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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

  • #126,981
  • Jul 28, 2013 1:45pm Jul 28, 2013 1:45pm
Quoting mbqb11
{quote} It's always hard to narrow trading down to percentages in such a general way comes down to method. While I think what Z's point is that each individual trade while it should be based on an edge we know we have historically once you click buy/sell we Never know for 100% sure where price is going to do. Instead what we know is that based on our methods in the LONG run we have an edge so we trade and go with that. It's entirely possible to have 90% + winning trades and be both a winning or a losing trader. Too many people wrongly focus on both...
Hi Mike,

The reason I was thinking about R:R and win rates is because if a trader plays a method for a lot of trades (or is backtesting his method for a lot of trades) he has a win rate and an average RR ratio. He can use these numbers to increase his risk with some formulas like the Kelly criterion (or use fractions of Kelly) or the risk of ruin calculator if he wants to use a fixed amount every time. What I noticed is if a trader wants to risk a bigger % it's better to have a higher win rate (even if he has a lower RR) than a lower winrate. Of course you must have a big sample to estimate your probability to win and your average RR.
  • #126,982
  • Jul 28, 2013 2:34pm Jul 28, 2013 2:34pm
Quoting str8
{quote} Hi Mike, The reason I was thinking about R:R and win rates is because if a trader plays a method for a lot of trades (or is backtesting his method for a lot of trades) he has a win rate and an average RR ratio. He can use these numbers to increase his risk with some formulas like the Kelly criterion (or use fractions of Kelly) or the risk of ruin calculator if he wants to use a fixed amount every time. What I noticed is if a trader wants to risk a bigger % it's better to have a higher win rate (even if he has a lower RR) than a lower winrate....
Hey Str8


Yep on paper you are correct about all that. But again don't get too sidetracked about looking to already have numbers to increase your risk and maximize profits/ minimize drawdowns. once you are profitable doing these things makes more sense, but in the mean time I always see people get a bit side tracked and distracted(been there) by such things before even being consistently profitable.

So all good stuff to think about just keep it in focus


Best
Mike
  • #126,983
  • Jul 28, 2013 8:55pm Jul 28, 2013 8:55pm
Quoting Winston Reed
{quote} Nice charts Swede. Just shows that you can't trade solely on method nor on R:R. You need both.

What I was alluding to in my post was the importance of finding trades with potential...for eg. the trade attached had all the elements needed to reach 3 to 1 or even better ratio of risk to reward.

This was a touch trade with potential for several reasons.....the BRN, the tested resistance level, 68.5 retrace (from May high) and the box. The PPZ was located 300 pips south, the FTA 500 pips south and what appeared to be an overbought area imho. So it was not a perfect set up...but one that had small risk (50 pips) with large potential...a trade that could cancel out any of my recent 1 to 1 where stops could have been hit.

So at this point 200 pips are in the account if my stop where to be hit now.....or I could simply close with a +300 pip gain tonight. (I think I will hold for now and see how Asia finishes)
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  • #126,984
  • Jul 28, 2013 9:41pm Jul 28, 2013 9:41pm
Quoting Swede
{quote} What I was alluding to in my post was the importance of finding trades with potential...for eg. the trade attached had all the elements needed to reach 3 to 1 or even better ratio of risk to reward. This was a touch trade with potential for several reasons.....the BRN, the tested resistance level, 68.5 retrace (from May high) and the box. The PPZ was located 300 pips south, the FTA 500 pips south and what appeared to be an overbought area imho. So it was not a perfect set up...but one that had small risk (50 pips) with large potential...a...

  • #126,985
  • Jul 28, 2013 10:59pm Jul 28, 2013 10:59pm
Quoting str8
{quote} Hi Mike, The reason I was thinking about R:R and win rates is because if a trader plays a method for a lot of trades (or is backtesting his method for a lot of trades) he has a win rate and an average RR ratio. He can use these numbers to increase his risk with some formulas like the Kelly criterion (or use fractions of Kelly) or the risk of ruin calculator if he wants to use a fixed amount every time. What I noticed is if a trader wants to risk a bigger % it's better to have a higher win rate (even if he has a lower RR) than a lower winrate....

Str8,

What Mike has said is very sensible and practical. I don't like this kelly criterion , because it increases my risk. We know that every next trade has a probability of 50%, imagine if i risk 20% or 20%, what if i lose? Now i am down 20-30%. My next consecutive trades will have to cover up the losses and make more to get in green. That is way to dangerous to trade like that and stress that comes along with it.

Simply work your risk percentages from 0.1 to 3% and just stop. you don't need to go beyond that. Max 3% on a trade should grow your account, also don't forget psychology comes in to play when you have risked higher and after you have to manage yourself and not just the trade and make sure you don't fuck it up. Been there done that lol.

Just my opinion.
  • #126,986
  • Jul 28, 2013 11:04pm Jul 28, 2013 11:04pm
What does anyone think about this pinbar as a continuation of trend on eur nzd its also touching a 50 ema.
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  • #126,987
  • Jul 29, 2013 12:22am Jul 29, 2013 12:22am
NEW CHART EUR-USD
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  • #126,988
  • Jul 29, 2013 2:56am Jul 29, 2013 2:56am
New chart eur-jpy
possible turning point 127.50
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  • #126,989
  • Jul 29, 2013 2:59am Jul 29, 2013 2:59am
Quoting Fx-chriz
What does anyone think about this pinbar as a continuation of trend on eur nzd its also touching a 50 ema. {image}
I dont think anybody trades pinbars as continuation signal, they are meant to be reversals...
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  • #126,990
  • Jul 29, 2013 3:47am Jul 29, 2013 3:47am
Quoting Fx-chriz
What does anyone think about this pinbar as a continuation of trend on eur nzd its also touching a 50 ema. {image}
Hi, in my opinion this bar was not worth playing. Idealy we want to see these bars at swing highs/lows, playing them as a continuation is more tricky (I myself would play this bar as a continuation bar only as a part of breakout play with some good story). The bar itself got never trigered so technically it´s not a true pin bar but if it did your first trouble area (or FTA) would be those highs on the left. So I think that this was just pin bar looking bar in traffic. Just my 2 cenths though

Mav
  • #126,991
  • Jul 29, 2013 3:54am Jul 29, 2013 3:54am
Quoting Fx-chriz
What does anyone think about this pinbar as a continuation of trend on eur nzd its also touching a 50 ema. {image}
Hey fx-chirz
It is not good pin bar
It is good pin bar in my chart
  • #126,992
  • Jul 29, 2013 3:54am Jul 29, 2013 3:54am
Pin bar
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  • #126,993
  • Jul 29, 2013 4:06am Jul 29, 2013 4:06am
I know what a good pinbar is, thanks anyway. I prefer BEOBs on retractments though they tend to trade better for me. Like the usd huf chart I posted on the page before.
  • #126,994
  • Jul 29, 2013 4:38am Jul 29, 2013 4:38am
Quoting zamfir
{quote} Str8, What Mike has said is very sensible and practical. I don't like this kelly criterion , because it increases my risk. We know that every next trade has a probability of 50%, imagine if i risk 20% or 20%, what if i lose? Now i am down 20-30%. My next consecutive trades will have to cover up the losses and make more to get in green. That is way to dangerous to trade like that and stress that comes along with it. Simply work your risk percentages from 0.1 to 3% and just stop. you don't need to go beyond that. Max 3% on a trade should grow...
Definitely Kelly criterion is not for everyone. If you're risk aversed probably you should not use it. I would never use the % from the formula, only fractions of it because it is also too agressive for me. With kelly criterion your risk of losing all your money is almost 0 but your risk of losing a lot of your money is very high. However you could also double or triple your account quickly (but I wouldn't use such big risk).

I personally don't think too much about psychology, I'm more a math person. For example I never take partial profits because I wasn't able to find a single situation in which taking partial profits has more expectation than a strategy in which you take full profit. I feel with small % it will take you a long time to win something substantially even if you're a good trader if you have a small account. And if it's possible to risk bigger and still have risk of ruin close to 0, why not? If you want to be safe it's good to risk only a few % but every trader is different, some of them think more of increasing the profits than decreasing the risk. Of course Mike is right, I should first be consistently profitable then only after that (maybe in a couple of years) I should think about these things.
  • #126,995
  • Jul 29, 2013 5:17am Jul 29, 2013 5:17am
This is a looser's viewpoint with respect to position sizing - I have lost and lost and lost - real money. The only reason I think I am still in the game is because I never risked more than 1% of my account. I think twice I risked 2% to make up for my losses and that was a huge mistake.
The key here I think is to be consistently profitable while demo trading. If I get to a stage where 8 out of my 10 trades always achieve my target, then I wouldn't mind risking 2% of my account.


Also, out of all the money you have reserved for trading - put half of it in fixed deposits or any other instruments that will give you a decent interest. This I think should be done for a disaster type scenario wherein you loose half of your trading capital.

To all who have come across this thread - Never ever take advice from newsletters, tip services. If you have come to james16 thread, be assured that you are in the company of good people. Be humble and do not think that you are smarter than the rest over here. Just be patient and may be you will be successful on a consistent basis.
  • #126,996
  • Jul 29, 2013 8:43am Jul 29, 2013 8:43am
Quoting dipie
{quote} I dont think anybody trades pinbars as continuation signal, they are meant to be reversals... {image}
perfect Dipie

That box tells it all. Price is stuck sideways and we want a pinbar like that at a nice swing low. Without that space trading right into that box top is trading into the last selling point in the market. Amazing how drawing one little box can tell us so much


Best
Mike
  • #126,997
  • Edited 2:52pm Jul 29, 2013 9:30am | Edited 2:52pm
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  • #126,998
  • Edited 10:59am Jul 29, 2013 9:40am | Edited 10:59am
Quoting mbqb11
{quote} perfect Dipie That box tells it all. Price is stuck sideways and we want a pinbar like that at a nice swing low. Without that space trading right into that box top is trading into the last selling point in the market. Amazing how drawing one little box can tell us so much Best Mike
Thx Mike, something I have learned from you..... it holds me from the bad trades and actually make opportunities for the best ones....hope my english makes sense:-)
  • #126,999
  • Jul 29, 2013 11:58am Jul 29, 2013 11:58am
Hey Mike,

Most of the time , i get these great PA at great location , but the FTA is just around the corner. The FTA is so near that you either Break even or take a loss.

My question is after you get a great setup(Great location + Nice PA bar), do you look for the a FTA that will give you 1:2 or more or do you simple enter it knowing you have so many FTA on way.

Sometimes i wait patiently and see some not so good setups and they run and run...and i wonder why i don't take those and then i have to remind myself to be disciplined to take A+ setups.

Does every A+ setup need to have a FTA as a Major PPZ and nothing in between?, because if you have even a small FTA you can bet that it will hold and you just BE when you have waited to patiently to catch a A+ setup. This is what frustrates me the most. How do you handle this?


Also sometimes there are so many FTA to your target(Major PPZ). What do you do in that case?
  • #127,000
  • Jul 29, 2013 2:36pm Jul 29, 2013 2:36pm
Quoting zamfir
Hey Mike, Most of the time , i get these great PA at great location , but the FTA is just around the corner. The FTA is so near that you either Break even or take a loss. My question is after you get a great setup(Great location + Nice PA bar), do you look for the a FTA that will give you 1:2 or more or do you simple enter it knowing you have so many FTA on way. Sometimes i wait patiently and see some not so good setups and they run and run...and i wonder why i don't take those and then i have to remind myself to be disciplined to take A+ setups....
Hey Z

I think people often take things and try to make them a bit too automatic. Not that this is wrong but it doesn't always need to be one way or the other neccesarily. This is how I approach every trade. I approach it as its own individual story and asses what I believe is the best course of action with the current information(and make adjustments if neccesary as new information comes in)

So for me this means a FTA can mean any one of the following

- Go to breakeven
-Take profit
-Move stop up
-do nothing

So essentially the importance is knowing where my trouble areas are, and then how those trouble areas fit in with the story. If I have a super strong setup and a small FTA just above most times this isn't going to "scare" me out or make me do something that is in my view not ideal. I might say ok price hit the FTA lets move my stop up so I get my risk down. But other times if I believe less strongly in a setup, or a FTA is strong this might call for taking profit there, getting to breakeven etc

So all FTA are not created equal just as all stories are not. Instead try to evaluate your specific situation and decide the best course of action for that particular trade as a whole.

My general focus is on reducing my risk while logically maintaining my trade. This is directly in line with how I pick setups though and each trader's approach will dictate how they exit and adjustments that might be made. For example someone who is less picky about their entries should generally be looking to cover their risk extra quick because the likelihood of a reversal increases and leaves them open for losses.

I suggest tracking different entry and exit techniques for each trade in a spreadsheet. After 6 month so or so you will have a lot of concrete data which to make adjustments and logical potential changes off. This is what I did

Hope that helps
Mike
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