Reading Charts in Real Time

[Kiwi 16]

I would comment on Midknight's chart and the final stop at 4hr resistance.

 

1. Yes the resistance is there so you could have either had a bounce (likely as its the second test of a zone that has a strong thrust previously).

2. When it did test you got very strong rejection over 30 minutes. A 30 min pinbar.

 

I think three strategies suggest themselves.

 

1. Preferred. On first or second approaches to strong 4 hour support just put in a limit exit like your early 15m support limits. Then if it breaks, sell the breakout of a bar that closed through???

 

2. Wait for PA and exit on break of the synthesized 30m pin bar (fast rejection of price).

 

3. This would suit 3rd or 4th touches of the support: just play it out as you did.

 

Option 3 has the merit of being simple and uncomplicated but I think Option 1 would be good as well given you are already exiting on S&R. You just need to make a rule so that you are not swinging in the wind when the decision time comes (zero stress).

 

I suggest applying Seiden's criteria to the 4 hour break and if it looks strong, exiting on the first two touches and holding for 3 and 4.

[thalestrader 14]

Thales,

 

Do you find much difference in the success of these simple breakout trades between the asian-euro-US market hours?

 

No, not really. Price is price no matter what time of the day or night. However, if you eyeball currency charts, the best moves occur around the Frankfurt and London opens, followed by the New York open, and then by the Tokyo open. Of course news releases also produce good volatility and range expansions. The Asian sessions seem to produce a disproportionate number of tight ranging periods, which of course explains the success of those breakouts that occur during the early hours of the European session (price cycles between periods of rest (range contraction) and volatility (range expansion). Europe and New York tend to be periods of volatility, while late New York and early Asia serve as periods of rest.

 

Tha being said, if you have watched this thread for a while, you will no doubt see that Asia does offer plenty of opportunties to profit from price changes as well. Therefore the best approach is to accept that price is going to act like price, regardless of the time of the day, so trade accordingly.

 

Best Wishes,

 

Thaels

 

 

Having thought about this a bit, I realize that I rarely am willing to enter a new currency trade after 2-2:30Pm EST, and almost never between 4PM EST and 7PM EST except on Sundays, which can be very good during Sydney and pre-Tokyo.

 

Best Wishes,

 

Thales

[MidKnight 12]

Thanks for the comments Thales and Kiwi. I'll be thinking more about the exiting as going forward. Both brought up some good points. I was pleasantly surprised to get a positive result on the 2 trades from yesterday because as I mentioned earlier, my previous experience with breakouts as a newb 5 years ago was brutal. Maybe this can start to change my perspective on that. So far so good!

 

I probably should have exited heavier at the 4 hour chart low test that I termed a false break. Maybe even scaled out lighter in the first 1/3 area and heavier in the second 1/3 area. Part of the reason why I was willing to let it come bounce back and give away all those pips on the last 1/3 was because it was with the general daily trade direction. Definitely more study required for me on this, but getting my feet wet in real-time is helpful, I think.

 

While sleeping I got taken out of the usd/jpy trade at BE as well. Only managed to hit 1/3 of my 1/3 scale outs. Probably too greedy on those. I was trying to squeeze out every tick on them because the entry felt too close to the first support area. I'll get better at this over the weeks ahead.

 

Here is the usd/jpy result.

[Dinerotrader 10]

GBPUSD - breakout

Started breaking out as I was annotating.

[Dinerotrader 10]

EURUSD

I am not sure of the correct H/L protical when it looks like the trend might reverse off resistance.

[thalestrader 14]

GBPUSD - breakout

Started breaking out as I was annotating.

 

Another view of the GBPUSD ... you identified a breakout, though perhaps not one of the significance for which you are looking, and if you were to look closely, the short at the degree which you are looking at would have been two bars earlier.

 

Best Wishes,

 

Thales

[Dinerotrader 10]

Another view of the GBPUSD ... you identified a breakout, though perhaps not one of the significance for which you are looking, and if you were to look closely, the short at the degree which you are looking at would have been two bars earlier.

Thales

 

I see what you mean. I tried to get the swing sizes right on this one. I suppose if a triangle is forming you would surpass taking a trade since your breakouts are now going to run into recent swing tops on both sides?

[MidKnight 12]

Just got long (demo account) aud/jpy at an entry of 81.35. Targets are set for 75% of the position. I'll be trailing by 30pips until BE is hit once price gets to 81.50

[Kiwi 16]

Jeepers Midknight.

 

You're beginning to look like a breakout trader.

 

 

For the record, Peewee managed 3 losing trades this morning. Interesting; a fair way off its biggest losing streak though. Now working on a new scalper system called Cheeta.

[forrestang 10]

Did anyone catch any of these?

[MidKnight 12]

LOL Kiwi - ya never know, maybe I am starting to like this!

 

Yes I got a little of this yen cross movement, forrestang. Update on the AJ trade here. A few hairy moments for me, was 'certain' I was going to get stopped out in that tight cluster just after entry. Proven wrong again. Hardest part for me with this is sticking to the simple plan. Because the duration is so much longer than I am used to, I feel out of control or that I 'know' what's going to happen next. Stuck with it so far and its worked well. Stop is sitting at 81.40. Exited out of 6/10 of the original position. Just in wait and see mode now....

 

As an aside, I was thinking of doing an add somewhere, but where I was going to do one was at the 81.60 area but instead I had targets still unfilled there. Hmm, so I guess if doing the adds, probably need to stretch out targets or be more confident in a decent favourable move.

[MidKnight 12]

Sorry to spam the thread, just one more update before going to bed. Have entered a long on NZD/USD based on the 3 hour chart. I'm not sure if this was a good idea as you can see by the horizontal line I place on the trade it was entered below the spike. I felt this was the more important level to break rather than the spike. Any comments from the BO masters is welcomed. This trade has a 77pip stop. 1/2 the position will be covered if those 3 targets get filled. At that point, I will move to BE. This trade management feels too simple. I have a habit of making things complex. Is it needed? Maybe a trailing approach, but I've never been good with trailing in the past. Any thoughts?

 

All my best,

MK

[thalestrader 14]

I suppose if a triangle is forming you would surpass taking a trade since your breakouts are now going to run into recent swing tops on both sides?

 

Triangles? What is this? Geometry class?

 

I meant to post this last night but I had an emergency that I had to take care of and never got back to the computer.

 

The notes on the chart should be clear enough EDIT: Note on chart should read price is NOW is the proverbial chop zone. .

 

Best Wishes,

Thales

Edited November 4, 2009 by thalestrader

[thalestrader 14]

EURJPY from last night, hit both targets, so we were flat for most of the run.

 

Best Wishes,

 

Thales

[MidKnight 12]

Triangles? What is this? Geometry class?

 

I meant to post this last night but I had an emergency that I had to take care of and never got back to the computer.

 

The notes on the chart should be clear enough EDIT: Note on chart should read price is NOW is the proverbial chop zone. .

 

Best Wishes,

Thales

 

That was probably one of my flaws with my early BO trading experiences. Thanks for this post.

 

With kind regards,

MK

[Gabe2004 10]

Triangles? What is this? Geometry class?

 

I meant to post this last night but I had an emergency that I had to take care of and never got back to the computer.

 

The notes on the chart should be clear enough EDIT: Note on chart should read price is NOW is the proverbial chop zone. .

 

Best Wishes,

Thales

 

For anyone who is saving Thales' charts, here is the one with the correct annotation.

 

Gabe

[MidKnight 12]

Closed the aud/jpy trade this morning when I got to the PC. Not a very 'systematic' exit. Once I saw that it was getting a decent reaction from resistance on the 60m chart then I exited with the idea that I may try again to the long side after some downward movement. The initial risk was 33pips and the average exit turns out to be at 67.25 pips. So roughly a 2:1 reward for the risk. Overall I'm quite happy about this one, mainly because I resisted so many urges to exit and end up cutting this winner short.

[MidKnight 12]

sold the drop here on GBP/USD (demo account). Short from 1.6537 with a stop at 1.6567. First target for 25% of the trade is at 1.6507. The next set of targets below will lay off 50% of the position. I'll move to BE once the first target is filled.

[thalestrader 14]

sold the drop here on GBP/USD (demo account). Short from 1.6537 with a stop at 1.6567. First target for 25% of the trade is at 1.6507. The next set of targets below will lay off 50% of the position. I'll move to BE once the first target is filled.

 

Looks like you made your first profit target. You seem to be doing well lately.

 

Best Wishes,

 

Thales

[MidKnight 12]

Looks like you made your first profit target. You seem to be doing well lately.

 

Best Wishes,

 

Thales

 

Beginners luck mate Yep, that one is hit and I'm at BE. I'm trying to just take the really obvious stuff and I'm totally amazed it is working. I need more trades under my belt to see just how lucky I have been. All feels good so far, thanks a lot for the sharing of information. I'd probably not be re-visiting this style of trading now if it wasn't for your posts in this thread. Any critique is warmly received if something looks off. I'm a rookie with the breakouts. Don't worry about my feelings, I am thick skinned (and thick skulled too, so I've been told) - See :crap: no pain at all

 

With kind regards,

MK

[thalestrader 14]

Beginners luck mate... I'm trying to just take the really obvious stuff and I'm totally amazed it is working. I need more trades under my belt to see just how lucky I have been.

 

Great Work!

 

Just keep it simple and keep using your eyes, not your brain. I have quite a few trades under my belt, and the more I trade the luckier I get. I too am still able to be somewhat awestruck from time to time with how well this works.

 

Best Wishes,

 

Thales

[MidKnight 12]

Sorry to spam the thread, just one more update before going to bed. Have entered a long on NZD/USD based on the 3 hour chart. I'm not sure if this was a good idea as you can see by the horizontal line I place on the trade it was entered below the spike. I felt this was the more important level to break rather than the spike. Any comments from the BO masters is welcomed. This trade has a 77pip stop. 1/2 the position will be covered if those 3 targets get filled. At that point, I will move to BE. This trade management feels too simple. I have a habit of making things complex. Is it needed? Maybe a trailing approach, but I've never been good with trailing in the past. Any thoughts?

 

All my best,

MK

 

Just was stopped out of this trade. I managed to get the first target filled while sleeping but then it came back to take me out. Looking at this 3 hour chart, I can't see much else to do about it. Should I have tightened up the stop? Was I right to give it breathing space? In real-time, I thought it hasn't showing me a LH so I'll stick to the original stop. The scale out reduced my risk from an initial 77 pips to an average loss on the trade of 57 pips. A decent result for hitting my initial stop - 74% of my initial risk. Sure, I could have dropped down to smaller time frame but I'd like to stay away from that as a solution, otherwise I will continually get shaken out of decent winners.

 

With kind regards,

MK

[MidKnight 12]

sold the drop here on GBP/USD (demo account). Short from 1.6537 with a stop at 1.6567. First target for 25% of the trade is at 1.6507. The next set of targets below will lay off 50% of the position. I'll move to BE once the first target is filled.

 

Trailing stop was hit on the short GBP/USD. Got 1 scale out for 25% of position and stopped on the remainder for a 17pip gain. Total result was an average gain of 20 pips. I moved the stop from BE to 1.6520 as the thinking was if the market rallied back up 50pts, then how likely is it to go down and hit my lower targets. I thought it wasn't so likely and could just as easily keep going up beyond that last LH.

 

Bit of a bugger, near its peak I could have exited the entire thing for a total position R:R of 2:1. Instead via trailing it and looking for more, I ended up with less than 1:1.

[thalestrader 14]

Just was stopped out of this trade. I managed to get the first target filled while sleeping but then it came back to take me out. Looking at this 3 hour chart, I can't see much else to do about it. Should I have tightened up the stop? Was I right to give it breathing space? In real-time, I thought it hasn't showing me a LH so I'll stick to the original stop. The scale out reduced my risk from an initial 77 pips to an average loss on the trade of 57 pips. A decent result for hitting my initial stop - 74% of my initial risk. Sure, I could have dropped down to smaller time frame but I'd like to stay away from that as a solution, otherwise I will continually get shaken out of decent winners.

 

With kind regards,

MK

 

Hi Midk,

 

First, from what I have seen of what you have shared with us over the last few days, you are doing very well, and I am very slow to offer anything by way of suggestions because I do not want to derail your nascent success.

 

As far as your NZDUSD trade, I did not see your entry as an opportunity. On the time frame you posted, I saw a lot of overlapping price movement, and nothing draws my eye to a point where I would say, "I want to get long of this market."

 

When I say use your eyes, not your brain, I am not trying to be "clever" or funny - I am telling you exactly how I operate. I remember a line from the Ed Seykota interview in Market Wizards where he says that he can look at a chart hanging on a wall from across the room and he can tell you what your position should be. I am very much in agreement. I see opportunities, and I just do not see one where you saw one.

 

I think you understand what I am saying. In a previous post you mentioned you are just taking the most obvious trades and you are amazed that it is working. The obvious ones are the ones you see - I know you know what I mean. Others who are not there yet will not be able fully to appreciate how visual this is.

 

One other thought as far as trade management: I try to participate in those opportunites where a likely first profit target will be equal to or greater than my inital risk. I would not risk 77 ticks for a 17 tick target. I take 1/2 of the position off a that first profit target, and then I can either move my stop to breakeven, assuring a profit on the trade, or keep my initial stop and let the remainder run, thus assuring a breakeven or slght profit for the trade. But that is me. You need to experiment and see what works for you psychologically and emotionally. For me, I do not like to lose, but even more I do not like to get stopped out and miss a nice run. The way I manage most of my trades lets me minimize my losses while keeping me in a trade for most (though not all) of the runners.

 

Best Wishes,

 

Thales

 

EDIT: Also, I almost always have a price level that is closer to my entry than my first profit target, and if that level is reached, I move to break evn.

Edited November 5, 2009 by thalestrader

[Kiwi 16]

A comment and a question on the NZD and GBP trades.

 

Comment to MidKnight: both of these trades seem to me to be counter to the larger time frame trend (HHHLs) and stopped working when the larger time frame reasserted itself.

 

Question to Thales: do you agree and do you tend to take trades against the next timeframe up? And if you do, do you require more range to your targets (or any other multiplier?)