Reading Charts in Real Time

[thalestrader 14]

Every trade your system signals and you skip, for whatever reason, diminishes your statistical edge a little bit.

 

 

That is an excellent point, Marko. Frustration can lead to shaken confidence, and shaken confidence leads to loss avoidance, i.e. skipping trades (fear of pulling the trigger).

 

Once you start doing that, you are dead.

 

 

 

There is no way to recover a draw down other than through trading. There is no better way to preserve and to increase a draw down than through fear managed trade selection.

 

 

As an example, I mentioned a few days ago how last week at one point I found myself down nearly 4R. I had quite a string of losses and BE trades, with hardly a winner in sight over a couple of days. As I was never down a cumulative 2R in any one session, I never had to stop trading per my 2R and I'm out rule. So I kept taking my swings. There I was, down nearly 4R, and the next opportunity presented itself. I placed my order, it triggered, and less than 20 minutes later I was out with a +5.06R profit that not only erased the draw down but put at a new high for the month.

 

It does not always work itself out so completely and at once, of course. However, if you start skipping trades out of frustration or damaged confidence, you will likely miss that +5R opportunity and you will uncannily select to take every -1R the market offers you.

 

Best Wishes,

 

Thales

[thalestrader 14]

A couple of long stock plays for the day...

 

 

 

 

MFE has triggered, but it is getting sloppy. QCOM has yet to trigger. Motorola (MOT) also looks good, but it is too cheap for me to play (chart not shown).

 

Best Wishes,

 

Thales

[thalestrader 14]

I might like the EURUSD/6E above 1.3600 ...

 

 

 

Best WIshes,

 

Thales

[Marko23 10]

I might like the EURUSD/6E above 1.3600 ...

 

Best WIshes,

 

Thales

 

Too late to post this

 

2nd chance to start at 1.3601 with small stop!!

 

Out for 7R, went above 8R

Had I been frustated about the first huge bar, I probably would not have bought the 2nd chance.

Edited February 12, 2010 by Marko23
2nd chance

[thalestrader 14]

I might like the EURUSD/6E above 1.3600 ...

 

 

 

Apparently I'm not the only one ...

 

 

Best Wishes,

 

Thales

[Marko23 10]

Apparently I'm not the only one ...

 

Best Wishes,

 

Thales

 

It jumped through the 62% zone.

[Marko23 10]

EUR/USD at 1.3600 again

 

Start visible in 3m timescale

 

Out for 10 tick and quitting-time.

Edited February 12, 2010 by Marko23
10 hours are enough for me.

[patrader 10]

15m 6e chart(three pushes to tcl and now back to tl)

[thalestrader 14]

Well, I'm not holding the 6E through a long weekend, so my stop is BE on this trade (1.3601) at this point. If I'm not stopped out, its MOC.

 

Best Wishes,

 

Thales

[Cory2679 11]

Well, I'm not holding the 6E through a long weekend, so my stop is BE on this trade (1.3601) at this point. If I'm not stopped out, its MOC.

 

I'm actually looking at a potential short on the EUR/USD...

 

(I got barely better than BE on my two long attempts on the EU.)

 

EDIT: Well, actually, I've taken 3 long attempts on the EU today, with a net loss end result.

[thalestrader 14]

I'm actually looking at a potential short on the EUR/USD...

 

(I got barely better than BE on my two long attempts on the EU.)

 

EDIT: Well, actually, I've taken 3 long attempts on the EU today, with a net loss end result.

 

We're in different scales of price movement as I am trying to catch a large rally, so your short and my long may be able to peaceably coexist under certain circumstances. However, as it is the weekend, I do not wish to endure an open position, so I will be out a tick or two before you are short. And frankly, I do not typically endure 60 tick stop outs, even if the liquidity will be there. Price has rallied and then declined to test my entry. I decline to let it fall below that point a second time with me aboard.

 

Best Wishes,

 

Thales

[Cory2679 11]

I'm actually looking at a potential short on the EUR/USD...

 

Well, I've pulled my order...it's getting fairly late and still hasn't triggered...I'm not convinced of an impending downmove at this point...

[TradeRunner 10]

Every trade your system signals and you skip, for whatever reason, diminishes your statistical edge a little bit.

 

Once you start doing that, you are dead.

 

Bang! Bang!

 

 

Today was a exceptional in that each trade that I skipped turned into winners. Other days I'm really pleased that I skipped some trades.

[thalestrader 14]

Bang! Bang!

 

You need to work on your trader instincts ...

 

 

 

Best Wishes,

 

Thales

[thalestrader 14]

pre-Weekend Reading

 

I do not want to use this as my weekend reading submission, but I think this is an interesting piece. I do not know who wrote it. My friend, the currency trader sent this to me sometime ago. He found it over at FF, and I have actually run into a few other places myself. It is a quick read, but I think it may be of great value for those who sometimes feel as though they are stuck in second gear - it may be the case that you are actually stuck in stage 2.

 

Best Wishes,

 

Thales

5 Steps to Becoming a Trader.pdf

[thalestrader 14]

Dollar, Dow, & Gold - I do not see anything today that adds anything new to current unclarity ...

 

 

 

 

Best Wishes,

 

Thales

[thalestrader 14]

I just want to say that I really like the use of #.##R (vs ticks or % return or $$).

 

The purpose of the Van Tharp readings were to try to influence the direction of the thread towards money management and viewing one's performance through the lens of Units of Risk or R-multiples.

 

Here is a Van Tharp article that may be a bit less intimidating than the more comprehensive pieces I previously posted in the thread, but nonetheless gives a good presentation money management and how focusing on R as oppossed to nominal dollars will help you overcome the desire to be right.

 

Best Wishes,

 

Thales

TTJMay Expectancy - Van K. Tharp.pdf

[Kiwi 16]

The trouble with Van is that, as usual, he's half right.

 

Expectancy is a really good measure (right).

 

But it isn't as good as Van promotes (wrong).

 

 

 

 

Why, because you get a higher expectancy from low win rate strategies than high win rate strategies that have the same profit factor ... so it makes them look much better!! But. And its a big but. Expectancy ignores risk of ruin.

 

And when you add RoR back in you find a somewhat different picture. But more later.

[Marko23 10]

... But more later.

 

Yes, please. Until beginning of this week I had R-multiples only in my Excel sheets.

Now I draw the R-scale for every trade and I feel very good with it.

 

As with every new aspect it feels too good just after the introduction.

But I can take profits more consistently when a trade has got to 2 to 3R, stalls

and does not progress to my favorite projection of the day.

[TrueBalance 10]

... focusing on R as oppossed to nominal dollars will help you overcome the desire to be right ...

 

Van Tharp is an educator. He's done a good job at teaching and explaining R-multiples. He did not invent the concept though, and I always thought he should give credit where credit is due.

 

The concept of R-multiples was conceived and developed by Chuck Branscomb.

 

Sorry for the slightly off topic information .

 

Best wishes,

TB

Edited February 13, 2010 by TrueBalance
grammar

[thalestrader 14]

Van Tharp is an educator. He's done a good job at teaching and explaining R-multiples. He did not invent the concept though, and I always thought he should give credit where credit is due.

 

The concept of R-multiples was conceived and developed by Chuck Branscomb...

 

Hi TrueBalance,

 

Good to hear from you again ... you've been too quiet!

 

I kind of thought R-multiples was the basis of Richard Dennis's and William Eckhardt's money management regimen from the 70's (not to be confused with N-multiples, which were trading units based upon volatility, if I understand them correctly, which I am never sure I do).

 

I'm not sure it really matters as risk as a percent of equity has been used by many over the years, including William O'Neil as far back as the 60's. Whether it was call "R" or "Units of Risk" is not so important. "A rose by any other name ..."

 

I personally have conceived of nothing new, I take credit for nothing, and do try to give credit where credit is due. It was Tharp's writings that made this type of money management approach clear to me, and whether it was developed buy Chuck Branscomb, Richard Dennis, or Socrates, Ben Franklin, Van Tharp has to get credit for making the concept and its benefits easily and publicly available.

 

Best Wishes,

 

Thales

[thalestrader 14]

... because you get a higher expectancy from low win rate strategies than high win rate strategies that have the same profit factor ... so it makes them look much better!! But. And its a big but. Expectancy ignores risk of ruin.

 

And when you add RoR back in you find a somewhat different picture. But more later...

 

Now do not leave us hanging for long, Kiwi, ...

 

Best Wishes,

 

Thales

[thalestrader 14]

While we are on the topic of Risk of Ruin and such, here is some good info from the blog of

Brett Steenbarger:

 

TraderFeed: How to Avoid Risk of Ruin in Trading

 

I'm not sure if this is the entry that MidK referenced recently, if so, no harm done, if not, its only tot he good.

 

Best Wishes,

 

Thales

[BlowFish 10]

And its a big but. Expectancy ignores risk of ruin.

 

And when you add RoR back in you find a somewhat different picture. But more later.

 

I am please that there is another champion of RoR. I have posted this link before it is one of my favourite little sites with nothing to promote but a different way of looking at things. TradersCALM - opening traders perceptions just click on risk of ruin.

[thalestrader 14]

I am please that there is another champion of RoR. I have posted this link before it is one of my favourite little sites with nothing to promote but a different way of looking at things. TradersCALM - opening traders perceptions just click on risk of ruin.

 

Traderscalm looks like it may be a decent resource, Blowfish. Thanks for sharing it with us.

 

Best Wishes,

 

Thales