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thalestrader

Reading Charts in Real Time

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USD/CAD could be good....Bigger picture (240m), I see it pulling back and just touching the edge of the decent consolidation it smashed through yesterday. Worth a shot I think.

 

With kind regards,

MK

 

Stopped out for a 20pip loss.

5aa70f53abacd_MK09_10_Nov_2009.png.c93a78f74e3beb149bd03942077609f7.png

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GBPUSD looks like a decent short at 1.6755, with targets at 1.6720, .6693, and .6643.

 

We were waiting for a 1.6735 print to go to break even on the stop, but enough is enough as this a slow mover, and the stop is now break even.

 

Hi Folks,

 

The above GBPUSD short was a break even effort. An hour or so after hitting the breakeven stop, the GBPUSD offered another short entry at 1.6733, with a 1.6764 stop loss, which quickly moved to revised targets at 1.6673 ticks for +50 and 1.6620 for +113 ticks.

 

Best Wishes,

 

Thales

5aa70f53d9cc9_11-09-09GBPUSDTwoTakes1.thumb.jpg.c2046375e47188f122b741cc63d280b0.jpg

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297 pips. A 1st for me.

 

That is fantastic, Gabe! Congratulations!

 

You folks all put in a good night, the profits were large relative to the risk (and in Gabe's case, the profits were large. Period.) Forrest also saw nice profits relative to his risk. The losses were kept small. This is exactly the outcome for which we all should be aiming. Gabe and Forrest have been diligently applying themselves for a few months here, and it is staring to come together for both of them.

 

Diligence, hard work & study, and patience will be rewarded.

 

Great work and great contributions by everyone. Thank you all.

 

Best Wishes,

 

Thales

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Can this one treated as LH?

 

This is just my opinion of course, but I wouldn't call it really a LH. It might be a trade if it were at an area if I were looking for a reason to short or expect a breakdown.

 

Even though I wouldn't see it as a LH, I don't think it's outside the realm of reason for you to see it as such.

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Thoughts on stops:

 

- stops almost always reduce profit simply because they take you out at the worst price (so far) of a swing

- that means that if you are very well controlled the combination of a disaster stop + exit with price improvement after a condition is met may well be best

 

- many markets test one swing but not the second so stops two swings back are recommended by some

- some forex markets seem to stop for the swing, and some overrun it a bit so stops should be adjusted for that

- often swing stops have the worst slippage because everyone's stops are there so sometimes a stop 1 tick inside the swing can be better ... defense of the price still exists ... but you'd have to check how this market and your data/price provider represents thing to find out if thats true.

 

All good point's.I used to drive myself crazy trying to 'finesse' stops with theses considerations, but there is no 'perfect' solution. (with trading there never is).

Edited by BlowFish

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My one trade thus far this morning and different outcomes of different exits... I had the worst one and it was due to nothing other than fear of loss and taking a par on a trade that had profit. And that fear cost me AT LEAST 25.00/contract which may not sound like much but will certainly add up over time.

 

Been trying not to fight some of the strong moves this morning. This trade looked good as it was into prior S/R and the swing had room to run to prior S/R.

pic001.thumb.PNG.b239e083aa4e36fdeb185cbbb43e39d0.PNG

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TT I wondered whether you where familiar with Joe Ross' Law of Charts? It is essentially 'price action' with all the usual 'patterns' HH HL HH...HH HL LH etc. Certainly don't want to lead anyone off track so I'll say no more at the moment.

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TT I wondered whether you where familiar with Joe Ross' Law of Charts? It is essentially 'price action' with all the usual 'patterns' HH HL HH...HH HL LH etc. Certainly don't want to lead anyone off track so I'll say no more at the moment.

 

Thales posted Ross's "Law of Charts" pdf at the link below in case someone wants to go read through it.

 

Here

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I am looking at this potential EUR.USD short with stops and targets.

 

Seems similar to the structure that Thales posted yesterday. Am I analysing this correctly?

 

I was looking at that EXACT same trade as well.:cool:

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I know thales has mentioned previously (and rightly so) that filtering trades is dangerous as you're going to miss as many good trades as you do bad trades.

 

However, we have also discussed how to avoid chop zones so there is some level of filtering that most of us are still using. So I was thinking we could start of list of qualities we look for in a solid setup regardless of the actual outcome.

 

The anatomy of a good trade in my view for starters:

- Strong and clean impulse move.

- Quick and clean LH/HL made near the bottom of the move (to limit initial risk and get in before most of the move may be over)

- Can be at prior S/R (but not a requirement).

- Entry doesn't coincide with a prior S/R zone (so we don't enter into the place where price is going to probably stop anyway)

 

Anyone else care to share their ideas?

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TT I wondered whether you where familiar with Joe Ross' Law of Charts? It is essentially 'price action' with all the usual 'patterns' HH HL HH...HH HL LH etc. Certainly don't want to lead anyone off track so I'll say no more at the moment.

 

Hi Blowfish,

 

I've read his Law of Charts, Trading the Ross Hook, and Trading by the Book. I would be more likely to recommend him if he didn't charge $150/title. I do not begrudge an author payment for his work, but $150 a pop?

 

I haven't read Joe Ross's Law of Charts in years, but it may be useful to those who are learning to apply the approach we are working on here. However, I do not want to turn this into a discussion of Ross Hooks and such. I'd like to keep the focus on S/R, Highs and Lows, and risk management.

 

Funny thing about the seeming direction this thread has taken lately. I have not done anything differently than I've been doing here since I started this thread, and suddenly folks seem to be understanding what it is I have been trying share.

 

I remember someone asking me one time to post the entries that my daughter was taking over the summer, and in response I posted a chart and I said something to the effect that "this is all she does. Every day there are 1-3 trades that look just like this." I am sure that all that chart showed was a H at resistance, a L, followed by a LH and then a break lower. But for some reason, it seems as though many folks looked at those charts but somehow failed to see them.

 

I post a chart with all the L's and H's etc., and it seems as though there was this mass "Eureka!" moment.

 

Well, I have to give credit where credit is due. A few weeks ago, my nine year old daughter was showing my seven year old daughter a printed chart of the EURUSD, and

she was showing her what she does, and labeling the chart with an orange marker in just the way I labeled that EURJPY chart last week. So, again, I am not a very original trader. Even my nine year old is better than I at conveying how to do what it is we do.

 

In my defense, however, she may have come up with the idea to label the H's/L's, but at some point I must hav stumbled upon the words that enabled her to understand me.

 

Unless she just got it intuitively and I was really nothing more than office furniture.

 

At any rate, I am really enjoying this thread.

 

Best Wishes,

 

Thales

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- Can be at prior S/R (but not a requirement).

- Entry doesn't coincide with a prior S/R zone (so we don't enter into the place where price is going to probably stop anyway)

 

 

The above two seem to contradict each ther......

 

Gabe

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I know thales has mentioned previously (and rightly so) that filtering trades is dangerous as you're going to miss as many good trades as you do bad trades. However, we have also discussed how to avoid chop zones so there is some level of filtering that most of us are still using .... So I was thinking we could start of list of qualities we look for in a solid setup regardless of the actual outcome.

 

The anatomy of a good trade in my view for starters:

- Strong and clean impulse move.

- Quick and clean LH/HL made near the bottom of the move (to limit initial risk and get in before most of the move may be over)

- Can be at prior S/R (but not a requirement).

- Entry doesn't coincide with a prior S/R zone (so we don't enter into the place where price is going to probably stop anyway)

 

Anyone else care to share their ideas?

 

From your list (and its a good list, by the way), you are attempting to define the conditions under which price may be presumed to be indicating its immediate future direction. That is what you are supposed to do. Do not confuse this with filtering trades, as this is not filtering but rather it is simply the act of determining whether price is presenting an opportunity for profit or not.

 

The chop zone is not a filter. The chop zone is created when price moves between a series of of HL's and LH's. Price most clearly indicates where it is going when it etches out a series of HL's and HH"s or LL's and LH's. In other words, the chop zone is simply a period of time and price action during which price is not clearly indicating in which direction its next tradable move is likely to be.

 

Best Wishes,

 

Thales

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The above two seem to contradict each other......

 

Hi Gabe,

 

Think of it this way: For a short, price preferably will print a high at a resistance level, decline into a low, rally to a lower high, and thus the entry will be a break of that decline;s low. Ideally, trhat low is not sitting right on prior support..

 

For a long, price preferably will print a low at support, and then rally into a high, pullback to a higher low, and thus the entry will be a break of the rally high. Ideally that high is not right up against with prior resistance.

 

Best Wishes,

 

Thales

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It's not a contradiction really Gabe. For a short, if it breaks the 123 and is breaking prior resistance at the same time (or is slightly below it so it has broken higher timeframe resistance, pulled back to form the higher low and then breaks the 123) then this is the 1st case. You get the strength of higher timeframe players also seeing a break.

 

In the second case the 123 might break and, less than a decent RR target below you have the longer timeframe Support. And price bounces.

 

So reading S&R and picking for RR is important. I'll try to see a example from yesterday. Actually I have two and both are case two but one has 3 zones and it stops at each before going; the other has one zone and it breaks it like a knife through hot butter Ok. A third where S&R is a good distance away also - I'll mark the S&Rs and you can decide which is which.

 

A close S&R zone (below your break but close) is a blessing and a curse. Because it might bounce your price it could end your trade prematurely. But because a break is likely to be a higher timeframe break it could also result in a lot of extra speed and support. What it does mean is that you need to decide ahead of time how you will react when price does XXX at the close S&R.

 

 

Edit: Hmmm. I seem to be posting my opinions just after Thales. Hopefully its complimentary.

s3.thumb.png.cea3efc2356f170c3b2e0ce0eb4f0d7b.png

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Hi Blowfish,

 

I've read his Law of Charts, Trading the Ross Hook, and Trading by the Book. I would be more likely to recommend him if he didn't charge $150/title. I do not begrudge an author payment for his work, but $150 a pop?

 

 

Quite, I have a handful of his books and actually mentored with him many many years ago. The law of charts is free and a pretty good resource, I too would be hesitant to recommend the higher price works without reservation. For example one area it (TLoC) may help people is in early (and consistant) identification of side ways action.

 

I haven't read Joe Ross's Law of Charts in years, but it may be useful to those who are learning to apply the approach we are working on here. However, I do not want to turn this into a discussion of Ross Hooks and such. I'd like to keep the focus on S/R, Highs and Lows, and risk management.

 

This is what I figured which is why I asked the question rather tentatively. JR does present a couple of ideas that I would be interested to hear your opinion on of course should I ask about those I will ask in the context of what you have written here. I'll hold fire for now anyway :)

 

Funny thing about the seeming direction this thread has taken lately. I have not done anything differently than I've been doing here since I started this thread, and suddenly folks seem to be understanding what it is I have been trying share.

 

I just started reviewing it from the beginning (though I have followed it from the start) I suspected something was different or had evolved. I was wrong. :)This has turned out to be a far sleepier thread than I thought it would be. But reading charts from the "hard right edge" as they say is what this business is all about, so I'll carry on for a bit longer. -: made me smile. I hope you are pleased that you carried on!

 

I remember someone asking me one time to post the entries that my daughter was taking over the summer, and in response I posted a chart and I said something to the effect that "this is all she does. Every day there are 1-3 trades that look just like this." I am sure that all that chart showed was a H at resistance, a L, followed by a LH and then a break lower. But for some reason, it seems as though many folks looked at those charts but somehow failed to see them.

 

The ego needs a degree of complexity to get 'fed'. If things are really that simple it tricks us into thinking there must be more or can even blind us to what is obvious as a last ditch resort!

 

 

At any rate, I am really enjoying this thread.

 

Best Wishes,

 

Thales

 

Me too - current favourite.

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Hi Gabe,

 

Think of it this way: For a short, price preferably will print a high at a resistance level, decline into a low, rally to a lower high, and thus the entry will be a break of that decline;s low. Ideally, trhat low is not sitting right on prior support..

 

For a long, price preferably will print a low at support, and then rally into a high, pullback to a higher low, and thus the entry will be a break of the rally high. Ideally that high is not right up against with prior resistance.

 

Best Wishes,

 

Thales

 

I understand what you wrote Thales but the following

- Can be at prior S/R (but not a requirement).

- Entry doesn't coincide with a prior S/R zone (so we don't enter into the place where price is going to probably stop anyway)

 

seems to be a contradiction.

If the entry is AT PRIOR S/R but IT DOES NOT COINCIDE WITH A PRIOR S/R ZONE, is that a contradiction?

How can entry be at S/R but not COINCIDE with it?

I have a problem with the English form while I understand the concept you illustrated.

 

:doh:

 

Gabe

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