Reading Charts in Real Time

[thalestrader 14]

If I were in this trade for real, I'd move the stop loss on the whole position to 134.31.

 

I did decide to "paper trade" this in an FXCM MT4 demo account I've been playing with for the last week.

 

The little rally fizzled at 133.98, and price has made a new low, so stop loss is now 133.99

 

Take Profits are still open targets.

[thalestrader 14]

The little rally fizzled at 133.98, and price has made a new low, so stop loss is now 133.99

 

Take Profits are still open targets.

 

While not visible on a range chart, the last little rally fizzled at 133.87, and price subsequently made a new session los, so stop loss is no3 133.88.

[thalestrader 14]

While not visible on a range chart, the last little rally fizzled at 133.87, and price subsequently made a new session los, so stop loss is no3 133.88.

 

I may have squeezed the stop too tight too quick. Paper trade net $1900 demodollars. Almost hit the first profit target, as price came within 4 ticks; but my dad always tells me that "almost" only counts in horseshoes and hand grenades.

 

 

Best Wishes,

 

Thales

[thalestrader 14]

I may have squeezed the stop too tight too quick.

 

I did, I did, I did squeeze the stop too tight.

[thalestrader 14]

Here is what I consider to be a very real gap ... others would say that the gap does not exist and you can just imagine it is not there.

 

Here is how I would trade this: Sell stop a tick below first five minute low (902.75), with a stop loss above the high of the first five minutes (or the HOD is price makes a higher high prior to making a lower low).

 

I would be watchful at the blue arrow lines for signs that price was reversing, or to add to the postion on a break.

 

Will it be a profitable trade? I do not know. But I have an entry, I have a stop loss, and I have potential profit targets. Anyone can see these without needing to learn anything terribly esoteric.

 

If the gap does not begin to fill within the first 15 -20 minutes of trading, I anticipate (anticipate, not predict) that it will not fill today, and that price will close in the direction of the gap, and that there is a high liklihood of a trend day down whereby the market opens at or near its high and closes at or near its low.

 

Well this is not real time, but it is the same situation as the ES trade I posted last week on a different thread here at TL. I know there are those who deny that gaps exits, either because there is continuous trade through the globex session or because they "imagine" and "slide" price at the open back to the rpior day's close. However, I have had too much success over the years by paying attention to gaps between prior day session close and the current session open.

 

Today the ES gapped down. I was not in this morning, so I did not make this trade. My entry would have been a sell stop one tick below the first five minute low with my stop loss 1 tick above the high. The assumption would be that the market would close at he opposite end of its daily range in the direction of the gap.

 

By the time I got to my desk, price had rallied off the low, and that rally had fizzled at 887.25-888.50. I entered short at 885 and ended up covering at 880.75. The exit was not my best, but I tried to play cute with the stop and got burned. It happens.

[thalestrader 14]

The USDCHF is up against resistance. If it gets above resistance, then price likely heads for a test of 1.0954.

 

If price instead prints a low and a lower high, then a test of 1.0869-77 would be likely.

 

I'm not trading it, just making an observation.

[thalestrader 14]

Hi Folks,

 

Here is current 15 minute EURJPY worth pondering.

 

Best Wishes,

 

Thales

 

PS Courtesy of my little girl - she loves the "EuroYen"

[forrestang 10]

Just found this, this is a great thread Thales, very practical!!!

 

Will read it.

[thalestrader 14]

Just found this, this is a great thread Thales, very practical!!!

 

Will read it.

 

Thank you. I hope you find it useful.

 

Best Wishes,

 

Thales

[Dinerotrader 10]

Just found this, this is a great thread Thales, very practical!!!

 

Will read it.

 

I totally agree forestang. I keep meaning to start posting on it but get bogged down at my day job. This thread could grow huge and be even more beneficial if we can get more posting to it with. Thales' stuff alone is so good.

[BlowFish 10]

Seems that it would be a good place to post up and coming 'levels' as was discussed in the Al Brooks thread.

[forrestang 10]

I have a few questions. I would appreciate comments from anyone.

 

1) How does a trader pick the bias for going long or short....as someone mentioned in the other thread, I sometimes feel like I'm guessing?

 

2) Is it ever useful to place orders on both sides of the area of consolidation?

 

3) The actual zone to trade the breakout, does it actually have to be a rectangle of some sort?

 

4) Do you collect your levels, or do you just basically trade what you see on the screen?

 

5) Stops - do we just look for some sort of swing high or low to define these 'natural' stops?

 

6) Are breakout charts more useful than a time based charts?

 

Again, I am in agreement with Blow and Morgan, that this is an extremely useful and PRACTICAL thread. So if ANYONE has insights into the above questions, please post.

 

Forrest

[thalestrader 14]

I have a few questions. I would appreciate comments from anyone...

 

Good questions, and I'll contribute a few comments later but right now I'm short on time.

 

But I think this thread by Db is an excellent place to start re-orienting yourself to identifying S/R: http://www.traderslaboratory.com/forums/f131/support-resistance-trading-foresight-6274.html#post69836

 

I'd also recommend a look at the chart Db posted here on post #134, page 17 of the following thread: http://www.traderslaboratory.com/forums/34/all-you-need-chart-3843-17.html

 

Best Wishes,

 

Thales

[forrestang 10]

Some things I was looking at. No urgency here, just throwing ideas I have into the conversation.

 

Will post charts of the NQ.

 

I was just playing around with some playback files trying to trade breakouts. Didn't do so well. But I was pretty much looking to take a trade anywhere, no matter if it occured near significant S/R or not.

 

So stepping back looking at a time frame with less noise, i.e. the 10K CVB chart.

 

You can see I've got 3 charts to look at, 5 min, 5tick breakout chart and a 10K CVB chart. Not sure which chart between the breakout chart and the 5min chart as to which will make the best chart for intraday candidates?

 

Looking for areas of congestion/consolidation and S/R on the 10K chart.

 

Right now, price closed Friday right in the middle of that box shown. Seems like good trading conditions will occur at the extremes of the box. Will look for opportunities, which ever way they begin to develop at those extremes?

 

So in my mind, there seems to be 3 clear opportunities.....

 

IF PRICE REMAINS INSIDE THE RANGE:

There will probably be opportunities to fade the range as price finds its value vascilating in between.

 

IF PRICE BREAKS ABOVE:

If price approaches that 1427 area, and breaks above, can expect move towards the next resistance area @ 1446.

 

IF PRICE BREAKS BELOW:

If price goes below, the short term support area is 1392 (which really isn't much room to move).

 

Below that is resistance of 1388, from the 27th of may. Below that is 1377 from the 25th of May.

 

Below even farther is 1341 found around that same time frame in May.

 

I will try to catch this real time and post whilst trading if any of these conditions unfold.

 

BTW...this logic could be completely wrong, but I am just throwing ideas out there.

 

Forrest

Edited July 13, 2009 by forrestang

[thalestrader 14]

Will post charts of the NQ.

 

Hi Forrest,

 

Thank you for sharing with us. If I may ask a small favor of you, perhaps you could post each chart individually, rather than tiles on a one pane. As you have them here, it is a bit difficult for me to really focus on each individual chart.

 

Best Wishes,

 

Thales

[forrestang 10]

Hi Forrest,

 

Thank you for sharing with us. If I may ask a small favor of you, perhaps you could post each chart individually, rather than tiles on a one pane. As you have them here, it is a bit difficult for me to really focus on each individual chart.

 

Best Wishes,

 

Thales

 

No Problem.

 

I think the only chart that is needed for what I was trying to illustrate was the CVB chart which is attached by it's lonesome now. The other two were just captures of a 5min and 5tick breakout chart with no notations on them.

 

Here are the comments again for each scenario:

IF PRICE REMAINS INSIDE THE RANGE:

There will probably be opportunities to fade the range as price finds its value vascilating in between.

 

IF PRICE BREAKS ABOVE:

If price approaches that 1427 area, and breaks above, can expect move towards the next resistance area @ 1446.

 

IF PRICE BREAKS BELOW:

If price goes below, the short term support area is 1392 (which really isn't much room to move).

 

Below that is resistance of 1388, from the 27th of may. Below that is 1377 from the 25th of May.

 

Below even farther is 1341 found around that same time frame in May.

Edited July 13, 2009 by forrestang

[forrestang 10]

THings changed as I was typping this. Rushing to get this chart in.

 

I saw resistance at about 1400.00, where price started to make HH and HL. Took the breakout anotated on the chart...... I AM NOT TRADING THIS.

 

But this is my right edge read.

 

As I was annotating chart, things picked up, stop not adjusted yet. But target is right in front of 1420.00

 

-------EDIT-------

Didn't want to clutter up the thread with another post. But here is the latest developement with a slightly better chart. Stop adjusted twice so far on two swing lows. Currently two points from target.

Edited July 13, 2009 by forrestang

[forrestang 10]

Target hit.

 

Probably a crappy trade, only approx 10 NQ points which is barely a scalp.

 

Hopefully this will make more sense to me shortly.

[thalestrader 14]

Target hit.

 

Probably a crappy trade, only approx 10 NQ points which is barely a scalp.

 

Hopefully this will make more sense to me shortly.

 

Looks like an excellent trade to me, Forrest. I do not know what size you trade, but, if you trade, say three lots, you might consider something like this:

 

Take Profit on 1 contract at first support/resistance.

Continue to trail stop on 2nd contract, with a take profit limit order at the next support/resistance.

Let 3rd contract run with a BE stop, MOC, or if price gives you an opportunty to stop and reverse.

 

Just suggestions, of course, and there is no right or wrong. I just thought I'd throw it out there.

 

I thought your posts and the trade well done. Thank you for sharing with us.

 

Best Wishes,

 

Thales

[forrestang 10]

Thanks for the encouragement Thales, I appreciate it!

 

I have an appointment in the early morning so I will miss the a.m. action. But here are muy comments and observations. Please point out any shortfalls or things I'm bringing up that may be off.

 

For NQ tommorrow:

 

We closed at 1441, AFTER reaching the 1446 level that was noticed yesterday.

 

The two purple arrows are the areas price will travel to reach the next level of S/R, potential profit targets.

 

So depending on where the open is, if we get a breakout opportunity, to either side of that green line, we would expect price to potentially reach 1466 to the upside or 1427 to the downside.

 

IF ABOVE THE 1446 AREA:

This seems to have more potential to move, as price has not established as much consolidation as the downside, and a move towards 1496 seems more likely to happen. Once a breakout occurs above 1466, a move to 1485 seems likely.

 

IF BELOW THE 1446 AREA:

Price should move towards Support at 1427. If a breakout occurs below 1427, expect price to vacilate within the consolidation area as price attempts to find it's fair value. As mentioned yesterday, fades of the extremes could be profitable?

Edited July 14, 2009 by forrestang

[thalestrader 14]

here are my comments and observations. Please point out any shortfalls or things I'm bringing up that may be off.

 

Forrest, you certainly lok as though you are on your way. Also, I highly recommend the posts from yesterday by cowseathay, atto, and DbPhoneix located in this post: http://www.traderslaboratory.com/forums/131/trading-wyckoff-way-5097-11.html

 

Best Wishes,

 

Thales

[Dinerotrader 10]

Looking for a breakout but trying to keep stop tight as market overall isn't trending heavily upward.

 

 

Update: Bought at 6.99 at ~9:08.... will post another chart as it progresses

 

Update 2 9:33: Here is where we stand. Sorry for all the lines. Just trying to visualize the channel as it progresses to see if it gives me any clues how it will trade.

 

Edited July 14, 2009 by Dinerotrader

[Dinerotrader 10]

Well, I stopped out at a $.03 loss. I increased my stops as things progressed because I figured if those levels were breached, the channel would be broken and things would just head south. A trade like this seems more likely to be profitable in the 1st 3 hours of the market when volumn has more chance to make something like this really move.

 

 

[thalestrader 14]

Well, I stopped out at a $.03 loss. I increased my stops as things progressed because I figured if those levels were breached, the channel would be broken and things would just head south. A trade like this seems more likely to be profitable in the 1st 3 hours of the market when volumn has more chance to make something like this really move.

 

Yes, often times the greatest % of the extent of the day's move is completed with the first 90-120 +/- minutes of the open. Also, I usually leave the lower priced stocks alone except for when the overall market is in the middle of a rip roaring rally off of an important low. Since mid-Mayor so, it has been better to limit yourself to stocks at least $20/share. I actually prefer $50+. Also, liquidity has been getting harder and harder to come by - if you're trading a few hundred shares it will not matter much. But if you are trading thousands of shares, it will atter a great deal.

 

It has been tough finding decent candidates offering the type of opportunity I like: 1) A strong gap open above resistance or below support with a lot of "middle of nowhere" between where it opens and the next R/S and that 2) extends in the direction of the gap, immediatley or soon after a brief pullback.

 

Sometimes, you have to wait all morning and into the afternoon for the move to extend, as the stock "bases" throughout the morning. It is not uncommon to find what is typically known as a "cup" or "cup with handle" base forming on these 5 minute stock charts, either after the inital gap, or after the rally extends above the gap. The breakout above the proper buy point in the base often occurs after 1:30-2:00 pm, and it can result in quite a gain in a short period of time.

 

Here is the chart of NOC, an imperfect, yet profitable example from today.

 

First buy point was approx. 44.65, second buy point approx. 45.10, for +$0.54 and +$0.09. The consolidation that took place as price more or less rode the 20 ema higher is, as I said, an imperfect example.

 

The real take away though, is that higher priced issues tend to move more than lower priced issues. I have done well on occassion with lower priced issues (a trade in Office Depot comes to mind), but the 50-300 penny moves will ussually be in the $50+ stocks.

 

Best Wishes,

 

Thales

[Dinerotrader 10]

Thanks for input Thales.

I wasn't super excited about the setup of the trade but I wanted to at least get myself rolling on practicing reading the "right edge".

I need to start managing other people's money so I can trade those $50 stocks in 5,000 share lots.

 

Do you simply scroll through the highest percentage gainers and losers on the S&P to find potential setups or do you use some other type of filter to look for these before they breakout?

 

Do you use Worden Telecharts to find these setups at the end of the day to analyze how they would have traded if you had found them?

 

I'll try to get some futures trades posted real time in the coming days.

 

Cheers.