thalestrader

Hi Folks, The seed is planted. In addition to the short position intiiated at 1.6315, I decided to add another mini-lot equivalent at 1.6167, and our sell stop at 1.6110 which had been resting for days and days was filled. I have attached charts and FXCM screen captures that show we are now short 30K GBPUSD at an average sell of 1.6197 (1.61973 to be exact). Our trading plan at this time is to wait and see how price action unfolds. Should price establish itself below 1.6100, we will add to the position by looking for short opportunities as I described them yesterday (see post #339 and # ). We have no profit objective, i.e., we are not targeting a specifi price level with buy limits to exit the trade; and we have no expectation of profiting a fixed amount in nominal dollar terms (e.g. we are not looking to exit at a profit of $1000 or any arbitrarily set level. This is an exercise for her (and I) in identifying a potential long term swing, and trading accordingly. The only goal is to let our profits run while keeping our loss, should this occur, very small. A short word about this account: This was a small account last night. It still is, though it is considerably larger than it was last night when we made our first (losing) skirmish of the campaign. This is the account my daughter had traded over the summer. We actually had withdrawn most of the equity in August to add to the funding of her small futures account (no futures trades for her yet - school makes day trading difficult). As she and I saw the GBPUSD showing the potential for a longer term swing trade, I made a small deposit that would allow us to test and establish a small position. A margin call at this point will close all the positions and leave a $75 balance and a loss of -$50.00. I say this for no other reason than I do not want to hear all the moans, groans, lectures, etc. about being "overleveraged and underfunded." This is an exercise, a game, a "teachable moment," as they say, for my daughter and I, nothing more, and the price of admission at this point is -$20 from last night and the possible loss of -$50 of initial capital more for a total loss of -$70. At any rate, our stop loss until further notice, is a margin call. If we are stopped out, we will bring the account back to $125.00, and look for the next opportunity. Best Wishes, Thales

Yes, September 23 12am-12am low (most charts run 5pm EDT - 5pm EDT. I have no idea what made me type June 23rd, and I will go back and edit the post. Best Wishes, Thales

Hi Folks, Our first small skirmish ended with a -20 tick loss as price rallied soon after stopping us in, and etched a very nice Low-High-Higher low. I also note on the recap chart that a very favorable entry presented itself last night in and around the Frankfurt open. I believe Gabe also noted in his post above that he thought that presented a favorable short entry. My daughter and I too were not awake to act on that opportunity. We did set a sell stop below yesterday's low and we were stopped in to a short position during the London morning session at 1.6315. The position is still open, and we will risk a little more than our open trade equity to hold the position as an initial seed for what may or may not develop into a longer term short campaign against the British Pound (if Soros can do it, why not my little girl, after all?). I have attached my preferred black and white showing a recap of last night's and this morning's price action, as well as a picture of our FXCM chart showing the open position and open p/l. Best Wishes, Thales

Hi Folks, A last look at the Yen futures before bedtime. Three items of interest: 1) Look at where the decline halted from this afternoon's sell-off - prior support turned resistance turned support. 2) Note the price action following that low (Low-high-higher low) which triggered a long trade into resistance turned support turned resistance 3) Note price action subsequent to price reaching that resistance level. (High at resistance, - a pullback low - and as of this moment, a potential lower high). For those interested in this sort of thing, it might be useful to compare these Yen charts to the 6E charts I posted earlier in post #339 of this thread. Again, I am not making predictions (I am not among the initiates in the predictive arts), I am just making and taking notes. Best Wishes, Thales

Hi Folks, Update on the GBPUSD: My daughter and I are going to manage this potential position trade together in her micro account (I included a screenshot that should be familiar to FXCM traders). We had an order to sell short a small initial position at 1.6327, which was just filled within the last few minutes. This is a small "attack," and we will close the position with a small loss should price move against us. Our main point of interest is still a break of 1.6100 with a special interest in a weekly close below that figure. The plan will be to establish an initial core position and add to that position if the market does move favorably. If the market does not move favorably, we will cut our losses and look for other opportunities. Best Wishes, Thales

These two charts do not represent predictions nor actual trades. These are simply two schematics that are meant to provide examples of the type of price action I look for around S/R and how I trade it. The pulback.breakout is somehwhat easier in that I am looking for price action in and around a zone of S/R, whereas the simple breakout requires that price action find a figure near the edge of a S/R zone. Also, for every rule a reader perceives in my posts, real or imagined, is subject to being broken, especially the imaginary ones. Best Wishes, Thales

Price has declined to 1.4756 (1.4753 actual low at this point). I would here prefer to see a bounce/rally attempt and sell a break below that level. If the decline continues, then I would prefer to see price pullback toward this level, and then sell a break to new lows. A break of 1.4753 has to continue quickly below 1.4747, or risk an immediate reversal. Profit target is 1.4722, entry 1.4752, and stop loss 1.4782. R/R works (barely). Still, trade seems very uncertain and uncommitted, and I will stay the same way by standing down. I have had a good morning elsewhere, and I am going out to sit on y hands until after the market has a chance to react to the Fed Theater this afternoon. Best Wishes, Thales

The first chart shows how I determine a potential zone of support. As you can see, there is nothing fancy or mystical involved. Within that zone, I look for price to "find a figure," i.e., I prefer that within that zone, price "picks a tick" that becomes the proverbial line in the sand between prices likely declining or prices resuming the rally. I also look for price to move in clear, distinct, swings. As I said, this is not an ideal situation in that price has not yet "found a figure" and price has been moving in choppy, overlapping swings as price is consolidating at the recent highs. I would also not be inclined to play a downside break while price is between 1.4756-1.4773. The second chart basically lays out the manner in which I map out this particular type of trade. Again, this is not an ideal situation, largely because any trade here is still in the chop, and as such possesses much lower probability than it would have had if this same scenario had played out yesterday immediately following the rally into the 1.4822 high. I will post more favorable situations as they occur, rather than going back in time and showing complyed trades taken under better conditions. For this particular situation, the buy stop would be 1.4793, the stop loss would be 1.4763, and the profit targets would be a very anemic 1.4811 and a better 1.4838. The fact that the first profit target offers an 18 tick reward for having taken a 30 tick risk disqualifies this trade for me, and therefore I am not trading the 6E at this time. Also, any trade belwo 1.4764 would invalidate the long opportunity. This is basically the very same kind of opportunity that I taught my daughter to look for this summer, and she did very well with it, primarily trading the EURJPY. She would identify zones or beds of S/R, look to see if price picked a tick, and then she would wait for price to move from a low to a high to a higher low, and she would buy the breakout to a higher high; or she would wait for price to pick a tick, and then she would trade a breakdown of that figure. Obviously this would be reversed when price is rallying into a zone or bed of resistance. None of this is very complicated, and it is best learned by observation and doing. Best Wishes, Thales EDIT: I have been doing other trades and so it has taken quite a while to complete this post. During that time, I see that price has broken down, and the long would be off the table.

Hi folks, Here is the current 6E. This is not an ideal situation, but the buy stop would be 1.4793. I will add a few annotations to the chart and post it in a subsequent post, but I wanted to get this posted before it triggers (and of course, it may not trigger at all). Best Wishes, Thales

Hi Folks, I have had two losing days in a row. I'll spare you the hearing (and me the telling) of the bloody details, but since I posted this Yen chart in the morning, I will postmortem the trade here. As I said in my morning post, I would not buy a break of the 10980 level, but would wait for a break above 10992. At 7:30 EDT I placed a buy stop at 10993, and was filled on the break almost two hours later, which quickly reversed. My initial stop loss was 10940. I would have preferred 10930, but I do try to keep close to 1:1 or better, and there was a small consolidation that bottomed at 10941, so if I wanted to take the trade, that was the stop I had to use. Without that consolidation, no trade. My Profit target was 10146, so, as you can see, for 1:1, there was no room for a larger stop loss. So, I was stopped in, and price immediately pulled back to 10965. I moved my stop to 10963 (if you wish to know why 10963 and not my usual -1 tick or 10964, you will see that the 6:15 EDT bar had a high print of 10964, so I wanted to be under that figure. Price then resumed the rally, printed a new high, and again immediately pulled back. Not exactly bullish behavior, but as long as that 10965 held, price had a good probability of rallying for my profit target. Price pulled back to, you guessed it, 10965, hammering out a double bottom pullback, and resumed the rally (or so I thought). Price stalled at the overnight high, and pulled back. And pulled back. And pulled back, stopping where? You guessed it ... price printed a low tick right at my stop. Often, especially with the Yen, I get "lucky" and though price prints my stop I do not get filled. Well, in keeping with my "luck" of the last two days, I had no such luck. -30 ticks. As a consolation, price did resume its rally and struck my target at about 19:30 EDT. I would rather not have lost, but I am actually very pleased to see the Yen rally to my target before violating my initial stop. It makes it possible to prevent myself from doubting myself on the next trade. Best Wishes, Thales

Yes, much easier on the eyes, thank you. I do not participate in this thread as I do not regularly trade the NQ (I think my last NQ trade was back in the summer of 2007). But I do read the contributions here with great interest. This is an excellent thread. I know that my early trading would have been helped immeasurably; and the "learning curve," aka "losing swerve," would have been much more easily and quickly navigated had I had access to this sort of material and the experienced help so generously provided to and by the participants of this thread. Thank you, and Best Wishes, Thales

Hi Folks, The last two days the Tokyo and London traders have had all the fun. Here is the updated Yen futures. Price tapped three time before the breakout carried to next resistance level. A trade for me would be a breakout above the red horizontal line rather than the gray line where price is now. Best Wishes, Thales

GBPUSD held about 20 +/- ticks above the 9/01/2009 low (1.6111). Plan is to either sell a break of 1.6100; or, if an opportunity to short presents itself (at a time that I am able to act upon said opportunity), I will sell at a higher level, but rather than trade out at predetermined profit targets, I will simply trail the stop, anticipating a potential drop through 1.6100. Best Wishes, Thales

Hi Folks, Support and resistance on Yen futures (6J). Best Wishes, Thales

A look at GBPUSD, closing at the lows of the week ... If a favorable short opportunity presents itself on the 15M, I will likely not be trading with profit targets, but will be playing for a drop below 1.6100. Best Wishes, Thales

This should not be an either/or statement. The amount you are risking on the trade should be a function of position size relative to the difference between you entry and your stop loss. The stop loss is set by price action, not your account equity or risk parameters. If you are risking 1% of equity and your account is 100k, then you will risk $1000/trade. If the difference between your entry and stop loss is $1.00, then you will trade 1000 shares on that trade. If the difference between your stop loss and your entry is $0.25, then you will trade 4000 shares on that trade. Adjust your position size to fit the risk, not your stop loss. If you do not wish to adjust your position size, then you will need to forego trades where the risk exceeds your risk limit. If you have a 100k account, risking no more than 1% or $1000/ trade, and you wish to trade 2000 shares/ trade, then you will be able to take any trade where the risk is less than or equal to 50 pennies/share, and you will not act on any trade where the risk is greater than 50 pennies per share. Risk is always defined as the difference between your entry price and your initial stop loss. That being said, in this example you are on a two minute chart. Since you entered on a new high without a pullback, then your stop should beneath the last high, or below the 17.01 high of the 11:06 bar. Best Wishes, Thales

What has been said by anyone here in this thread that would justify your request to see trade statements? Your request is incredible. I find your EW thread interesting. I have no inclination to wish to see trade statements proving to me that you trade based upon your analysis. Who cares? It is enough for me to read your analysis and then watch to see if price action unfolds as your analysis anticipated. That is all in which I am interested. Best Wishes, Thales

Stops should not be "too close to last natural stop." Your stop loss is either right or it is wrong. If it is right, it will take you out at a point at which price action is no longer immediatley favorable to your position. It can be wrong in too ways: It can take you out before price action has turned unfavorable, or it can take you out too long after price action has turned unfavorable. You seem to believe that your stop loss was wrong for the first reason. Take a close look at where you entered, and see if you can find a more logical placement for a stop loss for a position entered at the point you entered. I suggest you do this by starting at the beginning of the day and marking off entries and initial stops. Best Wishes, Thales

... and a last look at the 6B

Hi Folks, I am done for the day and for the week. Here is a last look at the ES. Best Wishes, Thales

1) There are certainly more opportunities to participate in a trending move by trading individual issues. Everyday there are trending stocks, whereas many days the indices are simply vacillating within a range. 2) Let's not worry about what does or does not belong in the thread. As long as you are not asking about where to locate indicators, we should be ok. Best Wishes, Thales

I have no personal preference, really. As a matter of personal preference, I'd trade potatos if they'd bring the contract back and there were sufficient opportunity to make it worth while to do so. Best Wishes, Thales

I agree that you cannot ignore the effects of margin and leverage. I may be wrong, but I beleieve this is why the notion of "risk-adjusted" returns is thought to be useful. And I see no reason to have posts removed if they are the result of the natural course of the discussion within this thread. I appreciate your participation But, as a side note, I was a bit thrown by the guy yesterday asking about "Darvas Box Indicators," though. I just presumed he got himself lost, and wandered away. Your "Google" response was perfect. Best Wishes, Thales

The way I would have managed this, it would have been a -.50 (-2 ticks) loss. I always prefer to short into the abyss and buy into open sky, rather than acting in the middle of a current or recent. Best Wishes, Thales

If I were to trade the break of a three bar pattern, this is what it would look like. Best Wishes, Thales