Reading Charts in Real Time

[DugDug 10]

Two interesting longer term Fib levels coming up in the AUDUSD.

If short using a longer term runner, these are a place I would normally look to lighten off a little. (at present I have no positions - paper trading is getting be back on track though )

 

Fib retracement levels previously show some chop at similar levels between 50-61.8%. Plus the 100% fib extension of the last few days moves co-incides with the same levels. can save some heartache if it rebounds even only intraday... they can be big.

(additionally if the AUDUSD really starts to capitulate from here targets of about 70 maybe in order?

 

 

\

[thalestrader 14]

At any rate, the drop to a new low below 1.3577 makes for a new MFE of +3R on the trade, so I have lowered the stop on the entire position to +2R ...

 

+2R

 

Best Wishes,

 

Thales

[patrader 10]

15m 6B

[fxThunder 10]

looking for a long on GU currently.

 

edit: entry triggered

[fxThunder 10]

Showing GU entry and adjusted targets.

 

Cheers,

eNQ

[fxThunder 10]

Well, GU reached my 1st target and then retraced to test my entry. Subsequently it rallied slowly to the downtrendline where it stalled.

 

It is late in the day and as price has clearly run out of fuel I closed the balance of my trade.

 

Cheers,

eNQ

Edited February 25, 2010 by fxThunder
typo

[thalestrader 14]

See no one else has asked the questions so I will then...

 

What was the basis for that trade and how did you arrive at your entry limit price? Is this a support / resistance play or fib pullback?

 

Look at the 240 minute 6E below:

 

 

 

Here is the 240 minute 6E - I wanted to sell a test of the pivot level (see red arrow) and marked by the horizontal line.

 

Why?

 

Well, I have made no secret that I use the Taylor Book method as part of my trading. I have made no secret that I subscribe to richbois's TTT service.

 

Today was a Buy Day for the EURUSD. So, what do we expect on a Buy Day? We expect a decline.

 

A decline, you say? But wouldn't we expect a rally on a Buy Day?

 

Well, that depends upon where price is in relation to its most recent highs and lows of its most recent 3-day cycle. For the most part, on a Buy Day, you should expect a decline, i.e. weakness, into which Pros will be buying. Conversely, on a Short Sale day, we expect at least a rally testing the Buy Day or Sell Day high, and during strong cycles, we expect rallies, i.e. strength, into which pros sell. In general, then I expect lower prices on Buy days, and higher prices on Sell Short days. Again, in general. It all depends upon where price is in relation to its current trading cycle.

 

All this to say the following: According to richbois's TTT Book for the EURUSD, price had a 100% chance of price making a low of 1.3450 today. Here is a screen shot captured directly from the report he emailed me last night:

 

 

For what its worth, there was a bear flag off of yesterday's 123 short sequence on the 15 minute that broke to the downside last night at about 7 PM EST last night. My short entry was 1.3539, and my profit target was 1.3559 - with 100% odds of price trading to 1.3450, I felt it was a good target. TTT is part of that "rich context" I have been accused of using to plan my trades. I confess that it is. But I have always admitted as much.

 

 

 

Anyway, back to this afternoon's short: Price on the 6E made a low at 1.3451 soon after the Frankfurt open (the spot did trade to 1.3450 as TTT called for). My experience has been that when the German and London traders get a chance to buy on the Buy day at or near the projected TTT low, then the NY traders usually do not let the trading cycle rally get its legs until they have a chance to Buy at or near that low, so price often looks for a recently broken pivot low to test as resistance (in this case 1.3531), and then dives for the TTT day low. Sometimes it overshoots (which is what I was playing for) and sometimes, like today, if comes up 10-20 pips short (15 pips, to be exact).

 

Now, had price made it back to the TTT low, I'd have cashed my short out and I promise you I'd be sitting on a long right now. Price did not get back to the 1.3450 level, and so, as luck would have it, I am short from 1.3562 and looking for 30 ticks at 1.3232. I did the trade in the ninja demo account as well (I am trying to do my trades in the Ninjatrader account as well so I can show the chart with fills for those who apparently have made a career out of harassing me and others who participate in this thread).

 

 

I would like to point out to the few idiots out there who do not know how to read and follow along that that this post is explaining in hindsight the short trade that was called in this thread this afternoon in real time.

 

Best Wishes,

 

Thales

Edited February 25, 2010 by thalestrader
typos

[MidKnight 12]

Good plan from yesterday with the focus squarely short. There could be some possible minor R in the 1.5270 - 1.5300 area and if that holds before it makes new lows, then that is very telling just how much control the short side has. Noted that we are not seeing the same volatility as EU is seeing at the moment. Usually that high volatility comes into currencies when a significant top/bottom is near. That is showing up on EU but is yet to appear on GU. The plan is more of the same.....

 

Only longs to be had will be scalps unless there is a very very clear capitulation. Should it capitulate I will aim to be out of 1/2 by the time we trade the recent multi-day range low and attempt to trail the rest and scaling out the remaining 1/2 into 2 separate exits.

 

Still not much to work with, feels a case of should already be short and riding it, rather than be aggressive to get on board this short train. However, I will be monitoring obvious minor intraday R as per the 15m chart should this decline continue today without a decent rally to wash out some shorts. Trades taken from minor R they will be managed a little more aggressively than normal, be out of 1/2 at the first immediate obstacle.

 

EDIT: I say yesterday's plan was good in that it kept me OUT of all but the very obvious.

Edited February 25, 2010 by MidKnight

[thalestrader 14]

... I am short from 1.3562 and looking for 30 ticks at 1.3232...

 

Futures just opened and my stop is now +5 ticks. If stopped between now and Tokyo it would not be unheard of for a +5 tick stop to reuslt in a BE or negative exit due to lack of liquidity, though I'm showing a 1 tick spread on Globex right now, so slippage should not be too much of a problem unless someone over at the Fed sneezes.

 

 

Best Wishes,

 

Thales

[Beachtrader 10]

I am in a similar trade, albiet at a lower level, and with slightly different reasoning. Thales, apologies for the fibs etc. but of late I have been finding that I am not being as precise with my entries as I would like to be (or reasons for) and so am trying to build a 'story' around my trades rather than simply hitting levels (with P.A. confirmation) in the overall direction of trends.

 

 

Kind regards

BT

[thalestrader 14]

... I am short from 1.3562 and looking for 30 ticks at 1.3232...

 

+30 ticks which is just over +3R on this trade ... Would anyone believe that since last night I am up +10.33R? I guess it doesn't matter if anyone believes me, though the funny thing about those who doubt what they see in this thread from me and others is that I've not seen one of the critics try to post a trade, whether live or demo or paper or whatever here or elsewhere. The only talent the doubter's have is that of tearing other folks down.

 

 

Best Wishes,

 

Thales

[thalestrader 14]

... apologies for the fibs etc. ...

 

Why apologize, BT? I use fibs all the time myself, and I've said so repeatedly in this thread. You should use anything you feel you need to use get you to see what you need to see to get the result you want to get.

 

Let me give you an example: I have been a little remiss about updating my daily charts here in this thread the last few days. But here is the daily chart of the Gold ETF, GLD, that I have used as a proxy for the GC/ZG, as of yesterday's close:

 

 

 

 

 

 

 

I am long gold futures (a trade shown prior to the long entry trigger in this thread), and the two blue lines represent the zone into which I was expecting Gold to pullback. As of yesterday, Gold had pireced the top of that zone.

 

Now here is the chart after today's close:

 

 

 

 

 

 

 

 

 

As you can see, Gold continued its decline a bit deeper into that zone, and then rallied nicely, presumably resuming its uptrend. There is nothing magical about that support zone represented by those two lines. All I did was eyeball what I take to be a zone that represents a 1/3 to 2/3's retracement of the rally out of that low. I could just have easily have used a fib tool. Reading price, watching waves, is about nothing more than recognizing the proportion and balance and flow of price. Fib's are an excellent tool for doing so - not because the actual numbers matter so much, but because of the proportionality that the levels represent.

 

So, BT, don't ever feel as though you have to apologize for anything you post here. If you decided that you were going to load your chart with 20 of your favorite oscillators, that would be fine with me (though I'd have to say something, of course).

 

Best Wishes,

 

Thales

[Beachtrader 10]

Well despite what looked like a nice level, price had other thoughts on the matter!! Aggressive trailing got me out at -0.30R. This week is turning into a week of lots of small losers and not much to show on the upside!!

 

Current screenshot shows that maybe I couldashouldawoulda been more relaxed, but rules is rules....

 

 

All the best

BT

 

P.S. I didn't know there were 20 oscillators!!

[thalestrader 14]

Current view of the 6E/EURUSD ...

 

Best Wishes,

 

Thales

[thalestrader 14]

Current view of the 6E/EURUSD ...

 

Long 6E and this is what it looks like:

 

Before the long entry triggered (see above quoted post)

 

 

 

 

After the long entry has triggered:

 

 

 

Best Wishes,

 

Thales

[thalestrader 14]

Current view of the US Dollar Index - If my 6E long trades to target, then this swing tot he short side on the Buck should trigger (unless the Cable continues to get pounded).

 

 

 

Best Wishes,

 

Thales

[jonbig04 10]

Sorry I haven't been around. I'm having my worst month ever and I don't feel like doing anything but putting me head through the wall haha.

 

Anyways here's some 6E action. I'm wondering if it will turn this thing into a large double bottom, or keep making LLs. Be nice to see one more bounce off of that 3450 level.

Click for full size - Uploaded with plasq's Skitch

Edited February 26, 2010 by jonbig04

[martinguitar 10]

15 minute NQ, Feb. 25

[Cory2679 11]

...the funny thing about those who doubt what they see in this thread from me and others is that I've not seen one of the critics try to post a trade, whether live or demo or paper or whatever here or elsewhere. The only talent the doubter's have is that of tearing other folks down.

 

...that's why what they say doesn't matter whatsoever, and shouldn't affect the thread's regulars...

 

This (I assume Thales is getting PM'd) and the other incidents in the thread made me think...

 

It's sort of like a middle school kid, who plays basketball averagely (or can't play at all!), talking trash to Michael Jordan...telling him he can't play, never could play, and is just a fraud. It wouldn't matter at all!! Not to MJ and not to anyone else!! Who the heck cares what that kid says/thinks?! That's how I see it here, and I wish those people didn't have the effect they do...if they're ignored, they'll go away...if they don't get the attention they're after (like the middle school kid).

 

Just my .

 

-Cory

[DugDug 10]

As a suggestion Thales - get a ghost writer or someone who has more time to write it for you.

Write a book about trading patterns - attribute it to who ever you like. (TT, LBR, God, Aliens)

Put in a bunch of hindsight trades - because clearly thats all they are as you must have a time machine that allows you to print ideas before they actually happen

 

Then here is the catch - put a price on it and sell it!

 

We humans are a funny bunch - we place no value on something when its given to us for free - however when its given a value by someone else we suddenly decide it must be worth something ---- go figure.

I am pretty certain all the detractors will gladly pay for it - because then they figure its the holy grail of trading and it will lead to instant riches!

 

(on second thoughts - can I steal your stuff and do it myself - I promise to give you a cut)

 

I for one (as I am sure a few others do) appreciate the hard work, ideas and post and hope the detractors if they are PMSing you give you their money in the market.

[thalestrader 14]

Long 6E and this is what it looks like:

 

Before the long entry triggered (see above quoted post)

 

 

 

 

After the long entry has triggered:

 

 

 

 

 

EURUSD/6R as it looks with a the stop moved to -.51R:

 

 

 

 

 

 

And, given the choppy, overlapping structure of the rally, and the fact that it gave what is usually called a 2B sell opportunity at the high, here is the EURUSD/6E trade as it looks with the stop moved to +.5R:

 

 

Best Wishes,

 

Thales

[DugDug 10]

ZN ten yr bonds.... remember to check expiry dependant on how long you wish to trade this for.....

potential short for me...live.

 

 

.

[thalestrader 14]

And, given the choppy, overlapping structure of the rally, and the fact that it gave what is usually called a 2B sell opportunity at the high, here is the EURUSD/6E trade as it looks with the stop moved to +.5R...

 

As I am sitting here sitting on my hands waiting for the flurry of news activity to clear at 8:30 EST, I thought I'd share a few thoughts about TTT, which I have mentioned here in the thread, though for various reason I choose not to emphasize it too much. I have recently received a PM asking about my use of it in relation to

 

I do not want to turn this thread into a commercial for richbois's TTT service, but I would like to show another factor I took into consideration this mornng in moving my stop to +1R on that long 6E trade from yesterday that held through the night. According to the TTT eBook that richbois's service emailed to me last night at 5:18 PM EST, the EURUSD had a 99% chance of making a high at 1.3631 today. It printed a high within 3 pips of that at its most recent high.

 

Here is a screen capture of the relevant spreadsheet line from richbois's report:

 

 

This does not mean does not mean that the EURUSD cannot go higher, and indeed, the TTT Book also shows a secondary possible high - a 51% chance of a high at 1.3652. And that does not mean that it cannot go higher still. No magic, nothing writ in stone, just basic probabilties.

 

I do apologize for the after the fact nod to TTT, but as it is a paid service, I do not think it would be fair either to richbois or to his other subscribers for me to share the TTT numbers publicly before the level is either traded at or through, or after the trading day is over (I know it has not yet traded to 1.3652, but I do not feel bad about sharing a level with only 51% odds - there is statistically no edge there).

 

While I am now speaking admittedly in hindsight, if I may go into wouldacouldashoulda mode, had I been awake at the high, I'd have exited the trade with a full +1R based upon TTT and the 2B sell, and, in fact, I like to think I would have actually dumped the long for about 1.13R and gone short with size due to the close proximity of the risk point for a short up there. But, all that is pure imagination at this point.

 

For the record, I use TTT as a sort of guide, landmarks, if you will, to confirm or help clear the road map I see unfolding on the chart before me. I am not a pure TTT trader. A pure TTT trader (and there are a few of them, trust me, and they are not pikers) would have been accumulating contracts yesterday between 1.3450-1.3475 and selling them this morning between 1.3571 and 1.3630.

 

Another word about TTT - if you are interested in it, you must read George Douglas Taylor's book about the method. As my currency trading friend says, it is "a tortuous read." To make matters worse, the publisher, Edward Dobson of Trader's Press, included two damaging essays in tthe edition he published - one by George Angell, and the other by, believe it or not, Linda Raschke. Douglas's book is a tough read. The grammar is awful. Because the book is difficult and because Angell was concerned with profiting from selling trading system, he distorted the Method (never really understanding it properly) and published what for a time was the infamous LSS system. Linda Raschke was introduced to Taylor not through direct exposure to Taylor, but through George Angell's essay. So her approach to Taylor was very much colored by Angell (she also tends to use a 2 period rate of change indicator to define the current cycle for her, rather than viewing the cycle organically as Taylor intended). As a result, neither essay is an accurate presentation of Taylor.

 

What has made matter worse, in his publisher's forward, Dobson recommends readers start with the Angell and Raschke essays, and in those essays, each suggests that one can safely read one or two sections of Taylor's book and understand the method without bothering studying the whole! If you buy Douglas's book, rip out and burn the Angell and Raschke essays, and read and re-read the whole of Taylor. His method is simple, but it is made very difficult due to his use (or misuse) of language.

 

Let me give an example of what I mean when I say the essays are damaging: Each essayist claims that at times, the market gets out of synch with the Trading cycle, and that the trader must therefore "shift" the cycle to get back in synch with price action. Not so - and Taylor himself is adamant on this fact - the cycle is a three day cycle. Sometimes it extends. But the cycle remains intact. Taylor explicitly states (in one of the chapters Angell and Raschke tell readers not to read) that once established, the cycle is not to be shifted. Nearly every week I come across a so-called (self-proclaimed) Taylor experts who claims that it is "time to shift the cycle." Usually this is because the market had a big rally on Short Sale Day or a large decline on Buy Day. Well, according to the original Taylor's Book method, those are the very best 3-day cycles, where you get to buy sometime during a Buy Day at tremendously discounted prices and then liquidate and go short sometime during a Short Sale Day at tremendously marked up prices. Many who understand Taylor as he is presented by Angell and Raschke come away believing that the Taylor method is to buy at the open on Buy Day and go short at the open on Short Sale Day, and that therefore, failure of the market to rally out of the gate on a Buy Day or fall out of bed from the start on a Short Sale day invalidate the cycle or invalidates the method entirely.

 

Taylor was a price action trader. The Book method is based upon what and how to act, or more precisely, what one should look for and expect, based upon where the market is in relation to support and resistance - highs and lows, opens and closes, prior highs and prior lows. Its very good stuff. Though, in terms of clarity, it reads as though it were written by my five year old (who just turned five, by the way, so he may as well be four).

 

Best Wishes,

 

Thales

 

PS As readers of this thread know, I love and respect Linda Raschke immensely for what she has shared with me and the trading world, and I owe her more than I could ever repay, but with respect to her Taylor essay, she just does not get the music right, in my opinion.

[thalestrader 14]

15 minute NQ, Feb. 25

 

Great looking chart, martinguitar.

 

Do you play a Martin?

 

Best Wishes,

 

Thales

[thalestrader 14]

Here is what a daily CL looks like with a short at 78.77 and a stop loss at 78.84 ...

 

 

 

Best Wishes,

 

Thales