Reading Charts in Real Time

[fxThunder 10]

GU long setup, entry triggered.

[Beachtrader 10]

EURGBP short triggered using M5 for the entry. Hopefully I have used the right colours to indicate my stop to b/e level and TP level.

 

 

In general I tend to ahoot for the first TP and take half off then trail using swings with the aim of riding a trend should it develop.

 

All the best

 

BT

 

Update: Stopped out at b/e after missing my TP by a couple of pips. With the benefit of hindsight I maybe could have allowed for a retest of the break level but rules is rules etc.

 

Edited January 6, 2010 by Beachtrader

[thalestrader 14]

Looking at a potential GU long setup.

 

This setup might be a bit agressive - Thales, would you consider this an appropriate setup?

 

Cheers,

eNQ

 

Nothing aggressive about buying a 123 at support, right? I can't tell you now if it will be a winner or not (you can check with me later), but I'm in it myself.

 

Sorry for no chart, but I have my hands full here.

 

Best Wishes,

 

Thales

Edited January 6, 2010 by thalestrader

[thalestrader 14]

Eur/Usd

 

------------------ -----------

End of Wave C rally

 

You have me confused. You say end of wave C rally, and yet you mark on your chart end of wave C at a low.

 

Also, I see the 5 waves down, but why are you labeling wave 2 as A and wave 4 as B and wave 5 as C?

 

Maybe Marko can help me here. Marko, do you understand what his count is showing?

 

Best Wishes,

 

Thales

[thalestrader 14]

GU long setup, entry triggered.

 

Hi EmNQ,

 

You don't need me or anyone else to tell you whether to take a trade before you take. Here is my 6B trade. Again, I'm sorry for not posting the chart before hand but I was swamped and had no time for annotating a screen shot.

 

Here is how it looks to me, and though it is after the fact, the fact that you saw it and posted it before the fact shows that hindsight wasn't necessary.

 

Best Wishes,

 

Thales

[Marko23 10]

Stop to Break Even

[thalestrader 14]

Current EURJPY starting wedge at the highs in the vicinity of PT2. A break below indicates a pause in the uptrend (not necessarily a reversal). A break above this type of action often is accompanied by a sharp impulsive thrust.

 

 

Best Wishes,

 

Thales

[Marko23 10]

You have me confused. You say end of wave C rally, and yet you mark on your chart end of wave C at a low.

 

Also, I see the 5 waves down, but why are you labeling wave 2 as A and wave 4 as B and wave 5 as C?

 

Maybe Marko can help me here. Marko, do you understand what his count is showing?

 

Best Wishes,

 

Thales

 

No, I don't understand anything of that "count" and have similar objections, looks like labeling after the fact. But I do not want to go into that; I'm glad to have left Elliott etc. behind me for trading; I don't need it to make money.

[Beachtrader 10]

Apologies if it is unhelpful or boring if I post a chart or 2 pre-setup but I tend to focus on levels before the setups themselves and, as with EURGBP, I quite like this level on USDJPY for a reversal. I wouldn't be keen on the long as there looks like quite a lot of trouble ahead to the upside and I prefer the path of least resistance. Would you agree with stance Thales or am I being overly cautious?

 

[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?

 

I gave a rather facetious answer to this question when it was asked. My response was that George Lane taught me that a trader must make it his job to make more money than his wife could spend.

 

My 6B post above reminded me of Lane and reminded me that I never came back to answer this question properly.

 

From a seminar that George Lane conducted nearly 14 years ago I learned a few tools that I use all the time:

 

1) Three drives to a top/bottom

 

2) Elliot wave is a viable theory, so long as you use it for distinguishing tradable moves from corrective moves

 

3) Always look for a HL after a double bottom or a Lower High after a double top.

 

So while he may be known for his development of stochastics, he was nonethless a consummate price action trader.

 

Best Wishes,

 

Thales

[Marko23 10]

Stop to Break Even

 

I'am out with +22, have to quit now.

[mblack246 10]

Current EURJPY starting wedge at the highs in the vicinity of PT2. A break below indicates a pause in the uptrend (not necessarily a reversal). A break above this type of action often is accompanied by a sharp impulsive thrust.

 

 

Best Wishes,

 

Thales

 

Hi Thales,

 

This looks like a pretty tight entry to me, and I probably wouldn't have even noticed it, let alone traded it. I'm wondering if you saw it outright or maybe dropped down to m5 to get a closer look at the PA? Or maybe you 'imagined' you were short and saw it as a potential stop and reverse?

 

mb

[thalestrader 14]

I quite like this level on USDJPY for a reversal. I wouldn't be keen on the long as there looks like quite a lot of trouble ahead to the upside and I prefer the path of least resistance. Would you agree with stance Thales or am I being overly cautious?

 

Well, the way I trade, if I get a good 123, I trade it, especially if it occurs in the vicinity of anticipated suport/resistance. I do not just go short at resistance or long at support without some sort of indication that that is more than likely the right action to take. Hence the reason I look for clear H-L-LH, etc.

 

I would not be in a hurry to initiate a new long here on the USDJPY either, not without a pulback, a 123 with the 3 eing a HL, etc. Yesterday it did decline into an area I had anticipated to be support (see blue rectangle on 4 hour chart below). So yesterday, I was looking for longs on the 15 minute.

 

On the monthly, I am watching for a possible break out above an ending diagonal that for what might be a decent rally (chart attached).

 

Overall, if push came to shove and someone put a gun to my head and said I had to take a position in the dollaryen, short or long - I'd rather be long of it here than short. But, since there is no gun to my head, I'll wait for a 123 indicating it is time to try a short, or a break above December's highs to go long.

 

As for thinking, I really try to do as little as possible. I have lost more money over the years thinking than I care to admit. Have rules for when you enter, and rules for when you stand down, and you will protect yourself from your thinking.

 

Best Wishes,

 

Thales

[Beachtrader 10]

Possibly putting my neck on the block then but I like the failure of price to retest the zone I've marked in blue and the LrH. As I mentioned earlier I am using paper money today but this is how I'm seeing things at the moment.

 

 

All the best

BT

[thalestrader 14]

Hi Thales,

 

This looks like a pretty tight entry to me, and I probably wouldn't have even noticed it, let alone traded it. I'm wondering if you saw it outright or maybe dropped down to m5 to get a closer look at the PA? Or maybe you 'imagined' you were short and saw it as a potential stop and reverse?

 

mb

 

I was watchng the EURJPY closely to see if I should get short of it as I stood down on the initial leg of the decline. If you look closely, you can see that price made three little pushes down, with the final push making a new low by just a tick or two, and then price rallied strongly nearly 15 ticks in a few minutes. This is basically the same trade as the 6B trade I posted, but the timing is compressed. I do not drop down to minute bars or five minute bars on the currencies (unless I am away from my desk I want to see the "order of events" if they are not immediately clear to me). Otherwise, bars are irrelevant. You could do this just watching the DOM, but it is much easier with a chart.

 

At any rate, think about the 6B trade, and also thing about the George Lane post I just made in connection with that trade - three drives to a bottom, buy after the first HL after a potential double bottom.

 

You may not have seen this now, but if you are trying to trade the approach I have presented here, eventually, you will see these.

 

This reminds me of the pin bar post I made back in October or November. Use the search thread function and search for pin bar. I made a post about a specific pin bar, and Kiwi and Blowfish both discussed it as well.

 

Best Wishes,

 

Thales

[thalestrader 14]

Possibly putting my neck on the block then but I like the failure of price to retest the zone I've marked in blue and the LrH. As I mentioned earlier I am using paper money today but this is how I'm seeing things at the moment.

 

If you can't risk being wrong on an anonymous internet forum, how can you expect to be comfortable risking money in live trades, right?

 

You have to be in it to win it, and I agree with you that there is a nice 123 presenting itself right now that may indicate a short opportunity is at hand.

 

My main point to you above was that you do not need to think about whether or not to take a trade if you have defined your trading rules and price action sets itself according to your rules. There is no think, only do, as Yoda would say (ok, he'd say "there is no try, only do," but you get the idea.

 

Best Wishes,

 

Thales

Edited January 6, 2010 by thalestrader
typo

[fxThunder 10]

Stopped at breakeven on the last GU long.

[thalestrader 14]

Ok Folks,

 

I'm quitting 'til Tokyo. I'll maybe pop back in off and on between now and then, but maybe not. I had the sudden realization over Christmas that my son will be starting kindergarten in September, so I am making a concerted effort to spend more afternoons with him between now and then.

 

Also, a reminder, any trade questions, chart questions, etc. should be addressed here in the thread, and not by PM. If you have a question, then someone else probably has the same question as well; and if I am not here to answer it, there are a bunch of good folks who hang out here or should be able to take a crack at it for you. I do try to go back through the thread and addres any posts that have accrued while I am out. If you ask something and you feel I have missed it, just repost it again.

 

Best Wishes,

 

Thales

[thalestrader 14]

Stopped at breakeven on the last GU long.

 

me too

 

Win. lose, or draw - the only thing guaranteed is that every trade will result on only one of those three outcomes.

 

But, you go to be in it to win it.

 

Best Wishes,

 

Thales

Edited January 6, 2010 by thalestrader
typos

[thalestrader 14]

By the way, what happened to Cory today?

 

Best Wishes,

 

Thales

[TradeRunner 10]

So I think your mechanical approach is fine, and it should help a great deal in managing the emotional aspects of this. But you do need to learn to respect S/R levels as you trade.

 

By the way, I think you did a wonderful thing by coming back today and keeping up the effort in the face of what I'm sure was a discouraging day for you yesterday. If I wore a hat, I'd take it off to you.

 

I’m still treating this as a learning exercise rather than something that I would end up trading so I wasn’t too discouraged but it still nice to have positive days. However, if it turned out to be profitable then why not? I think the low % of winners would be hard to stomach if I had real money on the line and I would also have to be careful with position sizing. Anyway as you say the sample size is too small to tell whether it would be profitable plus I’m still learning and making mistakes.

 

I think the exercise has the following advantages for me:

 

1. I can just focus on just reading price action.

2. Focusing on one contract means that I have to deal with whatever that contract gives me for the day – slow, fast, chop, range or trending.

3. It provides a framework that I can introduce other discretionary elements gradually (one at a time if necessary): position sizing, selecting target prices, trailing stops, identifying relevant S&R

4. Its good practice just trading a plan. It is very much like the exercise described in the back of “Trading In The Zone”

 

I will continue with exercise for another week or two and see if I can get rid of the trading errors before making any changes.

 

1) Your decision to to BE at +16 cost you a +30 winner while not preventing any of your -15 tick lossers. Also, you were stopped out to the tick on that trade. So, if you goal is to trim your losers, it would appear that the "move to BE" at 15 might not be as effective as you'd like. Of course, two days do not make a trend, or a mechanical system. But you want to keep your records, and this is one thing you should track: How often does your moving the stop prevent a ful -15 tick stop versus costing you a +30 tick winner? Over time, the rule must prevent 3 losses minimum for every one win it costs you or the rule will damage your results.

 

2) You are getting in on the right trades. Right now you are also seeing some situations as opportunities that I would consider marginal, and some I just do not see at all. As you practice this, you too will get better at identifying what I call the 80/20 trades where there is a high probability for profit from those that are more 20/80. So your rule of mechancially moving your stop to breakeven at +30 is intended to do for you what your lack of experience with this particular approach is preventing you from doing - reduce the number of losing trades and thus increase your winning percentage. Over time, this will take care of itself without using arbitrary rules.

That’s interesting because my feeling is that I would be more aggressive with my stops if I wasn’t following the mechanical system – quite often I feel the trade isn’t working and I’m just sitting on my hands waiting for -15. I think this is one of the many delicate balancing acts new traders have to become experience in. From my several readings of this thread I think you alter how aggressive you are with your trailing stops depending on the context of the trade. Is that correct?

 

Thanks for your help.

 

TradeRunner

[TradeRunner 10]

Hi TradeRunner,

 

I made some notes concerning your trades from yesterday (1/04/2010). Let me know what questions you have.

 

Best Wishes,

 

Thales

 

Hi Thales

 

I have a couple of questions...

 

 

 

Thanks for pointing out the data differences. I'm currently using SC's free historic data feed so I'm getting what I paid for I guess. I will switch SC to use OEC's data instead.

 

Thanks

 

TradeRunner

[thalestrader 14]

From my several readings of this thread I think you alter how aggressive you are with your trailing stops depending on the context of the trade. Is that correct?

 

Absolutely. I was making my point in relation to your mechanical exercise.

 

Best Wishes,

 

Thales

[thalestrader 14]

I have a couple of questions...

 

1) The rationale is simply that if price breaks down through a support level, I do not wanto to be a buyer at the first test of that level. I want a high above that level, then a pullback, and then I'll buy the next higher high. That is why I thought your first trade would be not trade for eme, though I'd likely have tried the second ling entry myself.

 

2) Yes, you have ahigh and a higher low, but this is in the middle of an uptrend. As I said in my chart notes to you, you could buy there, but you must use a natural stop (i.e.an actual pivot level) and not a mechanical fixed tick stop (fixed amount puts your stop below that pivot low). A 123 as I understand it and trade it is the first sequence off of a support or resistance level or after a significant base within an ongoing rally or decline. This was not the first High-higher low in this rally. As I see this it was simply a shallow pullback in a rally, and you bought the new high. I do the same thing, all the time. I just consider this a different entry from what I call a 123. I have no problem with the trade there, other than that it does not meet the criteria of the exercise, which, as I understood it, was to buy/sell 123 sequences. You are free to disagree with me, however. I may have misunderstood.

 

Best Wishes,

 

Thales

[TradeRunner 10]

I just consider this a different entry from what I call a 123.

 

Hi Thales

 

Ok I hadn't understood that this was a different entry setup but I can see that now. I guess you would make the same comment for my first trade yesterday where I bought new high out of a chop zone, the 123 entry would have been the high of the breakout candle.

 

TradeRunner