Reading Charts in Real Time

[thalestrader 14]

Weekend Reading

 

Hi Folks,

 

Here is a nice work by the late Stanley Kroll. I also recommend his earlier book, The Professional Commodity Trader. He is an interesting case in that he moved from being a largely discretionary trader to being systems based trader. What matters, however, is that whether he was trading based upon his discretion or his computerized systems, he knew well the importance of consistent and disciplined application of his method.

 

Best Wishes,

 

Thales

Kroll_on_Futures_Trading_Strategy_by_Stanley_Kroll.pdf

[daedalus 10]

1 trade 1 winner. Had to hold it for 30 minutes through the chop and bob to get the selloff but I stuck to my rules and was paid for it.

[daedalus 10]

i take losses too! this puppy was textbook but had no intention of giving me any cash today.

[thalestrader 14]

Hi Folks,

 

I've been quite distracted with non-trading business the last few weeks, and I likely have several more ahead of me before the Spring/Summer routine becomes a routine, and I can resume regularly posting. However, I got an e-mail today from Mike Reed, who runs a trade service focusing on S/R and providing intraday updates, and the material in his email lends itself to a nice, educational/informational post.

 

Full disclosure: I am not Mike Reed. I have spoken favorably of him and his service here in the past. I have bought and read his material, and a number of years ago, I had, for a while, subscribed to his service. I am no longer a subscriber because I learned to apply what he he taught. In other words, I graduated. His is a very good service, reasonably priced for the value, etc and so on. I do not mean for this to become an infomercial for his service - this is just a matter of full disclosure. And anyway, in an industry such as ours so full of pseudo-gurus, if we do find a service out there that actually is valuable, then why should we not say so, right?

 

One of the "set-ups" Mike teaches is none other than the JR type 123 reversal. His email had a link to two youtube videos showing his trading yesterday's 123 top reversal on the ES. Here is what it looks like on my chart (and I included a potential 123 bottom reversal from this morning as well). Yes, I know this is after the fact (I am not trading it, and I was not even watching the ES this morning). This is meant to be an educational example post, not a "Hey look at me I'm a trader" post.

 

 

The 123 bottom has triggered, though nothing says this is going to run like yesterday's top ran - it may be a winner, and it may be loser. That is what a stop loss is for, right?

 

I hope James does not mind me including the two part Youtube videos here. If so, he can delete them. I am posting them for their educational value. I am not Mike Reed. I have no affiliation with Mike Reed other than I am a former student and former subscriber of his services. This is not meant to be spam, and I apologize ahead of time if it is interpreted to be such.

 

I hope the videos are allowed to stand, and that you enjoy them.

 

Best Wishes,

 

Thales

 

PART 1

 

[ame=http://www.youtube.com/watch?v=oFZNy76HoRU]YouTube - 1186.avi[/ame]

 

Part 2

 

[ame=http://www.youtube.com/watch?v=tcW3QlXgAIQ]YouTube - 1186a.avi[/ame]

[thalestrader 14]

... (and I included a potential 123 bottom reversal from this morning as well). ...The 123 bottom has triggered, though nothing says this is going to run like yesterday's top ran - it may be a winner, and it may be loser. That is what a stop loss is for, right?...

 

Quick update on the ES shows a not very impulsive movement following the 123 trigger, as well as a possible 2B short opportunity. The proverbial "mixed signals," I presume. As price is above the open, I'd have to give preference to staying long, but my stop loss would now be at break even or very close to it. Again, I am not traing this, and if fact, I am on my way out. Have a great day, folks!

 

 

Best Wishes,

 

Thales

[daedalus 10]

2 trades, 1 par, 1 winner... had to hold it for 45 minutes of heat before she caved in favor...

[thalestrader 14]

... As price is above the open, I'd have to give preference to staying long, but my stop loss would now be at break even or very close to it...

 

Hi Folks,

 

A quick pop in and I see that long was the way to go as the ES has now rallied back to yesterday's prior break down point ...

 

 

 

Best Wishes,

 

Thales

[thalestrader 14]

Could the ES give yet a third 123 in just two day ...

 

 

Best Wishes,

 

Thales

[Marko23 10]

FDAX made new high of the year on a SellShort day, from my rhythm.

Open gap has been closed.

[BlowFish 10]

Hope you enjoyed your break Marko. I am glad your back today, I was kind of interested in today's DAX opening from a Trader Vic point of view. It was a big gap (with the weekend) and even though it did not close it 'early' in the session it seemed that was the clear intent. Just interested on your take....did the SS day trump the TV opening gap? Or maybe it was as there was no confirming PA?

 

Cheers.

[Marko23 10]

Hi Blowfish,

nice to read you. Yes, there is a life without the markets!

I've taken no trades yet.

 

" did the SS day trump the TV opening gap "

 

IMHO the gap closure and the SellShort day are in sync.

The gap was closed straight from the open but was too big for a closure

with one bar on a 30m chart.

 

Regards,

Marko

 

P.S. I just can't tolerate an "SS" in my writing.

Edited April 12, 2010 by Marko23

[thalestrader 14]

...

 

" did the SS day trump the TV opening gap "

 

IMHO the gap closure and the SellShort day are in sync.

The gap was closed straight from the open but was too big for a closure

with one bar on a 30m chart....

 

My currency trading friend, who was the first to really press upon me the power of the Trader Vic Gap Rule, explains the time element as follows - what is important is not whether or not the Gap fills within 10-15 minutes of the open, but whether or not price gaps open and then trends immediately in the direction of that gap, or does it reverse within 10-15 miutes, and begin trending in the direction of the prior close.

 

As for Taylor, for the US indices, I have today as a Buy day, and Taylor can easily accommodate the overnight gap and subsequent decline for a Buy Day on the US indices as well as for Marko's Short Sale day on the DAX. The reason being that both days are adjacent to one another in the cycle, and depending upon what the market has done during the previous two trading sessions, either day can see an initial rally followed by a decline (in some cases a precipitous decline). The short sale day finishes the previous three day rally. Sometime, momentum from that rally carries the market higher on the Buy day open before the decline sets in that allows traders to get long at more favorable prices for the next three day rally.

 

This is why richbois can say that the often times two traders can be working different cycle days on the same instrument, but if each follows Taylor's rules, and so long as each keeps to his or her labeling, the results should be the same. After all, what Taylor's method is really about using is recent prior highs and lows, and recent opens and closes as S/R levels, while anticipating that most of the time, even in bear markets, a market will spend more time going up than going down, even if the extent of declines outpaces rallies in a bear market. I've been using Taylor since the end of 2005, and I have been on the same cycle, which happens to coincide with richbois's cycle, since June of 2006. It works, and the Trader Vic Gap Rule is a very valuable addition to Taylor, in my opinion.

 

Best Wishes,

 

Thales

Edited April 12, 2010 by thalestrader

[BlowFish 10]

My currency trading friend, who was the first to really press upon me the power of the Trader Vic Gap Rule, explains the time element as follows - what is important is not whether or not the Gap fills within 10-15 minutes of the open, but whether or not price gaps and trends immediately in the direction of that gap, or does it reverse within 10-15 miutes, and begin trending in the direction of the prior close.

 

After I posted I figured that was possibly a large part of the equation. Thanks for clarifying.

 

I no longer have an office suite on any of my PC's (none that get turned on at least!). I might try running some stats on the phenomena on Zoho spreadsheet (online office suite) if it is up to the task. It would be interested to see if it happens as often as in Vic's day + if the size of the gap makes a different + how long to see if it fills etc. stats can increase confidence after all.

 

@marko do you pay much attention to the first hour's pre market (with respect to the rest of Europe) when dealing with TVGR?

[Marko23 10]

My currency trading friend, who was the first to really press upon me the power of the Trader Vic Gap Rule, explains the time element as follows - what is important is not whether or not the Gap fills within 10-15 minutes of the open, but whether or not price gaps open and then trends immediately in the direction of that gap, or does it reverse within 10-15 miutes, and begin trending in the direction of the prior close.

...

 

Yes, the immediate follow-up should lead to the proper interpretation.

Thanks for the clarification.

 

Re: Taylor cycle. I did NOT read the book during the last 2 weeks. But my own observations seem to resonate with the Taylor cycle.

 

@blowfish: I trade FDAX from 08:00 German time and apply TVGR to the pre market phase. XETRA opens at 09:00 and DAX normally follows FDAX.

[Marko23 10]

FDAX could move to a new 2 day low without major correction.

S1 is a target.

 

[Marko23 10]

As an illustration to Thales' clarification:

 

Bund made an open gap down und moves up since the first 15 minutes.

BTW. Bund has a Buy day.

 

[Marko23 10]

FDAX could move to a new 2 day low without major correction.

S1 is a target.

 

Here is the correction

 

[Marko23 10]

Minimum target after yesterdays new high was a new 2DL.

FDAX didn't make that yesterday, but the correction rose into a clearly visible resistance zone,

which is shown on all my charts yesterday.

 

Pivot calculation before todays open gave a PP just in that zone.

The first target down is S1 which coincides with a 2DL below yesterdays low.

 

FDAX gapped just into that position. Today is a Buy day from my rhythm.

That is a consistent picture: price comes down for an opportunity to buy.

Today my English sounds totally broken, hope you can take something out of it.

 

Edited April 13, 2010 by Marko23

[Marko23 10]

 

[richbois 10]

re TVGR I have a section in the Guide to trading TTT that covers TVGR with some examples. This section came about after a long period of watching daily gap on the US indices. I included a PDF of that section of the book. I know it has nothing to do with TTT but i find it a usefull tool.

 

re FDAX and TTT cycle. As Thales mentioned we can have a different cycle day for the same instrument and still need to trade it in the same manner. Mako had a SS day yesterday which made him look for shorts as the 3 day rally had culminated at the open.

In my case I had Monday as a Buy day. DAX had closed on the highs Friday, we could therefore expect the momentum to take it higher before that decline would start. In this case it had a huge gap up and that gap was above the SS Day high. In my statistics this is a must short at the first sign of reversal. In this case using Thales 1,2,3 method (if I understand it properly) this opportunity came at 9AM at the end of the 1st hour when we broke the low of the 1st 3min outside bar. That break also eliminated TVGR.

TVGR section of TTT Guide.pdf

[Marko23 10]

 

[Marko23 10]

 

Out for +4, still waiting for a proper 1-2-3 with 30m.

I still practice with 30m instead of 15m.

 

[Marko23 10]

New Start

 

At first target, fast

 

Waiting for gap closure and PP.

Edited April 13, 2010 by Marko23

[Marko23 10]

No follow-up after the signal bar, stop at break even

 

 

Stopped at b/e.

Edited April 13, 2010 by Marko23

[Marko23 10]

No follow-up after the signal bar, stop at break even

 

Stopped at b/e.

 

The up signal was immediately followed by a down signal.

I didn't realize what might follow after the b/e stop.

 

The gap is still open. FDAX rebounded twice from the resistance zone from yesterday evening.

Today is a Buy day from my rhythm, the price was pushed down to buy cheap;

at least that's my interpretation of price action.

 

 

The same situation in 15m representation looks a bit clearer (after the fact of cause).

Perhaps I should revert to that kind of chart for FDAX.

 

Edited April 13, 2010 by Marko23