Optiontimer's Project

[russellhq 10]

I'm just waiting for the bean oil to reverse

[PWP 10]

Hi OT,

 

I've added a position or two so here are my current positions:

 

Short Eur/Chf Stop BE at 1.1680 currently +256 pips

Long Nzd/Usd Stop 0.7960 currently -27 pips

Short Eur/Nzd Stop 1.7800 currently -124 pips

Short Eur/Gbp Stop 0.8890 currently even

Long Chf/Jpy Stop 96.00 currently -191 pips

 

There have been many setups but I too am tapped out as far as leverage goes so will be refraining from taking on new positions until one closes out. I'm a little disappointed to not have taken off my Eur/Chf when at +1450 pips but I guess that's the cost of getting in on the long trends. Or maybe I should have a rule to take off remainder of position when at 7:1 Risk reward ratio. However had I done that at some predetermined spot the trade never would have reached the +1450 pips in the first place. Also I think I'm going to set another rule that I not take positions that have greater than 300 pips initial risk. Reason is that it's hard to get 4:1 risk reward ratio when your initial stop loss in 720 pips like my Eur/Nzd position...

 

Let me know your thoughts.

 

Thanks all - PWP

[russellhq 10]

Here's my current status:

 

 

I made a bit of a goof and closed all my open trades by accident and had to open them all again. That's why you'll see Bean Oil, 10y Note and $ Index repeated.

[Ingot54 13]

Hi OT,

 

I've added a position or two so here are my current positions:

 

Short Eur/Chf Stop BE at 1.1680 currently +256 pips

 

I'm a little disappointed to not have taken off my Eur/Chf when at +1450 pips but I guess that's the cost of getting in on the long trends ...

 

Let me know your thoughts.

 

Thanks all - PWP

I know I am going to cop heaps for saying this, but here are the thoughts you asked for, PWP:

 

What is it that you want from the markets?

 

To my way of thinking, a trailing stop to lock in at least 1100 of those pips may have been a way to get what I want from the markets.

 

There are always other trades.

How many trades on average get to more than +1400 pips?

 

Maybe my thoughts are defective and need a bit more bashing about to bring me to conformity.

 

I know the purpose of the OT strategy is to get into juicy long trends, but I think we have to be a little more rational about it - we do not have a crystal ball, and if the market hands me +1400 pips, then I am not going to be dreaming about 3,000 pips without locking some of it in.

 

As pure TA traders, we are supposed to trade what we see. But it is a fact - and no one will convince me otherwise - that the higher up the TF traded, the more FA comes into the equation and must be respected.

 

The SNB and BOJ have both placed traders on notice that they will not stand by and watch their currencies appreciate ad infinitum. Consequently it should have been no surprise when the CHF pairs and the JPY pairs reversed rather violently the other night. I was watching the markets at the time, because I chat on Messenger with a trader mate who scalps, and we were discussing this very issue.

 

We watched the CHF pairs and the JPY pairs hit support, and then rally violently, from where they are slowly trickling back to where they were before intervention. The CHF pairs averaged 1000+ pips rally, and the JPY between 250 and 450 pips.

 

The point is this - when you become aware of likely Central bank Intervention in natural market forces (and you could make an argument that Central Bank Intervention IS a part of the "natural market") - you then have to cover your position somewhat.

 

My pockets are not deep enough to allow 1400 pips to be in my a/c and then allow them to flow away again.

 

How many more trades will you see that deliver 1400 pips+ ?

 

If the answer is "quite a few" then why not take profits and get set for the next one.

If the answer is "very few" then again, the solution is to accept that rare event as it presents, and take or lock in profits.

 

PWP - it is easy for someone like me to sit back and offer free advice after the event - it is a bit cruel, and I accept that, and would say that this is just one person's view, and not meant in any way to hurt you. If you read back through this thread, you will see that I have had to learn a few lessons too - and I suspect OT will have something more to say about my attitude after this "opinion."

 

Regardless, I accept that, and even look forward to it because I do not speak from the position of profitability that he and yourself are coming from.

 

That alone should tell you how little my opinion is really worth.

 

Best wishes

 

Ingot

[PWP 10]

Ingot - I appreciate your comments and agree I should have locked in those gains however here is my dilemma. If I had added a tighter stop loss - where would I put it? had i done that i probably wouldn't have reached 1400 + pips in the first place - see what i mean? it probably would have taken me out of the trade long before i reached that profit level. I haven't be en listening to any news at all - just following trends. So while the loss is frustrating - the lesson is important. Keep initial risk at less than 300 pips and take 1/2 profit at 4:1 and other half at a higher level just not sure where that level is.

 

OT - What do you think? (if you ask me what I want from the market - the answer is Kroll like profits)

 

Thanks - PWP

[russellhq 10]

PWP, from what has been discussed before, my interpretation for "Kroll Like Profits" is to stick with your initial stop until such time that the 65EMA crosses your stop, then use the 65EMA as your stop.

[livernik 10]

Expecting what OT. is going to comment about

[PWP 10]

PWP, from what has been discussed before, my interpretation for "Kroll Like Profits" is to stick with your initial stop until such time that the 65EMA crosses your stop, then use the 65EMA as your stop

 

- I agree Russellhq - This is a very mental game. I've been following my plan - it's just easy to question ones actions. My Eur/Chf is still in play - Who knows it could drop again - I would reenter if setup happens - and may have even larger than 1400 pips profit. I just need to remember to stick to my plan. Thanks for the reminder...

[russellhq 10]

Stick to the plan, stick to the plan, don't think just stick to the plan

[Ingot54 13]

Ingot - I appreciate your comments and agree I should have locked in those gains however here is my dilemma. If I had added a tighter stop loss - where would I put it? had i done that i probably wouldn't have reached 1400 + pips in the first place - see what i mean? it probably would have taken me out of the trade long before i reached that profit level. I haven't be en listening to any news at all - just following trends. So while the loss is frustrating - the lesson is important. Keep initial risk at less than 300 pips and take 1/2 profit at 4:1 and other half at a higher level just not sure where that level is.

 

OT - What do you think? (if you ask me what I want from the market - the answer is Kroll like profits)

 

Thanks - PWP

I can understand that dilemma, PWP.

 

I appreciate that you may not have arrived at that +1400 pips without keeping your stop in place. I also appreciate that you may never get the 3000 pips, or 5,000 pips ... or 17,000 pips that the market offers from time to time, if the stops are trailed too closely.

 

These profits are there - just take a look at a few of the Monthly charts, so it is not a hypothetical situation.

 

The alternative is to switch off the mind and follow the rules ... follow Kroll ... and take what the market gives.

 

Except at some point you have to decide what kind of profits you are willing to accept, and that includes accepting that some will be left on the table.

 

I think out of 10 traders following the OT / Kroll method, most would strike an entry at nearly the same level. Yet it is hard to imagine more than 2 of the 10 taking an exit at the same point.

 

Exits are what sort out the calibre of the trader, imho only.

 

There is NO profit until the trade is closed, and I believe this is an issue where it will be hard to reach consensus, let alone conformity/uniformity.

 

Is it better to take an earlier profit and then seek a new trade / re-entry, or watch the profits erode in the HOPE that the trade will eventually turn around again and bring in a bonanza? Taking arbitrary profits precludes the trader from participating in the big wins.

 

I guess it comes down to what you really want from the markets after all.

[optiontimer 10]

...That is the nature of the game, however. I tend to give a lot back in pursuit of taking even more.

 

I had a feeling that I'd have to choke down some toast with that coffee trade yesterday when I heard Smucker's was calling for lower coffee prices ahead. You can almost be certain that if a commercial is talking a commody down, it is going up. And up it went!

 

Bailed out of my cotton bales today as well. Both trades were higher risk than I would have liked, but both also looked to be set to be in the initial stages of potential downtrends, so I was willing to press the pedal a bit. I'm about three states from home, so I do not know the total damage, but my best estimate is that together these two combined for about a $3200 loss.

 

Notes are still open, and with an open trade equity of about 5K +/- (again, I do not have access to exact figures as I do not log onto my account when using public wifi access).

 

Bean oil is still holding with aprofit of perhaps a handful of dollars. I haven't seen today's chart yet, but bean oil should be close to rolling over again if the down trend is to continue. But from the looks of things, the commodity bull has awoken again from a "cat nap" and it is looking to carry prices higher. If so, bean oil will be stopped within a few days if not sooner.

 

I'm pressed for time, so I will answer what posts I can before I hit the road, and we will catch up this weekend.

 

-OT

[optiontimer 10]

... I'm a little disappointed to not have taken off my Eur/Chf when at +1450 pips but I guess that's the cost of getting in on the long trends...

 

That was a very old trend as far as trends go, and it had become almost parabolic during the last few weeks. I had been long the 6S for what seemed forever, but was really since June 2010, and I closed it all last week, but not until giving back over 500 ticks from its high. My profit was 41 handles from the original entry on that trade, and I had held through several 400-600 tick pullbacks. But it was an old trend, and the momentum of the last few weeks looked like end game to me. The market may prove me wrong, and I am ready and willing to climb back aboard.

 

You did fine. Yes, the 1400 pips was a huge profit to see eroded as it was. The only fault to be found with how you aquitted yourself was that you traded this as though it were early in a possible long term trend change, when in fact, this had been an extremely long and giving trend, and your entry was, possibly, the last great gift it was to give. That is an easy enough problem to fix. What was most important was that you were able to hold through that give back. That took discipline and patiences, and a lack of either of those is not an easy fix.

 

Right now, you ahve been learning a new way to trade, a new way to view the markets. As a result, you have narrowed your focus on the last few bars on your chart, which is natural.

 

I would caution against any predetermined take profit level as part of your trading plan, because as you yourself suspect, doing so will mean you never will get to feel what a 4100 pip profit feels like. What you do want to do is foster an awareness of the age of trends, the changes in momentum (and here I mean actual price movement and not the movement of this or that indicator or oscillator) and, of course, long term support and resistance.

 

I think that you should consider all the good that trade did for you, and do not mourn the loss of profit, but celebrate your adherence to the method. Have you ever had a 1400 pip open profit before? Probably not. But if you start limiting your profits to avoid giving them back, nor will you ever have another 1400 pip profit.

 

Nice trading, PWP! Be happy for yourself, and allow not a moment of regret.

 

-optiontimer

[optiontimer 10]

... and I suspect OT will have something more to say about my attitude after this "opinion"...

 

The main thing is to get into the habit of sitting on your hands while your position is in a profit. The secondary thing is to use certain aspects of price action to determine, to some extent, how far along we might be in a particular trend. That is mechanics, and I think that will come easily and with little effort as you do the hard work of following your method and sitting tight on your profits. In market wizards, T-Bond trader Tom Baldwin says about trading that it is like any other job - if you do it long enough, you have to learn how to do it. That is true, I believe, when it comes to the mechanics of price action. There is nothing new under the sun, and price repeats the same behaviors year after year in market after market.

 

Learn to control you fear of losing money, and while doing so, you will come to learn the mechanics of price action.

 

I think the time has come for everyone working along with us in this project to read Edwin Lefevre's Reminiscences of a Stock Operator. This is for everyone, even if you have already read it. It is time to read that book now that you have all adjusted your eys to wearing Kroll-lenses. It is the story of Jessie Livermore, and Livermore was Kroll's "mentor."

 

-OT

 

PS I have been known to day trade from time to time. It is a different type of focus, day trading is, compared to what we are trying to accomplish here. I think, Ingot, that you may have to learn to adjust your focus just a bit more away from that which you fell into when you were primarily day trading. Tomorrow I am scheduled to be in my office, and whenever that happens, I tend to take a look around and do some day trading if an opportunity presents itself. I will probably be quicker to lock in a "windfall" profit of 50 or 100 pips on a day trade than I would be to move to lock in a portion of a 1400 pip profit on a position trade. Everything else is the same, except for that of scale. You are still bringing a day trader's perspective of the scale of price action and profits to a position trading project. To borrow a phrase from pop culture, it is a bit like bringing a knife to a gun fight.

 

Now, I have to shut this thing off and get going. There are 105 miles between me and home, and between this thread and several phone calls from my kids, I am about an hour and half behind where I was hoping to be at this time.

 

Remember: Read Reminiscences!

[optiontimer 10]

Here's a quick update: I have an order to short the 6A, which is the futures equivalent of AUD.USD, and I shorted the Dow mini (YM) last night at 11312. Yes, that was just a bit early - "do as I say, not as I do!" I had my reasons. To make matters even more complex I shorted 5 of them, which at the time left me little "margin" for error ... I'll not hold all five through the close unless it closes the session with a +300 or better profit. My stop loss on at least four of them will have to move down both to lock in profits and more importantly to prevent a 3 AM Fed operation from crushing me while I sleep.

 

Total realized loss on the combined coffee/cotton operation was $3647.19, which is about 65% higher than my plan. However, I was willing to take on the additional risk given the position of the market and my past experience trading both of those commodities. Again, do as I say, not as I do. I was also no doubt emboldened by the open profit on the ten year note, which is currently nearly twice the realized loss on the two closed losses. Without that open profit, I would not have taken the chance on coffee or cotton. Have I mentioned that you should do as I say and not as I do?

 

I'll be busier today than I had initially thought I would be, so I do not know if I'll find time and opportunity to place any additional day trades in this account, and with the open short on the YM, I have little remaining capital with which to fund such trades anyhow.

 

Well, back to work!

 

-OT

[NeoTrader 10]

OT

 

I have the utmost respect for you, so please don't take this as insult or attack.

 

I am floored at the amount of leverage and risk you are throwing down with that 25k account.

 

That cotton position alone with 5 cent initial risk was insane to me.

 

I don't know if I am alone on this, but I'd like to see more under the hood of what you are seeing. I'm not sure if it's just your experience with trading or if you have some additional criterion that you use that you think would only confuse us or complicate things. From my own investigation and from what you've explained It seems you use support and resistance levels to confirm your entry or to enter before the system signals with very aggressive entries.

 

Would it be possible when you take these kind of entries you elaborate on what you see? Similar to your coffee trade when you pointed out on your 30 year continuous chart that selling had occurred at that level historically. I don't know if time allows, and I know this would require extra effort on your part, but i'm guessing (hoping?) I'm not the only one who would like to see this. I just seems like you have a lot more cooking than the stochastic closing on an up or down basis for entry.

 

Some of these trades you take is like watching a guy juggle chainsaws, I know you are a pro and aren't going to lop your arm off but wow is it something to see. :cinema::shocked:

[PWP 10]

I think the time has come for everyone working along with us in this project to read Edwin Lefevre's Reminiscences of a Stock Operator. This is for everyone, even if you have already read it.

 

Remember: Read Reminiscences!

 

Here is a PDF version of the book I found online. I'll start reading today! Thanks OT!

Reminiscences_of_a_Stock_Operator-Edwin_Lefevre-EN.pdf

[russellhq 10]

Cocoa and Oats (again) look tradable tomorrow:

 

 

[PWP 10]

Well I didn't find any new setups to enter in Forex cash market tonight.

 

I liquidated my Eur/Nzd Short & Nzd/Usd Long - They both were seeming to behave like they were continuing with the retracement and may be beginning a new trend. So I closed those out for a -387 & -201 pip loss respectively. I'll continue to look for new setups but it seems to be a pivotal time right now. I'll start reading my new homework assignment and watch my Eur/Chf, Eur/Gbp, & Aud/Chf shorts play out. Have a good night all!

 

Thanks - PWP

[Avarice 10]

I've been on hols last week so my access to TL was (deliberately ) restricted. I usually don't linger in front of my laptop any longer than necessary while we're away hence I decided that I wouldn't enter any new trades during the week. All I would do was peek at the markets for half an hour in the evenings, adjust my stops and be done with it. Free time is free time eh. Anyhow.

 

I got stopped out of soybean oil for a $783 profit,

 

British pound is still on and is showing a $1.5k paper profit. Protective stop has been moved past the break even point.

 

Livermore. If you don't mind ponying up the cash I strongly recommend you get yourself a copy of Markman's annotated edition of Reminiscences. His comments and annotations add a lot of background info about the 1900s economy and its notable players that would have been completely lost on me if I hadn't had them. Not that these notes add anything to Livermore's core message but I liked them nonetheless.

 

A

[mrcsidney 10]

Entry: /OJ @ 170.20 STOP 179.30

1 contract 8:53 PDT:missy:

[TradeRunner 10]

When the 21 EMA is above the 65 EMA, we do not want to be short, and we may be looking for a long entry signal. Only oversold readings of the stochRSI are relevant, and they are relevant if and only if price has retraced back to a level between the EMA's or even slightly below. A long entry is signaled when stochRSI has turned up on a closing basis, and entry is made the next day if price makes a higher high than the prior day.

 

When the 21 EMA is below the 65 EMA, we do not want to be long, and we may be looking for a short entry. Only overbought readings of the stochRSI are relevant, and they are relevant if and only if price has retraced back to a level between the EMA's or even slightly above. A short entry is signaled when stochRSI has turned down on a closing basis, and entry is made the next day if price makes a lower low than the prior day.

 

 

Thanks for the great thread Optiontimer.

 

How long is the signal bar valid for? From the wording above I would say that it is only valid for one day after the signal bar. However some of the examples show trades when the HH or LL come more than 1 day after the signal bar.

 

TradeRunner

[optiontimer 10]

...How long is the signal bar valid for? ...

 

Until the conditions that created the signal are changed. For example, if a short is signaled, but the next day price rallies to a new high and turns momentum up as a result, then the short signal is off the table until momentum again turns down on a closing basis. However, if price consolidates after the signal day, but momentum continues flat or down, then the entry would still be made on the next lower low than the signal day. This is usually the result of "inside days" following the signal day.

 

Thank you for reading along!

 

-OT

[NeoTrader 10]

Position Update

 

GBP/USD showing +180 pips

 

On my chart price is trying to work its way through some resistance but looks promising so far.

 

In hindsight it seems my entry was early (entered Aug 3 on the break of Aug 2 high.) Price was tickling but not touching the 21 EMA. To me this seems like an indication that I personally may want to wait till price crosses firmly into the 21/65 EMA zone and has an aggressive hook on the StochRSI before I enter. I know this will end up filtering out some legitimate trades, but I think it will increase my odds and help reduce the size of my stop loss.

 

EUR/GBP showing -25 pips

 

I felt good about my entry here but price seems to be having a really hard time breaking the .8650 support level thats held for 5 some months. Time will tell.

[russellhq 10]

Got knocked out of Oats this morning

 

[Ingot54 13]

Got knocked out of Oats this morning

Sorry to hear that Russell. Thanks for the chart.

I hope you are able to nail some good trades shortly.

 

I haven't found any currency trades over the past couple of weeks. It made me wonder if something is going on with the markets that is related to all the fuss over at the Bank Of Japan and the Swiss National Bank.

 

Traders who follow these pairs would have noticed the sometimes-violent bounces off support/resistance these two have been displaying over recent weeks as the two Central Banks have been attempting to weaken their respective currencies. The markets have deeper pockets than any central banks, and so each time the price is sent back to support, price has rebounded like it touched an electric fence!

 

For the USDJPY the level is in the zone 76.30 to 76.45. Any lower and the BOJ comes in and forces the Yen lower (weaker). For the USDCHF it is .7190 to .7230. Any stronger and the bank intervenes. (It appears the opposite on the chart below ... a weaker JPY would rally in the supplied chart).

 

This kind of intervention has meant that some of the trades I was watching didn't happen.

I was beginning to think that if central bank manipulation could continue to disrupt the natural flow of markets so easily, then how could any of it be trusted.

 

I didn't want to post this negativity on such a good and positive thread, but Optiontimer encouraged me to do so, because there may be other traders who may be thinking along similar lines.

 

My main error was in thinking that because I was not finding setups, then something must be wrong. In fact nothing is wrong - it is the cyclical nature of markets, as OT has kindly reminded me. There is no rule that says we have to be finding trades every day ... or even every week.

 

Good lesson for me.

 

I was reminded too about Jesse Livermore saying that he made more money through "sitting and waiting" than he did through trading. I found a link to a site that actually summarises Livermore's main maxims:

 

Lessons from Legendary Trader Jesse Livermore | Black Swan Insights

 

And don't forget we have the link in post # 319 to the "Reminisces of a Stock Operator" pdf here:

 

http://www.traderslaboratory.com/forums/trading-psychology/10158-optiontimers-project-16.html

 

Thanks to Optiontimer for his patience.