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  • #1,061
  • Feb 27, 2012 12:13pm Feb 27, 2012 12:13pm
Finally, I closed out the UJ long that I'd had open since couple weeks ago following the breakout, daily BUOB and FTB to this level.

Entry was @ 78.20, SL @ 77.95, exited 50% @ 78.44 and exited the remaining today when price closed below a support level @ 80.87.

Total gained +5.82R
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  • #1,062
  • Feb 27, 2012 2:19pm Feb 27, 2012 2:19pm
The last two pages of this thread are gold. Thank you very much Mark, the value of this information is nearly impossible to measure.
  • #1,063
  • Edited 2:48pm Feb 27, 2012 2:37pm | Edited 2:48pm
Quoting unlv_tj
The last two pages of this thread are gold. Thank you very much Mark, the value of this information is nearly impossible to measure.
True.no words to describe.
great work LJ.

this post is just gold:


Quote
The common theme that should stand out is that I manage my trades by looking at pure price action i.e. asking myself what does price have to do to tell me a trade setup is now looking unlikely to work out and acting accordingly.

I don't base my decisions on the % I have at risk on the trade or the absolute value I have at stake.

I don't base my decision on an emotional response that tells me to cut the trade cos it's not moving my way.

I don't let trades hit their SL unnecessarily or in hope that price might still turn round.

This is how professional price action traders look to manage their trades. When you realise that a MAJOR part of being a successful trader is having the tools and mental strength to manage trades EFFICIENTLY (cutting trades early IF price is telling you to do so and letting winners run IF price is telling you to do so) with logic and not mechanically, you'll understand that entries are not where the real edge is in trading. If you can realise this then you'll know that being picky and trying to focus on those A+++ trades is a waste of time and is a big mistake amateur's make.
  • #1,064
  • Feb 27, 2012 5:00pm Feb 27, 2012 5:00pm
Thanks Guys.

I'm finding that the people that come to me for mentoring off late have the following characteristics about their trading:

1. Their aim is to be very picky with entries.

They just get over obsessed with finding the 1-2 great trade setups per week.

Of course what does trading like this do - it brings high pressure to these trades as (a) you don't wanna take a loss when you know the next setup might not be for a while and (b) if you did take a loss last time you sure as hell don't wanna take a loss this time. You end up just getting so obsessed with making sure you are waiting for the great setup and come away with a winner that the likelihood of making a poor trade management decision is extremely high. It's so hard to trade in a relaxed manner if you so focussed on the outcome of 1-2 trades - where's the fun trading like that.

As I've mentioned before, anyone who is a professional trader knows that exits are FAR more important than entries. Also it doesn't say much for your ability as a price action trader if you can only find 1-2 tradable setups per week across numerous FX pairs - I mean you should be able to find multiple setups most days to make money if you really understand price action.

2. They trade mechanically rather than based on logic

Retail traders seem to have a knack of putting SL's, Entries and TP's at levels that are of no significance to the market. This is especially true when trading candlestick bar patterns. Entries at bar breaks, SL at bar lows, move to BE / take profit at x%R - it's complete and utter crap, no real trader trades like that.

It's making uninformed decisions like this that makes traders part of the retail herd that the big players take advantage of day after day.

I've shared my 3 losing trades from last week,

Where was my entry - on every one my entry was just after I had the 'signal' that a valid setup was present, why do I want to wait for bar breaks, if you have the sign that price is heading in a certain direction what additional information does a bar break tell you - absolutely nothing!

Where were my SL's placed - at levels where in all probability if hit the chance of the trade working out has changed from one where the probability is in my favour to one where it is not i.e. a trade I clearly no longer wish to be in. Thus my SL is at a level / price of significant not some arbitrary level that is meaningless to the market.

How do I manage my trades - I watch what price is telling me, if it moves in a way that tells me the chance of the trade working out is now particularly low then I cut the trade e.g. like for the EG trade where price closed above the S/R level.

Note that this isn't just that price is not moving my way or that I'm not prepared to accept a full loss - you have to accept you will suffer losses - I try to cut my losses early and on average I do, but at times there is no information that tells me the trade isn't going to work out other than my SL being hit, if that happens so be it.

I've lost count how many times I've heard people say I won't accept a full loss on this trade or cos the trade is worth $x I don't accept full losses - if you can't see the blatant hole in this logic then you seriously should consider quitting trading.
  • #1,065
  • Feb 27, 2012 5:08pm Feb 27, 2012 5:08pm
Quoting lovejoy80
We had a daily close above the previous daily open/close high.

In terms of a breakout, I'm looking for a good 4HR or Daily close above either side of the range now - of course the lack of space to the FLR to the upside would have to be taken into consideration on any breakout long.
Update on NCAD.

Price broke out long and as I expected might happen it hit the next resistance level in doing so. I don't like it when FTB's form having hit resistance levels in the process of forming the breakout. It doesn't mean it's not a tradable setup, it just means I take this into account when evaluating the setup and the % I want to risk. (Note that the safest place for the SL would be below the lower S/R area just below the breakout S/R - as price could feasibly test both before shooting on up to the FLR)
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  • #1,066
  • Feb 27, 2012 5:12pm Feb 27, 2012 5:12pm
Quoting AvanishDemo
it was a disappointing week.
i took a lil more loss than expected as i was waiting for price to reverse despite having worrisome drawdowns..Probability was good so i thought these strong moves may give reverse as friday is usually profit taking.

Risk was 2.8% set and cut out for 1.75%.(ofcourse its demo.)
1.75 is too mch for me.i had chance to cut it out for 1% but i kept 'hoping' and screwed it up.sometimes u never know which is the best time and place to cut out the trade
.
Even on Cadchf trade when the h4 bar closed below 0.90 i still...
Where was your SL on ECAD BTW?

For me price would have had to close above the higher level marked for a true breakout to have occurred which it couldn't.

My SL would have been above 1.35 based on the daily bar high on 20.01.11, though I would have likely cut the trade ahead of the weekend.
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  • #1,067
  • Feb 27, 2012 6:44pm Feb 27, 2012 6:44pm
Quoting lovejoy80
Thanks Guys.

I'm finding that the people that come to me for mentoring off late have the following characteristics about their trading:

1. Their aim is to be very picky with entries.

They just get over obsessed with finding the 1-2 great trade setups per week.

Of course what does trading like this do - it brings high pressure to these trades as (a) you don't wanna take a loss when you know the next setup might not be for a while and (b) if you did take a loss last time you sure as hell don't wanna take a loss this time. You end...
Hi LJ,

Thanks for sharing.

Your material is certainly refreshing.
There're certain points you touch on such as the disadvantages of being extra picky compounded by trades with low R:R.
It lowers morale and depresses the trading mind when a good stretch of winnings are eroded by a full bar loss.
Placing SLs at bar high or lows wo understanding the micro SRs too do not make any sense.
Your teachings have certainly allowed me to manage the trade in real time and improve on R:R
I'm fully compelled to agree with this style of trading as it's been certainly a stumbling block after taking in the rudimentary styles from j16.

Nevertheless i do admit that j16 is a good foundation course before anyone embarks on this advanced technique of yours.

Good stuff.

Thanks for sharing
  • #1,068
  • Edited 4:04am Feb 28, 2012 2:54am | Edited 4:04am
Quoting lovejoy80
Where was your SL on ECAD BTW?

For me price would have had to close above the higher level marked for a true breakout to have occurred which it couldn't.

My SL would have been above 1.35 based on the daily bar high on 20.01.11, though I would have likely cut the trade ahead of the weekend.
Hey LJ,im not worried abt last week losses,i learnt something out of it and from ur posts too


yep,my SL ws js above 1.35..

entry ws at 1.3495.i cut it out for 45 pip loss.as there were no signs of reversal and since it ws weekend.

but yeah as we can see price culd not CA 1.3435( lowest close of support as shown by ur chart pink line)...so we can expect fr price to retrace back to 1.34 monday morning n cut it out for small loss immediately..not sure if u prefer such way to manage trades..but this way to manage trade can be risky imo sometimes.
keeping a journal and working on it what suits best.
sry cannot post chart .

btw great insights on hw retail n prof. traders trade...

so far im looking @ Dow,if it CA pshycological 13000 on Daily chart..
  • #1,069
  • Feb 28, 2012 5:06am Feb 28, 2012 5:06am
Quoting AvanishDemo
Hey LJ,im not worried abt last week losses,i learnt something out of it and from ur posts too


yep,my SL ws js above 1.35..

entry ws at 1.3495.i cut it out for 45 pip loss.as there were no signs of reversal and since it ws weekend.

but yeah as we can see price culd not CA 1.3435( lowest close of support as shown by ur chart pink line)...so we can expect fr price to retrace back to 1.34 monday morning n cut it out for small loss immediately..not sure if u prefer such way to manage trades..but this way to manage trade can be risky imo...
I would have cut ECAD at some point before the weekend - I generally don't like holding trades open over the weekend unless I'm in a longer term trade because it creates unnecessary risks.

Yes, the 13k level is of course a psychological level. EP has closed above it's previous range high on LTF's and now has the May 2011 high in it's sigh, how price closes on the daily TF should give us some good clues as to the next likely direction.

At the moment (as per my tweet) price tried to break higher on EP but couldn't close above the May2011 high on LTF's this is a bearish sign...something I'm watching carefully and I've shorted AU partly because of this (NY session will be key as lately any European weakness has been quickly reversed).
  • #1,070
  • Feb 28, 2012 9:15am Feb 28, 2012 9:15am
Can anyone help me understand what does FLR, FLR, and FTB means? Thank you very much!
  • #1,071
  • Feb 28, 2012 10:03am Feb 28, 2012 10:03am
Quoting kenkoo
Can anyone help me understand what does FLR, FLR, and FTB means? Thank you very much!
FLR - First Line of Resistance
FLS - First Line of Support
FTB - First Time Back (i.e. having broken a resistance level the first time back to test as support).
  • #1,072
  • Feb 28, 2012 10:23am Feb 28, 2012 10:23am
Hey LJ,just a personal Q,hope u dont mind

how long it took u to be a succesfull full time trader?just curious.

avoiding posting for a while.will jst watch charts.
  • #1,073
  • Feb 28, 2012 10:52am Feb 28, 2012 10:52am
Quoting AvanishDemo
Hey LJ,just a personal Q,hope u dont mind

how long it took u to be a succesfull full time trader?just curious.

avoiding posting for a while.will jst watch charts.
I was just about to reply to your previous post...

I don't have an exact time-line, but my learning process went like this:

1. Beginners luck
2. Search for the Holy Grail.
3. Flip from system (method) to system until having losing trades.
4. Stop, reflect, realise that I need to find methods that suit my personality, trading goals and that I need to understand the psychology of gambling.
5. Stumble across J16 - have some success - still working on mindset issues.
6. Fully understand the psychology of gambling and how to control / minimise emotional affects of gambling / trading.
7. Realise that there must be a lot more to price action trading than found on public forums - go searching elsewhere, spend some time with professional traders - the penny drops as to what true price action trading is about and how professional traders use price action.
8. Learn to put the theory behind price action into a tradable system - I'm now making good returns for the first time.
9. Broaden my knowledge to include basic fundamentals, chart patterns, inter-market correlations / risk sentiment - learn how to incorporate this into my trading - I'm now making double digit returns month after month.

I'd say I spend 2 years on 1-4, 1 year on 5-6 and 1 year on 7-9.

The two hardest things when learning to trade IMO are:

1. Psychology - my view is that psychology in relation to gambling / trading is actually very simple, but it is often over-complicated in books on the subject. It all boils down to Greed and Fear - every emotion you experience in trading is a branch of this.

You need to UNDERSTAND how emotions can affect / impact your trading decisions and then work out what emotions effect you and how you can go about creating a 'process' / 'environment' that helps to minimise / eliminate their affect as far as possible.

2. Trading Method - the hardest part is the realisation that not all methods will suit everyone. For example I could not trade a method that produced a win rate of circa 40% but had a very good %R - even it had a positive expectancy as a system it just wouldn't suit my personality. It was when I realised what type of method would suit me that I then went and learned the knowledge I needed to devise / tailor a series of methods to suit my personality.

Once you are fully satisfied with a series of methods and have full confidence in them then you are there.

How long this process takes vary from person to person. I've seen people pick up methods and become consistently profitable within a few months, some people never succeed and others it takes a few years. As you can see for me, most of my time was wasted on pursuing pointless goals.
  • #1,074
  • Feb 28, 2012 11:07am Feb 28, 2012 11:07am
Quoting miracle16
Hi LJ,

Thanks for sharing.

Your material is certainly refreshing.
There're certain points you touch on such as the disadvantages of being extra picky compounded by trades with low R:R.
It lowers morale and depresses the trading mind when a good stretch of winnings are eroded by a full bar loss.
Placing SLs at bar high or lows wo understanding the micro SRs too do not make any sense.
Your teachings have certainly allowed me to manage the trade in real time and improve on R:R
I'm fully compelled to agree with this style of trading as it's...
I don't know any full time trader i.e. someone who doesn't just trade the daily TF's who has a main focus on being picky. They have a threshold on what constitutes an acceptable trade from a probability perspective and they vary their risk accordingly.

As you stated being picky and taking trades with low %R is a poor combination - there are practical reasons why this is so (you stated one) and their are psychological reasons too.

IMO people learn price action trading in the wrong order. I find that people that have zero price action knowledge become better traders more quickly than people who have read tons of stuff on public forums - why, because there seems to be this big theme that price action trading is centred around candlestick bar patterns on public forums and people come away without the ability to think logically about price and without the ability to understand what is really happening at an S/R in terms of order-flow and market dynamics - this is what price action is really about, other things like chart patterns, bar patterns are secondary to this and most are actually a result of a result of price action and not price action itself (but for some reason get tagged with the same brush).

There is a lot of arrogance on public forums that you don't find in the real trading world, retail traders get very protective over their trading methods and don't like to accept new ideas - hence why you find a severe lack of knowledge about fundamentals, risk sentiment and market dynamics at S/R's on public forums - if people don't understand it they just dismiss it as unnecessary or aggressive.

With regards J16, the truth is I learnt stuff that helped me from there but I also learnt stuff that set me back, they are good for helping beginners, but I think there is lots missing from the price action picture (note: this is my unbiased view!).

Your comment about 'advanced' techniques on this thread sums that up - people outside of public forums would not consider most of these methods advanced (yeah risk sentiment and fundamentals are more advanced for most) in that trading at S/R's is the bread and butter of price action trading for professionals - it's what they learn first before anything else when learning price action - but there is this stigma that trading straight off S/R's is aggressive / advanced compared to waiting for the bar confirmation - this really is a misconception that is only found amongst retail traders and on public forums.
  • #1,075
  • Feb 29, 2012 12:28am Feb 29, 2012 12:28am
Hello LJ,
I'm impressed with your time management skills to be about to focus on multiple currency pairs, timeframes and news event.

Do you mind sharing how you prepare yourself before the start of the trading week? What will you be doing before you enter any trade, during a trade, and after a trade? In short, what are the key activities taking place in a typical trading week from analyzing, planning to execution?

Appreciate your time
Thank you!!
  • #1,076
  • Feb 29, 2012 12:42am Feb 29, 2012 12:42am
Hi LJ,

first and foremost tks for the invaluable insights.
Always keeping an open mind to new concepts.

Also need some comments on CAD/CHF.
Some posts back we were talking abt 0.9 lvl.
Price broke though and was looking for a short on FTB at 0.9
Thought bar 1 was the breakout but price pulled back above 0.901(my SL) for a loss.

Toggled to H4 bar and i see a BEOB off the resistance again.
Was lookin at entering at 0.9 again with SL above that bar high 0.9035 (H1 resistance).

Need your input on how you would manage this trade or even cnsider taking it in the first place.

Tks
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  • #1,077
  • Feb 29, 2012 2:57am Feb 29, 2012 2:57am
Quoting miracle16
Hi LJ,

first and foremost tks for the invaluable insights.
Always keeping an open mind to new concepts.

Also need some comments on CAD/CHF.
Some posts back we were talking abt 0.9 lvl.
Price broke though and was looking for a short on FTB at 0.9
Thought bar 1 was the breakout but price pulled back above 0.901(my SL) for a loss.

Toggled to H4 bar and i see a BEOB off the resistance again.
Was lookin at entering at 0.9 again with SL above that bar high 0.9035 (H1 resistance).

Need your input on how you would manage this trade or even...
A few points:

1. It is an exception that I trade intraday FTB's on the crosses - they are less liquid and less reliable in terms of the order flow at these S/R areas - this is from experience.

2. If I'm trading an FTB I'm looking for a relatively quick reaction - what we want at an FTB is for there to be a) a rush into our entry area and b) for this relatively high momentum rush to be quickly stalled and reversed - that's ideally what we want to see in a textbook FTB.

Also, entries - I'm looking to trade the touch of the area, I'm not waiting for a breakout or a candlestick bar - the entry is based on the expected order-flow that will occur there.

So when this doesn't happen I'd be starting to get more cautious about whether the setup will work out, why, because the order flow I wanted is clearly not present. Thus if price is hanging around our S/R area for a number of bars then then I'd be thinking of reducing risk.

3. Candlestick bars - they are essentially a measure of sentiment over a set time period, of course bars like BEOB are in indication of bearish sentiment and a sign that bearish sentiment is more likely to continue.

However, I rarely look at these types of bars outside of what I deem to be the main liquid trading hours - and that for me is from 8am to 4pm UK time (i.e. the first bar I would consider would be a 1HR bar formed at 9am).

This bar you highlighted looks to have formed outside of this timeframe and thus it would not be one that I would consider.

Another thing I bear in mind when looking at bar patterns is going from one trading session to another - if I have a 1HR BUOB just before NY open then I would be wary of this, why, because you've got a whole load of new traders coming online which could have the opposite sentiment to the 'group' of traders that formed the BUOB.

With regards the 0.900 area, I've actually scrubbed this area now as an S/R to watch in terms of FTB's - Price didn't respect the area on the way down i.e. as support and barely respected it on the way back up i.e. as resistance - in my mind this says this area is now washed out and rather weak.
  • #1,078
  • Feb 29, 2012 3:07am Feb 29, 2012 3:07am
Quoting kenkoo
Hello LJ,
I'm impressed with your time management skills to be about to focus on multiple currency pairs, timeframes and news event.

Do you mind sharing how you prepare yourself before the start of the trading week? What will you be doing before you enter any trade, during a trade, and after a trade? In short, what are the key activities taking place in a typical trading week from analyzing, planning to execution?

Appreciate your time
Thank you!!
My trading day starts the night before.

1. Each night @ I look over all my daily charts (starting at around 9.30pm UK time).

I'm looking at:

- What has happened in the broader market.
- Actual setups that I'm looking to trade in the day(s) ahead.
- Areas of interest.

I annotate anything I've found and add them to the Dropbox for the Trading Room group to be able to view.

2. For any setups I determine my entry price, stop loss, FLR/S and trade management plan and write it down. I set a price alert in MT4 for when price gets near this area.

3. In the morning before London open I then go over the Asia session moves and news and re-assess the areas and setups I've marked the night before. I make a note of the main news events for the day ahead and then it's a case of watching and waiting.
  • #1,079
  • Feb 29, 2012 6:05am Feb 29, 2012 6:05am
Hi LJ,

Thanks for explaining the rationale.

Different points you point out do make sense especially w respect to order flow.

Another trade i took on demo.
This turned out well.
Beginner's luck? No idea.
I'll post and await your comments.

Was eyeing the 4hr channel descending trendline and 1.08 levels.
Bar closed well above and H1 showed 1.08 had turned into support imo.

Understood the FLR was pretty close at 1.0843 and took all off the table.
Maybe i should have left a small position running.

Other question is where should i've placed the SL.
I actually hid it just below 1.078 at 1.0775. Saw a mini support level on 4hr chart there.

Thanks for commenting.
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  • #1,080
  • Feb 29, 2012 7:21am Feb 29, 2012 7:21am
Quoting lovejoy80
I was just about to reply to your previous post...
.
the reason i deleted that post,bcos it was wrong timing,i culd see price retraced back at my entry level quickly and i entered the trade again ,
earlier i thought it is unlikely to come back to my entry.

i was bearish on xxx/Cad.
EurCad false breakout of 1.34,GbpCad daily Pin,UsdCad Monday Pin CB parity,NzdCad meeting Resistance @ 0.84,AudCad also meeting its top 1.0765/70 range

TP @ 1.5710
SL above the bar high
EDIT: just put @ BE now.

i dont trade this pair mch thats primarily bcos its too choppy..but by looking @ the overall picture i found it a decent trade
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