Reading Charts in Real Time

[Cory2679 11]

...I'd prefer to look for longs in the area between 1.3639 down to 1.3619...

 

Thales,

 

How come you didn't see my rectangle as major support and a possible turning point?

 

...you had better learn to trade what you see...

 

The problem is that I apparently can't see...

 

The way I saw it was that there was the area of support in my shaded rectangle, as well as the touch of the trendline on my 4 hour chart...:doh:

 

-Cory

[thalestrader 14]

How come you didn't see my rectangle as major support and a possible turning point?

 

The problem is that I apparently can't see...

 

The way I saw it was that there was the area of support in my shaded rectangle, as well as the touch of the trendline on my 4 hour chart..

 

You saw fine, and it is plain that there is support as you drew it - after all, price stopped falling and started rallying from within the zone you drew. But that reaction came almost four hours before I arrived, so at this point, I either need to wait for a new reaction high, or a retest of the low. I'd prefer it go even lower, but as I said, it may not get there. what I prefer and what I get often diverge immensely.

 

1.3658 down to 1.3639 is the top layer, for lack of a better term, of the entire area between 1.3619 and 1.3658. Price made it 10 ticks into that area. Had I been up and at 'em at that time, I may have tried a long there. Then again, I may have thought that the sellers took that 10 ticks with relative ease, and thus I would have perhaps held off and waited for (and still be waiting) for a retest of the low. And while if I had to "pick a tick" I'd like to watch for 1.3619, I am prepared to get long or get short from higher levels if price action indicates it would be prudent to do so. But it has to indicate such from somewhere other than the middle of nowhere, which is where it is at the moment. The nearst levels of interest to me are 1.3648-1.3639 below and 1.3700-1.3711. Price is right now between those two levels, in the middle of nowhere, where it spends most of its time.

 

Best Wishes,

 

Thales.

[DugDug 10]

(please correct me if I am wrong or intruding here Thales - this advice below is also a note for me)

Cory dont get too caught up in the tick levels or what you are seeing v what others are seeing - a bit like when you are in a trade its sometimes not the best to listen to others opinions, until your plan comes to fruition.

also

Once a trade level has reacted or broken then it will become a new level for later trades, yet the focus should be on the next anticipated level and the present action, that way you wont fall into the trap of chasing trades, or regretting missed trades. Just move to the next level and loo for the next trade.

Finally while Thales has a lot of experience at picking levels to a tick, as a new trader, focus first on the zones, and the flow of the market, then focus where a good tick level is. (I have been guilty of this, looking for exact tick levels and it can be frustrating trying to be exact. In my previous life we used to trade stocks almost to the cent, however we watched them day, after day, after day.....)

Worry about it being exact as and after you get better at the reading of the market.

[thalestrader 14]

I've been tracking the progress of this "bull flag" on the 6B (GBPUSD) since yesterday, first on a 15 minute, then 60 minute view as it grew from a calf to a bull. We're about to find out how bullish (or not) it is ...

 

 

 

 

Best Wishes,

 

Thales

[thalestrader 14]

Here are my two trades long the 6B (GBPUSD) and long the 6E (EURUSD) ...

 

LONG 6B ...

 

 

 

LONG 6E ...

 

 

PT's TBD, will trail stop if these do rally. Otherwise, if stopped, the total risk betwen the two is -1.3R. My attention was diverted to the 6E and as a result, I missed a more favorable entry on the 6B. If we see nice 123's develop as viewed on the 15 minute, I'll add to the longs.

 

I will be going outside to play with my son soon, and I will be monitoring the trades from a wireless laptop and a cell phone to my broker if necessary - the point being I will not be updating these trades here. But the charts speak for themselves, I'm either up, down, or out with a small loss - no one will need me to say which is what.

 

 

 

Best Wishes,

 

Thales

[Cory2679 11]

Think Trader Vic's 2B. Nothing like entering on a 2B, adding on a 123, and then scaling out on the way to your next area of interest.

 

I know Thales has mentioned and described Trader Vic's "2B" patterns, but I wanted to find out more and came across this great resource I thought I'd share for anyone interested...

suri2B_TJDec2007.pdf

[thalestrader 14]

I will be going outside to play with my son soon, and I will be monitoring the trades from a wireless laptop and a cell phone to my broker if necessary - the point being I will not be updating these trades here. But the charts speak for themselves, I'm either up, down, or out with a small loss - no one will need me to say which is what.

 

We just finished lunch and I will make one last update and then I'm out.

 

But first, I had a couple of PM's asking whether the way I trade from the beginning of the thread. I have not changed anything in years. I think the focus on 123's came from others, not me, as there seemed to be this mass "aha" moment when I posted a chart of the EURJPY marking off the various highs and lows and how I used highs and lows to mark off trend changes, indicate trade opportunities, etc. I have always tried to locate areas of S/R where I would expect opportunities to present themselves.

 

I have for years entered on a 2B or the first, smallest, spring bloom of a 123 at a significant level (see the earlier discussions months ago between MidK and I where I said I saw oblivious 123's and he disagreed with me - at certain levels, I'm lookng for significant wiggles). That led to a discussion of degrees of swing. The larger degree 123's are easiest to learn to see in real time, and it was simply the best way to help folks grow accustomed to reading price itself. So that is what I focused upon sharing here, it is a large part of the whole, and it comes in different sizes.

 

However, for some reason, I have my detractors, and so I started using the chart trader function in a Ninjatrader demo account so that I could show that whether or not my detractors believe the trade was taken or not, it was nonetheless possible for the opportunity to have been identified and acted upon in real time. Chart trader has the added benefit of letting me show how I will probe first as a test of what I think price is indicating. Sometimes, the action at a particular level is so compelling (e.g. exactly what is anticipated in those cases where I am able to "pick a tick") that I can go all in. Such was the case last night with my long 6E at 1.3713. Other times, price bounces from a tick level, and then, rather than pause there again, cracks through it, such as happened to day at the 1.3619 level.

 

Well, in those cases, I wait for price to either firm itself with a 123 or decline to the next tick level. In this case, my next level was in the mid 1.3580's, which would be about a 2/3's retrace of the entire rally from the 1.34xx low to yesterday's high. Price got there, more or less, and did what it needed to do to get me long with a 6 tick stop. I have since added at 1.3610 and again at 1.3622, and I added to the 6B at 1.5152. Had you just traded one contact at each level, you would now have three 6E and 2 6B contracts, with a total open trade equity of $1156.75 on a total initial risk of $137.50.

 

I average up into longs and I average down into shorts. I keep my risk as small as possible, while allowing for gains as large as the market is willing to give. The 123, it should be noted, is typically the last entry. There are many times where I do nto get the opportunity to enter mor favorably, so I am "all in" at the 123, and it is those cases that I am most ruthless with cutting a trade short.

 

Some of the entries should be obvious, while others might require that you drop down to a minute chart or even less to see them. The 6B offered a much lower entry, but I missed the opportunity while setting myself into the 6E.

 

Here is what the 6E looks like in the ninjademo account with chaarttrader tracking three single contract entries with an avergae buy price of 1.3608:

 

 

And here I have chart trader turned off to show the three entry points:

 

 

Stops are in, so a profitable result on each instrument is assured. My son is now casting me rather angry looks (who among us would seek the wrath of a five year old with cabin fever on a spring-like day), so I am leaving these trades here with you as they are.

 

Best Wishes,

 

Thales

[Cory2679 11]

We just finished lunch and I will make one last update and then I'm out....

 

Double thanks for that great post, Thales. It was a real eye-opener and cleared up some of the confusion I've had.

 

-Cory

[Cory2679 11]

It was a real eye-opener and cleared up some of the confusion I've had.

 

Although, I have to say, while it has cleared up some confusion, I believe I have a lot of work to do to wipe the fog from my vision when it comes to all this! I'm going to have a busy weekend. This reminds me of a quote by james_gsx from just a little while ago...

 

I would get a groove going, only to read something more complicated then be confused the entire weekend.

 

BTW...Thales, does your daughter trade this way, too? ...or is she still focused primarily on the larger degree 123's?

Edited March 18, 2010 by Cory2679
typo

[thalestrader 14]

BTW...Thales, does your daughter trade this way, too? ...or is she still focused primarily on the larger degree 123's?

 

Believe it or not, she actually discovered these entries on her own rather early on, and she does it far more aggressively than I do. Whereas I prefer to do it at a 2B, i.e. after a penetration of the level by at least a tick, she'll jump in at the market of need be even if price failed to test the tick level.

 

Let me give you an example of what I mean - this morning I was looking for longs on the 6E, but I really did expect that price would first test 1.3619 or lower before it would mount a rally. I was prepared to sell if price would have exceeded the 1.3696 high and then reversed. However, price stalled at 1.3695, and fell from there without me. My daughter, on the other hand, may have been sitting there with a limit order to sell short at 95 or 96, and she may have just entered short at the market when she saw price back off 95, then muster back to to 95, and then again fall away. In other words, she'd likely have gotten short while I'd be content to shrug my shoulders and wait for the next opportunity. Its not the way I trade, but she came up with it on her own, and it has worked very well for her on the EURJPY, so who am I to criticize?

 

Best Wishes,

 

Thales

[Cory2679 11]

Believe it or not, she actually discovered these entries on her own rather early on, and she does it far more aggressively than I do......

 

Thanks for the reply. I'm always really amazed/inspired when I here about what your daughter's doing. Every now and then I'll be out and see a little girl that looks about her age and think, "wow!"

 

It seems like it's just really clicked with her. I wonder what it's going to take for it to click with me like that......?

 

-Cory

[thalestrader 14]

It seems like it's just really clicked with her. I wonder what it's going to take for it to click with me like that......?

 

When you stop fretting over the money and start having fun.

 

I'm not trying to be flippant - I am amazed by her myself, and I have had the benefit of actually watching her do this. I was watching her play a new video game with her sister the other night. Every time I see her playing a new video game, the same thought occurs to me - that there seems no difference between her learning to trade and her learning to play a video game. For a technical trader trader from the electronic screen, that really what this is, isn't it? But the money spoils it for most, making it far too stressful.

 

Dinero had a great post in your log tonight where he said that "Financial stress ruins all the things that make life great." That is probably the most important thing anyone in your log has had to say to you to date. Take it to heart.

 

Trading clicked with my daughter because she is absolutely free from all the baggage that the money concerns weigh us down with. She is not worried about proving herself to me financially, buying a house, paying for college, getting marries (heaven forbid!) etc and so on. She simply wants to get a higher score than she did the night before.

 

Best Wishes,

 

Thales

[MidKnight 12]

When you stop fretting over the money and start having fun.

 

1000 times, Amen. Has been a recurring problem for me since day 1. With me, the degree varies from virtually no worries (usually when I start a new exploration) to life threatening fear. Anyone who knows my history will probably understand why the high level of fear at times I gotta say though, it does subdue over time!

 

Great conversation today. Thanks folks.

 

With kind regards,

MK

[Cory2679 11]

I actually have to leave in a little while, but I thought I'd post a chart for the evening...

 

I'm biased long, but I'm not afraid of a short either...if price breaks this afternoon's low and sticks, I anticipate a fall into the support zone I've drawn with a rectangle.

[MidKnight 12]

Sloppy down day testing the immediate S that so far has held. That significant R remains at the current high of the move up of which I am still awaiting resolution. I sorta expect at least one more probe into it before a decent drop occurs.

 

Attention Points

1.5350/450 significant 240m pivot low

++ 1.5250 ----------------

1.5210/45 immediate trend S

1.5160/200 pullback highs S

1.5020/60 recurring congestive S/R

 

Longs

The immediate trend S continues to be resolved and I should look for aggressive positions down here, preferably below 1.5240. I should take 1/4 off before 1.5320 trades, another 1/4 before 1.5360 trades, another 1/4 before 1.5400 trades and trail the rest for up to 1.5450 area maybe.

 

A slightly more risky alternative is that the immediate trend S breaks and instead get a test into the old pullback highs S. I'll take trades within that area but I must scale a 1/4 earlier than I would like. So far it is looking like 1/4 off before 1.5240 trades, 1/4 off before 1.5320 trades, 1/4 off before 1.5360 trades and trail the rest for a move into 1.5400/450 area.

 

Shorts

I'm still happy to short on an obvious trigger above 1.5350 and preferably above the recent high of 1.5382, continuing to work shorts from this significant R zone. Scale outs TBD if the reaction comes below the recent high or above it.

 

Another option is that we may drop below immediate trend S by a significant amount. If that should happen I'll be looking for a flip, selling in the 1.5210/45 area with targets of 1/4 near the current LOD, 1/4 at 1.5140 (assuming that is below the LOD at entry), 1/4 at 1.5060 and trail the rest for a push into the 1.4950 area.

[Marko23 10]

FDAX has a cluster of daily highs

[Marko23 10]

FDAX touched support zone

[Marko23 10]

Out for +1R. This is still an uptrend.

 

[Marko23 10]

The bar colors for the Short were only in my head.

Now they are also in the chart.

 

[thalestrader 14]

Hi Folks,

 

Yesterday I had shown a little channel that I had ben tracking as a "bull flag" on the 6B. As such, I had anticipated a break of that channel the upside and a retest of the recent rally high, if not new highs. However, the channel has broken to the downside. As Marko once said, "if it channels, it's corrective." A corollary to that is that once a channel breaks, the action may be impulsive. Price has mustered a rally back to the underside of the lower channel line, and it is finding selling interest there. This would be a relatively low risk (and by low risk, I mean small in number of ticks) short entry point in anticipation of a retest of the day's lows, if not a break to new lows.

 

 

Best Wishes,

 

Thales

[thalestrader 14]

... This would be a relatively low risk (and by low risk, I mean small in number of ticks) short entry point in anticipation of a retest of the day's lows, if not a break to new lows..

 

I'm short in real life from 1.5151, with a 1.5156 stop, which is $31.25/contract on the 6B. By the time I thought to place the trade in the demo account, the best I could do was a market order that was filled at 1.5145 which is more than twice the risk of my actual entry. Other wise, I have modeled the demo trade with stop loss and profit targets the same way I am actually trading this, looking to take 1/3 at 5120, 1/3 at 5060, and if it really turns into a runner, the final 1/3 at 4974, though I will be trailing a stop as well ...

 

 

Best Wishes,

 

Thales

[thalestrader 14]

I'm short... with a 1.5156 stop,

 

Stop loss is now 1.5140...

 

 

Best Wishes,

 

Thales

[Marko23 10]

FDAX had another high.

New possibility for Short or trend continuation.

 

[thalestrader 14]

Stop loss is now 1.5140...

 

Stopped at 5140, short again at 5151, same targets but initial stop is 5160. I will go to BE or better if first target is filled (possibly sooner)...

 

 

Best Wishes,

 

Thales

[thalestrader 14]

Stopped at 5140, short again at 5151, same targets but initial stop is 5160. I will go to BE or better if first target is filled (possibly sooner)...

 

PT1 is filled, and stop loss is now 1.5144...

 

 

Best Wishes,

 

Thales