Reading Charts in Real Time

[Marko23 10]

EUR/USD ACD Long closed at 17:15

Profit +30 , .84R

 

 

FDAX Long was better

 

[thalestrader 14]

Hi Marko,

 

Good stuff! Thank you for keeping things going here in the thread. My son's birthday is tomorrow, and the party is Sunday, and I am responsible, per my wife's "request," for coming up with a suitably carnivorous menu for a dinosaur themed party. It has been far more difficult than I had anticipated, and of course, being a guy, I let it go until today.

 

I'm likely not going to be able to trade at all today, other than two demo orders I have in on CL. As I am typing this, a short has just been filled at 79.71 ... I have a buy order down below where I'll stop and reverse.

 

 

 

I now have to go on a search for Brontosaurus legs right now (though my son tells me they are no longer called "Brontosaurus," but have been renamed "Appatosaurus." I am not responsible for the spelling of either.

 

Best Wishes,

 

Thales

[patrader 10]

15m ES chart

[thalestrader 14]

Here is a 1440 minute (daily) crude chart showing the prior day's high (green hash) and low (red hash) on each bar. I use 9AM EST as the daily open (pit session open). Ceratinly one can see that it can pay, and pay handsomely, to pay attention to price when it arrives that the prior day's high/low.

 

 

 

Best Wishes,

 

Thales

[Marko23 10]

...

My son's birthday is tomorrow, and the party is Sunday, ...

 

I now have to go on a search for Brontosaurus legs right now (though my son tells me they are no longer called "Brontosaurus," but have been renamed "Appatosaurus." I am not responsible for the spelling of either.

 

Best Wishes,

 

Thales

 

Thanks,

please give my birthday greetings to your son, wishing all of you a nice party and lots of fun.

[Marko23 10]

EUR/USD ACD Long closed at 17:15

Profit +30 , .84R

...

 

From a daily chart I learn that price made it above 1.36 during the evening.

So the R-multiple "could" be much higher, had I stayed online longer; anyway ten hours are definitely enough per day.

 

I'll update that chart on Mo morning for the exact multiple, my chart programs are in the office since I don't take the markets home.

[Marko23 10]

Here is a 1440 minute (daily) crude chart showing the prior day's high (green hash) and low (red hash) on each bar. I use 9AM EST as the daily open (pit session open). Ceratinly one can see that it can pay, and pay handsomely, to pay attention to price when it arrives that the prior day's high/low.

....

 

Yes it does pay. For my standard FDAX and FGBL trades I always observe the 2 day and 3 day rhythm of high and low.

[Kiwi 16]

Thales (and others following his HH HL breakout style) might enjoy a look at two threads over at forexfactory.

 

The first is "The System II (Yes with Irony)" which is a slightly different breakout;

 

and the second is a derivative "FCR Thread" which include thales trade as an FCR 1. The derivative also has a spin off website which includes a description of the method.

 

 

An interesting thing about it from my perspective (as a set the stop and just give it room type of guy) was that both are, like thales, very aggressive in tightening. This page describes the tightening strategy rather well ... its a little different to thales (maybe??? you could comment) but I think its quite a solid approach.

 

exit descriptions (author is not a native english speaker)

 

You need to read the summary document on the FCR spin off website to understand exactly when the different exits are applied.

[Marko23 10]

... fxchateau

 

fxchateau.com : trading in the noise for >= $100 per month ?

 

I always wonder, why these people can't make money with their perfect systems in the markets.

Edited February 21, 2010 by Marko23

[Beachtrader 10]

Hello there,

 

Apologies for not posting of late but I thought I should as I was an early follower of the 'System 2' thread which was started by a former pit trader. I never really posted much there as it focused on Euro whereas I traded cable but followed it avidly. The reason for my post was Kiwi's reference to trade management as this was always my bug bear and took a while to find a way to make things work properly for me. When the system 2 thread first started the OP mentioned the 20/20 and 20/40 rules whereby one used a 20 pip hard stop and a TP at either 20 or 40 pips giving either a 1R or 2R return. This had me bemused for a while as I found that my win rate with the suggested entries was way lower than 50% which meant that one was a net loser over time. Then it dawned on me (and I think this is what you have been explaining of late Thales?) that it is fine to have a 1R or 2R return for winners if the losers are always less than -1R. In other words one's stop needs to be aggressively trailed to reduce risk. I always liked this as I have a firm belief that the only thing I have any control over in my trading is the amount of risk I have in any one trade.

 

From memory the OP's own method of trade management was to trail his stop 1 pip at a time up to b/e. I tried this but it didn't feel logical enough for me. Anyway after a lot of experimentation I ended up using the method that hopefully these 2 charts that I posted elsewhere last year explain.

 

 

 

In essence I used M5 levels (set-ups) but, when the trade triggered, I would drop to M1 and trail above / below M1 swings up to a level where I could put my stop at b/e. The reasoning behind this being that, when price breaks through a level, I 'expect' it to break hard and fast. Any pullbacks or hesitation suggest to me that the trade might not work out as I am 'expecting' it to. My mindset is firmly of the belief that my job is to manage / reduce risk - the winners simply win, but it's how I manage the losers that defines whether I make money or not. I'm pretty sure Thales mentioned a similar method a few weeks ago when describing an ES trade?

 

Anyway, hope this isn't too off topic. As an aside I am now using a very similar system trading M15 'a la Thales'. It makes for an awful lot of losers (approx. 70%) but these losers are on average around -0.25R whereas the winners are a large multiple of this.

 

Kind regards

BT

[Kiwi 16]

Have a look at the derivative material from fxachillies as well BT.

 

I noticed that many people seemed to struggle to really get a handle on Thale's trade management and suspect that thinking about this material might help quite a bit. I think that fxachilies struggled with the system ii stops for the same reason you did and thus created a more logical structure to remove doubt.

 

His definition of a multiple stop strategies that evolve depending on 1. the entry pattern used and 2. what happens afterwards addresses the sort of uncertainty you describe above. To my surprise I realized that I too can trigger more aggressive exits to my benefit and will be experimenting with that tomorrow - and also that the exit is not a stop but a reduced limit order.

 

It also makes me wonder about the use of the absolute first exposed R in both R multiples and in expectancy calculations. If one is able to consistently manage a much lower loss then perhaps the average loss should sometimes be used rather than the maximum - or at least two measures should be considered when evaluating system quality.

[Beachtrader 10]

It also makes me wonder about the use of the absolute first exposed R in both R multiples and in expectancy calculations. If one is able to consistently manage a much lower loss then perhaps the average loss should sometimes be used rather than the maximum - or at least two measures should be considered when evaluating system quality.

 

I think that's an extremely interesting point and possibly hinges on one's personal attitude to risk. By that I mean that, given the way I manage my trades now, I could use a single digit hard stop for each entry but the danger for me in doing this is that I would see up to 70% of my trades get taken out at 1R which I personally couldn't handle, no matter how good the overall R/R on winning trades is, but that's just me!

[DugDug 10]

When I look back at my trades I actually compare the original stop level v the actual stop level and record a brief reason for why it was less (or more) eg; nervous, did not feel right, poor trade, no acceleration. This usually results in a large majority of stops being smaller than the original loss based on me being nervous - or not feeling right about the trade (I have never quantified why - maybe I should). I think this is a more accurate measure as its real trading on a discretionary basis v fully systematic.

Interestingly enough on about half of these should I have kept the original stop loss level as they then turned into profits. It has never made much difference to the PL overall (as lots of little losses do add up, compared to lots of even smaller losses) but I prefer the feeling of discretionary control suits me better at the moment, plus I use more context.

 

The most important thing I have been concluding lately that suits me, is that longs and shorts based on the context of the market behave differently. (I dont care about robustness and purity of a system that treats everything the same - I want one that will allow me to consistently make money in a way that suits me, plus different markets definatley react and trade differently).

eg; if in a downtrend and a nervous market the reactions are likely to be quicker and more shallow, while in an uptrend reactions seem to take longer, and pullback further. Currencies trade differently to crude to equities. So in each case the things to watch for are slightly different.

So for some markets I give more leeway to stops others less. The downside to this is that it can get confusing. too many choices are not necessarily always a good thing.

 

The one consistent thing that I find continually rises its head from profitable traders ---- is you have to give yourself the opportunity to participate in the runners. Just aiming to make money day in day out with little scalps (while it does work for some and I am not knocking it) is tough work.(good for the brokers). I have always found that myself and others I know make the majority of the money on a small percentage of the trades. (I only I knew which ones in hindsight)

[MidKnight 12]

Choppy trade most of the day on Friday showing a reversal in the USA session. The break down from the recent multi-day range has been fierce. Any re-test of the lower edge of that range is obvious for working into a short position.

 

Only longs to be had will be scalps unless there is a very very clear capitulation. Should it capitulate I will aim to be out of 1/2 by the time we trade the recent multi-day range low and attempt to trail the rest and scaling out the remaining 1/2 into 2 separate exits.

 

The obvious short to look for is in the recent multi-day range low area, ideally in the 1.5660 - 1.5620 area. Shorts there will be aiming for a new low but will be out of 1/2 before making that new low. I'll attempt to trail the other 1/2 with successive LHs from the 60 min chart.

[thalestrader 14]

... Based on the daily charts, I anticipate high prices for equities and gold, lower dollar...

 

I've been long the ES and Gold, and see no reason to change my view. While a pulback at some point is to be expected, I am never one to argue with one way prices so long as I am driving the right way on that one way street.

 

I am looking to take a position in the dollar index, but in spite of the push to new highs on Friday, I am still looking at the dollar as a coin spinning on its edge, and I do not yet know which way it shall fall. C now exceeds A, but still falls within a proportion that allows for a terminal movement to the upside, while still, of course, allowing for a continued rally.

 

Best Wishes,

 

Thales

[patrader 10]

15m 6E chart

[thalestrader 14]

Anyway, hope this isn't too off topic. As an aside I am now using a very similar system trading M15 'a la Thales'. It makes for an awful lot of losers (approx. 70%) but these losers are on average around -0.25R whereas the winners are a large multiple of this.

 

It also makes me wonder about the use of the absolute first exposed R in both R multiples and in expectancy calculations. If one is able to consistently manage a much lower loss then perhaps the average loss should sometimes be used rather than the maximum - or at least two measures should be considered when evaluating system quality.

 

I had a rough first week of February, during which I had a nearly -4R draw down, and for a while, my average loss was stuck above -.70R. After last week, I am now up +23.76R MTD, and my average loss is down to -.52R. During a more typical month, my results are fairly close to BT's, if I were to count BE trades as losses. That has always been my point - I keep taking my swings, cutting my losers, and letting my profits run to target(s). So, while my average win is currently +1.56R, it is actually +3R as measured by by average actual loss for the month. Again, during a typical month (it is unusual for me to have a -4R draw down, but it happens a couple of times each year) my average profit is around 1.5R as measured against my initial risk point. But measured against my average actual loss point, my average profit is about +6R.

 

For what its worth, I believe I could win a very high rate % of my trades, probably close to 90% or better, as almost every one of my trades foes into a small profit at some point soon after entry. However, I'd likely be exchanging profits for the sake of not losing as often. I really cannot imagine doing this day in and day out for +2 or +3 ticks/trade, especially when the inevitable full stop loss takes out the profits of 5 or more "winning" efforts.

 

Best Wishes,

 

Thales

[thalestrader 14]

Embrace life ...

 

[ame=http://www.youtube.com/watch?v=h-8PBx7isoM]YouTube - Embrace Life - always wear your seat belt[/ame]

 

Best WIshes,

 

Thales

[elitejets 10]

I am looking to take a position in the dollar index, but in spite of the push to new highs on Friday, I am still looking at the dollar as a coin spinning on its edge, and I do not yet know which way it shall fall. C now exceeds A, but still falls within a proportion that allows for a terminal movement to the upside, while still, of course, allowing for a continued rally.

 

Best Wishes,

 

Thales

 

I'm a bit jealous, I spent ages writing on my USD chart and yours is so much clearer than mine.

Sorry I haven't been contributing more ...

[Beachtrader 10]

For what its worth, I believe I could win a very high rate % of my trades, probably close to 90% or better, as almost every one of my trades foes into a small profit at some point soon after entry. However, I'd likely be exchanging profits for the sake of not losing as often. I really cannot imagine doing this day in and day out for +2 or +3 ticks/trade

 

I guess this is an example of 'gnothi seauton'? I think this is / was always an issue for me as I didn't believe that I liked losing. It's taken me a long time to realise that I don't mind having lots of losing trades but I do mind losing big!

[patrader 10]

15m ES chart

[Marko23 10]

Update for Friday EUR/USD > 2R at end of day

[Marko23 10]

EUR/USD ACD Setup for today

[thalestrader 14]

Hi Folks,

 

EURUSD/6E is at a level within a zone of some signficance and I would expect a trade that trends away from that level at some point today ...

 

 

Best Wishes,

 

Thales

[Marko23 10]

EUR/USD may be Short soon

 

Update: price returned into the Open interval.

Edited February 22, 2010 by Marko23