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thalestrader

Reading Charts in Real Time

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In an effort to learn from the breakout masters here. I'm posting a USD/JPY trade idea from my FXGame account. The 15m chart shows the limit sell order (orange) and 2 profit targets set into the market, each for 1/3 of the position. The stop is just on the other side of that small range we see on the 15m at 90.43. The long term daily trend is down as can be seen from the other screenshot. I'll update more if it gets filled.

5aa70f4bd911a_MK01_03_Nov_2009.thumb.png.94c6f97d3a0dd351e71bd38eadcba523.png

5aa70f4be0a9a_MK02_03_Nov_2009.thumb.png.6cfe13ef4132881f5884f36723cdcf2f.png

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Quick look at the 6J.

Looks like a reasonable breakout level given past price reactions to it. The quick move up that that level always worries me. If the move up to the S/R level is large and fast, it seems like a lot of the momentum is already used up by the time we get the breakout. I would rather have tight price action just below the breakout point and then have all the momentum stored up for when the breakout occurs.

 

Thales, do you prefer a certain type of price action sequence just before a breakout?

 

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5aa70f4be8791_11-2-20097.thumb.png.d1c0c84840ef7d0a72aabf649e3eaebe.png

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In an effort to learn from the breakout masters here. I'm posting a USD/JPY trade idea from my FXGame account. The 15m chart shows the limit sell order (orange) and 2 profit targets set into the market, each for 1/3 of the position. The stop is just on the other side of that small range we see on the 15m at 90.43. The long term daily trend is down as can be seen from the other screenshot. I'll update more if it gets filled.

 

Gabe is going to love your charts.;)

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I would rather have tight price action just below the breakout point and then have all the momentum stored up for when the breakout occurs.

 

Thales, do you prefer a certain type of price action sequence just before a breakout?

 

I have no preferences, as a break is a break is break to me. However, there is something to be said for a strong move such as you show on the 6J up to a resistance level, followed by tight price action (perhaps for several bars). But I have learned over the years not to make moral judgments about price action. This is simple stuff - do not over think it. For example, where does the notion that that a quick move might "use up" the "momentum" necessary for the break out come from? Did I ever say that? If I did, I plead temporary something or other. I hope I never said that, or else take me out back and shoot me.

 

Best Wishes,

 

Thales

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3 hour chart of gbp/jpy looks good to me. There is enough 'air' for a move either way, especially to the downside. I'm not sure which one someone would use for a downside break. I thought the upper line was more 'valid' and could take some profits near the spike low....but I don't know. Any thoughts?

5aa70f4bf1979_MK03_03_Nov_2009.thumb.png.ae798c00c1949c823d644cd09edfdbcf.png

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I have no preferences, as a break is a break is break to me. However, there is something to be said for a strong move such as you show on the 6J up to a resistance level, followed by tight price action (perhaps for several bars). But I have learned over the years not to make moral judgments about price action. This is simple stuff - do not over think it. For example, where does the notion that that a quick move might "use up" the "momentum" necessary for the break out come from? Did I ever say that? If I did, I plead temporary something or other. I hope I never said that, or else take me out back and shoot me.

Thales

 

Nope, you never said that. Those were my own ideas in trying to interpret price action. So many fail at trading breakouts that my hope would be to add some notions of "statistical advantage" in deciding whether to take a breakout or not. Somehow you have to filter through every breakout you see in order to just take the best ones. I am still on that journey.

 

I will try not to over think it though. I really wish it were simple.

Thanks.

Edited by Dinerotrader

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3 hour chart of gbp/jpy looks good to me. There is enough 'air' for a move either way, especially to the downside. I'm not sure which one someone would use for a downside break. I thought the upper line was more 'valid' and could take some profits near the spike low....but I don't know. Any thoughts?

 

I still suck at this but I would pass on a breakout to the down side because of the one large down bar unless I was looking at a smaller time frame with a much smaller breakout profit target. My :2c:

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Thanks for the comment Dinero.

 

I'm a forum posting machine this morning. Here is another one I liked. GBP/CHF. This one is filled (by the orange triangle) with a stop on the other side of the range. We'll see how she goes....

5aa70f4c5b05d_MK05_03_Nov_2009.thumb.png.ab0a660ad6e2f60b672eb62d4fef11eb.png

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Thanks for the comment Dinero.

 

I'm a forum posting machine this morning. Here is another one I liked. GBP/CHF. This one is filled (by the orange triangle) with a stop on the other side of the range. We'll see how she goes....

 

Pretty much filled me at bottom tick, not looking so good.

5aa70f4c64d17_MK06_03_Nov_2009.thumb.png.83c9b27c0e25ffadf068626295a1b235.png

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In an effort to learn from the breakout masters here. I'm posting a USD/JPY trade idea from my FXGame account. The 15m chart shows the limit sell order (orange) and 2 profit targets set into the market, each for 1/3 of the position. The stop is just on the other side of that small range we see on the 15m at 90.43. The long term daily trend is down as can be seen from the other screenshot. I'll update more if it gets filled.

 

Shorts canceled on USD/JPY, once Tokyo opened, the market decided to go up.

5aa70f4c6f842_MK07_03_Nov_2009.thumb.png.7a4f80061c9614b85ff260aaa8700199.png

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So many fail at trading breakouts that my hope would be to add some notions of "statistical advantage" in deciding whether to take a breakout or not.

 

Perhaps you ought first to consider why so many fail at something so easy. You are looking for a solution without first knowing the problem.

 

Somehow you have to filter through every breakout you see in order to just take the best ones.

 

This thought has me worried for you. It seethes danger. Banish from your thought the concept that trades must be "filtered." You will end up with the many who fail. Guaranteed.

 

I will try not to over think it though. I really wish it were simple.

 

It really is that simple, though. Don't be like me and take ten years to accept this fact.

 

Here is a suggestion (and this isn't just for you, Dinero, but anyone who wants to learn to trade price without using indicators and opinions and conjectures and unsubstantiated and unnecessary theories): Why not take a week, and watch a 15 minute chart of the EURJPY or the EURUSD or the 6J or the 6E, and just focus on what happens if you bought the break up of every low-high-higher low-higher high pivot sequence and sold short every high-low-lower high-lower low pivot sequence.

 

Just mark off the high and low pivots, and make it mechanical if you'd like: Buy stop above a high, with an arbitrary 15 or 20 tick stop loss, and a 30 tick Profit target. Just go ahead and see how you do. Paper trade it - as I stated elsewhere, paper trading is marginally useful, and here is an example of where it can be useful.

 

If you do this for a week, you will learn to read price action in a way that will put you solidly on track to where you want to be. One week. You should mark each high (H) and each low (L) and when the market turns, you should have an (H) pivot, followed by an (L) pivot, followed by a Lower High pivot (LH) followed by a Lower low (LL). If price makes a high and pulls back to a low and then rallies to the exact high tick of the previous high and then begins to pull back, consider that a Lower High unless it is bettered (and vice versa for two equal lows).

 

I did it to my chart for the last couple of days so you can see what I mean (I did this quickly so if I made an error let me know and I'll correct it). This is it - this is the big secret. My currency trading friend always says "its all about highs and lows, higher highs and higher lows, lower highs and lower lows, and support and resistance."

 

Try this for one week. Post your chart at the end of the day here and if you have any questions I'll help you. I'll help anyone here who will put in the effort and post his or her chart (I prefer not to do this through PM as this should be individual efforts that benefit all of us as a group). I would bet that anyone who does this for one week will, after that week, have much more confidence in his or her ability to watch price and determine whether to buy, sell, or wait. I'd bet even Gabe would be willing to shed his MA's forever.

 

Best Wishes,

 

Thales

5aa70f4c75f0a_ThalessSecret1.thumb.jpg.3c6a727de541ab5e9aba5f8acbd94ee7.jpg

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How you doing now?

 

Best Wishes,

 

Thales

 

Doing better, but still not hit my close first scale. What has been hard here is the duration of the trade. I don't know how many times I've said to myself "this trade is over". In the chart, you can see the horizontal red line, that is my stop. I have moved it 10 pips beyond the last swing high just below 1.6760.

5aa70f4c7f6c6_MK08_03_Nov_2009.thumb.png.58fc48108f751b0466055c50436d9a72.png

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Current look at the EURUSD - No need to filter. You take your swings. Most of the time you will reach base. Sometimes you hit a home run, maybe even a grand slam. Other times, you strike out.

 

Best Wishes,

 

Thales

5aa70f4c84f97_11-02-2009EURUSD1.thumb.jpg.76fe4c8ab38a50b9e324ed3b19539c86.jpg

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Perhaps you ought first to consider why so many fail at something so easy. You are looking for a solution without first knowing the problem.

 

I try to spend a lot of time considering why so many fail and there seems to be a handful of various reasons that are apparently very hard to overcome since, like you said, most fail. I will try to think through this more and post a concise answer.

 

This thought has me worried for you. It seethes danger. Banish from your thought the concept that trades must be "filtered." You will end up with the many who fail. Guaranteed.

 

I understand what you mean in some ways but in general, the act of filtering trades is fundamental to having a reasonable entry point. I wouldn't think you would recommend anyone enter at random points on a chart (even TRO filters his trades) and just try to manage your way into a reasonable trade.

You would suggest, as you did in your post, that you find a "L, HL, LL" sequence of price action which would give you better odds for the price going the direction of your entry. So I suppose you are saying that there is a balance between random entry points and trying to determine a "holy grail" entry point which you need to strike and you appear to be suggesting that the "H,HL,HH" sequence is enough to get you the edge and further "filtering" will not only be a waste of time but it will likely keep your from taking profitable trades. Let me know if I am following you correctly or if I am way off.

 

I will work on taking your challenge of posting a chart each day, for a week of the EUR/JPY. I will do my best to do this each day.

 

Thanks.

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Finally a little love on this gbp/chf short. Been over 4 hours so far. 1/3 has been exited for an average gain of 25 pips. The horizontal red line is my stop sitting at BE. I gotta say, this has been a very humbling experience though as at least a dozen times (probably more) I was sure the market wouldn't go any lower.

 

Any comments on this entry, too aggressive? range not picked well?

 

With thanks,

MK

5aa70f4c8dcd5_MK09_03_Nov_2009.thumb.png.aebc91b37f86e64facd646fd30a8ef81.png

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Current look at the EURUSD - No need to filter. You take your swings. Most of the time you will reach base. Sometimes you hit a home run, maybe even a grand slam. Other times, you strike out.

 

Best Wishes,

 

Thales

 

Price dropped to within 2 ticks of the first profit target, and reversed for a breakeven effort.

 

It may still go to target(s) but I went to BE at 1.4776 - a simple plan.

 

Best Wishes,

 

Thales

5aa70f4c946e2_11-02-2009EURUSD5.thumb.jpg.1aa0a8b9b6989934b569987fe91e7363.jpg

5aa70f4c9a803_11-02-2009EURUSD6.thumb.jpg.4df74ce0c48f40aa2a9b69f1a89af8e5.jpg

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Finally a little love on this gbp/chf short. Been over 4 hours so far. 1/3 has been exited for an average gain of 25 pips. The horizontal red line is my stop sitting at BE. I gotta say, this has been a very humbling experience though as at least a dozen times (probably more) I was sure the market wouldn't go any lower.

 

Any comments on this entry, too aggressive? range not picked well?

 

With thanks,

MK

 

You set your entry, your stop, and your targets - a simple plan. You should be very pleased. As my good friend often likes to say, there are folks who trade all week long and can't manage to make a 25 pip profit for all their effort. Congratulations.

 

What was your initial risk?

 

Best Wishes,

 

Thales

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Cheers Thales. My initial risk was 34 pips. I felt that maybe I entered a bit aggressively by using the wrong range. You can see from my latest post that I entered basically at perhaps a more significant low and maybe that instead should have been the breakout point. As can be seen now that it has happened, once it did finally break this other low, it kept dribbling down and has yet to come back within that range.

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Thales - great charts. As a lurker here, up until you showed charts w/ those labels, it didn't really click for me. Now it does and if you can get this simple mind around this, just about everyone here has some hope. ;)

 

If post of the month was still going, you'd have my vote hands down.

 

Question: have you tried to automate those H, L labels? Seems like something that could be done. Maybe you have already...

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I think your entry was fine (I assume you entered at 1.6842 or so). I think you could have used a stop loss above 1.6857 instead of above 1.6874.

 

Best Wishes,

 

Thales

 

OK, I see where you mean - thanks. Had I done it with a stop like that, the R/R could have actually been decent, even at the first target hit. You are nearly correct in your assumption, the entry was 1.6744 (you type 1.68xx, I thought that must be a typo). The trade is still going...hasn't done much and is coming up on the 8 hour mark. Longest hold I've done in years ;)

 

With kind regards,

MK

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