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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

  • #37,601
  • Jul 15, 2009 8:27pm Jul 15, 2009 8:27pm
Quoting johnnykanoo

sorry ive taken way to much space on this matter, john
You haven't taken to much space! Like Scott said above this is exactly what this thread is for IMO. It is that place where so many of us can relate to your story. I actually made my most progress when my dad did something similar back when I was in high school and I was like, wow what an idiot how could he lose his account in a few days that he built up so nicely. It set off my quest to become a trader. The thing is I get so many emails a month, with the same story you just said. And it wasn't with 1k to start, were talking a lot of money to start. This thread is just a place for all of us to share our experiences, and what has worked for us, and what we know is likely the best path for the majority. There will always be many ways to skin a cat in trading.

Thanks for sharing your story, and also for being open to both sharing and getting help. Those are very good traits to have. In fact those that seem to get stuck in one spot in their learning curve always have one trait in common. They are stubborn! But I don't believe anyone has built up a wall that can't get broken down enough to give them a shot(no one can promise you will be profitable).

Thanks again
Mike
  • #37,602
  • Jul 15, 2009 8:43pm Jul 15, 2009 8:43pm
Quoting Bemac
Due to lack of response, my current conclusion = Perhaps not.

On the other hand, ghous has made No response since I posted this offer. perhaps, he is sleeping.
Yeah I was asleep. Need to hit the gym early in the morning so a good night's sleep is important.

I don't use a %age risk trail stop either just the conventional manual trail stop ensuring that it does not violate my MM constraints.


Quoting Bemac
A Past Blast....

[color=Blue][i]Hi folks,
As some of you know I have, only recently, moved to a MetaTrader Platform.

Therefore, I am now without a few of the Tools I used to carry in my toolbox. {funny how learning a different language can, sometimes, make you feel lost.}

This is not something that you would be likely to use on a Scalping Method but moreso on one of those Trades that take off & you are up 50P before you know it.

Here's how it works. Let's use a Long Trade as an example.

I Buy EUR/USD @ 1.3500 & before I know it I'm UP 50P.
Q)...
uh...oh...

I see why you were in such a hurry to get a response from me. lol!

This needs to be tried out...

Thanks Bmac.

Regards,
Ghous.
I believe . . .
  • #37,603
  • Edited 9:31pm Jul 15, 2009 8:51pm | Edited 9:31pm
Quoting joelcf
Alot of the new traders in this thread seem to take the 'you need 1:1!@#' and run with it. And it isnt really true. and, since it has bugged me for a while and I am waiting for my coffee...

*beats it to death, cornfield-in-Casino style*
Nice Explanation! I've always been taught to target at least 1:1. But by backtesting James16's method, I see that his accuracy rate is astounding....IF YOU ARE NOT GREEDY!

If you have a great setup and your SL is 150 pips but your target is only 100 pips...that is totally cool if your setup is generally 80% accurate!!

I thought that I was thinking the unthinkable...committing the unforgivable sin by targeting less than 1:1.

Anyways, please correct me if I've mis-interpreted your explanation.

GregB
  • #37,604
  • Jul 15, 2009 8:59pm Jul 15, 2009 8:59pm
Quoting ghous
2 Doji's side by side now...(after a decent up move of 4 good sized bullish bars there presence is screaming)

Momentum building?

I always look at these cuties as compressed springs.

Price really has been squashed between a tiny range, the longer it stays like this the greater will be the "burst out"

PA is amazing guys, and it's got more to it then just outside inside and pin bars...

Trading these bars is something different but at least an...
Hey ghous, do you see a 2 Doji side by side on the Gbp/Jpy 4 hour chart? You gotta like the location of confluences at the 155.00.
Attached Image (click to enlarge)
Click to Enlarge Name: ej4.gif Size: 24 KB
Indicators show the past. Price Action "Indicates" the future.
  • #37,605
  • Jul 15, 2009 9:15pm Jul 15, 2009 9:15pm
It can be mathematically demonstrated that in any wager game with varying probabilities, winnings are maximized by adjusting the bet size in accordance with the perceived chance for a successful outcome. -The New Market Wizards
  • #37,606
  • Edited 9:31pm Jul 15, 2009 9:20pm | Edited 9:31pm
Quoting batesmotel
If you have a great setup and your SL is 150 pips but your target is only 100 pips...that is totally cool if your setup is generally 80% accurate!!

I thought that I was thinking the unthinkable...committing the unforgivable sin by targeting less than 1:1.

Anyways, please correct me if I've mis-interpreted you explanation.
No, got it perfectly.

.8*100 - .2*150 = 80 - 30 = 50... so, based just off this, you can expect to make 50 pips on average every time you take this setup.

So you might do it ten times, get 8 wins (800 pips) and 2 losses (300 pips).... pretty sure you will be happy you didnt stick to the 'law' of always needing 1:1

and that is assuming you only get to your TP and take your profit every time. You could just let it run through your 100 pip target and then trail a stop.

Half the time, it comes back.
Of the ones that dont, 75% go for another 50 pips and then end up getting stopped out. And the tiny 10% left get you a 1000 pip runner.

[(0.4 * 100) + (0.3* 150) + (0.1* 1000)] - (0.2*150)
= [40 + 45 + 100 ] - 30
= 185 - 30 = 155 pips average profit.

That is the real power of money management. Your risk is fixed, because your stop is set in stone. Your potential profit isnt.

(obviously, these are invented numbers and simplistic scenarios. dont trade your life savings based on this. etc)

edit: variance.

Obviously, just because a setup is 80% accurate, and you stand to make 50 pips on average everytime you take it DOESNT mean you can just go ahead and put 50% of your account on it. It might work 80% of the time, but that is an average - and based on the long term view. It doesnt mean it will work 4 times out of EVERY 5 times you see it. It could fail twenty times in a row, and then be successful the next eighty times.

Over the complete 100 trials, this is the 80% you expect... but it is going to suck if you went and put 50% of your account on the first twenty trades

(broadly, this kind of scenario is where the 2% rule and risk of ruin calculations come from)
When you have to shoot, shoot. Dont talk.
  • #37,607
  • Jul 15, 2009 9:26pm Jul 15, 2009 9:26pm
Interesting discussion going on regarding R:R, risk, account growth etc. Just checking in after 3 days of golf, and I am burnt three different ways - so I will be brief.

My first observation is that *clarity* is observed in the rear view mirror. You have to have passed the destination to recognize it.

So - I listen intently to those who are further down the road. They know.

Second - although we are all different, the basics we discuss here tend toward universal applicability. There is a right way to get started.
Last - spreadsheets are poison to the trader. They get you thinking about all the wrong things, rather on the simple recognition of an A+ trade and the really hard part of having the self control to stick to just these setups.

Off to bed. Tobacco Road GC awaits in the AM !!

Trade smart everyone.
I'm pretty much done with all this ...
  • #37,608
  • Jul 15, 2009 9:28pm Jul 15, 2009 9:28pm
Quoting joelcf
No, got it perfectly.

That is the real power of money management. Your risk is fixed, because your stop is set in stone. Your potential profit isnt.

(obviously, these are invented numbers and simplistic scenarios. dont trade your life savings based on this. etc)
Very interesting...can you recommend a book that I can look for on this?

Thanks!

GregB
  • #37,609
  • Jul 15, 2009 9:29pm Jul 15, 2009 9:29pm
Quoting PippingMama
Hello Jarroo,

Are you using the bar break stop or just some tight stoploss on this one?

I think I will take the bar bareak stop because it is above the 133 round number.

what do you think?



Pipping

Yes, I placed my stop just above the BarBreak.
Indicators show the past. Price Action "Indicates" the future.
  • #37,610
  • Jul 15, 2009 9:46pm Jul 15, 2009 9:46pm
Quoting jarroo
Hey ghous, do you see a 2 Doji side by side on the Gbp/Jpy 4 hour chart? You gotta like the location of confluences at the 155.00.
Ghous: "Yes jarroo, that's the same formations I was illustrating on the Eur/Cad. Now, notice that they were on the Weekly time frame so their strength and responsiveness will be better reflected. We all know how you feel about higher time frames jarroo."

jarroo: "Thanks ghous. Your the best."
Indicators show the past. Price Action "Indicates" the future.
  • #37,611
  • Jul 15, 2009 9:47pm Jul 15, 2009 9:47pm
Quoting jarroo
Hey ghous, do you see a 2 Doji side by side on the Gbp/Jpy 4 hour chart? You gotta like the location of confluences at the 155.00.
Yup surely! Great location just like you pointed out...nice quick release of the spring too...
Attached Image
I believe . . .
  • #37,612
  • Jul 15, 2009 9:48pm Jul 15, 2009 9:48pm
Quoting jarroo
Ghous: "Yes jarroo, that's the same formations I was illustrating on the Eur/Cad. Now, notice that they were on the Weekly time frame so their strength and responsiveness will be better reflected. We all know how you feel about higher time frames jarroo."

jarroo: "Thanks ghous. Your the best."
...
I believe . . .
  • #37,613
  • Jul 15, 2009 9:50pm Jul 15, 2009 9:50pm
Quoting ghous
Yup surely! Great location just like you pointed out...nice quick release of the spring too...
Thanks ghous. Your the best.
Indicators show the past. Price Action "Indicates" the future.
  • #37,614
  • Jul 15, 2009 9:50pm Jul 15, 2009 9:50pm
Quoting ghous
...
Indicators show the past. Price Action "Indicates" the future.
  • #37,615
  • Jul 15, 2009 9:51pm Jul 15, 2009 9:51pm
Wow dudes;
De ja ja vu vu...
  • #37,616
  • Jul 15, 2009 9:54pm Jul 15, 2009 9:54pm
Quoting Bemac
Wow dudes;
De ja ja vu vu...
Anyone know of a good language converter software/website...



Classic Bmac.
I believe . . .
  • #37,617
  • Edited 10:46pm Jul 15, 2009 10:14pm | Edited 10:46pm
Quoting StoragePro
Second - although we are all different, the basics we discuss here tend toward universal applicability. There is a right way to get started.
This should be in the first post. Everyone who has just started trading but thinks they can 'improve' on the rules set out by James in the first post to use the magic of compounding to make a million/billion/batmanillion dollars in x months, if only they use a little more risk... you are wrong.

Are you a better trader than James? Know more about forex? Richer? More experienced? No. You arent. So shutup and stick to 1-3% like you are told.

(note: this isnt meant to be harsh. questioning things is good, thinking about things for yourself is very good... but thinking you know better than what all the experienced guys are telling you is not.)

Quoting batesmotel
Very interesting...can you recommend a book that I can look for on this?
Depends whether you want a finance textbook or not

Van Tharp does talk about it in his books - he touches on it in Trade Your Way to Financial Freedom,but really doesnt go into detail. He is too busy having a hardon for trend following traders/systems

I have only briefly skimmed this one, but he seems to cover very indepth in The Definitive Guide to Position Sizing. Looking over it now, he goes into alot of advanced concepts (calculating the expectancy of your system, mean and standard deviaiton of your R multiples, etc), so I suggest it would probably have what you want - but I would definitely read it first though, pretty sure it is fairly pricey.

Personally, I am not a huge fan of his writing. The ideas are there, but they are way too drawn out, and wrapped up in a bunch of cross promotion of his other products/seminars/candy bars/etc.

Van Tharp can only dream of teaching money management as well as Fijitrader does in his section on the pf. Highly recommended*


(* i am in no way connected to the pf, aside from giving James and Mike $169 AUD extra beer money for the last two months.. i know they are kinda against promoting it in the thread, but there is some great info distilled in there and it helped me a ton.)
When you have to shoot, shoot. Dont talk.
  • #37,618
  • Jul 15, 2009 10:27pm Jul 15, 2009 10:27pm
truer words were never spoken in this thread.

not one of you would be the same trader in any way shape or form.

the same face will stare back at you in the mirror but you could literally change your name.

not one of you will trade the same.

not one of you will pick trades the same.

i have personally never seen this not to be true.

notsaying there are not exceptions but its a core truth of this business imho.









Quoting tac
I have never traded a large account so I am speculating, but I don't think psychologically you would feel the same about having $100 per pip vs $0.50 per pip on the table.
  • #37,619
  • Jul 15, 2009 10:36pm Jul 15, 2009 10:36pm
Quoting joelcf

Van Tharp can only dream of teaching money management as well as Fijitrader does in his section on the pf. Highly recommended*
Well said Joel,

Jim's got himself some star traders for teachers at the pf...and that's a simple fact.
I believe . . .
  • #37,620
  • Jul 15, 2009 10:37pm Jul 15, 2009 10:37pm
Quoting james16
truer words were never spoken in this thread.
not one of you would be the same trader in any way shape or form.
the same face will stare back at you in the mirror but you could literally change your name.
not one of you will trade the same.
not one of you will pick trades the same.
i have personally never seen this not to be true.
notsaying there are not exceptions but its a core truth of this business imho.
I do not have a large account by any means, but just going from 10 cents / 50 cents a pip to a whole dollar changed what I look for and how I trade. I'm more patient then when I started and a bit more picky. I'm sure when I go from 1 dollar a pip to 10 I'll be even more patient and more picky. I don't know how long it will take before trading 100 a pip, but I'm working on getting to that point, one day at a time.
Don't wish it were easier, wish you were better. ~ Jim Rohn
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