james16 Chart Thread | Page 2043 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

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

Attachments: james16 Chart Thread
Exit Attachments

james16 Chart Thread

  • #40,841
  • Aug 12, 2009 6:39pm Aug 12, 2009 6:39pm
Quoting supermatt
just to clarify something...what are the criterias for buob beob etc.
Does the body have to engulf the previous candle (ideally) or can you just have a smaller body and larger wicks engulfing the previous candle to count aswell?

I understand about location etc but just wanting to know the structure details

Just looking over some daily charts now and nothing really stands out
I believe outside bars must completely engulf the previous bar's trading range with a close on the higher end for a bullish and on the lower end for the bearish. It's even better if the close is above the high/below the low of the preceding bar. This is according to Pring anyway.

Engulfing candles are different, the real body of the candle must engulf the real body of the previous candle (not the high/low).
  • #40,842
  • Aug 12, 2009 7:09pm Aug 12, 2009 7:09pm
Bullish outside bar - even better that the close was higher than the previous bar's high
Attached Image


Bearish outside bar - even better that the close was below the low of the previous bar
Attached Image


Engulfing candle (not an outside bar because the low of the green candle is higher than the low of the red candle). Very close to a double low higher close though - was within a pip, 0.8 of a pip to be precise
Attached Image
  • #40,843
  • Aug 12, 2009 7:19pm Aug 12, 2009 7:19pm
Quoting consisTracy
Compounding interest the 9th wonder of the world:

There is a legend about a man who asked for his payment to be made in rice. 1 grain of rice on the first checker of a checker board - double that on the 2nd (2 grains) -

How many doubles do you need to do to start getting massive amounts of money?

Pretty exciting stuff A?
Yes - that is what compounding is all about. The Snowball gets bigger as it rolls downhill and picks up more with each successive turn than the previous.

If you are good trader - and can take advantage of this principle, then you'll be well off soon enough

Although thinking in terms of doubling is likely going to take your eye off of the (snow) ball.
I'm pretty much done with all this ...
  • #40,844
  • Edited 8:21pm Aug 12, 2009 7:23pm | Edited 8:21pm
Quoting consisTracy
Compounding interest the 9th wonder of the world:
72 divided by the interest rate = number of years to double
at 30% thats 2.4 years
at 50% thats 1.44 years
The 'rule of 72' is just an estimate. It doesnt work as well when you use big numbers or long periods. Once you get outside 5-9%ish, it breaks down.

Rule of 69 is a better estimate, although it also breaks when you start getting into 'what is my $1000 compounded at 40% for 50 years?!'

For the math inclined (or those with excel), the actual formula you want to find the time to double is f(X) = ln(2) / ln(1+(r/100))

Quoting consisTracy
In 1960 Warren Buffet started investing maybe 250,000? (this is a total guess based on his wikipedia info) he has been compounding this for 49 years. at 30% it could have doubled 18 times. Look at the picture - no wonder he is worth 62 Billion!!!
He isnt worth $62bn. Closer to $40bn. I suspect you have been looking at the old Forbes Rich List, which is pre-GFC.

Fascinatingly, he started with even less than that. When he started the Buffett Partnerships (which was the precursor to Berkshire), he had closer to $150k. Alot of money for those days, but not a huge amount by any stretch.

BRK hasnt compounded anywhere near 30%. It is around 20%, give or take a financial crisis or two. Still amazing.

He has written some absolutely fascinating things about compounding that you may be interested in. His old shareholder letters (particularly this one from 1989 http://www.berkshirehathaway.com/letters/1989.html about tax effects and 1963/1964 http://www.rbcpa.com/WEB_letters/1963.01.18.pdf and http://www.rbcpa.com/WEB_letters/1964.01.18.pdf , the famous 'Joy of Compounding' letters that talk about valuing Manhattan and the Mona Lisa) go into it quite a bit.

I'd also recommend 'Buffett: The Making of an American Capitalist', and 'The Snowball' if you are really dedicated (its like, a thousand pages)

(can you tell that I'm a massive Warren Buffet nerd?)

Quoting consisTracy
Lesson - good returns even 20% - 30% compounded over your life or applied to a reasonable size trading account over time will give you massive wealth - there is no need to aim for %returns any higher this way you will have a smooth equity curve and be a trading force to be reckoned with.
'good returns' are not 20-30% per annum. Those are extraordinary returns. Like, massive outliers.

No one makes those returns consistently. No one. As I said above, Berkshire has compounded around 20.3%. Cramer managed to do around the same.

The share market, historically, returns around 12-14%. Property is closer to 8%.

The thing is, you wont make either of those. No one does. Why? A few reasons:

1) Buffett/Berkshire never pay dividends, they reinvest everything. They buy and hold for the long, long run. And so they dont pay tax.

You, on the other hand, will pay tax, because you are engaged in short term trading, not buying an business and holding it for 50 years.

2) Buffett didnt make his money by 'picking stocks', despite popular opinion. He did it by buying great businesses, and holding them, and having them expertly managed. And he bought them using some financial tricks (basically, using insurance float as low cost funds). This is where the *real* compounding happens.

And then there was a ton of stuff made on complex arbitrage transactions, special situations and workouts. Hugely profitable, but highly risky. Not really what we are looking for here.

3) Once you get to a certain size, you are a hell of alot less nimble. You cant just short the break of a 4H pinbar when you are trying to invest a hundred million dollars - as I said to someone via pm the other day, you cant play the market... at that point, you *are* the market.

Buffett recently said that he could get 50% returns if you gave him a small amount of money to invest. That's one of the advantages we have, we can get in and out of things and not really have any effect on the market at all.

4) Like James has said a ton of times, once you get a large account, you will never trade the same. He says he is a hell of alot more patient and picky now. You really think you are compounding a huge account consitently at 30%?! Congratulations, Wall St will (literally) pay you hundreds of millions to run money.

--------
Sorry for the rant, its early and I need coffee!

Just to be sure, though - I'm not trying to have a go at you or anything! Alot of people just get carried away when they start plugging arbitary numbers into spreadsheets. Hell, I did - I sat in the back of my lecture theatre after learning about PV/FV calculations and annuities, and figured out that I could be a multimillionaire by my 30th birthday if I stopped drinking beer! Now, I am 30 in about two months...

I just think that people need to be realistic, not play around with compounding spreadsheets and get crazy expectations. At best, they make you lose focus. At worst, you start taking stupid risky trades and blow up your account.

Also, watch out of Mike comes around. I once saw him choke a compounding spreadsheet to death with his bare hands. And then kick it while it was down, just for good measure.
When you have to shoot, shoot. Dont talk.
  • #40,845
  • Aug 12, 2009 7:45pm Aug 12, 2009 7:45pm
Oh and I have been a long time follower of this thread. Back in the day when it was less than 50 pages long and I was still in nappies trading wise

I have to thank Jim for preventing me from leaping blindly into live trading without first proving to myself that I could do this profitably and most importantly keep my profits. I demo'd for over a year before going live.

I still to this day remember these words, spoken to me by a good friend who introduced me to the markets....

If you can't take a demo account seriously, how on earth do you think you're going to be able to treat a real account seriously? Chances are you will not and you will lose money.

Truer words have never been spoken. I believe this alone laid a rock solid foundation for my trading career. I cannot stress enough that Jim's advice of demo'ing first is that of genuine person who genuinely cares that others do not make the same avoidable mistakes.

Live since early 2007, slowly but surely building my account and best of all.... Margin Call free
  • #40,846
  • Aug 12, 2009 7:46pm Aug 12, 2009 7:46pm
thanks for the help there twobuck

just for example purposes is this regarded as an outside bar. I know its not engulfing but I think it is an outside bar as it is just the mirror image of an inside bar
Attached Image (click to enlarge)
Click to Enlarge Name: untitled.GIF Size: 17 KB
  • #40,847
  • Aug 12, 2009 7:49pm Aug 12, 2009 7:49pm
Quoting joelcf
Ej 4H pin last night
Yeah, another great example of price breaking and going exactly where expected. I personally took profit at the congestion just below 137.00.

Attached Image (click to enlarge)
Click to Enlarge Name: 08-12-09 eurjpy h4.gif Size: 15 KB
skype: ststroud. let's talk trading.
  • #40,848
  • Aug 12, 2009 8:11pm Aug 12, 2009 8:11pm
Quoting tyler812
Yeah, another great example of price breaking and going exactly where expected. I personally took profit at the congestion just below 137.00
Nicely played, pretty much textbook picture perfect.
When you have to shoot, shoot. Dont talk.
  • #40,849
  • Aug 12, 2009 8:14pm Aug 12, 2009 8:14pm
Quoting supermatt
thanks for the help there twobuck

just for example purposes is this regarded as an outside bar. I know its not engulfing but I think it is an outside bar as it is just the mirror image of an inside bar
Technically, it is an outside bar, by some definitions... but I wouldnt take it. Ever. If anything, it looks more like an indecision bar, representing a pause in the downward trend (notice how price barely changed)

This page from last week has some good talk on what we like to see in outside bar type formations.

http://www.forexfactory.com/t/2331/p...ml#post2945357
When you have to shoot, shoot. Dont talk.
  • #40,850
  • Aug 12, 2009 8:29pm Aug 12, 2009 8:29pm
Hi Joelcf,

I hear what you are saying loud and clear. And I apologise for my simplistic aproach - I am not a detail person.

I might be digging myself a bigger hole here - but here goes:

The general concept I am trying to convey and the thing that makes me excited is this - there is no need to risk silly amounts. A 2.5% positive increase in your account in a month without compounding gives 30% over a year - As you have pointed out thats extraordinary so at the 20% per annum mark an average positive % per month would need to be + 1.7%. With this material this is sooooo achieveable. No need to risk any more than 2% (and thats on the risky side) once you understand the things being taught here and in the PF.

Basically it means once you are in control of your trading to no longer be a break even trader and start showing consistant little profits you are on your way - In fact once you do that consistantly over time you are there.

Applying that to the big picture:

No aiming for ridiculous 100%+ returns as new traders a apt to do (I know I have done it)

And no need to risk any more than 1%-2%. Once consistant profits start showing on your account (instead of Break even or neg) over time you will have something that will really make money.
  • #40,851
  • Aug 12, 2009 8:32pm Aug 12, 2009 8:32pm
I'm Not sure if anyone else has complained about this before or not, BUT...

Is it possible if you guys who post your chart with a black background, to use BRIGHT coloured Bars (BRIGHT Green up bars & BRIGHT Red for down bars ...for example)...it would be so much easier to see the open and close on the bars....makes it easier to see everything better....OR.....use a white background....that is so much easier to see...something like how ghous posts his charts....just a suggestion, nothing more....

GregB
  • #40,852
  • Aug 12, 2009 8:40pm Aug 12, 2009 8:40pm
Quoting batesmotel
I'm Not sure if anyone else has complained about this before or not, BUT...

Is it possible if you guys who post your chart with a black background, to use BRIGHT coloured Bars (BRIGHT Green up bars & BRIGHT Red for down bars ...for example)...it would be so much easier to see the open and close on the bars....makes it easier to see everything better....OR.....use a white background....that is so much easier to see...something like how ghous posts his charts....just a suggestion, nothing more....

GregB
Eyes getting old, Greg??

Ghous can point you where you can get a new monitor...
I'm pretty much done with all this ...
  • #40,853
  • Edited 9:17pm Aug 12, 2009 8:42pm | Edited 9:17pm
Quoting consisTracy
The general concept I am trying to convey and the thing that makes me excited is this - there is no need to risk silly amounts.... No need to risk any more than 2% (and thats on the risky side) once you understand the things being taught here and in the PF.
Oh, definitely. If only more people thought like that, they wouldnt be putting 80%+ of their money on every trade!

If you sit back and wait for the good trades, and take just two 2% risk trades a month - even if they each only go to 0.5R, you have earned your 2% for the month. And 27% for the year.

The problem is that you have to take into account losses, negative compounding and the like. Even the best setup can fail, at which point you need a ~4.1% profit from your next trade(s) to get back to where you should have been.

And if you were a bit more agressive and risked 5%, you now need 10.53%

And if you were dumb and put 20%, you need to make a 50% return.

Asymmetric returns and negative compounding are a bitch.

Quoting consisTracy
No aiming for ridiculous 100%+ returns as new traders a apt to do (I know I have done it)
lol, you and me both. I shake my head at some of the dumbass things I did starting out. Hey, lets throw $2k into short dated barrier call index options, they cant *possibly* go down!

whoops.
When you have to shoot, shoot. Dont talk.
  • #40,854
  • Aug 12, 2009 8:48pm Aug 12, 2009 8:48pm
Quoting batesmotel
I'm Not sure if anyone else has complained about this before or not, BUT...

Is it possible if you guys who post your chart with a black background, to use BRIGHT coloured Bars (BRIGHT Green up bars & BRIGHT Red for down bars ...for example)...it would be so much easier to see the open and close on the bars....makes it easier to see everything better....OR.....use a white background....that is so much easier to see...something like how ghous posts his charts....just a suggestion, nothing more....

GregB
Here is a link to one of jarroos posts with his template, which I find very easy to understand.

http://www.forexfactory.com/t/2331/j...read-2724.html
  • #40,855
  • Aug 12, 2009 9:00pm Aug 12, 2009 9:00pm
Quoting StoragePro
Eyes getting old, Greg??

Ghous can point you where you can get a new monitor...
yes, perhaps that is it...lol....Maybe I'm just an old fart now, and need a new pair of eyes....(where did I put that magnifying glass anyway?)

Tac has the right idea though..... http://cloud.forexfactory.com/attach...1&d=1250110380 I can see those bright colours just fine against a black background...

GregB
  • #40,856
  • Aug 12, 2009 9:13pm Aug 12, 2009 9:13pm
Quoting joelcf
O

Assymetric returns and negative compounding are a bitch.
You have a way with words! You gotta have some Irish in ya.

At any rate - (sorry, no pun intended), once you get hold of 'it', and more importantly, get hold of yourself, then, and only then can 'I The Trader' take advantage of compounding.

Of course anyone who is currently travelling the road with success will tell you to forget the stupid compounding spreadsheets. I've said it. And I've ignored it.

Here is a trick that will assist you to remember that making that sheet work in real life means paying attention to taking the best setups. Ready?

Take a small, but meaningful amount of money - three months rent. (2,000 - 3,000 USD?) Don't have it? Get a part time job and get it. Open and account. Trade it.

When the visions of sugar plums stop dancing through your head, you'll be ready to focus on the important stuff.
I'm pretty much done with all this ...
  • #40,857
  • Aug 12, 2009 9:16pm Aug 12, 2009 9:16pm




Quoting TwoBuckChuck
Oh and I have been a long time follower of this thread. Back in the day when it was less than 50 pages long and I was still in nappies trading wise

I have to thank Jim for preventing me from leaping blindly into live trading without first proving to myself that I could do this profitably and most importantly keep my profits. I demo'd for over a year before going live.

I still to this day remember these words, spoken to me by a good friend who introduced me to the markets....

[i]If you can't take a demo account seriously, how on earth do...
  • #40,858
  • Aug 12, 2009 9:19pm Aug 12, 2009 9:19pm
Quoting StoragePro
You have a way with words!...
So, so true....I have over 10 spreadsheets on those compounding dreams....not to say that they are not valid....but start by doubling your trading account once....then twice....then 3 times.....

Then and only then can one entertain such dreams....learn to trade first....the rest will come naturally...

GregB
  • #40,859
  • Aug 12, 2009 9:23pm Aug 12, 2009 9:23pm
Quoting StoragePro
You have a way with words! You gotta have some Irish in ya.
Yeah, my Irish background is what gives me my lovely disposition and temperament

I should probably alter that quote though - negative asymmetric returns are a bitch. Positive asymmetric return profiles (small downside, big upside) are exactly what we are aiming for here

(I just got through this tome that talks in great detail about this topic - http://au.wiley.com/WileyCDA/WileyTi...470042664.html - excellent reading if you are into that kinda thing. Although, if you are, you might have to question whether you are *really* happy with life )

Quoting StoragePro

At any rate - (sorry, no pun intended), once you get hold of 'it', and more importantly, get hold of yourself, then, and only then can 'I The Trader' take advantage of compounding.

...

When the visions of sugar plums stop dancing through your head, you'll be ready to focus on the important stuff.
lol, it isnt me that has a way with words. This is the most poetic 'focus on trading, dumbass' I have ever seen!
When you have to shoot, shoot. Dont talk.
  • #40,860
  • Aug 12, 2009 9:23pm Aug 12, 2009 9:23pm
Quoting joelcf
lol, you and me both. I shake my head at some of the dumbass things I did starting out. Hey, lets throw $2k into short dated barrier call index options, they cant *possibly* go down!

whoops.
LOL. Did the same with warrants many a blue moon ago. Did ok, but not through skill. ( by "OK" I don't mean "won out"....for a lot of effort I ended up pretty much nowhere really)

I remember dropping AUD5k on one trade that was 20% of my account and not thinking there was anything wrong at all with risking that much. That's what traders did wasn't it?
...I *KNEW* where the underlying was heading and I bought into the warrant. ...Pretty simple. LOL
Bundy's status today: "Waiting..."
36 traders viewing now