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

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  • #43,941
  • Sep 16, 2009 8:28pm Sep 16, 2009 8:28pm
........... lol

Good information!!, very value value for me.......

Quoting joelcf
...........................

(some) desk traders definitely incorporate it, but it isnt the only thing they base their trades on. Like i said, they have other priorities - massaging their e................

.....................
Same as the big interbanks - they make money from the spread, not from trading super dragonball doji reversals.
[/size]
What does not kill me makes me stronger. Friedrich Nietzsche,
  • #43,942
  • Sep 16, 2009 8:41pm Sep 16, 2009 8:41pm
Quoting james16
Almost two hours of new guest videos are now available on the site.

1. A webinar excerpt from 8/31/09 from Mbqb11.

2. An hour and a half video from James16 titled Rants and charts - A closer look at what we do.

I think you will enjoy both.

jim
Jim,
can you post the "rants and charts" in the guest section so we can download it?
currently it is in the members only section
http://www.james16group.us/Members/v...iningvideo.wmv

thanks,
DZ
  • #43,943
  • Sep 16, 2009 8:51pm Sep 16, 2009 8:51pm
As always, you are interesting to read. Being an active trader, I read these inside the machine posts with an eye aimed at finding a nugget or two that will help me refine my trading.

The question is this - what part of this info actually helps?

My sense is that not much really does, although a little knowledge about what goes on provides some level of comfort that I am not 100 percent blind.

For example, order flow is interesting, but do I need the knowledge to know what a good PB looks like? No, I do not. Do I need order flow knowledge to undertand what strong order flow looks like? No.

I am sure that there a few bits of microstructure info that help (Osler writes some actionable stuff) but diserning what the gold nugget from the butt nugget is a big task for us outside the priesthood.

The floor is yours.
I'm pretty much done with all this ...
  • #43,944
  • Edited 11:21pm Sep 16, 2009 8:59pm | Edited 11:21pm
Hey guys, newb here (Couple posts, and have read well over 4500 posts in this thread :O )

2 pin bars I have questions about.
(Note my charts don't have fib and I haven't learned enough about it, but I have started demo to get my head back in the charts) On Oanda fyi

GBPUSD- Took this one (all demo account, btw)
Bought ten pips above high, set stop 10 pips below low. Got stopped out.
Trading with the long term trend, (possible pullback)
At a recent ppz. Too much traffic nearby?
Am I missing anything with this trade?
Obv it went against me
Attached Image (click to enlarge)
Click to Enlarge Name: GBPUSDSept15.jpg Size: 133 KB


USDCAD- Did not take this one.
Obv it worked nicely, and is in the profit by about 130 pips.
I did not take it because I felt there was too much traffic, but in retrospect, I see that it sticks out nicer than G/U above.
Also with long term trend.
Near short term resistance, which looks like it may be where it bounced today (and would have been a nice exit, but somewhere a little higher would have been more reasonable)
Attached Image (click to enlarge)
Click to Enlarge Name: USDCADSept15.jpg Size: 129 KB



Thoughts? Did anyone take these trades, why or why not?
And forgive me if these charts have been discussed, I am having trouble keeping up with 200+ posts per day on this thread I'm trying!

Final Question, and this is a biggie (I think)
When should I be looking at charts? I am following your rules of daily and longer charts ONLY, because I truly believe you are right in saying this is the best place for a rookie to start, if they want the chance to win at this game. (with what experience showed me in my daytrading endeavors)
Therefore, I should be able to sit down at my charts once a day, and look at them all and set my trades (if the PA setups tell me to) I would imagine the most sense would be at the close of the daily bar, right? Well that's midnight (on my charts) and while I am often up at midnight, I am not always 100% alert and in a trading state of mind. Can I set my charts to open and close daily bars at a different time zone? As I know with all the time zones, we all have dif bars (or does everyone run GMT?) Again, sorry if this has been answered, but it wasn't in the first 4500 odd posts that I can recall

Thanks
Your faithful student
  • #43,945
  • Edited 9:39pm Sep 16, 2009 9:17pm | Edited 9:39pm
Quoting StoragePro
The question is this - what part of this info actually helps?

My sense is that not much really does, although a little knowledge about what goes on provides some level of comfort that I am not 100 percent blind.

For example, order flow is interesting, but do I need the knowledge to know what a good PB looks like? No, I do not. Do I need order flow knowledge to undertand what strong order flow looks like? No.
I completely agree with you. It is a forrest:trees situation that I think new people to almost everything get stuck in.

I guess this goes back to this - not much of it matters at all...though it varies with your approach, pych and level of sophistication.

Understanding more about how markets work is a good thing, imho, but you absolutely dont need to know it to trade 'j16 style'. You could think that order flow has something to do with a mcdonalds drivethrough and a trading desk was a peice of wood with 4 legs and you could still make an absolute killing using the steps that James has laid out here.

For me, it gives me enough confidence in what I am doing to back my beliefs, and allowing me to finesse my trades a little more to squeeze a bit more R out of them.

I didnt believe that much in support/resistance - until I understood it. Now I have enough confidence that the strong PPZ level at 90.00 will hold and reject my trade, so I move my stop to the top of the PPZ once it breaks through... rather than assuming that it 'might' break and leaving my stop in place and taking a big loss, or a b/e trade, or *at best* putting a trail on it and getting out with a moderate profit.

Similarly, no one *needs* to know how to calculate their expected return, their variance or their risk of ruin. You can stick to 2%, like you are told, and trade practically forever without losing your capital. But knowing a bit more, I can use expected return to help filter trades, position size more appropriately and a range of other stuff.

Same with orderflow stuff. As you said, you dont need to know what is happening in a pinbar. James told you what to look for - size, shape, location, where the eyes are, etc. But understanding the orderflow behind it lets me take combination (2 day, 8 hour, whatever) bars. Or trade only bars which bounce off a round number. Or to weight moves more heavily if they occur during a high volume session. Or know that price will accelerate once it breaks through a round number, as all the orders that were holding it up are likely exhausted. Or so on.

Do you need it? Nope.

Can you make a truckload of money without reading anything outside this thread? yup.

Can it help you squeeze that bit extra from your trading? I think so. But only if you have everything else down.

----

Since I like analogies, here is the way I see it.







I suck at golf. Badly. So I need to work on the fundamentals.

  1. First, I need to hit the ball. With the club, not with the dirt. Or my foot. Or hit my foot with the club (yes, this happened)
  2. Once I can hit the ball, I move on to hitting it straight. Not slicing it into a car window (this also happened)
  3. Once I can do that, I might work on putting.
  4. At this point, I have a decent basic game. So I might work on hitting it out of the rough, which I use a couple times a round.
  5. Then, I might work on bunker shots, which I might only need occasionally.
  6. Then I might work on adding draw or fade to my shots, or a bit of extra loft, which I very rarely need to do

..and so on.

Knowing what kind of shoes I need, or knowing whether I want a high spin or low spin ball, or choosing a driver with an extra half degree of lift is a long, long way down the list of importance.

The problem comes when people concentrate on these minor issues and ignore the big picture.

It happens everywhere. When I used to box, there were new guys 40+lbs overweight that couldnt hold their hands in front of their face or throw a decent forehand jab - but they would spend their time reading about the right amount of creatine to supplement with, or practice their uppercuts on the bag, or talk to each other about 'the mental game'.

Instead of wasting your time, how about just running around the block, throwing a straight shot and practicing not getting punched in the face?

If you cant spot a decent pin, draw in correct PPZs and know where your stop/tp/break/entries go, then wtf are you doing spending your time reading about orderflow or the mechanics of interbank quoting? Practice the basics, son.

Tiger Woods can spend time on those kinds of things, because the fundamentals are second nature to him. The small edges are what puts the best in the world above the second best. Me? I just need to hit the damn ball.

Like the big man says - Keep it simple.

When you have to shoot, shoot. Dont talk.
  • #43,946
  • Sep 16, 2009 9:25pm Sep 16, 2009 9:25pm
Quoting joelcf
Not really.

Bank and institutional traders are there to put orders into the market for their clients and offload the bank's risk into the market (basically). They arent there to net pips. They get risk limits to trade within, so they can massage their orders to make a little, but their main job is to buy/sell what the bank has and doesnt want, or what the bank needs and doesnt have.

Chances are that one making 30% would end up getting fired for breaking his/her risk limits.

If you mean a hedge fund trader, on the other hand, then...
Another winning post Joel.

I have a few friends who are partners in some of the biggest hedge funds here in the UK. It's a completely different ballgame to what we do.

That said, I rarely talk about what I do anymore and if I do, I underplay it. Because amongst the "professionals" trading technical analysis is discredited voodoo akin to trading astrological charts and lunar calendars (come to think of I did know one guy who based his trading on the chinese calendar, but that's another story).

But you'd be surprised at who looks into our little corner of the world here. And there is more than one big player who is aware of James16. In fact one of my hedge fund friends was berating me for amateur trading. Then I told him I followed James16. He said "in that case, you're going to be fine". Cool eh?

We have so many more ways to be nimble in the market and make money than these big guys do. And don't get me started on the millions of dollars they spend on computers and algorithms trying to arb one pip. It's enough to give me a headache.

As an utterly unrelated footnote, I always quote the example of Madoff as someone who had the world at his feet with 10% annual returns. I was talking to one of my hedge fund friends recently and he said that Madoff made all his money from private investors because the big investment banks thought something was fishy and wouldn't go near him. Goldmans and the others didn't have a penny with him. The rumour that he's a big fake has been doing the rounds for years.
  • #43,947
  • Sep 16, 2009 9:25pm Sep 16, 2009 9:25pm
Quoting joelcf
I completely agree with you. It is a forrest:trees situation that I think new people to almost everything get stuck in.

I guess this goes back to this - not much...though it varies with your approach, pych and level of sophistication.

Understanding more about how markets work is a good thing, imho, but you absolutely dont need to know it to trade 'j16 style'. You could think that order flow has something to do with a mcdonalds drivethrough and a trading desk...

Good post and a few pro's I trade with and watch get into this stuff very deep, they count bars, do EW counts and work 18 hour days still and have been for 20+ years and its all they know. I do well maybe make 3-5% less and work 3-6 hour days sometimes if nothing is going on maybe more but I dont have to. So it comes down to is that 3-5% a big deal to me and for me I would rather have the time to do other things.

Also to me the J16 is just adding into my "hand" if I play poker I want a good hand to play and this PA adds into my rich deck plan, do I still lose sure, but would you fold if you had 2A's hell no you would play it, same deal. Also years ago we had a S&P e-mini system that worked well, we had it staffed 24 hours a day with 3 groups of people and it made damn good money, when the market changed we sold it to a firm in Chicage for a nice chunk of change and let them burn it out so these system do work but most not more then a few years at most but that's all you really need if you are running 100+ contracts of S&P e-mini's

The thing I found out is all the other crap you add just helps you take the trade it does not really help, at least for me. I used to have 12+ things on the chart and do EW and bar counts and all this other crap so when I took a trade I would not even question it, now after 10k trades and 10 years I can do it just with BB and RSI and take the trade and walk away and win 65-70% of the time off a 2% risk 4% reward so it pays the bills.
Keep taking CT trades, I need more money
  • #43,948
  • Sep 16, 2009 9:28pm Sep 16, 2009 9:28pm
Quoting Ryanmcd
on this weeks market action on the 5min... Please see attached chart.
"Don't trade to trade . . . trade to win." - James16
  • #43,949
  • Sep 16, 2009 9:34pm Sep 16, 2009 9:34pm
I take that turd pick back, 10 risk for 20 reward so I did get a trade in today
Attached Image (click to enlarge)
Click to Enlarge Name: eurusd.jpg Size: 95 KB
Keep taking CT trades, I need more money
  • #43,950
  • Sep 16, 2009 9:38pm Sep 16, 2009 9:38pm
Quoting joelcf
haha. That's awesome.. "didnt you watch Jim's last video? everyone knew where price was going to. amatuer. go back to demo!'


HI Joel, thanks for your great insight and the entertainment
  • #43,951
  • Sep 16, 2009 10:04pm Sep 16, 2009 10:04pm
Thanks Joel.

After doing some reading I know why order flow occurs at variuos places. It is pretty much all I need on that topic today. Tomorrow, I may realize a gap that might be filled and help me out.

What about "space"??

I've thinking about this - space as a prerequisite to a trade than moves well after PA.

Clearly, the bigger players take note of minor ppz's and place conditional orders there. I say clearly, because almost always, price reacts at it. No space means a lot of orderflow not in your favor.

In the case of space, I surmise that since there is no traffic, price will flow in a natural manner with more and more being added to positions to drive till exhaustion or a solid PPZ is encountered.

My best of the best - my personal hit parade consists of these trades, and they are there every month.

Now the comment about the psych side of things.

Since I know from hard experience over a number of years now, that waiting for the best setups pays off like crazy in account increase and peace of mind, why is it that I still feel the pull of the less than beautiful?

I think that my brain hates me.
I'm pretty much done with all this ...
  • #43,952
  • Sep 16, 2009 10:27pm Sep 16, 2009 10:27pm
Quoting StoragePro
What about "space"??

I've thinking about this - space as a prerequisite to a trade than moves well after PA.

Clearly, the bigger players take note of minor ppz's and place conditional orders there. I say clearly, because almost always, price reacts at it. No space means a lot of orderflow not in your favor.

In the case of space, I surmise that since there is no traffic, price will flow in a natural manner with more and more being added to positions to drive till exhaustion or a solid PPZ is encountered.
I think it is more a case of them having orders at certain numbers already, which then form the PPZ rather than the other way around, but the end effect is the same.

I'm also fascinated with the concept of 'space' - how do you tell how a market will react when there is nothing on the chart for it to react with?


My guess, when you are looking through a 'drop through the floor' type scanrio with no PPZs in sight, the obstructions that might stop the trade are

  1. Natural supply and demand - currencies can trade however they want, but people are still going to be selling iron to the Euro zone, buying cheap Chinese crap, holidaying in NYC and Disneyland (hurry up and move up, AUDUSD, so I can go to noo yawk) and hiding their money in Swiss numbered accounts... so there is always going to be supply and demand, regardless of price. Obviously, the amount of hedging/translation is going to be partially driven by the currency markets, but there will always be trading outside of speculation
  2. a change in sentiment - The kind of fear->optimism shift that stops falls, as seen in the DJI in March
  3. fundamental values - definitely with stocks, you will see a 'floor' somewhere at their 'fair' value, and again at their NTA/liquidation value... given how hard it is to determine the 'correct' fundamental value of a currency (let alone two) and the wide number of valuation/prediction models, I dont know how well this works in forex
  4. Bigass round numbers - the aussie dollar cant reach parity with USD, those kangaroo-riding drunks are getting out of line!
  5. and lastly, I guess, countertrend hero trades. People love calling tops/bottoms, and I guess if you get enough of them, it could stop a move

Quoting StoragePro
Now the comment about the psych side of things.

Since I know from hard experience over a number of years now, that waiting for the best setups pays off like crazy in account increase and peace of mind, why is it that I still feel the pull of the less than beautiful?
If you ever figure out the answer to this one, please feel free to share it. I'm still stuck in the gravitational pull of the B/C trade, and escaping isnt as easy as 'just say no' (even though it should be).
When you have to shoot, shoot. Dont talk.
  • #43,953
  • Sep 16, 2009 10:32pm Sep 16, 2009 10:32pm
Quoting joelcf
I think it is more a case of them having orders at certain numbers already, which then form the PPZ rather than the other way around, but the end effect is the same.

I'm also fascinated with the concept of 'space' - how do you tell how a market will react when there is nothing on the chart for it to react with?

My guess, when you are looking through a 'drop through the floor' type scanrio with no PPZs in sight, the obstructions that might stop the trade are [list][*]a change in sentiment - The kind of fear->optimism shift that stops falls,...
all your stuff is pretty right on Joel as I have told you before. There are various other factors that are very important to the markets we trade but we just have such little to do with it. One of these big factors are options. Options are HUGE with large sums of money on the line. Wherever large sums of money lie, well you know the rest. A large option barrier(or the blowout of one for liquidity) can stop a trend dead in its track if there is enough money behind to protect it compared to the force on the way up. But as with anything there are also people looking to blow out these options. Cat vs mouse resumes. Orderflow is real nice to have knowledge of it, but Joel said it straight, what we see and the way we interpret it(via J16 pa) is far more important. Although I do feel much better off for my knowledge of it and am greatly thankful to DS for sharing his knowledge with me. It certainly does help and is clearly evident in how I trade.

Mike
  • #43,954
  • Sep 16, 2009 10:33pm Sep 16, 2009 10:33pm
Quoting StoragePro
Thanks Joel.

After doing some reading I know why order flow occurs at variuos places. It is pretty much all I need on that topic today. Tomorrow, I may realize a gap that might be filled and help me out.

What about "space"??

I've thinking about this - space as a prerequisite to a trade than moves well after PA.

Clearly, the bigger players take note of minor ppz's and place conditional orders there. I say clearly, because almost always, price reacts at it. No space means a lot of orderflow not in your favor....
SP,

A lightbulb just went on in my head after reading this.

"traffic" is just another way of saying that there are more s/r levels around your trade where others are placing orders opposing to yours and price is likely to react at these levels.

I put nothing on my charts, but horizontal lines at support/resistance levels.

Why do I do this? Because it is the core of what James teaches. I love to scroll back through charts and mark s/r levels and then see how many times there is a reaction. If that isn't a confidence builder about the significance of these levels, I don't know what is. That shows me that is where the majority of the orders are stacked.

When there is a reaction (not necessarily a reversal) at a ppz, there is ordeflow. When you get a PB or OB at a ppz, to me that tells me that there are lots of big orders from the big players at these levels. And I want to be on their side of the orders, their pockets are deeper than mine

Ross
  • #43,955
  • Sep 16, 2009 10:42pm Sep 16, 2009 10:42pm
Quoting mbqb11
One of these big factors are options. Options are HUGE with large sums of money on the line.
yeah, i wasnt going to go near that one - I think I confuse people enough without going into options, let alone single/double knockout/knockin plain/reverse/compound barrier options or the more widely traded exotics (mostly binaries) ... Hull is there for anyone that wants to get that deep into it

Expiration day and rollover day are time to either hit the 15m chart or go to the pub, depending on how brave you feel.

Quoting rossbennett
A lightbulb just went on in my head after reading this.

"traffic" is just another way of saying that there are more s/r levels around your trade where others are placing orders opposing to yours and price is likely to react at these levels.
That 'moment of clarity' where all the bars and lines and traffic and fibs and round numbers and everything gets reduced to that single idea completely changed the way I traded.

If anyone still thinks it is a crazy mess without rhyme nor reason and arbitary PPZs all over the place... reread what Ross said.

This thread rocks
When you have to shoot, shoot. Dont talk.
  • #43,956
  • Sep 16, 2009 10:46pm Sep 16, 2009 10:46pm
Quoting joelcf

Expiration day and rollover day are time to either hit the 15m chart or go to the pub, depending on how brave you feel.
ROFL
  • #43,957
  • Sep 16, 2009 10:57pm Sep 16, 2009 10:57pm
See for my personality it's the type of nuts and bolts how things work that matter to me, even if they don't really matter in trading. Knowing about options, orderflow , microstructure, etc, etc, maybe not be need for most, but I know I need to know it.

I think it's great that someone can just look at a pinbar at great ppz and trade it, but I (for whatever reason) need more. Maybe it just comes from being in a technical background and I just like to know why things work and how they work. I guess that puts me at a disadvantage to the guy that can keep it simple. I am the way I am, I'm not sure I'd even want to change that part.

What to do you say to they guy that likes the complexity? How do I keep it simple when the gears in my head are constantly turning? I don't know...






Quoting mbqb11
all your stuff is pretty right on Joel as I have told you before. There are various other factors that are very important to the markets we trade but we just have such little to do with it....
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #43,958
  • Sep 16, 2009 10:59pm Sep 16, 2009 10:59pm
Quoting LasVahGoose
What to do you say to they guy that likes the complexity? How do I keep it simple when the gears in my head are constantly turning? I don't know...

I say shut down that brain, b/c it will drive you nuts


Keep it simple baby
  • #43,959
  • Sep 16, 2009 11:01pm Sep 16, 2009 11:01pm
me too.

joel blows me away all the time. 29? geez.

Quoting 4X=0
this made me laugh out loud.
  • #43,960
  • Sep 16, 2009 11:02pm Sep 16, 2009 11:02pm
did you get my message?

Quoting LasVahGoose
See for my personality it's the type of nuts and bolts how things work that matter to me, even if they don't really matter in trading. Knowing about options, orderflow , microstructure, etc, etc, maybe not be need for most, but I know I need to know it.

I think it's great that someone can just look at a pinbar at great ppz and trade it, but I (for whatever reason) need more. Maybe it just comes from being in a technical background and I just like to know why things work and how they work. I guess that puts me at a disadvantage to the guy that...
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