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  • #1
  • First Post: Edited Oct 15, 2007 4:55pm Oct 14, 2007 3:40pm | Edited Oct 15, 2007 4:55pm
I really liked the original intent of the other clinic thread that sought to bring traders together in a way that promotes healthy discussion. Unfortunately, the original clinic failed because people thought it was a good idea to be closed minded about what does and does not *work*.

The bottom line is that anyone who has traded a certain style for an extended length of time, and has made money doing so, is, in terms of statistics, likely not making money because they are "lucky." This much is undeniable.

As it goes, I was challenged to show exactly what I meant when I said that price patterns alone are not the answer, but rather that price patterns hold a situational degree of relevance. I will try to focus my personal contributions to this clinic in discussing that very issue only because it is what I specialize in.

I welcome any and all to add helpful points of discussion regardless of the timeframe and style you trade within. The exercise of this thread will be to get behind the true meaning of the various trading axioms we always see tossed around as well as to diagnose and potentially prescribe ways to get around problems that are common to all traders at one point or another.

Non 1kt members please feel free to send me inquiries and they will be posted here for all to comment on. This thread will NOT be closed by me and it shall contain comments from open minded individuals who understand that there is more than just one way to trade. I learned how to do what I do from a serious individual and I take it very seriously myself. My mentor's resume includes Quantitative Design/Trading for the Fixed Income Derivatives desk at Morgan Stanley, Vice President Quantitative Design/Trading at FIMAT Futures USA, Soceite General, as well as a consultant for Risk Management with countless other companies. This person has taught at Boston College School of Law, University Michigan School of Business, and several others.

With that being said, let's get this started.
  • #2
  • Oct 15, 2007 10:14am Oct 15, 2007 10:14am
First PM
Quoting tango112
Hi JFX81,

You make some good points and I think my Where is Waldo joke was slight misunderstood. We are much closer in actual strategy then you would believe except for the fact I trade on a much longer term basis as I'm not that fast and usually make mistakes when I pressure myself in the short term situations . My comments are below:

(1) "Well, I couldn't disagree more about price patterns on the 5min (or 10min for that matter). If anything, price patterns hold more value in the short term than longer term. Watching a 1min chart after a major news release where the market moves back and forth OFTEN times yields a triangle of some sort that can easily be played on for a quick scalp."

(2) "Also, when you couple price patterns with trend lines on the 5min you can use them in concert to help ascertain what a likely direction is going to be."

(3) "While people may know how to recognize price patterns it seems to me that they don't take the time to understand when they are and are not important."

(4) "So it is more than just being able to recognize the pattern, it is knowing how to recognize when one is actually significant."

-----

( The joke was meant for prediction systems such as Elliot Waves, Butterfly patterns (and other long term price patterns ), and Gann lines etc. )

(1) On the news releases I have noticed this myself and have entered in these retraces myself to add on to positions. I also believe these short term patterns mean much less when the market is quiet.

(2) Trendlines are just about the only technical tool I use and if used properly I believe they can be very effective. ( Very rarely divergence, but I believe that is more of a confidence booster than anything else ).

(3) & (4) I will use short term (1hr - 4hr) price action ( patterns ) for add on positions into trends and has worked very well for me. With regards to those patterns I think they can visually show points of strength and weakness very well which can be capitalized on -> which leads straight into point (4) . You are dead on with this and it is what gives these patterns a probability edge.

[ I do not believe in Fibonacci retracements and etc but I will not argue against you on this. It is a trading preference ( I use other tools ). ]

What you are doing on the 5min charts to me is the most difficult trading style and I'm amazed that you are able to do it!

Have a good weekend,
Ben
  • #3
  • Oct 15, 2007 11:31am Oct 15, 2007 11:31am
Remember those Fibonacci Lines we drew into the 10m chart on the previous thread? Those still come in handy at the moment. As you can see the price movement this morning halted, almost to the pip, at the top of those lines.

If you had not drawn in those lines or acknowledged the short-term top formed there on last Thursday then you might have missed on on an opportunity to take profits on a long trade.

Now, will this happen nearly every time? Not necessarily. The point is to be aware of these levels in case they do hold so that you can react accordingly.
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  • #4
  • Oct 15, 2007 11:55am Oct 15, 2007 11:55am
Another thing to notice this morning but this time from GBPUSD.

You can see by drawing in something as simple as a trend line on the 5min it would show a nice point of support at 2.0393.

As one can see the price did in fact dip one pip below that level and rebounded slightly, representing another scalping opportunity for 10 or so pips and a demonstration of how technical plays indeed exist in the short term.
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  • #5
  • Oct 15, 2007 12:35pm Oct 15, 2007 12:35pm
Quoting JFX81
Another thing to notice this morning but this time from GBPUSD.

You can see by drawing in something as simple as a trend line on the 5min it would show a nice point of support at 2.0393.

As one can see the price did in fact dip one pip below that level and rebounded slightly, representing another scalping opportunity for 10 or so pips and a demonstration of how technical plays indeed exist in the short term.
And we have yet another bounce off of that trend line. Things that make you go hmmm.
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  • #6
  • Oct 15, 2007 1:41pm Oct 15, 2007 1:41pm
Soultrader was right. Drawing lines just doesn't work.
  • #7
  • Oct 15, 2007 2:03pm Oct 15, 2007 2:03pm
Quoting bebop
Soultrader was right. Drawing lines just doesn't work.
It gets better, because now we can see that this triangle pattern is over and it died out just as volatility died out over time. Perfect pattern and if anyone thinks it is just luck that it turned out that way must be crazy. It doesn't matter why something happens it just matters that it does happen.

This pattern is over and there is no discernible trend so now is an example of when you STOP using the price pattern because its value has been diminished.

Had this pattern formed on the 1m chart over the span of 20 minutes after a major news announcement coming in near consensus then you would be looking to play on whatever direction it breaks the triangle near the end. But that is another situation entirely...
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  • #8
  • Oct 15, 2007 2:33pm Oct 15, 2007 2:33pm
Quoting bebop
Soultrader was right. Drawing lines just doesn't work.
Of course they work after the fact and after you guys skip obvious swing pivots that don't match up with your opinion. If you really want to get technical this triangle failed.

You guys got your feelings hurt when Soultrader discussed what didn't work so you started your own thread about what does. I'm not sure what the difference is but I don't think you should be poking a sleeping bear.
  • #9
  • Edited 3:16pm Oct 15, 2007 3:04pm | Edited 3:16pm
Quoting philmcgrew
Of course they work after the fact and after you guys skip obvious swing pivots that don't match up with your opinion. If you really want to get technical this triangle failed.
After the fact? I make plays on these types of moves quite frequently and there is no "after the fact" about using the resistance on the bottom of that line to make a long at approximately the 2.0390-95 level. It isn't rocket science.

Also, it is a common play to short at a near-term high as exhibited by my previous example of the EURUSD. Those are two very practical examples that were shown from today's trading. They aren't gospel but they aren't meaningless either. If anything, you wouldn't even have to short at that position for it to be useful. Just acknowledging that level could prevent you from entering a long at a reversal point so it intrinsically holds an opportunity cost savings variable.
Quoting philmcgrew
You guys got your feelings hurt when Soultrader discussed what didn't work so you started your own thread about what does. I'm not sure what the difference is but I don't think you should be poking a sleeping bear.
Maybe you are the one who is sleeping because I am showing clear examples. If you choose not to use these types of strategies that is your choice and yours alone. That really isn't a big deal. Additionally, I do not take offense to Soultrader's posts and I frankly do not care what he does and does not think works. If you or anyone else don't like a particular strategy then that is absolutely fine by me. Soultrader stated that he likes to be headstrong, and that is his prerogative. More power to him for controlling his thread in the manner in which he wants.

This particular thread is setup differently than his and hopefully both can answer questions...just in different ways.

I can't imagine that being a bad thing.
  • #10
  • Oct 15, 2007 3:05pm Oct 15, 2007 3:05pm
Quoting philmcgrew
Of course they work after the fact and after you guys skip obvious swing pivots that don't match up with your opinion. If you really want to get technical this triangle failed.

You guys got your feelings hurt when Soultrader discussed what didn't work so you started your own thread about what does. I'm not sure what the difference is but I don't think you should be poking a sleeping bear.
Well, you know what it is, Phil? Soultrader just loves to put down every method that he isn't using. He seems to think that he is some trading god that has all the answers. Nevermind the fact that he just nearly blew his entire account no longer than 10 months ago.

The fact of the matter is that there is more than one way to trade. If he has found HIS way, then congrats. But it is not the only way. Just b/c neither you nor him you can figure out how to trade with trendlines, forks, etc., doesn't mean that there aren't others that haven't. To steal a line from Soultrader, "you don't know what you don't know". Maybe he should read that to himself more oftenly.
  • #11
  • Oct 15, 2007 3:20pm Oct 15, 2007 3:20pm
Since you are teaching trendlines, how do this fit into the picture? (your chart from above)
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  • #12
  • Oct 15, 2007 3:33pm Oct 15, 2007 3:33pm
Quoting JFX81
Also, it is a common play to short at a near-term high as exhibited by my previous example of the EURUSD.
It's a common play to short at the high of an ascending triangle? Guess I didn't get that memo.

Quoting JFX81
Maybe you are the one who is sleeping because I am showing clear examples.
This particular thread is setup differently than his and hopefully both can answer questions...just in different ways.

I can't imagine that being a bad thing.
I have never said that trendlines don't work despite the fact that I have no personal use for them. I just think that there are unexplained inconsistencies with the way they are drawn.

I hope we can discuss this like adults. Maybe I wandered into the wrong clinic.
  • #13
  • Oct 15, 2007 3:35pm Oct 15, 2007 3:35pm
Quoting philmcgrew

I hope we can discuss this like adults. Maybe I wandered into the wrong clinic.
Maybe you did because I am in the middle of trying to give you a full response and you are jumping up and down asking "are we there yet."

Please treat me with respect and you will get the same. My response will be up shortly.
  • #14
  • Oct 15, 2007 3:44pm Oct 15, 2007 3:44pm
I look forward to hearing JFX81's response, and here is mine. This is a trade I took last night. I give credit to StrangeGuy for pointing out to me the significance of Friday's high/low. I guarantee he took this trade too.
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  • #15
  • Edited 4:01pm Oct 15, 2007 3:50pm | Edited 4:01pm
Quoting philmcgrew
Since you are teaching trendlines, how do this fit into the picture? (your chart from above)
Thank you for your question.

This hits on exactly what I am trying to get across: knowing when and when not to use certain technical analysis.

After spending hours upon hours each day for nearly the past 4 years in front of charts you begin to develop a feel of what matters most in terms of price movement. That applies here as well.

I drew my line from when trading in London was beginning to pick up. I viewed that to be a more important starting point than the point that you drew in. It really is that simple. In effect, it is the longer term trend of the two so I give it more credence to hold than the shorter term trend.

When examining the charts this morning it appeared significant to me and it turned out to be just the case. Now, there is no way for anyone to make correct judgement calls all of the time. But I have found through my thousands of trades that I have been very good at determining what price points to at least pause and take notice of. There is no holy grail, and I believe you would agree.

As this thread develops I will continue to post my analysis and how I look at things. Hopefully it helps someone else and it just might click with someone. We are here to share ideas and I look forward to hearing yours should you choose to post.
  • #16
  • Oct 15, 2007 3:55pm Oct 15, 2007 3:55pm
Quoting philmcgrew
It's a common play to short at the high of an ascending triangle? Guess I didn't get that memo.
There must be some confusion because I said EUR/USD. Go back and look and see that in the 5min there is no ascending triangle. In fact, it is just the opposite. You can see a descending triangle broke hard to the upside and approached the short-term high of 1.4240 and then retreated directly off of it almost to the pip.

Going long near that high would have been dicey. So just by seeing the resistance there, even if you wanted to go long, you could put in a stop that would have protected you from the 40 pip puke.

Quoting philmcgrew
I have never said that trendlines don't work despite the fact that I have no personal use for them. I just think that there are unexplained inconsistencies with the way they are drawn.
There is no golden rule that I have come across. I can only offer how and why I do it when I do it. People draw trendlines all over the place and will continue to do so. I can only post things that have consistently worked for me.
  • #17
  • Oct 15, 2007 4:24pm Oct 15, 2007 4:24pm
I think their is more than one way to skin the cat and what works for one might not work for another.. Is the key in trading finding what works for you?

If that is using 10 indicators on 15 time frames who cares? What matters in the end is your p/l sheet.. When we think what we do is above anyone else the pip monster is just waiting at the back door to give us some humble pie to chew on (remember this).

If lines work for you I say more power to ya and keep it up. If tic charts work for ya hey more power.. We all do things differently and with a wide range of perceptions and beliefs of any market.

I could care less about getting involved with mine is better then yours.. Makes people look like fools IMO..
Check Mate GAME OVER
  • #18
  • Oct 15, 2007 4:29pm Oct 15, 2007 4:29pm
Perhaps it would help if you changed the name to 'The Hindsight Clinic' I could Join in then - I'm briliant at Hindsight trading.

alas the only sort i'm good at is that sort where you can see my trades openly as they happen and not after the fact, hours later. Lets see it in action shall we? wanna see mine just click the link. - it's live

As for my own trading, do you really think that ive got this far without trading trendlines?, without trying every fib in the book? without knowing the probability of each and every chart pattern from flat top triangles to ascending flip flop backwards ghosts?

Bebop, i'm not putting down methods of trading, im putting down methods which do nothing but provide endless frustration to the struggling trader because they are so subjective and rely on the trader 'feeling good' about the market or getting up on the right side of the bed. Is that what you want to be?

3 years ago i was the same as this guy - listen to me, i used to say - spend 12 hours a day watching a 1 minute chart and you too will see what's going to happen - which you can if you really really try, until you have a headache, or want a holiday or god forbid have to take the wife out shopping! - if thats what you want for a trading career then fine, get out ya fibs and draw away your life.

The perspective that I give is that of a professional trader. I trade over 20 currency pairs at any time and don't have to sweat a single one of them or look at a chart every 5 minutes to trade. My thread began as it still is, aimed at those looking to turn this 'game' into a rewarding career, not at those who want cheap thrills by being 'right' and patting themselves on the back.

Yes, in the past I've blown accounts - chances are i've blown more money that you have ever seen Bebop, but ive also made more than you've ever seen (just guessing by the way, could be not). You look at my grail account and say 'oohh look, he lost almost 70k' - what you dont see is that I earned half that a month in commissions from managed money for over a year. On a good day on the managed funds I took over 200k from the markets - in a single day. That was not a failure in monetary terms, only in system terms and one that you as a trader may have to live with at some point in the future so be careful before you cast stones. The whole reason that i'm still here is that I recognised (a little too late i grant) that it wasnt working - how long till you throw fibs away or stop drawing trendlines? or counting waves? - I can tell you, that if you are to be here after five years you will have ditched the vast majority.

I'm not saying these things don't work per-se, im saying they are useless to anyone wanting to progress to be a long term professional trader. They are fine for the liquidity providers to piss about with and have fun with showing off to their mates like boys in a boarding school, but you'll very rarely find a true professional that uses them. - Show me one in 'Market Wizards'

JX, if you didnt want paralells drawn then maybe you should have thought of your own name for the thread instead of hi-jacking mine. They say imitation is the greatest flattery i suppose, but if you are to progress to be a professional trader you will have to learn to leave the pack and think for yourself.

Thanks for your time. Nuff said
https://linktr.ee/Soultrader
  • #19
  • Oct 15, 2007 4:35pm Oct 15, 2007 4:35pm
Quoting bunton
I think their is more than one way to skin the cat and what works for one might not work for another.. Is the key in trading finding what works for you?

If that is using 10 indicators on 15 time frames who cares? What matters in the end is your p/l sheet.. When we think what we do is above anyone else the pip monster is just waiting at the back door to give us some humble pie to chew on (remember this).

If lines work for you I say more power to ya and keep it up. If tic charts work for ya hey more power.. We all do things differently and with a wide range of perceptions and beliefs of any market.

I could care less about getting involved with mine is better then yours.. Makes people look like fools IMO..
I agree with you. However, I thought the point of the 1KT trading room was an area where we could discuss techniques with successful traders. It seems to me that any time you ask a question the author get his panties all bunched up (not directed at any particular author but if the shoe fits...) and curls up in the fetal position.

I never implied that trendlines didn't work. I simply wanted to know what the decision process is for picking major pivots while ignoring others. The answer seems to be "I've done this for 4 years and I know what I'm doing. I'm OK with that you can't debate one's thought process, especially when it isn't repeatable.
  • #20
  • Oct 15, 2007 4:41pm Oct 15, 2007 4:41pm
Quoting soultrader

Yes, in the past I've blown accounts - chances are i've blown more money that you have ever seen Bebop, but ive also made more than you've ever seen (just guessing by the way, could be not). You look at my grail account and say 'oohh look, he lost almost 70k' - what you dont see is that I earned half that a month in commissions from managed money for over a year. On a good day on the managed funds I took over 200k from the markets - in a single day. That was not a failure in monetary terms, only in system terms and one that you as a trader may have to live with at some point in the future so be careful before you cast stones. The whole reason that i'm still here is that I recognised (a little too late i grant) that it wasnt working - how long till you throw fibs away or stop drawing trendlines? or counting waves? - I can tell you, that if you are to be here after five years you will have ditched the vast majority.

I'm not saying these things don't work per-se, im saying they are useless to anyone wanting to progress to be a long term professional trader. They are fine for the liquidity providers to piss about with and have fun with showing off to their mates like boys in a boarding school, but you'll very rarely find a true professional that uses them. - Show me one in 'Market Wizards'
As far as me knowing about your account history, I'm just going by your 1st post in your thread. I've never cared to look at your blog or account details.

5 years? I've made it this far, I don't think I'll be gone in a few more months.

If Market Wizards teaches you anything, its that there are many, many different ways to be successfull in this profession. Some guys, like Tom Baldwin, say they use daily bar charts and patterns he sees in the pit. Others, like Mark Weinstein, use fib, EW, Gann, and oscillators. He reveals this info. in the very book you are referring to. Yet there are others that don't use T.A. at all and make all decisions from fundamentals.

You assume many things, Soul. That is not so smart, IMO.
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