Empty Blank Chart

Because of one particular ForexFactory Troll, I will no longer be participating in this thread. Instead, I'll be creating Live Stream Channel and insert that Live Stream into a different ForexFactory thread that I will create when I'm done setting up the background work for the Live Stream.

To be continued in that new thread......

See ya!
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Is it possible to consistently trade with acceptable results using an empty blank chart? Well, in this thread we're gonna find out by actually doing the work. No indicators. No pretty flashing lights. No moving averages. Nothing but price itself and the dark blackness of the UNKNOWN. Scary? Dangerous? Pointless? Useless? Impossible? You decide. I just grabbed a random pair (EURAUD) and will use that as the first Exhibit:



I'll be using simulated trades with pictorial annotation for now.

I'm running a high cost basis trade of a different kind in different thread, so I don't want to close that trade until it has finished. When the other actual trade is finished, I'll start using real trades here. For now, this is a simulated Long at the dashed green line.

I don't use Stops. When using Naked Directional Trades, I am the Stop. So, I use a simple hotkeyed script that either closes the position or reverses its direction.

Will you only trade on line-chart?

This thread is primary for Nubes, but anyone can participate. The exercise being conducted here is not insignificant for the Nube. It goes to the heart of what the Nube needs to learn in order to become a consistent Trader. When I was a Nube almost 2 decades ago, nobody showed me this. What's being shown here is a concept or Art Form (I like to call it) in trading that seems to have gone the way of the dinosaur: Pure Momentum Trading coupled to The Break Out. As a Nube, you have some very important decisions to make. Decisions that right now, you don't fully appreciate because you are in the very early stages of developing your skill, knowledge and expertise as a Trader. This will accelerate that appreciation tremendously.

It is important for the Nube to focus on what's taking place on the chart. The White Line is actual Price plotted via the Close. Right now, I'm on the 30 minute time frame, but that can change and it will change when the time comes... and that's a crucially key point to observe when it happens. This exercise accomplishes a number of different things that are good for the future of your trading. This exercise trains the brain:

- To be patient
- To recognize that both "Support" and "Resistance" can be very ethereal
- To understand the importance and concept of Magnitude
- To understand the importance of Timing
- To understand the real definition of Risk (in fact, to change its definition right before your eyes)

This does not focus on Direction or Probability as those concepts are advanced subjects that cannot be mastered until Magnitude and Timing are understood for what they are. If you are astute and you have the propensity towards becoming a Trader, there is no better way to learn this Craft than through a Black Chart with nothing more than Price Data at face value.

To the "Experienced Trader" this initial Long trade looks absolutely absurd. I would agree with that sentiment 100%. To the "Experienced Trader" this Long position does indeed appear to be absurd on the surface. However, there is more than meets the eye now taking place here and that is where the Nube can learn a valuable lesson.

Now, here is the interesting part.

I have no earthly idea what the Market will do with this trade. None whatsoever. And, what's more. I could care less what the market does, as long as it continues its Normative Historical Behavior which is to MOVE. I could give a rats tail about whether this or even the next trade results in profit, as long as the EURAUD continues in-line with its historicity of being a pair that moves enough to recapture all lost capital and regain a foothold on profits long term. This is an incredibly important Mindset for the Nube to grasp VERY early in their trading career. Failure to grasp this concept will severely stunt your growth as a Trader in the future.

Now, let's take a close look at what just happened in the EURAUD as I was typing. I'll zoom-in to demonstrate:

Where is Price now?

The Market created a Region of Risk between the upper arrow and the lower arrow. Recall from above that this is a Line Chart via the Close. So, those two points represented by both arrows represent where the Market Closed and the Range those Closes created. THAT (not anything else) is a Region of Risk through which Buyers and Sellers have disagreement. That Region of Risk can be exploited for profit, when you select the correct region. You can trade in any Direction on the break of that region as long as there is sufficient Magnitude remaining in the Pair to make the journey to a profitable level after breaching the Region. I picked the Region of Risk that took place just before this one. This is only 5.8 pips deep and it encapsulated by previous Regions of Risk that came before it and there relative nearby it.

A simple, yet very critical lesson for the Nube to learn here. The only "Price" that truly matters at the end of the bar is what the Market decided to print as the Close. That's True Price. The Settled Price. That's the Price that determines the Open Price of the "Next" bar. The goal here is to exploit the Region of Risk defined by the Market through Previous Close Prices that produces a Risk Ratio beneficial for the Trader.

What makes this work? Magnitude. Now, I'm doing this at the end of the trading session as an example, so there is no real Daily Magnitude remaining in this pair. But, the concept remains the same. Every Pair will move an expected number of pips per bar - in this case, I'm referring to the Daily Bar as I am using a Time Frame for this example that is less than the D1 Time Frame. Using the D1 Magnitude, I can know if a Pair is approaching its historical D1 Range (Magnitude). If not, then I have good foundation for accepting trades that break out from inside a Market defined Region of Risk.

The "Risk" is defined by the height of the Region established between two (2) previous Closes. In this mere example, I'm showing you two very close points via yellow arrows. This is not an optimal Region of Risk, but it serves the purpose for establishing the concept in your mind.

Why did I select the Long trade?

Because the Market challenged (broke) the upper region of risk with the Ask. I could modify that decision by requiring the Market to challenge either the Upper or Lower Region of Risk with the Bid. Or, a midway point between the two. It all depends on how much risk I'm willing to assume AND the actual size of the Region of Risk itself. In this case it was a mere 5.8 pips and not optimal but it demonstrates the point.

When will I move out of the Long and into the Short?

When the Bid challenges the Lower level of the Region of Risk. Ergo, this defines risk taken. Pure and simple. So, the Entry Protocol is clear. The only thing left to do is locate Regions of Risk that take place where there is still sufficient D1 Magnitude remaining in the session. Not rocket science, but highly effective for the Nube to gain an understanding of what real Momentum looks like.

Again, I put this on at a time in the session when D1 Magnitude is drained. This is a function of my time zone and when I'm available for demonstrating such things in real-time. I'll try to get to some of these when there is more D1 Magnitude remaining in the session at a later time. For now, the concept should be clear. The Nube is searching a Line Chart and looking for Regions of Risk that have been created by the Market, that have not yet been breached and that have a Defined Risk (in pips) that suits the Traders needs. You then simply trade the break of that region using the height of the region as the reciprocal for reversing trade direction. You iterate through that reciprocal until the Market resumes its historical expansion of its D1 Magnitude (D1 Range).

Ergo, it is quite clear that you MUST do this when there is sufficient D1 Range remaining in the trading day. That's the safest time to run these kinds of trades. Notice here that the Market is still considering which level within the most recent M30 Region of Risk (predicated on Close prices) that it wishes to breach:

Now, to expand on the concept.

Notice here that one time frame higher (on the MT4 platform) that H1 has a slightly higher elevation for the upper level of the Region of Risk:




Also, notice when taken in full, the H1 by itself has a larger Region of Risk defined as 9.7 pips instead of the M3 Region of Risk defined at 5.8 pips here:




What does this tell me? It tells me that I can use the Lower Level of the H1 Region of Risk in combination with the Upper Level of the M30 Region of Risk to extend the probability for an even larger break when it comes (WHEN there is adequate D1 Magnitude remaining in the session). I decide whether or not the Range containing the Region of Risk warrants acceptability.

In this examples, because I know that D1 Magnitude is so exhausted and because I know that the next D1 bar contains probable price action that secures the current Long trade, I can use the H1/M30 combined Region of Risk to allow more breathing room for the trade. 9.7 pips is not very scary and well within my threshold of tolerance.

Net/net, what you end up with here is the Market falling back into the Previous H1 Region of Risk at the very end of a D1 session. That's downward D1 Momentum doing what it should be doing as Scalpers do their thing. Let them do their thing, while Institutional Traders do their thing which is nearly always the exact opposite of what Retail Scalpers are doing.

Now, we have this on the H1 Chart:



Holding Long. Simulated draw is about 15 pips now and the H1 Region of Risk is about 9.8 pips.

Now, let's move out to H4. Keep in mind that this time frame is 8 times larger than M30 and 4 times larger than H1:



H4 has created what I an Inverted Region of Risk shown here:



Note the little "elbow" shaped price action shown by the dashed arrow on top. It looks like the "Lower Level" of the Region of Risk data point, but it points off to the side instead of pointing straight down or straight up. These "Inverted Levels" will always point to the Left of the chart because price moves through time from Left to Right along the X-axis. If you can see and understand that concept, then you can see that on the H4 TF, the Market is forecasting a probability for reversal in the direction of that inverse level.

Now, we go to the next higher Time Frame, D1. What we find here is the proverbial "Falling Knife" scenario:



Not much to say here. Most recent Region of Risk is a whopping 283 pips deep as shown here:



I'm not interested right now because the Market is nowhere near a break of those levels, yet. I will become highly interested when the Market reaches either of those levels.

Going to the W1 TF, there is a 360 pip Region of Risk:



Again, just not interested as the Market is not yet interested.

Finally, out to the MN1 where there is a large 617 pip RoR:



Again, when the Market decides to become interested, I'll become interested. Until then, my job would be to locate nearby RoR that I can exploit using the largest nearby bar of data possible that still has sufficient Magnitude remaining in its bar.

Again, I've posted this initial set-up predicated on M3 as the trigger time frame and D1 as the fuel for the trade. Clearly, today's D1 has exhausted which makes these types of trades highly muted. However, it is the concept and the idea that's most important. You can play with this yourself under more optimal conditions when D1 has sufficient remaining Magnitude (Expected Range) remaining. Right now, this provides you with the Concept.

These types of trades obviously require follow through on the part of the Market. That follow through comes by way of unspent Magnitude of a bar of sufficient Size and Scale relative to the size and scale of the selected Region of Range used to set the trigger.

Ok, you should now have some idea of the underlying concept. Using all larger time frames available above the triggering time frame that you have selected (in this case I selected M30 as the triggering time frame in which to locate a Region of Risk), you check for RoR in those times frames to see if the Market is nearing a break in one of those larger time frames.

Why is this important?

Its simple. H1 has more Magnitude than M30. H4 has more Magnitude than H1. D1 has more Magnitude than H4. W1 has more than D1 and MN1 has more than W1. Trading is process of locating (hunting) sources of Available Magnitude that has been so far been untapped by the Market. If you did the mathematical analysis on the historicity of this Magnitude, you would find that its persists through history. A simple ATR indicator can show you this, but fooling around with ATR without understanding WHY its output is important would defeat the purpose. You now know the WHY.

It is the Region of Risk that creates an opportunity to exploit remaining Magnitude. Why? Because no Market moves up or down in a straight line forever. When the Market creates a Range, it is telling you, this is the Region of Risk - accept it or reject it when we move beyond either Level containing the Risk. Buyers vs Sellers at levels in the market that are differential, establish a Region of Risk to those who have not already taken a side. Ergo, when the Market creates and then enters that Region of Risk, the Market is telling flat out - get ready for a move - IF - there is sufficient Magnitude remaining in a HIGHER and LARGER time frame.

You can then use this information to know when there is a higher probability to HOLD a position entered WHERE the Market is temporarily going against your trade. This gets to the heart of the first thing listed in my first post: How to learn to be patient.

Getting back to M30 and the trade:



This was a random trade entry using a tight M30 RoR with little to no D1 Magnitude remaining. Current draw is now 15.4 pips. I could take the break of the Lower Level or RoR on the M30, but the question is why? Where is the Market going to go after that? The next D1 bar is 3 hours and 30 minutes away. Upon the start of that D1 bar, I know that D1 Magnitude contains upward historicity that's hidden from Traders that don't yet understand Magnitude and how it works.

Because of this and to demonstrate the point, the Long position remains on Hold here.

Patients was the 1st lesson and the most important lesson the Nube Trader can ever learn. I told you this would teach you patients if you processed this information correctly and apply it correctly. You will learn both Patients as a Trader and the role of Magnitude. I will discuss a more "advanced" version of Magnitude at a later time. Right now, for the Nube, it is important to understand basic D1 Magnitude. This understanding will save you from being jerked around the Market and turned into an emotional wreck when you are trading.

Holding the Long when the "Experts" are saying, "this guys is nuts - I'm Short."

The Market has built-in protection for your trades, if and when you learn to use Magnitude properly. You have heard before that the "trend is your friend." Well, I'm here to say that while the "trend might be your friend," Magnitude is the air you breathe as a Trade. It is the literal blood that flows through the Market. Trading absent an understanding of Magnitude is unwise and unwarranted.

So, I can hold this Long position because I fully understand what Magnitude is all about as I've studied it for nearly two decades. So, I'm holding long while the "Experts" laugh holding their Shorts. If you get this concept Newbie, you will be way ahead of where I was nearly two decades ago. Way ahead.

No indicators. No moving averages. No digital trading panels. Nubes (Newbies, sorry) - should NOT touch "Indicators" and "Bots" until you have a thorough understanding of:

Timing
Direction
Magnitude
Probability

I've said this a billion times in the online trading world in the past. If you truly want to reach a level of genuine competence as a Trader, you must dedicate your trading career to understanding these four (4) giants of trading. Right now, you are gonna learn Magnitude from me. That's all I'm doing here. I won't have time to teach the other three. But this one is enormously important because it can and will spark trading ideas that go well beyond the average Trader and secures your emotional state by stabilizing it with empirical evidence for what you are doing in the Markets each day.

I'm using a weak example (D1 Magnitude expired) to demonstrate the power of understanding real Price Action and what it is predicated upon as a practical matter.

-17.5 pips in draw and comfortably holding:

Back to M30 to check out how the RoR is developing:



Two relatively recent M30 RoR. One 11 pips deep and the other 19 pips deep. Current draw on this simulated trade is about -17 pips on a less than optimal trade set-up near the end of D1 Magnitude. This is how you want to intellectually process this information.

- D1 Magnitude has expanded today over 158 pips to the downside
- Where is D1 going to go with 2 hours remaining in the D1 session if the Market breaks the Lower Level of the M30 RoR (currently my MT4 server time = 22:00)
- Does the potential for a reversal trade into the Short from here carry more risk than holding the current Long from here (huge question)

The last question shifts your thinking as a New Trader from how do I make a profit to how do I mitigate and manage risk. And, THAT is what a New Trader should be focused on: Methods and Procedures for Mitigating Risk.

You are not a Trader, yet. But, you are learning the Craft of Trading. Skill, knowledge and expertise is what you are seeking. Dismantling fear and its control over your thought process is what you are seeking.

Now, EURAUD just broke the Lower M30 RoR level. Had there been sufficient D1 Magnitude remaining, I would have reversed that trade. There is not. Ergo, I will Hold the Long position. Not because it was an optimal entry, but just to demonstrate why having an understanding of Magnitude is so extremely important. "Oh, but the Market is now pulling down and away from your Long entry! Don't you want to bail out now!" No. I don't want to bail out now. That's what a someone who does not understand Magnitude would do and THAT is one of the primary reasons why they get whipsawed around the market far too often.

Settle down and relax. Its ok of the Scalpers have some fun. Let them. Don't be greedy. As a New Trader, you have no business involving yourself in the Art of Scalping. That's an advanced Trading Methodology that requires a lot of skill to manage properly.

I want you to now remain focused on the bigger picture: D1 Magnitude. The next D1 bar will contain some surprises for you. Relax and learn to let it happen. This is where you learn to rely on Magnitude as your backstop. Mag has your back.

"Oh my gawd! M30 is running away from your Long!!!" No, it is not. Relax:

Stay calm. If you want to be a real Trader some day, then you must learn to remain calm at all times during the Draw Phase.

BTW - EOD spread widening (End of Day Spread Widening) done by our Bucket Shop Broker does not count towards a "Trigger" for either Entry or Reversals of these types of trades. This is the nature of Bucket Shop Hell. Don't fight it. Don't call up your Broker and curse them out because they clicked a button on the MT4 Dealer Plug-In and widened the spreads on you. Don't log into a forum and beat the broker about the head and shoulders because you got widened before the D1 close.

This is how Retail Buckets Operate and quite frankly, you will find this same kind of spread hijacking taking place in other legit markets as well. If you have been trading long enough and in variety of market types you know that spread-jacking is quite the norm. As a New Trader (Nube or Newb, sorry - lol!), this is simply something you need to learn to either ignore or simply don't trade around known spread-jacking times. Getting angry and upset over a spread-jack is pointless.

Besides, if you truly want to become a competent Trader, then you really should learn how to trade without using a Stop, or at the very least, you need to learn how to use a Trade Reversal Script that works - if and when you are doing Manual Directional Trading. When I manage my Directional Trades manually, I do so with a script that closes all open trades on a single chart, all open trades in a specific account and most importantly a script that Closes and Reverses an existing trade. I would say that as a New Trader, those are scripts that you need to obtain while you develop your skills.

Now, I wait patiently for the D1 bar to reset for the 2/5/2020 session. Notice also that the Market did not evolve into a run-away freight training headed south on my northerly heading. This is proof that the D1 Magnitude has reached near exhaustion. I told you that there were other types of Magnitudes that play a role in the Markets as well and that inform of what I should be doing and when I should be doing it. We get into that probably somewhere in the next D1 session.

Right now, I'm establishing how to enter this type of empty chart trade using nothing but RoR and D1 Magnitude (which I will unpack a bit more later).