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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

  • #93,801
  • Apr 16, 2011 5:06am Apr 16, 2011 5:06am
Hi James16, seniors and all

The following attached pictures are of the trades which I have taken for this week. Please feel free to comment on them.

Thanks and regards
NS
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  • #93,802
  • Apr 16, 2011 5:39am Apr 16, 2011 5:39am
on weekly chart ,price has broken the long term up-trend line,it seems a reversal. on daily chart ,a BOX, and price met the strong support line ,on h4 chart ,a pin bar, 4.3161 near the ema ,and 4.4451 are the major resistance .

so ,what shoud i do ? need your idea .
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A chart helps those who can read it.
  • #93,803
  • Apr 16, 2011 5:47am Apr 16, 2011 5:47am
Quoting aserbfx
yes, this is a good questions. i am still struggeling about it, so far.
i normally take a quantity of whole position of at a certian point (fta, very strong days, rn etc) and move stop to break even.
how do you do it?
Don't really know how I should do. I really don't have a specific way. Now I am taking some profits at round numbers or after a big move. Checking daily for some pa on hints where price may go.

pat
  • #93,804
  • Edited 6:00am Apr 16, 2011 5:58am | Edited 6:00am
Quoting aserbfx
took a long time to get this done. already crossed the 55 usd and approaching the upper triangle and 365 ema. if it breaks to the upside, there is a trouble area right above at about 58 usd.
comments appreciated...
Hi M

I can see a PPZ just overhead at around 56.50.
The last time price was there, it was proven to be too expensive, and price fell away from it quickly

Now it's coming back there nice and quickly.
Alot of people might buy here thinking this is going to run.
If they do, they should watch out for the confluence of the PPZ and TL at 56.50.
If price gets straight to that point it may reverse quickly, even as far as the lower level I've marked (c. 54?), winding the triangle up even tighter.

If the last Bear swing had a false breakout, it could possibly instigate a Bull Run out of the triangle.

It's an interesting time for sure
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  • #93,805
  • Apr 16, 2011 6:11am Apr 16, 2011 6:11am
Quoting the_wizard
Looking to fade these highs in NZD/USD. Wait for the flush from the stop buys if you want to hit it.
Hey Wizard, interesting response but I'm sruggling with your terminology.

- "fade these highs"
- "wait for the flush"

Would you mind expanding? Thanks in advance.
  • #93,806
  • Edited 7:25am Apr 16, 2011 7:10am | Edited 7:25am
Quoting 5.25
Hey Wizard, interesting response but I'm sruggling with your terminology.

- "fade these highs"
- "wait for the flush"

Would you mind expanding? Thanks in advance.
If you look at the NZD daily chart below, you can see a significant swing high on the daily chart (marked by the purple dashed line). You can also see that price has made a sharp, consistent move up into these highs.

As price comes into those highs, many traders will take positions short ahead of or into those highs for the potential double top.

The stop buys for those shorts will accumulate some way above the highs. In certain situations like this, the stop buys are more likely to be orders to cover rather than orders to go with the trend because many retail traders (and many professionals) are too afraid (or too reluctant) to buy after price has rallied this far and this just leaves the buying from those (retail or not) that are short, that see price go hard through the highs and panic "puke" (exit) their positions.

"Fading" a move is to take a trade counter trend. Usually it is most commonly associated with going counter to a sudden, sharp move in a situation like this.

Sometimes if you get short in an area like this, price just retreats briefly before moving higher (which is what happened here). Other times, it can be a major high. (see the second chart which was the infamous failed break on the USD/CAD which was the top of the market ever since)

However, whether it leads to a large move or not, it usually leads to a "reaction" which is why a lot of professionals "fade" these moves.

Next we will look at the "flush".
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  • #93,807
  • Edited 7:45am Apr 16, 2011 7:24am | Edited 7:45am
The "flush" is where prices suddenly accelerates as the stop buy orders get hit. Sometimes these are stop orders, sometimes these are market orders. There is a flurry of activity up here as suddenly the onus is on the buyers to pay up and just accept whatever offer they can get to move out of the way of the freight train.

Notice in the image below, how 10m before the "flush" you see price just take out the highs and then pause. Be careful. There is no flush. Most traders are wiser than putting a stop a pip or two above those highs.

The flush comes shortly after where price punches hard through the level. Once the brief panic has settled, there is no more aggression from the buyers. Note that it's not that more sellers than buyers enter the market - there is a seller for every buyer - but buyers are less eager after all the panic is over. Buyers now retreat waiting for a pullback and as price pulls back, the onus is on the sellers to accept lower prices as they push and shove to cover their longs incase this is just a "false break" of the highs or try and get a short on to "fade" the move. This is why price dramatically reverses in the next candle.

This is a rather simplistic approach to the order flow but it serves to illustrate the purpose.

As regards my approach, I didn't "fade this". I have a specific entry criteris for this type of move which was not fulfilled.
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  • #93,808
  • Apr 16, 2011 7:40am Apr 16, 2011 7:40am
As a further point of how it works - I kept a journal back when I was in proprietary futures trading...here is an excerpt from the journal that I published in another forum. It illustrates pretty much all the points I made above and I have highlighted them in bold. I was still a bit green on order flow back then. If you have a read you will see how I was long the S&P, massively counter trend, with a stop below the lows - basically a sitting duck for all the professionals in the room that are waiting to "fade" a significant breakout. What is also of significance is look at the reason I puked this which was principally fear (I'm over leveraged and more importantly have, "no idea how far this might go"....compare my thought process in this trade to those traders that might be short into those highs on the breakout in the NZD.

Friday, 27th February 2009: 13:00 P.M.

The S&P futures have been heading down all morning. Now it’s just above it’s November lows. It’s on a knife edge and everyone knows it. The dollar index is making new highs. World bond markets are rallying. The press is already running quotes from market analysts that claim a break below the November lows could result in a full blown crash scenario – a panic on the scale of 1929 or 1987. A drop of 20% is being touted by even the conservative.

And as usual, I am going against the trend. I'm heavily long.

My stop is just beneath the low.

The market is literally sitting on that level.

Everyone knows there are going to be a lot of stops beneath 739.

The locals are praying for a sharp spike down now so they can buy it up. I know this because I can hear them discussing it on the floor.

I’m hanging onto the last vestige of hope that this is not going to happen to me. That someone is going to step in and bid this up and that I’m not going to end up puking my position to my colleagues who are buying low.

The fact that my stop will get hit if I leave it where it is is inevitable but also unavoidable. I can’t afford to give up any more money to hold this – not when I have no idea how low we will go when price breaks.

Then at 13.20, it happens. The tension snaps. The S&P hits 739 and drops 9 full handles instantly. I hear a sharp intake of breath on the floor. I’m one of the first filled at 738 – I thank heaven for small mercies.

A minute later the offers get hit and we reverse sharply.
  • #93,809
  • Apr 16, 2011 7:53am Apr 16, 2011 7:53am
Quoting the_wizard
The "flush" is where prices suddenly accelerates as the stop buy orders get hit. Sometimes these are stop orders, sometimes these are market orders. There is a flurry of activity up here as suddenly the onus is on the buyers to pay up and just accept whatever offer they can get to move out of the way of the freight train.

Notice in the image below, how 10m before the "flush" you see price just take out the highs and then pause. Be careful. There is no flush. Most traders are wiser than putting a stop a pip or two above those highs.

The...
Hi Wiz...

I faded (in demo) that level..but not blindly...I waited forthat reaction that you have marked in the chart...but I got stopped out (30 pips)...
I hope you will cover in details what you was expecting to happen at that level in order to fade it...
Market is like a puzzle, YOU have to fit the pieces!!
  • #93,810
  • Apr 16, 2011 8:01am Apr 16, 2011 8:01am
Final point since it's a beautiful day and here in the UK that's a rare thing :-)

My experience in prop taught me no magical techniques to make money.

But what it did teach me is that the professionals use many techniques that are not designed to simply follow price and make money but to seek entries that literally take advantage of the other traders in the market and take money from them.

The guy I sat next too (taking home $250,000 per week - yes you read that right) was one of the stars of the firm although not even the highest earner there. Once I saw him trying to get a long position in the DAX by deliberately selling into a support to try and get the stops so that he could get the retail to push price down. He would be then waiting with large orders on the bid to "flip" the market on them. Once the stops (to cover) were out of the way, that just left the breakout traders that were still short that he could then squeeze higher with his large amount of buying. Their puking would push the price even further in his direction. You might have heard the saying that the market is often carried by the blood of others.

He used to talk to his screens like a madman. I would see him sitting there and shouting stuff like "f*ck you - puke it, puke it".

Remember: The moves in the market are not created by "pins" or by "bullish engulfing candles" or "inside bars". Price action is part of a intricate cause and effect relationship. The other traders in the marketplace are the cause, the candlestick is the effect.

This is what you need to think about with PA and specifically reversal candles like pins. Do the pins that break levels rather than turn at them, work better? This is what your notes are for.
  • #93,811
  • Apr 16, 2011 8:02am Apr 16, 2011 8:02am
Hi guys, hope everybody is having a great weekend so far. It's sunny in Sweden (uh rare) and I'm sitting on my balcony brainstorming about a few things I would like to share and have some input on.

It's been my forth profitable month in a row trading the higher timeframes now (two of them ended up being breakeven) and summer holidays is coming up soon and I'm strongly considering to change my number of lots trading. Before this "success" or whatever I broke all the rules Jim had and he were certainly right I weren't even close to break-even. Then I started to demo higher tfs and then started out with a mini-account (1k USD) and now I'm considering to start trade with a standard account starting with 14K USD. Whats came up to my mind recently is mainly two things;

Pros and cons of trading spot vs futures? I honestly don't have a clue.

And secondly the most important question: Do my results justify me starting to daytrade? I want to day trade beacuse I haven't managed to secure a internship as a trader of any swedish bank (#Fail) but I have a few other offers but certainly nothing I wan't to do in the near future. So I thought why not spend more time exposing myself to the market trading my own money and gain wisdom? And ofcourse i still could continue to position trade the higher tf's but then I would have nothing to do the hole summer. I guess most people would be fine just chillin n cruzin around in the sun but I'm sure I will feel some angst for not doing anything productive with my days.

We all know that PA setups on lower tf's are less accurate and much more difficult to deal with, it might even break me after the summer (having a negative PnL) but I've been back testing manually and have come to the conclusion that one should and must move stops to break-even or take out half your position once in profit in order to survive on the lower tf's, thoughts?.

Or maybe this is just stupid thoughts thinking out loudely, maybe I should just stick to the higher tf's.

Do you guys ever been in the similar situation before? Like I'm wondering why I'm so drawn to start day-trade if I can make money as a position trader? I think it's probably beacuse one can leverage up more on the lower tf's right?
  • #93,812
  • Apr 16, 2011 8:03am Apr 16, 2011 8:03am
Let me see if I get this right.

In essence "fading" is going short once price goes above the highs to catch that reaction (when those that have placed sell orders at that exact level "puke" their positions).

if the above is correct when exactly do youshort? (at what point/level) if you are not shorting at the exact highs like everybody else?

This is exactly what I was getting at

Quoting Chris_B
Hi Wiz...

I hope you will cover in details what you was expecting to happen at that level in order to fade it...
at what point will they get puked (how much higher will price go)?
  • #93,813
  • Apr 16, 2011 8:05am Apr 16, 2011 8:05am
Quoting Chris_B
Hi Wiz...

I faded (in demo) that level..but not blindly...I waited forthat reaction that you have marked in the chart...but I got stopped out (30 pips)...
I hope you will cover in details what you was expecting to happen at that level in order to fade it...
If you fade these moves as a swing trader, you need to understand that you will likely have a low strike rate and a high R (providing you have the ability to hold and that's a whole different story).

It is similar to trend trading as it made fame in the 80's. Remember the turtles that made all the money under Richard Dennis? Same thing. Buying a 20 day high has a low strike rate but a high R.

If you are a short term trader you shouldn't have taken a loss there. I will talk about it in the webinar some more. If there are any other questions (vasmiza) I will answer them in that.

Catch you Sunday.
  • #93,814
  • Apr 16, 2011 9:50am Apr 16, 2011 9:50am
Quoting the_wizard
But what it did teach me is that the professionals use many techniques that are not designed to simply follow price and make money but to seek entries that literally take advantage of the other traders in the market and take money from them.
Just gonna snowball off some of this good stuff cause I enjoy it too and use these very simple concepts in my chart reading/teaching too.

Yep Some refer to a lot of this as stop hunting(order hunting) and it works in numerous ways like anything else. Meaning different techniques on the entry and of course exit. I think understanding the different market dynamics and market microstructure give anything you intend to do a better PURPOSE or context.

Quote
Remember: The moves in the market are not created by "pins" or by "bullish engulfing candles" or "inside bars". Price action is part of a intricate cause and effect relationship. The other traders in the marketplace are the cause, the candlestick is the effect.

This is what you need to think about with PA and specifically reversal candles like pins. Do the pins that break levels rather than turn at them, work better? This is what your notes are for.
Here is an example for people to use practically with regards to PA. I prefer PA. I do touch trade minimimally at this point but it's really no different then PA. It's about undersatnding the situation as opposed to early on when someone says "oooo a pinbar". Once you spend 6 months + learning this stuff you will realize the bar is a small part of the 'story' we are trying to create with them.

Here is the eur/gbp someone just asked me about so I will use it

At the end of the day if you don't have a context in which you take your trades your just shooting from the hip. So next time you go to take that pinbar, or outside bar, or touch trade, or breakout, or whatever it is you like to do think to yourself? WHY???

Keep it simple folks and learn a few good things and be picky and it just gets easier. Goes right back to that post of James I quoted the other day. If you aren't doing that you are probably over doing things(again speaking for the majority rather then the other few doing ok)

Best
Mike
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  • #93,815
  • Apr 16, 2011 9:55am Apr 16, 2011 9:55am
Quoting V1ruSok
Hi to all and thnx to all who help newbies in this thread.
Sorry for my english
I think this levels are great for our trading.
Thanks for comments, this is important for me.

P.S. Question to Ghous: Where can I read about inverted pinbars?
Your English is great V! Welcome

These levels sure are important. Ghous will see this an let you know I am sure

Best
Mike
  • #93,816
  • Apr 16, 2011 9:57am Apr 16, 2011 9:57am
Quoting NSGoh
Hi James16, seniors and all

The following attached pictures are of the trades which I have taken for this week. Please feel free to comment on them.

Thanks and regards
NS
Very cool NS, you are really nailing these IBs right now. Your truoble area was dead on the gbp/usd which was crucial to that one

  • #93,817
  • Apr 16, 2011 10:00am Apr 16, 2011 10:00am
Quoting geniusztc
on weekly chart ,price has broken the long term up-trend line,it seems a reversal. on daily chart ,a BOX, and price met the strong support line ,on h4 chart ,a pin bar, 4.3161 near the ema ,and 4.4451 are the major resistance .

so ,what shoud i do ? need your idea .
Hey G

My best advice is keep it simple. View each timeframe on it's own and decide on what areas you like to watch and watch it . I think your charts are fine. At the end of the day this is stuck in a large box, and right now there is not much to do. I prefer to watch what happens when we get outside the box. Especially the top side as it is trending up strongly

Take care
Mike
  • #93,818
  • Apr 16, 2011 10:02am Apr 16, 2011 10:02am
Quoting zinger
Hello everybody!
Also new, though ive been reading and so on for a while now.

Great thread, great people.

Reffering to this setup, i think there is quite nice confluence:
- RN 1.32
- fibo 61.8 + fibo 38.2
- nice pivot zone
- ema 150

Is this enough, i don't know, but maybe worth to see what's gonna happend.
Some experienced people might tell me why im wrong

Good luck all.
-Zinger-
hey Zinger

Welcome to the thread glad to see you posting

I think your chart is great. it is certainly a nice area to watch. Pinbar is also watching into this area so he will smile to see this. Now it is a waiting game. Price is moving strong so this area may hold as support or if we break through an area to look to hold as resistance.

Keep posting
Mike
  • #93,819
  • Apr 16, 2011 10:05am Apr 16, 2011 10:05am
Quoting evgrinder
Hello all,

Newcomer here....
Welcome Grinder+EV

Ha I can tell by your poker name. Man I feel for you online poker players now. I feel like an old man talking about my online days LONG AGO(I think like 7 years now) the landscape was so different, it was like the wild west and it was full of donkeys. I got real lucky I guess. I see Pstars and FT just got slammed pretty bad, so I hope it works out for you guys(eventually it will).

Hang around here a few months at least. We aren't going anywhere in the PF, were as active as ever, but it's better to familiarize yourself, there is TONS here that is gold here.

Hey anything is less screen time then a poker session (i don't miss those lolol)

Mike
  • #93,820
  • Apr 16, 2011 11:18am Apr 16, 2011 11:18am
weekly and daily charts of cck. approaching the 40 usd. good volume on the fridays daily with a strong close. it needs a 1.2% gain to reach the 40 usd which seems doable on monday. (check the nice pinbar occurring at the bottom, too).
comments appreciated -as always-.
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meine augen sind die sterne
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