Reading Charts in Real Time

[daedalus 10]

While I'm in no ways a trade guru I think some people new to this idea may be "shotgunning" the approach a bit too much and applying the logic to EVERY wiggle in the market. And while this will work to some extent because we are still following the underlying logic of the market it may not be the best way to approach this. Take a second to consider the underlying logic behind what we are attempting to do and what makes this method work.

 

• - When we are entering the market the trades that work the best are the trades in which we enter into others failure. Their protective sell stops to lock in profit are getting hit forcing orders into the market that we are taking the other side of... the more sell stops get hit do to an adverse move, the more violent the reaction, and the more money we make.
  
• - That being said, the best opportunities are going to be in areas where other traders are going to be trailing their stops. And since they are going to be trailing their stops to pullbacks along the way, we look to enter when the pullbacks become reversals and ride the wave the other direction. Thus, the best opportunities are going to be on swings that have run some distance and have a strong impulse move.
  
• - Furthermore, think of the trade in reverse. If the market is downtrending, where would YOU be moving stops to? If you can find that nice pullback that says to you "yup, that's where I would put my protective stop in" then guess what? Others will be doing the same thing. Then all you have to do is wait for their failure (and subsequently your success) to take the market the other direction.
  
• - It just seems like a lot of the trades that don't work so well for some people in this thread come from applying the logic to the wrong spot on the chart or the place on the chart where there might be a wiggle of a HL or LH but it wouldn't be convincing enough to make all the other traders out there trail their stops to that point.
  

 

Its not just WHAT you apply that matters - its WHERE you apply it as well.

 

Take a look at the following example... just todays chart in the 6E on a 233T chart. If you were a trader long in this market where would you be trailing your stops? Its easy to spot the EASY setups when you can wait for them to appear. Wouldn't you rather be waiting to play that textbook LH opportunity? Its when you go looking for stuff, when you start shotgunning the approach at every wiggle on the chart you set yourself up for failure IMHO.

 

Hopefully this rambling tirade makes sense to at least one person out there. Off to shovel more snow!

 

Cheers!

[snowbird 10]

This hit home with me (I bet I won't be the only one this makes sense to)

 

I will note that there appears to be another natural spot on your chart where many would have moved a stop (the three hammers and a hangman around 13:25). Interestingly enough, the short here failed and a the subsequent long rallied swiftly into a tripple top after breaking back up past where all the short traders that likely had a stop (above the high of the hangman bar.)

 

Thanks for the insight... it was very valuable to me.

 

snowbird

[thalestrader 14]

While I'm in no ways a trade guru...

 

I wish I had thought to express that idea in those terms myself. That is an excellent, excellent post, daedalus - one of the best here in a while (and that's including anything I have had to say, that's for sure. This is one of those posts that ought to create a few "a ha" moments out there. If we still had the Post of the Month system here, I'd have nominated this post of yours.

 

Thank you for your effort. This thread will stand or fall based upon the efforts of good folks like you stepping forward and offering your thoughts and insights.

 

Best Wishes,

 

Thales

[Gabe2004 10]

Take a look at the following example... just todays chart in the 6E on a 233T chart. If you were a trader long in this market where would you be trailing your stops? Its easy to spot the EASY setups when you can wait for them to appear. Wouldn't you rather be waiting to play that textbook LH opportunity? Its when you go looking for stuff, when you start shotgunning the approach at every wiggle on the chart you set yourself up for failure IMHO.

 

Hopefully this rambling tirade makes sense to at least one person out there. Off to shovel more snow!

 

Cheers!

 

Thanks for your post daedalus.

For the sake of clarity I changed some of your lines. Is this what you meant?

 

Gabe

Edited January 6, 2010 by Gabe2004

[thalestrader 14]

Thanks for your post daedalus.

For the sake of clarity I changed some of your lines. Is this what you meant?

 

Gabe

 

Gabe,

 

Go back to daedalus's post, and read it a few more times.

 

Best Wishes,

 

Thales

Edited January 6, 2010 by thalestrader

[Gabe2004 10]

Gabe,

 

You should delete your version of daedalus's chart, and then go back to daedalus's post, and read it a few more times.

 

Please delete your version of daedalus's chart.

 

Best Wishes,

 

Thales

 

Out of courtsey I did but I thought that we learn by asking questions and not by censorship.

 

I think that the black lines were inconsistant.

An explanation rather than a request to remove a chart would have been more helpfull.

 

Gabe

[daedalus 10]

Gabe - I understand what you were saying with the lines. Please note that in my picture the lines with the bubbles attached to them are not to the exact level... (the trade platform wouldn't let me move the anchor point) but they would be at the orange horizontal lines I drew at each stop placement. (1 Tick below that level that is).

[thalestrader 14]

Thanks for your post daedalus.

For the sake of clarity I changed some of your lines. Is this what you meant?

 

Gabe

 

Gabe,

 

Really focus on this thought from daedalus's post - everything follows from this concept:

 

Take a second to consider the underlying logic behind what we are attempting to do and what makes this method work.

 

[*]- When we are entering the market the trades that work the best are the trades in which we enter into others failure.

 

Simple yet profound in its implications. Get this, and you will be more likely to get "it" as the saying goes.

 

Best Wishes,

 

Thales

[Gabe2004 10]

Gabe,

 

Really focus on this thought from daedalus's post - everything follows from this concept:

 

 

 

Simple yet profound in its implications. Get this, and you will be more likely to get "it" as the saying goes.

 

Best Wishes,

 

Thales

 

I don't understand why are the black lines not pointing all to the bar that the orange lines originate from? (my chart tried to correct the inconsistancy)

 

I understand the idea of trailing stops of a trade at the marked places and the idea of entering a short at those points because when the stops are hit a move in the direction of the stops will have a tidal wave effect.

 

Gabe

[thalestrader 14]

Out of courtsey I did but I thought that we learn by asking questions and not by censorship.

 

I think that the black lines were inconsistant.

An explanation rather than a request to remove a chart would have been more helpfull.

 

Gabe

 

My concern was where you added blue lines above each high and wrote that "by the same logic each of these is a long entry." 1) That is not the case. Each new high is not necessarily a good entry point, e.g. some highs occur at prior brak down point, and I wouldn't want to initiate a new long at a prior break down point; 2) your note distracts from the logic that daedalus's version shows.

 

If you just want to line up thearrows along the swing lows, that is fine, but you added additional annotations that were not correct and did not accurately convey the same logic that daedalus's post did.

 

I did not give an explanation because I wanted to hurry up and ask you to delete your chart before it would have been too late to do so.

 

I think I have shown that I am not a thread dictator and I am not a censor (other than I ask for no profanity as my daughter does read this thread).

 

I didn't mean any offense. I just think daedalus's chart is an excellent tool for folks learning this approach, and I wouldn't want folks to be confused by your additions. Sort of like I wouldn't want someone to draw a moustache on the Mona Lisa.

 

 

 

Best Wishes,

 

Thales

[jands 10]

While I'm in no ways a trade guru I think some people new to this idea may be "shotgunning" the approach a bit too much and applying the logic to EVERY wiggle in the market. And while this will work to some extent because we are still following the underlying logic of the market it may not be the best way to approach this. Take a second to consider the underlying logic behind what we are attempting to do and what makes this method work.

 

Very nice post Daedalus, I have to agree with Thales on the quality and helpfulness of this post.

 

Thanks,

 

Jands

[Rustie 10]

While I'm in no ways a trade guru I think some people new to this idea may be "shotgunning" the approach a bit too much and applying the logic to EVERY wiggle in the market. And while this will work to some extent because we are still following the underlying logic of the market it may not be the best way to approach this. Take a second to consider the underlying logic behind what we are attempting to do and what makes this method work.

 

• - When we are entering the market the trades that work the best are the trades in which we enter into others failure. Their protective sell stops to lock in profit are getting hit forcing orders into the market that we are taking the other side of... the more sell stops get hit do to an adverse move, the more violent the reaction, and the more money we make.
  
• - That being said, the best opportunities are going to be in areas where other traders are going to be trailing their stops. And since they are going to be trailing their stops to pullbacks along the way, we look to enter when the pullbacks become reversals and ride the wave the other direction. Thus, the best opportunities are going to be on swings that have run some distance and have a strong impulse move.
  
• - Furthermore, think of the trade in reverse. If the market is downtrending, where would YOU be moving stops to? If you can find that nice pullback that says to you "yup, that's where I would put my protective stop in" then guess what? Others will be doing the same thing. Then all you have to do is wait for their failure (and subsequently your success) to take the market the other direction.
  
• - It just seems like a lot of the trades that don't work so well for some people in this thread come from applying the logic to the wrong spot on the chart or the place on the chart where there might be a wiggle of a HL or LH but it wouldn't be convincing enough to make all the other traders out there trail their stops to that point.
  

 

Its not just WHAT you apply that matters - its WHERE you apply it as well.

 

Take a look at the following example... just todays chart in the 6E on a 233T chart. If you were a trader long in this market where would you be trailing your stops? Its easy to spot the EASY setups when you can wait for them to appear. Wouldn't you rather be waiting to play that textbook LH opportunity? Its when you go looking for stuff, when you start shotgunning the approach at every wiggle on the chart you set yourself up for failure IMHO.

 

Hopefully this rambling tirade makes sense to at least one person out there. Off to shovel more snow!

 

Cheers!

 

Now that makes a lot of sense and clears a few things up for me. Keep ramblin im all ears, thanks a lot for your thoughts!

[Dinerotrader 10]

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

 

If someone has a chance, could someone explain the distinguishment? I read through the elliot wave paper posted and some posts here and I am just not understanding something about this. Maybe I am overthinking it. :crap:

Thanks.

[Gabe2004 10]

I didn't mean any offense.

 

Appologie accepted

 

I still think that we should try and be accurate with our marking ( I agree that I should not have added my blue lines) but the black lines should be consistant.

 

I for one was confused and decided to clarify.

 

Realizing that I don't have the intellectual flexibility of some other people around here, the only way I can make sure that I understand what is going on is by drawing and asking questions.

 

I'll assume then that ALL those black lines were pointing to the origins of the orange lines.

 

Thanks for every one's patience with MY RAMBLINGS

 

Gabe

[Gabe2004 10]

Gabe - I understand what you were saying with the lines. Please note that in my picture the lines with the bubbles attached to them are not to the exact level... (the trade platform wouldn't let me move the anchor point) but they would be at the orange horizontal lines I drew at each stop placement. (1 Tick below that level that is).

 

Sorry that I did not see this answer of yours (had 2 instances of TL open).

 

Thanks for the explanation.

 

Gabe

[thalestrader 14]

Maybe I am overthinking it.

 

Probably.

 

Why not consider reading Hill's EW chapter, and also his discussion of thrusts. Also, there was a ridiculous thread here some time ago about making $800 a day one tick at a time or something like that. The original poster had James close the thread, but there was a post or two by bakrob99 that I have recommended several times here in this thread that might be helpful. Don't let yourself get mired down in wavespeak. But to try to really understand the difference between price impulsing or thrusting from one level of rest to its next level of rest. Levels of rest are characterized by flat, choppy, overlapping waves of price which often sees range contraction as well.

 

Ok, I went looking for them. I'd quote them here but for the fact that the thread from which they come is closed, and I am unable to quote them. But there is some good stuff here:

 

http://www.traderslaboratory.com/forums/f229/idea-850-two-1-tick-trades-6862.html#post76559

 

This one is a real gem:

 

http://www.traderslaboratory.com/forums/f229/idea-850-two-1-tick-trades-6862.html#post77616

 

Now, for any of you who do finally take the time to go and read bakrob99's posts, if you find them as well written and true and as useful as I did, be polite and do the rightthing and leave him a thanks. He shared in his two posts, especially his second, a great deal more generously than most who happen by this or any other forum.

 

Best Wishes,

 

Thales

[thalestrader 14]

Aud/Usd

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

Long Trade Se-up

 

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

looking to go long @ 9170

 

 

 

Looks like you hit your target - nice trade!

 

I do not typically watch the AUDUSD, and I had a short presentation briefly this afternoon (first chart), but soon after it turned to a long (second chart). My profit targets were not as aggressive as were yours (see third chart).

 

 

 

 

Again, nice trade!

 

Best Wishes,

 

Thales

[thalestrader 14]

Hi Folks,

 

Don't let the fact that this is Robert Prechter keep you from reading this short little interview. It is about trading, and succeeding at it, not Elliot Wave.

 

Best Wishes,

 

Thales

Prechter on Trading.pdf

[Dinerotrader 10]

Hi Folks,

 

Don't let the fact that this is Robert Prechter keep you from reading this short little interview. It is about trading, and succeeding at it, not Elliot Wave.

 

Best Wishes,

 

Thales

 

That was a great article for me since I am currently working hard at formulating my trading rules.

Thanks for sharing.

[Marko23 10]

If someone has a chance, could someone explain the distinguishment? I read through the elliot wave paper posted and some posts here and I am just not understanding something about this. Maybe I am overthinking it. :crap:

Thanks.

 

As a rule of thumb: " b 2 4 x " don't trade any of them.

 

The x is a synonym for the end of the alfabet, in Prechter's terms.

[Marko23 10]

E/U took "the other possibility", I mentioned yesterday.

[Marko23 10]

EUR/USD Long Setup

 

Out with -18, then Short

 

Maybe I'm always a bit late with my entries. Practice takes time.

Edited January 7, 2010 by Marko23

[Marko23 10]

E/U may get into chop mode

 

 

ADD: Short canceled, +2 .

Posted results are only paper ticks!

Edited January 7, 2010 by Marko23

[fxThunder 10]

Long setup on GU.

 

Cheers,

eNQ

 

Update:

 

LL on GU, long setup invalidated

Edited January 7, 2010 by fxThunder

[Marko23 10]

Lower Low, no chop mode, short