Reading Charts in Real Time

[MidKnight 12]

Hi Thales,

 

I appreciate the comments. I see your point on that nzd/usd trade. I was probably over fixated on the larger daily trend and thought that taking out a minor high on the 3 hour chart would be resumption of trend and off to the races.

 

Throughout my trading development, I have had instances where I do see the market really clear and obvious things jump out at me. I'm being patient, and just wait till I see it. Then for some reason usually after some success, I lose that clarity and things that are more obscure seem obvious. It's overconfidence. I usually need to be humbled again to regain that clarity. Hopefully as my experience continues, I can work on eradicating this cycle.

 

Good comments regarding the trade management. I will continue to experiment in this area and apply various scenarios over the weekend.

 

 

Hiya Kiwi,

 

I actually have all my trades as being with the larger time frame trend (to me that is daily chart). That's the beauty of 'trend' though, you can always find one time frame in agreement with trade direction

 

Thanks a lot for the comments and questions. It all helps me learn something.

 

With kind regards,

MK

[thalestrader 14]

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?)

 

As these are day trades that typically last a just few minutes to a few hours, I am not so much concerned with a higher degree trend. I am concerned with were price is in relation to support and reistance levels. So while I am usually on a 15 minute timeframe or lower, for entries and exits, I will check 4 hour, daily, and weekly to see if there is any nearby S/R of which I should be aware, e.g. MidK's GBPCHF short yesterday dropped to a support level that was clearly visible if one looked back a few days, but which was not shown on MK's trading chart and thus he mistook a probe to test that support as a false breakout on his trading chart.

 

Best Wishes,

 

Thales

[Kiwi 16]

Ahhh ... ok.

 

That's where we disagree MK. To me, the reason for larger timeframes is either:

- for support and resistance and any timeframe works here (daily, weekly, 4hr etc)

- for trend and here I think you want the one in which the next level of trend exists.

 

That second part means that to me, daily would be a good higher timeframe for the overarching trend on 4 hourly and maybe hourly trades (6x and 24x respectively). But on a 15m trade I think that hourly or 4 hourly would be more appropriate (4x and 16x respectively. So I'd look at (say) the hourly and ... hmmm ... I need to do pictures or this isn't adding to anyones education, mine included. I shall come back to this in an hour with a couple of pictures for the NZD and GBP trades properly annotated.

 

Hopefully that will make my point (lol, or prove me wrong as my system trading tests have done repeatedly).

 

Note: thanks for your comment too Thales as it appears you use the 1st reason as your main driver for a higher timeframe.

[Kiwi 16]

OK.

 

It is interesting looking at what MK and Thales are doing at the same time as I am trying to fully automate. Increasingly it seems to me that Automations strength is in taking advantage of either trends or patterns. And the human's advantage is in taking advantage of Support and Resistance.

 

Now, a smart guy by the name of Sam Seiden, who trades pullbacks into S&R uses the concept of odds enhancers to decide which ones are worth trading. One of them is strength of the initiating move (impulse), another is the shape of the S&R the move came from, another is how far to the next Very High timeframe S&R (daily here perhaps or 4 hr min). The other major is Big picture trend.

 

I'd say that in this case the VHT S&R supported the trades but gave warning areas in the GBP case. But in both cases the trade was against the long timeframe trend. And if you look at Thales' trades with both a 15m and 4hr chart open you'll see that when there is a clear trend (move) on the 4hr then its much easier to make money out of the 15m breakouts.

 

So here are MKs ones from yesterday (with the benefit of my perfect 20/20 hindsight).

 

 

 

 

Warning Warning ... Kiwi is inclined to trade with the trend so he might just be pandering to his own biases.

[Gabe2004 10]

We rarely see setups that failed.

I would like to post during the next several days, setups that would have failed had one taken the trades.

Please comment as to why a setup failed and whether it was a valid setup in the first place.

 

Thanks

 

Gabe

 

PS Red is a potential short and green a potential long.

[Gabe2004 10]

We rarely see setups that failed.

I would like to post during the next several days, setups that would have failed had one taken the trades.

Please comment as to why a setup failed and whether it was a valid setup in the first place.

 

Thanks

 

Gabe

 

PS Red is a potential short and green a potential long.

 

Just had an idea about the above.

If one looks at a pair that behaves largely like the EJ - GJ in this case - one can see a divergence between the two.

Maybe that would alert the trader that things are not as they seem to be.

 

Gabe

[MidKnight 12]

Good post Kiwi, the pictures help. I'm starting to become more inclined to just trade off the 15m chart but look at the 240m as a target and scale-out (even adding?) size adjustment factor. My hunch is this side of it can end up more mechanical, but I really need to knuckle down and get some study behind me on this part.

 

The nzd/usd trade I took was based off the 3 hour chart, so that is why the entry was so high up from it's recent range and the stop was much wider than the others I have been doing.

 

With kind regards,

MK

[MidKnight 12]

Just got short gbp/jpy. Entry was 150.27 with a stop at 150.60, 33pip risk. First target for 1/2 is at 149.87, with the next target for 1/4 at 149.27.

[Kiwi 16]

Just got short gbp/jpy. Entry was 150.27 with a stop at 150.60, 33pip risk. First target for 1/2 is at 149.87, with the next target for 1/4 at 149.27.

 

LOL. You really don't want to go with the trend do you

 

I'm going to critique it (helpfully I hope) applying Seiden's critera.

 

 

[MidKnight 12]

What can I say? I'm not trying to disprove the simplicity of what Thales is showing. But if just selling lows and buying highs is all that's required and I end up with more losses then winners, hopefully it will serve to vet some the filtering he is using. If it really is that simple, than I should come out on top like his daughter has

 

Recently Thales has been mentioning about a certain look of which I also mentioned in prior posts. I wonder how he conveyed that look to his daughter as this sounds like something experience based??

 

All my best,

MK

[MidKnight 12]

Just got short gbp/jpy. Entry was 150.27 with a stop at 150.60, 33pip risk. First target for 1/2 is at 149.87, with the next target for 1/4 at 149.27.

 

I only just remembered that today it is an NFP number tomorrow morning in the USA. Often the FX waits. Not the best backdrop when looking for a decent move

[thalestrader 14]

Just got short gbp/jpy. Entry was 150.27 with a stop at 150.60, 33pip risk. First target for 1/2 is at 149.87, with the next target for 1/4 at 149.27.

 

Hi MidK,

 

I just wanted to refer back to the chart that Gabe fixed for me (see his attachment in post 891). The same story told on that chart can be cut and past to this chart.

 

Your short may be profitable, but price is squarely in the middle of nowhere.

 

Best Wishes,

 

Thales

[thalestrader 14]

We rarely see setups that failed. I would like to post during the next several days, setups that would have failed had one taken the trades. Please comment as to why a setup failed and whether it was a valid setup in the first place ... Red is a potential short...

 

Hi Gabe,

 

I tried that short myself today and cut it loose for a 10 tick loss. As you can see, it is not surprising that price found buyers at that level. I try to post trades either before or soon after they trigger, and if I am unable to post them while price is still reasonably close to entry, I typically do not post the chart. This was a short worth trying, but you have to keep in mind that there are times that price is breaking out, while other times, price is simply digging into support or resistance. In this case, I exited at -10 ticks. I'd have been willing to re-short new lows, but I wasn't going to hold a short and let it hit new highs.

 

As Kenny Rogers sang, "You have to know when to hold them, know when to fold them ..." Losses can and will happen. You take them and move on to the next opportunity.

 

So, that was a good opportunity to try a short. It was also a good opportuntiy to practice cutting your losses quickly.

 

Best Wishes,

 

Thales

[MidKnight 12]

Hi MidK,

 

I just wanted to refer back to the chart that Gabe fixed for me (see his attachment in post 891). The same story told on that chart can be cut and past to this chart.

 

Your short may be profitable, but price is squarely in the middle of nowhere.

 

Best Wishes,

 

Thales

 

OK, I can see what you mean, but it doesn't look so dissimilar to your post here does it?

 

All my best,

MK

[thalestrader 14]

but it doesn't look so dissimilar to your post here does it?

 

I'd be curious to hear what others think about the comparison before I answer. Would any one else have any comments comparing the current GBPJPY to the EURUSD in my post?

 

Best Wishes,

 

Thales

[Gabe2004 10]

LOL. You really don't want to go with the trend do you

 

I'm going to critique it (helpfully I hope) applying Seiden's critera.

 

 

 

Who is Seiden and what is his criteria?

 

Thanks

 

Gabe

[Gabe2004 10]

Hi Gabe,

 

I tried that short myself today and cut it loose for a 10 tick loss. As you can see, it is not surprising that price found buyers at that level. I try to post trades either before or soon after they trigger, and if I am unable to post them while price is still reasonably close to entry, I typically do not post the chart. This was a short worth trying, but you have to keep in mind that there are times that price is breaking out, while other times, price is simply digging into support or resistance. In this case, I exited at -10 ticks. I'd have been willing to re-short new lows, but I wasn't going to hold a short and let it hit new highs.

 

As Kenny Rogers sang, "You have to know when to hold them, know when to fold them ..." Losses can and will happen. You take them and move on to the next opportunity.

 

So, that was a good opportunity to try a short. It was also a good opportuntiy to practice cutting your losses quickly.

 

Best Wishes,

 

Thales

 

Thanks for the answer.

As I said in my post, It would help if people would post failed as well as siccessful trades for the learning experience.

 

Gabe

[Gabe2004 10]

I'd be curious to hear what others think about the comparison before I answer. Would any one else have any comments comparing the current GBPJPY to the EURUSD in my post?

 

Best Wishes,

 

Thales

 

The difference is that there is more "separation" between the highs and the lows in Thales's chart.

I think that this "separation" issue is subjective and cannot be numerically quantified. Only by experience which comes from screen time.

 

Gabe

[sw9 10]

I'd be curious to hear what others think about the comparison before I answer. Would any one else have any comments comparing the current GBPJPY to the EURUSD in my post?

 

 

 

There is no lower high in your EUR post, also there is a clean shot at the target with no basing in the way.

 

Steve

[MidKnight 12]

Just got short gbp/jpy. Entry was 150.27 with a stop at 150.60, 33pip risk. First target for 1/2 is at 149.87, with the next target for 1/4 at 149.27.

 

Once the market failed to take out the previous low, I 1/2'd my stop. Got taken out at 150.43 for a 16 pip loss.

[Kiwi 16]

OK. Here's another cut at what the two differences are and thus how we might qualify when to stop trading and then start again.

 

 

if the image doesn't show

http : // charts.dacharts. net /2009-11-05/kw8.png

Edited November 6, 2009 by Kiwi

[hunnybunny 10]

Hello, everyone. I've been following this thread since i discovered TL a couple of months ago and wanting to join in. Thanks for starting this great thread to teach, Thales, and everyone here who is contributing to my learning.

 

I'm planning to mark up charts as Thales suggested and post when i can I'm just months old at this, so please bear with me if i'm slow on the uptake.

 

If i may begin with a question to Thales or anyone else who cares to answer, why was 1.4664 a buy setup when there was no BO? Forgive me if the answer should be terribly obvious ..

 

Thanks very much!

[Kiwi 16]

There was a breakout at the point I marked 14 .

 

It went Low at 1, high at 7, higher low 10 bars from the low and then the high at 7 was finally broken (briefly) at 14.

 

 

 

Whoops, sorry the next one.

 

Low above 11:45, then a high is made after one white bar and a black bar. then a higher low is made by the 1 bar pullback with the last red line touching it. Thats L ... H ... HL ... and the breakout is above 1.4664

[thalestrader 14]

it doesn't look so dissimilar to your post here does it?

 

If i may begin with a question to Thales or anyone else who cares to answer, why was 1.4664 a buy setup when there was no BO?

 

 

Low above 11:45, then a high is made after one white bar and a black bar. then a higher low is made by the 1 bar pullback with the last red line touching it. Thats L ... H ... HL ... and the breakout is above 1.4664

 

I would add to Kiwi's comment that that low was clearly digging into what proved to be an important support zone.

 

Best Wishes,

 

Thales

[Gabe2004 10]

Nice short signal on GC.

Got in twice but did not trust it because the futures were moving up.

THis where what Thales wrote should be adhered to. ie Trade what you see, not what you think.

 

Gabe