thalestrader

Then again, if you are trading off of a 15 second chart, a 5 minute hold would just about qualify as a long term investment! I still struggle with holding for my stops. I cannot say that it is easier for me to do so now, but my will has strengthened enough, and I have seen S/R work so well for so long now that I can resist the temptation, most of the time, to take the money and run. Good stuff, and thank you for your charts - I'm a visual learner myself, and I find a chart always helps me understand another's approach better than words alone. Best Wishes, Thales

Hi Blowfish, Thank you for sharing this here. I do believe that your use of volume can be helpful and does provide potentially useful information. My question about the opportunity reflected in your charts is this: Where and how do you enter this market? And how do you manage the trade? Are you entering at the market based upon the existence of the volume spike, or are you entering based upon subsequent price movement? Respectfully, Thales

Following up on the potential EURUSD trade posted last night, using the natural stopping points the market gave us, the final result would have been a marginally profitable trade for approximately 10 +/- ticks (in at 1.3955 and out at 1.3965). Not a wildly profitable trade, by any means, but a surprising number of such trades will result in the 50-100 tick profit. I have included a screen shot of the GBPUSD which shows what I mean: A sell stop would have gotten a trader short at 1.6366, and using a natural stop method, the trade would currently be +120 ticks open trade equity, with a stop loss that would capture approximately +90 ticks. These opportunities occur far more often than most realize. And each can be identified in real time, before hand, with entry orders entered well in advance of the trade, and all without the use of volume, better volume, fractals, fibs, Ganns, squares, magic, market profile, worrying about your "competitors" and what "they" are doing, and with no understanding of what "fundamentals" are behind the move, not knowing whether price is moving on rising volume or falling volume, no need for "permission" from "indicators" (one of the silliest things traders say is that they "had permission from my stochastics" to take a trade, or "I would have taken that trade but my MACD didn't give me permission" - You should trade to be free, not to be enslaved to a mathematical equation). You do not need to use phrases like market structure or market flow, and I admit I have no idea and nor do I care to know what folks mean when they speak of "market context." You do not need to buy CD's or DVD's or subscribe to a chat room or trading room or a mentor or load your bookshelves with high priced priced text books. Identify the immediate trend of the market, and trade accordingly. Do that and win or lose, if it triggers, it is an excellent trade. An excellent trade, win or lose. Best Wishes, Thales

Yes, it is the spread. If you are short with a bucket shop, then once your stop appears as the offer, you will be filled. You are trading in the example the GBPCHF, which tends to have one of the larger spreads. For bucket shop trading, you are often better off adding the spread to your stop loss. Best Wishes, Thales

Good for you! I knocked off early today myself and we had a family afternoon that included pizza, wings, and ice cream. I love having the kids home for the summer

Hi folks, Today was my first day back. I can't tell you all how great it feels to be sharing my office with my little girl. I got a little computer armoire and set up a computer for her use next to my work space. She trades forex while I trade stocks. We only traded the am session this morning. I managed to finish 2/2 with a net profit of +$0.28 pennies per share traded. She had her first losing trade today. She shorted the GBPUSD, and price immediately went against her and stopped her out for a loss of 24 ticks or so. She then saw another short opportunity, and was stopped out with a profit of just over 60 ticks on that one. So net for the day she was a bit over +26 ticks. The sceen shot of her equity run apparently includes her profits from yesterday as well as today. The microlot account balance finished today at $45.35, up $2.65 from yesterday. She's making me look like an amateur! Best Wishes, Thales

The path seems unclear because the path itself is so easy and simple that our minds reject what we see, and instead we throw obstacles to our vision between us and our objective. I have posted many charts of my recent trades here at TL, many of which were posted in real time, prior to a trade being triggered. Look at those charts! A simple line draw across a recent high or low. So simple, even a child can do it! A buy stop or sell stop placed a tick or two or a penny or two beyond that line and I'm in. A stop loss goes a tick or penny beyond the most recent natural stopping point against the position. You speak of getting to the point where you have high confidence in those levels. But the levels simply are! Support and resistance points are facts to be observed. It is yourself in which you desire confidence. You must listen to yourself (γνῶθι σ'αυτόν- Know thyself): You conjecture that such confidence comes from much practice drawing trendlines and determining if you were right. But how will you judge whether you were correct or not? The implication is that upon having drawn a trendline or otherwise having identified a support or resistance level, you would then paper trade around that information. If that trade would have been profitable, you would then conclude that you drew that line correctly. Conversely, if that trade would have lost, you would conclude that you did not draw that trendline properly. You would learn nothing of value from such an excercise. After all, trading based upon support and resistance is not a holy grail that will assure only profitable trades. For the speculator, there are, in my opinion, only two must read books: Reminiscences of a Stock Operator by LeFevre and How I made 2,000,000 in the Stock Market by Nicolas Darvas. After those, I would suggest How Charts Can Help You in he Stock Market by William Jiler and Technical Analysis of Stock Trends by Edwards and Magee (try to find a used copy of the 4th edition or earlier as later editions were published after the deaths of both Edwards and Magee, and subsequent editors have damaged the book's original integrity and usefulness). I am also a big fan of IBD and William O'Neil: I highly recommend his most recent edition of How to Make Money in Stocks. He has annotated charts of the 100 most profitable stocks of the last 100+ years. These patterns occur not only on weekly and daily charts, but all time frames. You do not need me. I have nothing to teach. I have no secrets to tell. Everything anyone needs to know to trade as I do may be gleened from reading my posts here at TL and studying the charts I have posted. It is up to you to decide whether or not you will commit to trading according to what the market is telling you through pure price action alone. My way is not the only way to achieve consistent profitability through speculation, but I am convinced it is the simplest and easiest; and because it is simple and easy, it is also the most difficult for folks to accept. I'll leave you with two charts - the EURUSD and the 6E. I just took these screen shots as I fam finishing typing this. A buy stop would go just above the blue line, and the stop loss goes just below the red dotted line. Will it trigger? I do not know. If it does trigger, will it be profitable? I do not know. But that is how I would trade the 6E if I were trading it right now (which I am not). That is how my daughter would be trading ithe EURUSD if she were trading right now (and she is not). The point is this: Win or lose, if it triggers, it is an excellent trade. An excellent trade, win or lose. Best Wishes, Thales

The definition of fractal is not what is the issue here. Rather, it is your assertion about the existence of "sequences of volume" that must "complete." You wil need to provide a much more detailed account of what you are asserting for that assertion to have the character of proof, rather than character of a mysterious scroll that only the initiated may translate. Best Wishes, Thales

Hi Folks, Other business kept me out on the road today, so no trades for me again, but I'll be back to trading tomorrow morning. My daughter did trade today, and she grabbed a nice piece of the up move in the EURJPY - +74.9 ticks. The microlot account has an ending balance of $42.70 Best Wishes, Thales

Hi imorgan, I reiterate that, in my opinion, you will serve yourself best by not looking for a system, but rather to learn simply to use observable s/r and learn to trade off s/r. I think that adding candlesticks to s/r is an obvious close second choice. I believe that that is the approach used by Brownie, and he has posted some impressive results. As you know, I use the 20 ema on a 5 minute chart for day trading stocks only - I do not use it anywhere else; and even there, it figures in fewer than 10% of my trade decisions. When I offered to share some suggestions with the OP, I had in mind suggesting an indicator approach that works well with forex. At forex factory dot com, I would suggest Sonic's thread as a good read. Also at FF, and mentioned elsewhere here at TL, are two excellent threads - James16 at FF and Trader Dante's thread at t2w. I posted the link to Trader Dante's thread in the pin barthread here this morning. You can google James16 and Sonic and find them easily enough. This weekend I became aquainted for the first time with The Rumpled One. I think he has something worthwhile there, though I have a very preliminary and incomplete understanding of his approach. But, in the end, I do not believe that one can beat simple S/R. I've been working with my daughter, who wants to learn to trade as a summer project. I have her trading a small microlot account at FXCM. All she knows is what I have shown her - trendlnes, support, resistance, highs, lows, prior highs, prior lows, and just a small bit of fibonacci (extensions not retracements). She wouldn't know a stochastic if it jumped out of her closet or a MACD if it crawled out from under her bed. It has been very much like Rousseau's Emile. She is removed from the influence of all the Grail seekers (among whom I used to count myself) and the sellers of pseudo-grail systems (to whom I have generously contributed thousands of dollars over the years). She knows of no other way to make trade decisions other than what I have shown her - all of which may be found here at TL in my posts. I have nothing to hide and nothing to sell. So, how is she doing? Well, she started trading live on Friday with $25 in the account. As of this moment, she has a balance of $42.70 - a feat she accomplished by trading 1 microlot/trade, which is worth 10 pennies/tick (thats $0.10/pip for you forex "purists"). She buys breakouts above resistance and shorts breakouts below support. She trails her stops according to the natural stops the market provides. She has an average profit of 59 ticks/trade. Oh, and did I mention that she is nine years old and just finished the third grade? Best Wishes, Thales

Hi there, I think Zdo's suggestions are very good - a small fx account, and Ninjatrader with the free Gain data feed. I am hesitant to agree to the smallest time frame suggestion, but then again, viewing price through any discreet unit other than itself, e.g. time, volume, tick, etc. is arbitrary. I would suggest that if you are truly new to trading, if you really are starting out from scratch, then do yourself a favor, (it will cut years off of your learning curve), and focus on learning to trade around support and resistance. Resist the urge and desire to find a magic bullet or Holy Grail in somme system, indicator, trading course, siftware, etc. The Holy Grail is to be found by trading price action itself coupled with sound risk management. If you already have caught indicatoritis (the chronic need for something external to yourself and price action on which to base decisions due to an extreme disbelief that everything you need to know to decide how to trade is already on the price chart) then for goodness sake do not spend a dime on any system! There are folks out there who have provided "systems" that will work so long as you use sound risk management, and they have done so for free. If you want some suggestions, reply to me here in this thread and I will respond with a few suggestions here in this thread. Good Luck to you! Best Wishes, Thales

I agree that volume can provide useful information at times. I am primarily interested here in the assertion that volume is primary to and somehow trumps price.

Gaps are very real, and are themselves a form of impulse that represents at least a tempoary imbalence between buyers and sellers. You can "mentally slide the market" all you want, but doing so chooses to erase an important piece of information that may be used to make trading decisions. Without people agreeing to an exchange of something of value for something else of value, there is no price, because there is no exchange. Volume measures units of goods, not people, i.e. not participants. Volume and price are two measures that come out of the observable data of a transaction. Without price having been agreed to, there would be no transaction, hence no volume to measure. In other words, the transaction is primary to both price and volume, and price is primary to volume. You are playing the sophist. And again, this last statement has the character of an assertion, not a proof. If you can prove it (without resorting to tautology) please do so. Best Wishes, Thales

Hi there, I have never learned "to thoroughly and properly 'contain' Price and Volume" in the manner you present here. Also, in the interest of full disclosure: I have learned to become immediately suspicious whenever anyone presents a "method" interpreting any indicator other than price as "the first step to profitability." I would bet, that in most cases, a reader of this thread, trying to do so as you recommend, would experience not "the first step toward profitability" but merely another step down the road of frustration and failure. I have attached a copy of yesterday's ES 5 minute chart to illustrate how I view yesterday's price action. Price is its own indicator, and it is in need of no additional, ancillary, and derivitive confirmation. Nothing other than what presents itself on the chartt throughout the day is necessary to trade profitably. Of course, price action is free. Best Wishes, Thales

T2W Day Trading & Forex Forums

Hi folks, Other business will keep me from trading until Wednesday. If no one objects to my reporting on my daughter's progress, I'll post an update here as we move through summer. My little girl made one trade today, short EURUSD, in which she was stopped out with a 10.1 tick profit, less .01 for "rollover". The current balance of the Microlot account is now $34.37. Best Wishes, Thales

People create price through agreement. Price is the amount of goods or money given in exchange for something else. Price can rise on falling volume. Price can rise on rising volume. Price can hold steady on falling volume. Price can hold steady on rising volume. Price can fall on falling volume. Price can fall on rising volume. The question for the speculator is simply "is price rising, falling, or holding steady?" Best Wishes, Thales

That is an assertion. Prove it. Thales

Rumpled One, I never read your thread before this weekend. Why now? And why go even further and reply to it? Well, you see (and forgive my presupposition that you may actually care as to why I decided not only to read your thread but to reply as well), I am conducting a summer project with my nine year old daughter, teaching her to trade a very small forex microlot account. I came across you elsewhere today on our internet travels this rainy Saturday afternoon, and I recognized your name from here at TL. So when I checked in this evening and saw your thread on the home page, I decided to drop by. Your post above is excellent. I could not agree more. It took more years and more dollars than I care to admit, but one day I realized that all I really needed was chart of price. I prefer a High/Low bar chart. I do not care where a bar opened or where it closed. I prefer black bars on a white background, but depending upon the software's options, I'll use white bars on a black background. I do not care whether a particular bar was an up or "green" candle or a down or "red" candle. A confession: I do keep a 20 ema on my 5 minute chart when I day trade stocks, but as far as indicators go, that it the only concession I make. I do not use the 20 ema for any other instrument I trade. As you suggest, when you focus upon price, it will tell you where it is likely going. When you focus upon indicators, you are no longer listening to the one thing that will tell you where price is going, i.e. price itself. The last thought in you post struck me most, given my daughter's recent interest in trading. The other day, after showing her how to draw trendlines, teaching her about what support and resistance, what they mean and how to determine which is what, etc., she ended our session with this summary of what she learned: "So basically if the bars are going up I should buy it and if the bars are going down I should sell it." I was trading longer than she's been on earth before I accepted the simple truth and power of that most basic observation. Best Wishes, Thales

Hi Folks, I did two trades on the ES, +11 and + 6 points respectively. No Stock trades as my attention was really focused upon helping my daughter with her summer project - learning to trade a microlot forex account. She did her first trade yesterday. I would post the blotter, but I didn't take a screenshot yesterday before we shut down to go celebrate, and when we logged onto FXCM's trading station tonight, we found that we were not able to log onto the trading station. I guess it is only available during market hours. She decided (and it was her decision, and it was she who identified the set up - though I did agree with her and told her as much) to go long with a buy stop above a small consolidiation area, and a fairly tight stop loss just below (about 15 ticks initial risk). We identified two areas of resistance above the morning's high, and decided to take profits on a sell limit at the upper range of that resistance. (See chart). The charts we use to watch price action are Ninjatrader charts with data provided by Gain Capital. The buy stop, stop loss, and profit targets are not precisley the same on the chart as the prices she actually traded, because there is a slight difference between the price data between FXCM and Gain. We use the FXCM charts to identify actual trading levels for entry, stop loss, profit objectives, etc., but we watch price action and identify opportunities using the Ninjatrader charts. At any rate, if one eyeballs the Gain data on Ninjatrader, what looks to have been an 88 tick profit was, in her actual trade, an 83.7 tick profit, or $8.37 (one microlot = 1 tick = $0.10 which requires $2.50 margin). So her $25 starting capital now stands at $33.37 Not a bad start! Best Wishes, Thales

Yesterday's ES had two of my favorite ES "set ups" 1) Stall at resistance - sell short near HOD. I posted one of these on the ES in real time a week or so ago in the "Look at a stock trader's day" thread. 2) 1-2-3 reversal, with the breakdown point being the prior day's high. Sell stop was one tick below the the prior day's high. Best Wishes, Thales

Thanks Brownie! She and I have been going over charts using Ninjatrader for the last few weeks when she has had time. I had her read a nice little book called "Stikky Stock Charts," which is very easy and straight forward. Today she and I familiarized ourselves with the FXCM microtrading staion demo account. She is really wanting to go live, so tomorrow or Monday she will place her first real trade. I have her watching the EURUSD, the EURJPY, and GBPUSD. I have her call the price moves "ticks" and not "pips" as I am not a big fan of retail forex. This is for fun and learning. If it goes well, some day she'll trade futures, and I don't want to hear her say she made 20 pips on the 6E. She's learned about trendlines, a little fib stuff that I have found useful in S/R, and at the end of today she said, "So basically, if the bars are going higher I should buy it, and if the bars are going lower I should sell it." I think she's ready! Best Wishes, Thales

I do not use volume myself. I do think that one can gain a good deal from studying Wyckoff's writings even if one does not incorporate volume as an indicator used in the decision making process. I believe I owe much to my reading of Wyckoff, and I do consider myself a Wyckoff influenced trader, even if I do not pass muster as a Wyckoff trader as defined by those who are the arbiters of such definitions. The old saying, if I remember correctly, is that "price follows volume." I would suggest that that is backward, and in reality, "volume follows price." Here is one of my favorite stocks of the last three months. It came on a screen I run each night using Worden Brothers Telechart 2007. I put volume on the chart for this post, but I do not usually have volume showing. This stock came on my screen eod 3/30/3009. It is up 1203% since then. I do not have volume as part of the screening criteria. My criteria is based upon price movement only. I post this only to demonstrate that one can make good trading decisions based upon nothing other than price movement without considering volume. I do not mean to imply that volume may not have value in making trading decisions.

As far as the charts, I have long made it a habit to capture charts of my trades as soon as I have an order placed. It has heped when there have been discrepancy's with brokers, market makers, etc. I also screen capture my order blotter, including each time I adjust my trailing stop. After a while, it became relatively smooth as it is now a habit.

A fine promising start, but in the end a -5 tick loss. I would think that a stop on 50% of the profit on 50% of the position would have been in order, especially as the trade was +31 ticks at its high. I never know for sure how I would have managed a trade if I'm not actually in it, but I doubt I would have let this end with even that minimal loss. I probably would have gone out on a market order when it reversed off that 133 round number so quickly without finding any support. And of course, for those who are looking for 10-20 tick scalps, you'd have had your profit.