Reading Charts in Real Time

[TrueBalance 10]

...

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

Thank you . If I were to post I would most likely only add noise. The charts that are posted and discussions that follow is already more than anyone could wish for.

...I kind of thought R-multiples was the basis of Richard Dennis's and William Eckhardt's money management regimen from the 70's...

..."A rose by any other name ..."

True. What Branscomb did was conceive how to use it for system evaluation (normalization of expectancy, R distribution graphs etc) and then to give it a name - important in itself since that is what makes it possible for me and you to talk about it in a conceptual manner now.

 

My comment was not directed to you Thales but to the writings of Van. I just think professional writers should give reference when appropriate, that's all. When they don't, they somehow imply that what they write is common knowledge and does not have an originator, or that they came up with the idea themselves. I don't know Branscomb, and he probably doesn't care - but I do.

 

Best wishes, TB

[thalestrader 14]

My comment was not directed to you Thales but to the writings of Van. I just think professional writers should give reference when appropriate, that's all....

 

No problem, TrueBalance. I agree with you - credit where credit is due.

 

I know you were not directing your comments toward me. I've said all along that I am a most unoriginal trader. And I stand by that self-assessment.

 

I have, however, spent my way through all manner of BS, and all I've wanted to do in this thread is direct folks to the people, books, articles, and concepts that I feel have been of value, so as to help others avoid the fools errands I've been on. So, our friend Kiwi notwithstanding, I found Van Tharp incredibly helpful (though I'd probably not recommend his two books so much as the three or four articles I've posted here in the thread.

 

Best Wishes,

 

Thales

[thalestrader 14]

Hi Folks,

 

Found some Linda Raschke videos on Youtube when doing a google search for her seminar. I haven't watched each of these, so I cannot vouch for their content, but she has never disappointed me.

 

[ame=http://www.youtube.com/watch?v=wsH6fWVP3Z8]YouTube - Linda Raschke: Stick to the Plan and Become a Better Trader[/ame]

 

[ame=http://www.youtube.com/watch?v=5x--xYjuajE&feature=related]YouTube - Linda Raschke and Why She Rarely Uses Trailing Stops[/ame]

 

[ame=http://www.youtube.com/watch?v=9rHLGJq79ZU&feature=related]YouTube - How to Use Stops, Why Trade with Stops, How to Determine Stops[/ame]

 

[ame=http://www.youtube.com/watch?v=AnQZnNmKJng&feature=related]YouTube - OCO As Trade Entry Techniques with Linda Raschke[/ame]

 

[ame=http://www.youtube.com/watch?v=g1hs6-mr6PU&feature=related]YouTube - Plan Your Trades, Learn the Essentials[/ame]

 

Best Wishes,

 

Thales

[Kiwi 16]

I, like TrueBalance, was irritated by VT's lack of attribution of the R Multiple idea to Chuck. Particularly because I'd found Chuck to be one of those guys, like you my dear Thales, who provides great value to others without requesting payment.

 

And lets not talk about some suspect stuff in VT's love of the once popular NLP.

 

 

But, I said that expectancy and R multiples didn't take risk of ruin into account and thus were a little flawed. I'm going to prepare a long post on this with a little spreadsheet attachment so that people can test the ideas themselves but this will take a while so I don't know when it will happen.

 

One question though. To demonstrate it easily I'll use the Kelly RoR percentage as the equivalent to RoR for a particular system. I don't say it is an absolutely correct calculation (because the assumptions actually aren't right) just that if I have two similar system outcomes (one at 35% wr, one at 50% wr and one at 80% wr) it can be used to compare one RoR with another and thus determine relative bet sizes. So, the question: does anyone object to my use of Kelly and if so what would you suggest instead?

 

The clue to my thesis on why Expectancy/R Multiple is imperfect is that you can bet much harder on a high win rate system than a low win rate system. To see this intuitively think about what causes ruin ---- a string of losing trades or more correctly a string of mainly losing trades that takes your account balance under (say) 50%.

 

If you think about an 80% wr system ... how many times are you going to take trades before you see a string of 20 losers? On the other hand, if you have a 35% wr system, how many times do you throw the trading dice before you see a string of 20 losers? So, if on a 50% wr system you were willing to bet 2% of your equity on every trade would you also bet exactly 2% on an 80% system and a 35% system ... or would you bet a different percentage.

 

If different then how does that affect the expectancy?

[BlowFish 10]

Not sure who originated some of these ideas I seem to remember Tewles writing about it in The Futures Game: Who Wins, Who Loses, & Why (1974) Amazon.com: The Futures Game: Who Wins, Who Loses, & Why (9780070647572): Richard Teweles, Frank, Jones: Books though may be mistaken. Don't have the book to hand to see if he credited anyone else. I also seem to rember he talks about RoR and Monte Carlo simulations.

[thalestrader 14]

Not sure who originated some of these ideas ...

 

There really has been nothing new of any real importance conceived, discovered, etc. and so on with respect to trading since Dickson Watts published Speculation as a Fine Art sometime in the late 1800's (what is "selling down to the sleeping point" if not a commonsense, real world expression of the risk of ruin?). If you have that book alone, that is enough, provided you have the emotional discipline required to heed its advice.

 

We now live in a world where fame is viewed as the pinnacle of achievement. It is telling that Charles Dow never called his technical approach "Dow Theory," that William O'Neil codified the work of others (Livermore, Baruch, Darvas et.al.) and named the approach with a simple acronym of the approach's component concepts, i.e. CANSLIM. Wells Wilder created an indicator that he called, simply Relative Strength Index. Others subsequently added the prenom "Wilder's" to RSI only to distinguish the indicator from the concept of relative strength.

 

But where have we come in the last 35 years? We have a Joe Ross who wants to name a basic building block of price action after himself, we have a Joe DiNapoli who wants to rename Fibonacci levels after himself, and Tom Demark wants to name every single thing that emanates from his body a "Demark this" and a "Demark that." Each is exceedingly unoriginal, in his own way. But why should I care? As Thomas Jefferson would say, "It neither breaks my bones nor picks my pocket."

 

I am all for credit where credit is due. But let's not become overly concerned with the "from where things came" and lose sight of the main point - "will this be to my advantage or disadvantage to use".

 

You can call it whatever you wish. In the end, this about speculating about the immediate future direction of prices in order to profit while limiting losses. And we should use whatever we may find at our disposal to aid us in those endeavors.

 

Best Wishes,

 

Thales

[thalestrader 14]

...And lets not talk about some suspect stuff in VT's love of the once popular NLP...

 

NLP is one thing for which I never fell ... I guess after he published his book he had to sell something.

 

As for the spreadsheet, etc., Kiwi, I think the Kelly RoR %'s should be fine for our purposes.

 

Best Wishes,

 

Thales

Edited February 14, 2010 by thalestrader
typo

[MidKnight 12]

Nothing really changed still. GU continues in the range giving another decent short opportunity on Friday. All of last week was spent down in this range. It has refused to break my immediate resistance in the 1.5740 area so far implying to me that there are many eager sellers still at only slightly higher prices than these lows. But I also feel it needs to go up through that R before it can go down through the S, it feels like a case of the market is too short at the moment and needs to wash some shorts out before it can go lower. Maybe I'm over analyzing it, but that is how I feel. Despite how I feel, I'll trade what I see and the plan will be similar to Friday. Looking to short above 1.5720 and be out of 3/4ths before 1.5580. Light longs in the narrow band of 1.5540/80 aiming to be out of 3/4ths before 1.5700. When we do finally break, I want to at least have something already on, even if it is just a 1/4 position because the move out of here could be decent.

[thalestrader 14]

Hi Folks,

 

I just want to reiterate a point made earlier in this thread that any questions about the approach to trading discussed here ought to be addressed to me here in the thread rather than through PM.

 

Thank You,

 

Thales

[beeker 10]

Anyone else thinking long on the EURJPY?

[Gabe2004 10]

Anyone else thinking long on the EURJPY?

 

The market is in coma.

EJ is in the middle of a chop zone.

If anything I think it is pointing down but I would not do anything.

 

Gabe

[beeker 10]

long is startin to play out, looks like 22.400 first area it should go, past that with some momentum, looking at 22.436

[beeker 10]

and no i didn't enter it, didn't have a limit and i'm not chasing it, would've been long at 22.345 but you can shoulda, woulda, coulda yourself to death

[mblack246 10]

long is startin to play out, looks like 22.400 first area it should go, past that with some momentum, looking at 22.436

 

I don't really see it, any chance of getting a chart up with your thoughts?

[thalestrader 14]

Anyone else thinking long on the EURJPY?

 

Hi Beeker,

 

The custom we follow in this thread when posting a potential trade opportunity is to include a chart, and on that chart, we use a dark blue line to denote the proposed entry, a red line for the initial stop loss, and green lines for profit target(s), if targets are used.

 

Without a chart, this may as well be twitter.

 

Best Wishes,

 

Thales

[beeker 10]

my bad, been watching this thread for awhile and it's one of the better ones on the forum.

 

here's a chart of the 15m EURJPY, i only trade futures but since today is President's Day and US markets are crap, nice to check out the forex... price action is the same whether you trade forex, futures, stocks, whatever... it's all run by human emotion and psychology which doesn't change (except for the computers, but those are programmed by humans).

 

this is a 15m, only trade on fast time frames usually a 1m and 5m, but this is still valid for a longer term trade, just larger risk/reward compared to the faster time frame.

 

red circle is where i'd go long, yellow trendlines just shows the break and the bottoming pattern is sort of obvious, the red line is the lowest i'd like to see this go for the long thesis to still be intact.

 

to make a call, long will be at 22.373, gotta worry about 22.375-22.380 but past that should be good to push up. stop at 22.340, first target at 22.430.

 

this is on my demo account, i don't have a funded forex account yet, only trading the futures live.

[TradeRunner 10]

Where is everyone? Is it a US holiday or have you all gone to see Don Miller in NY?

 

Anyway good day for me although with 6 trades I might have veered into over trading: +76

 

Some of my entries were aggressive but I also managed my stops aggressively.

[TradeRunner 10]

Where is everyone?

 

Ahhh - President's Day. Note to self must take note of American bank holidays!!!

[beeker 10]

out at 22.360, rejected nicely at 22.380 and moved stop up, could not post fast enough sorry still in this triangle playin around

[Gabe2004 10]

The market is in coma.

EJ is in the middle of a chop zone.

If anything I think it is pointing down but I would not do anything.

 

Gabe

 

I must have had a senior's moment as i was looking at UJ.

The picture is the same but I have a long bias towards the EJ and the GJ.

 

Gabe

[MidKnight 12]

Yawn, I may start cut and pasting the daily plan soon

(note to self, when I feel its going to last forever, this is when it will break - stay alert today!)

 

GU still within range of last weeks tight play. Good rejection out of 1.5720. I still feel it needs to go up through that R before it can go down through the S. The daily chart shows these tight clumps fairly often on GU with the majority end up breaking the counter trend swing (in this case, up) before resuming the major trend (down). Light longs in the narrow band of 1.5540/80 aiming to be out of 3/4ths before 1.5700. Looking to short above 1.5720 and be out of 3/4ths before 1.5580. Should be break out and I'm not on board I'll be entering on the first mini pullback into the edge of this range we are currently in.

[Kiwi 16]

Here's my pick for MidKnights chart.

 

This is not so much a prediction as a preference for a particular scenario which could be joined with a 15m thales break when the top penetration failed (if) or some sort of breakout on penetrating the lows after the failure.

 

[patrader 10]

15m 6B chart

[patrader 10]

15m 6B chart

[patrader 10]

15m CL chart chart