Reading Charts in Real Time

[thalestrader 14]

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?

 

All I do is scroll through the SP 500. Now that freestockcharts has screening capabilities, I filter out stocks trading for less than $20.

 

I use Telecharts only to scan EOD daily and higher timeframes. I trade IBD 100 stocks for longer pulls, not for intraday swings. I also keep a watchlist of stocks that have been trading inlong, flat bases and I scan those for breakouts. These too are for longer swings, not day trades.

 

Best Wishes,

 

Thales

[forrestang 10]

Gameplan for NQ tommorrow.

 

Today price closed at the 1447 area. And I just noticed (after doing a screen capture) that after hours has brought a move up to 1475.

 

The areas of consolidation are clear.

 

ABOVE 1447:

We have 1465-1492. There is also 1453 to 1465 for a possible target. Green area.

 

The 1453 - 1465 area looks ok for trades as well, green area.

 

BELOW 1447:

We have 1402-1427. Good area to look for trades (Green Arrow).

 

IF BETWEEN 1446-1453

This area seems to be one of consolidation, expect price to vacilate in this area looking for it's value. Trading is not good in this area (red X).

 

There is also an opening betwen 27-37. A move and hold below 1437, could have a short with a quick target to 27 as this area is rather 'open.' Orange area.

 

PLAN OF ACTION TOMMORROW:

If price holds above the 1465 level, look for a retest of 1465 to get long. It seems it would be reasonable to expect the possibility of a trend day after today's range with good targets up to the top of the range tommorrow.

 

[forrestang 10]

Will update with a picture, but wanted to get the right edge read out. Trying a long @ 1476.50, with a stop 1467.00.

 

1st target: 1484.25

2nd target: 1491.75

---------------------------------------------------------------------------------------------

UPDATES.....

 

1st Update:

 

2nd update - a few minutes later:

1st target was hit. 2nd target, stop would be at breakeven plus a tick right now.

 

3rd Update:

Ok, price has now gone above the first target and is at 1486, which is about a point above 1st target. Here is where I'm conflicted about how to protect profits? Since We've crossed back above, should the stop remain at BE (and hope the 2nd target gets hit), or would you now start to trail again since this is effectively a breakout?

 

This is just a question. I would rather do the 2nd thing I suggested. BUT FOR THIS TRADE, i AM LEAVING THE STOP AT BE+1, AND TRUSTING THE INITIAL TARGET.

 

Edited July 15, 2009 by forrestang

[forrestang 10]

Final update on NQ trade:

 

As mentioned last night, if price held above the 1465 area, we would look for a breakout to get long, which is exactly what happened this morning.

 

We got long @ 1476.50 and adjusted stop accordingly. After first target was hit, the stop on the second half was brought to breakeven. From here it was essentially a waiting game.

 

As mentioned in post above, once price reached the 1st target a second time, I would have liked to move the stop beyond Breakeven to secure more profits.

 

So first target yielded a total of 7.75 NQ points.

 

The second half yielded a profit of 15.25 NQ points.

 

This is a total of 23 NQ points! I still think this was pure luck that it worked out this way:crap:

 

[Dinerotrader 10]

Final update on NQ trade:

 

This is a total of 23 NQ points! I still think this was pure luck that it worked out this way.

 

Nice trade forrestang! I don't think luck is the right word. The goal, IMO is to anticipate the most likely price action based on what you know and adjust the mechanics as you progress through the trade. If what you anticipate doesn't happen, you simply interpret the new price action and adapt. Keep up the posts.

 

Cheers.

[thalestrader 14]

Gameplan for NQ tommorrow.

 

Today price closed at the 1447 area. And I just noticed (after doing a screen capture) that after hours has brought a move up to 1475.

 

The areas of consolidation are clear.

 

PLAN OF ACTION TOMMORROW:

If price holds above the 1465 level, look for a retest of 1465 to get long. It seems it would be reasonable to expect the possibility of a trend day after today's range with good targets up to the top of the range tommorrow.

 

A plan ...

 

Final update on NQ trade:

 

As mentioned last night, if price held above the 1465 area, we would look for a breakout to get long, which is exactly what happened this morning.

 

We got long @ 1476.50 and adjusted stop accordingly....

So first target yielded a total of 7.75 NQ points.

 

The second half yielded a profit of 15.25 NQ points.

 

... well executed ...

 

 

 

This is a total of 23 NQ points! I still think this was pure luck that it worked out this way

 

...is anything but luck.

 

Well done! Congratulations, you should be proud.

 

Best Wishes,

 

Thales

[thalestrader 14]

Gameplan for NQ tommorrow ...

 

Hi Forrest,

 

I was out most of today and will be gone tomorrow as well, so not much from me by way of contributions this week.

 

Please keep up what you are doing, as you are doing very well. Mistakes will no doubt be made along the way, but, as your aproach is solid and also you're a smart fellow, any mistakes will not prove fatal.

 

Great job today, and thank you for sharing your efforts with us.

 

Best Wishes,

 

Thales

[forrestang 10]

NQ observations for Thursday, 16July09.

 

Well, I think the observations for me are a bit tricky here. I think mainly because we had a mega-trend day up. Price opened way higher above resistance, tested then blasted off.

 

Seems like strong moves often lead to consolidation, or areas of indecision or chop. Vice-versa for price being trapped in consolidation and leading to strong moves. It appears to be easier to recognize a zone of consolidation, as you know where your limits are?

 

Price closed today @ 1497.50. As of right now, price is at 1490.00.

 

IF IN BETWEEN 1484 - 1500:

No trades. Price will need to take out previous high and last major swing low.

 

ABOVE 1500:

If price breaks above this level and holds, potential targets would be 1511 and 1516, potentially with a tight stop on 2nd half.

 

BELOW 1484:

I would not expect a freefall. Each zone represents areas where price might stop and vacilate, so will place trades accordingly.

 

PLAN FOR TRADING:

As stated above, expect conditions to not be the clearest. If we remain in the zone, no trading will take place. Even when and if a breakout occurs, I would want to see volume confirming the breakout.

 

The clearest opportunity would be a break above 1500. 1484-1467 also may be a decent trade.... but I expect potential for a indicisive trading day.

 

[Shamal 11]

forrestang,

Notice you have used 10000vol and 5tic charts similar to Dbphoenix on Nasdaq.

 

Think Db though employs 5sec charts, have you noticed much difference between 5sec and 5tic and any particular reason for using 5tic charts as compared to say 1min chart.

[forrestang 10]

forrestang,

Notice you have used 10000vol and 5tic charts similar to Dbphoenix on Nasdaq.

 

Think Db though employs 5sec charts, have you noticed much difference between 5sec and 5tic and any particular reason for using 5tic charts as compared to say 1min chart.

 

Shamal,

I'm using the 5 tick 'breakout' chart as the chart I have been mainly trading off of lately (not to be confused with the standard 5 tic charts where each bar represents 5 trades). U'll notice a lot of gaps in the bars with this type of chart(brekaout chart). I haven't used any intervals smaller than 5min in a while.

 

I can't say which is better, when I was setting up my charts, I pretty much just 'eyeballed' it until I found something I liked. Would up using 10K CVB and the 5 tick 'breakout' chart for NQ. On ES I like the 100KCVB and 3tick breakout chart.

 

I might wind up changing it, but for now I like it?

 

 

------On Current Price----------

NQ is now at 1491.50, 5 min before the open.

 

Last night, NQ found resistance at yesterday high at about 1500, it retested twice in AH, so that seems prettey significant.

 

Seems the 1492 area is also significant support. I'm not sure how this will play out, so I'll be waiting for clarity.

Edited July 16, 2009 by forrestang

[rigel 10]

Interesting way of looking at markets forrestang, what exactly is a "5tic Breakout chart" and how does it differ from a 5tic chart.

 

Secondly, do you get much slippage on NQ compared to ES and which trading platform yu employ to trade NQ?

[thalestrader 14]

The clearest opportunity would be a break above 1500

 

Hi Forrest,

 

 

So ... how did you do today?

 

Best Wishes,

 

Thales

[forrestang 10]

Hi Forrest,

 

 

So ... how did you do today?

 

Best Wishes,

 

Thales

 

Thales,

 

Thanks for asking! Didn't enter into anything today, but maybe posting what I was thinking might do some good.

 

No positions today. What was planned the night before, and what was executed unfortunately were not in sync for me today. :crap:

 

Resistance was clearly at 1500. There was a breakout that occured right below it, after one would have entered, the logical first stop is circled. This probably would have been a breakeven trade. If that second entry was taken after missing the first, maybe minus 2 points or so.

 

Then price seemed to be coiling, and finally broke out. Right after there was a volume surge that may have been confiming the breakout. The two targets above at 1510 and 1516 would still have been good targets as well.

 

Ok plan I suppose, but poor execution....and faked out by the subtlety the market provided today.

 

Forrest

 

[thalestrader 14]

Hi folks,

 

My daughter's new favorite game is trading the EURJPY pair. There are certain things about trading foreign exchange rates that elude her in spite of my efforts to explain and her efforts to understand. I gather that she vaguely grasps the idea that she is buying one country's money. She is paying for that money with another country's money. She does wonder how it is that she has the Yen to buy Euros or the Euros to buy Yen when I assure her that the account she is trading is populated with US Dollars.

 

She does not know about reserve currencies, interest rate risk, political risk, terrorism risk, risk premiums, carry trades, exchange differentials, etc.

In other words, she could be said to have very little understanding of the "fundamentals" of currency exchange and the markets she is trading.

 

But, she has been doing a very nice, nonetheless, of making good bets on when to buy and when to sell, and somehow the EURJPY has become her "preferred" pair to trade.

 

Tonight, I was on her computer, and she was explaining to me what she did this morning and why, and I happened to see the attached chart. This is a four hour EURJPY chart. I have not used this time frame with her. In teaching her, I started her out on a 13 range chart, and then moved her to the 15 minute time frame. I asked her how she came up with it, and she said she thought it would help her see better what was going to happen.

 

Imagine that! Out of the mouths of babes, as the saying goes.

 

Anyway, I'll say nothing more, but I'll let the chart speak for itself. I think she did a pretty decent job "mapping" out the EURJPY.

 

As an aside, here is how she tells me she chose her colors: RED she tells me, is for Resistance, Steel blue is for Support.

 

 

 

Best Wishes,

 

Thales

[forrestang 10]

Thales, tell your daughter I am stealing her idea for coloring and labeling my levels. :haha:

 

QUESTION:

On my chart, I have 1507 currently as an area of potential resistance. Is this level still significant? This was formaly 1511 taken from that area circled in red on the chart. Seeing as how price went through it today without noticing it, is it still significant? Or does it make sense to adjust it, and make the 'resistance zone' wider and match it to that hicup we had today at 1507.25?

 

NQ observations for Friday, 17July09.

 

Price is currently at 1507.50. We had another good trend day from the open. We put in a new high today, and the only thing above the high we put in today is an UTL and potential resistance at around 1550.

 

Other than the support and resistance areas, there do not seem to be an extreme areas of chop near where price is now that would present any problems for trading.... like the 1440-1450 area?

 

IF ABOVE 1507 OR 1520:

I will look for an opportunity to get long, targets are a bit unsure. Particularly if we break above 1520 (and depending on time of day this occurs), potential targets are 1550 and 1535. I would really like to see a break and hold above 1520 before looking to get long.

 

IF BELOW 1507:

If price opens below this area, and holds, I will look to initiate trades on either side of the extreme zones shown.

 

[forrestang 10]

Interesting way of looking at markets forrestang, what exactly is a "5tic Breakout chart" and how does it differ from a 5tic chart.

 

Secondly, do you get much slippage on NQ compared to ES and which trading platform yu employ to trade NQ?

 

As you know the '5tic' chart is based on the NUMBER of trades taken place within a given bar. So a new bar prints every 5 trades.

 

A range or breakout bar is based on the number of tics price moves, so it's a function of distance, and not time/trades/contracts. It prints a new bar when price moves 5 tics in direction. If you plot it, you'll notice each bar is exactly 5 tics long. Hence the gaps when price is moving really fast. It's supposed to make it obvious when price is range bound I guess?

 

I only saw this on Thales charts and it seemed like a good idea, I'm still trying to find what is comfortable for me that's all.

 

Slippage, I dunno, hopefully someone can answer this.

 

I'm trading it cause I feel more comfortable trading multiples in NQ than I do ES.

[rigel 10]

Thks, I don't have a charting pack that does that. However if you find benefit than that is fine. anything that gives that extra edge in my book.

I like to apply wyckoff principles and Taylor's rules.

As for slippage if you are trading multiple contracts on NQ, surely you become aware of whether or not your orders are being filled at the price you expect or not.

[atto 20]

As for slippage if you are trading multiple contracts on NQ, surely you become aware of whether or not your orders are being filled at the price you expect or not.

Slippage shouldn't be an issue during normal market hours. Specifically, you can pretty much always get in ~50 cars at market without moving it more than a tick.

[rigel 10]

Thks atto,

notice a lot of folks on the Wyckoff forum trade NQ, will have to start looking at this instrument, was under the impression that these tech stocks were far too volatile ie. spikey, hence the index would also be the same.

correct me if I am wrong

NQ moves in 0,25pt(1tick) = $5, hence 1pt would be $20

 

What is the average daily range?

[atto 20]

No, it's quite liquid during regular market hours. It's not really spikey, but it often does move more than ES. 30 day average daily range is about 30pts. One thing to note, though, that per move, it's usually cheaper than ES. For example, since open, NQ has ranged about 13 pts (= $260/car) while ES has ranged about 6 pts (= $300/car), even though NQ has actually moved more % wise today.

 

S/R principles work regardless of the instrument, however. Find one that fits your personality, and study it.

[forrestang 10]

Right edge read.

 

It's Friday, after lunch so this worries me. I doubt there will be any movement beyond this range?

 

 

 

[forrestang 10]

1st Update:

 

I wonder if momentum to the upside is falling off due to the LH we put in?

 

I still just don't expect a rally on this Friday.

 

 

 

 

2nd Update:

Note the comments on the hinge there. BTW, sucks we can't edit posts after 60 mins.

 

Final:

Out!!

Edited July 17, 2009 by forrestang

[forrestang 10]

So looking back on the prior week, looking at some situations here.....

 

This 1st post will be about S/R, the next will focus on the entries relevant to trading those levels.

 

ANY and ALL comments are appreciated, or if anyone has examples of something they saw related to observing support and resistance, please post! You'll notice the great many questions marks behind what seem to be statements as this is still coming together and your input is greatly appreciated.

 

So let's look first at the relevant S/R leading up to Friday's session. Traditionally, I have looked at S/R as areas where price was tested in either direction several times.....But more so focus on areas where price was rejected, i.e. Major Swing Points. I attribute this to it being very visual. Like when you see price hit an area, then reverse for 30 points, to me it just stands out.

 

But I am reading (mainly in DB's work), that rejection isn't what's most important, it is areas in which the most trades take place, like when S/R is tested many times. This makes sense as, these are likely areas where speculators are most interested? Areas of defense maybe if you will?

 

The chart below is mainly me looking at what I deem major 'SWING POINTS.'

 

 

 

Now, there willl obviously be overlap of levels from both 'Major Swing Points' AND 'Areas where levels where molested several times if you will', :haha: So here is the same chart, but focusing on areas only where price was tested several times:

 

 

 

OK, so what are the differences between the two? Here is a side by side comparison of what's going on:

 

 

 

So how does this relate to Friday? Well this might be purely a handpicked situation, and purely academic, and it is of course an observation made in hindsight, but i think this may have shaped the entry a bit differently.

 

Notice the level I had from the 'swing' chart was 1520. I still think this was an important level, as even AFTER the trading session started, price seemed to know this level was there.

 

So 1520 was the level that I anticipated would be the best shot at a good long. And it still wasn't a bad trade, although the entry was a bit late, and could have been managed better..... But the area it seems we really wanted to be focusing on was 1509.50. And once price breached this area, and then pulled back, it was straight up from there:

 

 

 

Again, this is in hindsight, but it was something I've been thinking about all weekend :missy: and i hope what I'm trying to convey is clear?

 

I will make another post simply dealing with the crappy, late entry on Friday, and why even that entry should have been sooner based on S/R.

 

ANY AND ALL comments are welcome in obtaining a better understanding!

Edited July 19, 2009 by forrestang

[atto 20]

Excellent work forrestang. You've nailed this concept. As you noticed, don't discount swing points, as they serve as possible areas of S/R. However, you want to keep your eyes on spots that have been traded many times. Why? More people interested.

 

As you see, after you learn how to identify support and resistance as you did, trading them becomes much easier.

[thalestrader 14]

Excellent work forrestang. You've nailed this concept. As you noticed, don't discount swing points, as they serve as possible areas of S/R. However, you want to keep your eyes on spots that have been traded many times. Why? More people interested.

 

As you see, after you learn how to identify support and resistance as you did, trading them becomes much easier.

 

I'd second that, excellent work indeed.

 

And not only does trading S/R become much easier once you learn to identify it, but trading in general becomes more enjoyable and relaxed. What a difference it makes when you know in advance at which levels you will trade, and what price has to do once it reaches those levels to induce you to trade.

It sure beats hanging on the close of each bar waiting to guess in which direction the next 1-4 ticks will be found.

 

You have done a wonderful job this week, Forrest, and I hope you continue to share your work with us.

 

Best Wishes,

 

Thales