blueberrycake

I agree with the point about the continuous nature of trading activity. At the same time to trade, one has to impose artificial conceptual structure on the market, even if it is an oversimplification of the underlying market dynamics. In your chart above, you are entering on breaks of 1-min bars and you are exiting on trendline (demand line) breaks. Both the 1-min bar boundary and the trendline are fairly crude artificial constructs, that in your own words the market doesnt much care about, yet they provide reasonably useful decision points for defining practical entry/exit rules. -bbc

If you are not a HFT trader, who can't afford 1-2ms of additional network latency, it might be simpler and cheaper to use a standard hosting company or cloud service (e.g. Amazon's EC2) to get a server, then just connect to your broker over the internet. -bbc

My observation has been that breakouts of major levels will often get tested in multiple timeframes. For instance a breakout of a multi-day high, will often be tested on the initial break (need a fast chart to see the pullback), however, you then later see another test on a 5 or a 15 minute chart (after bigger progression from breakout level) and again on the daily chart (after a multi-day thrust from the breakout level). -bbc

I've enjoyed reading you posts Mysticforex. No dead horse flagellation here. Thanks :-) If you don't mind sharing --- what sort of overall profit factor (total profits / total losses) have you seen using this approach, over the time that you've been trading it? -bbc

I bought the book and was pleased that I did. Its essentially a synthesis of DBs various posts on this board, but presented in a more structured fashion. It's not a "how to trade book", but a "how one can approach analyzing trend and Support/Resistance" book. -bbc

Unfortunately there is no single number answer to your question. There are various rules of thumb (e.g. statisticians typically look for a minimum of 30 points in a sample), but they are too general to be of much value. Some points to consider: 1) If your strategy has more or less equally sized wins/losses, then you need fewer data points than for a strategy where the results are determined by a small number of outsized winners/losses 2) If your strategy is highly profitable (e.g. wins 75% w/ 1:1 risk/reward), then you need less trades for verification than for a strategy that's mildly profitable (e.g. 60% win rate) 3) Also you want to verify your strategy not only based on the number of trades, but based on various market conditions. Analyze performance separately for periods of up, down and sideways markets, as well as highly volatile vs congestive periods. As a starting point, DBs suggestion of at least 100 trades is not a bad one. Unfortunately without knowing the precise characteristics of the outcome distribution for your strategy, its not possible to provide a good answer. In other words you may want to analyze a few dozen trades first, and then based on how the trade results are distributed, you can get a clearer understanding of what kind of sample size you need for various degrees of confidence in the observed results. Though even then a one number answer is likely to prove elusive. -bbc

Db - The stop entry above the daily bar high makes sense. I am curious, how do you quantify your stop-entry levels on intraday charts, as you've written that you don't give consideration to intraday bar boundaries . Do you use naturally forming swing highs as your entry breakout points? -bbc

This is consistent with my observations as well. When trading stock indexes and commodity futures, I never found Fibs to be of any value. However, when trading major forex pairs, I've found them to be a useful odds enhancer under some circumstances. -bbc

Looking at the trades that you've posted, a lot of them are in the middle of consolidation zones. I think being more selective about such trades may have a positive impact on your win/loss ratio. -bbc

It does look like a reasonable short setup as its a nice consolidation in a downtrend. One counter-point to consider is that if you bring up the daily, it currently looks like a pin-bar that's bouncing at the 50% retracement level from the previous swing high. -bbc

I've recently been trading the major forex futures (6E, 6J, 6B, 6A), and have been pleasantly impressed with the quality of trends, as well as their respect of important S/R lines. Having started looking at spot forex, I realized that the number of currencies and crosses available for trading is quite extraordinary. The liquidity seems a bit thin on some, but probably sufficient for longer term trading on 1D and 1H timeframes. I am curious, for those of you that have experience with a broader range of currencies, are there any minor currencies & crosses that are worth trading? By "worth trading", I mean that they respect horizontal S/R lines and MAs, and have good volatility / tendency to trend. -bbc

Two quick thoughts: 1) Price tested the resistance level and immediately fell back -- a common phenomenon. In my experience, if you want to buy a break of a resistance level, your two best options are either a) wait for price to hold above resistance for a few bars or b) move past resistance by a reasonable amount, pull-back, then signal continuation (e.g. break of pullback bar). I've found option (b) to yield more satisfying results in my own trading. 2) If you go up a timeframe (60 min), you see a normal correction in a strong downtrend. Trends that run counter to the higher timeframe trend have a higher chance of being abortive. -bbc

I hope you don't mind my saying it, but it seems like a risky thing to devote yourself to trading a method that someone posts on the internet. Maybe Thalestrader is a great trader and everything that he said is exactly right. Or maybe he is not a successful trader at all, just someone whose online persona is very different from who he really is. It's simply impossible to know one way or another. If you believe that there is merit to his method, why not download a few years worth of historical data and backtest thoroughly in replay mode? That should both help you refine the methodology and gain additional confidence in it without risking real money. I've personally read through the Thalestrader thread and have enjoyed it. I suspect that he is probably a real trader (though I obviously don't know). That being said, based on my personal experience in trading, I think there is far more discretion involved in how he decides which setups to take and which to skip than many readers of his thread suspect. -bbc

I find that some of the best entry opportunities often occur right after a thrust/shakeout. I don't know what sort of strategy you use, but you may look at entering a trade only after a test/rejection of the opposite direction. -bbc

I've been noticing something very similar in my trading of the currency futures (6E, 6J, 6B and 6A). Basically you often have very clear market structure in terms of S/R and trend on one timeframe one day, and then on a different timeframe another day. Initially I've been passing on any signals that weren't in my primary timeframe that I had done my testing with (15m), but I'm now thinking that I should retest my method (retracement to minor S/R w/ trend) on multiple timeframes, and potentially take signals in whichever timeframe has the clearest signal, then simply adjust the number of contracts traded to keep risk constant. Sounds like you have already taken this approach as well. -bbc

I've been sporadically checking out the TL chat room and it is always deserted. Is there a different chat room or IRC channel where any of the full-time traders hang out during trading hours? -bbc

Having recently transitioned from EOD trading where I used daily charts to intraday trading, I've been giving a lot of thought to the right timeframe (1m, 5m, 15m, CV, etc.) for my charts. After much experimentation, I'm coming to the conclusion that it's best to use a chart resolution where your expected trade duration for the type of move that you're trying to capture will typically be in the range of 2-20 bars. If you go below that (e.g. 1m chart while trading multi-hour swings), you'll find legitimate reversal patterns forming on the chart, which would rightfully put you out of a trade much sooner than with higher timeframe charts. That's not to say that you shouldn't fine-tune your entries/exits with a lower timeframe chart or confirm key support/resistance and trend with an even higher timeframe chart, but the key entry/exit decisions seem easiest on a chart where your trades have an average duration of 5-15 bars. Is this observation consistent with the experience of other intraday traders? -bbc

Using spot prices seems like a very good idea. At least you know that you are comparing apples to apples. Now that I have these three potential resistance levels (current contract, continuous, and spot), it'll be interesting to see which one is closest to the reversal point. Are there any sources of spot prices that you can pull directly into a charting program, such as Sierra? -bbc

You can see a good example of this in CL right now. If you look at the current (November) contract, the next significant level of resistance for the current uptrend is in the 83.50 - 84 range. If you look at a continuous chart of just the front contract, the next level of resistance is around 82. I am pretty sure we're going to see a retracement at resistance given the length of the current run, but the question is, what's the level of resistance that the major players are looking at? :hmmmm: -bbc

I've recently taken to trading physical commodities such as Oil (CL), and I am finding that there can be significant disparities in price between contracts for different delivery dates. This presents an interesting problem for establishing the correct Support/Resistance lines on the daily charts. Is it better to look at just the current contract, or does it make sense to use continuous charts of the front contracts (backadjusted?) to get a longer term view. The two approaches can yield dramatically different lines for S/R. Any thoughts from those experienced with such matters? -bbc