Reading Charts in Real Time

[MidKnight 12]

Hi Cory,

 

I've been silent on this forum for a LONG time and honestly haven't been to many trading forums for quite a while....

 

Waiting is productive and unless you are market making it is one of the most crucial things to master! You must remember that trading is not like other jobs where you must be doing things to make money. All trading is, is recognizing the when opportunity is present, acting, and managing. The rest of the time is waiting. I'd say that probably 90-95% of time trading is waiting. During waiting I'll do research, scan the markets probably hourly, chat with some trader friends via IM, listen to music, read some trading forums, go play with the dogs etc etc. It is not unusual that I'll spend a full 13 hour day 'trading' to do zero trades. I know its hard to change our mindset to this when we have been taught virtually our whole life to work HARD towards what you want to achieve, but trading often does require us to do the opposite of what is conventional.

 

All my best,

MK

[thalestrader 14]

...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....

 

But what do we do Cory? Price made it up into the next Resistance level. Is it time to turn that Red rectangle Blue? Or, must we remain undecided? Is there a case to be short? If so, you need to make it. Where or when do we get short? Is there a case, perhaps, to get long? No? Yes? Well, you need to make it. If so, where and when do we get long?

 

Or do we sit on our hands and practice our waiting game?

 

This is the four hour chart, but you can use any view you wish to make your case(s), as the case may be ...

 

 

It is 9:45 PM EDT and I show the EUR/USD cash is 1.4366/67 and the 6E is 1.4361/62.

 

What do we do? (And if you come across this twelve hours from now, try your best to roll time back to 9:30 PM EDT and tell what us what you think based upon "now," even though now may be long gone by the time you get here).

 

Best Wishes,

 

Thales

Edited August 17, 2011 by thalestrader

[thalestrader 14]

Hi Cory,

 

I've been silent on this forum for a LONG time ...

 

MidK, I can't tell you great it was to see your post. Your area was hit hard by the quakes, from what I heard, and I am happy to see that you are well.

 

Best Wishes,

 

Thales

[thalestrader 14]

...my question is, what would you suggest I do while I'm waiting?

 

I'd suggest that you spend some of your your new found extra time with your girlfriend and your parents for starters. You are a young man, Cory! I'm a geezer compared to you, and just sitting here I came up with about 14,380 things I could do while waiting for an opportunity to make coin to come along ... 14381 ... they just keep coming, young Cory.

 

Live your life!

 

Best Wishes,

 

Thales

[MidKnight 12]

MidK, I can't tell you great it was to see your post. Your area was hit hard by the quakes, from what I heard, and I am happy to see that you are well.

 

Best Wishes,

 

Thales

 

Thank you! :cheers: It's been a rough year to be honest. Current count is over 7,300 aftershocks. Aside from the SEP 2010 quake, the other big ones have been 5-10 km from my house. The house is a wrecked, the city has been closed since FEB 2011 as they demolish large amounts of the city. I'm still living in the house and waiting for my insurance to finally assess the damage and payout the full replacement of my policy. There isn't anywhere else I can really go. It's still liveable, but its on a lean, grossly out of level and every corner of the house has significant vertical cracking to blow the cold winter winds right through it. In summer time, that sort of ventilation could be quite nice though :p

 

Take care!

 

MK

[Cory2679 11]

Live your life!

 

Thanks for the advice, but to me the problem with that is that I don't feel that I've earned that privilege until I've managed to find at least a trace of success with what I'm working on (trading). When I was in college, I remember a Goldman Sachs recruiter saying that the average work-week for new analysts is about 80 hours per week, but sometimes it'd be as many as 120. There's no excuse for me not to be doing the same thing.

 

However, I don't put in 120 or 80 hour weeks with trading...for starters because I do have a job which I work nights and weekends, and secondly because I do "live my life" to some extent...during the evenings that I don't work, and during weekend evenings. I feel that my relationship with my girlfriend (now fiancé) would deteriorate if I didn't spend any time with her at all...and I do value that relationship. However, I feel guilty even about that...like I'm being lazy...I feel that I should be devoting that time to trading, but choose not to.

 

It's a nice thought to simply "live life" and spend time with friends and family etc., and in the position you're in now you have that luxury, but I'd be willing to bet that you've put in your fair share of 100+ hour weeks over the years to get to where you are!

 

But what do we do Cory?

 

I of course unfortunately do have the benefit of hindsight now, but I'll do my best...

 

 

Price traded up to the next resistance level, but it just barely penetrated the upper threshold of the rectangle and backed off...I don't believe we'd yet "cleared" resistance enough to turn the red rectangle blue.

 

One could have made a case for a short, seeing as we're at resistance, but I think by the time you posted the chart it may have been a little late. I would have maybe considered a short on the first hint of price being rejected when price approached and failed to break the 1.4476 high, but the big 123 I would have had some concern about...it was wide and a little choppy...after such a rally, unless there is an immediate and sharp sell-off, I'd hesitate to take that type of short.

 

I think there was a case for a long, too...like I said, the "big" 123 at resistance after the sharp rally was somewhat weak to me...looking potentially like an "ABC" correction. I've placed two arrows where longs could have been attempted, on the first hint of price being rejected at those levels. The first didn't get much steam behind it, but there was a somewhat decent favorable excursion. That was about where it was when you posted your chart. The second was the moneymaker.

 

In this very moment, if I was just getting on, I would be sitting on my hands and practicing the waiting game. I'd mostly be waiting on and anticipating price reaching the above level of resistance, at which point the lowest red rectangle would be turned blue...if not already. Price at the moment is struggling a little bit to make much of a move past the 1.4476 high. If one was anticipating price to reach the next level of resistance, I suppose one could look at this as an potential opportunity to jump in with a long and ride it to the next level of resistance. I personally don't see a great entry at the moment, though...there could be a sizable pull-back before the next burst...and of course, I could be wrong and price may plummet at this point.

Edited August 17, 2011 by Cory2679

[Cory2679 11]

I'd mostly be waiting on and anticipating price reaching the above level of resistance...

 

...I suppose one could look at this as an potential opportunity to jump in with a long and ride it to the next level of resistance....

 

I personally don't see a great entry at the moment, though...there could be a sizable pull-back before the next burst...

 

Perhaps not a terrible place for a long??

[Cory2679 11]

Well, I called that dead wrong. There was probably ample opportunity to take break-even on the potential long I posted, but I definitely got my analysis wrong.

 

Here's a current look at the EU...really hasn't "cleared" resistance yet, in my view...it still should be red. It's starting to swing widely, which if I'm not mistaken could indicate a weakening/end to the upmove.

 

We're in an area now where I might be looking to get long (looking at potential support and the upward-sloping channel. That being the case, you may want to short...all in!

 

[Cory2679 11]

All right, I'm not sure how much I've really "pulled myself together," but I'm going to be back consistently trading and posting full-time on Monday. As a reminder...I won't be trading, posting, or probably even checking TL after NY...I'm currently not trading or even monitoring Tokyo, due to my schedule. I do, however, have the FXCM app on my phone so I can monitor/manage open positions after NY.

 

I'm just going to be trading with a FXCM demo account, doing my best to treat the demo account as I would a live account. I'm well aware of the potential downsides to demo trading, but I've simply decided that I'm going to demo trade until I'm consistently profitable. That seems reasonable to me. I'm not going to bother with defining what qualifies as "consistently profitable" at this point...we'll know it when we see it!

 

Have a good weekend!

[Cory2679 11]

Currently short the EUR/USD...

 

UPDATE: Stop moved down...

Edited August 22, 2011 by Cory2679

[Cory2679 11]

Currently short the EUR/USD...

 

UPDATE: Stop moved down...

 

UPDATE 2: Stop moved down (11.7 ticks below entry)...

[thalestrader 14]

UPDATE 2: Stop moved down (11.7 ticks below entry)...

 

Why?

 

Best Wishes,

 

Thales

[Cory2679 11]

Why?

 

I moved my stop down to one tick above the recent consolidation...11.7 ticks below entry...my stop was already at 1 tick below entry ("break-even")...I anticipated that price would probably take me out at break-even if it broke out of the consolidation to the upside, so I went ahead and moved my stop down to lock in ~1/3R if it did.

[thalestrader 14]

I moved my stop down to one tick above the recent consolidation...

 

So you are sure we have seen the high of the consolidation if price is to continue lower? And you are sure that if price does trade above that high, that the decline is finished, and we are to look for higher prices immediatley ahead?

 

Best Wishes,

 

Thales

[SpideySense 10]

Sure is an interesting choice of word Thales.

 

I point it out because I try to think in probabilities. So I would "know" that there was a, say, 75% probability that exceeding a point by x ticks would result in a significantly larger pullback and thus I should exit. For me, that might define "sure."

 

On the other hand, I hate trailing stops anyway.

[Cory2679 11]

So you are sure we have seen the high of the consolidation if price is to continue lower? And you are sure that if price does trade above that high, that the decline is finished, and we are to look for higher prices immediatley ahead?

 

No, of course I'm not sure...I'm never sure about anything. I'm just saying that to me, I thought I would probably get taken out for break-even if price broke where my stop now is, especially since the "break-even" stop was only 10.7 ticks above, so I'd rather lock in the ~1/3R.

 

FWIW...if PT1 was eventually hit, my plan was to lift that stop and leave the stop at break-even for the second half and walk away...I have to leave here in about 45 minutes or so anyway.

[Cory2679 11]

Currently short the EUR/USD...

 

UPDATE: Stop moved down...

 

UPDATE 2: Stop moved down (11.7 ticks below entry)...

 

FINAL UPDATE: Taken out for +0.36R.

[thalestrader 14]

... I'd rather lock in the ~1/3R...

 

Did you get your 1/3R?

 

Best Wishes,

 

Thales

[Cory2679 11]

Did you get your 1/3R?

 

Yes.

 

Perhaps, with the idea of having to be in it to win it, it would have been worth risking the 1/3R of open profit to make make what could have been +2.85R for a full winner with my PT locations? Maybe this is your point?

[thalestrader 14]

Sure is an interesting choice of word Thales.

 

I point it out because I try to think in probabilities. So I would "know" that there was a, say, 75% probability that exceeding a point by x ticks would result in a significantly larger pullback and thus I should exit. For me, that might define "sure."

 

On the other hand, I hate trailing stops anyway.

 

I would like very much to cure young Cory of his trailing stops ... he wishes too much for too little.

 

I agree with your thinking in probabilitites. Cory cannot yet entertain such thoughts, however, until he reintroduces a touch more technical rigor into his trading. For example, I do not see price during that consolidation as having reacted back to any significant level of resistance. Therefore, anchoring one's stop loss off of any pont within that consolidation is no better than expecting a random result.

 

Having not reacted back to a significant level of S/R, price would then need to decline to a new low, by at least a tick (should happen shortly), in order for that high he used to anchor his stop to become eligible for me as a stopping point.

 

So where you would be able to adduce probabilities, young Cory is tossing dull darts while blindolded and drunk.

 

Cory, in other words, could use some Spidey Sense about now.

 

Best Wishes,

 

Thales

[Cory2679 11]

I unfortunately have to head out now...I have to leave earlier than usual today...I'm certainly not patting myself on the back after seeing what price has done since I was taken out!

 

I will try to digest, to the best of my ability, what has been said here before I come back tomorrow morning.

 

Thanks.

[thalestrader 14]

...Perhaps... it would have been worth risking the 1/3R of open profit to make make what could have been +2.85R ...

 

No use playing for larger targets if you're never going to do what is necessary to get to them, i.e. sit on your hands. Even taking it off at a retest of the low would be a preferable strategy to getting taken out for 10 or fewer ticks profit time after time. Right now (about 4:15 PM EDT) you can see that price has now wedged down in three little pushes into successively but marginally lower lows. This would be an excellent time to be covering your short day trades and calling it a day. I'd might even be tempted to get long here at 1.4363 with no more than a 10 pip stop loss and a 40 pip profit limit order and let it sit 'til one of them is filled or something within the price action itself tells me to close the position.

 

If you are going to "trade for a living," young Cory, you will have to do better than $0.33 for every $1 you put at risk.

 

Best Wishes,

 

Thales

[jovis 10]

I would like very much to cure young Cory of his trailing stops ... he wishes too much for too little.

 

As a noob myself I try to let go of half my position at 1:1 R/R.

 

That way I can get some of that "break-even-trailing-stop-security-feeling", without having to guess what the market will do. I'm entering on breakouts, and compared to a breakeven stop I also get a little larger safety zone/cushion, which the price would have to retrace through for my position to be stopped out.

 

More importantly, it also makes it easier for me to "set and forget" each trade, as I don't have to micro manage anything after the trade is entered. Instead I can concentrate on other things, and just take a peek at the markets a couple of times each day (or even less, if trading on > 4 hr charts).

[optiontimer 10]

...If you are going to "trade for a living," young Cory, you will have to do better than $0.33 for every $1 you put at risk...

 

That would depend upon what you call "a living."

 

 

"Win or lose, everybody gets what they want out of the markets. Some people like to lose, so they win by losing money." Ed Seykota

 

Good Luck, Cory! Be a winner! (Just be sure you know what "being a winner" really means to you;)).

 

-optiontimer

Edited August 22, 2011 by optiontimer

[MidKnight 12]

Hey Cory,

 

Whatever you decide to do with your trade management - may I suggest that you rigorously follow the same approach over a decent sized sample of trades? They say 30 is the minimum to be considered for statistical significance, but I like to do 50 or 100 sizes as a minimum. Collect data for a decent sized sample that spans, say a month of trading activity (or longer if you need to get a higher sample but the approach is low frequency). After you collect the data, run the scenario of some simple trade management variations. Such as, how does xyz trailing approach affect results, or what about moving to BE, or maybe never moving to BE, or scaling out etc.....you can run many simple scenarios and see the outcome. From there you should be able to make some basic assessment on probabilities and expected outcomes. The main benefit of this is that all your trade entries are not done in hindsight but you can clearly see how various trade management approaches can make or break a decent approach. I've done this since my second year of trading and still conduct this on a quarterly basis today (quarterly because my frequency is fairly low).

 

All my best,

MK