thalestrader

I am responding to Gabe's post here, rather than in the pnl thread where he had posted it so as to not throw Brownie's thread off for a second consecutive weekend. I have spent thousands of dollars buying software, indicators and systems, and thousands more on books, courses, classes, "mentors," etc. Nearly all of it was money I would rather have donated to the local food bank. The problem is two-fold: First, I suspect that most of those "successful traders" who profess to teach others to trade are not at successful at trading themselves. I have tried many of these self-professed gurus over the years, and almost to a man each and everyone was a fraud. Either he refused to make any before the fact analysis or real time calls, or, if he did, it became very plain very quickly that the method he was teaching was flawed and prone to endless draw down. As recently as two or three weeks ago I posted a screen shot form an email I received soliciting would-be forex traders to join a mentoring and coaching service. The video was of a "live trade example" showing a "profitable live trade." The problem, for the would-be Forex Coach, was that he traded using an FXCM demo account, and the demo server ID number was clearly visible in the video. Yes, he had a "demo profit." And some might say, "well who cares if it was a demo platform or real, he took the trade and it would have been profitable had you followed his advice." Well, the problem is this: He probably has two demo accounts, and he easily could have taken a simultaneous long and short on the GBPUSD in two separate demo accounts. He simply shows his prospective students his "live" profitable trade rather than the losing trade. As I said above, frauds, almost to the man. The second problem with paid services, schools, systems, softwares, etc. is that all of those who profess to teach others to trade leave out the emotional training required to be successful. Anyone with normal intelligence can be taught to apply a technically sound trading method in as little as an afternoon. Very few who learn to apply it will do so profitably. The problem is not the system, but the trader's own soul. Take, for example, some of TRO's simple "systems" that he posts here at TL. I have no idea if he trades them himself or not, but many of his simple approaches, coupled with the emotional discipline necessary to implement them with both sound money management and proper position sizing, will lead to an overall profitable result. In fact, bakrob99 posted his method earlier this week - very simple and straightforward - and very similar to an approach I myself deploy (the main difference being that bakrob99 enters on pullbacks while I wait to enter on new highs/lows). I know for a fact that if one were to learn bakrob99's approach and use his suggested money management strategy, the method will be overall profitable. Anyone here could learn the technical implementation rather easily. But very few who try it will have the emotional discipline necessary to attain bakrob99's success with it. Trading can be taught. The principles of emotional discipline that are required to succeed at trading likewise can be taught. I know that I have helped some folks who were struggling set themselves on a more sure footing. I know that many here at TL have learned from and become better traders by studying the contributions of DbPhoneix among others. In spite of my largely disappointing experiences with would be educators, I have managed to learn in important ways from others. I have learned from Linda Raschke. I have learned from MIke Reed. I have learned from contributions from Ed Seykota and several members of his trading tribe. Trading can be taught. The all important principles of emotional discipline can be communicated to others. However, the individual trader must him or herself undergo the practice to inculcate and habituate his or her soul to act as those principles dictate. I can tell you that you must let your profits run while cutting your losses short. I can tell you that you must stop trading after a couple of losses and take a break so as to keep your discipline intact. I can tell you that the only way back to equity growth if you know your approach is sound is that you must have the courage to trade through the inevitable draw downs rather than abandon what you have learned in search for a new method. I can tell you, but I cannot make you yourself act accordingly. Most of those who peddle trading education do not even tell you about the discipline necessary (likely they themselves are unaware of it and it is that very lack of awareness that has led to their own trading failure). And if they mention it, none will be willing to demonstrate it in real time by calling trades and managing trades according to their method and demonstrating the necessary discipline. Gabe, your post was excellent. You are likely closer than you know to really breaking out. Keep developing your focus and your discipline. Your new found respect for the importance of position sizing is positive evidence of the level you have reached. I'm pulling for you. Best Wishes, Thales

Excellent! And how does that compare to your typical results from, say, four to six weeks ago? Best Wishes, Thales

I agree with you that the most important aspect for a trader to conquer is his emotions: Without emotional control, there can be no success. As Wyckoff admonished in his Studies in Tape Reading, there must be "calmness before, during, and after the trade." Of course, that is often easier said than done. When I lose, I tend to get reckless. I guess I become what folks refer to as a "revenge trader." I will try to get it all back on one trade. I have known myself to increase my position size beyond all good sense in order to recoup what I had lost on earlier trades. I have a friend who also has known himself to act similarly. He instituted a practice that I myself adopted after my last bout of reckless loss chasing: I quit after two consecutive losing trades. Lose twice in a row, and I log off my trading platform. If I am particular angry, I will turn off my computer, and I go play with my children or hang out with my wife or read a novel or anything that does not involve anything trading related. I usually am not all that upset any more, so I will often continue to watch the market. But I will not place another live trade until the next day (for stocks) or until the next major session open (for currency futures et al). When I day trade stocks, it is not unusual for me to have three to five entry orders in at the same time. I usually will cancel any outstanding unfilled entry orders once I have opened three positions. If two of the three positions result in a loss, the third must close profitably or I am done for the day. I know myself enough to know that I must quit after two losses. If I do not, and I get that third loss, I am likely to get losses 4-10 as well before the day is out. If I stop after two, I can start the next trading session fresh and without any thought of the previous session's losses. You need to find what works for you. γνῶθι σεαυτόν - Know thyself.

Your screen time will be most productive by doing what you are supposed to do: identify S/R levels, and then observe how price behaves in and around those levels. As I've said elsewhere, price spends most of its time in the middle of nowhere, traveling between S/R levels. Over time you observe that price traces out the same actions over and over across markets and across time frames. Do not be impatient. As price spends most of its time in the middle of nowhere, most of your screen time will be you waiting for price to arrive a significant level from which you may have the opportunity to trade. I do not use market replay, so I cannot say how it can be used most effectively. I do print out my charts. Each week produces dozens of charts, and each night the last thing I do before I go to bed is to flip through a couple of dozen charts. I am looking at trades that worked, trades that didn't work, and I look for trades I would have or should have taken. In the end, it is simply a matter of coming to recognize that price moves in repeatable and repeating pattens. The patterns that are significant are those where price rests between making higher highs and higher lows (uptrend) and where price rests while making lower lows and lower highs (downtrend). While most consider me to be a breakout trader, and while nearly all of my entries involve buying a breakout above resistance or shroting a break down below support, the majority of those trades are done with the context of a trend of some degree. The trend is indeed your friend. I am constantly perplexed when I see folks try to short fierce rallies or buy precipitous declines (though at the same time I am quite thankful for such folks, as there actions feed the rally or decline in my favor). I much rather buy breakouts to new rally highs or short break downs to new decline lows. If you print your charts and study them, you will very quickly learn to see why I prefer to trade in that manner. Best Wishes, Thales

There is more than one technical approach that will enable you to take profits out of the market. But none of them will work for you if you don't get your emotions under control. The corner you turned is a psychological one, and not a technical one. You are now letting your profits run while keeping your losses manageable. And you are doing very well at it. Keep it up and keep sharing your charts! Best Wishes, Thales

Hi Brownie, If you look back to my early posts here at TL, you'll see that I did not always keep the 20 ema on the chart. I still find it useful and still use it depending upon how the market is acting. I am not sure why it is as useful as it is other than that so many folks have come to use it over the years [the 20 ema and the ADX >20 constitue a "set-up" that Linda Raschke (there's that name again) calls "The Holy Grail."]. Trading in the direction of the gap has been my primary means of trade selection for day trading stocks. Best Wishes, Thales

149.00 looks like the next real potential resistance. And I'd like to second Forrest's question: Why look to short against such a strong rally? Best Wishes, Thales

Great post, James. Any new trader (or struggling old-timer, for that matter) would serve him or herself well by writing James's observation on an index card and taping somewhere highly visible in the trader's workspace. I remember the palpable feeling of change that came over me as I evolved from "looking for a trade" to "waiting for the trade to come to me." When I do make a mistake, I can almost always attribute it to an impatience on my part to trade and thus forcing myself to take a position rather than simply waiting to hear from the market itself. Best Wishes, Thales

Well you all know where to find me! I just thought I could make myself more useful by posting charts rather than blotters. I was out most of this morning, and my only trade today was a short 6J (Yen fututres priced in USD and moves inversely to the USDJPY spot forex pair). My broker doesn't post pnl in a blotter, but I can show my trades - short at 11045, covered 3/5 at 11020 for +25 ticks and the remaing 2/5 stopped a entry. Gross profit was 937.50, which will be about $900 +/- after commissions. Interestingly, my 11020 profit target was low tick after my entry. Funny thing about the 6J is that sometimes I get filled on the touch, other times it has to trade through my limit by a tick or two or three to get a fill. Best Wishes, Thales

Stopped at 11045 on the remaining two. Best Wishes, Thales

Just as important as how price acted at resistance is the manner in which it got there. That was some pretty bullish price action if you ask me (I know you didn't). You should print that chart out and pin it on your wall. Of course, all rallies come to an end sooner or later, and no one evr knows for sure where or when sooner or later will come. I know that many here at TL (Db comes to mind as an excellent example) sell resistance and buy support as you did here. But they do so based upon what price does once it gets to S/R, and they do not simply take price reaching S/R as a signal in and of itself. You might find Db's "Trading in Foresight" thread particularly helpful inthis regard. I think it is one of the best threads on any forum anywhere. Best Wishes, Thales

Hoping, Dinero? Sounds a bit too emotional to me. I shorted the 6J at 11045 (I would have sold at 057 but I was out this morning and by the time I was able to open my platform open I missed the first 12 ticks). I bought 3 of them back at 11020, and I am hoping to buy the other two back at 10984. Hoping. Best Wishes, Thales

I appreciate any real time analysis demonstrating the application of your principles that you are willing to share. Thank you for this example, and I look forward to your future contributions. Best Wishes, Thales

Nice read, Gabe! Remarkable rally for the Pound. Here is an updated GBPJPY chart I had posted a few weeks ago. I was anticipating a breakdown out the consolidation, but the Pound decided to breakup instead. Years ago in her seminar, Linda Raschke, said that "sometimes a consolidation is not a continuation pattern - sometimes its a reversal." I should say so! I do not know if the recent GBP strength is going to continue, or if the downtrend will reassert itself. But either way, today's rally was what my grandpop used to call a "a real humdinger." Best Wishes, Thales

Hi Kiwi, If you didn't feel it would be giving away too much, you could always post your charts as your system signals an entry (and thus present it in real time rather than after the trade). But, I do understand how much work goes into putting together a working auto-traded system, and therefore I fully respect that you may not want to post your trades as your system manifests its entry points. I do like the fact that I can see your entries, stops, etc even after the fact. It is interesting to me to compare how your algo trades a market to how I myself might have traded it. So, it is up to you. As far as I am concerned, your posts here are welcome, and I feel that it up to the beholder to determine for him or herself whether or not he or she can make someone else's contribution relevant to one's own trading or not. Thank you for sharing with us. Best Wishes, Thales

Apparently you all simultaneously decided to shut MinnieMouse up. Best Wishes, Thales

Yes, Brownie, that is exactly how I traded them. In fact, I think it safe to say that 99% of my stock day trades are the exact same situation. HOG turned tail quickly and stopped me out after having spent very little time in positive territory basis my long entry. I basically stopped myself out of LM and AN for no other reason than I had an appointment out of the office and so I was done for the day. LM has managed to tack on another 75 pennies or more since I exited, and even AN has managed to chop a bit higher than my exit. I am still having difficulty with my screenhunter files. Best Wishes, Thales

Hi Folks, 2/3 today: HOG: -$0.44 (Bought at 26.45, stopped 26.01) AN: +$0.20 (Bought at 19.20, sold 19.40) LM: +$1.10 (Bought 31.65, sold 32.75) I took some screen captures but I am having trouble with the files. I'll try to upload them if I can resolve the problem without losing the data. I took two 6J trades today as well, but I was unable to load the screen shots. Best Wishes, Thales

Hi Folks, Sorry for the later post, I should be back to normal within a few days. Long HOG & AN and waiting to get long LM. Best Wishes, Thales

The relevance of that level continues. Best Wishes, Thales

Hi Folks, Interesting to see how the 6B is vacillating at the earlier noted level (see post #555 above). The GBPUSD has me somewhat befuddled. Daily and weekly price action leads me to have a bearish view of this pair, and the fact that as price digs into support it is chipping away deeper and deeper likewise lead me to a bearish opinion. But, each chip deeper is met with renewed buying interest, which, at the very least, humbles me and keeps me from putting "both arms in the bear suit," as they used to say. Best Wishes, Thales

I suppose my post is one of those which you consider to be rude. You asked for alternate suggestions.. All I did was provide a suggestion that I though represented a better use of your capital than the one you proposed (and I still think my suggestion is better). Listen to Tams, and do not hesitate to use the ignore feature. Tams placed me on ignore months ago and we have gotten on famously ever since. Best Wishes, Thales

Hi Folks, I may try to get back to the desk tomorrow. Here is a quick look at current S/R on the 6B (GBPUSD futures). Best Wishes, Thales

... And there is a reason to wait for breakouts at proper points.

Hi Folks, 6J 15 minute chartss is working on what William O'Neil would consider a very nice "cup with handle" base if this were a daily or weekly stock chart. Of course, O'Neil himself is a breakout trader, and the proper buy point would be above the 164 high of the right side of the base. Best Wishes, Thales