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thalestrader

Reading Charts in Real Time

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... Stop loss as shown would be lowered immediately to one tick above the current little bounce from the entry point upon entry...

 

For example, should entry trigger without price trading higher than the level shown by the red line here, that would be the stop loss (-28 ticks), and the profit target is +100 ticks.

 

Best Wishes,

 

Thales

5aa70fcbf0e58_2010-02-106E2.thumb.jpg.30f1a2f720ad4cfaf3bcdf554095f33b.jpg

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For example, should entry trigger without price trading higher than the level shown by the red line here, that would be the stop loss (-28 ticks), and the profit target is +100 ticks.

 

Initial stop was -34 ticks, current stop is +29 ticks, profit target is +100 ticks. So, worst case on this trade is a profit a shade under 1R.

 

attachment.php?attachmentid=19115&stc=1&d=1265818216

 

 

 

Best Wishes,

 

Thales

5aa70fcc0e52a_2010-02-106E6.thumb.jpg.6206553576d1a7eaafe42faa0a9dd217.jpg

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G/U possible reversal setup in previous bed of support.

 

Dropping down to m1 to show what I'm thinking with this one at the moment.

 

Price has now made 2 unsuccessful attempts at breaking through 5607, so I've moved my stop up to the last swing low (+ a few pips), the dotted red line on my chart.

GU1002b.thumb.jpg.b3cb88e216e172a52aae734448fcace1.jpg

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Dropping down to m1 to show what I'm thinking with this one at the moment.

 

Price has now made 2 unsuccessful attempts at breaking through 5607, so I've moved my stop up to the last swing low (+ a few pips), the dotted red line on my chart.

 

Well the '+ a few pips' kept me in before price made new highs, then I moved my stop up too tight as it offered another low temptingly close to my entry point. Needless to say I got stopped out to the tick before price went on to higher highs again. -1pip or 0.03R :crap:

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...I am up 12.26R for the month.

 

...-1pip or 0.03R

 

I just want to say that I really like the use of #.##R (vs ticks or % return or $$). A while ago, I made the post attached below, about how neither ticks nor % return really mean much in isolation (as far as gauging performance)...so how do you measure performance?...by ##R! (that hadn't occurred to be back then) :)

 

I just had a realization while thinking about leverage, etc. It doesn't necessarily matter how many ticks you make because 15 ticks can equal 50 ticks in terms of $$, provided that you are managing your risk per trade as a % of account equity.

 

On the same token, it doesn't necessarily make sense to measure performance on how much $$ you make, because that can just be manipulated by position sizing.

Edited by Cory2679

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I just want to say that I really like the use of #.##R (vs ticks or % return or $$). A while ago, I made the post attached below, about how neither ticks nor % return really mean much in isolation (as far as gauging performance)...so how do you measure performance?...by ##R! (that hadn't occurred to be back then) :)

 

The purpose of the Van Tharp readings were to try to influence the direction of the thread towards money management and viewing one's performance through the lens of Units of Risk or R-multiples. Those readings, unfortunately, though perhaps not surprisingly, were among the least popular of the Weekend Readings (rating as low as the Elliot Wave stuff!).

Of course, it makes sense that the most important element of trading successis the one that folks least wish to examine.

 

For example, most folks wish to avoid losses. As a result, a favorite metric of the uninitiated is the win/loss ratio, or the winning percentage. Winning percentage means nothing outside of the context of a trader's R status. Yesterday I gave the example of one trader with a 1.4 avg R and a 60% winning percentage compared to a trader with a 6R avg win and only a 33% winning percentage. Who would you rather be? Well, measured by nominal $'s won, you'd want to be the trader with the 6R average, even if it meant most of your trades would be losses.

 

As of today, (I am done 'til Tokyo, anyway) I am up +16.13R for the first 8 trading days of February. My largest win this month was 5.06R, my largest loss was 1.06R (commissions and slippage don't you know). My avg R actually slipped a hair today to 1.42, down from 1.44 yesterday. My average loss for the month dropped, interestingly enough, from about .73R to .64R after today and my winning percentage today was just over 50%, but I added 3.87R to my MTD profits. Not a bad day, if I say so myself, but I over traded like crazy, everything turning into a scalp.

 

Also, for those who think I have special powers, looking back over the month, I see that at one point last week I had a draw down of -3.87 R, which is nearly the equivalent of four consecutive full-on stops. It happens. You just keep taking your swings, and eventually the ship rights itself. By "right itself," I do not mean that I was doing anything wrong and that I had to change to get things right. I was fine. I did everything right during that draw down. More importantly, I did everything right since that draw down. You cannot let yourself worry about a bad trade, a bad day, or even a bad week. If you get to the end of the month, however, and things are bad, then it is time to stop, re-evaluate, paper trade, diagnose, etc.

 

By focusing on money management and risk, you will be able to identify and isolate any problems quickly.

 

There is no other way to trade for infinite yield while avoiding ruin other than to focus upon your RISK and a money management approach that wishes to avoid RISK and its pernicious effects as much as possible. An R unit of my futures account is 2% of equity, which means I double my account at 50R. It took me years to double my first account. Let me tell you how much more manageable a task that is if you have proper money management.

 

One last thought on this for now: If you are interested in reading about a trader who really understands risk and knows how to manage it, read the Larry Hite's interview in Market Wizards.

 

If you haven't read the Tharp articles, search the thread and read them. I've said it here before and i will say it again - position sizing is the closest thing to the Holy Grail of trading as you are likely to find.

 

Best Wishes,

 

Thales

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Probed the near-term R once again before a large sell-off. Immediate trend remains intact. Has dropped deeply into the support area putting me in a position where I am not very sure if it will hold or not. I'm not game enough to do any serious longs in this support area and also not game enough to do any serious shorting unless we break this low from 3 days ago. In a bit of no mans land for me. Will look for obvious scalps predominantly or possibly some light shorts testing the low before yesterdays spike high in the 1.5660 area.

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MK_03_2010-02-11.thumb.png.45abaa56639a9f12f9aed7512f0b3c9d.png

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...Yesterday I gave the example of one trader with a 1.4 avg R and a 60% winning percentage compared to a trader with a 6R avg win and only a 33% winning percentage. Who would you rather be? Well, measured by nominal $'s won, you'd want to be the trader with the 6R average, even if it meant most of your trades would be losses....

 

I honestly couldn't say which trader I would rather be without knowing the frequency. To really assess which is better one needs to know the frequency. Your 6R example may only do a handful of trades a month but the 1.4R guy may do a handful a day. Who would you rather be? I'd pick the 1.4R guy! :)

 

With kind regards,

MK

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Looking at the Dow daily, I was somewhat surprised to find a pattern not unlike what is commonly referred to as a bull flag ...

 

Nothing has changed ... small decline off yesterday's close, on diminishing volume. A quick look around the 'net and seems like everywhere no matter what the Dow does, the interpretation is that there is more down trending to come. Maybe. But as MidK says, there are two sides of any coin, and right now, the coin is balanced on its edge. It will fall, but right now, I see no reason why it must come up Bears rather than Bulls. It seems to me it can go either way at this point.

 

attachment.php?attachmentid=19132&stc=1&d=1265850399

 

Best Wishes,

 

Thales

5aa70fcc620c8_2010-02-10DJ-301.thumb.jpg.c31fb1e37ddb1c15f1d90f380bd2ab0e.jpg

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The dollar did not make new uptrend highs, nor did the Euro make new downtrend lows. It looks, at the very least, that the correction of the prevailing trends that was suspected a few days ago is indeed occurring...

 

However, another possibility is that the rally off the November 2009 low was itself a correction against the larger down trend off the March 2009 high, and that the down trend is ready to resume. ...

I would expect Euro strength, dollar weakness over the coming days/weeks.

 

No change with the US Dollar either ... If the dollar continues to a new high, then I think he odds favor that the recent uptrend does represent a change in the Dollar's intermediate to long term prospects. This new uptrend high could occur tomorrow, or after a deeper correction of the recent rally. Should a correction break and hold below 76.60, then the odds increase that the recent rally was itself counter trend, and the down trend may be resuming.

 

attachment.php?attachmentid=19133&stc=1&d=1265853715

 

Best Wishes,

 

Thales

5aa70fcc67059_2010-02-10DXYO1.thumb.jpg.e5a7cfd38b03ae0a83a461b3238c5f60.jpg

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EUR/USD Long possible

Triggered already

 

Modified start triggered and stopped.

 

At the end of this week, I'll know whether the start with pullback is useful for EUR/USD.

 

Original start stopped.

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Edited by Marko23
Original stop

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EUR/USD Short triggered

 

At break even

 

Trade closed at 2R, slow progress.

 

Trailing stop better than 2R

 

Trailing stop hit, insignificant improvement

 

MFE 5R

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Edited by Marko23
Update

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