Reading Charts in Real Time

[MidKnight 12]

Hello all,

 

I'm going to put more words into my trade posts because I feel that simply marking the blue, red, green lines is insufficient to explain why to take the trade. The actual entry on this technique is trivial, but the reasons why to take that entry are not.

 

I'm taking this short because I see that we have tested the R zone twice more last night and can see how price could go down to at least the 1.4920 area.

 

Stopped out for the full stop of -16.5 pips. 7 losses in a row, this is the most I've had in years with every trade for the week being a loss. On all of them, I've bought/sold the high/low of a false break.

[Kiwi 16]

I wonder whether you are achieving what I have done in some of my worst periods of trading Mk - cherry picking losers. I also, am not keen on be too soon but thats my personal view.

 

Cutting back to one pair, the one that's got the smallest spread - for the week. Notice I have a bias to trade only with the flow as defined by breaks of 4 hour bars.

 

 

Here is a suggestion: Why doesn't everyone practicing here stick with the same pairs that Thales is using - NO cherry picking examples from elsewhere and that includes you Thales :haha:

 

So, given it worked on these pairs for Thale's daughter, why not limit it to 4 and take every trade that sets up properly. EURJPY, EURUSD, GBPUSD, and USDJPY.

[thalestrader 14]

I like GBPUSD for a long, with a 1.6609 buy stop, stop loss -25, PT +100.

 

Best Wishes,

 

Thales

[Kiwi 16]

FWIW ... taking every break with the flow on the other ones (blue bars=while I sleep = us day)

[jonbig04 10]

Hola traders!

 

I thought it was about time for me to join in all the fun. I am a PA only trader as well and would like a smoother equity curve and just overall all more consistency in my trading. I think Thales' method will help me out quite a bit, as it has already helped many of you.

 

As of now I really don't put all that much wait on the HH's and HL's etc and I see that I am missing a big chunk of what PA has to give me. I'm hoping to combine Thales' analysis to what I already do to become a better trader.

 

My trading will likely still be a little different than everyone else's here, but we are all essentially looking for the same things, right? I also trade ES exclusively for now, but have been keeping my eye on USD/JPY (don't hate me).

 

Anyway I've attached some diagrams that outline what Thales has already said, but these kinds of things are helpful to me and may be to anyone else still unclear about what to do.

 

I have a journal here on TL as well and will be duplicating my posts here to that journal. I started it back when I really didn't even know what a HH was, so I like to keep it going somewhat.

 

Yes, I realize these could have been drawn by a 7 year old with a crayon, but that's the beauty of it!

 

 

[Don4 10]

Thales, I would say that you moved your stop by now, is it somewhere around 1.6587.

[thalestrader 14]

FWIW ... taking every break with the flow on the other ones (blue bars=while I sleep = us day)

 

How are the results thus far, if we might ask?

 

Best Wishes,

 

Thales

[RichardTodd 10]

FWIW I've been doing nightly "homework" that looks more or less like the attached chart. Basically trying to train my eyes to see the high-level swings by drawing them in by hand. Then labelling the HLs and LHs that break out. I know a lot of trades posted around here come off the "high frequency" wiggles in price... I've noticed that if you use those for tight stops on your entries while focusing only on the slower swings for the actual setup areas, you get smoother breakouts, though. I've posted about this some in other venues before.

 

I've seen Thales suggest similar exercises several times now, and I think it's kinda weird that I don't see more people trying them. If it's any enticement, I actually think drawing the highs and lows is kinda fun I know practice isn't as sexy as trading, but I'm certainly not above it when investigating an unfamiliar approach.

 

In the US, our "Thanksgiving" day is coming up, and I'd like to thank Thales for an awesome and informative thread.

[thalestrader 14]

Thales, I would say that you moved your stop by now, is it somewhere around 1.6587.

 

My stop is now -6, but I am losing patience with this trade and price needs to get in gear to the upside soon or I'll pull the rip cord.

 

Here is a look at the 1 minute. Price needs 1) to get back above the doted black line and stay there and 2) get a move on to new highs.

 

I see a long on the EURJPY as a possibility. I'll try to mark the chart and get it posted. Looks like the buy stop would be 132.23/24

 

Best Wishes,

 

Thales

[thalestrader 14]

I see a long on the EURJPY as a possibility. I'll try to mark the chart and get it posted. Looks like the buy stop would be 132.23/24

 

Current look at the EURJPY ...

 

Best Wishes,

 

Thales

[Gabe2004 10]

Here you are. To get the style you wanted (i think? chart attached), select BoxStyle = true, and make sure the penAlpha is like 100 or so. The alpha is important because otherwise you won't be able to see through to the bars beneath. Note that it also now counts in minutes by default (it used to count in bars by default, but some charts have gaps in the data that would throw off the timing).

 

Hi Richard.

 

Thank you.

This is amazing.

I wish I could program like you.

 

Gabe

[Gabe2004 10]

I wonder whether you are achieving what I have done in some of my worst periods of trading Mk - cherry picking losers. I also, am not keen on be too soon but thats my personal view.

 

Cutting back to one pair, the one that's got the smallest spread - for the week. Notice I have a bias to trade only with the flow as defined by breaks of 4 hour bars.

 

 

Here is a suggestion: Why doesn't everyone practicing here stick with the same pairs that Thales is using - NO cherry picking examples from elsewhere and that includes you Thales :haha:

 

So, given it worked on these pairs for Thale's daughter, why not limit it to 4 and take every trade that sets up properly. EURJPY, EURUSD, GBPUSD, and USDJPY.

 

 

What are the thick lines?

I am having a senior moment...

 

Gabe

[Kiwi 16]

I marked the blue and red dotted entry areas on my chart.

 

The after I'd snapped the picture and added text I looked at it again and could see internal 123breaks I hadn't marked. So I added them with the drawing package which makes thicker, shadowed lines.

 

My whole point is that there is a tendency to:

- trade against the flow (natural human tendency (read New Market Wizards, Eckhardt)

- cherry pick losers if one isn't careful

 

So one would be better off limiting oneself to the lowest spread (=highest liquidity) pairs and flagging EVERY setup here. Seeing these are the ones that Thales and daughter trade then it would seem that they will be closest to them and you don't spread yourself hunting opportunities in lots of pairs

4 pairs * 1.5 opportunities a day is still 6 trades a day which is heaps.

 

The lines were just to show that there were lots of opportunities with the flow - although an ultratight stop strategy could have strangled some before they had a chance to work and I, personally, prefer to give things a bit more room and take bigger losses if "wrong". But everyone is different.

[thalestrader 14]

Current look at the EURJPY ...

 

PT1 +12, stop is at break even, and PT2 is at +25.

 

Best Wishes,

 

Thales

[Gabe2004 10]

I marked the blue and red dotted entry areas on my chart.

 

The after I'd snapped the picture and added text I looked at it again and could see internal 123breaks I hadn't marked. So I added them with the drawing package which makes thicker, shadowed lines.

 

My whole point is that there is a tendency to:

- trade against the flow (natural human tendency (read New Market Wizards, Eckhardt)

- cherry pick losers if one isn't careful

 

So one would be better off limiting oneself to the lowest spread (=highest liquidity) pairs and flagging EVERY setup here. Seeing these are the ones that Thales and daughter trade then it would seem that they will be closest to them and you don't spread yourself hunting opportunities in lots of pairs

4 pairs * 1.5 opportunities a day is still 6 trades a day which is heaps.

 

The lines were just to show that there were lots of opportunities with the flow - although an ultratight stop strategy could have strangled some before they had a chance to work and I, personally, prefer to give things a bit more room and take bigger losses if "wrong". But everyone is different.

 

Where are you profit targets and SL points?

It would help if you mark them on the chart.

 

Thanks

 

Gabe

[thalestrader 14]

I like GBPUSD for a long, with a 1.6609 buy stop, stop loss -25, PT +100.

 

Best Wishes,

 

Thales

 

I pulled the rip cord on this trade and net was +1.7 ticks. Perhaps I will prove to have been a tad too impatient with this one, as price is consolidating at session highs, but I entered about 10 ticks higher than I would have liked, and I was looking for a swift break higher.

 

Best Wishes,

 

Thales

[brownsfan019 17]

I'd like to make an observation that I've noticed on Thales' charts that might help those trying to mimic his trades - quite a few of the H, L, HL that seem to get a quick burst occur where the H,L,HL where the total amount of candles in the grouping is under 5. I do best with pictures:

 

 

 

 

I would think the idea being you'd want price to fairly quickly get your HL or LH (esp on a 15 min chart) whereas if the test takes 8, 10+ candles to get there, some of the momentum you were expecting may have already been exhausted.

 

Again, just an observation and could just be a coincidence that the last few trades fit that criteria.

[BlowFish 10]

I'm still having a really hard time pulling the trigger on my live account. I considered opening a small forex account to work up to full size, but when I played around on a demo account for a little while, I soon remembered why I trade currency futures rather than spot forex, and would never go back.

 

I saw an excellent GU trade this morning, only to let it make 25 ticks or so without me...I was afraid because there was what appeared to be a losing trade a short while before it.

 

I'm watching a setup on the EU (which I didn't take) that would have been a 9 tick loser, which will no doubt keep me out of the next potential winning trade out of fear.

 

I'm so frustrated with myself. I haven't taken a single trade this week.

 

I'm currently watching the JPY/USD (6J), possibly looking for a break of 1.1286 for the short...

 

At least you seem to be being reasonably honest with yourself. It is quite easy to make excuses ("I'm waiting for only the very bests setups"). Maybe do the exercise that Mark Douglas suggests. Not sure if you are familiar with that it boils down to taking 40 trades absolutely religiously but obviously there is a bit more to it than that.

 

EDIT deleted comment on liquidity of mini's....was answered while I slept.

Edited November 25, 2009 by BlowFish

[BlowFish 10]

Deleted----------- more on mini liquidity that Cory kindly provided figures for.

Edited November 25, 2009 by BlowFish

[BlowFish 10]

Looks like I made the right decision...taking the 10 tick loss. Even if price comes back and makes the trade successful, worst case I could just re-enter at a break of the low or something like that. Like it's been said on here before, easier to make up that 10 tick loss than a potential 25 tick loss.

 

I dunno if it is a good idea to determine if you did the right thing by what price subsequently did. Did you do the right thing according to your plan? Did you do the right thing according to what price was doing when you made the decision to close?

[BlowFish 10]

I pulled the rip cord on this trade and net was +1.7 ticks. Perhaps I will prove to have been a tad too impatient with this one, as price is consolidating at session highs, but I entered about 10 ticks higher than I would have liked, and I was looking for a swift break higher.

 

Best Wishes,

 

Thales

 

Kind of interesting playing catch up on this thread (seems busiest whilst I sleep) Knowing where cable is trading now when I read your entry post puts a whole different slant on things

[thalestrader 14]

Kind of interesting playing catch up on this thread (seems busiest whilst I sleep) Knowing where cable is trading now when I read your entry post puts a whole different slant on things

 

That is definitely one for the couldaswouldashoulda file: The initial entry should have been 1.6590, but for whatever reason I hadn't been paying attention (probably reading and posting here to this thread), and I missed that initial break up. By the time I got back to trading, price was above 1.6600. I placed a limit to buy a pullback at 1.6598. No luck. Finally, I settled for a break of the then rally high od 1.6607, so my buy stop was 1.6609 to acount for the spread. Had price started its upward parabola then, I'd easily have held for the 1.6709 target. As it did not, and as I am an instant gratification type of trader, I moved exited at the market in a moment of frustration for +1.7 ticks. Like I said, "couldawouldashoulda."

 

At least I had sense enough to let our long EURJPY alone with a break even stop and go to bed. We had a PT set for 1.3250, which gave +26.5 on 1/2 in addition to +12 on the first half, for a +38.5 +1.7 = +40.2/2 = +20.1 per unit for the night.

 

Of course, holding that GBPUSD couldashouldawoulda have meant a +69.25/unit.

 

Here is how the charts look to me this morning.

 

Best Wishes,

 

Thales

[thalestrader 14]

I'd like to make an observation that I've noticed on Thales' charts that might help those trying to mimic his trades - quite a few of the H, L, HL that seem to get a quick burst occur where the H,L,HL where the total amount of candles in the grouping is under 5. I do best with pictures ... I would think the idea being you'd want price to fairly quickly get your HL or LH (esp on a 15 min chart) whereas if the test takes 8, 10+ candles to get there, some of the momentum you were expecting may have already been exhausted.

 

Again, just an observation and could just be a coincidence that the last few trades fit that criteria.

 

I have been trying to draw folks attention to the three bar pattern you are observing. It very often marks the low/high of a swing of some degree.

 

I would caution against thinking that this is an approach whereby people should start "counting bars."

 

The notion of "degree of swing" is important to this approach (I would imagine that it is important to any approach that is based upon price and what it is doing). For example, the anyone familiar with the approach discussed in the price/volume thread knows the terms "tapes, laterals, and traverses." For me, each of these simply denotes a swing of some degree.

 

The best current example can be found on the AUDUSD. I did not trade this, but I am "cherry picking" the example because it is happening now. In fact, a new entry has just triggered this morning. I have attached four charts, showing four possible long entries with profit targets using this approach.

 

As you will see, number of bars is irrelevant. What is relevant is the following:

 

1) In each case, the swings of similar degree are distinct and obvious. If you have to squint to see the opportunity, open your eyes and move on as there is nothing there.

 

2) There is no question that price has, in each case, etched out a Low, followed by a rally high, followed by a pullback that holds above the prior low (i.e. a higher low), followed by a break up of the rally high.

 

So, Brownie, your observation is correct, and it points to an important and valuable piece of this approach. This is a very common pattern (I have also attached two more in one chart from this morning on the EURJPY). I have pointed it out at least five times during the last week or so, and I assure you I did not point out each and every occurrence.

 

Keep in mind that this pattern is occurring at a very small degree of trend. It may be counter to higher degree trends. It may mark important long-term tops and bottoms, but you will only know that in hindsight.

 

Keep in mind too that this approach works at all degrees of swing or degrees of trend.

 

This will become apparent as one commences the practice of annotating one chart of one market for one week. If you do not get it after one week, try it for one more. If you do not get it after two weeks of diligently applying yourself to identifying the Highs and Lows and the swings points and the breaks, then I suspect that this may not be for you. This should not take long.

 

Of course, if you try to short cut it, you may never get it, even though it may very well be a good fit for you. But if you try to short cut it, you will likely just short circuit it, and you will never know what couldashouldawoulda been.

 

This approach is about looking for Highs and Lows, Higher Highs and Higher Lows, Lower Lows and Lower Highs to find your entries, and to use S/R for your stops and your profit targets. So, for anyone trying to learn this approach, the place to start is by looking for highs and lows. If you do not learn to see, you will fail. I guarantee it.

 

Best Wishes,

 

Thales

[thalestrader 14]

Stopped out for the full stop of -16.5 pips. 7 losses in a row, this is the most I've had in years with every trade for the week being a loss. On all of them, I've bought/sold the high/low of a false break.

 

Sounds as though you should stop trading this approach and try to identify why you are having these difficulties. Seven losses in a row is a tough stretch.

 

I didn't see your EURUSD post until after the fact. For what its worth, except for Sundays, it is probably best not to place orders between the NY close and the Tokyo open.

 

In the end, you will never know which trades will be your winners and which your losers, but if you hit seven in a row where price doesn't even move far enough in your favor to get to breakeven, then it would seem that something is wrong, and it is best to stop the bleeding and figure out where the problem is. "If it ain't broke, don't fix it," has as its corollary "if it is obviously smashed, fix or replace."

 

Here is my current EURUSD short. I'm trading this very very small, and this is it for me until next Tuesday.

 

I hope to see you back here, MidK. Though your frustration is evident, and I understand that you may already have moved on. In either case, I wish you well and much success.

 

Best Wishes,

 

Thales

[thalestrader 14]

Here is my current EURUSD short. I'm trading this very very small, and this is it for me until next Tuesday.

 

EURUSD touched my break even SLmove, and now its taking a bit of a bounce. A break even trade is ok with me.

 

Best Wishes,

 

Thales