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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

  • #133,341
  • Dec 10, 2014 3:43pm Dec 10, 2014 3:43pm
Hello, Mike. Do you trade exclusively your own account or you manage investors money as well? What do you think about such parameters of trading like profit factor, max drawdown, etc. what should those parameters be? Thanks in advance. Sorry for my poor english)
  • #133,342
  • Dec 10, 2014 5:52pm Dec 10, 2014 5:52pm
Quoting mbqb11
{quote} Trading is nothing more than lots of people buying and selling for all kinds of reasons. No one solves the market because it's not meant to be solved. Now as you said their will always be inefficiences. It's just the way it's always been and always will be because when you lump all these people into a place to buy/sell you are going to get that as a by product. Doesn't matter if its HFT, or fundamentals, or harvard mit grads. It's always been like that and always will. Markets go up and down and as long as they do that we can be profitable...

It is impressive that your brothers studied in those top notch schools. I agree trading is a different kind of mind set and being very successful at academics may not be an advantage with trading. There are so many things that are different with trading. You need to have a tolerance for imperfection and ability to function in grey areas rather than seeing in only black and white. I have come across a lot of such people and in most of the the ego is quite strong and market decimates the people with strong ego. You just work with the market and go with the flow but these folks may try to dominate it and it is not their fault because they had success with those strategies in studies and they apply it in trading. I have seen one such friend lose 75k in a span of 3 years trying to get even at the market and finally going broke.

If I am given a chance to work for you or your brothers I will ignore your brothers and will become a slave to you anytime. This is because at the end of the day trading offers me freedom and the other professions do not. Working with the market is not the same as working with other individuals. No matter how high up you go in the corporate world you still have to report to somebody. I came very late to this because I did not know that such a thing as trading exists until recently. Also I was careful to tread into this because of my tendency to get addicted. I resisted for quite some time and finally gave up because it became simply too hard to stay away from this.

Now coming to inefficiencies I think they do always exist. Man is driven by fear, greed and violence and human nature has not changed at all. The changes have been very superficial but at the core human being remains the same. These inefficiencies to some extent will be changed by man machine interaction but still it is driven by the same basic forces. Man made algorithms and strategies are still products of greed and fear and compete with each other in the market creating inefficiencies.

What I like most in trading is the process of working with the market , testing the strategies and trying to see how the market works. Every time I interact with the market no matter it is a win or lose I learn something and then I tweak the strategy and see what the market does. This process is at the core of trading and what attracts me most to the trading business.
  • #133,343
  • Dec 11, 2014 6:59am Dec 11, 2014 6:59am
Quoting mbqb11
{quote} breakeven now as we approach BUOB high again. Up a 1% which is great but i'm hoping to see us test at least the white box before considering closing or locking in profit. {image}
Mike,
Thanks for the extensive explanations. I just have one question. How come were you certain the price would bounce off of the TL? I understand there was confluence. Was it also because the risk was almost negligible?
  • #133,344
  • Dec 11, 2014 9:05am Dec 11, 2014 9:05am
Quoting Tin-soldier
Hello, Mike. Do you trade exclusively your own account or you manage investors money as well? What do you think about such parameters of trading like profit factor, max drawdown, etc. what should those parameters be? Thanks in advance. Sorry for my poor english)
Hey TIn

Yes I trade my own money. I've never gone down the investor route because it is a different line of work. I can't say never but I've always gotten into trading so that I can earn money and not have to answer to anyone. Taking on other peoples money is a very very serious thing and at the end of the day you begin to answer to other people. My goal was always to see how far I could take trading on my own. But I never say never with anything

I think the parameters you speak about are very important but also have their place. Drawdown is the most important to me. Over the years i've tried to figure out how can I best reduce my periods of drawdown from individual trades and into strings of losses. The reality is that they happen. Down months happen but it's HOW they happen that is most important. Profit factor is also important but for me this gets taken care of when you take care of your losses. Eveyrthing sort of blends into each other. It's all very calculated for me how I get involved in certain trades and how I manage those trades.

To give you an idea I can't even remember my last full bar loss. That is my normal risk on a trade is 3% and I can't remember the last time I took a full bar loss on any trade. That's because i'm very motivated in not just having a big huge win but more so concerned with what is the trade progression going to be and more important what will I do when things go wrong. People often ask me the same question "mike why do you start with your stop there if you will move it up to X point right away?" It's because it's my way of controlling my risk within a trade. Risk mgmt to me is how you manage your risk on a trade because that makes up your bigger risk profile as a trader.

Many people around the forums will say they are risking 2,3,4,5% a trade and if they aren't controlling their risk on trades 2-3 losses can wreck havoc and that's what is happening to most people. THey are so concerned with having a 10% winning trade as opposed to realizing how difficult it is to trade yourself out of a 15-20% drawdown on an account. It's not where I want to be. Again you might give up some profit but giving up some profit in order to smooth an equity curve is WELL worth it

So i'll say don't really pick what those parameters should be and try to trade to them. I never felt like that made sense. First learn to trade right and turn profit and then adjust your trading for things you are doing wrong. Example I used to let trades run more and in turn I took larger losses too. Because you gotta give a trade more room to run generally the more you want to see it turn to a big runner. I gave up profits this way instead of being more content with trades that didn't end up huge winners but great sized winners. So instead of trying to turn a lot of trades to runners, I turned to my mgmt on trades and learned to better manage them so my losses were smaller or negligent and I kept myself in a position to hit a reasonable target. When you see what even a few % a month consistent can do to your account you'll never look back. That doesn't mean the big months don't come. They sure do. But they won't come at the expense of huge drawdowns the come because things flowed well and you put yourself in a good position. This in turn will increase your profit factor As opposed to walking into a trade and saying I need to risk 1 and gain 3. So you arbitrarily stick a take profit to make that happen. I'm not saying that people out there aren't doing that and making it work but for me you leave too much great info on the table and I think when you can read read price more accurately things like that aren't worth it. These things start to take care of themselves. Again it's often slow, for me it was a slow evolution. Once you get to a point of knowing you can be profitable you often want to work on that profitability and that comes from basic things, picking better trades, picking better entries, managing them more logically etc


Sorry for the long rant but I do love this stuff

Hope this helps
Mike
  • #133,345
  • Dec 11, 2014 9:16am Dec 11, 2014 9:16am
Quoting Verbal
{quote} Mike, Thanks for the extensive explanations. I just have one question. How come were you certain the price would bounce off of the TL? I understand there was confluence. Was it also because the risk was almost negligible?
Hey V

This sort of blends from my previous rant. So read that first and then read this response.

First and foremost is the extensive confluence at this area. It's got a ton going for it. With that aside the ONLY entry that makes sense is on a pullback to my confluence area because I know my stop will be tight. If I am wrong. And I can be(that's what I was getting at in my previous post) I know how to get out with a very insignificant loss. So you put yourself into a great spot.

THis one got stopped out at b/e. Now imagine the trader how took the BUOB on a break. Your in a lot of pain right now. Sure it might turn around but your looking at a 50-60% drawdown. Not fun unless it makes sense to be holding a drawdown of that nature.

Now don't get me wrong just because you can get into a low risk situation doesn't mean you should take it. It starts with a strong story and confluenced trade

So that's out at b/e. Here is another trade that again starts with a ton of confluence but importantly i know my risk is low. It's all about control on your trades

Here is another one I am in at b/e now. Again these are charts I took from the PF.

Here is my first chart and I wrote
Quote
i like this one on a break of the beob(weekly beob created this whole move)

It's a break of the midpoint of the first box and back towards the bottom of that box. Interesting dynamics here
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then my entry
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then an updated chart with important "logics" of why this trade is juicy
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Hope that helps
Mike
  • #133,346
  • Dec 11, 2014 10:19am Dec 11, 2014 10:19am
Quoting mbqb11
{quote} Hey V This sort of blends from my previous rant. So read that first and then read this response. First and foremost is the extensive confluence at this area. It's got a ton going for it. With that aside the ONLY entry that makes sense is on a pullback to my confluence area because I know my stop will be tight. If I am wrong. And I can be(that's what I was getting at in my previous post) I know how to get out with a very insignificant loss. So you put yourself into a great spot. THis one got stopped out at b/e. Now imagine the trader how...
.....I am on the way....
Have a nice day
  • #133,347
  • Dec 11, 2014 11:47am Dec 11, 2014 11:47am
If someone is living on the east coast of US (EST) when is the best time to scan the forex charts. I want to scan the charts at least a few hours before the new day starts and if there is PA on some chart then I can place a trade once the move is confirmed by a new candle.
  • #133,348
  • Dec 11, 2014 11:49am Dec 11, 2014 11:49am
Quoting mbqb11
{quote} Hey TIn Yes I trade my own money. I've never gone down the investor route because it is a different line of work. I can't say never but I've always gotten into trading so that I can earn money and not have to answer to anyone. Taking on other peoples money is a very very serious thing and at the end of the day you begin to answer to other people. My goal was always to see how far I could take trading on my own. But I never say never with anything I think the parameters you speak about are very important but also have their place. Drawdown...
Thank you very much for your extensive answer. You are very popular among traders in Ukraine. Almost every blog on Price Action quotes you and spreads your ideas. I respect you very much for your work. You help traders around the world on their tough road to success. James16group became somewhat like a subculture.
  • #133,349
  • Dec 11, 2014 12:10pm Dec 11, 2014 12:10pm
Here's a trade I was in from last night (nzdjpy). Just about qualified as a pin bar to me and showed clear rejection of the lower levels (2 days in a row). PPZ wasn't the greatest but did have 3 touches so again just about qualified. SL was initially quite far but I felt confident enough getting it to B/E quickly and that's why I ended up favouring this trade. Not an A+++ setup, but a nice result

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  • #133,350
  • Dec 11, 2014 3:24pm Dec 11, 2014 3:24pm
Quoting prasad99
If someone is living on the east coast of US (EST) when is the best time to scan the forex charts. I want to scan the charts at least a few hours before the new day starts and if there is PA on some chart then I can place a trade once the move is confirmed by a new candle.
i do from 5pm til 7pm. winter time. 5pm-8pm summer time. Its also different brokers have different time daily bar close/open.
  • #133,351
  • Dec 11, 2014 3:44pm Dec 11, 2014 3:44pm
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  • #133,352
  • Dec 11, 2014 9:38pm Dec 11, 2014 9:38pm
Hi Tin-Soldier. i assume these timestamp flags you have at the bottom of the chart are for news releases? Can you please share that indicator? would be very helpful.. cheers!
  • #133,353
  • Dec 12, 2014 12:39am Dec 12, 2014 12:39am
EUR/GBP
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  • #133,354
  • Dec 12, 2014 3:08am Dec 12, 2014 3:08am
Quoting kotsh
Hi Tin-Soldier. i assume these timestamp flags you have at the bottom of the chart are for news releases? Can you please share that indicator? would be very helpful.. cheers!
Hi!It is not an indicator, that draws all this stuff, but an intergated function of MT5.
  • #133,355
  • Dec 12, 2014 3:18am Dec 12, 2014 3:18am
Quoting Tin-soldier
{image}
Look how fast price reached our first level after a break out. I have put my stop loss at BE. Let's wait for the price going higher to the next level.
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  • #133,356
  • Dec 12, 2014 3:19am Dec 12, 2014 3:19am
Hello all,

Have been away from the forum since around May - dipped in and out, but not been posting or reading as much. Glad to see everything still as it was

Well, November I finished positive for the third month in row ( was actually 5 months out of the past 6 positive, but a screwy August got me ). So, time to go live!

Given December seems notorious for being a bit funny with low liquidity, the fact that it's Christmas, and that my wife is about to give birth to our first child any day now, I've decided to wait until January before starting my first live account. But can't wait!

I'm starting with a low account, as suggested in the James16 rules, and one that I can afford to lose. I will be opening a spread bet account with Alpari who I have demoed with over the past year, and I can go as low as 10p/pip.

Back in December last year I started my demo account and found this thread, so it's taken me a year to fulfil James16 stipulation of 3 positive months before going live. At times I thought I was never going to make it ( an awful June for example where I lost 10% of my account ). But I've made it all back and am on target to finish my first year positive or just bit under. So anyone else who has just started, maybe found this thread for the first time - stick with it, it works

Thanks to everyone on this thread who has contributed with charts, words of wisdom, explanations to stupid questions etc. And once again I will lean on the generosity of people here and ask for any advice for a noob about to make the switch from demo to trade his first (small!) live account!

Cheers!
We are what we repeatedly do. Excellence, then, is not an act, but a habit
  • #133,357
  • Dec 12, 2014 4:00am Dec 12, 2014 4:00am
Quoting mbqb11
{quote} Some of those that struggle the most are the harvard and the MIT grads. Because they think of things too black and white , instead of grey... Mike
Great discussion!

There was a series I caught here in the UK where a trader took your average Joe of the streets and tried to train them to trade - similar to the Turtles I guess.

Out of the very mixed group, there was a an old guy was a computer programmer, and an ex-army Major. I suspected the computer programmer would be amongst the first to go, and that the soldier would succeed, and exactly that happened.

I'm a computer programmer, so I know how difficult it is to suddenly find that x+y = z doesn't work any more! And I guess the army officer did well as he had the discipline to follow his rules, manage his risk, not 'deviate from the mission' etc.
We are what we repeatedly do. Excellence, then, is not an act, but a habit
  • #133,358
  • Dec 12, 2014 7:57am Dec 12, 2014 7:57am
Though most of them can become traders through hard work, discipline and consistent application of strategy and money management etc. I still do believe that there is also a natural talent for trading. Just like a camel takes to water these folks come to trading and can have the ability to go with the market. And the intelligence required for this is of the grey type like one who is comfy with probabilities and chances and a lot of ambiguity. Trading needs more of an artist rather than a logician because it is the ability to fill in the gaps , the intuition and that "feel" for the market that can give the edge for someone in the market place.

In one of my earlier posts when I was talking about real intelligence without any motive I was not referring to trading intelligence but was pointing to a much deeper concept. This is like when intelligence is constrained by the self or the demands of the self it ceases to be intelligence and market will develop inefficiencies. The same applies in all domains of human endeavor. Trading is possible because of these inefficiencies. We are not there yet but let us say a bank came up with a super computer with artificial intelligence that can reorganize and improve on itself. Now this kind of computer is free from greed, fear and other human emotions and so can place trades and can take advantage of the inefficiencies to dominate the market.

Take this thought pattern to the extreme this super computer may even decide that human behavior with its prejudices, fears and emotions is the real stumbling block in the next step to the nature's evolution and may devise a plan to eliminate humans. This was what Stephen Hawking may be referring to when he said "Artificial Intelligence can mean the end of the human race" and of course trading as well.
  • #133,359
  • Dec 12, 2014 8:24am Dec 12, 2014 8:24am
Quoting Berserker
Hello all, Have been away from the forum since around May - dipped in and out, but not been posting or reading as much. Glad to see everything still as it was Well, November I finished positive for the third month in row ( was actually 5 months out of the past 6 positive, but a screwy August got me ). So, time to go live! Given December seems notorious for being a bit funny with low liquidity, the fact that it's Christmas, and that my wife is about to give birth to our first child any day now, I've decided to wait until January before starting...
Congratulations

Your biggest challenge when switching to live will be trade management--have a plan
  • #133,360
  • Dec 12, 2014 8:53am Dec 12, 2014 8:53am
Quoting prasad99
If someone is living on the east coast of US (EST) when is the best time to scan the forex charts. I want to scan the charts at least a few hours before the new day starts and if there is PA on some chart then I can place a trade once the move is confirmed by a new candle.
Hey P

I use a 5pm et close. I only really scan it 20 minutes before close personally so things don't change to much

Best
Mike
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