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Where can I learn more about Price Action like those in James16 charts? 9 replies

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james16 Chart Thread

  • #3,221
  • Apr 11, 2007 6:25am Apr 11, 2007 6:25am
i know jim's advice is 'play 'em as you see 'em' but folks, it sure pays to know the idiosyncracies of your broker!
and it's not always just the time difference the charts operate on that can cause problems.
my broker (E*trade) charts prices by always opening the next session where the last session closed.
if there was a gap up in price, for example, it still opens where the previous session closed but forms a solid bar up immediately.
this can result in huge differences to the bar formation.
check this chart out. oats - pin bar bounce off 50 fib as seen on E*trade. looks like a possible setup...(see follow up post)
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  • #3,222
  • Apr 11, 2007 6:28am Apr 11, 2007 6:28am
here we see "real" price action as confirmed by the chicago board of trade.
price gapped up on the open and then fell.
and repeated this identical pattern over two sessions.
so what looks like two pin bars on E*trade is really just two BEB's.
in this case, fortunately, both indicate that prices may go lower but still, it always pays to check!
tom
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  • #3,223
  • Apr 11, 2007 6:38am Apr 11, 2007 6:38am
Quoting the_wizard
price gapped up on the open and then fell.
This is the reason I don't touch commodities.
Gold can be played via Kiwi/Aussie proxy, oil reflects in USDCAD but is also one of the few exceptions of not gapping monstrously on my charts.
At least on FX when you get weekend gaps, you can assume they will close while you can trade the gap.

All the other stuff from livestock to whatnot I'd rather not touch. Also spreads are simply untradeable.

While it's nice to try and find some good PA on all the commods (it's odd how I constantly find people doing the very same things I did when I started out with this stuff), in the end you should break things down to a core set of your favorite and well known pairs / things and sticks to those. Preferably those that obey PA well, have high volume and a trend (EURUSD is a nice guy if you trade it long e.g. or Kiwi and AUDUSD have long rallies, too - only trade these long if you ask me, as trying to short gold, even proxied is never really such a great idea unless right before a meltdown of global scale like we had after 730$). Some pairs aren't as kind or obedient (I really, really hate USDCAD.)

Just some thoughts from my side - focus, practice, gather experience, know your pairs. Don't overcompensate with the amount of pairs/things for a momentary lack of great setups, it's just another way of "forcing" things I feel.

The real challenge is in the live trades, even if just on demo. You just HAVE to take it serious and assume it's real money you're trading. Mistakes are good - you'll learn from them. That's what the practicing is for.
You'll also see how much different things get if you are IN a trade as opposed to just outlining it
At least to me there's still a world of difference

Take care,

SeekingLight
Trust price. Know yourself.
  • #3,224
  • Apr 11, 2007 7:02am Apr 11, 2007 7:02am
Will be waiting for some PF here....CAD/JPY daily. Daily trendline and a weekly fib.
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Life is too short to have anything but delusional notions about yourself.
  • #3,225
  • Apr 11, 2007 8:18am Apr 11, 2007 8:18am
Here is a question regarding risk/reward for those who are taking profits consistently. I did ask something along these lines before but would like to raise the issue again.
I suppose it boils down to whether you are an all in all out trader, or you scale out etc. I like to scale about half my position at a pre-determined target area so i can move my stop to BE and book partial profits.
However, i am at a constant battle as to what is a good risk/reward for the first target. What do you guys do?
I recently took an AUD/USD short before the easter break and i could have taken partial profits which equated to my initial risk in pip size. However, i think that we need to see about 1:1.5 at least before scaling so i didn't take profits and i got stopped out. This was mainly due to the fact that i was away until yesterday and i could not manage the trade, otherwise i would have moved my stop to BE when price had shown strong support.
I was just wondering whether you guys have a pre-determined risk/reward and if this is not met then you leave the trade?

Also, regarding the entries on these setups. Say, for instance, you wish to take on a dbhlc trade but you want to get in on the retrace to manage a smaller stop, the same goes for a pin bar. Do you wait for the break of the low/high of the bar first and then wait for the retrace?
  • #3,226
  • Apr 11, 2007 9:41am Apr 11, 2007 9:41am
Quoting steveshutts
Here is a question regarding risk/reward for those who are taking profits consistently. I did ask something along these lines before but would like to raise the issue again.
I suppose it boils down to whether you are an all in all out trader, or you scale out etc. I like to scale about half my position at a pre-determined target area so i can move my stop to BE and book partial profits.
However, i am at a constant battle as to what is a good risk/reward for the first target. What do you guys do?
I recently took an AUD/USD short before the easter break and i could have taken partial profits which equated to my initial risk in pip size. However, i think that we need to see about 1:1.5 at least before scaling so i didn't take profits and i got stopped out. This was mainly due to the fact that i was away until yesterday and i could not manage the trade, otherwise i would have moved my stop to BE when price had shown strong support.
I was just wondering whether you guys have a pre-determined risk/reward and if this is not met then you leave the trade?

Also, regarding the entries on these setups. Say, for instance, you wish to take on a dbhlc trade but you want to get in on the retrace to manage a smaller stop, the same goes for a pin bar. Do you wait for the break of the low/high of the bar first and then wait for the retrace?
This is really where the most work on your trading is going to be with discretionary PA. Just some points to consider. If you are scaling out of a trade make sure it's because it is actually increasing your profitability, not for some emotional reason, like hating to lose, or hating too see a winner become a loser. A good thing to do is go over past trades(a large sample), and see where you intitially took 1/2 off, and just see what your profit would have been had you let full profits run.

As far as R:R, no one says you have to have a set R;R, again lots of testing here. There are numerous exit strategies to think use that may cut your losses and let profits run without having to use a fixed R:R. Such as a trailing stop(trailing previous X bars etc). Just food for thought. Exits are the key here, and its going to become a personal thing.

As for retrace, the whole idea is to get in before price breaks the bar. Although who's to say you can't do both. But when people talk about getting in on a retrace, they mean before it breaks.

Hope this helps best of luck,
Mike
  • #3,227
  • Apr 11, 2007 10:29am Apr 11, 2007 10:29am
Quoting steveshutts
Here is a question regarding risk/reward for those who are taking profits consistently. I did ask something along these lines before but would like to raise the issue again.
Would like to refer again to the things I posted here a few posts ago
http://forexfactory.com/showpost.php...postcount=3155

Quoting steveshutts
I like to scale about half my position at a pre-determined target area so i can move my stop to BE and book partial profits.
However, i am at a constant battle as to what is a good risk/reward for the first target. What do you guys do?
---
I was just wondering whether you guys have a pre-determined risk/reward and if this is not met then you leave the trade?
---
Do you wait for the break of the low/high of the bar first and then wait for the retrace?
Scaling out SEEMS good and FEELS good, however it usually doesn't DO good. I know there's tons of stuff written on pyramids and scaling and whatnot, but about the only thing I could agree with is adding to a position if the situation presents itself.

Scaling out however, as outlined in the post linked above, just totally decreases your profit and slows down your total growth potential.
I know this, because I am still prone to doing this as well and realizing I could have just been more patient with my trade and ended up multiple times better with the full position trailed out.

The point is - I'd dare say one doesn't take partials off to make more money, one takes them off to "feel safer". That's a remnant of the scared money / unsure trader syndrome and not something that works towards making money. (Ah I see Mike already wrote something along these lines - totally agree there, Mike!)

IMHO if you look over past trades and where you "took profit" or moved the stop - perhaps to be taken out and then have price resume from that very spot - in my case you will find that simply keeping the faith and giving each and every trade you did a chance will do a LOT better. Don't outthink the market, let the market itself decide what will or won't go.

That way those runners that do take off will reward you greatly and the losers stay losers no matter how you turn it. So what if you halve the losses at times, if it means you also reduce the chance at gaining 20-50% more if it ends up turning into a winner that little bit of loss reduction DOES NOT COMPUTE.

It may not feel as nice, but it IS the smarter way of going about it I am convinced.

I'll say this over and over again and if anyone thinks I am repeating myself it's because I need to realize and hear this myself so that I, too, may "get" this, because it IS the one thing I keep seeing over and over in my own trading, too

Retraces - I've seen some small timeframe pin formations first move 1-15 pips above the pin, turn around, go to .618ish and THEN and only then move out. Confirmation of a small PB at this spot or similiar helps.
Please note that this is most likely due to me living on the small timeframes however and may not apply to any other formation than the PB or higher TFs.
Obviously one would like to join price as its heading in the direction one wants to go and not against one


Take care,

SeekingLight
Trust price. Know yourself.
  • #3,228
  • Apr 11, 2007 10:30am Apr 11, 2007 10:30am
CHeers Mike,

Is this something you have just looked at from forward testing? There are so many factors influencing a decision with this kind of trading that you cannot backtest, as it is discretional.
I suppose i choose to scale for emotional reasons. It enables me to stay in a trade for longer, ensuring a free trade and i can trail the remainder behind swing points etc. I have just started using these setups so cannot look back over past trades.
This is indeed the hardest part of trading. Its all very well for people to say don't let winners turn into losers, but if you always take that attitude then you end up cutting profits all the time.
Nightmare!
  • #3,229
  • Apr 11, 2007 10:33am Apr 11, 2007 10:33am
Quoting steveshutts
CHeers Mike,

Is this something you have just looked at from forward testing? There are so many factors influencing a decision with this kind of trading that you cannot backtest, as it is discretional.
I suppose i choose to scale for emotional reasons. It enables me to stay in a trade for longer, ensuring a free trade and i can trail the remainder behind swing points etc. I have just started using these setups so cannot look back over past trades.
This is indeed the hardest part of trading. Its all very well for people to say don't let winners turn into losers, but if you always take that attitude then you end up cutting profits all the time.
Nightmare!
After I had months of trades under my belt(that were scaled out), I went back and redid all my trades had i taken full profit at the point I first scaled out. Needless to say BIG DIFFERENCE in my bottom line. It will be different for everyone too, have to find your niche.

There is ALWAYS going to be a trade off. If you move stops, your preventing profits from runnings, if you don't your increasing losers, etc etc. The idea is to find something that gives us some kind of edge in the long run, then to exploit that over and over day in and day out being confident in our method.

keep up the good work

Best of luck,
Mike
  • #3,230
  • Apr 11, 2007 10:50am Apr 11, 2007 10:50am
Well, we got a break of yesterdays high, inside bar on my chart and a BUOB on the 240 with a retrace to the round number. This could well be a false breakout but i have gone long at 62.28 with stop down at 61.60 below the 240 bar. I am looking for an initial target up near 64 where there is resistance and 50% fib and round number confluence.
My entry was taken from the 15, which showed a nice breakout and pullback scenario.
This is in line with the main trend.

http://www.forexfactory.com/attachme...1&d=1176306573
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  • #3,231
  • Apr 11, 2007 10:57am Apr 11, 2007 10:57am
Thats interesting Mike. So you now set a target and stick to it? All in, all out?
  • #3,232
  • Apr 11, 2007 11:16am Apr 11, 2007 11:16am
Just to add something to the exit strategy talk, I agree with Mike & Seeking on their thinking about scaling out.
For me personally, if I hadn't had scalled out of most of my trades I would have made a lot more profits. (I'm actually slowly starting to change my strategy to let as much as the position as possible to run)

It feels kind of good to close half of your position and take something early, but then when you see the other half really go in your direction it hurts the bottom line quite a bit that it's only half going all the way.

This is where the whole idea of only taking the best signals comes in. If you only take grade A trades, then you're more confident that you'll make more than 30 pips (especially on the higher timeframes).

This is probably the hardest part of trading. Good exits are what can make you or break you as a trader.

Tom
  • #3,233
  • Apr 11, 2007 11:28am Apr 11, 2007 11:28am
WOW! can't believe how enormous this thread has grown!

Quoting mbqb11
After I had months of trades under my belt(that were scaled out), I went back and redid all my trades had i taken full profit at the point I first scaled out. Needless to say BIG DIFFERENCE in my bottom line. It will be different for everyone too, have to find your niche.
Mike
Mike, for was the BIG DIFFERENCE in profitability favoring scaling out or favoring taking full profit at first exit point?
  • #3,234
  • Apr 11, 2007 11:31am Apr 11, 2007 11:31am
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  • #3,235
  • Apr 11, 2007 11:34am Apr 11, 2007 11:34am
looks like a neutral outside bar to me... open and close are more in the middle of the bar rather than at one of the ends
  • #3,236
  • Apr 11, 2007 11:38am Apr 11, 2007 11:38am
BTW , as JIM said he use 21 , 79 , 365 SMA and 89 EMA on the chart . Can anyone tell me what is the purpose for every MA ? Is 365 SMA work like 200 SMA ?
  • #3,237
  • Apr 11, 2007 1:59pm Apr 11, 2007 1:59pm
dow. hourly.
again, i didn't take this but when i saw the dow down almost 100 points i thought i'd drop down the time frame and see if i couldn't spot a potential entry.
and look what we have here.
tom
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  • #3,238
  • Apr 11, 2007 3:00pm Apr 11, 2007 3:00pm
hi all
could some one tell if it's good enough to look for going long the g/u now
or this pb is being engulfed-almost- by the last on it seems after mr bernanke speech the g/u well not head up ..confused??
thanks all
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  • #3,239
  • Apr 11, 2007 3:00pm Apr 11, 2007 3:00pm
Quoting Trumpcard
WOW! can't believe how enormous this thread has grown!



Mike, for was the BIG DIFFERENCE in profitability favoring scaling out or favoring taking full profit at first exit point?
favor of taking full profit, scaling out doesn't make sense to me. Cause people scale out of their winners, then take full losses, and end u p chasing their tails. Takes a lot more finesse to be scaling out, and in the end actually helping your bottom line. Everything should be done for one reason, to increase profit. Most people scale out so their psyche remains in tact.

best,
mike
  • #3,240
  • Apr 11, 2007 3:02pm Apr 11, 2007 3:02pm
Quoting archangel
BTW , as JIM said he use 21 , 79 , 365 SMA and 89 EMA on the chart . Can anyone tell me what is the purpose for every MA ? Is 365 SMA work like 200 SMA ?

yes that was neutral bar,

too answer your question about MA, they are all EMAs,. The purpose of the larger EMAs is to be used as support and resistance. Example price reaches the 365 ema and forms a pinbar.

best of luck,
Mike
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