Reading Charts in Real Time

[Cory2679 11]

We're back to that again, are we?

 

Best Wishes,

 

Thales

 

lol You caught me! I had decided this week I would be allowing some leeway for stop-management, but with a real effort to hold back on the micro-management.

 

That trade, after some lively movement beforehand, went nowhere...it hovered and hovered around my entry, and I thought it was reasonable to bring the stop tighter rather than risking a 1R loss. Had I not moved my stop and let it run, it would have eventually taken me out for a full 1R loss, rather than the -0.3R I took...but yes I know this is just one example...

[thalestrader 14]

...Had I not moved my stop and let it run, it would have eventually taken me out for a full 1R loss, rather than the -0.3R I took...but yes I know this is just one example...

 

I did not look closely at your chart before I posted. I thought your entry was higher.

 

What do you think of that trade?

 

Best Wishes,

 

Thales

[Cory2679 11]

Currently short the EU...

 

UPDATE: When I went to bed last night, I was in positive territory on the trade and just moved my stop to break-even, and that's what I ended up taking. Had I not, I would have taken a full loss. However, if my profit target had been just a little more conservative, I could have taken profit had I not gotten to break-even. I pushed it a little too much.

Edited August 3, 2011 by Cory2679

[Cory2679 11]

What do you think of that trade?

 

Clearly this isn't what you're looking for, but I thought the trade was ok...maybe not quite as nice as the trade from Monday, but trades as nice as Monday's are a rarity...

 

In hindsight, I can always come up with reasons why I shouldawouldacoulda avoided a losing trade, but to be perfectly honest, I believe that's probably a trade I'd take again (I feel like you're probably always a little disappointed with my responses to questions such as these! )...

 

Price was in a longer-term downtrend, we were into the downward slope in a swing, price had recently come alive, I saw a 123 for a short at resistance, and I took it. Once it became apparent to me that it wasn't going anywhere, I cut it.

 

I guess the primary concern I see is that the 123 wasn't as crisp and clear as it could have been, relative to the price action leading up to it...however, I kind of looked at it like the way price bounced from support (my BE threshold)...it kind of puttered along after stopping at support before it shot up...

 

So I guess I'm basically just lost...so now I ask...what do you think of that trade?

[thalestrader 14]

So I guess I'm basically just lost...so now I ask...what do you think of that trade?

 

I do not know if you had noticed, but here is where I posted what I would have used as a short entry:

 

I'll not bother with an updated chart (too many steps to attach a chart, you know) ... but a quick look at this would have me saying to try a short below 110.30 and a stop above 111.05.

 

And if you click back to that quote, you can then click back to the chart I had posted from that night. Initially, I saw a 123 with an entry level of 110.14 +/-, but then the EURJPY rallied to a new high a tick or two above 111.00, and the subsequent price action set up a 123 with a revised entry level of 110.30 +/- ... that is where I had presumed you had entered. It was only after you posted that moving your stop loss saved you from a full 1R loss that I took a close look at your chart and saw your entry.

 

Here is what I think:

 

1) You missed the real initial 123 entry into that downswing, which I posted above, and you were looking for a place to get in. But in doing so, you simply looked for a 123 of any degree, and at any place.

 

2) Also, you seems to be trading without any real awareness of S/R considerations. Do yourslef a favor, and strike a fib retracement tool from the 111.01 +/- high to the 109.29 +/- low. Tell me if you find a level where a significant fib level coincides with a significant actual price level where one might reasonably expect a test as resistance. If you find one, then that should have been you entry area. You could have watched closely for a small degree 123-like price movement to get you in, or you could have watched closely, shorted on the first hint of price being rejected at that level, with a tight stop above that level.

 

Do you see the level to which I am alluding? If so, I want to see your chart showing at least a scribble or two showing me that you understand what I just said.

 

Best Wishes,

 

Thales

[Cory2679 11]

I do not know if you had noticed, but here is where I posted what I would have used as a short entry...You missed the real initial 123 entry into that downswing, which I posted above, and you were looking for a place to get in. But in doing so, you simply looked for a 123 of any degree, and at any place....

 

Yes I noticed, and I agree...I was later to the party than you, but I wasn't on that evening (I'm currently unable to also trade the first part of Tokyo like I'd like to), so I did the best I could with what I had the next morning. But I did think I had picked a decent point of entry with regard to S/R (see more below)...

 

2) Also, you seems to be trading without any real awareness of S/R considerations. Do yourslef a favor, and strike a fib retracement tool from the 111.01 +/- high to the 109.29 +/- low. Tell me if you find a level where a significant fib level coincides with a significant actual price level where one might reasonably expect a test as resistance. If you find one, then that should have been you entry area...

 

Do you see the level to which I am alluding? If so, I want to see your chart showing at least a scribble or two showing me that you understand what I just said.

 

Price resumed it's downmove at right about the 50% retracement, which coincided with the red line of resistance I've drawn (and had drawn on the original chart I posted). I was keenly aware of that level and considered myself to be shorting at that level...I'd thought price had gotten close enough to count. But, alas, price then later continued upward to test the actual level before it resumed the downmove.

 

So you see, I don't feel I'm trading with no regard for S/R...maybe I'm just treating it wrong.

 

I guess I should have gone short once price actually did test the level...I guess I just didn't see a clear good entry. I've basically restricted myself to medium-to-large 123's, but your advice was good and something I've copied and need to keep in mind...because even on the short I took, I could have done much better had I shorted higher up, closer to the level of resistance, rather than so much lower off the larger "123" I took:

 

...You could have watched closely for a small degree 123-like price movement to get you in, or you could have watched closely, shorted on the first hint of price being rejected at that level, with a tight stop above that level.

Edited August 3, 2011 by Cory2679

[thalestrader 14]

...So you see, I don't feel I'm trading with no regard for S/R...maybe I'm just treating it wrong.

 

I guess I should have gone short once price actually did test the level...I guess I just didn't see a clear good entry. I've basically restricted myself to medium-to-large 123's, but your advice was good and something I've copied and need to keep in mind...because even on the short I took, I could have done much better had I shorted higher up, closer to the level of resistance, rather than so much lower off the larger "123" I took:

 

I see the second push that actually tagged resistance as the better spot to start looking for a 123 type entry, but I do have the benefit of looking at it in hindsight, and as you know, these things are always clear in hindsight.

 

Yes, I think that if you locate a break up or break down accompanied by a clear 123, and you want in, then rather than chase the trade, let the trade come back to you, and add a pullback to the breakout point to your repertoire. Otherwise, I fear that you will continue to get chopped to death without anything other than your frustration to show for it.

 

Also, I know I recommended in the past that you perhaps put day trading on hold, and rather than being glued to a 15 minute chart, you give straight S/R trading a try, using 60, 240, and daily charts, or perhaps a range bar chart (I use 13R and 34R for the 6E). Look for areas of S/R where significant fib levels coincide.

 

Best Wishes,

 

Thales

[Cory2679 11]

Also, I know I recommended in the past that you perhaps put day trading on hold, and rather than being glued to a 15 minute chart, you give straight S/R trading a try, using 60, 240, and daily charts, or perhaps a range bar chart (I use 13R and 34R for the 6E). Look for areas of S/R where significant fib levels coincide.

 

I've never really used fib retracements much, but I will begin doing what you said here. I have used fib extensions in a similiar way for profit targets, but not retracements.

 

As far as daytrading...I would think I'd rather make a real effort to incorporate these ideas more into my daytrading, but not give up daytrading all-together. My feeling has been that I can get more experience faster by daytrading...I guess I just need to make sure that it's quality experience, and not just quantity...which I'm not sure that I've necessarily managed to do well. It seems to me like it could take weeks or even months of swing-trading to equal a relatively short period of daytrading, experience-wise.

 

An example of incorporating these ideas more would be my trade from Monday...you'll see on my trade from Monday that I even posted a 4-hour chart to show the resistance where I was shorting. That was actually a trade much like we were talking about earlier...shorting the retracement to the breakdown point after a (in this case, a much longer-term) 123 short.

[SIUYA 11]

My feeling has been that I can get more experience faster by daytrading...I guess I just need to make sure that it's quality experience, and not just quantity...which I'm not sure that I've necessarily managed to do well.

 

two points of note Cory - print out this quote of yours - quality not quantity is important (unless you have a built in edge like a market maker/HFT front runner.)

 

You can have all the patience int he world and no one is forcing you to trade - just go for the quality fruit. You cant loose money not being in the market, but you are more likely to in a crappy marginal trade

 

2 - Fib retracements can definitely help here. They can give you that extra patience.....

 

Interestingly I have found I dont use fibs very often for taking profits - as I like to try and let things run (though I am aware of them, I find them distracting and tempting to take profits)

BUT they do offer a guide to various entry levels TO WATCH, and when certain things happen there (or with enough experience you might get good at pre-empting them) they can help with areas to watch for ENTRIES.

Now when it comes to Fibs - much like trend lines they are a very personal thing, so think about what you are trying to acheive out of this IN CONJUNCTION with what you know.

[thalestrader 14]

...An example of incorporating these ideas more would be my trade from Monday...you'll see on my trade from Monday that I even posted a 4-hour chart to show the resistance where I was shorting. That was actually a trade much like we were talking about earlier...shorting the retracement to the breakdown point after a (in this case, a much longer-term) 123 short.

 

That is exactly what you should be looking to do - identify S/R on the 240 minute or higher, and then trade S to R and R to S. Give up those fib targets. You are using them indiscriminately. Even when I mention fib retracements, I always say to find significant fib levels that correspond to significant S/R levels. Your entry on Monday should have been for a 208 tick profit. S/R always trumps fibs. In fact, I am sure I have said thata here before.

 

... and of course, actual S/R always trumps fib levels for me.

 

As far as you desire for experience, I also said ...

 

 

1) You do not need to make money everyday

 

2) You do not need to trade everyday

 

3) a. if you are serious, your goal is to make trades in accordance with your defined entry and trade management guidelines, not to make trades for the sake of making trades.

 

b. if you are serious, then your goal is also to avoid trades that do not fit your defined entry guidelines.

 

c. if your are serious, and you seek to trade only when your defined opportunities present themselves, then the profits will take care of themselves...

 

Listen to SIUYA and listen to yourself: Quality is what matters. You gain quality experience by not trading when there you see no defined set ups at significant price levels. Do not trade for the sake of gaining experience. Trade or not trade based on where price is and what it is doing there.

 

Best Wishes,

 

Thales

[Cory2679 11]

Currently short the GBP/USD...somewhat regretting the trade as soon as it filled...the best trade was probably on the EUR/USD, which I missed, and I'm worried that I'm a little late to the party and that I'm shorting into too much of an area of support...

 

NinjaTrader is messed up right now...has a significant gap in recent historical data, which messes the chart up bad...so I'll be posting all MT4 charts until that's fixed...I like Ninja sooo much better...

 

UPDATE: Stop moved down...

 

FINAL UPDATE: I actually decided just to pull this trade for a 0.5R loss since it wasn't really a trade I wanted to be in to begin with. I should have probably just pulled it right away once I realized I'd made a crappy trade. I'm really not sure why I held on to it as long as I did. Probably just hope. :doh: I can't believe I've started the week this way. I never learn anything.

Edited August 8, 2011 by Cory2679

[Cory2679 11]

Currently short the GBP/USD...somewhat regretting the trade as soon as it filled...the best trade was probably on the EUR/USD, which I missed, and I'm worried that I'm a little late to the party and that I'm shorting into too much of an area of support...

 

...I actually decided just to pull this trade for a 0.5R loss since it wasn't really a trade I wanted to be in to begin with. I should have probably just pulled it right away once I realized I'd made a crappy trade. I'm really not sure why I held on to it as long as I did. Probably just hope. :doh: I can't believe I've started the week this way. I never learn anything...

 

Well the trade is doing much better than I thought. Maybe I should have just stuck with the initial logic that got me into the trade in the first place, rather than my reaction once I had gotten in it and become fearful.

 

It's turning out to have been a decent entry, but poorly managed trade. Gosh, that's so unlike me.

 

I went back live today with a $1,250 account, with a $25 R (2%)...up from trying $5 last week and up from weeks of SIM before that. Maybe that had something to do with it. I don't know. Either way, I know it's no excuse. I want to trade live because I think it's the best thing for my training...and $5 was practically like SIM psychologically for me I think, plus it's more difficult to precisely size positions with 1,000 unit lots with such a small R value.

 

Ok, I'm not going to post about this trade anymore...I'm putting it behind me and moving on.

[Cory2679 11]

Ok, I'm not going to post about this trade anymore...I'm putting it behind me and moving on.

 

Can't help myself...profit target 1 hit...

[Cory2679 11]

Got burned trying to jump back into the GBP/USD much further down from my first entry...basically chasing the trade...entering after price had already made a big move, and was closing in on support. Took a 1R loss...I deserved it. I'm so disappointed in myself. I think it'd probably be a good idea not to allow myself to take any more trades today.

 

I think missing out on the great downmove that I was in and pulled for a 0.5R loss just messed me up emotionally. Same old story. I never learn anything.

[Cory2679 11]

Looking at a potential short in this area on the EUR/USD. Price declined to an anticipated level of support, climbed to an anticipated level of resitance, now, with the overall trend downward, I'm betting on a decline from resistance back down and through support to the next level of anticipated support.

Edited August 8, 2011 by Cory2679

[Cory2679 11]

Looking at a potential short in this area on the EUR/USD. Price declined to an anticipated level of support, climbed to an anticipated level of resitance, now, with the overall trend downward, I'm betting on a decline from resistance back down and through support to the next level of anticipated support.

 

Took practically a full loss. I adjusted the stop before the fill to reduce my risk zone a little bit, then moved my stop down slightly after it almost took me out.

 

Once price became so choppy, I probably should have pulled my order...especially considering the time of day and that I was getting short after an impulsive upmove off of support...

 

I got clobbered today. I really got out of control. It's pathetic. I don't know what's wrong with me. I should have listened to myself:

 

...I think it'd probably be a good idea not to allow myself to take any more trades today...

 

I ended up down a grand total of -2.322R (-$58.06) today. No excuse.

 

I traded poorly (even for me!) and had a bad day...it happens. I simply need to take a deep breath and move on and shake this off emotionally, while not forgetting the lessons and mistakes I've mentioned.

Edited August 8, 2011 by Cory2679

[Cory2679 11]

Potential short the EUR/USD. Price has rallied back to the breakdown point and is showing signs of being rejected at that level. I'm betting on a decline back to support, where I'll take half off, then a break and decline to the next level of support, where I'll take the other half off.

[Cory2679 11]

Potential short the EUR/USD. Price has rallied back to the breakdown point and is showing signs of being rejected at that level. I'm betting on a decline back to support, where I'll take half off, then a break and decline to the next level of support, where I'll take the other half off.

 

Well, shoot.........

[Cory2679 11]

Relfecting on the week so far:

 

Monday:

 

Essentially, I got into a decent GBP/USD short trade, got stupid/emotional/fearful and pulled out, only to see it decline into profitable territory. I stated that I wasn't going to post anymore about the trade and put it behind me, then proceeded to make another post about the trade...a clear sign that I was a little messed up emotionally.

 

As an emotional reaction to this miss, I jumped in after the market had already substantially declined and was closing in on support, and took the 1R loss I deserved. After this emotional trade, I stated that I wouldn't be taking anymore trades that day due to my state of mind.

 

I then went against my resolve not to take anymore trades and took another short, only to again take almost a full 1R loss, which I deserved. The trade looked ok initially, but then price became choppy and lacked impulse...and it was late in the day. The thing to do would have been to pull it, but instead, due to my emotional trainwreck state-of-mind, I kept the order in, hoping that the trade would prove profitable and make back everything I'd lost. Price then became choppy and overlappy, and took me out.

 

Tuesday (Today):

 

I got into what was probably an ok EUR/USD short trade...a short on the GBP/USD proved to have been the better trade to take... I eventually got a decent decline...about 1R...but I held on through the FOMC announcement, hoping it would be the boost I needed to get to big profits and make up for all of Monday's loss. Instead of hoping, I ought to have been thinking about preservation of capital and either moved my stop or pulled the trade...there was plenty of opportunity...I was even in profitable territory leading up to the announcement.

 

 

So, basically, this week I've been an emotional wreck. I think this is because of 2 things...first, I went back live with my bigger size. Second, I was starting something "new," which psyched me out and messed me up.

 

I think I basically haven't gotten the hang of this "new" way I'm trying to trade yet...starting with the 4H chart and using the 15M for entries only, basically. Today's trade probably wasn't the best...yes, price had retraced to the breakdown point and showed signs of rejection, but the way it retraced the breakdown point was choppy and wide. The GBP/USD, on the other hand, which would have been the better trade, looks much nicer. We had just had a nice double top/test and rejection of resistance, and price proceeded to decline to an anticipated level of support. It doesn't get any clearer/easier than that. I think I just need some more practice with this.

Edited August 9, 2011 by Cory2679

[thalestrader 14]

Cory,

 

Not for nothing, but you are beating yourself to death trading the two pairs that have been locked in a chop box most of the year. Meanwhile, the Swissy, the Aussie, and the Yen have been trending and volatile and everything you need to make it easy on yourself. I know I have recommended narrowing your focus in the past. But perhaps you need both a narrow focus viewed through "funnel vision." In other words, I think it is a good idea to focus on one or two or maybe three of the majors. But why not keep an eye on their longer term charts, and focus on those showing trend-like, range expanding price action?

 

Both the 6E and the 6B will break out of those trading ranges eventually, and perhaps soon, but until they do, tred (and trade) them carefully.

 

Best Wishes,

 

Thales

[Cory2679 11]

I think I'm going to take a little hiatus from TL...for maybe a week or so.

 

I have to pull myself together. With the mess I've been posting this week, I'm just wasting people's time. I'm doing things that I know I shouldn't be doing. Once I consider myself to have pulled myself together, I'll resume posting.

 

Thales, I want to express my immense appreciation for all the recent advice and posts, and tell you it's really nice to have you back. I had mentioned to a good friend some of the advice you'd been giving me lately and that you were back on TL, and she asked me if I had let you know how much I appreciate it...and I guess I really hadn't.

 

Thank you to everyone else, too, who has contributed. There are a lot of generous people around TL.

[thalestrader 14]

I think I'm going to take a little hiatus from TL...for maybe a week or so.

 

I have to pull myself together...

 

Hi Cory,

 

I'm hoping that you are taking a week away from posting but not a week from checking in here.

Let's see if we can't pull you together a bit over the coming week. Perhaps you should demo trade these next few days if you are trading at all.

 

Here is the current look of the EURUSD. You know the drill - red rectangles are resistance, blue rectangles are support. We want to watch for short sales at red, long opportunities at blues. If a red breaks, we turn it blue, so we then look to play long on a retest of the once red now blue area. You're a bright kid, and you know to reverse the scenario should price fall to and break through a blue.

 

 

When price is out between these areas, such as it is now, we call that no man's land. You will recall that no man's land is a dangerous place, and that price spends most of its time out there. Since it is dangerous, we will leave it alone until it comes to us.

 

Now, for the record, if you were to look at an hourly chart, you'd see that the EURUSD is right at a level where we might expect it to encounter some resistance. It would be up to you whether you were going to play these areas right now.

 

 

My suggestion is that for the time being, you focus on those S/R areas that are plainly visible on a daily chart.

 

At some point, I suspect (and expect) price to break hard one way or the other through this ever tightening stranglehold it has put on itself. When that happens, we will zoom out to an even bigger picture and see if we cannot figure out a game plan to ride what may become a sizable trend, while protecting ourselves from what may turn out to be an explosive thrust that quickly reverses itself.

 

Last, but not least, I am going to suggest that you do not glue your face to your charts this week. If your broker or platofrm has alerts enabled, create alerts to send you a text or email or ring a chime when price gets within 10-20 ticks of these areas. Then you can watch your charts.

 

Let's see if we can get you back on track.

 

I'll check in with you sometime tomorrow - morning, noon, night - who knows? But at some point, I'll be back to review the charts with you.

 

Best Wishes,

 

Thales

[thalestrader 14]

In fact, Cory, let us add, perhaps temporarily, another color to the mix - red resistance, blue support, and purple for an area where the twain may meet, such as where price is now. In the above post I noted that visible on the hourly chart, but not the daily, is an area of resistance around 1.4310. Well, just below that resistance is an area of potential support near 1.4285. So, when red meets blue, we get purple. So I have added a small purple rectangle to the chart, and tomorrow, when we review, we will see what happened in and around that area.

 

 

Here is how the chart looks right now - as you can see, a short opportunity did arise at that resistance level. As I said above, it is up to you if you want to play these lesser areas right now. But until we set you aright again, playing the more obvious areas seems to be in order, right?

 

Best Wishes,

 

Thales

[thalestrader 14]

And here we can see that price is really whipping around back and forth through that purple zone, which is is not to be unexpected given the narrow band between minor S levels and R levels.

 

 

I will check in later today. Right now, I am waiting for price to travel to the 1.4400 level or back down to the 1.4100 level (all +/- of course) before expecting anything that would entice my participation to develop.

 

Best Wishes,

 

Thales

[Cory2679 11]

Hey Thales,

 

Yes, I'm still checking in...and thanks so much for the charts and commentary.

 

I have a question...you'll often suggest to me focusing on longer timeframes, sticking to the sidelines when price is in no man's land or chop, not always being glued to the chart, not needing a trade every day, etc...my question is, what would you suggest I do while I'm waiting? I want to fill every moment of my trading day with something productive.

 

Thanks,

 

Cory