thalestrader

Hi Gabe, I do not know why it is so - size of markets? relative percentage of retail vs professional traders? number of highly liquid hours/day? I do not know. If you are asking me why I trade that way, I do it because it works best for me. Best Wishes, Thales

I just felt like it was a lot of work yesterday. Friday's have been just as good for me as any other day, though during the summer, I tend not to trade them because I like to do other things on summer Fridays. In general, if I am flat at 11:30-12:00 on a Friday, I will not initiate new positions, even though I will sometimes watch through the close. Today I will flatten at 11:30-12:00 regardless, as I have things to do this afternoon. As far as the focus of the thread, most of my trading is stocks, but it seems that folks are more interested in futures, and so I have decided that I would share futures rather than stock trades here. Best Wishes, Thales

Hi Brownie, Well, yes, strictly speaking price did trade at exactly the same low. But I approach it the way Forrest described: I would look for price to stop its decline, and then rally sufficiently to create an identifiable counter swing, followed by a swing back down to test the prior swing low. Now, I'd trade the break of that low on the very next bar. I would not look for yest another swing high before trading the break. What you are pointing to is a double test low that occurred within one down swing, not a double test of two separate swing lows separated by at least one intervening swing high. What you describe as a "push up" did not encompass a range of price movement that would qualify as a swing (it is, after all, an "inside bar," and as such it cannot be a separet swing from the prior bar, the activity of which completely encompasses the activity of the "push up" bar. Now, had there been a lateral consolidation for several bars, even if all of them were inside that first bar that printed the low, then, I would likely have traded a break. But a single inside bar does not, for the purposes of the way I approach this, sufficient to be a range unto itself. And, the whole of the particular pattern you point to is really three bars, of which the range of the second and third is each inside the initial bar of the pattern. Best Wishes, Thales

Hi Forrest, I use the double test on the ES. The examples you showed were of Yen futures and Pound futures. I do not need a double test to trade a breakout on a currency future. Best Wishes, Thales

Hi Forrest, I would say I feel the same way ... I want to see price try to rally or try to decline form the second test, and then breakout. I look for the second test when trading the ES, but it is the same type of entry as most of the trades I post, wouldn't you say? Best Wishes, Thales

Hi Folks, X did indeed mark a spot, if not necessarily the spot. I also have attached a current view of the weekly GBPUSD. I'll be trading a break of the blue line at 1.6100, with first target 11 handles down at 1.500, and second target 26 handles down with a retest of the 1.3500 low. This is not a trade where I place a stop 700 ticks above the entry point above the lower high. This is a trade where I probe the market in order to attack it. I will look for a favorable short entry on 4 hour down to the 15 minute, and look for a move that moves swiftly away from entry so that risk can be minimized while allowing the move to mature. I once heard (or read ... I do not remember) another breakout trader say that, "Money is made in chunks. You can't save a million dollars. You have to make it." I will treat the potential opportunity on the weekly GBPUSD as one where I trade for chunks, not scalp for crumbs, while making sure to keep any loss(es) crumblike, rather than letting it take a chunk out of my capital. Best Wishes, Thales

This one ended in a loss of -.50/contract. Total for the day, in hindsight, wouldashouldacoulda been +8.50 points, as the second half of the first trade should have been a +1.50 stop. I kept a break even stop, so the +1.5 on the chart is theoretical, not actual. The second trade stopped its decline before my 55.25 target, and was stopped out for +1.75 on the whole position. The third trade handed me my only loss today, -.50 on the whole position. Total was a mere +7 points after a whole lot of trading (for me). I will probably not even look at the ES tomorrow. I am still 50% short the 6B, and my stop on the remaining position is at +1, because that is what the market has dictated (entry at 1.6468, and the reaction high 1.6466, and current stop right in the middle at 1.6467. First half of the position was taken at 1.6435 (right above the upper horizontal line). Best Wishes, Thales

1) Trade 1 stop loss was 1062. I mistyped it here as 1062.25. The low prior to the entry was 1062.25, so stop loss was placed 1 tick below. After trigger, price pulled back to 1062.25 and then hit 1070 target. If some had set a stop loss based upon what I typed rather than the chart, then they would have been stopped out. My stop was 1062. 2) Trade 2 was entered on an stop at 1062. I believe I did type the correct stop loss in that post, which was 1065.25 for that trade. 3) I did not think of that as a short break there in real time, Brownie. And looking at it now, I do not see it as anything special either. Now, if you are going to ask me why I don't se anything there, I can only answer that I do not see that as a favorable place either to go short or to add to a short position. Best Wishes, Thales

Hi Folks, ES ... over and over and over and over ... Best Wishes, Thales

If the loss would be too large, adjust your position size or skip the trade - there will always be others. Most of my losses occur after price has pulled back once and resumed its rally, allowing me to raise my stop loss. So, for example, I may have an entry at 35.75, with a stop loss at 35.25. My entry is filled, price rallies to 35.99, and then pulls back to 35.63. I raise my stop loss accordingly after price rallies back to or above 35.99. Price rallies to 36.02, and then collapses to 34.99, stopping me out for a 13 penny loss on its way down. The initial stop is for those times where your entry is triggered, and price turns and drives right through that stop. It is an emergency, a disaster, a worst case scenario type of stop. My average loss is small because I rarely experience such a worst case stop out (though I do indeed have them from time to time). More often, would be this example: I have an entry at 35.75, with a stop loss at 35.25. My entry is filled, price rallies to 35.99, and then pulls back to 35.74. I raise my stop loss accordingly after price rallies back to or above 35.99. Price rallies to 36.02, and then collapses to 34.99, stopping me out for a 3 penny loss on its way down. Of course, if I were buying or shorting in the middle of muckity muck like you then I would expect to see my worst case stop hit more frequently. Best Wishes, Thales

Let's see if "X" marks the spot. I anticipate that 6B makes a new low below 1.6400.

Possible breakdown on the 6B

Updated 15 minute ES

Here is a possible short ES 1062, stop 1065.25, though as I highlight on the 15 minute, this short happens right where price will have an opportunity to dig into potential support. If the decline carries below that support, then ES should target 55, 52, and perhaps even a test of yesterday's low. Best Wishes, Thales

I enter on a 1 tick stop, e.g. this morning the test of yesterday's high at 1064 gave me a 1064.25 buy stop. No, though they might have been stop loss areas. I would have needed a lower high to print first before I would start to look for short opportunities. I trade it just as you see here. If instead price had printed 1064, and then a few bars later it printed 1064.25, and then a few bars later it printed 1064 again, I would be sitting on my hands waiting for a print at 1064.25 that then pulled back. Then I would have placed a buys stop at 1064.50. Best Wishes, Thales

Hi Folks, I was able to snap a series of shot of this morning's ES action, but the first 30 minutes are often my most hectic period of the day, so simultaneous posting is not always possible. Same pattern occurred again this morning, giving a buy point at 1064.25, and an initial stop loss of 1062.25. A wise profit target to scale out with some profits was 1070, the Globex overnight high. Looks like 1090 area is next higher target for cash, but there is no reason SP has to see that today, and it certainly has earned a rest. Also, the futures have been and continue to see at a discount to cash, so while 1090 is a cash target, futures may not print that high. TTT has this as a Short Sell day, and as the market closed at its highs yesterday, a continuation to higher highs was to be expected. Best Wishes, Thales

Hypocrisy. Traders Laboratory is not a free forum We are not allowed to disagree or criticize with your masters in the Price/Volume thread. If one does, the post is reported. And the response from leaders of that thread is the same response that TRO just gave here, to wit, "if you don't like don't read it". Why does it apply to you and your P/V participants, but not to anyone else? Shouldn't the old saying apply here,:"What's good for the goose is good for the gander"? Hypocrisy.

Thanks Gabe and Db - that is a fun game! Too bad it does not allow you to short. Will this keep an ongoing track record via cookies, or will it start as a new user each time you play? Best Wishes, Thales

Here is today's ES. I posted a series of charts showing the ES making a series of higher highs throughout the day in the "Reading Charts in Real Time" thread. This shows the ES repeating a reliable breakout pattern four times during today's session. However, you want to get in the first or second breakout to new session highs, probably refrain from most third breakouts (though today's worked), and refuse to buy the fourth. In fact, if you are still long from an earlier buy, set a sell limit to liquidate at the waht would be the fourth breakout point's buy stop, and you will find yourself often liquidating at or near the high tick of the session. I had to leave early today, so I closed my long about a point below the third breakout point. Best Wishes, Thales

Hi imorgan, Perhaps you would consider looking for stocks behaving as WFR did today. This is a common occurrence, and in many ways it is exactly the same as FNET yesterday only different. Both stocks had early, strong moves, and each offered three buy points. Now, here is a caution, the third buy point off of any base usually finds that the rally out of that base is completely retraced or more. Therefore, when you have a strong move, either up or down, where two narrow consolidations at the highs breakout to new sustained highs, I typically do not buy the third breakout. This applies to intraday rallies as well as daily and even weekly charts. Late stage bases tend to be weak. The traders who had bought the first two breakouts are usually selling on the way out of the third breakout. If the third does not retrace, and the stock offers a fourth, I will sell into that fourth breakout. Both FNET yesterday and WFR today offered three buy points. The first two led to positive results. The third breakouts stalled and a correction ensued. This much is almost scripted. Everyday, day after day you will see stocks behaving like this (for both rallies and declines). Here is where they are different: FNET's correction never ceased, and the stock never saw a new high. WFR, on the other hand, traced out a patter that some might call a "cup with handle." You can call it "macaronie and cheese" for all it matters. The point is that the stock recovered and made new highs. It did so at 12:35 EDT, more than three hours after the open. You will find these stocks breaking to new intraday highs after 12 noon. The often do so on the half-hour (12:30, 1:30, 2:30, 3:30). The time is not a requirement, just sharing an observation. For a day trade, you have a fixed, limited time. Why bother messing around with buy or sell points that may or may not lead to desired new highs or new lows? Be patient. Be demanding (but not too demanding or you will create a trading checklist that will forever keep you out of the market). Others may differ, and perhaps you will too, but the channels you are drawing do not look particular useful to me. Also, I may only close about 38% of my stock trades with a profit. But, if I simply wanted to trade for tiny 5-10-15 penny moves, I could close a much, much higher percentage of my trades for a profit. In other words, most of my trades show a 5-15 penny profit soon after entry. My willingness to see which will go for a dollar necessitates that I allow many of these small profits to run to a small loss. I suspect that these channel breaks you are using here will perhaps lead you to a similar winning% as me, i.e. approx 38%. But your average profit will likely be much too small to overcome your high % of losses. Why? Because you are buying into resistance. As with FNET, many of these stocks will not go on to make new intraday highs, which means you will experience fewer runners. You are new. Why start bad habits right from the beginning? I will tell you from personal experience, bad habits inculcated today will be damaging to you for many years to come. Why put yourself through that? I did. I hate to use such language, but frankly, it sucks. Best Wishes, Thales

I usually use HiLo bars, rather than OHLC bars as I show in the above screenshots. Some of you may find that the HL bars might help you see the establishment of S/R as it develops in real time. Anyway, I had to make an early exit as I have appointments this afternoon and may not be back before the close. Best Wishes, Thales

But it did happen twice yesterday as well. Best Wishes, Thales

It dawned on me after I made that excruciatingly long post that my trade on the ES shows precisely what I was trying to comunicate, and in fact, the ES has obliged by giving us two perfect examples in one morning. The attached chart is a keeper. Print this out and keep it near your trading station, because if you are trying to trade the ES, this chart is worth more than any book, seminar, magazine, trading course, etc and so on that costs tens, hundreds, thoudands of dollars. This pattern occurs over and over. Everyday? No. But that is where patience is required. In my opinion, I would bet that 90%+ of all trades that were breakeven or losses that are blamed on "false breakouts" are nothing more than a trader trading a test to establish a level's importance, rather than the breakout from a level the significance of which has already been established. Best Wishes, Thales

Hi BlowFish, When I day trade stocks I almost always am trading stocks that gapped at open (and I trade only in the direction of the gap) and typically enter on new session highs/lows. I watch a 5 minute chart. When I day trade the ES, I will typically watch a 5 minute chart of the day session only. I also will use a 15 minute continuous session (24 hour) chart. Currency futures I really do not look at anything other than a 15 minute chart, though I do look at certain range charts. In the end, I would suggest that all of my trading does come down to the same things: support, resistance, new highs/lows in trends and breakouts of ranges, paying attention to highs and lows, higher highs and higher lows, lower highs and lower lows. In addition to scanning through the biggest % movers in the S&P 500, I watch 6B, 6E, 6J, and the ES. I have attached an example of each chart. If you think you are seeing something that I am not addressing let me know. I haven't really thought much about that, but I do know that for ES trades, I tend to trade on a breakout only after a precise price point has been tested at least twice before it fails to hold, whereas when I trade currency futures or stocks, I am likely to trade a new high/low on the first go around. I do not know if I would say that that is because the index futures are more prone to false breakout (a term the accuracy of which I doubt) as much as index futures trade in such a way that S/R sometimes isn't established as quickly as with certain other markets. Also, what are often called false breaks are not breaks of S/R at all. For example, I remember reading somewhere here at TL where someone bemoaned the fact that he or she shorted a "false break of yesterday's low" and questioned how anyone could trade breakouts as they are so "unreliable." Prior highs and lows are indeed important, and they do represent areas of potential S/R. But it does not seem, to me at least, that a particular price ought to be considered to be SUPPORT or RESISTANCE in fact simply by virtue of the coincidence that during time period X that particular price happened to be the highest or lowest price traded. In other words, those price levels have potential significance, but that significance is not realized or established until price tests and reacts in and around those levels. So, what is often identified as a "false break" is really nothing more than part of the testing process. But, though I am what most folks call a "breakout" trader, I have bought more "breaks" of prior lows than I have shorted over the years, and I have likewise sold more breaks of prior highs than I have bought. I do not know if I am communicating my meaning very clearly. If I can come up with a more clear explanation, I'll share it. Best Wishes, Thales

Why not keep it all under one thread? I do appreciate your willing ness to post your counts as price action unfolds rather than after the fact. EW analysis often looks so clear after the fact. It sems much more difficult in real time. I hope you continue contributing. You have a good thread started here - run with it rather than splitting off into multiple threads. Best Wishes, Thales