Reading Charts in Real Time

[Don4 10]

Requires too large of a stop for me.

 

I didnt have this system when I traded futures and in hindsight anybody could look at your chart and say anything but here is my opinion. I do believe Gabe was right. In the way Thales trades. But Im not Thales so you might be right. But just for giggles here is the way I believe I would have traded it.

 

Don

[thalestrader 14]

Sure, at your leisure.

 

With kind regards,

MK

 

Hi MidK,

 

Interesting note on your short Aussie trade - my data does not show the slightly lower low that IB shows. So, this is one case where your broker's data triggered a trade that would not have been triggered at another broker.

 

Even so, I see what you are doing, and I'd even agree with the entry (though I would not have traded it), had it occurred sooner. But price really fell into a little chop zone.

 

In other words, I see what you think you were seeing, but what you think you were seeing wan't in fact what you were seeing. That sentence just gave me a migraine putting it together, so I'll leave it up to you to try to puzzle that out.

 

Best Wishes,

 

Thales

[jonbig04 10]

I didnt have this system when I traded futures and in hindsight anybody could look at your chart and say anything but here is my opinion. I do believe Gabe was right. In the way Thales trades. But Im not Thales so you might be right. But just for giggles here is the way I believe I would have traded it.

[ATTACH]15961[/ATTACH]

 

Don

 

I did like Gabe's entry, I personally just wouldn't have taken it b/c of the stop requirement. But IMO it would have been valid entry that simply didn't work out.

 

I have to admit that I can quite figure out your entry as price had yet to make a LL. My main problem though is that it looks like you want to take some profit at +1.25ES on a trade that requires a 1.25ES stop.

 

Not that there is anything wrong with that, but for me personally I don't even move my stop to BE until around +5 ES (ideally around an area where price might reverse against me) and my smallest profit target is around 10ES with a max stop of around 2ES. And with the exception of the move to BE, I don't scale or trail. To me profit targets that small would need a much smaller time frame.

[thalestrader 14]

Hiya Thales,

 

As I saw it at that time, this was a H-L-LH into the the late resistance from Friday. Based on your questions, I have one for you of which I will ask after answering yours.

 

1) No, I don't see why you were so aggressive on the first long. Even after you posted it I remember saying to myself that I thought that was an aggressive entry and I didn't really see it. At the time of your first entry, yes, it could have been a false break below Friday's low but I still saw it as an aggressive stance (which is fine of course!). The second one I could see as taking, maybe....but it isn't what I would have called an obvious trade, especially with the R from late Friday just overhead. If I only noticed the second one and wasn't in from somewhere near the assumed false break after the open, then I would have felt too late getting on the long side as this would have been in the middle of a fairly tight range (tight for GJ) and would have preferred to play the edges of that range. The first obvious trade I saw based on the type of trades posted in this thread came at the short that I took.

 

2) I can't answer this question properly because my hit rate with this style is so terribly low that most of my entries are losers. Because of that, no, I wouldn't have reversed. Because of the lack of skill, it permeates into the rest of the trade management encompassing everything from moving stops, pulling the rip cord, exiting close enough to PT etc. I'm sure you can see why - with such a low percent of winning trades (winning decisions), each decision made has a better chance of being the opposite to what is done.

 

Now my question to you is why were you not concerned about the R overhead - if you were concerned, then you would have been looking for any reason to get short. But you don't seem to be and are even saying it isn't obvious. I've seen you post countless trade ideas with less of a reason to enter (like your two longs right here). Obviously as it turned out, your ideas were right and mine was wrong, but I just can't see why.

 

The above refer to your GJ short.

 

Of course I took note of the potential resistance, but that is what a break even stop is for - to protect a profit from turning to a loss due to a sudden reversal. But consider my profit targets. What are they but potential resistance in the path of a further rally. So while you suggest that I should have been looking for "any reson to get short," I'd respond by saying that price has indicated in wants to go higher. I will watch price for indictations to the contrary and act acordingly.

 

As far as reasons to get long (of which you say I had little reason to get long, I'd say that I had very sound reasons to get long. The EJ, which is the pair my daughter and I traded, tested support from the prior day and started etching out a series of higher highs and higher lows. The GJ gapped open below the prior days low and quickly reversed higher, a situation some would refer to as an "Oops" trade as named by Larry Williams years ago.

 

Now, the first entry, which I posted in real time on the EJ, you say you do not see. I would suggest you put up a one minute chart, and see if you see it then. You say that the second long entry isn't obvious. I would suggest that if you think that that long is not obvious but that your short entry was obvious, then I do believe you would benefit from taking a week, stop your trading of this approach, pick one market, and follow a fifteen minute chart tick by tick.

 

Best Wishes,

 

Thales

[Don4 10]

Hi MidK,

 

Interesting note on your short Aussie trade - my data does not show the slightly lower low that IB shows. So, this is one case where your broker's data triggered a trade that would not have been triggered at another broker.

 

Even so, I see what you are doing, and I'd even agree with the entry (though I would not have traded it), had it occurred sooner. But price really fell into a little chop zone.

 

In other words, I see what you think you were seeing, but what you think you were seeing wan't in fact what you were seeing. That sentence just gave me a migraine putting it together, so I'll leave it up to you to try to puzzle that out.

 

Best Wishes,

 

Thales

 

Thales, price on MB trading was the same as IB, (I hope this picture is right.) But forex is a crazy business though!:boxing:

 

Don

[thalestrader 14]

Thales, price on MB trading was the same as IB, (I hope this picture is right.) But forex is a crazy business though!:boxing:

 

Don

 

I thought MidK's chart was from Interactive brokers, maybe he uses IBfx. At any rate, his data appears to show a low tick that stopped him into a trade that would not have triggered at at least thre other brokers.

 

Best Wishes,

 

Thales

[MidKnight 12]

Hi Thales,

 

Thanks for taking the time to look over those trades, have a think about them, and annotate your thoughts on a chart. I understand very well that under the hood, so to speak, a discretionary method is a complex if/then decision tree of which the trader is usually not aware of. So I can see why some of your comments are in conflict. I hope you can see though that simply applying the breakout of a trend, or the 1-2-3 reversal type on their own is of very little merit. I think there was only 1 of those 7 trades that you agreed with, yet all those trades were breakout plays. You are filtering them, but just not aware of it. As I've said several times in this thread, the breakouts of pivots (with the trend or the 1-2-3s) is just an execution trigger. What makes it work for you is that you are right about the markets near term movement - it isn't that you take every pivot break. And that is fine - it is a discretionary method and I'm a big fan of discretion because once experience accumulates (an eye or feel is developed) it ends up feeding on itself and just gets better and better over time.

 

With regards to the GJ longs you suggested - yeah sure, I could drop down to a 1min chart and look at the PA within that. Dropping down in time frame looking for a PA reason to put on a trade can always be done. Your post suggesting those longs was on the 15m though, so that is what I based my response on. I know from my own experiences that when I start dropping down in time frame, then I'm looking for a reason, any reason to put a trade on, no matter how small. I already have a strong feel for where the market may go, so I'm just looking for any excuse to get in. That to me is how your GJ longs look. You had a strong notion that prices may go higher and you were looking for the slightest reason to get in. Looking back through this thread you can find many trades where you do that with less obvious trades that are a result of you dropping down in time frame either mentally or maybe you actually have smaller time frame charts open. It's a hallmark of a highly competent trader IMHO.

 

The reason these 7 trades didn't work out has everything to do with applying the right entry with the wrong context.

 

Thanks again for looking over these.

 

With kind regards,

MK

 

PS: Yes my data comes from IBs IDEALPRO network - it's an ECN thingie. Some of market makers are IB FX but it is not limited to that - UBS, Citigroup. Credit Suisse are a few of the other liquidity providers. I realize IB data can easily varry from one feed to another. Only 1 out of 7 wasn't bad I thought

[BlowFish 10]

Thales, price on MB trading was the same as IB, (I hope this picture is right.) But forex is a crazy business though!:boxing:

 

Don

 

Unusual that the 'proper' feeds poked through by a tick. Usually it is the bookies that run a little further thus triggering orders.

[Kiwi 16]

Unusual that the 'proper' feeds poked through by a tick. Usually it is the bookies that run a little further thus triggering orders.

 

Its just a market. And with forex there isn't a trade. All it needs is for one party to pull their bid or ask to stretch the midpoint (if that's what you're triggering from).

[BlowFish 10]

Its just a market. And with forex there isn't a trade. All it needs is for one party to pull their bid or ask to stretch the midpoint (if that's what you're triggering from).

 

Actually there are two types of 'market'. IB & MBT get there data from interbank feeds you place your trade in the 'real' market with one of those banks. Most brokers are actually bookies they can pretty much make up the prices (though obviously they can only deviate a few ticks) when you trade you are placing a bet with the bookie. If you compare a bookie with a 'real' feed they regularly run the market a tick or two beyond any 'real' quote to trigger stops.

 

Another difference is IB charts mid price between bid and ask though to get filled you need a bank to take your trade (as in any real market you can join the bid or offer or even go inside bid or inside offer). A lot of the bookies chart based on best bid or ask to get filled they simply need to decide whether they want to take your bet or not, of course if they have a lot of bets on once side they might decide to hedge, they have the luxury of slipping your bet to the price they finally get hedged at. They also have the option of slipping your bet to add a tick or two of profit to their bottom line.

 

Short version yes it is just a market but with the bookies you are not participating in it. You are taking a bet on the prices they choose to quote. The bookies can and do manipulate the price a tick or two if it suits them. From what I understand the MT4 platform (back end) actually has those 'features' built in.

[BlowFish 10]

This was what I was trying to remember...of course just because these facilities are available does not mean a 'broker' has to use them.

[BlowFish 10]

Anyway back to normal programming....

 

MK, many people that trade 'price action' 'zoom out' to determine S/R. This is not advocating a particular type of bar but 4 hour or daily are commonly used I sometimes use 1 hour squished up a bit.

 

The thing is looking for reasonably 'significant' levels of S/R. I think you can greatly increase your odds of success by initiating trades in these areas. You can take trades at more minor levels and TT sometimes does but the best ones occur at more significant S/R.

 

There is nothing really 'hard' about establishing S/R levels/zones the tricky thing is establishing ones that are appropriate for what you are doing. (significant enough if you like). Sure you get all sorts of double tops tests break outs on a fast chart but they are far less likely to go far and may well re test before they do. In my case if there are not good multi day (or week) levels to trade against I often find myself looking for slightly less significant zones this does not usually work out so well. Irritatingly price often goes on to the more major level and turns beautifully. (had a couple of DAX trades just like that last week) Put anther way a H L LH sequence that is over in 10 seconds is less likely to produce the end of this bear than on that say takes a couple of months to complete.

 

I am not sure if you can see what I am driving at. If you look for support that has been established and tested over a few days and then look for a 'good' 123 to form there over the course of an hour or three you are likely to get a decent tradeable reaction (even if S does eventually break) .

 

Many people talk about waiting for the 'best' setups, to me that is waiting for the best location rather than the crispest pattern. If you take the other trades they are the ones you want to be taking early profits and moving stops to BE asap.

[Gabe2004 10]

 

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.

 

 

 

Seems to be a contradiction.

 

Could you explain please ? thanks

 

Gabe

[Gabe2004 10]

The above refer to your GJ short.

 

Of course I took note of the potential resistance, but that is what a break even stop is for - to protect a profit from turning to a loss due to a sudden reversal. But consider my profit targets. What are they but potential resistance in the path of a further rally. So while you suggest that I should have been looking for "any reson to get short," I'd respond by saying that price has indicated in wants to go higher. I will watch price for indictations to the contrary and act acordingly.

 

As far as reasons to get long (of which you say I had little reason to get long, I'd say that I had very sound reasons to get long. The EJ, which is the pair my daughter and I traded, tested support from the prior day and started etching out a series of higher highs and higher lows. The GJ gapped open below the prior days low and quickly reversed higher, a situation some would refer to as an "Oops" trade as named by Larry Williams years ago.

 

Now, the first entry, which I posted in real time on the EJ, you say you do not see. I would suggest you put up a one minute chart, and see if you see it then. You say that the second long entry isn't obvious. I would suggest that if you think that that long is not obvious but that your short entry was obvious, then I do believe you would benefit from taking a week, stop your trading of this approach, pick one market, and follow a fifteen minute chart tick by tick.

 

Best Wishes,

 

Thales

 

 

In several post when the entry based on the 15 min was not obvious you refered to a smaller time frame.

It is confusiong because I was under the impression that we are sipposed to look at trades only based on the 15 min charts.

Comparing GJ to EJ is something I do for a long time but this is the first time you refer to the comparison as part of your method.

Someone mentioned that you FILTER your trades.

I think that the many years of experience behind you are the answer why you succeed while others fail.

There are things that will be revealed to us over time, in your posts, that were not htere in the initial introduction.

A while back I paid for the trading manual of a trader who to this day makes money almost on a daily basis.

He was very open about his system but I could never make money with it.

There is another person whith whom I discussed different trading strategies and eventhough he was very open in explaining his method (verbal, charts etc) I do not, to this day, understand what he does (to the point of making money, that is).

Some people suggested that engineers are the worst traders. Maybe that is the case and maybe your background - which might be of a more liberal arts type would explain the differences.

Maybe we should make a "Turtles" experiment (it seems as if you are doing it already with MK) and see what happens.

If you don't mind, I will try and formalize your trading method and others -again with your permission - are welcom to join me.

The idea is to concentrate every nuance that comes up in your posts.

Like the relationship between pairs, the proximity to round numbers, the distance from the start of the move, "For what its worth, except for Sundays, it is probably best not to place orders between the NY close and the Tokyo open", "I rarely am willing to enter a new currency trade after 2-2:30Pm EST, and almost never between 4PM EST and 7PM EST except on Sundays, which can be very good during Sydney and pre-Tokyo" etc.

if after having all the above detailed information and many hours of screen time one will not get it, than as you wrote somewhere - one should look for a different think to do rather than trade (couldn't find the post where you wrote that)

 

Gabe

[Cory2679 11]

People keep attributing Thales' success to years and years of experience, and an almost subconcious way that he must filter his trades because of those years and years of experience.

 

BUT...did he not teach his daughter to trade in a MONTH?...and then she subsequently went to trade for the 3 month summer, turning $25 into nearly $1,000...after just a month of pre-trading training?

 

I don't know THE answer as to why some people seem to pick this up and some people seem to struggle a lot, but based on the example set by his daughter, I don't think the answer is simply that he has years and years experience, and someone without the experience won't succeed.

 

I don't know the answer, but I don't think the answer is lots and lots of time and experience. It must be something else...

 

Just my

 

-Cory

[Marko23 10]

...

I don't know the answer, but I don't think the answer is lots and lots of time and experience. It must be something else

...

-Cory

 

His daughter had nothing to unlearn.

[Cory2679 11]

His daughter had nothing to unlearn.

 

Ahh...good point, Marko.

[thalestrader 14]

In several post when the entry based on the 15 min was not obvious you referred to a smaller time frame. It is confusing because I was under the impression that we are supposed to look at trades only based on the 15 min charts.

 

I made a post a week or so ago about one particular bar that Kiwi referred to as a pin bar. In that post (I'm sure you can find it) I mentioned that if the low of that bar occurred first, followed by a rally t0 the high of that bar, followed by a pullback into the bar's close, I would perhaps have bought a break of that bar's high.

 

I mention that here because in real time, whether I am watching a tick chart or a daily chart, I can see what price is doing. And so can you.

 

However, when discussing dead charts, i.e. discussing price action that occurred in the past, most bar charts give you only a OHLC, and while you know by definition that the open happened first and the close happened last, and you know the range of price during the period of that bar, you do not know anything as to how the market really behaved during that period of time. Since I was discussing a dead chart with MidK, I referred him to the one minute chart of the EJ so that he could, in effect, "reconstruct" the path price was etching out at the time.

 

I know that DbPhoenix has made this point in his threads, and I have reiterated it myself a number of times: Price arriving at an anticipated support level is not in and of itself a buy signal. What matters is what price does when it gets there, how the market behaves. If you go back to last Sunday's open on the EJ, you will see that price pushed down to test the prior day's low, and then rallied, pulled back but held above the session low, and then continued to rally to a new high. This is not the case of "forcing a trade" or looking for "any reason to get long." This is watching price for indications of whether it will hold a support level or break below it.

 

MidK asked in one of his posts why I was not concerned about the "overhead resistance." Well, so long as there is enough daylight between my entry point and that resistance level to allow me to exit either with a profit or at least with a break even stop, and the amount of daylight is equal to our greater than my initial stop loss, then there is enough daylight to cause me to trade so long as that is what price indicates I should do.

 

MidK further commented that if I were concerned about that resistance, I should have been looking for any reason to get short. I never look for any reason to get short or long. I just wait for price to indicate whither it will go. If price rallies strongly into resistance and then trades sideways, I am not thinking short. If price rallies strongly into resistance and then sharply reverses down, I will then start to look for an indication to get short, i.e. a rally that fails to carry higher followed by a resumption of the decline from the high printed at resistance.

 

The point of all this is that time frame doesn't matter. What matters is what price is doing.

 

Price is not invisible, but we seem to make it so.

 

We cut it up into "bars," and we reduce it through mathematical equations and we overlay and occlude it with lines representing not itself but the products, sums, differences, and quotients of our attempted reductions.

 

All you need to do is watch, and by watching you will learn to see price for itself, rather than for what you currently think it is.

 

I have suggested many times now that anyone who wants to learn to trade ought to pick one market, and for one week, maybe two weeks, certainly no more than three weeks, do nothing but watch price action unfold tick by tick on a fifteen minute chart, marking off highs and lows (or what you believe to be highs or lows at the time).

 

Do not trade, just watch.

 

If you do not do this, and you are struggling to understand what I am doing, I can do no more to help you. At some point, you have to help yourself. Do for one week what nearly no one, apparently, is willing to do, and then, if trading is indeed for you, you will find yourself able to live the rest of your life as nearly no one else is able to do.

 

Someone mentioned that you FILTER your trades.

 

1) Well, there are certain times during which I will not trade. My approach is technical, and we all know that technical analysis only works in freely traded, liquid markets. As such, I do not trust price's indications during times of relative illiquidity as I do when many more participants are trading, looking to make their daily book. Thus I avoid trading currency futures during the time between the NY close and the Tokyo open. For stocks, I like to initiate most of positions within the first 20 minutes of the open, and while I do occasionally open a trade between 11 AM est and 1 PM est, I generally avoid doing so. Is that filtering trades, or just trading smart?

 

2) I do distinguish between price moving impulsively, making a clear and clean succession of higher highs/higher lows or lower lows/lower highs, versus price chopping around, with a lot overlapping activity. I prefer to trade in the direction of the impulsive moves and I avoid entering during sideways, choppy, overlapping periods. Is that filtering trades, or just trading smart?

 

3) I watch price moves through its levels without regard for the bar or candle being printed on my chart. What matters to me is where price is relative to its most recent high and low, and whether it is breaking to new highs, even within a bar, or breaking to new lows, even within a bar. Is that filtering trades, or just trading smart?

 

4) I do try to enter after the first reaction off of the initial turn from an anticipated support or resistance level, rather than initiating a completely new position after price has already moved 50 or 100 or 150 ticks through a succession of important levels. Is that filtering trades, or just trading smart?

 

5) I trade based upon what I see on my price chart and not upon what my personal opinion concerning the state of the economy, the "value of the market," or what I expect China might do tomorrow. Is that filtering my trades, or just trading smart?

 

All of which, each and every point point, I have stated and demonstrated here in this thread (by the way, Gabe, I was only discussing the GJ because that is the market MidK traded, and I was not suggesting that I watch the EJ and GJ and compare them to make trade decisions - I do not).

 

Finally, MidK has said that the L-H-HL/H-L-LH sequence trigger is, on its own, of not much value. I may be mistaken, but it seems as though he bases that assessment upon a scattering of trades across a number of markets.

 

When I first posted that chart that showed the H-L's and everyone had this "Ahaa" moment, I said that if you simply pick one market and trade every single one of these sequences, using an fixed 15-20 tick stop and a 20-30 tick profit target (I cannot remember exactly the random numbers I used but you get the idea) that you would, over time, be net profitable. The takeaway, of course, which despite my repeated pleadings has been largely ignored, was to focus on one market.

 

Again, I may be mistaken, but MidK seems to have applied himself to trading a sequence or two here and there on multiple pairs. Learn it on one market, and the ability to apply it to multiple markets will follow. Try to learn it on multiple markets, you will likely fail ever to be successful at aplplying it at all.

 

I never said that there would not be losing trades, break even trades, and merely marginally profitable trades, but such an application as Midk's raises the odds of finding a disproportionate number of unfavorable trades. That is, if you take one AU trade, rather than every opportunity the AU presents, will yield a random outcome.

 

I do not want to appear as though I am picking on Midk, and I very much appreciate his sharing his experiences here openly and honestly. Of the seven losing trades he posted, three occurred on the same market (GU) in the same direction (short) while price was making a 150+ pip decline. I've been there. I know exactly how that feels. I have done it more times than I can count. Let me tell you what I learned - if you are repeatedly shorting a falling market and you are still losing money, you are doing something wrong and you need to stop yourself.

 

Finally, the ability to understand the mechanics of reading price action are a necessary but not a sufficient condition of trading success. The ability to do so will mean little without the emotional discipline required to deploy that skill and make a profit.

 

Furthermore, the ability itself will likely remain elusive without the discipline required to sit on your hands and watch and study price action sufficiently. It doesn't take long to learn, but it does take patience and the ability to watch and observe without trading. Here is an excerpt from a post I made not long ago on how I approached the task of teaching my daughter to trade:

 

If I were to train a new trader, I would do it very much as I taught my daughter. While it wasn't formalized before we started, this is more or less the path we took:

 

I. Psychology & Emotions

 

No Trading ...

 

II. Reading Price - Theory

 

No Trading ...

 

III Reading Price Live

 

No Trading

 

She sat with me and watched my charts live and observed

 

The only way for you to come to know price itself from all that you think you know about price is to stop trading and start watching price in a very concentrated and focused manner with the purposeful intent of learning to understand how price behaves, rather than the purpose and distraction of earning an immediate profit.

 

She was very eager and quite willing to to do what I suggested, to read what I suggested, and to sit and watch, and watch, and watch. Furthermore, though I introduced her to the GU and EU initially (as these are the markets I trade, i.e. 6B & 6E), she very quickly established and affinity for the EJ, and a look back at the trades she took that I posted will show that she must have spent a large percentage of her time focused on that one market. But she is only nine years old, and unlike we "older and wiser folks," she did not already come to this "knowing so much that isn't so."

 

This brings me finally to this week's edition of Weekend Reading, which I will post shortly.

 

Best Wishes,

 

Thales

[Marko23 10]

... watch, and watch, and watch

...

 

At the age of nine, she is (still) very good at that. She learned much of the world that way.

 

Thales,

 

I'm quite impressed by this thread. Much of what I read here reflects my own experience, when I try to move my thoughts about trading into another head.

 

P.S. If I get the wording wrong many times, English isn't my mother tongue.

[thalestrader 14]

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.

 

Seems to be a contradiction.

 

Could you explain please ? thanks

 

Gabe

 

You must first explain where you are seeing a contradiction.

 

Best Wishes,

 

Thales

[thalestrader 14]

Weekend Reading

 

Hi Folks,

 

Here is an excerpt form Plato's Republic known commonly as the "Allegory of the Cave." I'd have preferred the Allan Bloom translation, but I was unable to find a decent electronic copy, and I do not have the time to scan it from my own copy of the book, so the Jowett translation will have to do.

 

I have been planning this reading for a while, and it just so happens that the course of recent discussions here in the thread lead nicely into the themes of this reading.

 

Best Wishes,

 

Thales

 

From Plato's Republic, as translated by Benjamin Jowett

 

 

[socrates] And now, I said, let me show in a figure how far our nature is enlightened or unenlightened: --Behold! human beings living in a underground cave, which has a mouth open towards the light and reaching all along the cave; here they have been from their childhood, and have their legs and necks chained so that they cannot move, and can only see before them, being prevented by the chains from turning round their heads. Above and behind them a fire is blazing at a distance, and between the fire and the prisoners there is a raised way; and you will see, if you look, a low wall built along the way, like the screen which marionette players have in front of them, over which they show the puppets.

[Glaucon] I see.

[socrates] And do you see, I said, men passing along the wall carrying all sorts of vessels, and statues and figures of animals made of wood and stone and various materials, which appear over the wall? Some of them are talking, others silent.

[Glaucon] You have shown me a strange image, and they are strange prisoners.

[socrates] Like ourselves, I replied; and they see only their own shadows, or the shadows of one another, which the fire throws on the opposite wall of the cave?

[Glaucon] True, he said; how could they see anything but the shadows if they were never allowed to move their heads?

[socrates] And of the objects which are being carried in like manner they would only see the shadows?

[Glaucon] Yes, he said.

[socrates] And if they were able to converse with one another, would they not suppose that they were naming what was actually before them?

[Glaucon] Very true.

[socrates] And suppose further that the prison had an echo which came from the other side, would they not be sure to fancy when one of the passers-by spoke that the voice which they heard came from the passing shadow?

[Glaucon] No question, he replied.

[socrates] To them, I said, the truth would be literally nothing but the shadows of the images.

[Glaucon] That is certain.

[socrates] And now look again, and see what will naturally follow if the prisoners are released and disabused of their error. At first, when any of them is liberated and compelled suddenly to stand up and turn his neck round and walk and look towards the light, he will suffer sharp pains; the glare will distress him, and he will be unable to see the realities of which in his former state he had seen the shadows; and then conceive some one saying to him, that what he saw before was an illusion, but that now, when he is approaching nearer to being and his eye is turned towards more real existence, he has a clearer vision, -what will be his reply? And you may further imagine that his instructor is pointing to the objects as they pass and requiring him to name them, -will he not be perplexed? Will he not fancy that the shadows which he formerly saw are truer than the objects which are now shown to him?

[Glaucon] Far truer.

[socrates] And if he is compelled to look straight at the light, will he not have a pain in his eyes which will make him turn away to take and take in the objects of vision which he can see, and which he will conceive to be in reality clearer than the things which are now being shown to him?

[Glaucon] True, he now.

[socrates] And suppose once more, that he is reluctantly dragged up a steep and rugged ascent, and held fast until he 's forced into the presence of the sun himself, is he not likely to be pained and irritated? When he approaches the light his eyes will be dazzled, and he will not be able to see anything at all of what are now called realities.

[Glaucon] Not all in a moment, he said.

[socrates] He will require to grow accustomed to the sight of the upper world. And first he will see the shadows best, next the reflections of men and other objects in the water, and then the objects themselves; then he will gaze upon the light of the moon and the stars and the spangled heaven; and he will see the sky and the stars by night better than the sun or the light of the sun by day?

[Glaucon] Certainly.

[socrates] Last of he will be able to see the sun, and not mere reflections of him in the water, but he will see him in his own proper place, and not in another; and he will contemplate him as he is.

[Glaucon] Certainly.

[socrates] He will then proceed to argue that this is he who gives the season and the years, and is the guardian of all that is in the visible world, and in a certain way the cause of all things which he and his fellows have been accustomed to behold?

[Glaucon] Clearly, he said, he would first see the sun and then reason about him.

[socrates] And when he remembered his old habitation, and the wisdom of the cave and his fellow-prisoners, do you not suppose that he would felicitate himself on the change, and pity them?

[Glaucon] Certainly, he would.

[socrates] And if they were in the habit of conferring honors among themselves on those who were quickest to observe the passing shadows and to remark which of them went before, and which followed after, and which were together; and who were therefore best able to draw conclusions as to the future, do you think that he would care for such honors and glories, or envy the possessors of them? Would he not say with Homer,

 

Better to be the poor servant of a poor master,

 

and to endure anything, rather than think as they do and live after their manner?

[Glaucon] Yes, he said, I think that he would rather suffer anything than entertain these false notions and live in this miserable manner.

[socrates] Imagine once more, I said, such an one coming suddenly out of the sun to be replaced in his old situation; would he not be certain to have his eyes full of darkness?

[Glaucon] To be sure, he said.

[socrates] And if there were a contest, and he had to compete in measuring the shadows with the prisoners who had never moved out of the cave, while his sight was still weak, and before his eyes had become steady (and the time which would be needed to acquire this new habit of sight might be very considerable) would he not be ridiculous? Men would say of him that up he went and down he came without his eyes; and that it was better not even to think of ascending; and if any one tried to loose another and lead him up to the light, let them only catch the offender, and they would put him to death.

[Glaucon] No question, he said.

[socrates] This entire allegory, I said, you may now append, dear Glaucon, to the previous argument; the prison-house is the world of sight, the light of the fire is the sun, and you will not misapprehend me if you interpret the journey upwards to be the ascent of the soul into the intellectual world according to my poor belief, which, at your desire, I have expressed whether rightly or wrongly God knows. But, whether true or false, my opinion is that in the world of knowledge the idea of good appears last of all, and is seen only with an effort; and, when seen, is also inferred to be the universal author of all things beautiful and right, parent of light and of the lord of light in this visible world, and the immediate source of reason and truth in the intellectual; and that this is the power upon which he who would act rationally, either in public or private life must have his eye fixed.

[Glaucon] I agree, he said, as far as I am able to understand you.

[socrates] Moreover, I said, you must not wonder that those who attain to this beatific vision are unwilling to descend to human affairs; for their souls are ever hastening into the upper world where they desire to dwell; which desire of theirs is very natural, if our allegory may be trusted.

[Glaucon] Yes, very natural.

[socrates] And is there anything surprising in one who passes from divine contemplations to the evil state of man, misbehaving himself in a ridiculous manner; if, while his eyes are blinking and before he has become accustomed to the surrounding darkness, he is compelled to fight in courts of law, or in other places, about the images or the shadows of images of justice, and is endeavoring to meet the conceptions of those who have never yet seen absolute justice?

[Glaucon] Anything but surprising, he replied.

[socrates] Any one who has common sense will remember that the bewilderments of the eyes are of two kinds, and arise from two causes, either from coming out of the light or from going into the light, which is true of the mind's eye, quite as much as of the bodily eye; and he who remembers this when he sees any one whose vision is perplexed and weak, will not be too ready to laugh; he will first ask whether that soul of man has come out of the brighter light, and is unable to see because unaccustomed to the dark, or having turned from darkness to the day is dazzled by excess of light. And he will count the one happy in his condition and state of being, and he will pity the other; or, if he have a mind to laugh at the soul which comes from below into the light, there will be more reason in this than in the laugh which greets him who returns from above out of the light into the cave.

[Glaucon] That, he said, is a very just distinction.

[socrates] But then, if I am right, certain professors of education must be wrong when they say that they can put a knowledge into the soul which was not there before, like sight into blind eyes.

[Glaucon] They undoubtedly say this, he replied.

[socrates] Whereas, our argument shows that the power and capacity of learning exists in the soul already; and that just as the eye was unable to turn from darkness to light without the whole body, so too the instrument of knowledge can only by the movement of the whole soul be turned from the world of becoming into that of being, and learn by degrees to endure the sight of being, and of the brightest and best of being, or in other words, of the good.

[Glaucon] Very true.

[socrates] And must there not be some art which will effect conversion in the easiest and quickest manner; not implanting the faculty of sight, for that exists already, but has been turned in the wrong direction, and is looking away from the truth?

[Glaucon] Yes, he said, such an art may be presumed.

[socrates] And whereas the other so-called virtues of the soul seem to be akin to bodily qualities, for even when they are not originally innate they can be implanted later by habit and exercise, the of wisdom more than anything else contains a divine element which always remains, and by this conversion is rendered useful and profitable; or, on the other hand, hurtful and useless. Did you never observe the narrow intelligence flashing from the keen eye of a clever rogue --how eager he is, how clearly his paltry soul sees the way to his end; he is the reverse of blind, but his keen eyesight is forced into the service of evil, and he is mischievous in proportion to his cleverness.

[Glaucon] Very true, he said.

[socrates] But what if there had been a circumcision of such natures in the days of their youth; and they had been severed from those sensual pleasures, such as eating and drinking, which, like leaden weights, were attached to them at their birth, and which drag them down and turn the vision of their souls upon the things that are below --if, I say, they had been released from these impediments and turned in the opposite direction, the very same faculty in them would have seen the truth as keenly as they see what their eyes are turned to now.

[Glaucon] Very likely.

[socrates] Yes, I said; and there is another thing which is likely. or rather a necessary inference from what has preceded, that neither the uneducated and uninformed of the truth, nor yet those who never make an end of their education, will be able ministers of State; not the former, because they have no single aim of duty which is the rule of all their actions, private as well as public; nor the latter, because they will not act at all except upon compulsion, fancying that they are already dwelling apart in the islands of the blest.

[Glaucon] Very true, he replied.

[socrates] Then, I said, the business of us who are the founders of the State will be to compel the best minds to attain that knowledge which we have already shown to be the greatest of all-they must continue to ascend until they arrive at the good; but when they have ascended and seen enough we must not allow them to do as they do now.

[Glaucon] What do you mean?

[socrates] I mean that they remain in the upper world: but this must not be allowed; they must be made to descend again among the prisoners in the cave, and partake of their labors and honors, whether they are worth having or not.

[Glaucon] But is not this unjust? he said; ought we to give them a worse life, when they might have a better?

[socrates] You have again forgotten, my friend, I said, the intention of the legislator, who did not aim at making any one class in the State happy above the rest; the happiness was to be in the whole State, and he held the citizens together by persuasion and necessity, making them benefactors of the State, and therefore benefactors of one another; to this end he created them, not to please themselves, but to be his instruments in binding up the State.

[Glaucon] True, he said, I had forgotten.

[socrates] Observe, Glaucon, that there will be no injustice in compelling our philosophers to have a care and providence of others; we shall explain to them that in other States, men of their class are not obliged to share in the toils of politics: and this is reasonable, for they grow up at their own sweet will, and the government would rather not have them. Being self-taught, they cannot be expected to show any gratitude for a culture which they have never received. But we have brought you into the world to be rulers of the hive, kings of yourselves and of the other citizens, and have educated you far better and more perfectly than they have been educated, and you are better able to share in the double duty. Wherefore each of you, when his turn comes, must go down to the general underground abode, and get the habit of seeing in the dark. When you have acquired the habit, you will see ten thousand times better than the inhabitants of the cave, and you will know what the several images are, and what they represent, because you have seen the beautiful and just and good in their truth. And thus our State which is also yours will be a reality, and not a dream only, and will be administered in a spirit unlike that of other States, in which men fight with one another about shadows only and are distracted in the struggle for power, which in their eyes is a great good. Whereas the truth is that the State in which the rulers are most reluctant to govern is always the best and most quietly governed, and the State in which they are most eager, the worst.

[Glaucon] Quite true, he replied.

[socrates] And will our pupils, when they hear this, refuse to take their turn at the toils of State, when they are allowed to spend the greater part of their time with one another in the heavenly light?

[Glaucon] Impossible, he answered; for they are just men, and the commands which we impose upon them are just; there can be no doubt that every one of them will take office as a stern necessity, and not after the fashion of our present rulers of State.

[socrates] Yes, my friend, I said; and there lies the point. You must contrive for your future rulers another and a better life than that of a ruler, and then you may have a well-ordered State; for only in the State which offers this, will they rule who are truly rich, not in silver and gold, but in virtue and wisdom, which are the true blessings of life. Whereas if they go to the administration of public affairs, poor and hungering after the' own private advantage, thinking that hence they are to snatch the chief good, order there can never be; for they will be fighting about office, and the civil and domestic broils which thus arise will be the ruin of the rulers themselves and of the whole State.

[Glaucon] Most true, he replied.

[socrates] And the only life which looks down upon the life of political ambition is that of true philosophy. Do you know of any other?

[Glaucon] Indeed, I do not, he said.

[socrates] And those who govern ought not to be lovers of the task? For, if they are, there will be rival lovers, and they will fight.

[Glaucon] No question.

[socrates] Who then are those whom we shall compel to be guardians? Surely they will be the men who are wisest about affairs of State, and by whom the State is best administered, and who at the same time have other honors and another and a better life than that of politics?

[Glaucon] They are the men, and I will choose them, he replied.

[socrates] And now shall we consider in what way such guardians will be produced, and how they are to be brought from darkness to light, -- as some are said to have ascended from the world below to the gods?

[Glaucon] By all means, he replied.

[socrates] The process, I said, is not the turning over of an oyster-shell, but the turning round of a soul passing from a day which is little better than night to the true day of being, that is, the ascent from below, which we affirm to be true philosophy?

[Glaucon] Quite so.

[Gabe2004 10]

People keep attributing Thales' success to years and years of experience, and an almost subconcious way that he must filter his trades because of those years and years of experience.

 

BUT...did he not teach his daughter to trade in a MONTH?...and then she subsequently went to trade for the 3 month summer, turning $25 into nearly $1,000...after just a month of pre-trading training?

 

I don't know the answer, but I don't think the answer is lots and lots of time and experience. It must be something else...

 

Just my

 

-Cory

 

You have a point there with respect to Thales's daughter,BUT, it is exactly that experience that he convayed to his daughter which caused her to succeed.

I bet that if we would sit with Thales one on one for 1-2 months, most of us would would succeed.

 

Gabe

[thalestrader 14]

Thales, I was wondering what you thought about this potential short.

 

Hi jon,

 

A few things,

 

1) While my approach to trading is built on the same basic concepts, I have tweaked how I apply these concepts to trading different markets. My approach the ES tends to be a bit more rigorous or tighter. While I do from time time take a simple 123-type trade, usually it would be based upon a larger degree, such as would be visible on a 15 minute chart.

 

2) My approach to trading off of a 5 minute ES has been shown in several examples earlier in this thread. I am not here to change your mind or anything of the sort. You should apply this approach in the manner in which you feel comfortable and which provides you success. That being said, you can search out some of my own ES trades to see what I like to see occur before I enter a position.

 

3) I would be careful of reading too much into the price action at the end og a holiday shortened trading session. Rather, I'd wait until the new week opens, and then see what price indicates it is likely to do.

 

4) If this were a regular session at that time of day, I think a break of the prior 15 minute low would have offered a more favorable entry than the one you propose. Again, as this was a holiday shortened day coming inot a weekend close, I would not have done anything.

 

Best Wishes,

 

Thales

Edited November 28, 2009 by thalestrader

[Gabe2004 10]

You must first explain where you are seeing a contradiction.

 

Best Wishes,

 

Thales

 

I don't understand what you mean by "degree of trend" and the words "this pattern is occurring at a very small degree of trend" and then " this approach works at all degrees of swing or degrees of trend".

very small degree of trend <> all degrees of ...... trend.

THis is what I was refering to as a contracdiction.

 

Gabe

[RichardTodd 10]

I bet that if we would sit with Thales one on one for 1-2 months, most of us would would succeed.

 

Why? Because that way he could ground you if you repeatedly ignored his suggested path of learning?

 

I don't understand the turn this thread has taken. This will sound harsh, but it sounds like a lot of excuses are starting to surface. Look, even if you are correct, a negative, defeated mindset like this will never lead to any kind of success. I know it's easier for people to attribute elusive and uncommunicable subconscious filters to Thales, but however good that makes you feel, you aren't even one step closer to winning the game.

 

Meanwhile, I don't see any posts from people who have stopped trading and talking about points they liked from the Darvas book or Stikky stock charts, etc. Haven't noticed any photos of printed out charts with S/R drawn in by hand. Maybe his daughter's main advantage was actually following the course Thales laid out? Is that such a silly notion that we're all going to assume Thales has occult trading powers without even trying it?