james16 Chart Thread

I was actually trying a Jacko trade, I wouldnt use TS for J16 just because its mainly based on S/R, I picked the bottom of small swing but had a 100 TS. I think using ea's you can almost let it exit you. I will have a trailing stop that steps every 40-50 pips, to give it room to move. Along with albchr's EA to take some off then you can pretty much set your trades up the night before and your set.

You are breaking a record Ryan. 3 trades open over the weekend? WOW!

Regarding your loser...have you thought of using tight stops like Jim? I think that style might match your short term trader personality and still use the daily charts.

I have tested a lot of daily Pins and you can get the 1:1 RR (the same way you get it in a 5M chart) the problem is that you have to endure the drawdowns or halfway to your TP which can last 5-7 days and maybe more on a daily chart and that's the part I don't like. Obviously you can kill it earlier, but a lot of trades do go to their targets but just stall for a while.

Here's a thought that occurred to me today. Pick a $ amount that's a lot of money to you. For me it's $1K risk on a trade (never done it). Now would I want to have a trade sitting for 5-7 days between negative $1K and positive $1K. Personally I wouldn't because that would be too much pain to watch that trade every morning, afternoon, evening oscillate all over the place. I'd rather have that risk at 9am and be done with the trade by 12pm or 4pm the latest win or lose $1K. The pain or pleasure is done at the end of the day.

Just my 2 cents...I'm sure you've thought about most of these points.

Rubin.

Not a big fan of holding over the weekend yet Also I and going to have to go back and look, it seems at least on the daily the IB's that work really do not retrace, the ones I am looking at taking are going to be at RSI over bought / sold with hitting the BB just like I used to CT trade, same stuff here is a chart.

Also about the pain or pleasure, it does not matter to me, I have lost 15k in 1 day no biggie I will still help the little old lady across the street

It's not just a question of what is most profitable. In fact it's largely an issue of psychology and account size. Jim tends to get his stop very very quickly to break even and take some off the table at first target. It may not be the most profitable strategy but it's the most comfortable for him and he has a large account size and so a few pips means a lot to him. Jim can't stand too much drawdown so he kills his trades early as well.

The bottom line is, we are not machines. If you're not comfortable with your profit taking strategy you will screw it up.

Let's take the recent UCAD short as an example. It ran and ran and ran. To stay in that you need a strategy that would also involve you handing back loads of profit on other trades throughout the year. Think you can handle that? Or would you keep looking for bigger moves all year, getting frustrated at the amount you gave back, and then at the crucial moment of this trade think "dammit I am not letting another one get away from me, I am banking while I can" and then watch it stop you out in modest profit and run for more.

Mike lets his trades run a lot more, but then he is pickier with trade selection and he allows himself to take a full loss if it doesn't work out. Jarroo has tight tight stops on his trades but consequently he gets to his targets quicker and takes his profit when the trades start to pull back. He also gets a few more losers from trades that break and retrace but the increased profit and position size are worth it to him. He also discovered that he hated 100 pip drawdowns on trades. I can relate to this. My EURAUD is in drawdown right now and I don't like it.

Jduester (Josh)takes 1/3 off at 0.5R, 1/3 off at 1R and 1/3 off at 2R not just because he tested what the "mot profitable strategy is" (he did) but because he wanted a mechanical exit plan that takes the emotion out of deciding when to close the trade. He's now looking at whether this is indeed the most profitable.

That's why Jim recommends that when you start out, you keep it very simple because your focus is on trade selection. Then when you learn to pick trades that are yielding a good few pips, you try and work out an exit strategy that magnifies profit and suits your psych and doesn't hit your bottom line too much. He is giving us a way to start that takes most of the subjectivity out of trading.

But sooner or later we will learn that trading is an art not a science. And we need to work out what suits us and how we are going to pay things. Usually we develop some nice hard objective rules to offset the subjectivity and avoid emotional trading. (eg Jim always looking for bar confirmation...Mike not taking outside bars where the close isn't higher/lower than the high/low of the previous bar...or clockwork71 setting weekly PPZ levels as lines on his charts and then only taking 4H trades off those levels all week. No level hit, no trade).

Partial profits, for example, hardly ever makes financial sense. Why do so many do it? Because it gives them psychological comfort (they make something off every trade), perhaps it gives them the confidence to let the second half run because they've already banked the first, maybe their pip values are so high that even a small profit really means something, or perhaps they want to make their profit taking mechanical like Josh. All these are fine. But you'll find that the experienced traders know the tradeoff they are making. They feel more comfortable even when they make less on their bottom line. Clockwork and Mike don't take partial profits. Clock said that he stopped doing it when he realised "Do I take partial losses?"

I use that as an example to illustrate the futility of looking for "the most profitable exit strategy". It's like looking for "the best sweater in the world" rather than finding one that suits you.

If you are toying with exit strategies, like me, here are some options to get you thinking:

1) Take full profit at first PPZ. If you like this and have a high win rate perhaps backtest a smaller stop size at a key SR level within the bar. This will result in low RR and puts a huge pressure on you to have a high win rate as a full 1R loser will cancel out a few winners. Maybe you'll be cutting your losers quicker and never taking a full bar loss (see Jim's most recent video in the members section)

2) Take partial profit and let the rest run (see paragraph on partial profits above)

3) Be pickier on trade selection and let it run. This allows for a little drawdown (which believe me is a lot hairier with a big account) but hopefully you're picky enough to get the big moves. You can tuck your stop behind key resistance/support levels and EMAs as price moves on through. Price comes back to test these levels as it ploughs through and old support becomes new resistance.

4) Have a mechanical exit strategy like Jduester's with fixed R levels to take profit at. Advantages are that it takes all the emotions out. Disadvantages are that it ignores SR levels and what the market wants to give you.

5) Use a trailing stop, either manually or with MT4.

6) Use a volatility based indicator like the BAT (it's here on FF and you can search for it). I have no experience with this.

7) Trail your stop behind the high/low of the most recent bar. Or perhaps the most second most recent bar. There are many ways to experiment with this.

8) Experiment with tighter stops or retrace entries that allow you to have a much larger position size and therefore much more modest pip targets for higher percentage returns. This is an aggressive trading strategy and will reduce your win rate. How well can you cope with more losers? My guess is it depends on whether your account is $10,000 or $500,000

To summarise:

There is no right way, there is only the right way for you.

Exit strategy is as much dependent on comfort zone as profitability.

Trade management is situational. Mike uses different styles depending on how he feels the trade should be managed.

Your exit strategy will affect your trade selection. Jim will take trades that Mike doesn't because he moves his stops to BE much quicker.

Whatever approach you pick (quick targets or let em breathe), try to be consistent. It will play with your head otherwise as you switch from letting them breathe to quick targets just as the runner of the year shows up.

And my personal advice...backtest backtest backtest....and then demo demo demo.

Hope that gives you guys something to chew over.

Aaron

Keep us posted on how you do with this Ryan, because very few people here play IBs and I am seriously looking for a set of rules for them because I think they can be really lucrative if played and picked well. Jim uses them I know.

I've always thought your 5M system would work just as well on higher timeframes. A little divergence and BB confluence could be a great way to handle all these IBs.

So much to research. Time for me to put in the hours this weekend.

I once lost around $18k in a day. But it wasn't my own trading, it was some clown who was trading my money. And every cent of that 18k was beyond pre-arranged max drawdown levels (so imagine the total loss). And he went pretty much bankrupt so couldn't pay me back a cent.

I was an idiot. That's the last time I ever let anyone trade my money. Still hurts to this day.

And that's why I'm here....

Happy weekend everyone

Wow great post, one thing I do want to add is about that taking profit at .5% risk. To me I would rather just get stopped out on all of it because it's going to kill my odds down the road. What I am doing now is just keeping them open "3" positions and just closing them at resistance, if I look at a trade and see I can not get a 1:1 out of it I skip it. I do not want to risk 100 to make 50 that's just not for me. If I can make 200 on 100 risk 50% of the time I will make huge money still. Remeber my brother plays with a 1-2% edge and it's HUGE money in the long run, hell you see Vegas?? They run a 3% edge I think lol...

I will keep everyone updated and start a log once I get something solid. All I need is a 50% win rate and I am done.

Now your talking my language.

I'll be watching this pair for reversal very carefully this week as it is approaching a strong PPZ. USDJPY has also reached major fib retracement levels. If we get the necessary price action for a short trade, I'll be looking for price to traverse back down to the 150ema. Here are a couple of charts.

K.I.S.S.

anyone else notice the nice dblhc on the daily usd/inx chart this past week? followed by a nice bullish bar on fri. from here we'll probably see a retrace back to ~80 & then take off from there. let pa lead the way...
anyone else also know if the usd/inx can be traded in the spot market? if so what broker? thx.

watch for clues from the dow & s&p.

The gbpusd market's rally could face a critical test in the coming week....

A nice pinbar which looks good to run because it is has tested the 38.2 fib,1.6000ppz and shows mike's favourit's test run move.So, good move on the downside of 1.55XX PPZ..or maybe lower...

I can't wait until the market opens . . .

I would appreciate if anyone could enlighten me where these trades have gone wrong.

In the attached chart, the first circle denotes a PB on a daily chart of the EJ. It hit the 38.2 fib level and retraced. But as you can see, the stop was resoundingly taken out by 2 bars later.

The second circle was also a PB. The nose admittedly was not as long as I would like, but it hit the 365 ema which James had said was significant whenever it is touched. But again the trade was stopped out by a resurgent bar 2 days later.

Is it just bad luck or is there something wrong with chart interpretation?

Thanks in advance.

the first pinbar, the nose is far too short. We want really long noses of pinbars, check the weekly G/U for what a good pin looks like. Second, it never broke therefore it isn't a pinbar.

You need to brush up on this stuff, to see the whole pic i hope this helps.

Firstly, I see that this is your first post so welcome to the thread. This stuff can seem overwhelming at first but we have all been where you are and with a little time, practice and dedication this stuff starts to jump out at you. You are already in the right place and that will take months and maybe even years off your learning curve.

On to your questions:

I wouldn't have played either of those bars.

The first bar is more of a neutral bar because the open and close are within the middle of the bar. The nose is very small too with the high of bar barely sticking out past the high of the last one. Doesn't really show price rejecting any level to me. On those factors alone I would rule it out.

I would also zoom out your chart a bit more to see what level we are at. Look for the big picture and see if you can identify Price Pivot Zones....ie previous areas of support and resistance where price flipped. These should be the number one thing to look along with seeing whether it's a tradeable bar.

The second bar is not a pin bar because the low breaks the low of the previous bar. It is actually a bearish outside bar, because it completely engulfs the previous candle with a close in the lower third of the bar. The low of the bar was never breached so it would have been a no trade for me, before I look for anything else.

This early in your trading I would recommend not playing bars before the breach of the bar low. Remember its not technically a pinbar until it breaks. Setting a pending order below the bar with a small buffer would have kept you out of the trade.

Price did show a reaction to the 365 but it was within the bar itself as you can see.

I would recommend examining the thread and your old charts to see the kinds of pinbars that signalled reversals. See how big they were and at what critcal levels they were at. And then concentrate on bar identification, so that you know exactly what a pin bar is. Watch the guest videos on the james16 group private forum (they are free and will help you hugely)

In my opinion these were not failed bars at all but were untradeable. A little work and I am sure you'll be able to spot the good opportunities from the bad.

Good luck!

Great post (as always) Tia.

the novice:
Can I just add that for a beginner like myself, I found it helpful to understand that it is not the shape of the bar that is significant but what it actually represents. In other words, a good pinbar shows an attempt by, lets say, the buyers to push the price up through a PPZ only for it to be pushed back down again below the opening price. This indicates that there are more sellers than buyers and the price is likely to head downwards. A short nose shows that the buyers didn't try that hard and so the corresponding downward pressure wasn't that great either. That's why we look for a long nose. Hope this helps.

I may be going against the general consensus here but I'm not taking the weekly cable pin.

Two reasons:

1. I don't want to trade into the 1.6000 round number.

2. As this is a weekly pin I would potentially have to hold it for a while. Looking at the monthly chart I see a strong bullish bar and this is only one timeframe above the one I would be trading on.

This is my thought process on this one anyway :-)