Reading Charts in Real Time

[forrestang 10]

Here is more of my clutter for the thread!

 

TARGET HIT!!! ONCE AGAIN IN A STATE OF SHOCK.

 

Once again I am not happy with the P1 selection. Everything at BE, although I think the better stop would be above the last swing high,but nice to book profits before sleeping it seems. We'll see how this goes in the morning.

 

[BlowFish 10]

HI TT,

 

I seem to recall that you mentioned early in this thread (or maybe another) that while your approach for stocks and the ES (and FX for that matter) is essentially the same across the board, there where some subtle differences. Looking at your recent ES trades I am struggling to see much difference at all The most obvious is I see you using some 15 min charts on ES. I wonder if you might perhaps highlight the more important differences.

 

Do you find the ES to suffer from more false break outs? It seems Index futures are particularly prone to those tests pokes and prods that go a tick or two beyond a range and then shoot off he other way.

[forrestang 10]

Here is more of my clutter for the thread!

 

TARGET HIT!!! ONCE AGAIN IN A STATE OF SHOCK.

 

Once again I am not happy with the P1 selection. Everything at BE, although I think the better stop would be above the last swing high,but nice to book profits before sleeping it seems. We'll see how this goes in the morning.

 

 

2nd half stopped B.E.

[thalestrader 14]

Here is my Yen (6J) trade from this morning. At the time it triggered I could not connect to TL, so I decided to wait until its conclusion - otherwise it would have been posted in real time.

 

Entry point was 11072, initial stop loss 11091, with profit targets at 11042 and 11012 for +30 ad +50 ticks respectively. It is not a pretty as it looks, however, as my initial position was knocked out for -19 on the whole position on what I presume must have been a news driven spike (no other reason for price to move from +21 to -19 and then immediatley resume the decline other than some external event). My stop loss was11091, high tick of the spike was, you guessed it, 11091). I rentered short at 11072. So net result is +11 on 50% (+30 ticks - 19 ticks) and +31 on 50% (+50 ticks - 19 ticks).

 

Best Wishes,

 

Thales

[thalestrader 14]

HI TT,

 

I seem to recall that you mentioned early in this thread (or maybe another) that while your approach for stocks and the ES (and FX for that matter) is essentially the same across the board, there where some subtle differences. Looking at your recent ES trades I am struggling to see much difference at all The most obvious is I see you using some 15 min charts on ES. I wonder if you might perhaps highlight the more important differences.

 

Hi BlowFish,

 

When I day trade stocks I almost always am trading stocks that gapped at open (and I trade only in the direction of the gap) and typically enter on new session highs/lows. I watch a 5 minute chart.

 

When I day trade the ES, I will typically watch a 5 minute chart of the day session only. I also will use a 15 minute continuous session (24 hour) chart. Currency futures I really do not look at anything other than a 15 minute chart, though I do look at certain range charts.

 

In the end, I would suggest that all of my trading does come down to the same things: support, resistance, new highs/lows in trends and breakouts of ranges, paying attention to highs and lows, higher highs and higher lows, lower highs and lower lows.

 

In addition to scanning through the biggest % movers in the S&P 500, I watch 6B, 6E, 6J, and the ES. I have attached an example of each chart. If you think you are seeing something that I am not addressing let me know.

 

Do you find the ES to suffer from more false break outs? It seems Index futures are particularly prone to those tests pokes and prods that go a tick or two beyond a range and then shoot off he other way.

 

I haven't really thought much about that, but I do know that for ES trades, I tend to trade on a breakout only after a precise price point has been tested at least twice before it fails to hold, whereas when I trade currency futures or stocks, I am likely to trade a new high/low on the first go around.

 

I do not know if I would say that that is because the index futures are more prone to false breakout (a term the accuracy of which I doubt) as much as index futures trade in such a way that S/R sometimes isn't established as quickly as with certain other markets. Also, what are often called false breaks are not breaks of S/R at all.

 

For example, I remember reading somewhere here at TL where someone bemoaned the fact that he or she shorted a "false break of yesterday's low" and questioned how anyone could trade breakouts as they are so "unreliable."

 

Prior highs and lows are indeed important, and they do represent areas of potential S/R. But it does not seem, to me at least, that a particular price ought to be considered to be SUPPORT or RESISTANCE in fact simply by virtue of the coincidence that during time period X that particular price happened to be the highest or lowest price traded.

 

In other words, those price levels have potential significance, but that significance is not realized or established until price tests and reacts in and around those levels. So, what is often identified as a "false break" is really nothing more than part of the testing process. But, though I am what most folks call a "breakout" trader, I have bought more "breaks" of prior lows than I have shorted over the years, and I have likewise sold more breaks of prior highs than I have bought.

 

I do not know if I am communicating my meaning very clearly. If I can come up with a more clear explanation, I'll share it.

 

 

Best Wishes,

 

Thales

[thalestrader 14]

Do you find the ES to suffer from more false break outs? It seems Index futures are particularly prone to those tests pokes and prods that go a tick or two beyond a range and then shoot off he other way.

 

I haven't really thought much about that, but I do know that for ES trades, I tend to trade on a breakout only after a precise price point has been tested at least twice before it fails to holds

 

It dawned on me after I made that excruciatingly long post that my trade on the ES shows precisely what I was trying to comunicate, and in fact, the ES has obliged by giving us two perfect examples in one morning. The attached chart is a keeper. Print this out and keep it near your trading station, because if you are trying to trade the ES, this chart is worth more than any book, seminar, magazine, trading course, etc and so on that costs tens, hundreds, thoudands of dollars.

 

This pattern occurs over and over. Everyday? No. But that is where patience is required. In my opinion, I would bet that 90%+ of all trades that were breakeven or losses that are blamed on "false breakouts" are nothing more than a trader trading a test to establish a level's importance, rather than the breakout from a level the significance of which has already been established.

 

 

 

Best Wishes,

 

Thales

[throughthemud 10]

this is definitely a good technique thales. I have such a hard time with being patient for this kind of thing though. looking at my chart of gbp/usd i see 4 tests in a row though i expect it to break out soon

[thalestrader 14]

This pattern occurs over and over. Everyday? No.

 

But it did happen twice yesterday as well.

 

Best Wishes,

 

Thales

[thalestrader 14]

But it did happen twice yesterday as well.

 

Best Wishes,

 

Thales

 

I usually use HiLo bars, rather than OHLC bars as I show in the above screenshots. Some of you may find that the HL bars might help you see the establishment of S/R as it develops in real time.

 

Anyway, I had to make an early exit as I have appointments this afternoon and may not be back before the close.

 

Best Wishes,

 

Thales

[forrestang 10]

this is definitely a good technique thales. I have such a hard time with being patient for this kind of thing though. looking at my chart of gbp/usd i see 4 tests in a row though i expect it to break out soon

I say this knowing obviously anything could happen, but if you look to the left of these 4 tests occuring about the time of your post, what did you see that would make you a little aprehensive about any BO that might be occuring, in that direction?

 

At least that was my interpretation.

Edited September 16, 2009 by forrestang

[brownsfan019 17]

Nice charts Thales - clean, crisp, easy to understand - which is not easy to find in an indicator, software driven business we operate in.

 

Thales continues to post great stuff and he should get some HOF (Hall of Fame) status or something.

 

:applaud:

[brownsfan019 17]

Thales,

Couple questions on trade execution. I apologize if this was answered previously.

 

1) When entering a trade, do you have a buy stop or sell stop sitting just above the level after a 2nd retest occurred or do you wait for price to break above and then enter?

 

2) Would you consider shorting at the areas I highlighted in yellow? Or only shorting new lows and buying new highs?

 

3) How do you define a retest - price must touch previous level exactly, price must come w/in X ticks of previous level or price can break previous level by X ticks? In other words, how stringent are you in looking at the 2nd retest high or low compared to the previous level?

[BlowFish 10]

Hi BlowFish,

 

I do not know if I am communicating my meaning very clearly. If I can come up with a more clear explanation, I'll share it.

 

 

Best Wishes,

 

Thales

 

Thanks for your detailed reply....seemed pretty clear to me

[thalestrader 14]

Hi Folks,

 

I was able to snap a series of shot of this morning's ES action, but the first 30 minutes are often my most hectic period of the day, so simultaneous posting is not always possible.

 

Same pattern occurred again this morning, giving a buy point at 1064.25, and an initial stop loss of 1062.25. A wise profit target to scale out with some profits was 1070, the Globex overnight high. Looks like 1090 area is next higher target for cash, but there is no reason SP has to see that today, and it certainly has earned a rest. Also, the futures have been and continue to see at a discount to cash, so while 1090 is a cash target, futures may not print that high.

 

TTT has this as a Short Sell day, and as the market closed at its highs yesterday, a continuation to higher highs was to be expected.

 

Best Wishes,

 

Thales

[thalestrader 14]

1) When entering a trade, do you have a buy stop or sell stop sitting just above the level after a 2nd retest occurred or do you wait for price to break above and then enter?

 

I enter on a 1 tick stop, e.g. this morning the test of yesterday's high at 1064 gave me a 1064.25 buy stop.

 

2) Would you consider shorting at the areas I highlighted in yellow? Or only shorting new lows and buying new highs?

 

No, though they might have been stop loss areas. I would have needed a lower high to print first before I would start to look for short opportunities.

 

3) How do you define a retest - price must touch previous level exactly, price must come w/in X ticks of previous level or price can break previous level by X ticks? In other words, how stringent are you in looking at the 2nd retest high or low compared to the previous level?[/indent]

 

I trade it just as you see here. If instead price had printed 1064, and then a few bars later it printed 1064.25, and then a few bars later it printed 1064 again, I would be sitting on my hands waiting for a print at 1064.25 that then pulled back. Then I would have placed a buys stop at 1064.50.

 

Best Wishes,

 

Thales

[Laurel 10]

can anyone point me to where I can ge ta darvas box indicator? for trade station?

[sevensa 10]

can anyone point me to where I can ge ta darvas box indicator? for trade station?

 

GOOGLE

 

Try searching with "Darvas Box indicator for Tradestation".

[thalestrader 14]

Here is a possible short ES 1062, stop 1065.25, though as I highlight on the 15 minute, this short happens right where price will have an opportunity to dig into potential support. If the decline carries below that support, then ES should target 55, 52, and perhaps even a test of yesterday's low.

 

Best Wishes,

 

Thales

[thalestrader 14]

Updated 15 minute ES

[thalestrader 14]

Possible breakdown on the 6B

[thalestrader 14]

Possible breakdown on the 6B

 

 

Let's see if "X" marks the spot. I anticipate that 6B makes a new low below 1.6400.

[thalestrader 14]

Hi Folks,

 

ES ... over and over and over and over ...

 

Best Wishes,

 

Thales

[brownsfan019 17]

Thales - questions on a chart, just put them directly on the screenshot.

 

thanks

[thalestrader 14]

1) Trade 1 stop loss was 1062. I mistyped it here as 1062.25. The low prior to the entry was 1062.25, so stop loss was placed 1 tick below. After trigger, price pulled back to 1062.25 and then hit 1070 target. If some had set a stop loss based upon what I typed rather than the chart, then they would have been stopped out. My stop was 1062.

 

2) Trade 2 was entered on an stop at 1062. I believe I did type the correct stop loss in that post, which was 1065.25 for that trade.

 

3) I did not think of that as a short break there in real time, Brownie. And looking at it now, I do not see it as anything special either. Now, if you are going to ask me why I don't se anything there, I can only answer that I do not see that as a favorable place either to go short or to add to a short position.

 

Best Wishes,

 

Thales

[thalestrader 14]

Hi Folks,

 

ES ... over and over and over and over ...

 

Best Wishes,

 

Thales

 

This one ended in a loss of -.50/contract.

 

Total for the day, in hindsight, wouldashouldacoulda been +8.50 points, as the second half of the first trade should have been a +1.50 stop. I kept a break even stop, so the +1.5 on the chart is theoretical, not actual. The second trade stopped its decline before my 55.25 target, and was stopped out for +1.75 on the whole position. The third trade handed me my only loss today, -.50 on the whole position. Total was a mere +7 points after a whole lot of trading (for me). I will probably not even look at the ES tomorrow.

 

I am still 50% short the 6B, and my stop on the remaining position is at +1, because that is what the market has dictated (entry at 1.6468, and the reaction high 1.6466, and current stop right in the middle at 1.6467. First half of the position was taken at 1.6435 (right above the upper horizontal line).

 

Best Wishes,

 

Thales