Reading Charts in Real Time

[Cory2679 11]

Thales,

 

Here was how I saw the 6E today...I marked up the chart...

 

The trade you referred to would have been 32 ticks...4,000/(12.50*10)

 

I'm assuming you guys didn't start before 5am, so I bracketed 5am-5pm. I assume you probably didn't even start that early...or trade that late...

 

I only see 2 swings where I think 32 ticks is reasonably possible. I labeled the major swings...the gray arrow I think isn't applicable for the time you were trading, the red arrows I think are too small, and the 2 green arrows represent swings I believe are large enough to reasonably pull 32 ticks...

 

I think the trade was likely on the down-move. I marked 2 possible entries and 2 possible PT's. HOWEVER, the biggest problem I have here is how the PT's were determined...price hadn't traded that low in months to give what might have been a shorter-term support level to take profit.

 

Also, I marked a level of support...the blue horizontal line (it had been tested twice, recently)...which made me a little nervous for the short...I think a BE would have been in order once price hit that level (which, this time, would have still allowed you to get to profit).

 

The up-move, where I put my entry, would not have been big enough. If you got in closer to the bottom though, you could have gotten 32 ticks.

 

So, in summary, I'm not exactly sure... :hmmmm:

 

Thanks,

 

Cory

[thalestrader 14]

I think the trade was likely on the down-move. I marked 2 possible entries and 2 possible PT's.

 

For anyone confused by Cory's post, this is a continuation of a question I asked him in response to a PM he sent me. I mentioned a trade my friend made today, and I asked Cory to see if he could figure out where he might have entered, and to post the chart here in the thread.

 

Cory, you are correct. His trade was on that downswing, and the reason you can't figure out his PT is because you are looking for what you know I to use for PT's. My friend uses something that to me is quite artificial, and yet it works for him surprisingly often. As I said, he sold it on the down move with a sell stop at 1.4339. He, like myself and daedalus, owns a fib/EW software called MTPredictor. It had a function called a "DP" level, which is essentially a 1.10-1.27 fib off a prior swing reverse engineered yada yada yada. It worked for him, what can I say?

 

 

Best Wishes,

 

Thales

[Cory2679 11]

For anyone confused by Cory's post...

 

Sorry for the lack of clarification...just got caught up in what I was doing and wasn't thinking about it... :doh:

 

Thanks for the reply, Thales.

 

-Cory

[TradeRunner 10]

I hope you keep this up for a week or two or three. I think you will find that you will gain a great skill in a short period of time. I get so many PM's from folks who tell me they've been trading for 3 years, 5 years, 7 years, and still they are struggling. Yet few take my suggestion and just commit a few weeks to observing price and marking off highs and lows. You would think after years of struggle, they could muster a few weeks of concentration to try and right the ship./QUOTE]

 

Hi Thales

 

Do you rank/grade your HL/LH sequences and treat them differently? For example your first and fourth trades are in my eyes subtle and therefore feel more risky.

 

I have been interested in trading for a long time (I think I joined T2W in 2003) but I have to say that this is only the second time I have tried trading in real time and I have never been able to focus on one setup. In the end it's easier to read about trading than practice trading. For me it’s like my guitar practice (or any instrument). I would get a guitar magazine each month and spend more time reading that than actually playing. When I did play I might practise a song for a week but then move on to something else never mastering any song.

 

I will definitely continue with this exercise although I will have to do this on sim in the evening after work. Work being another reason for my steady progress (and I would guess this is true for many).

 

I have another question brewing about swing scale and chop zones which I'll try and formulate later.

 

Thanks

TradeRunner

Edited December 18, 2009 by TradeRunner
added picture

[ziebarf 10]

Short triggered on EU

 

Don't really like the RR on this trade. I have been very ill for two days (Vietnam and its crazy bugs) so I am a bit out of my mind right now.

 

Very small PT1 (1/2 of my stop size)

 

EDIT: Yabba Dabba Dooo, PT1 got hit. Stop now at BE. Going out for some bread, as thats all I can stomach at this point

Edited December 18, 2009 by ziebarf

[TradeRunner 10]

Hi ziebarf

 

Snap and it has started to move...

 

Update:

BE. Next!

Edited December 18, 2009 by TradeRunner

[TradeRunner 10]

Next!

 

Actually maybe I missed the next entry.

 

Added:

 

Second chance?

 

Added 2:

 

SL to break even. Last trade of the day for me today. Going to play in the snow with my kids.

Edited December 18, 2009 by TradeRunner

[daedalus 10]

Boring week this time around. Fought trades all week and ended up with a good deal of pars and a only two small 5-6 tick winners prior to todays trade. That being said, I stayed out of trouble.

 

A couple changes in my trading I wanted to share:

- I added the 5 minute chart of the BP/JY/EC to my charts. I found that these time charts were fantastic in catching some breakouts (see my example from today below).

- I have decided to start trading in the evening from 7PM CST - Till around 12AM CST. Obviously some times there isn't much happening but I think you'd all be amazed at the moves that can be found dialing down on a smaller tick chart. They are as crisp and clear as ever.

 

Anyhow - only 1 trade today as per the rules (quit after the first winner on fridays). Pretty self explanatory. Again I regard double tops/bottoms as LH and HL failures.

 

 

Last day of the year for me. I continue to read and watch this thread daily and am impressed by everyones progress. Keep it up guys and have a great holiday!

[Cory2679 11]

No charts from me today...I had some things I had to take care of this morning...it's ashame too, because there looks like there were some good moves on the EJ (what I've been watching this week).

 

I'll be back Monday. Monday I'm going to watch 3-4 currency pairs...

 

Have a good weekend!

 

-Cory

[ziebarf 10]

Long on the EU..

 

Good pattern, but we are in a serious downtrend..

 

EDIT: Moved PT1 down to half my stop size (1.4300)

 

EDIT2: Price kissed PT1, but not filled, moved SL up to 1.4287 or almost BE

 

EDIT3: Stopped out at -2

Edited December 18, 2009 by ziebarf

[forrestang 10]

Long on the EU..

 

Good pattern, but we are in a serious downtrend..

 

EDIT: Moved PT1 down to half my stop size (1.4300)

 

EDIT2: Price kissed PT1, but not filled, moved SL up to 1.4287 or almost BE

 

EDIT3: Stopped out at -2

 

I am hitting the 'exit market' button now when price gets right near, touches, or comes within a tic and begins to back off. I say this if price is making a strong impulse move to my target and is close to letting me out all in one shot.

 

This is obviously subjective and a bit of something that might take some getting used to, but the situation you described is sooooooooooo frustrating to watch happen.

[ziebarf 10]

I am hitting the 'exit market' button now when price gets right near, touches, or comes within a tic and begins to back off. I say this if price is making a strong impulse move to my target and is close to letting me out all in one shot.

 

This is obviously subjective and a bit of something that might take some getting used to, but the situation you described is sooooooooooo frustrating to watch happen.

 

 

I might have to work something like this into my plan. This trade had frustrating written all over it heh. On the bright side I am still up for the night.

[Cory2679 11]

No charts from me today...I had some things I had to take care of this morning...it's ashame too, because there looks like there were some good moves on the EJ (what I've been watching this week)...

 

Well, just for fun, I went ahead and marked up the chart up from this morning. Enjoy!

 

(2 trades off smaller-term swings and 1 trade off the larger swings)

Edited December 18, 2009 by Cory2679
grammar

[Cory2679 11]

I might have to work something like this into my plan. This trade had frustrating written all over it heh. On the bright side I am still up for the night.

 

Better safe than sorry. You could always jump back in at the break of the high (depending on the circumstances).

 

EDIT: Although, I can tell you in this case, personally, I wouldn't feel comfortable jumping back in and holding to that second PT...that's a long way away...l'd probably have a profit target at that major low that had just occurred (about 1/3 of the way between your PT1&2).

 

Just my

 

-Cory

Edited December 18, 2009 by Cory2679
"edit"

[TradeRunner 10]

Today's trade summary:

[thalestrader 14]

Weekend Reading

 

Hi Folks,

 

After the lengthy Joe Ross pieces I heaved at you during the last week, I thought a few shorter pieces would be in order.

 

The first is an article by Chris Terry, a Linda Raschke protégé, call "The Trading Game." This is a piece that focuses on the importance of determining a trading plan that fits your personality. Many who try and fail at this game do so no doubt because they are trying to day trade with a position trader's personality, or day trading with a scalper's personality. At any rate, I find this an interesting article, and worth sharing with you.

 

I have also attached a short article by Linda Raschke called "Tape Reading." Of all the seminars, courses, lectures, etc I have attended or otherwise seen and heard over the years, Linda Rashcke's is one of two that really stand out as having had a lasting and meaningful impact on my trading (the other beng a lecture by George Lane).

 

I hope you enjoy these. Have a good weekend.

 

Best Wishes,

 

Thales

Trading Game - Chris Terry.pdf

Tape Reading.doc

[forrestang 10]

Thales or anyone else for that matter that might have an opinion on money management. This question is mainly about the volatility we see on say the NQ or ES.

 

I have been reading about the idea of liquidating a THIRD to HALF portion of your contracts to cover costs and fees, and then move remaining to BE after covering fees.

 

Then if trading in 2 lots, kill the other HALF as your discretionary runner.

 

If trading in 3 lots, kill 1/3 at about twice the fee cost, and the final 1/3 as your discretionary runner.

 

The idea was that you'd usually at least cover fees. Maybe 7 of 10 times you cover costs and take a BE stop. Then maybe once or twice you get an explosive move. Every once and a while hit your P2 which is small profits, and every once in a while you'd hit that big runner. Supposedly this is how your account has not choice but to grow.

 

Example using a round $5.00 all inclusive fee cost per contract:

3 Contracts x $5 = $15.00

P1 = +3 tics

P2 = +6 tics (stop @ BE once P1 is hit)

P3 = Discretionary exit (stop @ BE once P1 is hit)

 

My questions are essentially how would you manage your ISL and is this even feasible?

 

If your stop rests beyond a swing point, NQ for example, this is usually about 2-2.25 points. So if you're stopped out at a swing point for 2 points, that's a cumulative 24 tics on 3 contracts, get where I'm going with this?

 

So is this type of money management even feasible?

[BlowFish 10]

This is an age old quandry FT. A couple of thoughts

 

If you are going to partial out I would still look at market structure to determine stops targets and RR and see if it is acceptable. So, if placing P1 at the nearest previous swing high and stop loss at the previous swing low, does not give you enough absolute tics profit and more importantly aceptable RR..... pass the trade.

 

 

If you are partialing out record information for each leg seperately so at a later stage you can analyse things seperately. You might discover for example that you are more comfortable with the initial P1 'scalps' or that you would be more profitable taking 2 off at P1 and 1 off at P2. Connversley you might discover the P1 'scalps' are break even or marginal and that the P2's and P3's make the payrol. By recording all the info seperately and evaluating them as seperate trades with the same entry you will have more idea how things are panning out.

 

Some might find partialling psycologically easier even if strictly by the numbers it is less effective. I guess it's kind of like 'playing with the houses money' I am not sure if that is neccassary a good way of viewing things but if taking a partial helps you run the rest of the position to your ultimate target who is anyone to tell you otherwise

 

Finally P1's will have higher % winners with higher risk lower reward than P2's and P3. Stating the obvious I guess as P1 will always be reached before P2, you will likely discover that lets say 70% of P1's make 1:1 RR and say 30% of P3's make 1:5 RR (made up example). Quite different characteristics.

[am5001520887468 10]

I have also attached a short article by Linda Raschke called "Tape Reading." Of all the seminars, courses, lectures, etc I have attended or otherwise seen and heard over the years, Linda Rashcke's is one of two that really stand out as having had a lasting and meaningful impact on my trading (the other beng a lecture by George Lane).

 

I'd never heard of George Lane before this post. From my quick googling he's a trader of 50+ years, who is a big proponent of stochastic indicators.

 

Could you share, roughly what message did you find important from him?

[Marko23 10]

The search for indicators finally has reached this thread.

 

This seach is completely needless and will never come to an end for obvious reasons:

- an indicator merely transforms price action into another picture. This vital information is within the price action, no need to move to another representation

- the parameter(s) for this transformation can always be fitted perfectly to the near past. They will never suit the near future because markets constantly change

- the transformation normally is a dumb algorithm, which nether recognizes change nor adapts to it

- because of the dumb algorithm, people start to draw "clues" from divergences. This distorts the picture even more

- there are thousands of indicators. Which one do you choose?

 

There is a much better solution to this dilemma: your brain.

Why not follow Thales' suggestion and take the patience to train it for some time.

[Marko23 10]

This following example ist taken from FGBL during last week.

FGBL stands for Future German Bund Long, a treasury future traded at Eurex.

After last Monday Close FGBL had moved down for 1 1/2 day and up for another 1 1/2 day. Thursday's high is not taken out. The down move has been retraced a little more than half way.

 

To prepare for Tuesday one looks at Monday's details. The vertical scale is enlarged from 150 ticks to 76 ticks, almost doubled.

An opportunity for Thuesday Open is clearly visible.

[thalestrader 14]

I'd never heard of George Lane before this post. From my quick googling he's a trader of 50+ years, who is a big proponent of stochastic indicators.

 

Could you share, roughly, what message did you find important from him?

 

Sure.

 

"Always make more money than your wife can spend!"

 

Best Wishes,

 

Thales

[Marko23 10]

2nd target reached after 75 min

 

[thalestrader 14]

The search for indicators finally has reached this thread...

 

Hi Marko,

 

Your points concerning the lagging character of indicators is well taken. I would hope new traders who find themselves here would likewise take heed of your warning. However, I would like to add a couple of cautions for folks like you and I who do feel strongly that indicators take more than they give in terms of benefits and harms to the trader's ability to read price action.

 

I'm not sure to which post you are referring when you say the search for indicators has arrived. I know Kiwi is doing some work with this method and he is applying various indicators as a mean for writing computer programs to autotrade. I'm not sure how one would write such a program without attempting to reducing price action to set of mathematical formulations that the computer can understand.

 

I know a few other of our friends here, for example, daedalus, has shown how they have found an indicator or two to be helpful to their decision making. I myself have shown charts from as recently as two or three years ago where I still was using a CCI along with this approach.

 

I think the process of which you speak whereby one trains his or her brain to apply this approach is correct. But, most who happen by this thread are not starting with a blank slate, and we should expect that for some, the process may be made somewhat more comfortable if each is allowed to wean him or herself from these supports at their own pace.

 

I, like you, do think the process would be easier and quicker if one were to go "cold turkey" and lose the indicators from the get go. And certainly, if one is a new trader, and is therefore a "blank slate" without a whole library of "favorite indicators" in tow, I would hope one would keep it simple and clean as TradeRunner, zeibarf, Cory, Forrest, Gabe and MK have done.

 

Remember Plato's cave - the transition from the shadow world of the cave to the bright light of the sun is a painful one, and one that can cause a paralyzing fear and anxiety. Thus, exercise care and patience with those in the process of becoming free as they endeavor to be free. We wouldn't want to discourage someone from trying at all because he or she did not yet have the confidence to go it without an indicator or two.

 

Best Wishes,

 

Thales

[thalestrader 14]

I have been reading about the idea of liquidating a THIRD to HALF portion of your contracts to cover costs and fees, and then move remaining to BE after covering fees.

 

Forrest,

 

This always seemed a bit "gimmicky" to me, and it is probably the best indication that while Joe Ross may be able to teach folks how to trade, he himself likely does not trade.

 

When I day trade stocks, I am almost always all in/all out, and I use a trailing stop, not profit targets. I typically trade the ES the same way, though I will at times try to apply a scale out PT's to an ES trade (and almost always seem to regret it after the fact). I am much more comfortable adding to a position as price moves in my favor, and keeping a trailing stop on the whole position.

 

For currency futures, I usually am all in on entry with usually 2 profit targets based on S/R and fibs. I trade them this way because in my experience, it works best for me.

 

I think trading an extra contract to cover your commission is, frankly, stupid. I just do not see what benefit it has. Maybe back in the days of $50/round turn commissions one could have made a case for it. But why take on the added risk to cover what is essentially less than 1/2 of a tick? I know you already seem to intuitively grasp this, but I just thought I'd share my opinion with you, as it may confirm what you already suspect - this is more a gimmick to impress the gullible rather than a sound money management approach. Others may disagree, but I it seems to me you are risking dollars in the hopes of covering dimes.

 

Also, why trade for 2-4-6 ticks? My goodness, if you trade this approach on the currency futures, you should rarely have a trade that initially moves less than 10 ticks from your entry before a stall and reverse. Why take 2 ticks without first trying for the 10?

2 ticks for me is a break even trade.

 

Best Wishes,

 

Thales