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B.S. Trading with Kenneth Lee

  • #4,581
  • Edited 5:16pm Oct 12, 2012 11:47am | Edited 5:16pm
Quoting C-12
I want to share my trade management technique which is absolutely vital to success on the M1, and probably for other timeframes.

1. Place order with a 6 pip stop loss.
2. I take profits at 6 pips and move my stop to entry + spread (no questions).

Now once you've done this you are effectively in a free trade so you can be as creative as you want to be. You can either trail the stop or set a final TP.

The important thing here is steps 1 and 2.


Ah yes C-12... A thing of beauty! .. Sweet

If I may take some liberty here...

1) By waiting for a good base to form and then taking a set up, you put the odds in your favor
2) See the higher of the 2 demand level picked... A quality area > 4 candle sideways
3) Look at the move preceding the level picked... There was a good rise, then a drop...A small base form (4 candles) then another strong rise from that level. When picking levels this another way to spot them.
4) See how price reject this level with a solid pin bar. You clue to get in.. And C-12 did !!
5) We are trading out of a basing pattern back into our Supply area above. This may end up being the classic text book... Drop-Base-Rise pattern.

I also trade in this manner .. and in different time frames as well. When you see the pattern this well formed, the Supply Area ( in this case ) act like magnets... So I’ve started labeling these types of trades, in my trade log as “Magnet Trades “. Remember the magnets, that had a “ U ” shape to them. If price reaches back to the Supply level above, this will have that classic “ U “ shape a magnet.


Attached Image



Again… I do not suggest that those still learning this method attempt these types of trades. But once you have a good handle trading in the higher time frames ( 30M ) Per KL…Then maybe give this a go.. Learn the method first... There will be plenty of time for the exotic stuff down the road.

Good trading to all

TSD
  • #4,582
  • Oct 12, 2012 12:34pm Oct 12, 2012 12:34pm
C-12, why do you use 6 pips SL, not 7 or 5? Do you use it on all curriencies? Did you do some research?
You can control your emotions
  • #4,583
  • Oct 12, 2012 1:22pm Oct 12, 2012 1:22pm
Thank You.


Quoting C-12
I'll be honest and say the most important thing on this time frame is the quality of the level.

I do a top down analysis first thing in the morning for a general idea of trend but I'm really useless at making directional predictions.

I trade what I see by marking off my levels and then wait for the reaction to my level.

One thing I do stress about on the M1 is sharp trade management. Around 1/2 of my trades end up with a break even stop out, but it's fine since there are so many trades to take.
Thanks to Rocky!
  • #4,584
  • Oct 12, 2012 1:55pm Oct 12, 2012 1:55pm
Can you be more specif in stop and profit defining?
  • #4,585
  • Oct 12, 2012 2:55pm Oct 12, 2012 2:55pm
Quoting Sztukmistrz
C-12, why do you use 6 pips SL, not 7 or 5? Do you use it on all curriencies? Did you do some research?
I calculated on average my stops were between 3-6 pips so decided to use 6 as the default. I use it on all pairs.

The initial TP can vary depending on the location of the nearby M1 S&D level and the stop can often be reduced but never increased or moved. Keeps me picky and prevents me from holding onto losers.
  • #4,586
  • Oct 13, 2012 5:51pm Oct 13, 2012 5:51pm
I have received some requests regarding S/D Levels.
Let me say for the record... This is KL’s thread...My intention is to possibly bring some value to those still having difficulty.

KL, if I am over stepping here or incorrect please let me know..

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Here is a Daily chart of the CAD. We are in a down trend. How do we know that? There will be some question as price has made a HL ?? … BUT… Price has not taken out the previous swing High #1. So we are still in a down trend. Remember HH’s and HL’s.
Price made a level @ #1 Swing. Now this is not the best level to be sure but relative to the previous moves down this is: 1) Above average 2) Fresh 3) Price preceding this drop was sideways.
Note: If you look closer you will see a Drop-Base-Rise pattern preceding the #1 swing and subsequent move down. We had 4 candles moving sideways... Not a pull back. Additionally we broke support and, a return to this level would create a swap trade… Ala KL

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Here we have the 30M... IMHO ... This is as Classic as it gets.
#1 Market pivots down with good momentum in the direction of the trend.

#2 Price move SIDEWAYS for 7 candles. Remember in the smaller TF you can get a few more bars. The key is are they moving SIDEWAYS? This is not a pull back. Price then proceeds to drop again creating the Drop-Base-Drop pattern. This creates a great level ( the BASE in the Drop-Base-Drop ) to be looking for price to return (Supply)... Remember we are in a down trend... Odds Enhancer = Trading with the trend

#3 Price creates its base. Notice how price stayed away from our chosen Supply level. Almost a day and half.
Odds Enhancer = Price stayed away from our level for a good amount of time.

Perspective: See the Rise-Base-Rise preceding #1. The area just above the red line. One could argue this is more of a pull back then a basing pattern...But for the sake of argument let call it a base. Price rose rather quickly up, and then pivoted back down into this area.
a) Price did not spend any real time creating a base ( Rise-base-Drop)
b) We are in a down trend so trading this Demand ?? would be risky
c) Put the 2 together... I’ll pass

Additionally: Price took a bounce off a lower level (dark blue 30M and 60M counter trend level ). Price created a HL in the Base. This adds to the momentum going into our Supply Level.

#4 Price returns to our Supply level and rejects this level sharply.

Yes, I know... Its end of day. It’s the pattern that is important. They can happen at any time.

Hope this helps

Good trading to all
TSD
  • #4,587
  • Oct 13, 2012 6:33pm Oct 13, 2012 6:33pm
something to think about
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Good Trading To All ; Ken Lee
  • #4,588
  • Oct 13, 2012 7:03pm Oct 13, 2012 7:03pm
2
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Good Trading To All ; Ken Lee
  • #4,589
  • Oct 13, 2012 10:41pm Oct 13, 2012 10:41pm
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The week ahead AUD

Here is a 4HR view of what may be in store.
Looking left we see a 4HR Demand bounce on Sept 26 w/a 3280 low... We then had a move back in this area that went to 3270 low... In keeping with KL’s previous statements regarding a second revisit into an area, price will tend to move deeper into the level on it seconded revisit.


What makes this interesting are the swap levels we have. The upper swap level is the Daily and the lower is the 4HR. interesting that the two levels are presenting themselves with a fresh Daily and 4Hr levels. A confluence on levels is always a good thing.

Price broke through and did not come back to confirm this swap level. Price just continued down to the Daily Demand level in blue. That was 3’d revisit and it went deeper into the level from the previous 2. If you look on the Daily chart you will notice that the first revisit had a very strong bounce long. The second was not quite as strong but yet good. The third is very weak. (Where we are now) This tells us that this level is very weak. If we are in a trade short heading toward this level we might want to hang in there due to the potential weakness in this level...A break of this level could produce some definite extra pipage. 9700 would be the next Daily Demand level... The odds favor the possibility… Look at the weekly, price is contracting. Will see??

Trend...We are in a downtrend overall. But looking at the 4HR we have HH’s and HL’s and we have taken out the most recent swing high on the 4HR. mmmm???

So here’s the question: Do we have a Daily down trend and a 4HR up trend??

Answer: No … We have a Daily downtrend and a 4Hr downtrend. Reason … The HH’s and HL’s forming are forming inside the base from the previous move down from the 3595 area /4HR Supply zone above. We have a forming Drop-Base-Rise pattern. The 4Hr is resting inside the Daily (green inside blue). If you take this 4Hr down to a 30M level you will see virtually the same Supply level. This is the fine tuning KL speaks about and what you want to achieve.
The interesting part about this chart is the Swap Levels contained. If price can get far enough up into the swap levels we may see a good move short … and... We are trading with the trend! = Odds Enhancer
We also see that price has been away from this level for quite some time. = Odds Enhancer

Will it get all the way back up to our Supply Level…Will see?? We will need to monitor price as it moves into our supply area.

Generally if we get a strong move into a level (look at the previous move into the Demand on 9/26 inside the swap level) this is what we are looking for. Price came in good and strong.

For all you who are considering a Trading Log but, have not started one, this is the kind of information that you would want to put inside your log. I do. Then when the move happens, for or against me, if I take the trade or not, I update accordingly. Overtime you begin to see patterns in the market, your assessment of the market and most importantly, yourself. Are you correct or are you incorrect. Either way, this will make you a better trader in the long run. Do not be afraid of being wrong. This is how we learn. How we become better traders. This is why I am willing to make my ideas public. It’s not about being right, it’s about being PROFITABLE. There is a BIG difference!

Good trading to all

TSD
  • #4,590
  • Oct 13, 2012 10:57pm Oct 13, 2012 10:57pm
Thanks TSD, great explanation. Thank you for taking some time to help us understand

Quoting TraderinSD
I have received some requests regarding S/D Levels.
Let me say for the record... This is KL’s thread...My intention is to possibly bring some value to those still having difficulty.

KL, if I am over stepping here or incorrect please let me know..

Attachment


[font=Calibri][size=3]Here is a Daily chart of the CAD. We are in a down trend. How do we know that? There will be some question as price has made...
  • #4,591
  • Oct 14, 2012 12:11am Oct 14, 2012 12:11am
Quoting ax3l
Thanks TSD, great explanation. Thank you for taking some time to help us understand
Your welcome

  • #4,592
  • Oct 14, 2012 3:53am Oct 14, 2012 3:53am
Quoting TraderinSD
Your welcome

well done traserinSD
  • #4,593
  • Oct 14, 2012 10:51am Oct 14, 2012 10:51am
Quoting TraderinSD
Attachment

The week ahead AUD
TSD
Teaching is the half of learning.
Confucius
  • #4,594
  • Oct 14, 2012 9:02pm Oct 14, 2012 9:02pm
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Took this short on the second revist into the 30M Supply level. Notice how price moved deeper into the level on second revisit. KL speaks to this..
Odds Enhancer = Price approached this area in fairly strong fashion. ..then fizzled at the last minute.
Odds Enhancer = As we are trading with the major trend.

We took the short on a MO.

Given this is the CAD and we are in the Asain session a 2:1 R/R is more than enough..This is an agressive trade Will see?

Good trading to all

TSD
  • #4,595
  • Oct 14, 2012 11:13pm Oct 14, 2012 11:13pm
I usually pick things up easily but I have read 90% of this thread from beginning including the pdf and cannot for the life of me work out where and when to form these areas of supply and demand.

If I follow what I think I understand then I literally see them everywhere. Is this right?

https://lh6.googleusercontent.com/-G...21015GU-SB.jpg
Winners add to winning trades!
  • #4,596
  • Oct 15, 2012 1:53am Oct 15, 2012 1:53am
Hi Marshalmax,

It appears to me that you're ignoring the odds enhancers which explains the amount of levels you're finding. You're essentially marking down every single turn in price as a supply or demand level.

For 3-4 of those levels the first thing to note is there's only been 1 candle of the opposite colour in the base. The very first one near the top of the trend for example, the ideal base has between 2-4 candles in it according to Sam and that's how I trade it as well.

Secondly, I can see that nearly all of the levels you've drawn in around the middle of the chart (where it's all a bit choppy) fail on the risk/reward odds enhancer. To be a valid level the market needs to have moved AT LEAST 3 times the width of the base.

Finally, the key factor that transformed my trading with this method when I first started out was when I started to learn and apply higher timeframe analysis to it. That means noting the bigger levels as "TraderinSD" did a little earlier on in the thread and taking note of the bigger picture. Just aimlessly taking every single potential level on your chosen timeframe isn't the way to trade this at all.

Where is each one of those levels in relation to the trend? Where abouts on the price curve are you? These are the kind of things you need to start to understand to take the strongest levels.

Hope that's of some help. I would advise you to do what I did and write out a detailed description of each odds enhancer so that you can work through it step by step for each level that you see.
  • #4,597
  • Oct 15, 2012 4:50am Oct 15, 2012 4:50am
Morning guys. Don't normally trade a Monday but here's a quick low risk trade I took while getting ready for work.

I took 6 pips off both positions and auto moved my stops to BE + spread.

Do I want a runner? Sure.

Do I get upset if it now stops me out for BE? Of course not!
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  • #4,598
  • Oct 15, 2012 5:17am Oct 15, 2012 5:17am
Quoting C-12
Do I want a runner? Sure.
With the bigger picture to back you up, it often happens.

So I've now locked in a further 8 pips and will let the last position run to target or get stopped out for BE..
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  • #4,599
  • Oct 15, 2012 5:28am Oct 15, 2012 5:28am
Neat trade TSD!! A bit of stalling at this level but london open flushed it down.

The supply was hit late friday session, wasn't looking for a short at this level since it has been touched once before.

Not really getting what you mentioned by price moving deeper into the zone on this 2nd visit, is it sort of a false breakout of the friday high?

Thanks to C-12 for this amazing indicator, sure make drawing the chart a lot more convenient
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  • #4,600
  • Oct 15, 2012 5:47am Oct 15, 2012 5:47am
Hey marshalmax,

hope my chart might help you a little.

There are a few factors to take note of, as mentioned by CAJ1986. Takes screen time and looking at the success and failure of your defined levels to understand how the odds work best.




Quoting marshalmax
I usually pick things up easily but I have read 90% of this thread from beginning including the pdf and cannot for the life of me work out where and when to form these areas of supply and demand.

If I follow what I think I understand then I literally see them everywhere. Is this right?

https://lh6.googleusercontent.com/-G...21015GU-SB.jpg
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