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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

  • #129,221
  • Dec 15, 2013 4:40pm Dec 15, 2013 4:40pm
Quoting michal9
Thanks a lot Mike for your reply re: the stop loss. I absolutely AGREE you need to ALWAYS have a stop loss. There was NO question about this. Only thing I am still "debating" is whether to do example A or B. A. hard stop loss 1 pip below the pinbar low, 50 pips away from entry, and position size so that 50 pips = 1% loss, take profit 100 pips (bare with me, please assume 100 pips is a logical target, not just pre-defined R ratio). Our losses distribution will be, if trades executed OK, each loss equals 1% capital. B. hard stop loss 4 times wider,...

Hey Michal

It's not that option B is wrong. There is no flat our right or wrong in many ways in trading. It's about having an edge with your method or not. So if you test out and find that by doing option B you are profitable, then great. I never knock other methods and ways people put the pieces together. But be careful on what is profitable and based on both hard data but also logic behind it(ie not curve fitting your results).

So is it ok to both put a stop loss X amount of pips as a "mental" stop loss and close out when you get a close below/above the bar. Sure. In fact it's more than valid, it's just another way. BUT be careful when we talk about "pip" numbers, the basis for this(logic), and also consider the MM side of things.


My bigger fear is what is the reason to do option B? For me it sounds more out of fear of taking losses or leaning on "hope" to turn price around. The market doesn't care about "pips" So having your stop loss 50 pips, 100 pips etc doesn't have a meaning to the market. So for me sticking a stop loss 200 pips above the high of a beob or what not negates the reason for taking the beob. After all if my analysis is correct that beob should do what I expect and if price comes above the beob(all things considered) wouldn't I no longer have a reason to be in the market. If at that point I am just hoping over the next 200 pips for price to reverse, that's just hope an no longer an edge for me. As well as how can i properly manage such a trade that has now negated my reasons for getting in. Every move I make from the entry of my trade to the exit is all calculated based off that initial story/entry as well as new price that comes in. When things no longer act the way that are conducive to my entry I jump ship or get stopped out(via a trailing stop that I manually move or where my inital stop was etc). This is how I know when to get out because my story no longer exists. Or in other words the market is now behaving in a way that is not part of my method in the long run. Of course this is based on something I created as well as based on specific types of entries I take, specific ways I manage such entries. We can't say that this is the proper way for ALL methods, or ALL entries. Hence why your hypothetical example isn't right or wrong.

Another factor is, if it's the case that you are spreading your risk over 200 pips AFTER you PA bar you are jeopardizing when price goes in your favor. So your returns are diminished. If I risk 2% on a Beob that's say 200 pips, and you are risking 400 pips on that same bar(200+ 200) at 2% now think about your upside as well. How does that fit in? So when I see people do what you say eventually i see them do the following. Most likely they greatly increase their risk to compensate for this loss in position size. So they now say risk 5%+ on a trade. Then price does reverse and their stop that they think is large(which 200 pips is nothing) is about to get hit and they start to drag it back going "oh just a little more room it has to reverse". All of a sudden they are in major drawdown.

So again I am not knocking other methods that are tested and proved. In fact I applaud those of you that do. That's what a trader is. Someone who creates something that is proven and they stick to it. But always question all pieces of your method or ideas and it will teach you a lot. The above is of course an opinion(as is anything in trading). If your testing shows you one thing and to you it is logical nothing wrong with that. Continue to test and dig into everything you do. That's all any of us can do. We trade our beliefs in the market at the end of the day.

Hope that helps
mike
  • #129,222
  • Dec 15, 2013 4:59pm Dec 15, 2013 4:59pm
Hey Mike, thank you! Your post is very helpful.
And I really appreciate you have taken time to write this.

I get it... if the price is 50 pips above BEOB, the setup is NOT longer valid, so I should NOT be in the trade, as there is no edge anymore, just a hope.
And I get the point on smaller upside if I put a wider stop and smaller position. I was hoping (...) this would be positively offset by a higher win ratio.

At the same time... my past trades analysis had lead me to think it would have a positive impact.

What I will do next is review my trades again, to see what will most likely work for me. Another idea to test could be maybe 20-30 pips, or 0.2*ATR(20) above last high/low (ATR makes it more universal) and this 20 pips will avoid evident spikes, but not so much negatively impact R ratio (assuming unchanged TP distance from entry).

Thanks agin. This was helpful, and I am clear what to do next (more work on my couple hundred trades analysis... ;-)

On a final note, in our example of price being 50 pips above BEOB... there is no edge from BEOB pattern anymore, but there can still be edge from overall trend direction (if trade was taken in line with it) and from key level (e.g. if traded short below a key resistance, assuming still not invalidated).
Michal9
  • #129,223
  • Dec 15, 2013 6:08pm Dec 15, 2013 6:08pm
Quoting michal9
On a final note, in our example of price being 50 pips above BEOB... there is no edge from BEOB pattern anymore, but there can still be edge from overall trend direction (if trade was taken in line with it) and from key level (e.g. if traded short below a key resistance, assuming still not invalidated).
Hey M


Glad it helps. Of course all just opinion and based on my own experiences. A few things that might at least keep you thinking(which is always good and challenging yourself as you analyze your methods).

-Is it really worth trying to then analyze each trade in the manner of the above quote. Meaning I take plenty of trades that are against the long term trend, so then do you only apply that rule to specific patterns and times? Possibly. But less is always more and that stacks a whole new set of things to analyze. The more we have to analyze the more we tend to make mistakes as traders in my view. Less is more. Less is so much more

-Another thing , I rarely if ever take a full bar loss. I honestly can't remember my last full bar loss. That doesn't mean I don't take parital losses, or never have a full bar loss. It's just so rare cause most times the market allows for other times to get out or at the least reduce risk(you can see this on trades I post). A stop is just the initial point to base my setup on and my position sizing. But often my stop is moved fairly quickly to the next logical point.

Just some food for thought

Best
Mike
  • #129,224
  • Dec 15, 2013 7:22pm Dec 15, 2013 7:22pm
Hey Mike,
How do you sell an equity?When I try to do this I get this message:"You are selling contracts not owned".I`m new in trading stock market.
Thank you!
  • #129,225
  • Dec 15, 2013 8:34pm Dec 15, 2013 8:34pm
Quoting andyhardwick
I believe that Ghous has a similar approach where the trade is only invalid if price closes below a certain point, so has a hard stop further away that that, as does Wizard with his SFPs (which is a 20 period ATR away from the tip of the fake out bar). This reduces the chance of further fake outs taking us out before price takes off.
Yes, that was part of the very first rule book but I obviously had to move away from it due to the HUGE disadvantage of not not knowing your exposure on a trade. Sometimes I saw trades that took off to -3R to return back to profit and sometimes hitting the "emergency stop" -3R to -4R away. Pretty pathetic I thought. These were early days of course.

Its very hard for me now to even take a -1R (i.e a full loss) hit. Knowing your overall exposure, as Mike said is ULTRA important.

g.
I believe . . .
  • #129,226
  • Dec 16, 2013 2:33am Dec 16, 2013 2:33am
My losses are always full bar :-(
This may be the problem I need to solve.
But how? I can trade from 7 pm till 10 pm CET only (this is 1pm - 4pm New York). I have full time job.


Solutions I see:
1. take profit for half the position at 1R, trail the rest (but I tried this: adds complexity, results were poor likely due to poor setups I traded at a time)
2. place an automated trailing stop (I could set a fixed amount of pips that will move the stop at a logical level)
3. quickly check the trade every 4 hours, from the office, just to move the stop to next logical level (I could do that)

But each solution has some disadvantage, too... complexity, or cutting winners. But indeed, I think I will look more closely at a trailing stop combined with an entry on the break (i.e. with the momentum). Looks like a correct research direction?
Michal9
  • #129,227
  • Dec 16, 2013 3:44am Dec 16, 2013 3:44am
Quoting michal9
My losses are always full bar :-( This may be the problem I need to solve. But how? I can trade from 7 pm till 10 pm CET only (this is 1pm - 4pm New York). I have full time job. Solutions I see: 1. take profit for half the position at 1R, trail the rest (but I tried this: adds complexity, results were poor likely due to poor setups I traded at a time) 2. place an automated trailing stop (I could set a fixed amount of pips that will move the stop at a logical level) 3. quickly check the trade every 4 hours, from the office, just to move the stop...
I can tell you how I handle this matter.
For me there are two type of trades: AA++ - perfect location, perfect looking PA and some confluation; and then is everything else - so so location or not perfect looking PA... you get it.
If the trade is AA++ that means that I would have strong confidence in it and I would not bother moving my stop; I am willing to accept a full bar loss.
However, this is not the case with less than perfect set ups. The way I handle those is with logical orders. My broker offer those. That is basically if (somethind) then do (something). So I simply set up a logical order to move my stop to BE when price reaches next logical level of support. Sometimes this is only when I am at +15 or so pips and yes i've cut some runners earler than I should; nevertheless - i've cut my losers dramatically as well after I started doing this.

But even if you are not able to stop taking full bar losses... just try to be more picky. All you need is just 1-2 trades per month... Those perfect ones; the obvious winners. Heck, I've had some months with no trades! Not being in the market is much harder than you think, but it pays back in the long run.
Twitter @raitchev
  • #129,228
  • Dec 16, 2013 4:36am Dec 16, 2013 4:36am
Quoting michal9
My losses are always full bar :-( This may be the problem I need to solve. But how? I can trade from 7 pm till 10 pm CET only (this is 1pm - 4pm New York). I have full time job. Solutions I see: 1. take profit for half the position at 1R, trail the rest (but I tried this: adds complexity, results were poor likely due to poor setups I traded at a time) 2. place an automated trailing stop (I could set a fixed amount of pips that will move the stop at a logical level) 3. quickly check the trade every 4 hours, from the office, just to move the stop...
Hey M,

option 3 looks good. If you can spare some time during work to watch your charts, it should be all you'll need to manage the trade.

The best thing to do would be to plan for all contingencies up front so that whichever scenario unfolds you know exactly what has to be done as opposed to seeing something happen unprepared and in that small period at work where you're watching your trades you make a decision without putting in the required thought process.

When you enter a trade you should know exactly what you're expecting off the setup and what your plan will be if that happens. You also need to plan for alternative scenarios and how you're going to be cutting your losses short in case the markets don't quite work the way you want them. This just clusters all the thinking right at the time of entry and simplifies the exit part as you're following a clearly laid out plan.

Hope this helps.

g.
I believe . . .
  • #129,229
  • Dec 16, 2013 5:04am Dec 16, 2013 5:04am
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  • #129,230
  • Dec 16, 2013 6:19am Dec 16, 2013 6:19am
Thanks everyone.
Ok, take the best setups only and have the exit plan upfront.

If I trade just 2 times per month, how many years it will take me to learn?
How can I aspire to be profitable every month, or at least every quarter, with so few trades?

I often missed the best setups becasue I placed a limit entry and got no fill...
And when I used a stop entry on the break... it filled me and reversed to my stop loss, with a full bar loss.

I guess this also boils down to a setup quality. This is likely more important than entry method (limit or stop) and stop placement (last low or further) and exit plan (trail, or move to BE, or exit half).
Michal9
  • #129,231
  • Dec 16, 2013 7:41am Dec 16, 2013 7:41am
Quoting Neytiri
{image}
I've noticed this abbreviation many times on charts but still don't know what it stands for...

what is FTA?

may I ask what is your plan for this trade? Is 18235-50ish part of your first TP or something cause it looks like a trouble area to me
  • #129,232
  • Dec 16, 2013 7:44am Dec 16, 2013 7:44am
Quoting TamRoofer
{quote} I've noticed this abbreviation many times on charts but still don't know what it stands for... what is FTA? may I ask what is your plan for this trade? Is 18235-50ish part of your first TP or something cause it looks like a trouble area to me
Hey TR,

FTA = First Trouble Area

Take care
Dan
  • #129,233
  • Dec 16, 2013 7:59am Dec 16, 2013 7:59am
Quoting dan89
{quote} Hey TR, FTA = First Trouble Area Take care Dan
Thanks for this quick answer

After a quick research on google I was thinking it stands for Free Trade Area but that was making no-sense to me... Now it's so clear I feel dumb haha

Anyway... Thanks!
  • #129,234
  • Dec 16, 2013 8:17am Dec 16, 2013 8:17am
I think thats most comonly used here ... but there are allso some "new" abbrevations like HHR and maybe some other that i mised or didnt pay attention to
im a bad student

FTA = first trouble area
STA = second trouble area
PPZ = price pivot zone
BEOB = bearish outside bar
BUOB = bullish outside bar
PB = pin bar
pin = pin bar
DBLHC = double Bar low higher close
DBHLC = double Bar high lower close
IB = inside bar
Ib4 = inside 4 bar
S/R = support/resistance
PA = price action
RN = round number
BRN = big round number
MA = moving average
TL = trend line
BO = breakout
BO + PB = breakout + pullback
RET = retracement
DIV = divergence
CT = counter trend
SL = stop loss
TP = take profit
BE = break even
FTB = First time back
TBH = two bar high
TBL = two bar low
PBT= Price Breaks Through
TT = Touch Trading
CAor B = Closing Above or Below

Jarroos Terminology
PBT&CA= price breaks through & closes above
PBT&CB= price breaks through & closes below
RT= retest
LCS= lowest close of support
HCR=highest close of resistance
  • #129,235
  • Dec 16, 2013 9:59am Dec 16, 2013 9:59am
Quoting michal9
Thanks everyone. Ok, take the best setups only and have the exit plan upfront. If I trade just 2 times per month, how many years it will take me to learn? How can I aspire to be profitable every month, or at least every quarter, with so few trades? I often missed the best setups becasue I placed a limit entry and got no fill... And when I used a stop entry on the break... it filled me and reversed to my stop loss, with a full bar loss. I guess this also boils down to a setup quality. This is likely more important than entry method (limit or stop)...
Learning does not include only taking trades. Sitting on your hands is also learning. In fact this is the hardest part of the trading process... to pass on those trades. It might become even harder when you see them going in your direction. But you need to know that this is for the good.
Also, trading off daily bars is fairly easy to backtest. Scroll back your metatrader charts to 2004 and start "pretending" that you are trading for real with live account. Scrolling the chart forward bar by bar, and making decisions based on what price did... is the closes to live experience you will get. Certainly better than nothing.
And lastly... on your question how many years. Let me give you me as an example. Look when I joined the forum. I've been learning ever since then. I am barely over BE now. It's almost six years now... I've blown 4 accounts, and I am trading my 5th one. How many years it will take ME to be consistently profitable? I don't care. That's my dream and if I have to I will spend another 6 years trying to get there.
That's not a sprint my friend. It's a marathon...

PS: Also you might have not realised, but there is a tremendous amount of knowledge in this thread. Sort the attachments by downloads and you will find hundreds of charts posted by James compiled in zip files. That's his experience offered to you for free. Also users like... you know, the experienced ones - mike, ghous... I don't want to list them because I might forget somebody. Go into their profiles and look at the graphs posted by them. Even more knowledge and experience offered for you. Take advantage of this.

PPS:
http://www.forexfactory.com/attachme...hmentid=906039
http://www.forexfactory.com/attachme...hmentid=906041
http://www.forexfactory.com/attachme...hmentid=906045
http://www.forexfactory.com/attachme...hmentid=906046
http://www.forexfactory.com/attachme...hmentid=906052
Here are the charts I am talking about.
Twitter @raitchev
  • #129,236
  • Dec 16, 2013 10:44am Dec 16, 2013 10:44am
Quoting iuliu00
Hey Mike, How do you sell an equity?When I try to do this I get this message:"You are selling contracts not owned".I`m new in trading stock market. Thank you!
Hey Iuliu


Not much differences to buying/selling FX in many ways. Differences in terms of brokers are that you must have an account that allows this (of course also depending on your country) Generally just on margin. You must meet minimum account size standards. And you must borrow the equity that is available. Depending on availability from your broker. Best to contact your specific broker for more information. Of course if you are on demo(which you should be if learning) it might have different issues that your broker can help you with too


Hope that helps
Mike
  • #129,237
  • Dec 16, 2013 10:51am Dec 16, 2013 10:51am
Quoting michal9
Thanks everyone. Ok, take the best setups only and have the exit plan upfront. If I trade just 2 times per month, how many years it will take me to learn? How can I aspire to be profitable every month, or at least every quarter, with so few trades? I often missed the best setups becasue I placed a limit entry and got no fill... And when I used a stop entry on the break... it filled me and reversed to my stop loss, with a full bar loss. I guess this also boils down to a setup quality. This is likely more important than entry method (limit or stop)...
Few things I want to comment on here for you and others M

You don't neccesarily need to have your exact exit plan up front. In fact I often have an idea of whta I am looking to do based on the "type" of setup. But as new information comes into the market I use that information to adjust as needed.

As for so few trades you made a contradictory statement. You said how can I aspire to be profitable every month with so few trades? Well profitability is based on if you come out on top. This in reality only takes one trade. Meaning if you take one trade for the year and it's profitable technically you are a profitable trader. Of course none of us would probably do it for just one trade for the year . But now take that point and say what about one trade a month? Yes once again most of us will be taking more than that. The point is though is it better to be a profitable trader taking one trade a month and WINNING an making actual money. Or better to be a losing or b/e trader taking 20 trades a month?


At the end of the day when you have a solid method that you trust and know works these issues sort themselves. You don't focus on things like how many trades am I taking a month. Instead you execute your trade plan. For me that could mean 1 trade a month or 20(or heck even zero if the market so dictates that month).


These are some of the most common hurdles i see aspiring traders getting hung up on. I extend the challenge probably every month for someone to adjust their thinking to the above and take only a handful of trades a month to actually learn what it's like to be profitable. But most want to go from losing to winning(and winning big) , don't have the patience to do this, or worst of all think in terms of "sample size".

As for your last comment about entry. Every entry has advantages and disadvantages. But because you got nicked in on a break and it hits your stop loss. Or it's missing your limit orders has very little to do with the type of entry, but most likely the type of setup and if it's even a good setup or if you are applying the better entry point for that specific setup

You will ultimately find all these things tie together too and that's part of the journey. I just happen to be sitting on the other side of the fence so it's easier for me to say what works for me and share those experiences. Each one of you will have to go through the above and likely in your own ways. But I hope the above might shed light on areas that are keeping you from making the next step if what you are doing you are finding not to work

Best of luck
Mike
  • #129,238
  • Dec 16, 2013 10:53am Dec 16, 2013 10:53am
Quoting raitchev
{quote} Learning does not include only taking trades. Sitting on your hands is also learning. In fact this is the hardest part of the trading process... to pass on those trades. It might become even harder when you see them going in your direction. But you need to know that this is for the good.
Fantastic R
  • #129,239
  • Dec 16, 2013 2:55pm Dec 16, 2013 2:55pm
Quoting michal9
My losses are always full bar :-( This may be the problem I need to solve. But how? I can trade from 7 pm till 10 pm CET only (this is 1pm - 4pm New York). I have full time job. Solutions I see: 1. take profit for half the position at 1R, trail the rest (but I tried this: adds complexity, results were poor likely due to poor setups I traded at a time) 2. place an automated trailing stop (I could set a fixed amount of pips that will move the stop at a logical level) 3. quickly check the trade every 4 hours, from the office, just to move the stop...
U could also download a mobile application on your phone (i think you do have one) and check the trades there. It wont let u enter the trade, but it helps to controll the trade you are in.
If not up, then down, otherwise sideways :-)
  • #129,240
  • Dec 16, 2013 3:30pm Dec 16, 2013 3:30pm
working in blackbarry?
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