Reading Charts in Real Time

[Mr_black 10]

looking for 3 points on this long

long closed for 4 ticks profit

[jonbig04 10]

Lately I've been getting my butt handed to me in the market. It's no fun. But I have been noticing something about my trades that I think can be improved. However, it involves an amount of discretion I'm not used to exercising.

 

For example, here's a short sequence.

 

 

As has been gone over in this thread, I would enter when price makes a lower low, with my stop above the lower high. However I have been noticing that when I take a full stop, it's usually because even though price made a lower low (or higher-high in the case of a long) it only did so enough to get me filled before quickly rebounding and stopping me out.

 

In other words, in the case of a long, we can think the higher high as price breaking a resistance level. But sometime the level only bends enough for me to get fill via a stop-limit order, before falling back down. Here's an example of a long on ES that took out a full stop on Friday. Oh and I know you can't tell here, but I did wait for the blue line to get taken out before I got in long.

 

 

Here's a 5 second view. Notice the vol spike just as a I get fill. Price then retreats and retreats before stopping me out.

 

 

My question is this: is there a way, in these kinds of circumstances, I can look at the chart and see the vol spike, see the rejection and get out early? I know for sure that if getting out early is an option than reentering has to also be an to be an option, and that's fine.

 

The obvious answer is seems to be yes, but that's easy to say here. We have to keep in mind that this is a decision that has to be judged and decided while I'm in a trade. As of now I've avoided making price based decisions while in a trade because that's when our judgment is most skewed. But I'm starting to realize that dynamicness (dynamicism?) would have it's benefits.

 

What exactly can we look for in price that may tell us to jump out early? I think a volume spike can be meaningful. For whatever reason, they seem to happen just as price changes direction (just like here). The other thing to look for is of course whether price is moving against you. But then if you look at the long above, price could easily have went against me for a time, then made a HL and continued upwards. How are we to know the difference? Could time be factor? For example, the rate at which price is moving against us?

 

And if we do jump out early, do we re-renter with the stop in it's original place? If so that means additional risk which could outweigh the benefits of getting out early to begin with.

[nextlife 10]

Hi Jon

 

I also trade the ES. My default bracket right now is one point stop and 2.5 points target. What I am looking for is my trade to go green right away. If it doesn't, I am looking for the door. Once I am in the red, if the trade goes green and then comes back, I am looking to exit at BE. I got a string of BE trades the past couple of weeks but I'm not complaining because those are all trades where a) my entry wasn't great and B) all I paid for the shot was commissions. If a trade goes green by five or six ticks, then I can decided about moving the stop.

 

 

As far as reentries goes, if I have a level I am really sold on and I take a stop--whether it's BE or a couple of ticks-- and the setup hangs around and still looks good, I will hear myself saying "I still like this." Then I'll take the same price if I can get it. Maybe I get stopped again but when a setup looks good, that's what it's all about. You have to get your money down then, right?

 

 

I see pro traders and mentors saying "Forget about losses, move on." I don't find that easy. I usually end up reflecting awhile and sometimes that means I miss a nice move that I knew about but lost my concentration. That's maybe time to go work in the garden for awhile.

 

My two cents. Best of luck regrouping.

[daedalus 10]

Jon - been in the same boat looking at the same info and trying to avoid those exact losses.

 

All I can say is this:

 

1. The ES sucks monkey balls compared to practically every other futures market available. Due to the constant arbitrage between teh big and small contract backfill is the name of the game much more so than with any other market.

2. I found that range bar charts really cleared up a lot of the mess and "standardized" my trades and risk as it was the same measure of price movement to measure off of most all the time for pars and targets.

3. I would look into using some type of bar count filter or moving average filter to see if the LH/HL is already overextended or if its still got momentum left to play with.

4. I have been using the Value Chart indicator to see if the push upwards into the LH/HL is overextended on the Value Chart. If it is, I kind of see it as having already made the push and not having much left in the gas tank.

 

There is no right answer I suppose... I just also found those losses very annoying and I don't think there is any big right answer. Maybe these suggestions might give you places to look for answers.

[Kiwi 16]

I don't know if you guys will like this. I sleep while the ES is active (yes!!!) so I have no experience trading it.

 

My view is based on zones, boxes, or value areas (call them what you want). What you show above is the formation of a value area, progression down to form a new one (a down trend) a move to the upper edge of the value area and then a very minor test of the value area above. This is then rejected for a loss.

 

If you think about these moving rotations/boxes/zones/value areas and remember that an edge test is very likely to fail either at the edge as above or half way into the value area then you might well choose not to trade a 123break that is at the edge of the value area. ??

 

[ziebarf 10]

Lately I've been getting my butt handed to me in the market. It's no fun. But I have been noticing something about my trades that I think can be improved. However, it involves an amount of discretion I'm not used to exercising.

 

 

While this might sound incredibly arbitrary, I have been trying to employ a 10 minute rule in trading the NQ/YM. Basically when the trade breaks, I do nothing with my stops for 10 minutes. If the trade isn't going my way by then, I try to reduce my risk by half or by the closest swing. This still calls for some discretion, but stream lines the process a little bit. Trading break outs is tough, thats why I have been trying to find a way to reduce my risk as much as possible. So far this simple rule has led me to some decent SIM profits. But this is also with a relatively small sample size, but i'd figure I would throw the idea out there.

 

EDIT: If a trade immediately jumps to 1R profit, I reduce my risk before the 10 minutes is up, otherwise I do nothing.

[Mr_black 10]

long 6e

[thalestrader 14]

Lately I've been getting my butt handed to me in the market. It's no fun.... I have been noticing that when I take a full stop, it's usually because even though price made a lower low (or higher-high in the case of a long) it only did so enough to get me filled before quickly rebounding and stopping me out.... My question is this: is there a way, in these kinds of circumstances, I can look at the chart and see the vol spike, see the rejection and get out early?

 

I do not use volume on intraday charts, so I will not comment on your proposed use of volume in this case.

 

I am reminded of a post I made a little over a month ago:

 

...I've been going back over the Linda Raschke seminar material again over the last few weeks, and one line that must have resonated with me at the time is this: "The trade must move in your favor right away. Sideways is not an acceptable response."

 

Well, if I'm long, and if sideways is not acceptable, then down is an absolute no-no!

 

If I am not up a few ticks real soon, I am likely out. If I am stopped in based on a BO that can't even hold for a handful of seconds, I am out. As for re-entry, I enter at a new BO high (for longs) or new BO low (for shorts).

 

One thing to keep in mind is hat this thread has really spoken of two different "1-2-3" entries, and the one one you are using in this case is a simple sequence typically associated with Joe Ross and his Ross Hooks.

 

Another, more rigorous 123 is that associated with Trader Vice, and those require the break of a correctly drawn trend line. The Trader Vic 123 will weed out many, though not all, of those instances where you get ticked into a trade that immediately reverses. The trade off will be that by the time you gte both the trend line break (Trader Vic's 1), a retest of the high (Trader Vic's 2) and then a break of the significant low (Trader Vic's 3) a large portion of the move may already be over.

 

The Joe Ross type 123 will get you in for much of those moves, but you often will also be buying or selling the "C" of a simple ABC correction, which reverse against your new trade and quickly head for a break of the B pivot. This is why I do not stick around long in these trades. These either work, or they do not work (usually). True, sometimes I cut the trade loose only to see price do what I had positioned myself for it to do. In those cases, I re-enter as described above. Remember, risk is a function, not a simple measure - risk is a function of spread (entry-stop loss), position size, and probability., So though the re-entry level is not as favorable as the initial entry, by adjusting position size, along with the increased probability that the trade will work if the BO direction resumes, the risk really has not changed (at least not much).

 

I would also recommend a couple of posts from early in this thread, one by Blowfish, where he reminds us that where there is a potential long trade no doubt lurks a potential short trade as well; which leads to the second post I recommend in which Kiwi advises us to always consider the other side. If we are preparing to get long, ask what would make us change our minds and decide to go short instead?

 

In my view, my stop loss protects me against suffering an inordinately large loss. It also marks a point where I am wrong. But, it is not the point at which I am wrong - it is the outer boundary of the bad lands. If price is heading in the direction of my stop, I am already wrong.

 

I would also recommend that anyone working along with this thread read (or re-read) chapter 7 of Trader Vic I - Methods of a Wall Street Master. Pay special attention to the 2B criterion, as many of these trades based on Joe Ross 123's that get immediately stopped out are suitable for a stop and reverse on the basis of the 2B criterion.

 

Best Wishes,

 

Thales

[Mr_black 10]

long 6e

trade was stopped out p/l+4

[jashanno 10]

Thales,

 

I have spent the last week reading pages 1-300 and the last 50 pages of this thread. I must say this is a great thread and it ranks right up there w/ AHG on ET (if anyone knows what that is).

 

I want to try to force myself to participate and see if I can learn something in the process. I am one of those that reads a lot but rarely posts.

 

I am on sim right now (I watch 6E and NQ) and I replay the day when I get home from work. I eventually want to trade the Asian futures.

 

I tried out Oanda last night and I think that is going to be too painful for me. I really wanted to try to trade the same markets as everyone else here but I couldn't get the data to match and order entry was harder than it should have been so I am just going to stick with what I am doing.

 

I do things a little bit differently than some here so maybe some can help me fix my glaring errors and in return I can .... well I don't know what I can give in return. Maybe some bad advice.

[daedalus 10]

Two trades today... frustratingly took a par on one.

[DugDug 10]

Jashano - welcome - re matching charts and data, many people trade slightly different contracts, or the spot as opposed to futures. Plus with the FX different bar starting times may result in slightly different data sets - hence trying to match exactly will be hard unless you have the exact specifications of someone else's chart.

Have no fear in posting ideas, mine constantly seem to loose! - its all about ideas, education and helping yourself and others....so I am sure everyone is happy to see other ideas and other contracts.

[thalestrader 14]

...I am on sim right now (I watch 6E and NQ) and I replay the day when I get home from work. I eventually want to trade the Asian futures.

 

I tried out Oanda last night and I think that is going to be too painful for me. I really wanted to try to trade the same markets as everyone else here but I couldn't get the data to match and order entry was harder than it should have been so I am just going to stick with what I am doing.

 

I do things a little bit differently than some here so maybe some can help me fix my glaring errors and in return I can .... well I don't know what I can give in return. Maybe some bad advice.

 

Hi jashanno,

 

Nothing wrong with Sim - while it will do little to help you with the emotions of trading, it is the proper way to learn the mechanics and to help train your eye - as we are nearing opening day, I'll shift to baseball for my analogies: Sim is the batting cage - it will help you learn to see the ball and practice taking your swings, but it will not take the place of standing in against a 90+ mph curve ball in front of 50K screaming fans. But even the pros take swings in the batting cage regularly.

 

Do not worry about trading what everyone else is trading here. I trade the 6E, and I think both the 6E and NQ are wonderful instruments to trade, especially for someone learning to read price based on S/R and various repeating patterns.

 

As far as doing things differently, this is not a "my way or the highway" thread. Each of us who have participated here have our own grip on the bat and our own individualized stance at the plate particular to his or her "body" type. I would wager that those who have improved the most here tend to be those who do it his or her own way.

 

Welcome to TL and welcome to this thread. I look forward to your participation.

 

Best Wishes,

 

Thales

[Cory2679 11]

Current look at the 15 minute EUR/JPY...

 

It's probably just my inexperience, but I don't know anything to do but wait when price looks like this. I'm just waiting for it to start "swinging" and/or reach one of my blue lines.

 

[jonbig04 10]

Thanks for the insights guys. This is one of those tough questions that there really is no perfect answer to. I'm in the midst of a drawdown right now so I'm not going change anything, but I'm going to keep working and thinking about this until I figure something out.

[daedalus 10]

two trades.... screwed on both.... right on direction each time.

[Cory2679 11]

The ADP Employment Report had some effect on the EUR/JPY..this news was NOT "market moving" or "high importance" on Econoday or DailyFX, yet it still caused the Oanda spreads to widen to 10 ticks! I have a feeling I'm going to end up getting taken out on one of those news spikes one of these days...

 

[daedalus 10]

3 Opportunities... only 1 truly capitalized on for a win. Missed one not paying attention, took a high tick +1 on the other before it dropped to target. BLAHHHH today.

[Mr_black 10]

sell@1168.50 stop@1172 limit@1162

[jashanno 10]

Here's a trade I like. Just an observation and not even sim.

 

Edit: How do you post your charts? Mine just come up as an attachment. Do you have to have a web link?

euro.bmp

Edited March 31, 2010 by jashanno
edit

[DugDug 10]

Jashanno - to post charts look at this

http://www.traderslaboratory.com/forums/f30/how-post-chart-properly-805.html

[Mr_black 10]

sell@1168.50 stop@1172 limit@1162

trade closed p/l+2

[jashanno 10]

move 1st target up to 1.35079. Move stop to BE. Going for homerun on second target.

[MidKnight 12]

The ADP Employment Report had some effect on the EUR/JPY..this news was NOT "market moving" or "high importance" on Econoday or DailyFX, yet it still caused the Oanda spreads to widen to 10 ticks! I have a feeling I'm going to end up getting taken out on one of those news spikes one of these days...

 

Hiya Cory,

 

Use the forex factory calendar as the reports there are coloured by how they generally affect currencies. You'll see that the report is marked RED

 

Forex Calendar @ Forex Factory

 

With kind regards,

MK

[daedalus 10]

had 3 great setups, none went to targets at +11, all stopped and reversed around 8-9 ticks in favor...