just didn't move as you anticipated and you took your loss, and thus you move on. Losing trades are not what is going to hurt you. What is going to hurt your results cutting your winners short. If you already had 34 ticks profit in the bank, and a stop loss at BE +4, presumably assuring you of at least another 4 ticks profit on the remaining position, then from where was the "heat" coming? You need the runners to take care of your losers and to feed your family. Best Wishes, Thales

I typically use solid blue for entry (whether short or long), solid red for stop loss (whether short or long), and green for profit targets. I have several friends with who I share charts, and this has been our convention for years. It is very simple and you know at a glance exactly what is being communicated. Best Wishes, Thales

Hi Folks, Not trading this - but note the rally back to the top of last week's "chop zone," and finding a bit of resistance there. Best Wishes, Thales

Pictures. If you read this thread from the beginning, I have said over and over that "beautiful pictures paint themselves." Here is a look at the GBPJPY. Take a look at the price activity within the ellipse. That is a picture - a pattern that happens everyday. The hashed lines represent the chop zone we discussed. The dark blue represents short entry, the red line is the initial stop loss. Taking cues from the boundaries of the chop zone, this is the first trade opportunity (unless one were to have used a buy stop to buy the breakout). I taught my daughter by pointing these patterns out, and then having her watch for them as well. As daedalus said: Best Wishes, Thales

Great to hear, daedalus! I hope that you will share some of your charts here with us as well. Best Wishes, Thales

I would hope you don't feel like that over a trade. And, the thing to remember is this: If you were to take every single trade, even those such as that GBPJPY short that is bothering you, and you respect your stop loss, and play for 1:1 first target, you will be net profitable over time. Do not let that trade bother you, especially when you are doing so well. You cannot expect perfection. Last week, between my daughter and I we took 20 trades in our little forex account. We had 7 losing trades and 13 winning trades. Of the thirteen winning trades, 5 were for less than +3 ticks, so those were basically breakeven. That means that the bulk of our profit for the week came from less than half of our trades. Had we taken that trade with you, we'd have still had a nice profit for the week. It is better to take a trade and lose than to not take a trade that could have run to two or three profit targets. So long as you manage your risk and trade based upon what price is indicating, you will be fine. I think that doing a post mortem of losing efforts can be helpful. But do not let one losing effort gain such significance that it can damage your confidence. After all, technically your entry was correct. Based upon preceding price action, it was perhaps not the most favorable opportunity. But, you have to be in it to win it, so do not allow this one trade to feed your fear or to discourage you. Do not compare yourself to what my daughter has accomplished. If I were to compare her experience to my own, I'd have to question what was wrong with me for so long. I am not kidding you. I bounced around, marginally profitable, with a few fortunate big wins for years before I finally settled down and focused upon trading the way that you are now. Even then, it took me far longer than it has taken her to really settle in to my approach. Give this some time. Do not get discouraged. Do not give up. I am convinced that if you diligently apply yourself to the approach we are sharing here that the time remaining until you achieve your trading goal will be measured in weeks and months, not years. But you do have to keep your heart and your head straight, Best Wishes, Thales

Well, I did say that since we are seeing higher lows and lower highs, price has entered what I consider to be the chop zone, and that I would take my cues from the last true high and the last true low. That is fairly close to a clearly defined and objective rule or guideline. Best Wishes, Thales

We'll be watching the EURJPY tonight (at least through the first half of the Eagles/cowboys game). Best Wishes, Thales

I didn't mean to imply that price wasn't digging into resistance at that point. Clearly it was, and I was just adding that to the discussion of the EURUSD trade. Price, in my opinion, just did not indicate whether it was going to dig through it or whether it was going to reverse. As it was, price chewed through and then gave indications that shorts were in order. Look at Kiwi's charts in post #930. I think that might be instructive as to how price indicates where to buy & sell. I know you want something more, a rule perhaps. And I am trying to come up with something that might help you. Kiwi's logic has captured something, and perhaps he might have something more concrete to add (unless he already did so in his posts surrounding your GBPJPY short. Best Wishes, Thales

"Digging into support," is a phrase I learned from reading Stanley Kroll years ago, and it seemed a very apt description of what price does when it finds itself at a zone of S or R, and therefore, it stuck in my thinking. In some of my charts, I use rectangles to illustrate these zones. For a breakout-type trade, I would usually require price to dig through, rather than merely into one of these zones before I'd take a position. I do not draw these rectangles on my charts, but I do "see" them nnetheless. I've made no secret that Nicolas Darvas had a large impact on my approach, and I am sure these rectangles are more or less something that has evolved out of that influence. I do not claim to be a very original trader. From the great many whom I have read, I have learned from but a very few - Darvas, O'Neil, Livermore, Wyckoff, Schumacher, among others. I have kept what has worked for me. Best Wishes, Thales

Hi Kiwi, First I want to thank you for your offer to share your work with other TL members, as it is very much in the spirit of this thread. If I were wearing a hat, I'd tip it to you. As to the "overshoot" question, I do not have a quantifiable parameter in mind. An overshoot at point 3 in an uptrend is indicative of a basing pattern that William O'Neil refers to as a double bottom base where price rallies into a high, pulls back, rallies to a lower high, and then pulls back yet again into a lower low before rallying to a new rally high (higher high). I would not want to suggest a parameter, and you will likely be better off trying to test out a few conditions on your own. When is a double bottom a basing pattern and not a breakout to the downside? That is usually a matter of the structure of the support zone into which price is digging. I cannot quantify it so much as I can qualify it by saying "I know it when I see it." All this to say that I do agree with you concerning what you term overshoots, both that they exist, and that they are tradable in the context of what we have been discussing here. Also, I agree that for the beginner, it is probably best to focus on the simple L-H-HL and the H-L-LH while learning to see and trade price itself. I have attached a few views of the daily Dow Indistrials. The first shot is of my Telechart screen as it appears today. There is a trendline that I drew back in July, and it is drawn at what I considered to be a buy point at that time. This was at a time when you could not turn on CNBC without hearing someone squawking about the "Head and Shoulders top" in the Dow. The next two shots show that S/R must trump any "chart pattern" trading. This "H&S top" was really just a pullback into a support zone, and the buy point was when the LH was bettered. I made the same point in a chart Browning posted of AAPL where, strictly trading the H-L-LH would have caused the trader to initiate a short, this short would have been selling into a test of prior resistance being tested as new support. a discretionary trader should not trade this approach separate from an awareness of S/R. If you are programming and auto-trading this, I do not know how you would account for S/R. I think the pattern is reliable enough to trade straight away and just take your (admittedly small) lumps. Perhaps something along the lines of the old turtle strategy would be in order - if the last two trades were long and were winners, do not take the next short, and vice versa. Then again, trying to program a loss avoidance is usually the first step in sinking an otherwise profitable system. Best Wishes, Thales

You can usually offer to show two years tax returns, and most landlords in NYC will be satisfied if your two year average meets the requirements. You could also see about getting a co-signer for the first year, but make sure that the Landlord agrees to renew the lease without a co-signer after 12 months of on-time payments. I would hope that you meant "4 to 5 times" the monthly rent and not "40-50 times the monthly rent." I was in NYC yesterday, and I happened to see an ad in the Daily News for a two bedroom apartments in the Bronx starting at $1300/month. There are not too many folks, even in NYC, who are pulling down 52k-65k/month unless they are getting bailout bonus bucks as a GS, JPM, or C employee. Fifteen years ago when we were first married, my wife and I paid $695/month for a large two bedroom apartment between Fordham University and Little Italy in the Bronx. Now how's that for Inflation! Many of our friends in NYC say that rents have been dropping, Funny thing though, in order to take advantage of the falling rents, you often have to move. That is, your current landlord will not lower your rent, so you will need to move to a building with a comparable apartment for less rent. Good Luck! Best Wishes, Thales

Weekend Reading Hi Folks, I'll have a somewhat busy weekend, and also I have business obligations that will keep me from trading Monday-Wednesday this week. I see some good posts here, and I will respond to all posts and the PM's as soon as I can. Here is an article from the NYTimes from eight years ago called the "Wizard of Odds," and if you trade, you should be able to see its relevance to what you do. Best Wishes, Thales Wizard of Odds.doc

Hi Brownie, I like your idea for this thread. One comment, if I may: The loss you mention appears to be a short trade. I would suggest that you do not trade the H/L in isolation from S/R. I attached a chart with some notes explaining what I mean (sorry for the font - I do not like Telechart's drawing tools, and so I used MSPaint. My daughters use Paint all the time. I have no idea how to change the font. I'm thinking that the last time they used Paint it was for some Halloween project. Best Wishes, Thales

I have a migraine that is building and building, and so I am not trading anymore today until (unless) the meds kick in. Here is the weekly PnL for the little forex account my daughter and I have been trading. I'll break out the trades, wins/losses/breakeven later in the Reading Charts thread. Also, lest anyone thinks this came from trading large on the NFP, I have a screen shot of our one trade today - short at 133.75, stopped out at 133.745 for + 1/2 tick. Best Wishes, Thales

"When I can't sleep at night I trade S&P futures at Lind Waldock." That line is definitely in the top 10 funniest lines in a trading oriented commercial/advertisement I have ever seen/heard. "When I can't sleep at night I trade Dax futures," on the other hand, sounds perfectly reasonable to me. Best Wishes, Thales

I would add to Kiwi's comment that that low was clearly digging into what proved to be an important support zone. Best Wishes, Thales

I'd be curious to hear what others think about the comparison before I answer. Would any one else have any comments comparing the current GBPJPY to the EURUSD in my post? Best Wishes, Thales

Hi Gabe, I tried that short myself today and cut it loose for a 10 tick loss. As you can see, it is not surprising that price found buyers at that level. I try to post trades either before or soon after they trigger, and if I am unable to post them while price is still reasonably close to entry, I typically do not post the chart. This was a short worth trying, but you have to keep in mind that there are times that price is breaking out, while other times, price is simply digging into support or resistance. In this case, I exited at -10 ticks. I'd have been willing to re-short new lows, but I wasn't going to hold a short and let it hit new highs. As Kenny Rogers sang, "You have to know when to hold them, know when to fold them ..." Losses can and will happen. You take them and move on to the next opportunity. So, that was a good opportunity to try a short. It was also a good opportuntiy to practice cutting your losses quickly. Best Wishes, Thales