Reading Charts in Real Time

[iwshares 10]

Reading through some old threads came across this gem from Dinero Trader at

 

http://www.traderslaboratory.com/forums/traders-log/7306-trader-p-l-2010-a-44.html

 

Losses

 

Losses in trading can very reasonably be viewed as operating expenses. In trading, losses are a necessary part of daily operations. Maximizing revenue and minimizing expenses is how every business must operate and trading is no exception. If your profit margin is tight like Walmart, you simply increase transaction volume and in turn profits go up while maintaining historical margins. Thinking you can eliminate losses in trading is like a hair salon owner wishing they didn't have to pay employees or pay for supples. That salon owner wants to keep those costs down as much as possible without affecting revenues. The owner could only hire 16 year old hair stylists to keep wage expense low but that most likely would in turn decrease revenue from repeat customers. A trader can easily make the same mistake and cut profits by trying to decrease expenses (losses) to excessively. There is a careful balance of accepting expenses and revenues that must be maintained while always striving to adapt to market changes. A business owner would not characterize a wage expense as a loss and neither should a trader. I will define and shift my own paradigm in trading to realize that each trade loss is simply part of my business expense structure.

[Cory2679 11]

...just a little worse than break-even, I think...

 

Yup...ended up being -0.16R.

 

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As far a my data and Ninja go, I'm honestly really not that worried about it. It'll just act funny sometimes. It's the Gain data feed.

 

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As far as indicators go, it's an interesting idea that I'm willing to experiment with over the coming weeks, but I haven't had a good experience with indicators (I dabbled in them some before showing up here). I haven't used them is this way, though...it was more of an effort to find the perfect set of indicators with just the right setting to ensure long-term profitability...kind of like trying to crack a mythical code to riches in the market. I understand that's not what's being suggested here, though.

 

I'm out of here for the day...see you guys tomorrow morning!

[iwshares 10]

Conducting a trading exercise with very simple rules: 5m EUR/USD, buy/sell in the direction of the daily trend the cross of 5/20 EMA at the market, 3 lots, SL on all lots 20 points, TP1 entry +SL, TP2 a S/R swing (and stop to BE), TP3 the next swing high. Trading London 0700-1100 (but manage any open trades after those times). On trade 5/20.

 

Sold 3 @ 1.41734

SL 1.41934

TP1 1.41534

TP2 1.41335

TP3 1.41774

 

P.s. I'm aware the entry, SL and TP1 aren't necessarily S/R optimal but they are determined mechanically by the system (next time round I'll put in some entry optimising rules), with only TP2 and TP3 discretionary.

 

Update - stopped out 2 mins after posting, as I expected would happen based on S/R, but I can't filter what trades I take based on what I think will happen, just have to follow the rules and change them once the exercise is completed.

Edited September 6, 2011 by iwshares

[Cory2679 11]

Currently short the EUR/JPY...

 

UPDATE: I'm not actually doing it, but I'd like to be moving my stop tighter right now...

Edited September 6, 2011 by Cory2679

[Cory2679 11]

Currently short the EUR/JPY...

 

UPDATE: I'm not actually doing it, but I'd like to be moving my stop tighter right now...

 

UPDATE 2: As price has gotten fairly close to PT1 now, I'd like to be moving my stop tighter, but again, I'm not actually doing it...

[Cory2679 11]

UPDATE 2: As price has gotten fairly close to PT1 now, I'd like to be moving my stop tighter, but again, I'm not actually doing it...

 

UPDATE 3: Again, not doing it, but I'd like to be moving my stop tighter...

 

NOTE: I just noticed this chart makes it look like my actual stop is at break-even...it isn't. I had drawn that line anticipating going to break-even once PT1 filled, but I hadn't actually moved it yet. I forgot to delete it before I posted.

 

UPDATE 4: Had I actually been moving my stop, I'd have just been taken out for about +0.18R...(the spread popped wider for a moment on FXCM with the news and would have taken me out...as opposed to this Ninja chart where it didn't quite penetrate my level yet)

 

UPDATE 5: PT1 filled...stop at break-even...

Edited September 6, 2011 by Cory2679

[Cory2679 11]

Currently short the EUR/JPY...

 

UPDATE: I'm not actually doing it, but I'd like to be moving my stop tighter right now...

 

UPDATE 2: As price has gotten fairly close to PT1 now, I'd like to be moving my stop tighter, but again, I'm not actually doing it...

 

UPDATE 3: Again, not doing it, but I'd like to be moving my stop tighter...

 

NOTE: I just noticed this chart makes it look like my actual stop is at break-even...it isn't. I had drawn that line anticipating going to break-even once PT1 filled, but I hadn't actually moved it yet. I forgot to delete it before I posted.

 

UPDATE 4: Had I actually been moving my stop, I'd have just been taken out for about +0.18R...(the spread popped wider for a moment on FXCM with the news and would have taken me out...as opposed to this Ninja chart where it didn't quite penetrate my level yet)

 

UPDATE 5: PT1 filled...stop at break-even...

 

UPDATE 6: Once again I'd like to be tightening my stop to lock in some profits...right now the second half has the potential to retrace all the way back to entry and take me out for break-even...

 

FINAL UPDATE: PT2 filled. Full profit on this trade. Overall result was +1.59R...mediocre at best...should have gotten a better entry...or pair.

 

I think from now on I'll just mark my chart with dashed red lines for hypothetical moved stops, but not make a post each time...they'll just be visible on my next actual update.

Edited September 6, 2011 by Cory2679

[iwshares 10]

Overall result was +1.59R...mediocre at best...should have gotten a better entry...or pair.

 

You defined a set of rules and traded to those rules, therefore it was a good trade. Good work carry on.

[Cory2679 11]

Currently short the EUR/USD...

 

I'm admittedly a little concerned about the steel-blue rectangle of potential support I've drawn, but the way I see it is that the first bounce was the reaction to the support, and now we're continuing lower to break the support with my entry...I'm counting on the downward momentum that began about a week ago to take us lower...

[Cory2679 11]

Currently short the EUR/USD...

 

I'm admittedly a little concerned about the steel-blue rectangle of potential support I've drawn, but the way I see it is that the first bounce was the reaction to the support, and now we're continuing lower to break the support with my entry...I'm counting on the downward momentum that began about a week ago to take us lower...

 

UPDATE: Stopped & reversed long...

[Cory2679 11]

UPDATE: Stopped & reversed long...

 

UPDATE: Nice initial start, but it's trailing off...not very optimistic here. I'll be leaving shortly. I'm just going to let it play out on its own...full stop or full profit.

 

I was kicking myself on that first trade...basically selling support...stupid...was just too eager to be in a trade......but I felt ok going into the second trade...just kind of a choppy day...

[Cory2679 11]

Currently short the EUR/USD...

 

I'm admittedly a little concerned about the steel-blue rectangle of potential support I've drawn, but the way I see it is that the first bounce was the reaction to the support, and now we're continuing lower to break the support with my entry...I'm counting on the downward momentum that began about a week ago to take us lower...

 

UPDATE: Stopped & reversed long...

 

UPDATE: Nice initial start, but it's trailing off...not very optimistic here. I'll be leaving shortly. I'm just going to let it play out on its own...full stop or full profit.

 

I was kicking myself on that first trade...basically selling support...stupid...was just too eager to be in a trade......but I felt ok going into the second trade...just kind of a choppy day...

 

FINAL UPDATE: Stopped out. First trade: -0.89R, second trade: -0.98R.

[iwshares 10]

Really enjoying this mechanical system: I have the chance to overthink the trade but it doesn't affect what I do. Makes a nice break from my usual discretionary trading. I have changed my chart colours to be easier to the eyes.

 

Here's the chart, TP1 hit, waiting for TP2 or SL to adjust stop to BE and leave it alone.

Edited September 8, 2011 by iwshares

[Cory2679 11]

Currently short the GBP/USD...

 

UPDATE: Stopped out for -0.99R.

 

Gosh, I had an almost 2 month winning streak of all profitable weeks over May-June...what has happened?! I thought I was really getting somewhere back then...now I'm worse off than ever it seems. :doh:

 

I do feel like cutting losses played a role...maybe I was managing my trades better overall. I know I was still cutting winners, though.

 

The way I look at it is that if one knows what he's doing, one could take a 0.3R loss then take break-even on two trades that would have otherwise been losses, then over 3 losing trades one is down 0.3R...rather than 3R...10 times the loss. That's kind of what Thales used to do with cutting losses. I have not mastered that skill, though...I just cut everything. I think cutting losses is an important part of the equation...it's just I haven't managed to pull it off without cutting most of my winners...which is why, for know, I'm going to continue to let all of my trades run...to break the habit of cutting everything...then gradually start working on trying to cut losses where appropriate...the key is knowing when to hold them and when to fold them.

 

Edited September 8, 2011 by Cory2679

[iwshares 10]

Update: TP3 filled 2.61R, 1.57R net for the day. I'll try to post all the rest of the trades from this set as they happen.

[Cory2679 11]

Currently long the USD/JPY...

 

I put this trade on yesterday, but I didn't post it right after entry like I normally do because I was pessimistic and was tired of posting loss after loss...of course the first one I don't post turns out to be a least a partial winner!

 

PT1 filled, stop currently at break-even...

[Cory2679 11]

Currently long the USD/JPY...

 

I put this trade on yesterday, but I didn't post it right after entry like I normally do because I was pessimistic and was tired of posting loss after loss...of course the first one I don't post turns out to be a least a partial winner!

 

PT1 filled, stop currently at break-even...

 

I'm out of here so I won't have a chance to update this...you can follow along on your computer at home if you'd like and see what happens.

 

Here's where it is now...

[Cory2679 11]

This post will be my last activity whatsoever on Traders Laboratory for a while (including private messages)...I'm leaving Saturday for a week-long trip to the beach. I need a vacation!

 

 

[iwshares 10]

Hi Thales,

 

I've been reading through the thread from the start and it's a great read so far (pg 190 atm), so much useful stuff has gone on. A couple of years ago you were using FXCM Micro for spot FX trading. Are you still using that or have you/your daughter abandoned it in favour of another spot provider or has she moved to futures? Which futures broker are you using? You might have already given these answers but I've not read all the thread yet. Please feel free to pm me if you'd rather not these question in the forum.

 

 

Thanks

iwshares

[E-Money 10]

Is anyone familiar with this "MOFU" lines? I have seen these in several forums however, the traders using them refuse to talk about what they are or how the methodology behind it Any ideas?

[iwshares 10]

Doublepost but:

 

EUR/USD Long @ 1.36722. Stopped out very soon after entry for full stop.

[iwshares 10]

Second setup today:

 

eur/usd Long @ 1.36056

 

Also e-money, that is one indicator I've never heard of, can't help sorry, though I'm intrigued to learn about new ways to look at the markets

 

Update:

 

TP1 filled, then price dropped down to SL, -0.47 R

Edited September 13, 2011 by iwshares

[iwshares 10]

So I've made some discretionary trades while doing my mechanical trading exercise and here is an example of some bad trade management:

 

Setup was fine. However price stalled on entry, a warning sign I chose to ignore (I thought, let's give it some room - which I think was the right decision). It then then hit resistance at 77.36 and dropped back almost to entry. SL to BE, would have been an over reaction but I should have been more on the ball as to further price action.

 

The dotted lines show the H L LH setup that a) should have suggested I close my long as the price action was indicating a drop lower and b) opened a short position with the dotted lines as SL etc. Of course in hindsight TP1 would have been hit and then I'd have been stopped out before TP2 so I'd be breakeven for the day, but you never know where price will go.

 

A loss is a loss, you take it and move on. However I believe the reason I didn't - and why I'm posting this trade a day after it all happened - was I'd recently had some good winners (in terms of execution, and pips - short EU 1.4314, cover 1.3572 traded to plan) and was feeling over confident; that old demon called greed strikes again...

 

Okay, now I've got that off my chest I'm going to make dinner...

[iwshares 10]

10/20 Mechanical Exercise Trades:

 

Long @ 1.37243

 

TP1 then price pulled back halfway between entry and SL, chopped around then made a fast move up to above TP1 again, before pulling back, using TP1 as support.

[iwshares 10]

Update: TP2 and TP3 filled. Attached is chart of the completed trade and a zoomed out view to another potential TP3 point higher that I rejected for being too greedy target. As it happens price is pulling back but I thought I'd mention it to get other peoples input.

 

While it's obviously each traders personal opinion, is 60 pips on a 5m chart eur chart a sensible target? Having thought about it perhaps the reason I was hesistant is this trading system only allows stop to BE when TP2 is hit, when price action would have indicated adjusting stop to below TP2 for last 1/3 i.e. an unwillingness to give up unbanked P&L. Food for thought, the reason I'm doing the exercise