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thalestrader

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Well, I'm just about done for the day. I have to get ready and leave...

 

Today was obviously a pretty decent day...some great anticipatable downmoves on the charts I watch.

 

I have a question for Thales or anybody:

 

Do you have any reservations about taking positions at the same time on different currency pairs?

 

For example, the EJ, EU, and GU all presented short opportunities at around the same time today.

 

Since these currencies are fairly correlated, I think there is a good chance that either you win them all or you don't in any of them. Therefore, it'd almost be like tripling up on one position.

 

HOWEVER, I guess the counterargument to that would be an example like today...same signal on all 3...EJ easily got PT1, but is struggling to reach PT2 (still working on it, though), the EU has blasted through PT2, and the GU got nowhere.

 

Maybe I've already answered my own question. Anyone's thoughts on the subject would still be helpful/appreciated, though.

 

Thanks,

 

Cory

Workspace.thumb.JPG.ef7905a95f4b4104b3755821a233e8d2.JPG

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Hi Cory,

 

Not that I can offer any advice but I know what you mean about trading more than one currency at the same time. I have just had one of those dilemmas of being short EURUSD and then seeing this on EURJPY.

 

5aa70fa2ad202_eurjpy100113m15a.thumb.gif.3d14b8bac455a6ead273b1f7370daf82.gif

 

I guess it's a case of taking the set-ups. Interestingly this EURJPY was 'setting up' prior to EURUSD reversing. Obviously a hindsight observation but was interesting to watch.

 

All the best

BT

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Well, I'm just about done for the day. I have to get ready and leave...

 

.....

 

I have a question for Thales or anybody:

 

Do you have any reservations about taking positions at the same time on different currency pairs?

..........

 

Cory

 

Hi Cory,

 

I prefer not to have trades on in more than 1 pair. I feel they are too correlated and I also prefer to only manage one trade at the time.

 

My main reason is the correlation factor.

 

Cheers,

eNQ

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For example, the EJ, EU, and GU all presented short opportunities at around the same time today.

 

Since these currencies are fairly correlated,

 

If you are looking short, sell the weaker of the two (6B/6E). If you are looking long, buy the stronger of the two. If they both look equally enticing, pick your favorite. I was late getting into the 6E today. I was watching the 6B make its way to my target from last night's long, and I entered an order to reverse long to short. I should have chcked the 6E first, but i didn't. Today I got lucky. The 6E retraced and let me in, and I felt better cutting the 6B loose,

 

Also, do not assume that the Yen crosses are as correlated to the dollar rates as you imply. I have seen plenty of days where long EJ/short EU or vice versa was a very nice combination of trades.

 

Also, do not be dismiss ot of hand a simultaneous short EU/long GU or vice versa. If two correlated currencies are moving in opposite directions, you may have a pair of good trades on your hands - not always, but often enough.

 

Best Wishes,

 

Thales

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2nd attempt at gold today...

 

Hi Motion,

 

Thanks for sharing! I see what you are seeing, but how about this: Your entry would have been an excellent place to be taking profits on a much more favorable long entry 123 reversal off the lows, don't you think?

 

attachment.php?attachmentid=17706&stc=1&d=1263409088

 

Best Wishes,

 

Thales

5aa70fa2b7021_2010-01-13Gold1.thumb.jpg.4355ba4bae6fc48c458e304656712ed9.jpg

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thanks for your comments Thales. I certainly agree in hindsight that the entry you highlighted is a good entry. But if you were in your trade and it breaks the recent high is it not a good opportunity to take some profits but leave some on table to shoot for my current TP?

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thanks for your comments Thales. I certainly agree in hindsight that the entry you highlighted is a good entry. But if you were in your trade and it breaks the recent high is it not a good opportunity to take some profits but leave some on table to shoot for my current TP?

 

 

I didn't mean to imply I was in a long gold trade as I am not. I was simply commenting on your chart. When you posted it, I thought to myself that I see what he's seeing, but I would rather have gotten long of gold on the 123 below, and I thought I'd point it out to you in case you hadn't seen it. Certainly you are correct - if I had traded this I'd likely have kept have the position for a higher profit target.

 

Best Wishes,

 

Thales

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I have quoted this with charts to save flicking back.

 

I wonder what made you think the break out above longer term resistance at (about 14540-50) would fail? To be perfectly honest I might have seen the bar that got you long as a test of that resistance that might now be expected to be support. Was there some longer term context or perhaps the PA after the break suggested that the bulls had lost it. I guess the lower high a couple of bars before entry was a clue? Even with the benefit of hind sight I would have been wary of that one shorting into longer term support (which obviously wasn't!!)

 

As I was getting ready to get out of here, I heard my chimes going off - sweet music to my ears.

 

Both PT's hit on the 6E ...

 

attachment.php?attachmentid=17698&stc=1&d=1263397407

 

Best Wishes,

 

Thales

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This is something I am having still problems with.

I see an impulsive move down (I hope the arrow conforms to an impulsive move) and I see price in a support zone from 3 days earlier but there is a resistance zone just above the entry signal.

I usually tell myself that to go long would be a bad idea yet Thales thinks it's a good idea (even if he did not take the trade)

I also remember that Thales wrote that he would not take a first break of a prior S or R line.

 

:confused: Could someone explain this?

 

Thanks

 

Gabe

5aa70fa37b9ef_ImpulseSupportandResistance.thumb.png.0fd6c45bccf7e3ce48ac9959501dd5d7.png

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...

Even with the benefit of hind sight I would have been wary of that one shorting into longer term support

...

 

...

I usually tell myself that to go long would be a bad idea yet Thales thinks it's a good idea (even if he did not take the trade)

...

:confused: Could someone explain this?

...

 

In any special case nobody can say what will happen next.

But the 1-2-3 way or procedure has a good statistical edge.

 

So I trade that way and know that there will be significantly more winners than losers.

Edited by Marko23

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In any special case nobody can say what will happen next.

But the 1-2-3 way or procedure has a good statistical edge.

So I trade that way and know that there will be significant more winners than losers.

 

If taken in context. 123 is a smal part of the equation, context is just as important. My testing of taking all 123's (many years ago) on a variety of bars and time frames with differing MM regimes (equally important as the trigger) showed it was marginal at best (that is being charitable). It did convince me however that it was a useful trigger condition and had merit taken in the context of where support and resistance are. Every now and then someone runs the figures in an open forum, I can't recall any that have demonstrated an edge with 123's taken alone. I wonder what you are basing your it "provides a good statistical edge" argument on I would be very interested in the other money management parameters you used to reach this conclusion? I would absolutely re run the tests if you could give some clues :). You can reach a profitable completely systematic approach but it requires other criteria too.

 

I wonder what the context for a short was there. The longer term trend was up resistance had just broken and was potential support, the previous impulse was strongly bullish, the most recent action was a sideways 'corrective' one it might be reasonable to anticipate more upside (yes of course we don't know what will happen next but we can anticipate what might be more likely).

 

Mostly I can see TT's rationale at a glance....this one caught me by surprise not least by the fact that the ones that surprise me usually turn out to be winners! :D

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I wonder what the context for a short was there.

 

Hello,

 

This was just how I was looking at it but the context for that short was a support becomes resistance level from Friday. I was looking to see if price would look weak at, or around, this level and I saw that 1-2-3 reversal as a sign that price was failing to make it any higher. i.e. that the resistance was holding. As an aside I also look for these reversal patterns at HOD's and LOD's as that seems to be quite good context as well. Does anyone else find the same thing?

 

5aa70fa39cba8_eurusd100113m15b.thumb.gif.d7fc8c43df87b2377ce443b2e3e14873.gif

 

All the best

BT

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I have quoted this with charts to save flicking back.

 

I wonder what made you think the break out above longer term resistance at (about 14540-50) would fail? To be perfectly honest I might have seen the bar that got you long as a test of that resistance that might now be expected to be support. Was there some longer term context or perhaps the PA after the break suggested that the bulls had lost it. I guess the lower high a couple of bars before entry was a clue? Even with the benefit of hind sight I would have been wary of that one shorting into longer term support (which obviously wasn't!!)

 

I am glad you asked that question, because it is a great way to let me make some general points that I think may help clear some things up for folks regarding this approach.

 

First, I did not think it would fail. I simply noted that price was doing the things it needs to do to get me short. Specifically, in the case of this trade, if you were to look at a 240 minute chart, you might see where the area between just under 1.4500- just under.4600 should be some tough sledding for the EURUSD, especially if it is sledding uphill. So anywhere a rally stalls within that zone I will take seriously, provided price gives me the proper indications that a short try is a worthwhile risk. As far as the "re-test," of resistance turned support, I fully agree with you. And, had the sell stop been just a few ticks above that level, I would have been very wary too. As it was, there was a 10 tick cushion (I refer 15, but I can work with 10). Now, on this trade, I did miss my first chance to enter on a sell stop at 1.4556, price had dropped to the previous breakout level (1.4445) and bounced hard. Once price traded back up through what would have been my original sell stop (1.4556) I placed a sell stop at 1.4556, and once filled, I placed my stop loss above the 1.4564 reaction high from that initial bounce. Of course, you still may ask why I took the second opportunity to short, right?

 

Well, we had a 1-2-3 within the context of a larger potential 2B, and that leads me right to where I wanted to go with this post.

 

Here is the way I think about price and S/R (none of the following is at all original with me):

 

1) When price arrives at an anticipated S/R level, there are two, and only two things that can happen subsequently - price reverses, or price continues. That is it. Now, some may say that price can go sideways also. Yes, it can, but that is only a precursor to reversal or continuation. It is going to reverse, or it is going to continue. And sooner, rather than later.

 

2) I trade breakouts of these areas. Do you remember that some time ago I wrote that not every breakout is a reversal, but every reversal can be traded as a breakout. Trader Vic's 123's define the breakout trade for me. Even when it looks as though I am simply buying or selling a break out of a specific level, you can bet that somewhere, somehow, and without any tricks, I am playing a 123, but some of them are only visible if you zoom out far enough to include the data I am considering. So, a 123 is the manner in which for me, price indicates its intentions - continue or reverse.

 

3) Trader Vic also amends the 123 with what he calls a 2B trade (I believe he uses the term "criterion," and not trade). In order truly to understand what the 3B is, we must set ourselves straight as to what, exactly, Trader Vic refers when he speaks of a 1-2-3.

 

Here is what a 1-2-3- is (do not skip this, because it may surprise you): The "1" refers, in this case, to the high of an uptrend, the "2" refers not to the pullback low (which we all, following Joe Ross, mistakenly lapse into thinking) but rather the "2" refers to the retest of the high, i.e. the retest of the "1", and it is the "3", the break of the pullback low that triggers the trade. So 1 (uptrend high) - 2 (test of high) - 3 (break to lower low).

 

3) Sometimes (as our friend kiwi has pointed out) the "2" exceeds the high to which the "1" refers. Hence, the "2B". Now, I am not a fan of trading the 2B on its own, effectively fading the immediate trend. I always want to see price make a 1-2-3 where price makes a high, a pullback low, and a retest of the high that is equal to or lower than the "1" high (remember also that when doing the exercise I mentioned some months ago about labeling the highs and lows that one should consider a high/low that equals the previous high low to be a lower high/higher low).

 

So, while following Joe Ross's nomenclature makes discussion somewhat easier, e.g. I sold the break of the "2" point, it is not following Trader Vic's understanding, and thus it may occlude the meaning of the "2B." Again, I do not trade 2B's on their own (typically), but I will always trade a 1-2-3 within a larger 2B.

 

I hope that helps explain myself a bit better than I have done in the past.

 

Best Wishes,

 

Thales

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Mostly I can see TT's rationale at a glance....this one caught me by surprise not least by the fact that the ones that surprise me usually turn out to be winners! :D

 

Hi Blowfish,

 

As far as specific context - anywhere within that red rectangle, I am willing to get short if given the opportunity.

 

attachment.php?attachmentid=17745&stc=1&d=1263477927

 

Best Wishes,

 

Thales

5aa70fa426021_EURUSDContext1.thumb.jpg.8bf7883d02beb511fdca7af09671034c.jpg

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As an aside I also look for these reversal patterns at HOD's and LOD's as that seems to be quite good context as well. Does anyone else find the same thing?

 

That is exactly where you are likely to find them, given the logic of the price action, right? The better ones will be at the extremes of recent ranges, while those that occur within the range are not as likely to run favorably, unless it is at the midpoint of the range and follows a test of the midpoint as support/resistance. For example, if price makes of high, falls and breaks below the midpoint of the range, and then rallies back to or just above/below the midpoint, then a short there might be a good one.

 

Best Wishes,

 

Thales

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