Reading Charts in Real Time

[Gabe2004 10]

In other words, you would prefer to get in at the beginning of the move after a HL/LH formation and with "shorter candles" (lower volatility) - Is that so?

 

Thanks again!

 

Now thtaa you put it that way, yes, calmer waters/smaller candles are prefereable to me but Thales might give you a better explanation.

My gut tells me that your entry would not have been appropriate for me.

 

Gabe

[daedalus 10]

Only one trade for myself this morning... nothing else setup and thats just fine by me. Textbook trade, so I thought I would explain it in detail.

 

 

• First, we have divergence from low to low on the swings downward and the CCI is at the extreme.
  
• Next, at point 1 there is a bar that closes higher than the previous candles high. This is the start of the HL rotation.
  
• At point 2 price closes lower than the previous candles low. This is the second stage of the HL rotation, i'm now in "buy mode".
  
• At point 3 price hasn't filled yet and the CCI remains lower than the 0 midline, i.e. i'm still in a good "value" area for entry... basically a substantial move hasn't occurred yet so jumping in still makes sense.
  
• I move to par on the 200% extension (purple line) and target 270% line.
  
• Point 4, (on the chart I accidentally put another 3 - this should be a 4) the CCI closes > +100 and I exit the trade.
  

 

Easy peasy. I got slipped on this trade by a tick on entry so I was actually long from 37 but I got out at 51 and didn't wait for the bar to close. CCI was > 100 intrabar so I was just looking for a solid exit price and was happy with what I got. Don't think I can explain my trade logic any further than that. Theres nothing left to explain!

 

End result was +14 ticks.

 

Cheers!

[daedalus 10]

Just got an email from channelingstocks.com with another one of their winning stock picks... First off, i do find them to be legit (all they do is find stocks at prior S/R) and they usually have pretty good picks, but they let you decide when to get in and they always advocate waiting for a stock to stop falling or rising and start to reverse before getting in....

 

That being said... this was one of their picks a couple weeks ago...

 

And here it is now... anyone see what made this puppy launch? :rofl:

 

Cheers!

[thalestrader 14]

Now that you put it that way, yes, calmer waters/smaller candles are preferable to me but Thales might give you a better explanation.

 

My gut tells me that your entry would not have been appropriate for me.

 

Gabe

 

Gabe, I think you said it as well as I could have. I agree with you completely on this example.

 

Does anyone recall this recent post from Marko?

 

There's a saying with swing traders "enter in mild times and exit in wild times"

 

Best Wishes,

 

Thales

[jonbig04 10]

My internet here is crap. I'm moving in a few days though, then it won't be a problem. I'm missing data so the entry chart looks spotty. I will try to reload historical tomorrow so we can more clearly see the entry. For now all i have is this chart. Same trade as last nights BE. Trying again. I will move to BE if/when we make a LL. Target is the S below.

 

 

 

Sorry, Out BE on this one.

[jonbig04 10]

Quick question: Can anyone direct me to a site where I can get a crash course on FOREX? For the life of me I cannot find another future to trade, so it has to be FX. The PA looks very nice in some of them, but I have no idea what the PIP values are etc. I've always just traded NQ and ES.

[thalestrader 14]

Quick question: Can anyone direct me to a site where I can get a crash course on FOREX? For the life of me I cannot find another future to trade, so it has to be FX. The PA looks very nice in some of them, but I have no idea what the PIP values are etc. I've always just traded NQ and ES.

 

Are you trading the currency futures? The 6E and 6B offer plenty of opportunities. If you are trading those already, have you looked at Oil or NatGas?

 

As far as forex, it is a strange way to trade, trading with a bucket shop. I do recommend a micro account with FXCM because of the very tight spreads relative towhat you will find elsewhere (or even at FXCM on their standard accounts. With a micro account, you can trade as small as $1000 lots, which are a dime/pip, and up to $5,000,000, which would be worth $500/pip. For example, a forex equivalent to the 6E would be $125,000 trade size, which would move at $12.50/pip.

 

Sign up for a demo account. It takes some getting used to placing your stops, etc. The first time I saw that my daughter got stopped out when price never got closer than 1.5 pips to her stop price was an eye opener (first a head scratcher, then an eye opener). You can beat the buckets, but you have to understand their game first.

 

 

Best Wishes,

 

Thales

[brownsfan019 17]

Quick question: Can anyone direct me to a site where I can get a crash course on FOREX? For the life of me I cannot find another future to trade, so it has to be FX. The PA looks very nice in some of them, but I have no idea what the PIP values are etc. I've always just traded NQ and ES.

 

Really?

 

Euro is a good currency future.

ZB, ZN or ZF for bond futures.

CL or QM for oil futures.

ZS or ZC for grain futures.

 

Still need more?

[Dinerotrader 10]

For the life of me I cannot find another future to trade, so it has to be FX.

 

There are obviously more futures than the ES and NQ so I am assuming you must have looked at others and decided they didn't meet some criteria you have. Just curious what criteria use which have disqualified all the futures Brownsfan suggested above.

[thalestrader 14]

Are you trading the currency futures? The 6E and 6B offer plenty of opportunities. If you are trading those already, have you looked at Oil or NatGas?

 

For what its worth, if it were not for my daughter, I'd not touch a bucket shop account. I still trade the 6E, 6B, and 6J. I do think that for someone with limited capital who is learning to trade, a micro account can be a good way to "cut one's teath." I think these little fx accounts can be fun. They certainly make it easy for me to demonstrate my approach to trading, as the currencies trade with fairly good liquidity during 21 hours of a 24 hour day. But, it you are trading futures, I can't see moving to retail fx unless it is to trade one of the pairs that does not have a well sponsored futre, e.g. the EURJPY & GBPJPY. I admit that I have found the EJ a terrific market to trade.

 

Best Wishes,

 

Thales

[Gabe2004 10]

Really?

 

Euro is a good currency future.

ZB, ZN or ZF for bond futures.

CL or QM for oil futures.

ZS or ZC for grain futures.

 

Still need more?

 

How would you compare ZS to ZC?

 

Thanks

 

Gabe

[Gabe2004 10]

For what its worth, if it were not for my daughter, I'd not touch a bucket shop account. I still trade the 6E, 6B, and 6J. I do think that for someone with limited capital who is learning to trade, a micro account can be a good way to "cut one's teath." I think these little fx accounts can be fun. They certainly make it easy for me to demonstrate my approach to trading, as the currencies trade with fairly good liquidity during 21 hours of a 24 hour day. But, it you are trading futures, I can't see moving to retail fx unless it is to trade one of the pairs that does not have a well sponsored futre, e.g. the EURJPY & GBPJPY. I admit that I have found the EJ a terrific market to trade.

 

Best Wishes,

 

Thales

 

How about the liquidity of the currency futures during Non RTH of the US market?

Doesn't forex have an advantage?

 

Gabe

[Kiwi 16]

How about the liquidity of the currency futures during Non RTH of the US market?

Doesn't forex have an advantage?

 

Gabe

 

Maybe, maybe not. If you watch ecn futures vs ecn forex vs bucketshop forex you find that there are various ways around the issue (forex may become much jumpier at key point, stretches may be applied, etc).

 

In reality forex liquidity will also decline during those periods so in all cases due diligence is needed to find out what is "really" happening.

 

Personally I quite like Interactive Broker's forex offering. The commissions are similar to the futures commissions. You can scale from 25k usd up. The liquidity is actually better and for the majors we get 1/2 tick spreads so they're cheaper to trade. But with everything there are tricks. If your fills drop below the idealpro minimum size (25kusd) you drop automatically to a fill on ideal which has a higher commission per unit size - not that this should be a frequent occurrence, just illustrating that nothing is perfect.

 

The only reason I'd ever trade a bucket shop was if I was too small to use IB (so I'd go to Oanda) or I was trading a multi-entry strategy that could make me too small by way of the worst case averaging down in the strategy.

[brownsfan019 17]

How would you compare ZS to ZC?

 

Thanks

 

Gabe

 

While both are grains, the ZS has movements that I prefer for my style of trading. Best way to see what may work for you is to check it out yourself.

[Gabe2004 10]

Maybe, maybe not. If you watch ecn futures vs ecn forex vs bucketshop forex you find that there are various ways around the issue (forex may become much jumpier at key point, stretches may be applied, etc).

 

In reality forex liquidity will also decline during those periods so in all cases due diligence is needed to find out what is "really" happening.

 

Personally I quite like Interactive Broker's forex offering. The commissions are similar to the futures commissions. You can scale from 25k usd up. The liquidity is actually better and for the majors we get 1/2 tick spreads so they're cheaper to trade. But with everything there are tricks. If your fills drop below the idealpro minimum size (25kusd) you drop automatically to a fill on ideal which has a higher commission per unit size - not that this should be a frequent occurrence, just illustrating that nothing is perfect.

 

The only reason I'd ever trade a bucket shop was if I was too small to use IB (so I'd go to Oanda) or I was trading a multi-entry strategy that could make me too small by way of the worst case averaging down in the strategy.

 

If I understand how IB forex works, all trades are converted to the denominator currency, so if you have a profit and your account native currency is USD you have to convert your profit (JPY from trading EUR/JPY) back to USD on IDEAL so now you are paying a 3rd commision.

Is that correct?

The commisions account for about 1 pip round trip and the spreads of IB are smaller but when you add the commision on the final conversion - which would add about a pip to the deal - the fees paid by an IB customer approach the amount paid at the bucket shops with their wider spread but with less flexibility to trade smaller amounts like at Oanda.

 

Gabe

[MidKnight 12]

If I understand how IB forex works, all trades are converted to the denominator currency, so if you have a profit and your account native currency is USD you have to convert your profit (JPY from trading EUR/JPY) back to USD on IDEAL so now you are paying a 3rd commision.

Is that correct?

The commisions account for about 1 pip round trip and the spreads of IB are smaller but when you add the commision on the final conversion - which would add about a pip to the deal - the fees paid by an IB customer approach the amount paid at the bucket shops with their wider spread but with less flexibility to trade smaller amounts like at Oanda.

 

Gabe

 

Hi Gabe, that is about right, but as you trade size with IB the comms cost is quite small as a ratio of the size. The other key difference I have noticed with IB spreads vs Oanda (probably true for any bucket shop) is around reports the spread only widens for a fraction of a second rather than the 1 minute sort of area with Oanda. I compared this directly at the last NFP report.

 

With kind regards,

MK

[Kiwi 16]

The other thing is that the "third" commission isn't entirely right either.

 

Because you are not forced to close the same size you opened you can often zero a non-base currency. Or you can choose to leave your winnings in a higher interest currency as the base is less "real" in the IB world (you can effectively maintain balances as you wish).

 

If you traded EUR.USD and GBP.USD and GBP.JPY and your base was USD then a build up of any of the currencies could be cleared through the other trades. When you choose to do it though you have to figure out the closing sizes. I suspect most people set up a little converter in excel so that they can change balances when they need to do so.

 

On commissions: when the size is small (25k or so) the commission+spread effect is similar to a low cost bucket shop but as size rises then IB gets more and more attractive. Also as MK says, because its an ECN the games around news are not as pronounced and resolve more quickly.

[thalestrader 14]

Hi Folks,

 

It will take a close below 1.6239 to keep me short the Pound into the weekend.

 

Best Wishes,

 

Thales

[thalestrader 14]

Weekend Reading

 

Hi Folks,

 

While I find it somewhat amusing and a little unseemly that Joe Ross felt compelled to attach his name to a common and naturally recurring price action phenomena, I have to give credit where credit is due. I found another old chart of another trade of mine where I explicitly mention the Joe Ross by name. As I said, I am a terribly unoriginal trader. At any rate, I have his "Trading the Ross Hook," as a .pdf file, and having found the reference to him on my old chart, I figured I'd pop his book open and take a peek for old times sake.

 

I think it is worth a read, so I submit it as this week's edition of Weekend Reading. It is a large file and TL would not allow me to upload it due to its size. I've made it available off of a link to adobe (I hope it works):

 

https://acrobat.com/#d=3qaSCczKmqk6DSrelWkeFg

 

I have also included a shot of the chart in question. I am one of a small but hearty group of friends who also happen to trade, and the five of us have been sharing our charts for years. This was a mini nat gas trade from two and a half years ago. As you can see, I was still hooked on the CCI. I also speak of a "bullish candle," which I find only slightly less embarassing than the CCI. But, as you can see, otherwise the basic elements of what I present here in this thread were there at that time.

 

 

Best Wishes,

 

Thales

[thalestrader 14]

Hi Folks,

 

Here is a series of charts from another Nat Gas trade, also from 2007. Again, whether you call it a 123 or an ABC, the concept is the same - a low, a high, a higher low, a buy.

 

Best Wishes,

 

Thales

[Cory2679 11]

Hey everyone,

 

I'm going to be taking a little time off from trading.

 

Since I began working with this approach, I've done better than I ever have. Even though I haven't traded too awfully consistently, I had a solid 50% return my first week of sim trading (the week prior to my first post on this thread), struggled a bit going live the next week, and I'm up 44.5 ticks this week (mostly between Sunday night and Monday morning). I'm not trying to brag or anything like that...I just want to share my experience.

 

I feel like this approach really fits me. I feel like it's what I've been searching for...I feel like I've picked it up pretty well and sort of have a knack for it...

 

Up to this point, all of my "education" concerning this method has been strictly from reading this thread. So at this point in time, I'm going to essentially clear my mind and start from scratch. I'm going to begin the "course" that Thales set out in the following post:

 

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'm looking at it like this - the trading performance and education up to this point with this approach was essentially a test run, and I like the approach and want to move forward with it...and I want to do it right. I want to take 100% full advantage of what I've discovered here, rather than rush into it. So I'm not doing this in spite of my performance, but because of it.

 

I have in my possession all five books mentioned in Thales's post. They're short reads so it won't take too much of my time to go through them, especially if I devote my entire day to it.

 

SO, I'm beginning the Thales "course" tomorrow. I'll begin by reading Nicolas Darvas's How I made 2,000,000 in the Stock Market.

 

Cheers!

 

Hey guys,

 

I'm just chiming in to give an update!

 

Well, I've read Nicolas Darvas's How I made 2,000,000 in the Stock Market & Edwin LeFevre's Reminiscences of a Stock Operator...twice!

 

Excellent reads.

 

That does it for "I. Psychology & Emotions" and now I'm moving on to "II. Reading Price - Theory."

 

So, tomorrow I'll begin by reading Stikky Stock Charts.

 

-Cory

 

Hey guys,

 

I have another update! I've read Stikky Stock Charts, How Charts Can Help You in the Stock Market by William Jiler, and the price action/chart reading section(s) of William J O'Neil's How to Make Money in Stocks...all twice!

 

A lot of it was indeed review, especially Stikky Stock Charts. This is obviously a beginner's book...but an excellent one at that!! Interesting to read it and see their approach to teaching. What wasn't review, though, was O'Neil's book...how price bases and then breaks out (other than allusions to it on this thread). It was interesting to see references to the other books I'd read in some of the other books...Jiler mentions Livermore by name and so does O'Neil. Jiler also mentions Darvas I believe, although he doesn't disclose the name of who he's talking about. O'Neil mentions Jiler's book as well. It was also interesting to see some of the same stocks being discussed throughout the different books.

 

After I was done reading, I took some time to review the thread, including specific references and recommended readings (I say review because I had already read and studied it before I began trading with the approach).

 

I also took some time to print some charts and mark S/R levels with a ruler and some crayons. I realize there's potentially some added benefit during the learning process to do it this way, rather than just simply visualizing it or drawing it on Ninja. I have attached four charts to this post...they are 4 hour charts of the EJ, EU, GU, and UJ.

 

Please note that my intention was not to identify every potential S/R that was ever relevant...my intention was to treat it like I was about to trade, so I identified what I considered to be the most relevant moving forward.

 

I welcome any feedback on these 4 charts.

 

My next step will be to spend all of next week not trading, but instead just focusing on the price action of one pair (the EJ, since it appears to be pretty popular on this thread)...paying particular attention to H's and L's, as well as identifying S/R. I'm sure I'll be posting some charts on here...just not actually trading.

 

-Cory

Edited December 12, 2009 by Cory2679

[daedalus 10]

Huge props to you cory for actually printing out charts and picking up a crayon. Thats awesome!

[thalestrader 14]

Hi Cory,

 

Your charts look excellent. Also, I always felt that O'Neil does not give credit enough to Darvas. Isn't O'Neil's CANSLIM nothing more than a formalized version of Darvas's Technofundamentalist approach?

 

Good work, Cory. I think it is an excellent course of action, and it can only help your trading, even if you eventually change course. And it didn't cost you anything other than the price of the books and your own time and effort.

 

I hope it pays you great dividends over the coming weeks, months, and years.

 

Best Wishes,

 

Thales

[thalestrader 14]

Hi jands,

 

I see you.

 

Best Wishes,

 

Thales

[jands 10]

Hi jands,

 

I see you.

 

Best Wishes,

 

Thales

 

 

Hi Thales,

 

Thanks for the recommendation. I've been reading the thread from the beginning. I must say, what a great thread you have going and you also have some great contributors that make it very robust. It's great of you to pass so much information and help along to so many. I hope people take advantage of what all this offers.

 

See you around,

 

Jim