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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

  • #131,621
  • Jul 31, 2014 2:14pm Jul 31, 2014 2:14pm
Quoting FxLester
{quote} Hi Doerpn! Nice chart. In my analysis, I believe price has already made it to the first area of resistance and you're probably a bit late to be taking this trade. Here is my view: {image} I think the area you have marked out is decent. However the price action is quite small and I personally would not have taken this trade. In terms of how this price action signal has played out, I believe the it has already given what is to be expected by reaching the first area and now stalling which I have marked above). Will it break through? Who knows....
Hi FxLester,
thanks for your comments. You`re right, there`s much traffic nearby. Still learning to be more patient and wait for better situations. Nethertheless I took this trade....if it turns back and leaves the triangle downside I`ll hedge the position by selling double lotsize. Still looking for the trading style that fits to me.
Have nice trades
Have a nice day
  • #131,622
  • Jul 31, 2014 2:28pm Jul 31, 2014 2:28pm
What`s about SGDJPY daily? Breakout and return to FTA or wass the breakout not strong enough to be considerable?
If target weekly support then about 100 pips profit. SL maybe under RN 82=RR 2:1
Opinions?
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Have a nice day
  • #131,623
  • Jul 31, 2014 2:49pm Jul 31, 2014 2:49pm
May I post still another chart?
USDJPY DAILY- Is this an acceptable fake-out-bar? SL above spike, TP pole area....RR about 2,5:1
Attached Image (click to enlarge)
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Have a nice day
  • #131,624
  • Edited 8:23pm Jul 31, 2014 7:12pm | Edited 8:23pm
Quoting mbqb11
{quote} Hey Flash You can PM me in the group if you are ever confused where to post or ask a question Yes taking limited opportunities is a fantastic way to learn. Trading is a funny thing. Most people come to trading trying to apply what skills they have used in previous endeavors to tackle trading. One of the most common things(and what I've done and most do) is to do more. Meaning Trade more to learn more. Seems logical right. The more we can practice the better we can get. I used to play sports, have had many hobbies and they all tell you...
Less really is more! However, as humans, overcoming the urge to overtrade is very difficult. I define overtrading as not just opening a new order, but also overmanaging a trade e.g. not sticking to your plan, moving stops constantly for no logical reason apart from emotion or taking profit early despite a pre-determined plan. All of this is based on emotion.

That said, I am a big advocate for backtesting. Kathy Lien wrote an interesting book which is similar to the Market Wizards series by Schwager called "Millionaire Traders" where she interviews successful traders. In one of her intervews, one trader talks about how he considers himself a full time backtester and a part time trader which I think is a good attitude for new traders. I really believe that backtesting can give you an excellent edge in terms of experience and chart time.

There is a lot of data and research out there to support that simulations give you a similar level of experience and education that a live experience would. When I really started to take trading seriously, I did what I called the Century Experiment. That is, I backtested my skills on 10 markets (uncorrelated) over a period of 10 years. It was gruelling but it really gave me three things:
1. The confidence to execute my system without hesitation as I could see that it was profitable
2. The ability to see what worked for my personality (e.g. I worked out I preferred to scale out and move the BE quickly as I found this gave a smoother equity curve)
3. Gave me 100 years of experience on a strategy

Tell you a quick story. When I worked as an ICU doctor, we actually spent several hours each week running mandatory simulations on a mannequin. Despite the fact we all knew all of the rescuscitation protocols off by heart. This based on that neuro research I mentioned earlier which concluded that simulations, while obviously not identical to real world scenarios, are very good in building the mental framework for pattern recognition.

Imagine the edge you will have over someone who has traded live for three months and has taken a total of 6-10 trades. Versus someone who has run a simulation for 4 hours and taken 600 trades on a daily chart.
Follow me on twitter @FxLester
  • #131,625
  • Jul 31, 2014 8:21pm Jul 31, 2014 8:21pm
Quoting FxLester
{quote} Less really is more! However, as humans, overcoming the urge to overtrade is very difficult. I define overtrading as not just opening a new order, but also overmanaging a trade e.g. not sticking to your plan, moving stops constantly for no logical reason apart from emotion or taking profit early despite a pre-determined plan. All of this is based on emotion. That said, I am a big advocate for backtesting. Kathy Lien wrote an interesting book which is similar to the Market Wizards series by Schwager called "Millionaire Traders" where she...
It's funny, but in keeping with backtesting theme I watched this last night
Inserted Video
it has interesting insight on back testing pure price action trading. The speaker mentions this book http://www.amazon.com/gp/product/B00...=eauciuen0a-20 in his webinar which I thought worth a glance
  • #131,626
  • Edited 11:01pm Jul 31, 2014 10:48pm | Edited 11:01pm
Hi guys,

can I take the marked bar as a good pin bar and anticipate a trend reversal?
A little help on all of the other marked items (are they correct) would be great too.

Thanks a lot.
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  • #131,627
  • Edited 12:42am Aug 1, 2014 12:12am | Edited 12:42am
Quoting Alfans16
Hi guys, can I take the marked bar as a good pin bar and anticipate a trend reversal? A little help on all of the other marked items (are they correct) would be great too. Thanks a lot. {image}
Hi Alfans,

That bar you have marked is technically an inside bar. I would not trade it.

A pinbar by definition has a wick which peirces S/R and moves past the last bar which demonstrates a rejection. If you think about it another way, a pinbar is a bar which shows during the life of the bar (on a daily, that is 24 hours), there was a whole heap of buying followed by a massive sell-off and the price closing near the open.

This bar does not do that. As an inside bar it signifies consolidation. Actually, to be more detailed, after such a strong preceding bull move, it is not uncommon to see "pinbar-lookng" bars as inside bars which can indicate any number of things such as profit taking from the bulls who took the elevator up the day before, consolidation, or indecision in the market. What this does not scream out to us is rejection.

I've only had a cursory look at your other bars (as I am not at home at the moment) and I don't think your other bars are correct.

If you are starting out, you should be looking for bullish outside bars from swing lows and looking for bearish outside bars from swing highs and trading them as reversal signals. By definition, a bullish outside bar must engulf the high/low/open/close of the preceding bar and close near the high for a bullish signal or near the low for a bearish signal.

Cheers,
Lester
Follow me on twitter @FxLester
  • #131,628
  • Aug 1, 2014 4:26am Aug 1, 2014 4:26am
Very nice post FxLester!

Did you do backtesting on targets as well? My challenge right now is holding and adhering to my targets and not getting freaked out. Any suggestions on the same?

Also, when you did your Century Test, did you do it manually going thru each daily chart and looking for your patterns 1 by 1?

Thank you,

Quoting FxLester
{quote} Less really is more! However, as humans, overcoming the urge to overtrade is very difficult. I define overtrading as not just opening a new order, but also overmanaging a trade e.g. not sticking to your plan, moving stops constantly for no logical reason apart from emotion or taking prfit early despite a pre-determined plan. All of this is based on emotion. That said, I am a big advocate for backtesting. Kathy Lien wrote an interesting book which is similar to the Market Wizards series by Schwager called "Millionaire Traders" where she interviews...
  • #131,629
  • Aug 1, 2014 4:33am Aug 1, 2014 4:33am
Hello colleagues! what do you think about CADJPY. There are good PPZ+150 ma+94.00 . If break TBL, may be it will be resistance. First goal - 93.50 and second - 93.00. appreciate your comments.
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  • #131,630
  • Aug 1, 2014 5:47am Aug 1, 2014 5:47am
Quoting doerpn
May I post still another chart? USDJPY DAILY- Is this an acceptable fake-out-bar? SL above spike, TP pole area....RR about 2,5:1 {image}
more like IB. So if i sell i do it if price go under 102.70. Or may be 102.70 will be now support? also 103 is near
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  • #131,631
  • Aug 1, 2014 8:28am Aug 1, 2014 8:28am
Quoting FxLester
{quote} Less really is more! However, as humans, overcoming the urge to overtrade is very difficult. I define overtrading as not just opening a new order, but also overmanaging a trade e.g. not sticking to your plan, moving stops constantly for no logical reason apart from emotion or taking profit early despite a pre-determined plan. All of this is based on emotion. That said, I am a big advocate for backtesting. Kathy Lien wrote an interesting book which is similar to the Market Wizards series by Schwager called "Millionaire Traders" where she...
absolutely lester! I used to back test so much my computer and walls were covered in spreadsheets. I always tell people I learned a ton through backtesting and more so I learned a lot about what doesn't clearly work. I've certainly backtested till my eyes bled lolol I used to joke that friends and family would say my office looked like a beautiful mind guy


Mike
  • #131,632
  • Aug 1, 2014 9:33am Aug 1, 2014 9:33am
Quoting FxLester
{quote} Hi Alfans, That bar you have marked is technically an inside bar. I would not trade it. A pinbar by definition has a wick which peirces S/R and moves past the last bar which demonstrates a rejection. If you think about it another way, a pinbar is a bar which shows during the life of the bar (on a daily, that is 24 hours), there was a whole heap of buying followed by a massive sell-off and the price closing near the open. This bar does not do that. As an inside bar it signifies consolidation. Actually, to be more detailed, after such a strong...
Hi Lester,

I would have jumped right into it...Thank you so much for your guidance. It looks like I need to learn a lot more from all of you..
I better push myself to crawl before I can walk...

Cheers,
Alfans
  • #131,633
  • Aug 1, 2014 11:18am Aug 1, 2014 11:18am
Quoting dvimix
Hello colleagues! what do you think about CADJPY. There are good PPZ+150 ma+94.00 . If break TBL, may be it will be resistance. First goal - 93.50 and second - 93.00. appreciate your comments. {image}
so, i take it. with proper MM of course.
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  • #131,634
  • Edited 5:04pm Aug 1, 2014 3:48pm | Edited 5:04pm
Quoting courier12
Very nice post FxLester! Did you do backtesting on targets as well? My challenge right now is holding and adhering to my targets and not getting freaked out. Any suggestions on the same? Also, when you did your Century Test, did you do it manually going thru each daily chart and looking for your patterns 1 by 1? Thank you, {quote}
Thanks mate! Great question.

Yeah I backtested as much as I could and tried my best to emulate a real trading scenario. When I started I simply used MT4 and scrolled forward one bar with F12. I would scroll forward with my S/R marked out, then If I saw a massive pinbar on S/R I wanted to trade, I would draw a few lines in different colours (stoploss, entry, TP's). I recorded all of these variables (e.g. pips SL, pips to TP's and whether or not they were hit, whether the trade was a success, B/E or a loss etc.)

I had several excel spreadseets where I recorded everything I could think of and continued to add more columns when I got the idea that something would be useful to know (e.g. "hey I'd like to find out if there's a lower success rate for trades I take on friday? maybe I'll add a column where I can enter the day of the week" ->this ended up being very useful information). I got some really cool stats which I still refer to sometimes e.g. "I know from my testing that this XYZ setup has about a 90% chance of reaching the first area and a 60% chance of reaching my second" or "I know that trades opened on a friday have a xyz percentage of success compared to wednesdays, maybe I'll give this one a pass".

I also think it is a very good idea to also take screenshots of all of your trades. Going back to my ICU/emergency experiences, they would always record our simulations and play them back to us. They would also play sims we did from several months ago. This is all based on that neuro researched I mentioned in my last post. I still go and flick through my old screenshots some times.

I received some PM's which had some good questions on the backtesting so I thought I'd just mention them here:
1. The period I chose (10 years) was not an arbitrary or random number. We know that market cycles last approximately 8 years. So if you back test 8 years worth of data you will trade through lots of market environments (low/high volatility, wars, political instability, bull markets, bear markets, bubble markets etc.). So to me, 8 years was a good number on the daily chart and I simply rounded it up to give a bit of a buffer to 10 years.

2. There is a lot of paid backtesting software, which to the new trader is very expensive. I myself simply used excel and MT4 for the longest time. I can see the resident genius, Mike did the same in his post above! Full disclosure, I did end up purchasing some commercial back testing software but only once I became profitable. You don't need it, but it had the advantage of allowing you to "feel" a drawdown. What I mean by this is the software can show you the progression of the next bars in fast-forward so you can watch your signal get triggered and then watch your P&L go down as the market retraces. That was a big problem for me initially as I would often get scared out of a successful trade, exit early in drawdown and watch it rocket back up in my direction without me.

Quoting mbqb11
{quote} absolutely lester! I used to back test so much my computer and walls were covered in spreadsheets. I always tell people I learned a ton through backtesting and more so I learned a lot about what doesn't clearly work. I've certainly backtested till my eyes bled lolol I used to joke that friends and family would say my office looked like a beautiful mind guy Mike
Awesome!! Great minds.
Follow me on twitter @FxLester
  • #131,635
  • Aug 2, 2014 3:26am Aug 2, 2014 3:26am
Quoting dvimix
{quote} more like IB. So if i sell i do it if price go under 102.70. Or may be 102.70 will be now support? also 103 is near {image}
Hello dvimix,
thanks for your opinion. In this case price went down...But as you wrote might had gone up...who knows before.
For me these examples help to get a better look to the whole story.
Have a nice weekend.
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Have a nice day
  • #131,636
  • Aug 2, 2014 3:33am Aug 2, 2014 3:33am
Quoting dvimix
{quote} so, i take it. with proper MM of course. {image}
Nice entry!
Be so kind to tell me where I can get this indi shown in your charts (H1,H4,D1)?
Have a nice day
  • #131,637
  • Aug 2, 2014 4:13am Aug 2, 2014 4:13am
Quoting doerpn
{quote} Nice entry! Be so kind to tell me where I can get this indi shown in your charts (H1,H4,D1)?
http://www.pipware.com/software/mini-charts.html
  • #131,638
  • Aug 2, 2014 3:58pm Aug 2, 2014 3:58pm
Thought I'd share some more charts with you all.

I'm watching GBP/USD (all TF's) and the Hang Seng Index (daily only) for price action in the next week.

GBP/USD
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We've broken through a long term trendline that has been respected since Feb '14. I'm anticipating a retrace to the 70000 and for shorts at the revisited TL+S/R zone at the green box highlighted.

Hang Seng Index
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The indicies CFD's have been posting some fantastic price action this year. This is helped by the fact that many of them are trending. The Hang Seng Index is no exception. We have broken through a long term high which has otherwise been respected for over 3 years. A strong and clear breakout of the 24000 has occured in the last week. I'm anticipating a retrace and then looking for longs at the 24000.
Follow me on twitter @FxLester
  • #131,639
  • Aug 3, 2014 4:01am Aug 3, 2014 4:01am
Quoting moretti12
{quote} http://www.pipware.com/software/mini-charts.html
Hi moretti,
thanks a lot
Have a nice day
  • #131,640
  • Aug 3, 2014 4:08am Aug 3, 2014 4:08am
Quoting FxLester
Thought I'd share some more charts with you all. I'm watching GBP/USD (all TF's) and the Hang Seng Index (daily only) for price action in the next week. GBP/USD {image} We've broken through a long term trendline that has been respected since Feb '14. I'm anticipating a retrace to the 70000 and for shorts at the revisited TL+S/R zone at the green box highlighted. Hang Seng Index {image} The indicies CFD's have been posting some fantastic price action this year. This is helped by the fact that many of them are trending. The Hang Seng Index is no exception....
Hi Lester,
great charts...I`ll observe them
Have a nice day
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