Reading Charts in Real Time

[Kiwi 16]

Cory,

 

You should do the following:

 

a) Get a copy of New Market Wizards out of the library and read the interview with William Eckhardt. I have owned the book since before I started trading and just reread it the other day. Its probably the tenth time and it always tells me something. Then reread what you said above.

 

b) Test it. Go back to the beginning of the period and even allowing for the fact that you know whats going to happen see how it goes when each one is coming at you from the right hand edge.

 

Anyone who is new to trading or considering trading and hasn't yet read Eckhardt's interview would do themselves a huge favor by doing so and by underlining the stuff that seems important. You could also look up a guy who's gone by the name's TheRealThing, Leonardo, and Joel Rensink - his stuff + Mark Douglas's stuff is very important. But start with the big E.

 

 

For the record I think that MK did succeed in Cherry Picking losers and that Thales examination of them will be useful. I also support Thales suggestion that people narrow their focus to the big 3 or 4 in part because if you only look at them you get to take each opportunity rather than attempting to pick which one to take from a larger selection of pairs. http://www.traderslaboratory.com/forums/208/reading-charts-real-time-6151-177.html#post81985 I don't know how many times I've seen two factors suggested in people finally digging their way out of the losing game that forex is for most people - narrowing their focus to one or a few pairs and/or going up timeframes to a minimum of 4H and preferable 1D.

Edited November 26, 2009 by Kiwi

[Kiwi 16]

If someone is looking for an electronic copy of NMW then they might try looking at 4shared dot com a repository of considerable amounts of material.

[Cory2679 11]

Cory,

 

You should do the following:

 

a) Get a copy of New Market Wizards out of the library and read the interview with William Eckhardt. I have owned the book since before I started trading and just reread it the other day. Its probably the tenth time and it always tells me something. Then reread what you said above.

 

b) Test it. Go back to the beginning of the period and even allowing for the fact that you know whats going to happen see how it goes when each one is coming at you from the right hand edge.

 

Anyone who is new to trading or considering trading and hasn't yet read Eckhardt's interview would do themselves a huge favor by doing so and by underlining the stuff that seems important. You could also look up a guy who's gone by the name's TheRealThing, Leonardo, and Joel Rensink - his stuff + Mark Douglas's stuff is very important. But start with the big E.

 

 

For the record I think that MK did succeed in Cherry Picking losers and that Thales examination of them will be useful. I also support Thales suggestion that people narrow their focus to the big 3 or 4 in part because if you only look at them you get to take each opportunity rather than attempting to pick which one to take from a larger selection of pairs. http://www.traderslaboratory.com/forums/208/reading-charts-real-time-6151-177.html#post81985 I don't know how many times I've seen two factors suggested in people finally digging their way out of the losing game that forex is for most people - narrowing their focus to one or a few pairs and/or going up timeframes to a minimum of 4H and preferable 1D.

 

Kiwi,

 

I have the book and quickly skimmed the Eckhardt interview...I assume your point was the discussion about the chart patterns and the human mind "seeing" patterns, even in random data. Interesting stuff. Thanks for the reference.

 

I'll thoroughly re-read the interview and look up the other references tomorrow...off to bed now. I have read Douglas's Trading in the Zone.

 

And FWIW, manually "replaying" past data against the hard right edge is something I do.

 

-Cory

[Kiwi 16]

Cool. Yes, you got it. And his reference to the stochs in a similar test.

 

Leonardo does something similar to what Thales does - similar kind of.

 

 

.

Edited November 26, 2009 by Kiwi

[jonbig04 10]

Well Thales maybe it's a good sign. The first time I employ your strategy and I hit a monster. A monster for me at least. 1:7 R/R on that one, good stuff. That will at least staunch the blood flow for the month.

 

+11.5ES

 

[thalestrader 14]

Hundreds of ticks available if I'm right about this short opportunity on the GU.

 

Hi Folks,

 

We are up and at 'em early here at the Thales' Home this mornng (though it will be back to bed time soon).

 

The GBPUSD trade plan worked well. First PT filled for +130 ticks, Price dropped to within 41 ticks of my second PT. The bounce from those levels has generated a potential long opportunity. I am holding the second half short, with a stop at +50 on the remaining position.

 

For those who are having a tough time with this approach, perhaps a step back from day trading the small degree swings and a shift of focus to a larger degree swing such as this trade was based upon would be useful.

 

Best Wishes,

 

Thales

 

Best Wishes,

 

Thales

[thalestrader 14]

Well Thales maybe it's a good sign. The first time I employ your strategy and I hit a monster. A monster for me at least. 1:7 R/R on that one, good stuff. That will at least staunch the blood flow for the month.

 

+11.5ES

 

Congratulations, Jon! Nice trade. They will not all work out so well, and there will be losers along the way. But you seem to have a good grasp of the approach and a trading plan, so you should be fine.

 

Congratulations again on a a well played trade!

 

Best Wishes,

 

Thales

Edited November 26, 2009 by thalestrader

[Gabe2004 10]

Hiya Thales,

 

As I saw it at that time, this was a H-L-LH into the the late resistance from Friday. Based on your questions, I have one for you of which I will ask after answering yours.

 

1) No, I don't see why you were so aggressive on the first long. Even after you posted it I remember saying to myself that I thought that was an aggressive entry and I didn't really see it. At the time of your first entry, yes, it could have been a false break below Friday's low but I still saw it as an aggressive stance (which is fine of course!). The second one I could see as taking, maybe....but it isn't what I would have called an obvious trade, especially with the R from late Friday just overhead. If I only noticed the second one and wasn't in from somewhere near the assumed false break after the open, then I would have felt too late getting on the long side as this would have been in the middle of a fairly tight range (tight for GJ) and would have preferred to play the edges of that range. The first obvious trade I saw based on the type of trades posted in this thread came at the short that I took.

 

Hello MK

 

I must admit that I am strugling too with general concept but I will continue with it for a while.

As far as the above goes, I took a long at the same time as Thales but not because there was a valid setup based on his teaching but because there was a gap and these gaps on Sunday night tend to close fairly quickly.

 

Don't give up.

 

Gabe

[Gabe2004 10]

Hi Folks,

 

We are up and at 'em early here at the Thales' Home this mornng (though it will be back to bed time soon).

 

The GBPUSD trade plan worked well. First PT filled for +130 ticks, Price dropped to within 41 ticks of my second PT. The bounce from those levels has generated a potential long opportunity. I am holding the second half short, with a stop at +50 on the remaining position.

 

For those who are having a tough time with this approach, perhaps a step back from day trading the small degree swings and a shift of focus to a larger degree swing such as this trade was based upon would be useful.

 

Best Wishes,

 

Thales

 

Best Wishes,

 

Thales

 

Based on past posts I would have thought that you would move to BE at some point. Possibly around the time that the first swing occured at 1.6650 around midnight EST.

I took the same trade but because i moved my stop to BE I did not participate in the whole move down.

My 2nd question is - how did you pick your profit target and why wasn't 1.6650 a valid PT1?

 

Thanks

 

Gabe

[thalestrader 14]

Based on past posts I would have thought that you would move to BE at some point. Possibly around the time that the first swing occured at 1.6650 around midnight EST.

I took the same trade but because i moved my stop to BE I did not participate in the whole move down.

My 2nd question is - how did you pick your profit target and why wasn't 1.6650 a valid PT1?

 

Thanks

 

Gabe

 

Hi Gabe,

 

You and I were short the same market but trading from different places. I have attached a chart that should clear things up for you. I was trading off of a swing sequence of which your sequence was but a small part. I used your trade to gain a more favorable entry (perhaps Blowfish would call it a "Trader's Trick Entry" per Joe Ross).

 

For your trade, my BE move would have occurred at 1.6676, and my PTs would have been 1.6664 and 1.6628.

 

I did have a BE level for my trade. It was 1.6620. Price looks as though it barely paused as it broke that level. And let's not forget that went to bed soon after this trade triggered, so I was not in a position to move my stop manually. As I say on the chart, this trade was basically PT or bust.

 

I chose my profit targets as I always do - I use S/R zones to show me where price is likely going, and I use fib levels that fall within those zones to tighten up the orders. I know I have stated this several times during the course of this thread, right?

 

You had a good trade it seems. And in spite of similar entry points, your trade and my trade where coming from different views, using the same approach.

 

Best Wishes,

 

Thales

[thalestrader 14]

Hi folks,

 

I am going to be shutting down for the day soon. It seems as though some folks are struggling a good bit with this approach while others are getting along well. I'm sure we have folks scattered at various places between absolute struggle and smooth sailing.

 

I want to point out a few posts that have some valuable suggestions. If you are not where you want to be with this, and if you wish to continue, then why not take some time and ponder the points made in the following posts (These are all snippets, so click on the quote and read the posts):

 

I wonder ...

 

Instead of thinking of it as overhead resistance what about reversing that and thinking about it as an overhead magnet.

 

This seems like quite a small thing but it is quite profound in it's implication.

 

If you buy into the idea that resistance becomes support when broken (which we all do right?) then isn't there always a potential long lurking wherever there is a short?

 

And last, but not least, are these diagrams contributed by Jon the other night. I for the life of me cannot figure out why I am the only one who thanked Jon for posting these diagrams. Yes, as he notes himself, they are simple. But these diagrams are what you should be looking for with this approach. If you are struggling, you should print these out and hang them by your work station. If you think you see an opportunity, and you cannot "overlay" these diagrams over your price chart to make a fit, then do not trade it!

 

I'd like to thank Jon again for putting these together. My daughter actually saved them and configured them as her desktop wallpaper. And you know, she has an eye for these things.

 

Best Wishes,

 

Thales

 

 

Yes, I realize these could have been drawn by a 7 year old with a crayon, but that's the beauty of it!

 

 

[Gabe2004 10]

Hi Gabe,

 

You and I were short the same market but trading from different places. I have attached a chart that should clear things up for you. I was trading off of a swing sequence of which your sequence was but a small part. I used your trade to gain a more favorable entry (perhaps Blowfish would call it a "Trader's Trick Entry" per Joe Ross).

 

For your trade, my BE move would have occurred at 1.6676, and my PTs would have been 1.6664 and 1.6628.

 

I did have a BE level for my trade. It was 1.6620. Price looks as though it barely paused as it broke that level. And let's not forget that went to bed soon after this trade triggered, so I was not in a position to move my stop manually. As I say on the chart, this trade was basically PT or bust.

 

I chose my profit targets as I always do - I use S/R zones to show me where price is likely going, and I use fib levels that fall within those zones to tighten up the orders. I know I have stated this several times during the course of this thread, right?

 

You had a good trade it seems. And in spite of similar entry points, your trade and my trade where coming from different views, using the same approach.

 

Best Wishes,

 

Thales

 

This was my trade.

It was a late entry but I thought it was worth it.

When I went to sleep I did not want to take a chance anf put a stop @ BE +2.

 

Closed 2/3 for 25 pips each 1/3 and 2 pips on the last 1/3.

 

Gabe

[Don4 10]

My hard stops are nothing mysterious. The initial stop that is attached to my entry order is one tick above/below the last reaction prior to my entry trigger. I always have at least one profit target, usually two, sometimes three. I will set my OCO limit order or bracket order for my second profit target. Once my entry is triggerd, I manually enter my firt profit target imit order.

 

Before the trade is triggered, I have a level at which if price moves that far in my favor, I will move my stop to break even. An old one eyed trader from Texas I know used to call it "the trend killer level." It is a level at which there is potential support/resistance to kill the move in your favor. (Take a look at the attached chart. The dotted Magenta line is my "trend killer level" where if price touches it, I want to protect myself form outright reversal against me with a break even stop. I extended the line so you can see from where it came).

 

Some trades, there is nothing between my entry and my first profit target. In that case, there is no trend killer level, and I will simply watch price as it makes its way toward my first profit target. I will move to break even once price moves 10-20 ticks in my favor. Each trade is different, and it depends upon how price is moving.

 

Once my first profit target is filled, I will definitely have a break even stop on the remaining position, and I will typically start to trail it with a 5 tick move for every additional 5 ticks in my favor.

 

This works for me. You have to find what works for you. All I know is that I hold it as no badge of honor to hold a 10 or 20 tick profit into a loss. I see folks all over the place trying to squeak 2-4 ticks/trade out of the ES. Why should I feel bad to take 10 ticks of a one time 20 tick profit on the 6E? Why would I want to allow an open trade equity of 20+ ticks roll back to a -10 tick loss? For what?

 

I know when I am playing for 100 ticks. I know when I am playing for 20 ticks. I am not going to get upset if I take 10 ticks of a 20 tick move that the runs for 100+ ticks without me. I am not going to get upset if I am playing for 100 ticks, and I get stopped out with +30 if price is going to go all the way back to -20 before rolling for +100.

 

You have to take what the market gives you, and get out with what you can.

 

Best Wishes,

 

Thales

 

This is the reason that I dont use stops. Or place them very, very far away. Did you even read this post above. You had to of since you wrote it. But it would seem as though you avoided everything that you wrote. Why! What made you avoid all of this?

 

Thanks,

Don

[BlowFish 10]

Hi Thales,

 

snip....

 

These entries that we talk about, the H-L-LH type thing is nothing more than entry trigger with perhaps a minor execution edge. It is not a complete setup IMHO.

 

Quite. It seems recently the thread has drifted toward the trigger (and trade management - that is not a bad thing imho). The 'context' is absolutely as important (arguably more so) a part of the set up, always has been. TT is always pointing out that these trades should be taken at S/R and never intimated that all '123s' should be taken.

 

I do understand where you are coming from (as I said before) sometimes I loook at TT's trades and thing hmmmm I'd favour the short side here (if it breaks that way) where he is lining up a long (if it breaks the other way).

 

There is a saying about how if you do the same thing again and again you will likely get the same outcome. It may well just need the tiniest change to change the outcome. I hope you decide to try and establish what needs to change rather than just starting again. Sounds to me as if just fading the BO's you are taking would do the trick. (I am not being facetious). In any case I think it would probably be beneficial posting some of your chart with your context for the trade. Having established the trigger is almost trivial in its simplicity, it leaves context or management (or a mixture) that must be going astray.

 

Edit: As usual I am playing catch up to the thread and see you have posted charts and stuff has moved on.

Edited November 26, 2009 by BlowFish

[brutusdog 10]

If someone is looking for an electronic copy of NMW then they might try looking at 4shared dot com a repository of considerable amounts of material.

 

or sribd has it also.

[thalestrader 14]

This is the reason that I dont use stops. Or place them very, very far away. Did you even read this post above. You had to of since you wrote it. But it would seem as though you avoided everything that you wrote. Why! What made you avoid all of this?

 

 

 

 

 

 

I had a -40 tick stop on this trade. If you want to trade without a stop, go ahead, its your money. I'm not sure why you appear as angry as you do, but I would refer you to the following two posts:

 

1)

 

Unless it is an overnight trade where it is open while I sleep, I will not allow a 50 +/- tick profit to turn into a loss.

 

2)

 

Finally, I have said elsewhere here at TL that for every "rule," or "guideline," or "I do," that I post, I have a bushel basket of trades in which I have violated one or more.

 

The second half of this position is still open and still holding for PT2. And here is the chart I posted of the GBPUSD trade that you attached to your post.

 

I would think that anyone who has both read and paid attention to my posts in this thread from the beginning would agree with me in saying that I am extremely consistent for a discretionary trader.

 

-Thales

Edited November 26, 2009 by thalestrader

[thalestrader 14]

Hi Folks,

 

Hundreds of ticks available if I'm right about this short opportunity on the GU.

 

Best Wishes,

 

Thales

 

Stop on the second half is +178.

 

Best Wishes,

 

Thales

[Gabe2004 10]

 

I chose my profit targets as I always do - I use S/R zones to show me where price is likely going, and I use fib levels that fall within those zones to tighten up the orders. I know I have stated this several times during the course of this thread, right?

 

 

I am having a problem defining SR zones.

Could you help in understanding how you decide whether a zone of prices is or is not a valid SR zone?

 

Thanks

 

Gabe

[Gabe2004 10]

This is the reason that I dont use stops. Or place them very, very far away. Did you even read this post above. You had to of since you wrote it. But it would seem as though you avoided everything that you wrote. Why! What made you avoid all of this?

 

What do you do if you have a power failure?

Or you internet connection gets severed?

 

I had 2 occasions of loss of Internet connection and I can tell you that I was in BIG trouble?

The loss of power I solved by attaching a UPS to each of my 2 computers.

 

At one point I had a land line to back up my cable internet connection but unfortunately that option is gone now as most of the phone companies in my area switche dto providind phone service over the internet.

 

Whe I will get to be positively successful, with larger trade sizes I will look for another solution to the internet connection problem.

 

Maybe spring for a land line, totaly separate from my home phone or get a wirelless modem that will go through my cell phone.

 

In any case, I think that trading without stops is suicide and moving your stops after the trade has been initiated is equally dangerous.

 

I must admit that occasionally I still move my stops but I would say that 95% of the time that was a mistake.

 

Take care

 

Gabe

[Don4 10]

I had a -40 tick stop on this trade. If you want to trade without a stop, go ahead, its your money. I'm not sure why you appear as angry as you do, but I would refer you to the following two posts:

 

1)

 

 

 

2)

 

 

 

The second half of this position is still open and still holding for PT2. And here is the chart I posted of the GBPUSD trade that you attached to what strikes me as an impolite post at best, and confrontational at worst.

 

I would think that anyone who has both read and paid attention to my posts in this thread from the beginning would agree with me in saying that I am extremely consistent for a discretionary trader.

 

-Thales

 

First, I would like to apoligise about what I wrote but I was not angry when I wrote it. But reading it again I can see how you thought I was. Sorry!! With that said I think you are doing an amazing job with this system. You are a polite person and very,very humble.

 

Thanks,

Don

[Don4 10]

What do you do if you have a power failure?

Or you internet connection gets severed?

 

I had 2 occasions of loss of Internet connection and I can tell you that I was in BIG trouble?

The loss of power I solved by attaching a UPS to each of my 2 computers.

 

At one point I had a land line to back up my cable internet connection but unfortunately that option is gone now as most of the phone companies in my area switche dto providind phone service over the internet.

 

Whe I will get to be positively successful, with larger trade sizes I will look for another solution to the internet connection problem.

 

Maybe spring for a land line, totaly separate from my home phone or get a wirelless modem that will go through my cell phone.

 

In any case, I think that trading without stops is suicide and moving your stops after the trade has been initiated is equally dangerous.

 

I must admit that occasionally I still move my stops but I would say that 95% of the time that was a mistake.

 

Take care

 

Gabe

 

Maybe I can answer your questions like this.

What do you do if you have a power failure? It doesnt matter if I can place a trade I am in with stops. 8tp and 160sl now its safe to say that if I took all the setups that my system gives I would find maybe a few trades in the week that would be losers. Thats why I only take 2 to 3 trades a week with most of them being 2. But I would prefer 1. The less trades that I make the higher probability of a profit. The more trades that I make the higher probability for failure. So, does it really matter what system I use? I would have to say no, but I want to get my 8 pips as soon as I can. Even if I am not around my computer to see it.

Or you internet connection gets severed?

Like last night, sorry about that!

 

,Don

[jonbig04 10]

Well Thales maybe it's a good sign. The first time I employ your strategy and I hit a monster. A monster for me at least. 1:7 R/R on that one, good stuff. That will at least staunch the blood flow for the month.

 

+11.5ES

 

Congratulations, Jon! Nice trade. They will not all work out so well, and there will be losers along the way. But you seem to have a good grasp of the approach and a trading plan, so you should be fine.

 

Congratulations again on a a well played trade!

 

Best Wishes,

 

Thales

 

Thanks, Just happened to get a good one in on the first try. Congrats on that larger winner of yours also.

 

I'm a little frustrated bc I thought the markets were closed today. I had a short in place for the break down to 1082 and figured I could do it tonight or tomorrow. But alas the market was open and I missed it. The trigger would have been the lower-low at 1092 with a target at 1082.75. I was already up late with the other trade. It seems there's no rest in this business haha.

 

As Thales mentioned, if you are struggling I would look over those ultra-simple diagrams I drew. When I was in #AHG we had dozens of those things and they always helped me visualize the trade. To be honest it seems like some here are over-thinking the concept.

[Kiwi 16]

Hi folks,

 

I am going to be shutting down for the day soon. It seems as though some folks are struggling a good bit with this approach while others are getting along well. I'm sure we have folks scattered at various places between absolute struggle and smooth sailing.

 

I want to point out a few posts that have some valuable suggestions. If you are not where you want to be with this, and if you wish to continue, then why not take some time and ponder the points made in the following posts (These are all snippets, so click on the quote and read the posts):

 

 

 

the original post with links is here

 

 

 

 

And last, but not least, are these diagrams contributed by Jon the other night. I for the life of me cannot figure out why I am the only one who thanked Jon for posting these diagrams. Yes, as he notes himself, they are simple. But these diagrams are what you should be looking for with this approach. If you are struggling, you should print these out and hang them by your work station. If you think you see an opportunity, and you cannot "overlay" these diagrams over your price chart to make a fit, then do not trade it!

 

I'd like to thank Jon again for putting these together. My daughter actually saved them and configured them as her desktop wallpaper. And you know, she has an eye for these things.

 

Best Wishes,

 

Thales

 

 

 

 

 

I was following Thales links and thought that something I wrote this morning might also apply to the magnet conception:

Why Does Support Turn into Resistance and Vice Versa?

 

 

On the question - which S&R is important I suggest thinking about the following things:

- the more people that can see something the more important its likely to be (can it be seen on hourly, 4H, and daily charts? weekly?)

- if two areas are close together, is it the closer, middle or more extreme that's effective in your market?

- here are some odds enhancers for s&r creating a bounce (and maybe, thus, for attracting price in the first place (maybe))

-- did price move strongly out of the area in the first place (there was lots of supply or demand so some might be left over)

-- is a bounce supported by what longer term players would perceive to be current trend/flow (4H, daily?)

-- is this the first or second time S&R is tested (third and fourth tests are much more likely to break)

-- does it arrive cleanly (straight in rather than pausing and retracing just before which is more likely to generate a break and even if it doesnt will provide s&r against the move back).

 

S&R is a probability. So you never know. At most, you can look for things that say the probability is higher.

 

 

 

Happy Thanksgiving Americans :thumbs up:

 

Edited November 26, 2009 by Kiwi

[jonbig04 10]

I don't mean to jack this thread at all because I know everyone is trying to learn from Thales, but since swing trading was suggested I thought I should post this, as it may turn out to be important.

 

[Cory2679 11]

Hey guys,

 

I just pulled up the GU...curious to see it after Thales' trade last night...

 

I wonder...does it still have further to go??

 

My first chart is the 4 hour chart, and a line that I'd consider strong support...perhaps this support will act as a "magnet"?

 

That's not to say there couldn't be a pullback before it reaches that level...

 

I was tempted to short where where I've indicated on my 15 minute chart, but I'll think I'll just stick to the sidelines for this one...I'm not necessarily comfortable with jumping into a move that has already come SO far.

 

-Cory