Reading Charts in Real Time

[patrader 10]

15m ES chart

[Cory2679 11]

Operation Insane Rodeo Clown (OIRC)

 

You ought to play "King of the Micro!" I'm sure you obviously don't care about the prize money, but competition is always fun...since you're trading a small micro account, anyway. I think you need a $500 account, though. I think some of the winners will make somewhere around 2,000% return in a month (obviously super duper mega rodeo clown leverage).

 

I was just reading about King of the Micro so when you just made that post, I thought of it. I didn't realize that it was actually a real competition when you mentioned it a while back! :o I thought it was just a phrase you coined.

 

You may not win king of the micro, but in the end you will still have a growing account long after the cowboys have gone form $500 to $5000 to $0.

 

Obviously, it's up to you!

 

EDIT: Although, I guess you're already "competing" with your daughter!

 

BTW...

 

I'm trading at 2 dimes/pip, so my risk is $11.16 (how's that for crazy rodeo clown leverage?!)

 

Good grief!!! I think I missed that the first time I looked at that post! :shocked:

Edited January 28, 2010 by Cory2679

[forrestang 10]

For a short, the low tick after I am stopped in is a Low. Price then bounces from that Low and rallies 3-4 ticks above entry. That is a High. Price then comes down and retests the low. That is a Higher Low. I am out if price comes back up to make a Higher High. This usually all happens on the same "bar." Bars have nothing to do with it - Highs, Lows, Higher Highs and Higher Lows, Lower Lows and Lower Highs. I am very consistent.

 

Question for you Thales, about management and the quest for consistency and cutting losers quickly.

 

Shown here on the first chart is just a larger outlook. IN that price did have 3 pushes in a way(shown by different color tcl), and possibly a 3rd push with a slight overshoot of the tcl. But nothing super obvious, so I wouldn't really expect much.

 

This graph is showing a medium out look, definitely no tcl overshoot, or anything that really makes one think reversal IMO..... other than a strong move in one direction. But shown is the entry, BE trigger and two targets.

 

I'm showing next a really small tf view. Now you can see the entry and BE point replicated on the chart (pay attention to the ordering of the bubbles). In this instance I never got a chance to get to BE.

 

You see after the entry a nice move, different than the sometimes stop in and retrace on you. Price then came back towards entry. Now I took the stop shown on the chart.

 

But here is the question, you said you like to see(for a long), a H-LH-LL that will take you out early. My question is this scenario occurred around points 3-5. But my exit was prior to this occurring. Is this rationale correct on what may have seen you exit the trade? And in this case it really was only a difference of a tic, so this is more an academic question.

[patrader 10]

Yah, I get your point. I was asking more on a practical approach. Clearly it seems his daily charts are based on a rejection, once a good rejection forms, that becomes a S/R level.

 

The lines on the 15m chart, I am wondering how he defines those S/R levels?

Lite blue horizontal lines are support levels and lite red horizontal lines are resistance levels that i am watching for three push wedges to end at/or near in order to exit my last contracts and/or reverse.One of the nice things about trading off the 15m chart is i can see(by looking "left") S/R levels in the recent past easier.Most of my S/R levels come from the 15m chart but sometimes when the market has moved a considerable distance in one direction i may need to go to higher timeframe charts to see S/R levels in these areas.I will transfer these higher timeframe levels to my 15m chart.I use the daily,240m and 60m charts for this.My main focus is the third push of the wedge ending at these levels.I look for important previous swing highs for resistance levels and swing lows for support.Usually these levels are at highs or lows where previous wedges end.I do not use volume or anything else to determine these levels just price action.The dark blue horizontal lines are breakout areas of swing highs or lows in the trend.HTH

[jonbig04 10]

So I got stopped to the tick last night, and I really didn't like it. Haha. Thales i was hoping you would look over this and let me know what you think. I'm trying determine if it was just bad luck or if there's a better route I could have taken.

 

Click for full size - Uploaded with plasq's Skitch

 

 

The red lines are the trade that I took. We had a high, a HL and a LL. I was slightly apprehensive before I took this because the LH was only a tick below the high, and there was a small support area that I was afraid might hold and own me (which it did) in the green boxes.

 

But I had a choice. I could make the entry higher up, which I did. And my stop would be further up, which it was. The down side would be that the little support area would still be there lurking. Or I could wait for that area to break down and have my stop in a slightly worse spot.

 

The downside to that (besides the worse stop placement) is that if price didn't bounce right there like it did, it may end up never returning to give me the 123 and I don't take the trade unless it's at the extreme, which I usually define as 2-3 points from where price found R.

 

In my mind either entry was valid and had its's drawbacks and it just so happens that the one I took came back to bite me. But I wanted to see what you had to say about it.

 

I know of course that when you trade you use much bigger waves, but leave that aside for now.

 

Also one thing I am considering is something I'm uneasy to consider, and thats being more dynamic. I've always been a rules person, and a discipline person, but I can't help but look at this trade and see how price reached the trouble spot (green box) we had a slight volume spike and even a doji. Maybe if I was more dynamic, I could have moved to BE at that point and waited for the secondary entry that I marked with the green lines? I always think that kind of thinking is playing with fire though.

[MidKnight 12]

...............................................

Edited January 28, 2010 by MidKnight
comment corrected and not needed

[thalestrader 14]

But here is the question, you said you like to see(for a long), a H-LH-LL that will take you out early. My question is this scenario occurred around points 3-5. But my exit was prior to this occurring. Is this rationale correct on what may have seen you exit the trade? And in this case it really was only a difference of a tic, so this is more an academic question

 

I do not know why you exited where you did. The closest thing to a "lower high" occurred after ou were already stopped out, and it looks as though had you moved your stop to below the low of the pullback that shook you out, you'd have been safe, right? That is assuming i am looking at it correctly. Your small TF chart (a single tick chart?) is no good on ,my eyes.

 

I am more concerned with those cases where, as you put it, I am "nic'd" into a trade. In this case, price did what you had hoped - it rallied through your buy point. Now you have to allow it do breath and pullback to test the buy point if it so desires. Do you see the difference? A trade that tick's you in and goes no where is much different behavior from a trade that carries beyond your entry and then comes back to test the entry.

 

I have another comment: you have on one of your charts something to the effect that price doesn't look "wedgey." There is no such thing as "wedginess." Price either forms a wedge or it does not form a wedge. A wedge is obvious. If you have to ask yourself, "Is this a wedge?" then it probably is not a wedge.

 

Also, when I look for the "three pushes" or "three drives," I do not want to see such wide and sloppy PA as we have here. There should be a symmetry between the waves down and up, down and up, and into the final wave down. Symmetry does not mean equality, but it does imply proportionality. In fact, I usually do not refer to this asthree pushes, as I am more interested in what Blowfish calls a rising or falling wedge or what I would call an ending diagonal.

 

Look at patrader's many fine examples of various wedges. I think he and I would be on the same page in that the three drives should resemble a hinge that is either downward or upwaard sloping. What you have is what is sometimes referred to as a broadening formation. O'Neil calls it wide and loose. I call it sloppy. Call it what you will, it is a very unreliable indicator of what to expect next.

 

I hope that helps.

 

Best Wishes,

 

Thales

[forrestang 10]

I do not know why you exited where you did. The closest thing to a "lower high" occurred after ou were already stopped out, and it looks as though had you moved your stop to below the low of the pullback that shook you out, you'd have been safe, right? That is assuming i am looking at it correctly. Your small TF chart (a single tick chart?) is no good on ,my eyes.

That LH you mentioned, that I placed on the chart was where I figured a better exit should have been where I highlighted the LH you speak of. But, if I would have based to stop off of even that(placing one tic below that last swing), I would have been tagged to the tic. I apologize for the chart, I figure it's the only way to illustrate my question.

 

I am more concerned with those cases where, as you put it, I am "nic'd" into a trade. In this case, price did what you had hoped - it rallied through your buy point. Now you have to allow it do breath and pullback to test the buy point if it so desires. Do you see the difference? A trade that tick's you in and goes no where is much different behavior from a trade that carries beyond your entry and then comes back to test the entry.

Yes, I see the distinction. On the trades that initially do what I want, and do not quite reach my BE trigger, how much room should I give them beyond retesting my entry price? Is it a matter of something occurring like two consecutive LHs(for a buy case) beyond my entry and then exit? I was just throwing that idea out there.

 

 

I have another comment: you have on one of your charts something to the effect that price doesn't look "wedgey." There is no such thing as "wedginess." Price either forms a wedge or it does not form a wedge. A wedge is obvious. If you have to ask yourself, "Is this a wedge?" then it probably is not a wedge.

Thanks, I had a feeling there wasn't much there. I think that's why I didn't necessarily expect much of a rally.

[thalestrader 14]

In my mind either entry was valid and had its's drawbacks and it just so happens that the one I took came back to bite me. But I wanted to see what you had to say about it.

 

I would agree with you Jon, in that I could make a case for either. Now, here's a funny thing. I was watching during your first entry, but I didn't take it (I think your chart is a fie minute, and I watch a 15 minute, but the entry was there just the same). I wish I could tell you why I didn't take it. I normally would have tried it. I think the reason I did not was that I had been snookered by an earlier short try, and I was just willing to be more cautious and wait for a larger wave to start swinging (two very nice entries presented themselves today in my opinion and I marked them on the attached chart).

 

Interestingly, you would probably think you were being more cautious because you try to play entries where you can have a tightr stop, whereas I would consider myself to be more cautious as I am waiting for entries that confirm weakness (for shorts) or strengther (for longs), albeit with a larger initial stop. Of course, I rarely allow a day trade go full stop on me. You might be surprised how often price would allow you to play a larger swing for an entry, and still give you the ability to keep your stops close (though maybe not quite as close as you play them now).

 

As for you becoming more "dynamic," as you put it, do so slowly and with caution. I think you have shown yourself to very disciplined and patient (certainly more so than I am at times). You seem to know yourself better than most. Keep using what you know. Right now you seem to have adapted your trading to yourself. What you are suggesting is a change to your trading that seems at odds with the kind of person you know yourself to be. Having said that, I have often found that taking two swings at the same entry has worked, i.e. I enter, take a small loss, enter agian, and I get my 2-3R or more.

 

I hope that helps.

 

Best Wishes,

 

Thales

Edited January 29, 2010 by thalestrader
added chart

[traverse 10]

I'm trying to learn about forex/currencies. Where can one find information?

A few of the questions are what is 6E?

What is a micro account and how does one go about setting them up? never mind, googled it

TIA

Edited January 29, 2010 by traverse

[jonbig04 10]

I would agree with you Jon, in that I could make a case for either. Now, here's a funny thing. I was watching during your first entry, but I didn't take it (I think your chart is a fie minute, and I watch a 15 minute, but the entry was there just the same). I wish I could tell you why I didn't take it. I normally would have tried it. I think the reason I did not was that I had been snookered by an earlier short try, and I was just willing to be more cautious and wait for a larger wave to start swinging (two very nice entries presented themselves today in my opinion and I marked them on the attached chart).

 

Interestingly, you would probably think you were being more cautious because you try to play entries where you can have a tightr stop, whereas I would consider myself to be more cautious as I am waiting for entries that confirm weakness (for shorts) or strengther (for longs), albeit with a larger initial stop. Of course, I rarely allow a day trade go full stop on me. You might be surprised how often price would allow you to play a larger swing for an entry, and still give you the ability to keep your stops close (though maybe not quite as close as you play them now).

 

As for you becoming more "dynamic," as you put it, do so slowly and with caution. I think you have shown yourself to very disciplined and patient (certainly more so than I am at times). You seem to know yourself better than most. Keep using what you know. Right now you seem to have adapted your trading to yourself. What you are suggesting is a change to your trading that seems at odds with the kind of person you know yourself to be. Having said that, I have often found that taking two swings at the same entry has worked, i.e. I enter, take a small loss, enter agian, and I get my 2-3R or more.

 

I hope that helps.

 

Best Wishes,

 

Thales

 

 

Hehe, well at least it got me and not both of us. I thought about you when I took the short because I think it was identical to a short you took on ES a couple days ago, that I missed. Anyway, I think I'm just gonna chock this one up to "crap happens".

 

About the price/information risk dilemma, well I guess we could talk about that for days. That trade was a perfect example of the trade off between the two and I happened to end up on the wrong side. I'm sure I've been on the right side many times too, and just never took the time to notice.

 

About being dynamic, I'm going to do as you suggested and just take it slow. I will not forget what happened today and hopefully through trading more and more I will get more and more dynamic. I will say though that the benefit of being as stubborn about my rules as I always have been is that increasing size hasn't had any adverse effect on my trading. Nor did moving from SIM to cash. I saw so many struggling with those two things that I set out from the beginning to make sure I accounted for them. Only now that I am actually increasing size am I starting to be glad that I did that. I'm not trading large size or anything lol, but one day I will be.

[Cory2679 11]

Not trading, just watching...

 

Long on the EUR/USD...I figured I'd post it since I haven't posted a chart in a while...

 

EDIT: Rather than posting more charts, I'll just say...similar situations on the GBP/USD, EUR/JPY, and potentially even the USD/JPY...

Edited January 29, 2010 by Cory2679

[patrader 10]

30m 6E chart.Notice both tl's(larger and smaller) plus the longer tcl are falling (descending).The lite blue support line comes from the Daily chart which has three support levels all within 23 ticks starting at 1.3916.Price came down to 1.3917 on the 15m held for three bars then pushed down to 1.3911 running stops and reversing up.Also price pushed to a slight LL from yesterday's spike low (9 p.m. est) and trapped short traders adding fuel to the reversal.This may not be the bottom but good for a scalp to the closest tl at least.HTH

[thalestrader 14]

I do believe that ES does a dance off of that descending trend line before it mounts a rally. I have long term support on the Cash between 1052-1068, so we're getting close, I would think. But the longer it takes, the farther down that trendline touch will occur, if it occurs at all.

 

 

 

 

Best Wishes,

 

Thales

[Marko23 10]

EUR/USD Long about 07:00, too early for me.

 

2nd chance for Long

 

Lower High visible, Lower Low will Stop.

 

At 1st target

 

Stopped

Edited January 29, 2010 by Marko23
End of trade

[BlowFish 10]

I too find tremendous value in Ross's material. But have always had trouble with stop placement because Ross has a weird way of managing a trade, at least the way he describes in his books. And I just can't see how that could work?

 

The Rh in concert with 1-2-3s on the bigger tf you posted seem logical, can you post your Rh ideas or trades in real time as they develop, I'd be interested in seeing someone elses take on that idea, particularly while the trade is developing. There are hooks or TTEs that dont immediately move in you favor that makes trade management a bit confusing.

 

I think there are some subtleties in JR's work that are easy to miss. These are essentially to do with 'context' though I don't think he uses that term. He doesn't seem to talk about 'S/R' either. He considers things from the point of view of 'where are the orders'. Incidentally it was this way of thinking that lead me me to the idea that S/R could be considered as a 'magnet' attracting price rather than simply as a barrier that price bounces off. This is not discussed in his free material as far as I am aware.

 

He also has pretty robust definitions for congestion and cautions on taking trades there. As to the stop my understanding is that it is initially under the lowest bar of the hook, brought to BE after P1 is hit.

[BlowFish 10]

You ought to play "King of the Micro!" I'm sure you obviously don't care about the prize money, but competition is always fun...since you're trading a small micro account, anyway. I think you need a $500 account, though. I think some of the winners will make somewhere around 2,000% return in a month (obviously super duper mega rodeo clown leverage).

 

I guess as a bit of fun these things are OK but they can encourage pretty bad habits as you point out (using maximum leverage on the most volatile instruments whilst being as close to always in as you can). There are a whole bunch of 'trading gurus' that started their careers in this fashion.

[Marko23 10]

...

Stopped

 

Stupid error with Stop in last trade.

 

At 2nd target

 

At 3rd target.

Edited January 29, 2010 by Marko23

[DugDug 10]

ZN - US 10 yr Mar 10

small short on, based on break of 5 min chart.

Will look to short again near the 117'29 level. Stops above the recent highs.

Targeting mid 116's but will let run if it goes, as it could find new lows below 115'20 on daily.

[DugDug 10]

Re Ross Hooks.

A friend of mine tried to really dissect his trades a few years ago (early 2000s), and came to the conclusion that seem to apply to almost every system that works really well.

 

Its the few trades that run and run and run that make the money.

His conclusions were (in a generalised format)

 

For JR, you have to constantly trade 3 units, sell 1 to cover costs, sell 1 at a take profit, run the last unit.

Keep pyramiding, so that by the end of a large run, you may have accumulated quite a large position with the trend.

 

The hard part is managing the accumulating trades.

[Marko23 10]

ZN - US 10 yr Mar 10

small short on, based on break of 5 min chart.

Will look to short again near the 117'29 level. Stops above the recent highs.

Targeting mid 116's but will let run if it goes, as it could find new lows below 115'20 on daily.

 

FGBL (Bund) may form a top, not confirmed yet.

[Kiwi 16]

Re Ross Hooks.

A friend of mine tried to really dissect his trades a few years ago (early 2000s), and came to the conclusion that seem to apply to almost every system that works really well.

 

Its the few trades that run and run and run that make the money.

His conclusions were (in a generalised format)

 

For JR, you have to constantly trade 3 units, sell 1 to cover costs, sell 1 at a take profit, run the last unit.

Keep pyramiding, so that by the end of a large run, you may have accumulated quite a large position with the trend.

 

The hard part is managing the accumulating trades.

 

 

 

Its an interesting observation DugDug.

 

In my work I now seek two different types of setup (context factors + trigger + post trigger entry + stop and profit capture). One is "get into trends on the timeframe reasonably early and then hang on for the big one." The other is "find the high probability of an xx move for a yy stop" situation and take a quick high probability buck.

 

They are very different.

 

One thing to think about in the first category is a high probability non-trend liquidation point where you can take half off to create a free trade for the long run rider. Thales clearly does this effectively although hes to fast to be+ for my liking if he was going for really long holds. At ff this is advocated for some systems where the NTL has an expectancy of under one --- but I suspect the real positive for it is that it gives the holder that "free ride" feeling that lets them hold a position long enough for the few really big pay offs.

 

Also, if you get at all mixed up about what you are doing you are likely to join the 95%.

[MidKnight 12]

....For JR, you have to constantly trade 3 units, sell 1 to cover costs, sell 1 at a take profit, run the last unit.

Keep pyramiding, so that by the end of a large run, you may have accumulated quite a large position with the trend.

 

Hi DugDug,

 

I've thought about this a lot for a while now but ended up thinking that the concept is in conflict. I mean if one is going to be scaling out quick and fairly quick (exits 1&2), but then later on adding to the winner (the pyramid part) - the whole thing seems in conflict to me. One is adding to the trade when the risks for continuation are diminishing. At least that is how I decided upon it Ya know what I'm saying?

 

With kind regards,

MK

[DugDug 10]

MidKnight and Kiwi -

I think this is probably a good discussion for a thread on its own. So I might actually start one (I think it might me a legitimate first for me) rather than interupt the current thread whose focus is different.

Needless to say I agree 100% with both of you..... to make good money trending trades are the way to go, taking part profits really only helps from a psyc point of view and if you can combine both a short and a long term style to flatten pl volatility and satisfy the mental needs as a trader then its the ideal situation.

 

I will start another thread, throw in some of my ideas I have been working on myself, and see if it can attract some interest, ideas, thoughts and happy happy joy joy.

[Marko23 10]

EUR/USD: waiting for Long

 

Triggered, spiked and dead!

 

Of course, price turned 1 tick above the stop.

Edited January 29, 2010 by Marko23
Only seemingly dead