Reading Charts in Real Time

[Cory2679 11]

There was a nice, good ol' fashioned resistance/123 trade on the EUR/USD this morning...

 

It didn't turn out that great (<1R)...

 

I'd consider a short at the break of the blue line on my 13 range chart...

 

-Cory

[Cory2679 11]

I'd consider a short at the break of the blue line on my 13 range chart...

 

Possible earlier short entry off a smaller degree of swing...offers better R:R...

[DugDug 10]

I managed to get that short EUR trade.... and luckily took profits on back near the break the other day on Mar 3 137.34.

All based on context of where it is and what you are trying to get out of the trade I guess.

 

Interestingly enough I then had a similar trade to Thales on the JPY, however I took a loss - enough to cancel the EUR profit (doh!) and even worse - NEVER REENTERED.

 

Thales always reminds us of this, and I was off looking at something else.

 

NOTE TO SELF - if looking at 1min charts, and quick cuts and rentrys this IS an intensive occupation. (more so than what I am used to trading longer term)

 

Shorting JPY on 100% abc up from bottom at 11.079 (15 tick stop.)

 

(I have to work out the cut and paste charts on OEC)

[thalestrader 14]

With revised profit targets ...

 

So far, so good on the 6J trade:

 

 

Initial entry: -.2R

 

Second entry: 1/3 filled at PT1, which was +50 ticks on a trade sized with an intitial 10 tick stop loss (10084 was a "Custer's last Stand" to keep the reason to be long alive) - which is why the first entry at 11002 was sized with a 30 ticks stop, whereas the second entry at 10086 was sized with a 10 tick stop).

 

That 50 tick profit on 1/3 = 1.66R on the whole trade (do the math folks, and you will se that 50 ticks versus a 10 tick stop yields a profit on that 1/3 alone equal to 1 2/3's times the initial risk).

 

Stop loss is now at +36 for 1/3 remaining, and at -3 ticks on the other 1/3 remaining.

 

Worst case, assuming no slippage or a giant gap down at the Sidney open should be +2.76 R, less the -.2R from the initial entry, yields a worst case scenario of +2.56 on the trade.

 

If I am so fortunate as to see PT2 and PT3 each filLed as I currently have them set, the entire trade would yield +16.5R after commissions, fees, and the initial loss. PT2 and PT3 are not both hit very often.

 

Best Wishes,

 

Thales

[Cory2679 11]

Possible earlier short entry off a smaller degree of swing...offers better R:R...

 

This would have been filled a little while ago, but the PA is uninspiring...

[Cory2679 11]

This would have been filled a little while ago, but the PA is uninspiring...

 

At this time of day, at this time of week, with this type of PA, I'd probably move my stop pretty tight at this point (to about -0.4R)...

[Kiwi 16]

So price seemed to respect hourly channels and the daily form for an abc/double followed. Consolidation on Monday anyone?

 

.

[MidKnight 12]

Initial entry: -.2R

 

Second entry: 1/3 filled at PT1, which was +50 ticks on a trade sized with an intitial 10 tick stop loss (10084 was a "Custer's last Stand" to keep the reason to be long alive) - which is why the first entry at 11002 was sized with a 30 ticks stop, whereas the second entry at 10086 was sized with a 10 tick stop).

 

Great UJ trade. I have a couple questions about your initial stops if I may...Your first entry had a 30pip initial stop - may I ask how you arrived at that? Reason I ask is because I am very comfortable with the idea of entering like that and have done so a lot in the past. However, I was doing that with fairly large stops and would love to go back to that entry style if I could do it with smaller stops as you show here. Having said all that, I am not a fan of arbitrarily sized stops.

 

Then in your re-entry you only used a 10 pip stop, how did you decide to chop it down so much more than the stop used on your first entry?

 

With thanks,

MK

[DugDug 10]

MK - I found this interesting as well, I was looking at the identical setup as Thales - 15m chart, I was thinking it was a three drives down (something I am just starting to experiment with), and bought at 996, and stopped myself out at 986 (doh) and then thought I would renenter above the big figure, however I never did.

My stop was purely arbitrary and set at take a small loss using an automatic stop set at ten ticks below, figured I was trying to pick the bottom.

The real mistake was not re-entering, and going at it again - this I feel is vital when trying to trade like this, whilst still remaining flexible enough.

I would imagine Thales has a better explanation for his.

[thalestrader 14]

...Your first entry had a 30pip initial stop - may I ask how you arrived at that? ... I am not a fan of arbitrarily sized stops.

 

Then in your re-entry you only used a 10 pip stop, how did you decide to chop it down so much more than the stop used on your first entry?

 

Most of the answer as to why I "chopped it down so much" is contained in the very same post of mine that you chose to quote ...

 

Second entry: 1/3 filled at PT1, which was +50 ticks on a trade sized with an initial 10 tick stop loss (10084 was a "Custer's last Stand" to keep the reason to be long alive) - which is why the first entry at 11002 was sized with a 30 ticks stop, whereas the second entry at 10086 was sized with a 10 tick stop).

 

The first trade was sized for a 30 tick stop, the second entry was sized for a 10 tick stop. In point of fact, the actual stop on the first trade was 25 ticks from entry, and the actual stop for the second trade was 9 ticks from entry. In each case, my initial stop loss at the moment the trade was filled was 10977. The closer I enter to that level, the lower my risk. Far from being arbitrary, though my entry level changed, I never once changed my stop loss.

 

As far as how I determined my stop loss, I simply looked at past S/R below that descending trend line to find what ought to be the lower limits of a final low. Here is how the expiring March contract looked to me ...

 

 

Anything beneath that lower red arrow would, in my opinion, bust the ending diagonal scenario and likely have indicated that a full retrace of the previous rally would occur.

Here is how the same support area looks on the June contract, which is the contract I am trading ...

 

 

The actual level of the lower red arrow is 10982. I intended to post that 10982 was a sort of Custer's last stand to keep the reason for the long trade alive, but I mistyped and put in the level of the actual low print of 10984 (I would hope such be judged an honest mistake). As for the stop loss, I simply placed the stop loss 5 ticks below that 10982 level because I wanted a small margin of error on my side because these final lows are often emotional events and a small overshoot to the downside is not unusual. Is that arbitrary? Perhaps. After all, you might ask why not 3 ticks below, or why not 12? Because I have always used five as multiples of 3 and 5 seem to work best for my brain to figure out a position size without resorting to a slide rule or calculator.

 

Here is a screen shot I took of what was then mere potential for a long opportunity the day before, on 3/11...

 

 

I did not post this here, but I had thought about it, so I placed the orders on the demo chart and took the screen shot (I was actually hoping that Cory would come up with this on his own and post it here, thus I held back on posting it). My entry order on the 11th was 11007. As price action progressed, I lowered my entry order (as you can see, far from chasing entries, in these cases, I make the entry chase me. You can also see that the initial stop was resting at 10977. That was the initial stop on my first entry. That was the initial stop on the second entry. Again, once price rallies above my entry, pulls back, even just a few ticks, while holding above the low print, my stop loss goes moved from 10977 to 1095 in the first case, and 10983 in the second case.

 

The initial entry changes, the initial stop loss does not. The initial stop protects me against an all out panic. Once I am in, and there are no signs of panic, and price is moving away favorably from my entry, I cut the risk to the closest extreme print. Nothing arbitrary about it at all. It is simply that the closer I am able to make entry to that initial stop level, the lower the risk/contract, and thus, the closer to the risk point, the larger the size.

 

Best Wishes,

 

Thales

Edited March 13, 2010 by thalestrader

[Marko23 10]

Hi folks,

 

I found another small feature with the TWS charting program, which helps me during my daily routine.

 

The program can color single bars as I wish. The following scheme works better for me than horizontal lines or a 1,2,3 numbering

 

for a 1-2-3 up I color the "1" and "2" blue, the signal "3" yellow

for a 1-2-3 down I color the "1" and "2" red, the signal "3" yellow

 

A 60m FDX chart looks like this

 

FDAX ended with an up signal on Friday close

 

This could even be traded in a 1m- or 2m chart

 

Sometimes I find it useful to draw traditional trend lines. They can point me to the real "1". I know that Thales never uses them.

Edited March 13, 2010 by Marko23

[Cory2679 11]

I try never to post opinions about a market if I know someone in the thread is already in a trade. I refrain from commenting on open positions, or even resting entry order...I do not want my opinon to influence anyone else's.

 

Thales,

 

Like I've said, I'm going to begin posting real-time charts/analysis/trades regularly to this thread again on Monday.

 

What I ask is for what you said in the quote above not to apply to me. I want your opinion, criticism, feedback, etc. I'm only trading demo, so don't worry about affecting my trades.

 

I'll be soley posting/trading the EUR/USD.

 

Thanks,

 

Cory

[thalestrader 14]

Weekend Reading

 

Hi Folks,

 

After a brief hiatus, weekend reading returns with nothing new under the sun. Attached is a chapter from the old Market Technicians handbook on technical analysis written by Alan Shaw. I think it may give those who eschew the use of indicators a bit more respect for those who do use them, while giving those who do use indicators a better understanding of what it is the indicators are ... indicating ...

 

I am not advocating the use of indicators in general, nor the use of any one indicator in particular. However, nor would I advocate that someone who has found trading success using indicators to remove them. This booklet serves as a reminder to all that we really are trading the same thing - price - no matter how we choose to view and depict price so as to facilitate trading decisions.

 

Best Wishes,

 

Thales

Shaw, Alan, Market Timing and Technical Analysis.pdf

Edited March 13, 2010 by thalestrader

[MidKnight 12]

Cheers for the 'mega post' above Thales. It is clear to me now. No, I don't think there is anything really arbitrary in what you are doing there, a small buffer beyond your S/R limits is always good I think, markets are imperfect. My thanks again for the detailed reply.

 

With kind regards,

MK

[MidKnight 12]

What I ask is for what you said in the quote above not to apply to me. I want your opinion, criticism, feedback, etc. I'm only trading demo, so don't worry about affecting my trades.

 

Howdee Cory,

 

IMHO, you would be better served not having the opinions of others while you are in trades. After the trades are done, a postmortem can be useful if it is a recurring problem that keeps appearing. I just think you'll learn quicker if you are relying on yourself when you are in a trade. Get used to the feelings, the self-talk - overtime you will start to notice the consistency of your feelings and self-talk in certain situations and it can become a highly useful indicator! The influence of others when you in a trade detracts from all that.

 

Said with good intentions,

MK

[thalestrader 14]

IMHO, you would be better served not having the opinions of others while you are in trades.

 

I agree wholeheartedly with MidK. Also, as I have been known to be wrong about half the time in the past, I think we'd all be better off if I were to withhold any comments about live trades - whether demo or dollars - until after the trade is dead. I've already seen one "I'd have taken this great trade it it weren't for Thales's post" and I want to keep those to a minimum. Besides, Thales is not always going to be around, so, young Cory, you had better learn to trade what you see, rather than what I see.

 

Best Wishes,

 

Thales

[Studog 10]

Indicators are useless if day trading futures realtime IMO.

There is nothing more futile than subjecting yourself to a strategy based on indicators.

Support, resistance, trend and a way of seeing those events realtime is the best way of trading. Consistently applying that same approach - if it is indeed logical is the best way of preserving capital and winning.

Trading on the basis of indicators for equities, well that is like watching paint dry and has a failure rate to high to contemplate.

[Cory2679 11]

Current view of the EUR/USD...

 

Finished last week with a rally...I'd be expecting consolidation or even a pull-back in the near future. The 4 hour chart displays what I consider to be the next major area of resistance, which I expect price to rally to...possibly after consolidation/pullback, though.

 

As a general rule, I'm hesitant to take trades on Sunday...but we'll see...

[MidKnight 12]

Large up day on Friday taking out the pullback high in the USA session. I'm continuing to work with the capitulation theory from 2 weeks ago but there is not a lot to get long off from up here unless we trade to the upper R marked on the 60m chart and then back down to the previous pullback high in the 1.5140/200 area, that would be a possible long. Somehow I can't see that happening though. I feel that if this break higher is legit, it will rally hard not giving a favourable position to get long. Should really already be long rather than trying to initiate new longs at the current picture.

 

Attention Points

1.5240/80 refined zone within upper R just prior to exhaust low

1.5140/200 rally high R zone

++ 1.5178 ----------------

1.4980/5020 pivotal minor S

1.4850/900 last S before capitulation low

1.4783 capitulation low

 

Just obvious scalps unless we rally into the refined upper R and then pullback to test 1.5140/200 with an obvious entry trigger. Longs taken there will be out of 1/2 before 1.5260, another 1/4 shortly after a new HOD and trailing the rest for a target around 1.5300 area.

 

Ideally opportunity knocks at the refined upper R with a first target for 1/2 before the previous pullback high in the 1.5200 area, another 1/4 before 1.5120 trades and trail the rest for the pivotal minor S/R 1.4980/5020 area. I'm not so interested in selling within this current R zone just because we have rejected off it last week, rallied up into it again on Friday and so far have held so I feel it is going to break. If it does not break higher and instead starts to plummet solidly through 1.5140 then I will look to sell a pullback testing that 1.5140 area. First target would be the 1.5060 area for 1/2, 1/4 more at the pivotal minor S/R area and trail the final 1/4 for the 1.4940 area.

[Cory2679 11]

I'd consider a short like this, except that I have to drive home now...we'll see where price is when I get there...

[Cory2679 11]

I'd consider a short like this, except that I have to drive home now...we'll see where price is when I get there...

 

Well, shoot! :doh::o

[DugDug 10]

Cory - I am sure you are on top of it - however as we can all forget easily enough - dont forget the march futures contract expiry - I notice you are still posting mar contract. Personally I roll earlier as volume is not such an issue, and I never want to get caught. Also I have done it where I am trading the next month contract and reading off a different chart..... it always freaks me out when I am looking at two different prices initially.

[Kiwi 16]

Long GU ... but its still going down .. a lesson in humility could be coming here.

 

 

.

[Kiwi 16]

:doh: It was time for a cooling bath

[richbois 10]

I just posted on this thread, a great way to trade TTT on a Buy day. This was on GBPUSD today.

 

http://www.traderslaboratory.com/forums/f208/original-taylor-trading-technique-book-method-7627.html#post91534