Reading Charts in Real Time

[thalestrader 14]

Hi Folks,

 

I was going through some old trade files tonight. Here are some miny Nat Gas trades from 2 1/2 years ago. As you can see, while I was basically trading the same then as I am now (I used 1-2-3 and A-B-C interchangeably to annotate the price action that identified the trade opportunity), back then there was a CCI on my chart, and I used CCI trendline breaks to "confirm" my trades. I trying to find exactly when I shed indicators completely. As of 2.5 years ago, I was still clinging to the CCI.

 

Best Wishes,

 

Thales

[thalestrader 14]

Hi Folks,

 

I was going through some old trade files tonight ...

 

I have said that I have purchased more than my share of indicators, systems, softwares, books, dvd's, trading courses, ect and so on over the years.

 

One of those systems was MTPredictor software. Of all the ones I had purchased, this was the one that was worth having owned. First, the trading course that comes with the software, though not the most polished, was very good and useful. Also, the software and the course really drove home the importance of risk analysis, position sizing, and R/R considerations.

 

Here is a Nat Gas trade form nearly three years ago, and that was and still is my single best day trade ever on an all in/all out trade. In this particular case, MTPredictor gave a buy signal as price was bouncing along support in an area that allowed for an extremely tight stop loss. An R unit for me at the time was $600/trade. That day, a $600 bet paid $24,234 over the course of about 6 1/2 hours.

 

At the time, I still was second guessing my self, and often I would skip signals, only to watch the market move in a way that would have allowed for a decent profit. Invariably I would then take a string of trades that would lose. Then, having been demoralized by the losses, I would skip the very next trade, and, you guessed, that was the trade that would have made me whole on my recent losses and profitable for the day or the week.

 

I wrote those notes on the chart to myself. I printed this chart out and kept it by my workstation for at least a year. It cured me of "thinking" and helped me put me firmly on the road to trading what I see. I'd have been sick if I had skipped this trade. By the way, I am still waiting for that next all in/all out 40R day trade.

 

As you can see, even after I had turned the corner and was primarily trading S/R, I was not always trading without water wings.

 

Best Wishes,

 

Thales

[daedalus 10]

I have said that I have purchased more than my share of indicators, systems, softwares, books, dvd's, trading courses, ect and so on over the years.

 

One of those systems was MTPredictor software. Of all the ones I had purchased, this was the one that was worth having owned. First, the trading course that comes with the software, though not the most polished, was very good and useful. Also, the software and the course really drove home the importance of risk analysis, position sizing, and R/R considerations.

 

Its shocking how so many of us go down the same path and ultimately end up in pretty much the same place... I couldn't agree more with your analysis of MTP - even if the software's signals were questionable at time, the overall packages enforcement on importance of risk, position sizing, and potential reward was a huge step forward in my trading some years ago.

 

[Kiwi 16]

OK. Here's a possibly simple question:

 

I have a portfolio of pairs I'm looking at:

AJ AU EJ EG EU GJ GU Kiwi Loony Swiss UJ

 

How many (full not the new half) ticks would anyone opine each of these should break by before you jumped on the breakout. Similarly for stops, how much back past the last swing before you exit?

 

Opinions on one, all, or the generic issue are welcome

[monad 10]

Kiwi,

 

Really, there is nothing about which you need to apologize. I am not one to censor things (though the Brooks post above threw me for a bit of a loop as it seems ill-conceived and old out of place, if not a bit suspicious). I find your participation here valuable (and I'm sure others have as well), and I would not want to to start "filtering" your posts.

 

Thales

 

Have been going through your posts with great interest as like Dbphoenix, you are walking your talk.

Ref: to your mention of MTP predictor, Richbois of TTT (Taylor Trading) also uses that to enhance his trading , so there is obviously merit there.

BTW, have you ever employed Taylor method.

 

Also which Brooks post you are referring to, is this pertaining to Al Brooks who seems to have amassed a large following, all looking to him to open up a trading room/mentoring etc after putting up a few posts here.

[thalestrader 14]

Its shocking how so many of us go down the same path and ultimately end up in pretty much the same place...

 

Yes, I have known many who have tried to make it in this game. Those who have found some degree of success almost invariably have spent 10's of thousands of dollars over the years on "chart ornaments," only to find that the succes that eluded them finally came once they learned to trade with nothing other than price bars.

 

Also shocking is how easy it is for someone who does come close to what you have called "the truth of the markets," to revert back to hanging chart ornaments on their screens.

 

Best Wishes,

 

Thales

[Gabe2004 10]

At the time, I still was second guessing my self, and often I would skip signals, only to watch the market move in a way that would have allowed for a decent profit. Invariably I would then take a string of trades that would lose. Then, having been demoralized by the losses, I would skip the very next trade, and, you guessed, that was the trade that would have made me whole on my recent losses and profitable for the day or the week.

 

I had the same thing happen to me this week twice.

I skipped the trades that would have made my day.

It felt like I gave up on trading those days.

Lost my focus and lost interest. Went to work on some woodworking project.

It is tough to keep focusing for many hours.

 

When I used to trade without stops or used to move them, the way to cure myself was to install a small program that would pop a small message window with "DON'T MOVE STOPS" and it sounded a sound alert as well.

So after a week of this Chineese torture I was cured.

 

Taking all the trades and realizing that this is a probability game, is the next step.

 

Gabe

[Dinerotrader 10]

Yes, I have known many who have tried to make it in this game. Those who have found some degree of success almost invariably have spent 10's of thousands of dollars over the years on "chart ornaments," only to find that the succes that eluded them finally came once they learned to trade with nothing other than price bars.

 

Also shocking is how easy it is for someone who does come close to what you have called "the truth of the markets," to revert back to hanging chart ornaments on their screens.

Thales

 

I am relatively new to trading and took the advice of many here on TL and I haven't ever used indicators at all on futures, like none at all. I sometimes wonder if I am missing some part of the learning process since so many have used them early on in trading.

 

I was showing my friend a trade I made on the ZS the other day and he likes the idea of bollinger bands so he wanted me to put it on my chart. I did and noticed that it would have kept me in the trade for the entire move if I had used it to confirm when to exit the entry.

Very likely a coincidence but it got me thinking, maybe I am not taking advantage of some useful indicator that would help me navigate when price gets moving lightning speed as it does on the ZS.

 

I also feel a little stupid when others talk about common indicators and I have no educated understanding of them. Do you think there are a select few indicators that everyone should at least become familiar with even if they aren't going to use them?

 

Do you think an indicator can train you to indentify something when you are new? You can always lose the indicator once you develop the eye for it in simple price action.

[thalestrader 14]

I am relatively new to trading and took the advice of many here on TL and I haven't ever used indicators at all on futures, like none at all.

 

I wish I had been able to experience the same when I was starting out.

 

I was showing my friend a trade I made on the ZS the other day and he likes the idea of bollinger bands so he wanted me to put it on my chart. I did and noticed that it would have kept me in the trade for the entire move if I had used it to confirm when to exit the entry.

 

A chart would be nice, Dinero, share and share alike. Why not show us how you decided to exit the trade, and then take another shot showing how you would have used the BB's to remain in the trade?

 

I also feel a little stupid when others talk about common indicators and I have no educated understanding of them.

 

Perhaps this should make you feel fortunate rather than stupid.

 

Do you think an indicator can train you to identify something when you are new? You can always lose the indicator once you develop the eye for it in simple price action.

 

You are free to do what you want, use what you want, and experiment with what you want.

The question is will you ever develop the eye for following price as effectively as you wish if you are splitting your attention between price and an indicator(s).

 

I feel that my development was delayed by an undue reliance upon indicators as I searched for the Holy Grail.

 

I think daedalus's post #1169 of this thread may be offer some things for you to consider before deciding whether or not you will sit down to feast at the indicator smorgasbord:

 

I just thought I would comment on the indicator discussion because I really do agree that more is not more. The most efficient and powerful design will always be the one in which nothing else can be subtracted from it without an adverse effect in outcome.

 

I was browsing through another trading forum where people were all trading the same holy grail method using a bunch of indicators, and some of their trades were awesome, but like usual a lot of them were bad entries and getting people chopped around. Below are a couple of screen shots of their trade examples. Note the patterns that is printed up on a LOT of the good winning entries... is EXACTLY what thales has been instructing in this thread.

 

I think far too often we find ourselves looking at the trees (indicators) and we just can't see the forest (price).

 

If these guys want to use their indicators for confirmation - fine but they should realize (and they don't) that the power of their winning setups is not because of or due to the indicators but rather the underlying price behavior or L, H, HL and H, L, LH.

 

Indicators can be helpful in my opinion but ONLY when we respect them for what they are and use them in a useful way (ie not as entry triggers). In my opinion a useful way to use an indicator is limited to identifying areas for a trade (MA's used for S/R, Bolinger/Keltners for S/R, and Oscillator for Trend Exhaustion, or Using them to give us pointers on holding or folding trades). But we MUST respect the underlying truth that the indicator works because of price and tells us what price has already told us, and thus we must respect price first and foremost as the ultimate truth teller.

 

Best Wishes,

 

Thales

[Gabe2004 10]

After seeing Michaelangelo's sculpture of David, an

art student asked the great artist how anyone could

make something so beautiful and emotionally moving

from a block of stone. Michaelangelo replied, "I simply

chipped away the excess so David could emerge from

the stone."

 

See the analogy?

 

Gabe

[daedalus 10]

Do you think there are a select few indicators that everyone should at least become familiar with even if they aren't going to use them?

 

Do you think an indicator can train you to indentify something when you are new? You can always lose the indicator once you develop the eye for it in simple price action.

 

To answer your first question. I think its fine to understand how a basic indicator functions - the caveat being that you don't use them. Which segways into your next question...

 

I think more often than not an indicator does NOT help you see something - it prevents you from seeing EVERYTHING. Again, its the looking at the trees and not the forest. I don't know about you but when I have an indicator on my charts my eye is naturally drawn to it and I focus on what the indicator is saying rather than what the picture above it (price) is saying. I think thats why a lot of new traders are setup to fail. The indicators train them to look at the wrong thing (the indicators). And consequently they fall down the rabbit hole of failure for weeks, months, and years before they realize what they should've been focused on was on their charts too all along. They just couldn't see it through the indicators.

 

Thats why I do feel slightly guilty about using any indicator on my charts (value chart). But I use it completely secondary to price and am very conscious of that. If price is telling me something and the indicator isn't, I respect price first and foremost. I am ONLY using it as a confirmation to take profits and get to par.

 

Cheers!

[forrestang 10]

 

Thats why I do feel slightly guilty about using any indicator on my charts (value chart). But I use it completely secondary to price and am very conscious of that. If price is telling me something and the indicator isn't, I respect price first and foremost. I am ONLY using it as a confirmation to take profits and get to par.

 

Cheers!

 

Who cares? If I had an indicator that wasn't for show, and ACTUALLY helped me make money in some way, I'd absolutely use it, and have no such compulsions of feeling bad.

 

Let's not forget 'why' we trade the markets. It is not to be able to say that one is cool for not using anything but price, the point is to make money. Sure it's interesting, but would it be interesting if there was no potential for profit?

 

If there is something that you truly find makes you money, it's foolish to feel guilty about it. Wether that be a MACD, or only taking a trade when your cat walks across your trading desk and meows....

[brownsfan019 17]

I am relatively new to trading and took the advice of many here on TL and I haven't ever used indicators at all on futures, like none at all. I sometimes wonder if I am missing some part of the learning process since so many have used them early on in trading.

 

I was showing my friend a trade I made on the ZS the other day and he likes the idea of bollinger bands so he wanted me to put it on my chart. I did and noticed that it would have kept me in the trade for the entire move if I had used it to confirm when to exit the entry.

Very likely a coincidence but it got me thinking, maybe I am not taking advantage of some useful indicator that would help me navigate when price gets moving lightning speed as it does on the ZS.

 

I also feel a little stupid when others talk about common indicators and I have no educated understanding of them. Do you think there are a select few indicators that everyone should at least become familiar with even if they aren't going to use them?

 

Do you think an indicator can train you to indentify something when you are new? You can always lose the indicator once you develop the eye for it in simple price action.

 

Dinero - I have 1 piece of advice here.... The amount of indicators out there is like pandora's box. Once you open it, you may literally spend the rest of your life trying to find that perfect combination that works each and every time... only to find out that doesn't exist and you're back to where you started.

 

I know the grass looks greener on the other side, I've been there too. Like Thales, I spent more money than I care to think about on the 'holy grail' systems out there. Result was a ton of wasted time and money.

 

Based on your posts in the p/l thread, I think you are making huge progress and that's w/o any indicators! A part of you is saying - yeah, but... imagine if... maybe if .... But I think in the end you'll end up saying - that was a waste of time.

 

So my suggestion is to resist the urge but if you need to try it out, just be prepared for many, many, many hours spent on this. Have you seen all of what is tucked inside OEC trader? And there's so many more that aren't included there.

 

If you want to go this route and test stuff out, here's what I would do - find something that could help with EXITS. As dae mentioned, he's using the value chart to help with timing of exits. As I've said many times here, exits are my crutch and I'm always looking for something to test out. I put the value chart on my charts to see how exits would compare to what I am doing now and we will see... Even now, after all these years, I still have trouble resisting that temptation. And that's what I think a few of us are trying to save you from. So if you want to try something out, throw up the value chart and see how it looks for exits. I have a basic one that I'm using in OEC and I'll put it in the OEC area of the forum if you want to try it out. Just be aware that once you open this box, it's next to impossible to shut it back up. Thales is one of the few that I've seen be able to do that.

[Kiwi 16]

I support Brownsfan's view. I am a person who knows most indicators and has written hundreds of them for other users of Sierra Chart. What's more, unlike most who talk as though they understand indicators I think I really have a grip on how they work and what they are doing.

 

I now would only use indicators for one purpose: to summarize information for automation that can be more clearly seen with calm, well trained, unstressed eyes and brain.

 

They can be useful but if you head down the path of wanting to appear knowledgeable about indicators to your friends and actually be knowledgeable then be prepared to use up years of your time. And bollinger bands are such bs. They look great until they don't. I have written and dissected the Value Chart indicator (last week) and can assure you that it has NO magic - its just a comparison of 5 days movement against average bar range and declares every burst of enthusiasm to be oversold or bought. One could make it work for them but you can find plenty of other ways ... so why not KISS. Find an objective reason to exit trades (next S&R or trailing a stop for long holds with a potential trend) and just do it ... the same every time.

 

 

Your goal is to learn a method to be profitable consistent trader (I assume).

 

A private trader has a few edges over the big boys and the super machines. One is that you can buy breakouts (because your size is small so you don't have to scale in to get filled). Another is that you can see support and resistance with training - and that is very hard for a machine.

 

So, put indicators aside. Don't argue about them. Say "I've been lucky enough to be trained by people who read price action and support and resistance alone - and are profitable because of it. So I'm sticking with that and mastering it."

[MidKnight 12]

Hiya folks - MK is reporting for duty :yes sir:

 

Pairs near S/R:

EUR/GBP

EUR/USD

EUR/JPY

GBP/CHF

USD/JPY

AUD/USD

AUD/JPY

NZD/USD

 

RED is for Resistance

STEEL BLUE is for Support

 

EUR/GBP

Looking for longs

 

EUR/USD

Looking for shorts, even though it is at the marked R area, I would be more comfortable with another attempt at fridays high into the 1.4950 area.

 

EUR/JPY

Looking for longs. Have been in this range for some time, when we break out of this range it could be extreme. Stay open to the idea of an explosive multi-day move. Play the range on obvious entries.

 

GBP/CHF

Look for shorts. Mirror image to EUR/GBP. Prefer to trade this market if possible.

 

USD/JPY

At immediate support and also testing those lows of early OCT in what I consider to be a weak fashion. Look out for longs. Should support be found here, could really fuel the yen crosses higher - keep that in mind. I don't know why, but I find this pair tough to trade so right now, I'm just using this as extra yen cross analysis.

 

AUD/USD

At resistance. This market has been on a massive tear upwards since March this year. Am hesitant to sell up here as would have expected a more solid decline off the recent 3 thrusts above the OCT high, but instead we are back up at those OCT highs. Probably do nothing here unless something screams at me.

 

AUD/JPY

Tight range all last week. So far has been respecting the R area but not really responding to it. I don't feel very comfortable looking for shorts within this current condition.

 

NZD/USD

Overall, similar to AUD/USD. Huge gain since March this year. The recent multi-day drop has been the largest decline since March in both price and time but it is only down approx 5 cents. I'll look for shorts if something obvious appears.

[Dinerotrader 10]

Thank you all for your responses. Great points from all. I do see that the ultimate indicator is price and I plan on spending all my chart time developing an eye for reading PA.

 

There is this great trend in the threads I love that during the week posts are all about trades and the weekend addresses some philosophical issues. I can't tell you how much I enjoy this.

 

Thanks again.

[MidKnight 12]

Hi Dinero,

 

When I was a brand new trader and just started my full-time adventure into this business. I focused just on PA exclusively for the first year. As the years passed though, I did find myself exploring many things. Many things have been re-visited and re-explored as well, because you never know how a type of analysis may be different after you have more experience. I'm only bringing this up because, one needs to explore for themselves what suits them and it probably should be re-explored as new experience is added. This all takes time unfortunately. Few traders are able to shortcut this it seems If you can believe it, when I first started out and quit my job, I naively thought I'd be profitable within 6 months :shocked: but it's taking a lot longer than that.

 

With kind regards,

MK

[thalestrader 14]

Hi Folks,

 

Current look at the EURJPY ...

 

Best Wishes,

 

Thales

[thalestrader 14]

Current look at the EURJPY ...

 

Starting to look a bit like a chop zone ...

 

Best Wishes,

 

Thales

[MidKnight 12]

Hi Thales,

 

Japan has GDP news in 40mins, so maybe not much till after then??

 

Just a thought.

 

With kind regards,

MK

[thalestrader 14]

Hi Thales,

 

Japan has GDP news in 40mins, so maybe not much till after then??

 

Just a thought.

 

With kind regards,

MK

 

We usually don''t put any trades on until Tokyo opens unless there is unusual volatility early on. But it is always nice to try to sync up a bit (sort of like doing warm-up laps).

 

And here is another look as it may go the other (either) way.

 

Best Wishes,

 

Thales

Edited November 15, 2009 by thalestrader

[thalestrader 14]

Japan has GDP news in 40mins, so maybe not much till after then

 

Believe it or not, except for US NFP, I really do not pay much (if any) attention to pending news. And even for NFP, if an opportunity presents itself with news pending, and the entry is triggered, then I will be in.

 

Best Wishes,

 

Thales

[MidKnight 12]

Believe it or not, except for US NFP, I really do not pay much (if any) attention to pending news. And even for NFP, if an opportunity presents itself with news pending, and the entry is triggered, then I will be in.

 

Best Wishes,

 

Thales

 

I hear ya man, I only brought it up because of the apparent lackluster movement within the first hour...I'm not a huge fan of avoiding action due to news either.

 

All my best,

MK

[thalestrader 14]

And here is another look as it may go the other (either) way.

 

Just running some laps, doing some stretches ...

 

Best Wishes,

 

Thales

Getting Warmed UP.wav

[Gabe2004 10]

We usually don''t put any trades on until Tokyo opens unless there is unusual volatility early on. But it is always nice to try to sync up a bit (sort of like doing warm-up laps).

 

And here is another look as it may go the other (either) way.

 

Best Wishes,

 

Thales

 

What is the spread on EJ at the moment?

 

Thanks

 

Gabe