Reading Charts in Real Time

[Marko23 10]

...

Wave 3 cannot be the shortest wave in terms of extent, ...

 

So many counts overlook this rule. There is a useful implication from the rule.

 

When the trader is "in" the 3rd part of a clearly visible three part movement and the 3rd part does not grow beyond 100% of the 1st part, he should get out. The whole movement cannot evolve into a five part movement with a proper 5th part, unless EW theory is false.

[thalestrader 14]

Happy New Year everyone.

 

Well, because system trading is boring I've decided to add a little discretionary trading to hold my interest ...

 

I sometimes wonder if the difference(s) between a profitable computerized trading system and a profitable discretionary trader isn't much less than I assume (or assumed) it to be. While I would think it difficult, if not impossible to program a computer to trade based upon all the various "inputs" I use to make trading decisions, I suspect that I am. at this point, much less "discretionary" than one would would think.

 

Best Wishes,

 

Thales

[thalestrader 14]

BRV's No Brainer Trades Method

 

I am not familiar with the wmd thread, but BillyRayValentine's was one of my favorites (literally, his is one of 3 FF threads that I have bookmarked over the years). He seems to have abruptly abandoned the thread himself some time ago, however.

 

I'm looking forward to your discretionary contributions, kiwi!

 

Best Wishes,

 

Thales

[Gabe2004 10]

trade based upon all the various "inputs" I use to make trading decisions

 

Happy New Year to all.

 

If it is not a trade secret, what are those "inputs".

 

Thanks

 

Gabe

[thalestrader 14]

Weekend Reading

 

Credit where credit is due, so I reference a few of our Kiwi's posts from other threads here at TL:

 

Then add douglas for psych ...

 

...Similarly, my friend lives in a messy house and is bloody disorganized. He doesn't have a written trading plan and he turns up at the trading desk when he feels like it. He leaves on the same basis. He changes styles without "proper" research. But he is very disciplined under monetary risk in the sense that Mark Douglas means (operating without fear or greed). His breathing rate goes up etc but he doesn't let fear or greed change his approach - he does the same thing he'd do on paper or with twice the risk. He is very disciplined and as a result he is consistently profitable. But he is also totally ... disorganized.

 

The game is rigged blue. By you. Because its not like anything you've succeeded at in the past:

 

- you don't have to work hard to succeed

- working harder doesn't necessarily make it easier

- your emotions and what you do because of them seem to hinder rather than help you ...

 

One basic thing you need is a method with positive expectancy after expenses. While one is in the "having trouble" stage that method needs to be something that you can't second guess - what mark douglas calls the mechanical stage.

 

Funny thing happened yesterday when I was replying to yet another thread here at TL:

 

1) Pick your method

2) Build trust in your method

3) Build trust in yourself

 

How? Practice, practice, practice ... or, start as a nine year old girl (or boy) with a teacher in whom you have implicit trust and so you will have steps 1 & 2 taken care of for you from the get go, and then it is a merely a matter of learning trading as you learn any game or skill and thus quickly develop the confidence in yourself that is necessary to trade well.

 

What do you know? I have just had an "a ha" moment.

 

Again, credit where credit is due, that aha moment was no doubt aided in part by thispost some time ago by Blowfish:

 

I wonder whether having implicit trust is something to do with it? I think one of the reasons people have difficulty with trading (in general) is that whilst they acknowledge certain 'truths' they don't completely and unconditionally accept them.

 

Before today, I had only skimmed the first few pages of this book by Mark Douglas (I would hope this is the Douglas to whom Kiwi refers). I still have not finished reading this book, Trading in the Zone. I turned to it today because of an epiphany I had yesterday regarding why my daughter likely found trading so easy to learn while others have not has much to do with trust - trusting the method and trusting your ability to trade the method consistently. I recalled that Douglas addressed this here, and so I wanted to read what he had to say.

 

From what I have read of this work, I think this would be a good addition to our program here. In fact, I think the John Hill reading from last week combined with Douglas's work here, taken together, offer a potent "one-two" punch, so to speak, toward knocking down some of the obstacles, both technical and emotional, to one's development as a trader, especially one who wishes to trade the approach I have presented here.

 

Best Wishes,

 

Thales

Douglas, Mark Trading in the Zone.pdf

[thalestrader 14]

If it is not a trade secret, what are those "inputs".

 

That's kind of what this thread is all about, Gabe. As I have said many times, I have no secrets, and I have shared all: S/R, fibs, impulses versus chop and overlap, highs and lows, etc and so. Each of these things are included in my "inputs."

 

Best Wishes,

 

Thales

[Gabe2004 10]

That's kind of what this thread is all about, Gabe. As I have said many times, I have no secrets, and I have shared all: S/R, fibs, impulses versus chop and overlap, highs and lows, etc and so. Each of these things are included in my "inputs."

 

Best Wishes,

 

Thales

 

So no Voodoo or witch craft

I think that i finally found a good analogy to a good trader. A good Chef.

Both can make an ordinary recipe/methor into a meal/account fit for a king while others will spoil/ruin the dish/account.

 

Thanks for your help/thread Thales.

 

Gabe

[Marko23 10]

So no Voodoo or witch craft

I think that i finally found a good analogy to a good trader. A good Chef.

Both can make an ordinary recipe/methor into a meal/account fit for a king while others will spoil/ruin the dish/account.

 

Thanks for your help/thread Thales.

 

Gabe

 

Good analogy.

 

You may trust the Chef, be assured.

[thalestrader 14]

Hi Folks,

 

For anyone wondering about how to add position sizing to his or her money management parameters, I put together a little excel spread sheet that will calculate position size for various instruments. Use the drop down menus to select lot size: 1000 (fxmicro) 10000 (fx mini) 62500 (futures 6B) 100000 (fxStandard) and 125000 (futures 6E, 6J). You then select the proper tick value in the next column, .1, 1, 6.25, 10. and 12.50 respectively.

 

Then, as a trade opportunity presents itself, you enter the correct stop loss size and the correct profit target size, both in # of ticks. The spread sheet will tell then calculate the number of lots max for that particular opportunity.

 

I included a set for each instrument/fx lot, and I used as examples two trades form this last week that where posted here by other thread participants before the trades triggered. I used the short EU/6E for each of the three fx lot sizes and, of course, for the 6E/6J example. I used a short GU trade for the 6B example. I think the spreadsheet is self explanatory. You obviously would enter your own account size and your own desired risk level. I kept the account sizes in the spread sheet small as I assume many here are trading small accounts, and this shows clearly how risk/trade is high for a smaller account, especially as one moves up to lots/futures with higher notional values.

 

You do not have to keep all five examples on one sheet. I did this simply to illustrate each lot size. Just keep one set on one sheet, wih your own values already loaded. This way, as an opportunity presents itself, you can easily enter that particular opportunity's ticks at risk and ticks to profit target, and you will know your trade size, dollars at risk, and anticipated profit in dollars at target.

 

If you decide you are going to limit your risk per trade to 2% of account equity, then you must trade the smallest lot/futures available that will let you take the trade while keeping your risk to 2%. If even at the smallest size you are unable to properly size the trade without exceeding 2% (the excel program will calculate a "0" in the position size column), then you simply do not participate in that opportunity. Thta goes for whatever you decide your max risk/trade will be.

 

Best Wishes,

 

Thales

 

 

 

EDIT: Uploaded Corrected spread sheet - changed B8 value to 10000 and changed Column C heading to Tick Value

Position Size - FX Micro Mini Standard with examples.xls

Edited January 2, 2010 by thalestrader

[Gabe2004 10]

 

Cell B8 of the Excel file should be 10,000.

 

Gabe

[thalestrader 14]

Cell B8 of the Excel file should be 10,000.

 

Gabe

 

I uploaded a corrected spread sheet, which also corrects the column C heading.

 

Best Wishes,

 

Thales

[thalestrader 14]

Hi Folks,

 

Monthly USDJPY is presenting a familar pattern. Each of the last two times it presented this pattern, price commenced a move that lasted many months in the direction anticipated by the pattern. Nothing is writ in stone of course, but it better to be aware f the pattern's presence than not.

 

Best Wishes,

 

Thales

[thalestrader 14]

Hi Folks,

 

Monthly GBPUSD shows a range (nascent "triangle," aka Chop Zone) going back to August. I'll be watching for a break of that range to define the next GU/6B campaign trade.

 

Best Wishes

 

Thales

[thalestrader 14]

Hi Folks,

 

Monthly GBPJPY. A break above the August 2009 high gives targets 2000-3500 ticks higher.

 

Best Wishes,

 

Thales

[thalestrader 14]

Hi Folks,

 

Monthly EURUSD. Falling sharply away from anticipated resistance. Below I outlined an important support zone (green line within the zone was a 1.2100 target I had for an old short on the 6E). Right now, I do not see anything one way or the other at the moment. A case could be made that the rally over the last few months has gotten choppy, sloppy and almost wedge-like. But, I do not see anything clear enough for me to say "I'd be looking to get long at 1.xxxx or short at 1.xxxx. I wish I had gotten short at 1.5000, but that's the stuff for wouldacouldashoulda.

 

Best Wishes,

 

Thales

Edited January 2, 2010 by thalestrader
typo

[thalestrader 14]

Hi Folks,

 

EURJPY monthly. Nothing to do but to play that range until it breaks that range (125 +/- to 139 +/-).

 

Best Wishes,

 

Thales

Edited January 2, 2010 by thalestrader
typo

[Cory2679 11]

...I put together a little excel spread sheet that will calculate position size for various instruments...

 

...You then select the proper tick value in the next column, .1, 1, 6.25, 10. and 12.50 respectively...

 

Hey guys,

 

I had a suggestion for the spreadsheet, so rather than just post it, I've attached my edited version for anyone who's interested. The only thing I changed was the "Tick Value" column for the retail forex rows. I removed the drop-down lists and allowed the user to enter the value...

 

This just makes it more exact, because depending on the pair, the tick value can vary. The FXCM platform quotes the tick value for each pair in real-time (I'd post a picture, but it doesn't allow me to sign on when the market's "closed" over the weekend).

 

I appreicate Thales putting this together. This is a better version of what I had posted here, which required trial and error to calculate position size:

 

BTW, I found a convenient "forex profit calculator" on Oanda's website, for anyone who might be interested...it's helpful if you're defining your risk as a % of your account equity: Profit Calculator | Calculate Forex Profit - OANDA FXTrade

 

The profit calculator does the job, but Thales's spreadsheet is more convenient.

 

-Cory

Position Size - FX Micro Mini Standard with examples(Cory2679Edit).xls

[DaKine 10]

Hello Thales I am working my way through this thread excellent stuff I did have a question about this trade though and your thoughts on why a short at this level the second time around was no longer appealing to you.

 

The original late day trade had a target of 1.4485 if you did get triggered in. 1.4519 S was not originally labeled so it may have been overlooked if that was the case then I understand the reason for the no short... If it was the case that 1.4519 was overlooked would the original trade have been less appealing as well? Thanks for your help...

 

http://www.traderslaboratory.com/forums/208/reading-charts-real-time-6151-24.html#post75145

 

Edited January 2, 2010 by DaKine

[thalestrader 14]

Hello Thales I am working my way through this thread excellent stuff I did have a question about this trade though and your thoughts on why a short at this level the second time around was no longer appealing to you.

 

The original late day trade had a target of 1.4485 if you did get triggered in. 1.4519 S was not originally labeled so it may have been overlooked if that was the case then I understand the reason for the no short... If it was the case that 1.4519 was overlooked would the original trade have been less appealing as well? Thanks for your help...

 

http://www.traderslaboratory.com/forums/208/reading-charts-real-time-6151-24.html#post75145

 

2) A short after the test of 1.45

 

 

 

First, let's look at what I was looking at when I posted what I saw as either a short or a long. I was triggered into a long position.

 

 

 

1) First and foremost, let's consider what price was doing when I posted that I had brackets the area with both a sell stop and a buy stop (initialy I only had a sel stop). Price had declined after having rallied following a breakout of an area of congestion. After the decline, price rested in a narrow range. When price rests, it is not going to do so forever. It is usually going to continue in the direction it had been heading going into its snooze, but when that rest occurs at or near a recent break out level, then one should prepare for price either to continue to to reverse.

 

Your proposed short entry, in my opinion, was both too late and too early. It was too late, in that I would have rather shorted the first 123 after testing what was now the high of a new range. It was too early in that having missed the first short opportunity in the 1.457x area, the next short at this point would be a break below the area of congestion from which price had broken the day before. This will be more clear if we consider the next point:

 

2) My proposed short short entry was 1.4433, which gave a 15 tick cushion between entry and support at 1.4418. I think I have said here before that "I can work with 15 ticks, I cannot work with a tick or two." You seem to be suggesting a sell stop at 1.4418. Why would you want to initiate a new short position right at the top tick of a potential support zone?

 

3) And last, recall that when I considered the short, price was in a brief period of range contraction. Where you are suggesting a possible short, price is experienceing a period of range expansion, with large overlapping swings chopping lower, digging into support rather than cutting through it.

 

Now, here is what you would have been looking at where you are suggesting a short:

 

 

When I look at the hard right edge of that chart, I see a long opportunity in the making, not a short.

 

Now, here is the very next bar:

 

 

A break to a slightly lower session low, but right to the 1.4319/19 level. Now, if price bounces and then drops below that level, I may try a short. But No way am I selling what has a very good chance of being the low tick before the prior day's rally resumes unless price tries to muster a rally and then fails (I do still occasionally short the low and go long the high - its an occupational hazard).

 

Instead, let's look at my next trade (all of these screen shots are coming right out of my files - I take a pic of every trade I take, usually multiple pics - and I keep them. Forever.)

 

 

I don't think I even posted this one as I would have been late getting the chart off (I do try to post my trades before they trigger). As you can see, price not only did not come back down to break that low, but instead set up a very nice looking long opportunity.

 

I know I have said more than once in this thread and elsewhere at TL, price getting to S/R is in itself not sufficient to make me do anything. What is important is 1) How did price get there, and 2) what is it doing now that it has reached that level. In the first case, price had acted in a manner that led me to be comfortable going either long or short depending upon the direction price took out of that little narrow range. In the second instance, price was not acting in a manner that presented me with an opportunity to go short. In fact, it showed me a long, and then busted that opportunity, and then showed me another long, and triggered that opportunity. I follow price the best I can. I think in this case I did everything price told me to do. What do you think?

 

Best Wishes,

 

Thales

[Gabe2004 10]

I think in this case I did everything price told me to do. What do you think?

 

I think we should call you the PRICE WHISPERER but on a more serious note I would not look at a short in the immediate area below 1.4520 because the resistance area I see to the left of the chart.

If price would get below 1.4485 or so I would be looking for a short.

 

Gabe

[thalestrader 14]

Hi Folks,

 

I'd like to hear opinions on this stock chart. Any thoughts?

 

Best Wishes,

 

Thales

 

[Gabe2004 10]

Hi Folks,

 

I'd like to hear opinions on this stock chart. Any thoughts?

 

 

I would go short if we break below the low of the rightmost bar or wait for price to break above the double top and subsequently retrace (ideally not too fat beloww the double top level) and then go long above the highest point above the double top.

 

Gabe

[forrestang 10]

Hi Folks,

 

I'd like to hear opinions on this stock chart. Any thoughts?

 

 

Two possibilities maybe.

[DaKine 10]

Thanks Thales for taking the time to respond. When you say you can work with a 15 tick cushion you are still monitoring the 1.4418 area for potential support but it is enough where you can potentially scratch the trade if need be. In my case you would be shorting right into potential S with no leeway.

 

3) And last, recall that when I considered the short, price was in a brief period of range contraction. Where you are suggesting a possible short, price is experiencing a period of range expansion, with large overlapping swings chopping lower, digging into support rather than cutting through it.

 

Can you maybe elaborate on range expansion more and its implications on price when it is at a potential S/R area. What is price telling you when range extension occurs in these areas?

 

You did mention the long in your following posts and those setups are clear. Shorting into potential S with no leeway is a no. Range expansion in these areas I still need some help wrapping my brain around. :crap:

 

If price would get below 1.4485 or so I would be looking for a short.

Gabe

 

I would think think price would need to get below the 1.4470 area to get short where you are proposing maybe Thales can help us with this one.

 

 

 

DaKine

[Gabe2004 10]

I would think think price would need to get below the 1.4470 area to get short where you are proposing maybe Thales can help us with this one.

 

 

On 2nd thought, I agree with you.

Maybe even lower than 1.4460

 

Gabe