What Really Works for Technical Traders

[Ingot54 13]

So true...

 

Why risk $150 to make $150 when you can risk $150 to make $600? $800? $3000???

 

Reward to risk, baby!

 

Luv,

Phantom

My post makes #126!!

 

What a pity I had to read through 7 pages to get here. Many comments were worthwhile, but ...

 

Phantom - do you still have plans to summarise your ideas into a .pdf file or similar?

I'll come back in mid July ... this has been an exasperating read!

 

Is there a needle in this haystack, because ...

[phantom 16]

Phantom ...

 

i have read your posts and chart examples with interest. I agree that one must try other mkts than ES NQ etc. How do you pick other futures such as grains etc a) Do you regularly check all grains to see which one is setting up? same with the currency b) Do you have some grains/currency that you find better than others in the category?

 

Thank you ..great thread and hope you will keep posting your setups ..

 

 

Hi Pat,

 

Been on holiday w/o internet access, then chased from my home due to the LAS CONCHAS fire, so pardon my delays in responding...

 

I look for markets that provide opportunities for entries where I can get in with an initial risk of somewhere around $100-$150 per car, and markets that are not too prone to whiplash. Corn, beans, euro currency are my personal favorites, but there are others. I avoid stock indicies like the plague.

 

I personally think that most traders spread themselves WAY too thin by monitoring multiple markets. If one cannot master a single method of trading in one market, how can one expect to trade multiple markets effectively?

 

I will get deeper into price action in this thread when I can return to my home.

 

 

Luv,

Phantom

[phantom 16]

My post makes #126!!

 

What a pity I had to read through 7 pages to get here. Many comments were worthwhile, but ...

 

Phantom - do you still have plans to summarise your ideas into a .pdf file or similar?

I'll come back in mid July ... this has been an exasperating read!

 

Is there a needle in this haystack, because ...

 

 

Hi Ingot,

 

PM me and I'll provide an adequate reply to your questions...

 

 

Luv,

Phantom

[jrcata 10]

Glad to see that this thread may continue on. I found that the thread started off providing some quality information and took a slight turn when people started questioning Phantom's motives. I believe this thread, along with some others here at traders lab, contain little pearls of wisdom that may provide a struggling trader with that aha moment. Continue your good deed Phantom, Im sure there are many lurkers like myself paying attention.

 

Regards,

[phantom 16]

Charts work with indicators if one knows how to apply the indicators

 

MACD: Moving Average Convergence-Divergence: Use this indicator to pinpoint reversals on failed tests of previous swing points. Also use this indicator on 20 sma tests to see if the test is "normal" for the current trend-the fast line on the MACD should not penetrate the slow line during the test.

 

RSI: Relative Strength Index" Set this at a value of 6. When overbought (touching the 75%

line) or oversold (touching the 25% line) look for reversals in the market when the RSI crosses over to head for the other side (OB or OS line)

 

Bollinger Band: The underlying premise is this: a 20 sma of price action channeled by a 2 SD band. 2 SDs are supposed to contain price action around 96% of the time?

 

So, how does this band give any advantage to the novice trader? Look for PINCHES in the band; places where volatility has subsided to historically low values. Then look for breakouts of the pinch zones with large range bars, especially following narrow, tightly ranged bars. These volatility breakout bars should be 2 to 3 times the average range of the range-bound bars. And the breakouts should be congruent with the overall trend (i.e. the 240 minute chart 20 sma determines the immediate trend?)

 

Reminder: the smallest time frames I look at are 10 & 15 minutes. Smaller time frames produce all kinds of problems.

 

Practice makes perfect!

 

 

Luv,

Phantom

[IamJon 10]

Phantom,

 

Thanks so much for your food for thought. I have looked over charts that are futures other than the stock indexes and see many good trade opportunities. This is great information. The other observation is that almost all of the trades I see that fit the method are range bound prior to a news release, followed by the large increase in range and movement (breakout) from the interpretation of the news. The fundamentals (or at least the psychology of the participants) drives the price action. Since the market velocity is rather high for this type of trade, I am wondering what type of order you typically use for your trade entry to get a good fill?

 

It would also be great if you could expound more on your recent post on specific indicators,and how you use them to augment your trading style.

 

Thanks,

 

J.

[jwhtrades 10]

Phantom, it seems to me the value of a hammer is at the bottom of a trend. Your example is showing the hammer as the prices are rolling over to the downside. A hammer, by definintion (Nison) would occur at the end of trend to qualify as a hammer. Even then, it would need confirmation to be of any value.

 

 

 

This is the July Beans showing a perfect consolidation breakout followed by a hammer. Notice the "rattail" that helps identify the hammer. See if you can identify the other two hammers in this down move (both excellent places to pyramid your position).

 

This is only one of several breakout systems I developed and trade but I'm able to get in on several sustained breakouts each week with this method in just the currency futures alone.

 

Hope this helps.

 

 

Luv,

Phantom

[eplum 10]

Phantom - great topic and content, thanks!

 

Question - Have you looked at volume bars vs. time bars? I'm just curious to get your take, as in the last year I have found the volume bars much more compelling, particularly when used to quantify the battle between bulls and bears (aka price action).

[phantom 16]

Phantom,

Since the market velocity is rather high for this type of trade, I am wondering what type of order you typically use for your trade entry to get a good fill?

 

I usually use a stop order 1 tick outside the signal bar, hammer or doji, with a risk stop on the other side of the signal bar.

 

In the event that the market moves too quickly to get the stop placed prior to the breakout, I'll enter at the market with the same risk stop placement.

[phantom 16]

Phantom - great topic and content, thanks!

 

Question - Have you looked at volume bars vs. time bars? I'm just curious to get your take, as in the last year I have found the volume bars much more compelling, particularly when used to quantify the battle between bulls and bears (aka price action).

 

I haven't spent any time with volume bars per se; I am looking into range bars for specific applications and I do trade tic charts in some applications.

[phantom 16]

It would also be great if you could expound more on your recent post on specific indicators,and how you use them to augment your trading style.

 

MACD: I use this to filter trades. I only sell contracts when the fast line is below the slow line and I only buy contracts when the fast line is above the slow line. I use a 5,13,13 setting on the MACD for reasons beyond the scope of this training; just take it for what its worth to you.

 

RSI: I told you how to use this, but I don't use it any more because I use market price as it relates to the Bollinger band as a proxy for RSI.

 

Bollinger band: I look for pinches in the BB to show me that volatility has decreased prior to my entries. I NEVER chase the market; if I miss a breakout opportunity, I close shop because I know that there will ALWAYS be more opportunities in the future, as long as I haven't depleted my trading account by trading in an undisciplined manner.

 

Other than that, I use price rejection and clear channel breakouts as my cornerstones to making money consistently.

 

If you're looking for more than this, you'll have to look elsewhere...

 

 

Luv,

Phantom

[phantom 16]

Phantom,

 

Thanks so much for your food for thought. I have looked over charts that are futures other than the stock indexes and see many good trade opportunities. This is great information. The other observation is that almost all of the trades I see that fit the method are range bound prior to a news release, followed by the large increase in range and movement (breakout) from the interpretation of the news. The fundamentals (or at least the psychology of the participants) drives the price action.

 

Jon,

 

I never really concerned myself with the reasons behind price movement, be it psychology of traders, supply/demand, someone trying to corner the market, WHATEVER...

 

It is what it is, and my attempts (or any other person's for that matter) will not produce one single iota of change to what is going to happen in the future. Those folks that tell you they know why the market did what it did or will do what it is going to do are only kidding themselves and you, if you choose to believe it.

 

My best advice to you is to stop looking for the why of price action and focus on the fact that the market is doing what it is doing, anti-dis-irregardless of the reasons behind the events.

 

Furthermore, don't kid yourself into believing that you'll need a report to drive the markets. Although it is true that reports have a tendency to create hyper-volatile moments, most of my success on report days has come from being in position BEFORE the news release. If you have a way of consistently beating the markets after the news release, I'm all ears.

 

Anyway, if anything this thread reveals has rung true to you, just focus on the cornerstones I mentioned in my last post: volatility, channel breaks and price rejection.

 

In my mind, nothing else matters.

 

 

Luv,

Phantom

[bobcollett 10]

For those of you looking for more detail on Phantom's "hammers", without all the wisecracks and interference

Read ........ Candlesticks and Pivot Point Trading Triggers by John Person

He looks for support/ resistance at a pivot. Then he looks for a hammer / doji at this level.Then he trades in the direction of the next closing bar which is higher / lower

Simple, and I find it works on 30min charts and higher

You can find the book at 4 SHARED.COM

Regards

bobc

[kuokam 10]

hi Phantom,

 

What I struggle with, is why you refer to Bolly Bands, 20 ema, MACD, Hammers etc,

when it is obvious that you can read price behaviour so clearly.

 

Hi,

 

In my opinion,it "so clearly" appears only in hidnsight. If you eliminate all the candles at the right of the red arrow, the situation is less clear, especially given the prior bullishness of the trend.

 

Kuokam

[phantom 16]

Hi,

 

In my opinion,it "so clearly" appears only in hidnsight. If you eliminate all the candles at the right of the red arrow, the situation is less clear, especially given the prior bullishness of the trend.

 

Kuokam

 

 

Well said, my friend. Well said.

 

 

Luv,

Phantom

[SUTTS 10]

Thanks Phantom, your help has been invaluable. Great to see an experienced trader giving up precious time to help the stugglers. It took me 4 years to get rid of my stupid indicators but I'll never look back. It's amazing how those wiggly lines stop you seeing what is really going on.

[phantom 16]

I received a PM asking about this trade.

 

I missed this trading signal last night because of its timing, but for those of you around the globe who were up and monitoring the EC, I thought I'd go through it for you...

 

The euro market had been channeling for several hours. Just after midnight (GMT +7) the market broke upwards out of the channel. We see the price action waiver around for awhile and then retrace to the breakout zone, followed by a quick move upwards and back down.

 

The market proceeded to move through the channel and downward, followed by a test of the lower channel zone. A doji formed at the test point. A downward break of this doji around the 1.4220 area led to a sharp decline to the 1.4120 area, a $1200 (plus or minus) profit per car for those involved. Not bad for a $200 risk...

 

Notice how waiting for the doji test of the channel zone kept one from taking the breakout to the upside and getting stopped out.

 

Similar signals in this market happen all the time.

 

Question is, are you getting these R/R ratios in your trades?

 

 

Luv,

Phantom

 

 

 

[phantom 16]

Reminder: the test bar in the prior example could have been a hammer instead of a doji.

 

Both work great.

 

 

Luv,

Phantom

[phantom 16]

Incidently, I devised this method for futures traders.

 

Forex traders will have to work it out on their own; I have no idea what the eur/usd chart looks like pertaining to this matter.

 

I stay away from forex due to the ridiculous spreads I've seen some of my students encounter. My commissions are way lower than these spreads.

 

One can easily find sub $8 round turn commissions if one does the leg work.

 

A dollar saved is a dollar saved...

 

 

Luv,

Phantom

[IamJon 10]

P,

 

The "doji test bar" is nor a very good doji. If I combine the "doji" with the candle prior to it, it makes a better doji. On the 60 min time frame there was clear rejection of the high.

 

What else would have been clues to wait and take the short?

 

Thanks,

 

J

[phantom 16]

The "doji test bar" is not a very good doji. If I combine the "doji" with the candle prior to it, it makes a better doji. On the 60 min time frame there was clear rejection of the high.

 

What else would have been a clue to wait and take the short?

 

 

Granted, the opening price is not equal to the closing price, but hey, if we waited for perfection, we'd never get anything done...

 

The divergence between the 17:45 high and the higher 01:45 high against the descending MACD is another clue that this market is weakening.

 

 

Luv,

Phantom

[Wingnuts 10]

Fantastic information presented here Phantom, really appreciate your generosity and persistence.

 

However the focus so far has been on taking entries - but experienced traders know we only make money on the exits, and skill is required to deal with all the psychological and financial dramas that may occur on the journey from entry to exit!

 

Can you please tell us more about your trade management and exit strategies? Not necessarily expecting codified rules here, but your general approach to (for example) scaling out, reducing risk, and spotting signs to take the money and run.

[phantom 16]

Fantastic information presented here Phantom, really appreciate your generosity and persistence.

 

However the focus so far has been on taking entries - but experienced traders know we only make money on the exits, and skill is required to deal with all the psychological and financial dramas that may occur on the journey from entry to exit!

 

Can you please tell us more about your trade management and exit strategies? Not necessarily expecting codified rules here, but your general approach to (for example) scaling out, reducing risk, and spotting signs to take the money and run.

 

Glad you're not expecting rules, because trade management has always been a "feel" thing for me. Taking money out of the market is the most difficult part of the trade, imho. I will now begin to address this issue in the next series of posts.

 

To begin, I EXPECT a test of my risk stop as soon as I enter a position. This mindset puts me at a distinct advantage over most traders, imo, because I don't have to take the trade off on the first positive tick in my direction after "sweating out" a near stop out. Since I usually exit the trade prior to the close, so I don't have to carry the risk through an opening (my broker LOVES me because of this), all I have to do initially is maintain my sanity as the market does its best to test my resolve.

 

Only today I was in a CL trade where the market came within 1 tick of taking me out at a loss before moving in my favor and making me a handsome profit. And this is by no means an isolated incident.

 

Anyway, the moral of the story is that once I set my initial risk stop, immediately following my entry (I NEVER use mental stops; I ALWAYS use hard stops and I NEVER move them back to give the market "more room") I do not tinker with the risk stop until after the market has done certain things that I will point out soon.

 

If you've followed my posts throughout the thread, you know that I enter on a breakout of one side of a hammer or doji bar and set my initial stop 1 tick past the other side of that same signal bar.

 

This approach is so very important that I will segregate it from the rest of the story and let it sink in before I continue to post on this subject.

 

 

Luv,

Phantom

[Wingnuts 10]

Glad you're not expecting rules, because trade management has always been a "feel" thing for me. Taking money out of the market is the most difficult part of the trade, imho. I will now begin to address this issue in the next series of posts.

 

To begin, I EXPECT a test of my risk stop as soon as I enter a position. This mindset puts me at a distinct advantage over most traders, imo, because I don't have to take the trade off on the first positive tick in my direction after "sweating out" a near stop out. [...]

 

Trade management is more art than science. Your comments about expecting a test of your stop are very enlightening, something I will try and get my poor scared mind to emulate. Also very interesting that your stop at only 1 tick beyond the previous bar's low/high has proved to be such a strong support/resistance area.

 

Really looking forward to learning more on how you manage your trades, Phantom.

[pat15 10]

Excelent post on trade management ..and Stop location. Phantom I dont trade CL cuz of the velocity of its moves and knowing my limitations in trading... I would appreciate if you could post the chart (s) setup on CL that you took ...

 

Thank you.