Reading Charts in Real Time

[forrestang 10]

Thales - questions on a chart, just put them directly on the screenshot.

 

thanks

 

I took the first and the 2nd trade today myself in the ES.

 

The trade you asked about as to why not a trade, IMO it doesn't look right. I've been doing the 2Test type entry Thales described for a while now.

 

On the one you listed, it seems like there wasn't 2 tests. When I look for the 2tests, I want to see an actual retracement off of the high at least some degree before the actual B.O.

 

A lot of Thales' trades don't fit that criteria and are other types of entries.

 

ALL my trades (and ALL the ones I've posted here) have an entry with the 2 Tests occuring prior to my entry. This means I watch a WHOLE lot of trades go on w/o me(a lot of which look good otherwise), but I figured I'd focus on only one setup for now.

[forrestang 10]

I didn't catch this one, a lot of new tv shows were on tonight, damn Fringe.

 

But the G/U seems to offer something every night.

 

First picture is the micro look, second is the macro in what seems to be obvious levels of support.

[thalestrader 14]

Possible breakdown on the 6B

 

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

 

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

[thalestrader 14]

I've been doing the 2Test type entry Thales described for a while now.

 

On the one you listed, it seems like there wasn't 2 tests. When I look for the 2tests, I want to see an actual retracement off of the high at least some degree before the actual B.O.

 

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.

 

A lot of Thales' trades don't fit that criteria and are other types of entries.

 

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

[forrestang 10]

Hi Forrest,

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?

 

Most yes. I could be wrong, but it seems like some trades don't meet the 'strict' criteria of the 2tests (unless you are looking on a smaller time frame than the one posted), but I figured that was just because you can tell when a breakout is going to be particularly useful since you've been doing it for a while?

 

Like THIS one. Now I wouldn't have shorted at this point.

 

Or HERE is another one I asked you about before, because I could see why you would enter before you explained it. And while they were indeed breakouts, I would say they don't fit the necessary criteria to give a newb like me the confidence to jump in.

 

Sometimes I do see what seems to be a good area to trade the BreakOut w/o meeting my criteria, and more times than not they work out, but I also get faked out quite a bit. Eventually I think it will become more obvious.

 

Does what I'm saying make sense?

Edited September 18, 2009 by forrestang

[brownsfan019 17]

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

 

RE #3: Would you agree that there was a '2 test', meaning price did test the exact same price level twice after a push off in between? If so, would that qualify as a book '2 test' or not? Just trying to see if I am missing something there.

 

 

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.

 

 

Is that b/c this threads recent focus on the ES may have taken you away from other, easier trades? Or b/c it's Friday? Or...

 

[brownsfan019 17]

I took the first and the 2nd trade today myself in the ES.

 

The trade you asked about as to why not a trade, IMO it doesn't look right. I've been doing the 2Test type entry Thales described for a while now.

 

On the one you listed, it seems like there wasn't 2 tests. When I look for the 2tests, I want to see an actual retracement off of the high at least some degree before the actual B.O.

 

A lot of Thales' trades don't fit that criteria and are other types of entries.

 

ALL my trades (and ALL the ones I've posted here) have an entry with the 2 Tests occuring prior to my entry. This means I watch a WHOLE lot of trades go on w/o me(a lot of which look good otherwise), but I figured I'd focus on only one setup for now.

 

To me, that 3rd one did resemble a 2 test. Price was tested at the identical level 2 times, in between the 2 tests there was a push up.

[brownsfan019 17]

I didn't catch this one, a lot of new tv shows were on tonight, damn Fringe.

 

But the G/U seems to offer something every night.

 

First picture is the micro look, second is the macro in what seems to be obvious levels of support.

 

Other possible 2 tests?

[forrestang 10]

Other possible 2 tests?

 

I was responding to your last post, but I think I can convey my thouhgts based on your recent post.

 

And this is just the way I see it, I'm still getting a handle on things myself. If anyone has better ideas please post.

 

Brown,

When I look for the testing to occur, I am wanting to see actual swings, that encompass several bars. Not a 5min bar occuring at 8:30 for example(depending on what bar interval you're using), and the next bar occuring at 8:35 that matches the 8:30 bar. I want to give it time to develop, so you've got plenty of time to watch the test develop.

 

What I'm saying(for a long) is that i want to see a swing high, followed by a down retracement, followed by another swing high, followed by a retracement, THEN get ready to enter the Breakout. I have attached a chart showing this and some commentary, the chart of mine you posted with a wider tf.

 

So someone asked me yesterday with the GU short i took why I didn't get long. To me, I was worried about the possible resistance overhead. Which wasn't super solid, but to me it pushed me away. Also what I said earlier to this quote below was that if you look to the left, you'll likely see some resistance overhead, or support below where your entry might be that would make you aprehensive about taking the trade.

this is definitely a good technique thales. I have such a hard time with being patient for this kind of thing though. looking at my chart of gbp/usd i see 4 tests in a row though i expect it to break out soon

 

 

I have attached a chart showign this and some commentary.

[thalestrader 14]

I look for the second test when trading the ES

 

Most yes. I could be wrong, but it seems like some trades don't meet the 'strict' criteria of the 2tests

 

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

[thalestrader 14]

To me, that 3rd one did resemble a 2 test. Price was tested at the identical level 2 times, in between the 2 tests there was a push up.

 

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

[Gabe2004 10]

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

 

Good morninh

 

Why are currency pairsd different as far as the x2 test is concerned?

 

Thank you

 

Gabe

 

PS. Thank you for your patience and detailed explanations.

[thalestrader 14]

Is that b/c this threads recent focus on the ES may have taken you away from other, easier trades? Or b/c it's Friday? Or...

 

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

[Gabe2004 10]

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

 

Statistically intraday stock swings are larger than index swings. Is that the reason you prefer stocks to index futures?

 

Gabe

[thalestrader 14]

Why are currency pairs different as far as the x2 test is concerned?

 

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

[Gabe2004 10]

Statistically intraday stock swings are larger than index swings. Is that the reason you prefer stocks to index futures?

 

Gabe

 

I just ran some numbers on the ATR(20) of stocks > $50 devided by the closing price for yesterday.

SPY representing ES.

>> there were 523 stocks in the group.

>> SPY was #434 meaning that close to 83% of Stocks have a daily range larger than that of SPY=ES.

>> ~24% of the stocks have an ATR(20)/Close double that of SPY-ES

 

The above does not take daily volune into account.

 

My point is that if one catches a move in a stock he/she will make more $ than trading index futures. (margin requirements not factored in)

 

Doing the above analisys for stocks >$10 with trading volume > 1million, SPY=ES is out performed by 97.8% of the stocks that meet the criteria.

58% of the stocks move x2 compared with SPY=ES

 

Gabe

[thalestrader 14]

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.

 

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

 

 

Best Wishes,

 

Thales

Edited September 18, 2009 by thalestrader
spelling/typo

[thalestrader 14]

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

 

[ATTACH]13570[/ATTACH]

 

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

[sevensa 10]

I just ran some numbers on the ATR(20) of stocks > $50 devided by the closing price for yesterday.

SPY representing ES.

>> there were 523 stocks in the group.

>> SPY was #434 meaning that close to 83% of Stocks have a daily range larger than that of SPY=ES.

>> ~24% of the stocks have an ATR(20)/Close double that of SPY-ES

 

The above does not take daily volune into account.

 

My point is that if one catches a move in a stock he/she will make more $ than trading index futures. (margin requirements not factored in)

 

Doing the above analisys for stocks >$10 with trading volume > 1million, SPY=ES is out performed by 97.8% of the stocks that meet the criteria.

58% of the stocks move x2 compared with SPY=ES

 

Gabe

 

 

I don't think this is a valid conclusion (the part bold). You cannot ignore margin and leverage. To make an apple to apple comparison and conclusion like that, you need to assume a fixed investment amound, say $5000 and then see which give you more bang for your buck based on that fixed amount.

 

This is probably off topic for this thead though. Feel free to remove my post.

[thalestrader 14]

I don't think this is a valid conclusion (the part bold). You cannot ignore margin and leverage. To make an apple to apple comparison and conclusion like that, you need to assume a fixed investment amound, say $5000 and then see which give you more bang for your buck based on that fixed amount.

 

This is probably off topic for this thead though. Feel free to remove my post.

 

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

[Gabe2004 10]

I don't think this is a valid conclusion (the part bold). You cannot ignore margin and leverage. To make an apple to apple comparison and conclusion like that, you need to assume a fixed investment amound, say $5000 and then see which give you more bang for your buck based on that fixed amount.

 

This is probably off topic for this thead though. Feel free to remove my post.

 

I posted the stats as a continuation of trying to find a reason why Thales prefers stocks to futures but you may be right and this subject should be in a thread of it's own.

As a quick reply to the above, assuming you use $5000, you can buy 2 ES contracts and catch a typical daily range (hypothetical assumption) of 10 point (10%) = $1000, or buy 150 shares of a stock that trades @ $100 (30% margin) that moves 4% = $600 . In this example you are correct that my conclusion was wrong because the futures will make you more $ but I think that stocks trend better throughout the day and while you may be chopped to pieces trading futures, you can survive and do well in stocks.

 

My appologies if this did not belong here. If someone wishes to continue the debate I'll start a new thread for further replies.

 

Gabe

[thalestrader 14]

Statistically intraday stock swings are larger than index swings. Is that the reason you prefer stocks to index futures?

 

Gabe

 

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

[thalestrader 14]

I think that stocks trend better throughout the day and while you may be chopped to pieces trading futures, you can survive and do well in stocks.

 

My appologies if this did not belong here. If someone wishes to continue the debate I'll start a new thread for further replies.

 

Gabe

 

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

[thalestrader 14]

Hi Folks,

 

I am done for the day and for the week. Here is a last look at the ES.

 

Best Wishes,

 

Thales

[thalestrader 14]

Hi Folks,

 

I am done for the day and for the week. Here is a last look at the ES.

 

Best Wishes,

 

Thales

 

... and a last look at the 6B