Reading Charts in Real Time

[thalestrader 14]

Here is the one hour EURJPY as of 10 PM EDT. It will be interesting to se what it looks like come morning.

 

Best Wishes,

 

Thales

[thalestrader 14]

One last chart for the night, this is the 15 minute GBPJPY. Never traded it myself. I do not think my daughter has, though she may have once or twice for all I know.

 

But whether its PoundYen or Potatoes (anyone here been trading since before Potatoes went off the boards for good?) S/R is all the same.

 

I imagine that if price were to drop below the small blue trendline at 155.94, that might be good for a 50 tick +/- drop. I know folks who scalp all week long and don't manage to come close to putting 50 ticks in their account, let alone their pockets. Of course, it may not drop that far. It may drop further. It may not drop at all. But, if I were a betting man ...

 

Best Wishes,

 

Thales

Edited July 24, 2009 by thalestrader

[Dinerotrader 10]

I was looking at the same thing Thales. That is becoming a pretty flattened out pattern on the 15 min chart. Now I just need to figure out how to put in buy/sell stops correctly so I can go to bed and wake up to see how my trades went.

[Gabe2004 10]

Trade closed before the intended target because I thought that conditions changed.

Time will tell if I was right.

[thalestrader 14]

I imagine that if price were to drop below the small blue trendline at 155.94, that might be good for a 50 tick +/- drop. I know folks who scalp all week long and don't manage to come close to putting 50 ticks in their account, let alone their pockets. Of course, it may not drop that far. It may drop further. It may not drop at all. But, if I were a betting man ...

 

Best Wishes,

 

Thales

 

I was looking at the same thing Thales. That is becoming a pretty flattened out pattern on the 15 min chart. Now I just need to figure out how to put in buy/sell stops correctly so I can go to bed and wake up to see how my trades went.

 

Hi imorgan,

 

I placed some notes on the chart: Once price breaks below that blue trendline, it should not return above the double red lines before it first reaches the lower red line. So a sell stop at 1.5594, with a stop loss at 1.5634, and a profit limit of 1.5544 (as price feeds vary not only between different brokers but also betwen different customers of the same broker, anyone looking at these figures would have to adjust to his or her broker's price feed).

 

As you can see, price did rally briefly and choppily above the double red lines prior to breaking below the blue trendline. It did this after I had finished watcing and gone to bed. If I were trading these markets myself, I would have set my orders exactly as I outlined above - if price dropped to 1.5594, I would want to be short, and if ater getting short, price rallied above 1.5634, I'd want no longer to be short.

 

As I said last night, a drop below that blue line would be a high probability 50 tick profit in the bank. Makes me wish I had my own forex account to trade. Again, as I mentioned last night, I know traders, in fact, I see traders posting right here at TL who place 4-6-8 or more trades each day and at the end of the week haven't made 50 ticks net profit. I'm not saying that there are not successful scalpers out there (and I am aware that neither what they do nor what I describe here is "scalping" in the sense of buying and selling inside the spread), but it does seem to me an awful difficult and stressful way to earn a living. But to each their own.

 

Trading S/R:

 

1) Allows you to plan your trades in advance,

2) Allows you to scalp for 30-50-100+ ticks per trade rather than 2-5-10 ticks per trade,

3) is so easy to learn even a child can do it.

 

That third characteristic is what makes trading S/R so difficult, as human emotion balks at the thought that something where 95% of the participants are unsuccessful should have so simple a solution. Of course, leaning S/R is made somewhat difficult by misinformation about what it is. For example, in a recent issue of TASC, an article about S/R contained at least one glaring mistake where a test of support is characterized as a false breakout because the author identified a price level as support before that level could legitimately have earned the honor of being so named. I am sure most folks reading that article would have agreed with the author that a "false break" had occurred.

 

The good news is that you do not need to spend thousands of dollars on a trading course, special software, or a paid mentor. A few inexpensive books, a demo account, and lots of hands-n, eyeballs-on practice and screen time and within a few months, you should be well on your way to freedom.

 

Of course, learning to trade S/R is truly the easy part.

 

The hard part is controlling your emotions, your fear and hope and greed, but mostly your fear of loss. If you can control that, and learn S/R, then you will have acquired something truly liberating.

 

 

Best Wishes,

 

Thales

[thalestrader 14]

Here is an interesting study of Support and Resistance in Action

 

Best Wishes,

 

Thales

[forrestang 10]

Here is an interesting study of Support and Resistance in Action

 

Best Wishes,

 

Thales

 

Ignore the following post, no need to reply as I am unsure how to even phrase the question?

 

But sometimes I don't get what's going on?

[rcossey73 10]

 

Trading S/R:

 

1) Allows you to plan your trades in advance,

2) Allows you to scalp for 30-50-100+ ticks per trade rather than 2-5-10 ticks per trade,

3) is so easy to learn even a child can do it.

 

That third characteristic is what makes trading S/R so difficult, as human emotion balks at the thought that something where 95% of the participants are unsuccessful should have so simple a solution.

 

Best Wishes,

 

Thales

 

Just wanted to say Thanks for such a great thread.

 

I struggle with s/r because of #3. My head tells me "Nah it can't be that easy" and I keep searching for something else only to let the trade pass me by. Hopefully I can figure out the mental part and get my trading back on track.

[thalestrader 14]

Ignore the following post, no need to reply as I am unsure how to even phrase the question?

 

But sometimes I don't get what's going on?

 

Hi Forrst,

 

I'd never want to ignore a friend.

 

The first chart just shows price. The subsequent charts show various S/R levels marked by horizontal trend lines. The point I was trying to make is that once you identify S/R levels, it makes it much easier to see "where" price is in relation to where it is likely going.

 

It might be easier if you put that post together with the posts from last night that I made using the GBPJPY. Start with last night's posts, and then lok at thse charts.

 

Best Wishes,

 

Thales

[forrestang 10]

Hi Forrst,

 

I'd never want to ignore a friend.

 

The first chart just shows price. The subsequent charts show various S/R levels marked by horizontal trend lines. The point I was trying to make is that once you identify S/R levels, it makes it much easier to see "where" price is in relation to where it is likely going.

 

It might be easier if you put that post together with the posts from last night that I made using the GBPJPY. Start with last night's posts, and then lok at thse charts.

 

Best Wishes,

 

Thales

I will look over those posts again.

 

With the idea of how to observe the 'natural' swings of the markets, big,small and intermediate......

 

Can you throw a picture up of S/R and why you picked them as levels? Sometimes it's obvious, but some of them I cannot see at times.

 

I think with the question Morgan asked in the other thread with certain breakouts and why certain were not taken, it was because they were of different move sizes. These swings obviously effect how one marks S/R.

 

Thanks,

Forrest

[Gabe2004 10]

Here is an interesting study of Support and Resistance in Action

 

Best Wishes,

 

Thales

 

Thales

 

Would you have shorted @ A or B and how many pips below the blue line?

Would you have taken profit @ C (1/2) and @ D (second 1/2) or you would let the whole thing close @ C or another option?

 

Thanks

 

Gabriel

[Dinerotrader 10]

Here is how I am currently marking up my chart. I try to put red lines at S/R breaks that in my mind were unprofitable based on some general stop loss positioning and how far the break went. My hope is that I will start to see some of my problems as I go back and look through days of these breaks.

 

Looking hindsight, it appears easy to see what breaks you should have taken. In foresight, you start finding all kinds of breaks not knowing if any of them are going to lead to that big move up/down. Thales' uncanny ability to call movement gives me hope to become successful. I liked that post Thales put up a few posts before. I am also trying to balance in DBPhoenix's posts on how to NOT find S/R in the middle of nowhere which leads me to want to put more major S/R levels from prior days.

 

I attached the EUR/JPY chart that I have been marking up. I am now looking for breaks between the lines and inital profit targets out the outer blue lines.

 

[thalestrader 14]

Thales

 

Would you have shorted @ A or B and how many pips below the blue line?

Would you have taken profit @ C (1/2) and @ D (second 1/2) or you would let the whole thing close @ C or another option?

 

Thanks

 

Gabriel

 

Once price breaks below that blue trendline, it should not return above the double red lines before it first reaches the lower red line. So a sell stop at 1.5594, with a stop loss at 1.5634, and a profit limit of 1.5544 (as price feeds vary not only between different brokers but also between different customers of the same broker, anyone looking at these figures would have to adjust to his or her broker's price feed).

 

So sell at A, take profit at C, especially as this would have been an overnight trade. If this had been, for example, the 6B, and I was entering an order at night, I would have 1 entry at A, a stop loss above the upper red lines, and one profit target. If it were during the day, Iand I was able to stay on top of the trade, I would have taken half profits at c, and either let the second half ride with a breakeven stop or I would have had a profit target below at the next support.

 

I see that this particular pair has a 4 tick spread at FXCM micro, which means it is probably 5-6 ticks elsewhere, so that 50 tick profit I spoke of may be more like a 40-45 tick profit.

 

As far as entries go, I have always been one to enter on a 1 tick buy/sell stop. Of course, trading at a bucket shop where there is a marked up spread like this pair has, maybe, maybe I'd add a pip or two, so that I wouldn't get filled at a price where price never really traded.

 

That is the one problem with trading at a bucket shop that I do not have to contend with trading currency futures. If have a sell stop on the EURUSD at 1.4100, I may get filled there, even though price never traded there anywhere by at my broker and in my account. Whereas if I have a sell stop on the 6E, and I get filled, I know that price really did trade there, even if I were the lone piker who sold the low tick, it was a real trade.

 

All this is really to say that if you are a forex trader trading with a bucket shop, then you need to get a feel for the manner in which your broker deals the spread.

 

I have my daughter trade primarily the EURUSD, GBPUSD, and the EURJPY. The spread on the EUR rates at FXCM micro are typically 1.2 ticks or less, and the spread on the GBP is typically 1.8 ticks or less (a far cry from the olf Refco days of fixed 3 tick spread on the EURUSD and 5 ticks on the GBPUSD).

 

The good news is this: If you trade S/R, the bucket shops can be beat. But you do have to learn to accomodate the spread in your trading.

 

 

 

Best Wishes,

 

Thales

[Gabe2004 10]

Once price breaks below that blue trendline, it should not return above the double red lines before it first reaches the lower red line. So a sell stop at 1.5594, with a stop loss at 1.5634, and a profit limit of 1.5544 (as price feeds vary not only between different brokers but also between different customers of the same broker, anyone looking at these figures would have to adjust to his or her broker's price feed).

 

Sorry I missed that in your first post.

 

I trade FX with Oanda and their spread varies based on time of day or news.

I was nailed several times by INVISIBLE spikes but not too badly.

Overall they are OK.

 

Have a good weekend all.

 

Gabe

[thalestrader 14]

I trade FX with Oanda and their spread varies based on time of day or news. I was nailed several times by INVISIBLE spikes but not too badly.

Overall they are OK.

 

Have a good weekend all.

 

Gabe

 

My daughter uses FXCM, and they had a strange price spike on the GBPUSD the other day that disappeared later. She wasn't in a trade at the time, so it did not affect her at all. I do not know if FXCM varies the spread at news times as I haven't paid that much attention.

 

Best Wishes,

 

Thales

[thalestrader 14]

Hi Folks,

 

Continuing our Support/Resistance study of the "PoundYen". GBPJPY broke support at 155.35 area and should drop it to at least 155.15(20 ticks). A break there takes it to 154.95 area (40 ticks), and a break there leads possibly to a drop to 154.60 area (70 ticks).

 

Best Wishes,

 

Thales

[thalestrader 14]

Hi Folks,

 

Continuing our Support/Resistance study of the "PoundYen". GBPJPY broke support at 155.35 area and should drop it to at least 155.15(20 ticks). A break there takes it to 154.95 area (40 ticks), and a break there leads possibly to a drop to 154.60 area (70 ticks).

 

Best Wishes,

 

Thales

 

I see that I deleted the 155.15 line when I was deleting some of the text from last week. I put it back on, and you can see that price came down right to that level and is finding a bit of support. I doubt that it is very strong support there, and I'm fairly confident, though nothing is certain, that should price break below that 155.15 will take the GBPJPY quickly down to 154.95.

 

Again, if you are playing along at home you may beed to adjust the precise levels discussed here to your own broker's price feed.

 

Best Wishes,

 

Thales

[Gabe2004 10]

I see that I deleted the 155.15 line when I was deleting some of the text from last week. I put it back on, and you can see that price came down right to that level and is finding a bit of support. I doubt that it is very strong support there, and I'm fairly confident, though nothing is certain, that should price break below that 155.15 will take the GBPJPY quickly down to 154.95.

 

Again, if you are playing along at home you may beed to adjust the precise levels discussed here to your own broker's price feed.

 

Best Wishes,

 

Thales

 

Had you shorted at the break down of 155.35, where would your Stop Loss have been?

 

Thanks

 

Gabe

[thalestrader 14]

Had you shorted at the break down of 155.35, where would your Stop Loss have been?

 

Thanks

 

Gabe

 

Unfortunately, the sensible place for me would have been a quite uncomfortable 90 +/- ticks above at then high of the day. If you look at the chart there was no real swing point that stands out as a closer natural stop. As the minimum anticipated move was only 20 ticks, I would not have considered shorting that break other than as a quick scalp, e.g. 20 tick stop 20 tick limit. When I trade the 6E and 6B, I don't mind 100 tick stops if my profit target is close to 100 ticks. I like to have the relationship between the stop loss and the minimum profit objective be close to 1:1 if not better.

 

The break above that high at 155.20 would have been a good long entry, as

154.80 level did provide an ok stop level, and the first profit target would have been 156.85 level, for a 65 tick profit potential versus a 40 tick risk.

 

Right now, GBPJPY is heading into a real thicket of resistance. Unless there is some external impetus (e.g. news) then this rally will liekly remain choppy as it moves toward 157.30-157.60, and subject to reversal anywhere along the way. Should price break and hold above 157.60, then there should be a good bit of no man's land in which to run.

 

Best Wishes,

 

Thales

[Gabe2004 10]

Short @ 135.641

Took profit on 1/2 @ 135.396

Target 135.225

S/L @ 135.625

[Gabe2004 10]

Stop was too close

[thalestrader 14]

Stop was too close

 

Looks like your stop loss served you well, wouldn't you say?

[Gabe2004 10]

Looks like your stop loss served you well, wouldn't you say?

 

Now yes but 10 minutes after I was hit it did not look like that

 

Gabe

[Dinerotrader 10]

Thales,

At what point does historical S/R become irrelevent to current trading? I start looking back 1 month, 4 months, and even a year wondering if there is any point to using S/R from that long ago especially given the changes in the economy. Just curious of your thoughts on this.

 

Cheers.

[thalestrader 14]

At what point does historical S/R become irrelevent to current trading?

 

S/R matters until it no longer matters. I don't mean that to be flippant, but it is true. I remember an article or book by John Murphy where he used the example of IBM stock to show the "memory" the market has for various price levels. I do not remeber precisely, but I beleiev that IBM found support at $40/share some twenty-five years apart. I am likely off by a bit, but that is how I remember it.

 

Probably not the answer you were looking for, and maybe if I weren't so tired I could come up with a more well thought out answer. But off the top of my head, I'd have to say just what I said - An S/R level matters until it doesn't.

 

Best Wishes,

 

Thales