Reading Charts in Real Time

[thalestrader 14]

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?).

 

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 We actually had withdrawn most of the equity in August to add to the funding of her small futures account (no futures trades for her yet - school makes day trading difficult).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

Edited September 24, 2009 by thalestrader

[thalestrader 14]

Hi Folks,

 

Here is the weekly GBPUSD chart showing price action subsequent to when I first posted it here last week. Two trendlines are shown. Both relevant trendlines have been violated with today's preice action. At this point, there is still some nearby potential support, so while the seed for a decent long term short has been planted, we are not guaranteed of any "green shoots," and it we do get "green shoots," we all know that such shoots do not always survive to maturity.

 

I do wish that my daughter had been here for the break below 1.6100.

 

Well, perhaps the break will stick until she gets home from school.

 

Best Wishes,

 

Thales

[thalestrader 14]

Hi Folks,

 

Here is the weekly GBPUSD chart ...

 

I forgot to add this chart with additional nearby levels noted.

 

Best Wishes,

 

Thales

[thalestrader 14]

I am not sure if this is the right place to post trades that have closed but I like this thread so I am posting it here. If someone could suggest a better place, please let me know.

Gabe

 

Hi Gabe,

 

While real time (including ahead of time) is always preferred since reading price action in real time is what will help us learn to trade more effectively, I have no objection to posting closed trades as well.

 

I do have a quation about your trade. You say in the annotation on your chart that the basis for the trad was a stop order below the swing high. Do you mean below the swing low? And if so, which bar are you identifying as having establishes a swing low?

 

Best Wishes,

 

Thales

[Gabe2004 10]

Hi Gabe,

 

While real time (including ahead of time) is always preferred since reading price action in real time is what will help us learn to trade more effectively, I have no objection to posting closed trades as well.

 

I do have a quation about your trade. You say in the annotation on your chart that the basis for the trad was a stop order below the swing high. Do you mean below the swing low? And if so, which bar are you identifying as having establishes a swing low?

 

Best Wishes,

 

Thales

 

 

Hello Thales

 

I meant Stop/Short entry below the LOW of the HIGHEST bar. Sort of an Al Brooks entry.

20:30 EST 15min is the bar I am talking about. I would like to see a small bar (doji is preffered.)

 

Basically it is a hybrid of your S/R system, Al Brooks and ME all combined.

I find that breakouts are not my cup of tea as I detect too many false ones.

 

Gabe

[Gabe2004 10]

Long/Short trade possibility for GJ.

Stop will be below/above the last swing that will form below/above the breakout point.

 

Gabe

Edited September 24, 2009 by Gabe2004

[thalestrader 14]

I find that breakouts are not my cup of tea as I detect too many false ones.Gabe

 

Hi Gabe,

 

You might find it easier if you were to focus on breakouts that are trend continuation BO's rather than trying to trade countertrend BO's.

 

For example, let us look at the potential long trade on the GBPJPY that you posted above. Now, I do not want to discourage you from taking the trade. The Pound has been pounded today, and I would expect that at least a temporary bottom would get hammered out here from which price would retrace some portion of the recent decline. Therefore, you trade may very well trigger and proceed to reach one or both of your profit targets.

 

That being said, a look at the daily chart displays a rather large, fairly clear pattern that, for those who fancy these sort of things, would identify as a "double top." Price today has pierced the intervening low between the two highs that constitute the respective "tops."

 

Now, for those who fancy these patterns, there is a common "rule of thumb" regarding price projections, i.e. a guideline for measuring the potential extent of a continued drop below the pattern low. That measurement for this particular pattern looks to identify a potential downside target of about 1500 ticks.

 

Now, there is nothing to guarantee that move will occur. In fact, your long trade might trigger and the ensuing rallymay prove to be a reversal of the recent down trend that launches the GBPJPY back to new recovery highs.

 

If the decline does continue, it will no doubt be punctuated by some rather sharp, fast, and furious rallies that will attempt to shake weaker shorts out of their positions. But, right now, at this moment, the short side has momentum and gravity on its side.

 

So, my question to you is this: Why do you identify the long trade that you do, but not also not the potential for a continuation of today's decline?

 

And a comment on your use of Brooks's material: You may consider that for breakouts, you need to be certain that you are identifying breakout points that are actual swing highs/lows, and not merely the high/low bar of an ongoing swing.

 

 

Best Wishes,

 

Thales

[Gabe2004 10]

Hi Gabe,

 

 

So, my question to you is this: Why do you identify the long trade that you do, but not also not the potential for a continuation of today's decline?

 

 

Best Wishes,

 

Thales

 

Hello Thales

 

Thank you for your comments about my chart.

Please look at it again as I have edited it probably at the exact time that you posted your reply.

I have added a short option.

 

What do you think about the entry point for the short?

 

Thanks

 

Gabe

[thalestrader 14]

What do you think about the entry point for the short?

 

Thanks

 

Gabe

 

I think that if I were trading the GBPJPY that I would probably try that short around that level as well. I never mind selling a break to new lows or buying a break to new highs so long as I have a stop loss in place and a profit target equal to or greater than my initial risk.

 

Best Wishes,

 

Thales

[thalestrader 14]

Hi Folks,

 

Here is how things look soon after the NY close five or take an hour or so for dinner.

 

Still holding the three positions short. Total cumulative ticks open profit is just over +400. That of course will fluctuate, and I would not be surprised if the open trade equity is not sharply reduced by a bounce/correction/rally after the smash the pound took against the US Dollar today.

 

Will continue to hold short against a margin call and will monitor for opportunities where additional shorts may be added.

 

Best Wishes,

 

Thales

[thalestrader 14]

I have added a short option.

 

What do you think about the entry point for the short?

 

Thanks

 

Gabe

 

How are you doing, Gabe?

 

Best Wishes,

 

Thales

[thalestrader 14]

Thales,

Two quick questions:

1.) In the picture below, would you say that this is too loose to fit the criteria I quoted in the first quote, for price drawing a line in the sand if you will? I was just trying to find an example, not the best example. Would a long at either the 1st or 2nd green arrow make sense based on the quote above?

 

2.) I've been more so doing the thing mentioned in the 2nd quote more often than not. Is there a way you go about picking which way you plan to trade, i.e. shorting the breakdown that picked a figure or playing the continuation? In this second picture below, it may not be the best example but I am trying to find something real time.

 

Would you say that price has somewhat drawn a line in the sand to the downside along with that swing high to the far right from which I have drawn the red line. And either a BO above the green line at top or down the green line bottom make sense?

 

Again, this isn't the best example but looking for something showing the general 'swings' and how it might relate to reasonable direction.

 

Hi Forrest,

 

I have to admit that I spent a bit of time with your charts, and to tell you the truth, I have a hard time looking at them and seeing anything. If you could post future charts on a white back ground with dark candles/bars, text, and no grid, I would have an easier time answering you more quickly.

 

In your first chart, I am not sure what you mean by "pbs." As far as the areas where you suggest various entries, nothing really jumps out at me as a favoable opportunity, though that may very well have more to do with the chart appearance and presentation than the price action depicted on the charts.

 

Perhaps zooming in a luttle closer (increase the bar spacing) would also help.

 

I'm sorry I couldn't do better.

 

Best Wishes,

 

Thales

[thalestrader 14]

You might find it easier if you were to focus on breakouts that are trend continuation BO's rather than trying to trade countertrend BO's.

 

 

That measurement for this particular pattern looks to identify a potential downside target of about 1500 ticks.

 

Well, I would not have thought that the first 250 ticks were imminent, but the market is going to do whatever it is that the market wants to do.

 

Best Wishes,

 

Thales

[Gabe2004 10]

How are you doing, Gabe?

 

Best Wishes,

 

Thales

 

Hello Thales

 

I got 80 pips out of the move. I was watching a movie and did not think that the move down will be so decisive and quick so I was not watching it (a blessing by itself because knowing myself, I would have closed half the position after 10-15 pips but as things happened, i got my full target for both halves).

Anyway, it was a good lesson for me iby bracketing the move.

I shoud have put my secondary target at around 143.50. I am not sure about the 1st target.

 

Thank you for your explanations and comments.

 

Take care

 

Gabe

[forrestang 10]

Hi Forrest,

 

I have to admit that I spent a bit of time with your charts, and to tell you the truth, I have a hard time looking at them and seeing anything. If you could post future charts on a white back ground with dark candles/bars, text, and no grid, I would have an easier time answering you more quickly.

 

In your first chart, I am not sure what you mean by "pbs." As far as the areas where you suggest various entries, nothing really jumps out at me as a favoable opportunity, though that may very well have more to do with the chart appearance and presentation than the price action depicted on the charts.

 

Perhaps zooming in a luttle closer (increase the bar spacing) would also help.

 

I'm sorry I couldn't do better.

 

Best Wishes,

 

Thales

 

No worries, that probably wasn't the best example or the clearest example. I will repost with something that makes more sense the next time I see it.

[Gabe2004 10]

Hello Thales

 

I got 80 pips out of the move. I was watching a movie and did not think that the move down will be so decisive and quick so I was not watching it (a blessing by itself because knowing myself, I would have closed half the position after 10-15 pips but as things happened, i got my full target for both halves).

Anyway, it was a good lesson for me iby bracketing the move.

I shoud have put my secondary target at around 143.50. I am not sure about the 1st target.

 

Thank you for your explanations and comments.

 

Take care

 

Gabe

 

Here is the chart for my trade from yesterday

Too bad that I cannot stay awake 24 hours a day without side effects

 

Notice the 50% retracement around 01:00.

 

Gabe

[thalestrader 14]

Hi Folks,

 

Due to a family illness, I will not be able to post and respond regularly over the next few weeks. I'll check in when I am able.

 

 

Best Wishes,

 

Thales

[Gabe2004 10]

Hi Folks,

 

Due to a family illness, I will not be able to post and respond regularly over the next few weeks. I'll check in when I am able.

 

 

Best Wishes,

 

Thales

 

I/we hope that all will end up well Thales.

 

Gabe

[taq 10]

Great charts thales

Here is my Updated EURJPY Chart

 

trail SL to 135.25 Shorted 135.05 t1 131.50 t2 130.05

 

RRR (Risk Reward Ratio) 20:355 , 500 time period 5-8 sessions not bad

 

updated EURJPY chart +300 pips

 

here is GBPUSD initiate long at 1.5950 expecting a bounce back upto 1.6375-80 zone

 

Regards,

TAQ

[brownsfan019 17]

Hi Folks,

 

Due to a family illness, I will not be able to post and respond regularly over the next few weeks. I'll check in when I am able.

 

 

Best Wishes,

 

Thales

 

Take care Thales. I learned over the summer that the forum isn't going anywhere, so we'll see you when time and life permits.

[thalestrader 14]

 

here is GBPUSD initiate long at 1.5950 expecting a bounce back upto 1.6375-80 zone

 

Regards,

TAQ

 

Hi Taq,

 

I know that breakouts and the traders who trade them are often held suspect by the general trading community (and I presume the general trading community includes the majority of traders, and we know how successful the majority of traders are) but I have found that life is much more simple and pleasant when I respect the breakout.

 

Best Wishes,

 

Thales

 

PS Nice trade on the EURJPY, by the way!

Edited September 28, 2009 by thalestrader

[thalestrader 14]

Hi Folks,

 

Just a quick post to update the progress of the "Pounding of the Pound" trades posted last week.

 

GBPUSD: The GBPUSD has fallen to within pips of anticipated support at 1.5800. That may be enough to exhaust the Pound sellers so as to allow for a bounce back to breakdown levels (1.5914, and then the 1.6100 area would be a perfect level to which price might rise.) A break of 1.5800 would likely lead to a drop to 1.5714 area. Below 1.5714, there are a few areas of potential support, most notably between 1.50-1.5100. However, I would anticipate that any bounce form those levels ultimately to resolve themselves to the downside for a test of 1.35. A break of 1.3500 might very well precipitate a drop to par.

 

 

 

GBPJPY: Last week I posted that GBPJPY was about to confirm what some call a "Double Top." The breakdown point was 146.74, and the target for this pattern is approximately 1600 ticks/pips/points or 16 handles (however you wish to call it, it would be an enormous move. Since that post, the GBPJPY has hit a low of 139.70, or 705 ticks, or nearly 50% of the projected move. I have noted relevant lower levels on the chart. I think the potential for this drop is considerably more than the 1600 ticks projected using the measured move off the double top. But 1600 is a minimum projection. I would like to see 139.00 +/- reached before a rally commences; but having dropped so far so fast, a snap back to test breakdown levels (143.00, 146.75) may occur at any time. Failure to rally to breakdown levels might mean an exceedingly quick fulfillment of the 1600 tick target, and an overshoot to the downside a probability.

 

 

 

 

I will check in later in the week to update the charts.

 

Best Wishes,

 

Thales

[taq 10]

Hi Taq,

 

I know that breakouts and the traders who trade them are often held suspect by the general trading community (and I presume the general trading community includes the majority of traders, and we know how successful the majority of traders are) but I have found that life is much more simple and pleasant when I respect the breakout.

 

Best Wishes,

 

Thales

 

PS Nice trade on the EURJPY, by the way!

 

I am following your threads from quite some time & this one is the best on TL.

my trading strategies are not different from yours only difference is you initiate trade at the breakout but i wait for proper entry point & probable tgts so that i can get atleast 1:3,5 RRR

 

but when i am looking for reversal trade than i expect 1:7,10 RRR (less than 30% of my trades are like this)

for ex. in last trade in GBPUSD RRR was 44:400 (i lost 20 pips bcz i closed at 5930 at closing time)

 

here is updated EURJPY covered at 130.05 500 pips in 6 sessions.

[thalestrader 14]

GBPUSD: The GBPUSD has fallen to within pips of anticipated support at 1.5800. That may be enough to exhaust the Pound sellers so as to allow for a bounce back to breakdown levels (1.5914, and then the 1.6100 area would be a perfect level to which price might rise.) A break of 1.5800 would likely lead to a drop to 1.5714 area. Below 1.5714, there are a few areas of potential support, most notably between 1.50-1.5100. However, I would anticipate that any bounce form those levels ultimately to resolve themselves to the downside for a test of 1.35. A break of 1.3500 might very well precipitate a drop to par.

 

Hi Folks,

 

I did not intend to check in today, but I wanted to make a coupl of quick points. First, the 1.5714 should read 1.5722.

 

Last night I made a quick note on the GBPUSD chart that implied a rally may have been imminent. The first chart is the market as it looked when I went to bed. The second chart is a shot from soon after I woke this morning. The third chart I just took now because I wanted to adjust the arrows drawn the night before and also label the Low, High, Higher Low that created the long entry opportunity. Price does indeed show you where it is going before it gets there.

 

Best Wishes,

 

Thales

[thalestrader 14]

my trading strategies are not different from yours only difference is you initiate trade at the breakout but i wait for proper entry point

 

I haven't smiled in days, but that made me not only smile but laugh out loud. Imagine that ... I've been trading improperly all this time! Reminds me of something Larry Hite said in his Market Wizards interview - something to the effect that "it is amazing how much money you can make from being wrong."

 

Best Wishes,

 

Thales

 

PS Please do keep posting to the thread. Your EURJPY example was excellent.