Reading Charts in Real Time

[brownsfan019 17]

I haven't smiled in days, but that made me not only smile but laugh out loud. Imagine that ... I've been trading improperly all this time! Reminds me of something Larry Hite said in his Market Wizards interview - something to the effect that "it is amazing how much money you can make from being wrong."

 

Best Wishes,

 

Thales

 

PS Please do keep posting to the thread. Your EURJPY example was excellent.

 

:rofl:

 

Good stuff. Thales - you are wrong! lol

[taq 10]

I haven't smiled in days, but that made me not only smile but laugh out loud. Imagine that ... I've been trading improperly all this time! Reminds me of something Larry Hite said in his Market Wizards interview - something to the effect that "it is amazing how much money you can make from being wrong."

 

Best Wishes,

 

Thales

 

PS Please do keep posting to the thread. Your EURJPY example was excellent.

 

sorry about my language(english is not my first language) & happy atleast i made you laugh

i was not able to communicate it properly.

its not about being wrong or right but how much you make when you are right & how much you lost when you are wrong.

 

 

I know that breakouts and the traders who trade them are often held suspect by the general trading community (and I presume the general trading community includes the majority of traders, and we know how successful the majority of traders are).....

 

i never suspect your strategies(atleast we have our own strategies) i am pattern trader

i use weekly for breakouts & old support & resistance levels & retesting of them

daily for patterns & probable tgts in the direction of BO & trend & 240-min to initiate & trailing my SL.

& one thing more i use triangles a lot (ascending, descending & symmetrical) & trading on triangles are based on breakouts only.

 

Best Wishes & Happy Trading

Regards,

TAQ

Edited September 28, 2009 by taq

[thalestrader 14]

sorry about my language(english is not my first language) & happy atleast i made you laugh

 

Hi Taq,

 

There is certainly no need to apologize. I understood what you meant, and I was in no way offended.

 

Your English is fine. If you want to see something incomprehensible, you ought to try to read my Hindi!

 

I hope to see you continue to share your charts with us here.

 

Best Wishes,

 

Thales

[thalestrader 14]

Hi Folks,

 

This is not a Real Time Charts post. I receive dozens of SPAM solicitations from various trading services (as do most of you, I'm sure). Some I receive over and over again (no matter how many times I click "unsubscribe" and how many times I change my email address, the offers keep coming). These I simply delete, as I have seen them before. If something is new, I will at least open the email. And when one of them offers a video of a "live trade example," well, how could I pass it up!?

 

Tonight I received an email offering a live forex trading signal service. I watched the video showing not a "live trade" but a recap of a supposed trade that the Guru/Coach/Mentor had made himself earlier that day. He made a profit of 68.3 ticks/pips on a 100k position for a profit of $683 USD. And to prove it to us, the would-be subscribers to this trading service, he opened his closed positions tab in his trading platform. Lo and behold, there it was - indisputable proof of the would-be Guru's trading prowess for all the would-be guruettes to salivate over ("all those pips could be mine! mine! all mine! Sign me up!).

 

What our earstwhile "Guru" failed to notice in displaying his "profit" is that in his video capture of his trading platform, clearly visible at the bottom of the screen, was the server ID window (anyone familar with FXCM's trading station will recognize it here). The server connection used by this "Guru" for his "trading" was [Demo: U100D5].

 

Some "Guru"!

 

Lest there be any doubt, I also included a close-up of his Demo server ID and the ID window on the micro account my daughter and I use.

 

I had a good laugh over this "Guru's" video of his "profitable live trade example."

 

Best Wishes,

 

Thales

 

[forrestang 10]

Don't you hate it when this happens?

 

Edited September 29, 2009 by forrestang

[Tams 20]

Don't you hate it when this happens?

 

 

until you can let this go... you won't have the time (or the proper mind frame) to look for the next op.

[thalestrader 14]

Don't you hate it when this happens?

 

 

Hi Forrest,

 

Three things:

 

1) You did your job by selecting an entry, a stop loss, and a profit objective. Your stop loss did its job by getting you out of the position and protecting our capital when price action threatened to move against you. You should feel pretty good about yourself - many who try this game (especially retail forex traders) never learn to place a stop loss and blow out account after account. You have positioned yourself to be among the small percentage of people who try this trading game and actually succeed.

 

2) Study the pattern price action traces out at the lows: A low, followed by a reaction high, followed by a slightly lower low that quickly reverses and breaks the reaction high. This is a very common pattern on all markets - futures, individual stocks, currencies, etc. You would serve yourself well to study it and commit it to memory. As others instruments repeat this pattern, you will notice them more and more. The break above that reaction high would have offered you a low risk, high probability entry for a trade back to the high prior to the initial sell off that stopped you out.

 

2) Have you thought about using a chart with your black OHLC bars on a white background with no grid? You might find that S/R is easier to identify with a more clean and crisp contrast. I find your charts terribly difficult to view.

 

Best Wishes,

 

Thales

[Gabe2004 10]

Don't you hate it when this happens?

 

 

Don't feel bad Forrest.

Another train will come

 

I have to find a way to stay in my trades longer.

This time it would not have helped but in general it would.

I don't know how to control the premature eja....(sorry) closing of my trades

Need therapy

 

Gabe

[forrestang 10]

Hi Forrest,

 

Three things:

 

1) You did your job by selecting an entry, a stop loss, and a profit objective. Your stop loss did its job by getting you out of the position and protecting our capital when price action threatened to move against you. You should feel pretty good about yourself - many who try this game (especially retail forex traders) never learn to place a stop loss and blow out account after account. You have positioned yourself to be among the small percentage of people who try this trading game and actually succeed.

Thanks for the comments! It was a pretty low risk trade after the first swing low printed allowing the movement of the nat stop.

 

2) Study the pattern price action traces out at the lows: A low, followed by a reaction high, followed by a slightly lower low that quickly reverses and breaks the reaction high. This is a very common pattern on all markets - futures, individual stocks, currencies, etc. You would serve yourself well to study it and commit it to memory. As others instruments repeat this pattern, you will notice them more and more. The break above that reaction high would have offered you a low risk, high probability entry for a trade back to the high prior to the initial sell off that stopped you out.

This pattern you speak of is basically a 2B correct? But do you want it to appear in the exact scenario that it happened to me? Where price has broken resistance for example and headed up, then falls out of nowhere, then creates the 2B?

 

2) Have you thought about using a chart with your black OHLC bars on a white background with no grid? You might find that S/R is easier to identify with a more clean and crisp contrast. I find your charts terribly difficult to view.

I am sorry about that. You aren't the first to suggest that. I have strayed away from white charts as I thought the contrast was giving me headaches(I dont think that was the case). In my MT4 I have all white. And right after I posted that chart today, I created a white template. I'll be sure to post them in white for easier viewing.

[forrestang 10]

Don't feel bad Forrest.

Another train will come

 

I have to find a way to stay in my trades longer.

This time it would not have helped but in general it would.

I don't know how to control the premature eja....(sorry) closing of my trades

Need therapy

 

Gabe

Posting my losses after the fact I think can be more useful than the winners, the winners are the same thing over and over and look boring.

 

This particular trade was easy to sit through IMO. Mainly because before I went to bed, I was able to get my stop to right at BE, so in my head it was a free trade! I wound up loosing about 2PIPs on the trade because of the spread.

 

For a split second, after being in the trade, I realized I was up about 60pips, and thought about closing it, but left it alone. I was chatting with a friend last night who told me to cash it in, he doesn't look for that much a move. He later boasted about how I could have had 60pips instead of a BE trade. I told him that he would have never sat through long enough to get up to 60 in the first place.

 

I've noticed that with the trades I take, I have moved my initial target in, only to see that it usually gets hit later. So I'm done with that for the most part. Maybe if I had two lots on, I would have cashed one in?

 

About holding for a while? How did that trade you hit the other day that netted you 80 Pips make you feel? That had to be better than killing a trade early to grab 6pips when it went on for another 40-50 right?

[Gabe2004 10]

Posting my losses after the fact I think can be more useful than the winners, the winners are the same thing over and over and look boring.

 

This particular trade was easy to sit through IMO. Mainly because before I went to bed, I was able to get my stop to right at BE, so in my head it was a free trade! I wound up loosing about 2PIPs on the trade because of the spread.

 

For a split second, after being in the trade, I realized I was up about 60pips, and thought about closing it, but left it alone. I was chatting with a friend last night who told me to cash it in, he doesn't look for that much a move. He later boasted about how I could have had 60pips instead of a BE trade. I told him that he would have never sat through long enough to get up to 60 in the first place.

 

I've noticed that with the trades I take, I have moved my initial target in, only to see that it usually gets hit later. So I'm done with that for the most part. Maybe if I had two lots on, I would have cashed one in?

 

About holding for a while? How did that trade you hit the other day that netted you 80 Pips make you feel? That had to be better than killing a trade early to grab 6pips when it went on for another 40-50 right?

 

 

The trade with the 80 pips gain happened while I was watching TV.

It seems that whenever I don't watch the charts my gains are larger because i don't try to second guess myself.

I don't know why watching the charts is more difficult than to leave them alone. Still working on that.

 

Take care

 

Gabe

[brownsfan019 17]

Speaking of chart color backgrounds, I've been told by my eye doc that you want an off-white color as your main background color. You don't want bright white, but something like an egg shell in terms of what is best for your eyes.

 

For awhile I used a black background as I thought it was pretty neat looking but it does cause your eyes to focus more and bring the other colors to the front.

 

Just my

[thalestrader 14]

This pattern you speak of is basically a 2B correct? But do you want it to appear in the exact scenario that it happened to me? Where price has broken resistance for example and headed up, then falls out of nowhere, then creates the 2B?

 

The pattern would be a form of Sperandeo's 2B. Strictly speaking, a 2B is an opportunity to fade and extreme S/R level whereby you watch for price to exceed a prior high/low and then quickly reverse.

 

The way I read Sperandeo, his entry point would be the prior high/low, i.e. in this case, as price trades back through the prior low, go long. I was suggesting a later entry, i.e. go long when price breaks above the high of the little rally that preceded the lower low. You have to decide which way you wish to trade it (or if you wish to trade it at all). Sperandeo's approach offers a much smaller stop loss, and thus allows for a larger position size than would my entry with its relatively large initial risk in comparison.

 

My experience is that waiting to buy the break of the high provides a higher probability to first profit objective, where as Sperandeo's entry, especially on intraday trades, will typically result on a high losing percentage. However, winning percentage is no important so long as you are trading for (and allowing price to achieve) profit targets greater than your initial risk. In other words, either entry should over the long term prove generally profitable assuming the use of proper money management (proper use of stop loss, position size, and letting profits run to targets when price is able to do so). Using proper position sizing, I would not be surprised to find that Sperandeo's more agressive approach, though losing more often, may very well generate significantly greater profits than mine.

 

All this to say that yes, this pattern is a form of 2B, but the shape of this particular pattern makes it a special case of the 2B.

 

Look at the 5 minute NQ today. I think I may have spied one on the qqqq today, so it should be on the NQ.

 

Best Wishes,

 

Thales

[thalestrader 14]

For a split second, after being in the trade, I realized I was up about 60pips, and thought about closing it, but left it alone... Maybe if I had two lots on, I would have cashed one in?

 

Hi Forrest,

 

Do you trade one of those FXCM Microlot accounts? If so, you can split even a 2k position in half and take 1/2 at one profit target and hold a second for a larger move.

 

60 ticks is a lot of profit to let run back to a loss (even a 2 tick loss). However, if I had to choose between you letting a profit run back to break even or Gabe who cuts every trade at 7 ticks profit, I'd go with you (right Gabe?).

 

By the way, what was your entry? It seems that price fell from a fairly well defined resistance zone, and taking some profit on a long would have been justified at those levels (143.40 +/-).

 

Best Wishes,

 

Thales

[Gabe2004 10]

Hi Forrest,

 

60 ticks is a lot of profit to let run back to a loss (even a 2 tick loss). However, if I had to choose between you letting a profit run back to break even or Gabe who cuts every trade at 7 ticks profit, I'd go with you (right Gabe?).

 

Best Wishes,

 

Thales

 

statistically speaking you are right

Actually yesterday I made 15 and 20 but I am not proud of it.

 

Can someone give a chart example of a 2B pattern?

 

Thanks

 

Gabe

Edited September 29, 2009 by Gabe2004

[forrestang 10]

 

The way I read Sperandeo, his entry point would be the prior high/low, i.e. in this case, as price trades back through the prior low, go long. I was suggesting a later entry, i.e. go long when price breaks above the high of the little rally that preceded the lower low.

 

All this to say that yes, this pattern is a form of 2B, but the shape of this particular pattern makes it a special case of the 2B.

Which entry point were you referring to, see the attached chart. I am guessing you meant an entry at point 1. What was it that makes this a special pattern? I guess I'm just wondering what you meant by paying special attention to this particular pattern? Was it that price had previously broken above of a resistance level, then crashing down and developing the 2B? That it happened AFTER a breakout and fell to a somewhat prominent support level shown by the blue dotted line?

 

Do you trade one of those FXCM Microlot accounts? If so, you can split even a 2k position in half and take 1/2 at one profit target and hold a second for a larger move.

Funny you ask that. I remember you saying a long time ago that FXCM had changed something and your daughter being upset about it.

 

I tried the demo platform and just couldn't get used to trading with it. I can understand one's frustration. So I went with and am using the live MB platform, I wonder if I can split a mini lot in half? Seldom do I take a trade with the first PO being 100pips away, so splitting that as you mentioned would have made sense.

 

By the way, what was your entry? It seems that price fell from a fairly well defined resistance zone, and taking some profit on a long would have been justified at those levels (143.40 +/-).

My entr was 142.80. I see your idea of where I could have taken the first PO. It makes sense.

Edited September 29, 2009 by forrestang

[Gabe2004 10]

My latest trade of GJ.

I have switched to trading in x3 (3 units).

The logic behind this is to take profit on 1/3 at a level that will cover a possible loss on the other 2/3 if the target for the 2nd 1/3 is not met.

I have taken profit of the 1st 1/3 at what seemed to be a logical resistance point while giving me somewhat of a decent profit.

 

Take care

 

Gabe

[thalestrader 14]

My latest trade of GJ. I have switched to trading in x3 (3 units).

The logic behind this ...

 

Hi Gabe,

 

Looks like an excellent trade, and your strategy seems sound in theory. Just be sure that you use S/R to determine your entries and exits, and not anbitrarily selected money management regime. In other words, adjust your money management to the market, rather than expecting the market to bend to your desired money management outcome.

 

Now, a question, and tell the truth: Were you watching your chart after entry while waiting for the rally to your first profit limit? Or did you take a nap so that you wouldn't be tempted to exit early?

 

Best Wishes,

 

Thales

[Gabe2004 10]

 

Now, a question, and tell the truth: Were you watching your chart after entry while waiting for the rally to your first profit limit? Or did you take a nap so that you wouldn't be tempted to exit early?

 

Best Wishes,

 

Thales

 

I have to check whether my house is bugged and you did not put some cameras in here

 

I was watching it while surfing and I made a BOOBOO which so far worked in my favour.

Still have 1/3.

 

Not anymore. S/L hit.@ 143.86. Maybe it was too close.

 

Gabe

Edited September 30, 2009 by Gabe2004

[thalestrader 14]

Which entry point were you referring to, see the attached chart. I am guessing you meant an entry at point 1. What was it that makes this a special pattern? I guess I'm just wondering what you meant by paying special attention to this particular pattern?

 

Hi Forrest,

 

This pattern is a form of a "double bottom." Here is an article from Investors.com (IBD):

 

Investors.com - Double Bottom Shakes Out Weak Holders

 

I do not like the chart example that was used for this article, however. I have attached some of my own. I do not know why IBD's editors selected the example that they did, because if you ask me, their example is nothing at all. This is an easy pattern to spot. The article makes the point of proportion between the lows. I agree. Read the article, and look at the examples I post here. Do not look for anything ancillary to the action between the two lows. This pattern can occur after a decine, but it can also occur as a basing pattern in the middle of an uptrend. One of the charts I posted is of the Dow Industrials. The July bottom is an excellent example of this pattern occurring as a basing pattern within an uptrend.

 

It can also be seen in inverse at tops, though my eye always seems to catch it better as a bottom than at tops.

 

Best Wishes,

 

Thales

[thalestrader 14]

Another IBD Double Bottom Article: I have found William O'Neill's Books very helpful.

 

 

Investor's Corner: Double-Bottom Base Takes Practice To Spot

 

By PAUL WHITFIELDPosted 03/10/2008 03:00 AM ET

 

With its sometimes raggedy appearance, the double-bottom base can take some practice to recognize.

 

The price movements within the double-bottom base can be more severe than in a cup or saucer base.

 

The double bottom forms a W-like shape -- going down, then up, then down again and finally up while clearing its buy point.

 

The middle point 15f the W should be lower than the left peak. Successful examples of this pattern show that middle point 12ies in the upper half of the base.

 

The second low should undercut the first low, serving as a shakeout.

 

When the stock clears the ideal buy point, which is the middle peak plus 10 cents, volume should be at least 50% higher than average.

 

Some investors look at this pattern and wonder what is happening. Because market watchers often pin a cause on every effect, many investors look for hidden meaning in the down-up-down-up movement.

 

Don't worry over it.

 

As William O'Neil's 2004 book "The Successful Investor" pointed out, "It's not important to understand what's causing a pattern to look a certain way or why a stock is strong one day and weak another. In many cases, you simply aren't going to know. And even when you think you know, it may be something else entirely.

 

"The only thing that's important is that you recognize whether a pattern is strong or weak, normal or abnormal. You'll never know all the answers, and it's not worth trying to find them out."

 

In July, Aecom Technology ACM began to decline after hitting a high at 29.24 (point 1).

 

It was beginning work on its first base since its initial public offering in May.

 

It corrected 17% as it formed the first low of a double-bottom base (point 2). The stock rallied, forming what proved to be the middle peak of the W (point 3).

 

Then it turned south and fell to a new low within the base (point 4).

 

It now had corrected 21% from its high -- an acceptably moderate dip.

 

The stock rallied about 21% over the next six sessions, but it still had not cleared the buy point.

 

Sometimes a double-bottom will form a handle, and that is what happened here (point 5).

 

The new buy point 14 the handle was 27.87.

 

Some stocks will break out in a stuttering, or delayed fashion. Aecom cleared the handle on modestly higher volume (point 6), then moved more convincingly, rising sharply on huge trade three sessions later (point 7).

 

It went on to a 37% gain over the next four weeks from the buy point.

Edited September 30, 2009 by thalestrader

[Gabe2004 10]

Hi Forrest,

 

This pattern is a form of a "double bottom." Here is an article from Investors.com (IBD):

 

Investors.com - Double Bottom Shakes Out Weak Holders

 

I do not like the chart example that was used for this article, however. I have attached some of my own. I do not know why IBD's editors selected the example that they did, because if you ask me, their example is nothing at all. This is an easy pattern to spot. The article makes the point of proportion between the lows. I agree. Read the article, and look at the examples I post here. Do not look for anything ancillary to the action between the two lows. This pattern can occur after a decine, but it can also occur as a basing pattern in the middle of an uptrend. One of the charts I posted is of the Dow Industrials. The July bottom is an excellent example of this pattern occurring as a basing pattern within an uptrend.

 

It can also be seen in inverse at tops, though my eye always seems to catch it better as a bottom than at tops.

 

Best Wishes,

 

Thales

 

Hello Thales

 

I am confused. Could you please look at the question in the chart that I have attached?

 

Thanks

 

Gabe

[thalestrader 14]

Hello Thales

 

I am confused. Could you please look at the question in the chart that I have attached?

 

Thanks

 

Gabe

 

You are confused! Go back and re-read my posts and the IBD articles. These are discussions of a "double bottom" pattern that signifies long opportunities, not short opportunities. All of the trend lines in the charts I posted in those examples represent buy points. The discussion of this pattern originated in my response in post #382 to Forrest's chart that he posted of the GBPJPY in post #380. The posts relevant to this discussion are 380, 382, 384, 388, 391, 395-396.

 

On a side note concerning the short trades you posted, you note that one would have been profitable and the other not. The profitable trade was an example of shorting in a downtrend. That is generally a good idea. The unprofitable short trade (which I was using as an example of a profitable long trade off of a double bottom pattern) was an example of shorting in an uptrend. That is generally a bad idea.

 

Best Wishes,

 

Thales

[subterfuge 10]

I think maybe he's confused because the 2b long trades are sort of in contradiction with most of the trade setups you post where you are generally shorting on a break of a previous low, whereas this setup almost 'fades' the break.

 

However, in the chart he posted I also noticed what you noticed in terms of the overall trend direction

[thalestrader 14]

Hi Folks,

 

I meant to post this GBPUSD last night, but after I snapped the first picture I got involved in putting together the "double bottom" posts and forgot about the GBPUSD.

 

At any rate, last night GBPUSD buy point was 1.5990, targeting 1.6133 or so.

 

Best Wishes,

 

Thales