Flag trading the trend

well done DD it's exciting to watch someone other than myself doing this live no giving forecasts but recording right after trades concluded

Nice hat on ym at 42 for 21 ticks

I know there are probably quite a few who read this thread and would rather see "real time calls." But I spent a couple of years in another thread giving "real time" and "before the fact" calls; and in the end, it was too tiring, too distracting, and took me out of the zone.

What I like about the group we have here is that we are workers, not whiners - each one of us is working on his own edge while we each benefit from what we share with each other (my avatar used to have the motto "sharing is caring").

Look at jtrades and his work atn "jlabs!"

And Erasmus and his commitment to back testing!

You just do not see that in most threads at most trading forums. Everyone everywhere on the internet wants a handout, a "gimme." I am a believer in the "give a man a fish, feed for a day, teach a man to fish for himself, and you feed him for a lifetime." That being said, I am here both to help others and learn from others. I am not here to teach. I don't think trading can be taught they way most people seem to assume it can be taught. You can show us the "hat" set up, for example, but it is going to depend upon the indivudal himself to do the work and out in the time that allows him to make your hat set up his hat set up!

To me, trading success requires an individual to commit to watching the market trade and learning how to identify repeatable price action patterns (and by "price action" I would include those who trade a naked price chart or those who you a judiciously selected indicator or two). Then the trader has to learn to back test and forward test those patterns and hammer out a trading plan that allows for consistent profits. The observation, analysis, and testing is what allows the trader to have the confidence required to get in the zone. Because you can have the best trading plan with the best set ups, but if you don't have the courage, determination, and discipline to execute that plan flawlessly, you will not achieve the success to which you otherwise aspire.

Then, and only then, can a trader achieve what so many dream about - trading for a living. The reason I wanted to do this $2K to $200K here "out loud" is to show, as you have, that a disciplined consistent patient approach to trading small capital on well-defined price action edges is indeed one path to that goal which is shared by most FF'ers: Trading for a living.

Well, here it is - Friday morning at 10AM, and I am done for the day and for the week. Ahhhh ... the life of a trader

Learn not to hate the loser when it is first. It can have a detrimental affect on your ability to trade your plan. Re-read trading in the zone.

If you want to catch the big moves, you need to plan for them. If your plan is to take a fixed $X tick profit no matter what, then smile when you get it and don't worry about "how much more I could have made." If it isn't in your plan, it does not exist.

I struggled with both of these feelings this week myself ... I feel your pain, brother. Let's leave it and forget it and enjoy the weekend while we wait for our next day at "work."

Lots of +1 trades today for me

this post was better than the video you shared the other day. For me today was a chop chop day yielding 1 21 tick win and about 5 + 1 trades when I saw that environment wasn't good I retreated by closing down charts keeping what I got and live to fight another day.

I know you are 100% correct & if one has truly "grokked" what Douglas (R.I.P. btw : I did not realise until this week that he died last September : I sure am grateful to him) writes about not having to know what happens next to make money, it would not matter. I know it's a FEAR-based concern & continue to work on it.

As you write, courage, determination & discipline are all essential.

I feel both you and Harold have taken this great thread to a new level this year : it's very inspiring and I intend to join you !

I especially admire your success with ES, because of the possibilities to trade size : Al B's "1 ES point/day" calculations look fabulous on 4 points / day. Something similar must be possible with the Bund, so perhaps I will start a "10 ticks a day Bund project" soon.

Have great weekends everybody .

Imop having a hard stop makes me comfortable to trade from I know what my risk is and since most of my trades are more than 1:1 a loss won't hurt.

One point a day is harder than it looks, imo, because your aim is so low that it is easy to have a few losses wipe out a couple of week's gains. I really believe that $200 to $300 per day per contract should be the goal, regardless of the market. And if your chosen instrument does not give you enough high probability opportunities for such a profit on a consistent, almost daily basis, then my suggestion would be to find one that does. The ES, like all morkets, sometimes goes through brief periods of extreme volatility contraction. But by and large, it gives me 4 to 6 points more often than not.

Other than ES as I see it cl and ym especially the YM achieving 200 to 300 per contract is doable other markets not so much but that's my opinion so what do I know

10 year notes and 30 year bonds can have the range necessary but you have to be a real S/R trader to max out.

I quess it boils down to the game plan and the instrument that will get you to the achieved target whether it's 500 to 1000 a day or 4 pts (200 dollars per contract)or whatever the trader is trying to acomplish

Agreed.

I would also add that I think it is better for someone not yet consistently profitable to pick one market that does have the required characteristics and become consistently profitable before adding another market. I have two close, real life, flesh and blood friends (that is, these are gys in my city and not guys I know from the internet) who also trade for a living. Of the three of us, I'm the only one who trades multiple markets. Both of them do extremely well trading just the ES and doing so with good size. One trades 20 contracts and he is always in during the day long then short etc., but not as a scalper - he tries to hit the swings - 10 points up then 12 points down. The other guy trades 100 lots, but he quits after 4 to 6 points in the bank. He is also not a scalper, but he will bank a 4 to 6 point gain and be done until the next day. Neither have very many losing days. They are both more profitable than I, and both are convinced that my unwillingness to trade just the ES or bonds (my main traders are ES, ZB, YM, ZN, 6E). This little side project of mine is my attempt to test their hypothesis. I I can run this $2K to $200K inside of two years, I will probably follow in their footsteps and go ES only.

these guys are big hitters. I was also a 1 market at a time guy in fx it was ej then in futures it was cl and last month I switched to ym only then when I got back in the zone with a little adjustment I now do just cl and ym. More ym than cl but my game plan which was to make 500 and has turned into a 1000 day day which has been accomplished and then some. It's been more like 1500. So if I have a 250 day like today it's ok. So what you are doing is fine because your game plan is to net 200 a day per contract. Just continue to stick to game plan 1 trade at a time

Hi guys, some great posts and quotes recently, truly inspirational. I'm not sure if i can post charts, but will try in this post. If not, i will have to drop management a line.

I'm watching 8 pairs/index's, for the purpose of concentrating on finding something that is trending nicely. My fave trade is the cup and handle, for trend continuance, but also doubles up fairly well as the H&S pattern for reversal. once the last LH or vica versa HL has been taken out.

We were a little spoilt today regarding trends!

Nice chart I am a 123 2b h and s trader myself I use macd to confirm momentum in direction of setup and if confirmed before breaking pt 2 I take it out of the box if mo confirmation I let it break and take pb to pt 2

"... 123's that breakout of the flagline. For me it is important the the point 2 always does so ..." Nice way to frame the set up ... Thanks for sharing!


Trader Vic (Victor Sperandeo, who popularized the 123 nomenclature, would agree. In fact, for Trader Vic, the #1 of the 123 should coincide with the break of a trendline (courtesy of http://www.dacharts.com/123.htm):


1-2-3 reversal
(as described by Vic Sperandeo in "Trader Vic: Methods of a Wall Street Master")
1. trend line broken
2. lower high in an uptrend, or a higher low in a downtrend.
3. break below the previous low in an uptrend, or above the previous high in a downtrend
At point 3 the reversal is confirmed and everybody's brother is getting short. A stop run often follows to re-test the penetration at point 3. Quicker traders may get short at the X, or even closer to the 2 based on other indicators (divergence, fibonacci retracement, bollinger band touch, etc.)




1-2-3 reversal
(as described by Vic Sperandeo in "Trader Vic: Methods of a Wall Street Master")
1. trend line broken
2. lower high in an uptrend, or a higher low in a downtrend.
3. break below the previous low in an uptrend, or above the previous high in a downtrend
At point 3 the reversal is confirmed and everybody's brother is getting short. A stop run often follows to re-test the penetration at point 3. Quicker traders may get short at the X, or even closer to the 2 based on other indicators (divergence, fibonacci retracement, bollinger band touch, etc.)

Hi Harold, yes, i've done a load of catching up! Haven't been around for quite a while, but have been with you here from the start effectively, back in the old CCI days!

Similarly, i have been trading for around 15 years, but NOT consecutively. In between other life projects, but my desire has always been to make it through trading alone. I have lost a small fortune in the earlier days, making the same mistakes time and again with no regard or discipline in sight.

'Discipline'... now there's a word! It's probably the key when all is said and done.

As above, by searching for the criteria that point 1 of a 123 must break a flagline, i am limiting set ups and of course, it does not mean that others do not work. I still need to play around with whether to enter on a fresh high (2b).

Our enemies (in Elliott terms) are as always, a 'B' wave upon a flagline break and also a short 5th wave of a degree with the 2b fresh high scenario. Little can be done about this, unless the market is kind and spells it out, but it also takes a lot of fibonacci work to back up wave counts. I have spent literally thousands of hours studying this and conclude that it simply is not worth it!

No system will give 100% results. Risk must be taken and controlled. What you have given us with this thread is a simple high probability approach and i must thank you as, even though i have strayed away to different pastures... i can say for sure, that the grass was not greener!

Trading with trend is the most obvious way, learning how to call a trend is vital for everyone and caution when the last HL/LH has been taken out, to look for minimum of a bigger pullback to follow within the overall trend. I use this usually as a cup and handle/H&S, to take at least one trade, countertrend to the overall trend, abc scenario...

I have tuned your system a little here and there to suit my own criteria. I don't trade contracts, but spread bet instead, hence watching 8 different pairs, the most liquid and hence with the smallest spread, (between 1 and 1.5 pips), as a result, i place my stop below each significant point, (point 2 of a 123, or below low of flagline etc), this means my position size alters, (although the risk does not). Risk remains the same, but quick calculations must be made!

As stated before, i scan several different charts purely to identify one that has started trending and then focus on that pair/market. Anything to try to find an edge!

DD, wow! i am greatly interested in your exponential growth experiment. I have long thought about this scenario, risking 50% of profit or something along those lines, but have not had the consistency req'd. I hope to get back in the zone after catching up on events here.

You are quite right to point out the correct labelling of 123's, although i would actually have it that, point 1 being the first HH and point 2 being a HL, point 3 being the entry a pip above point 1, so indeed we look for point 1 to break a flagline...

QUOTE;
'I know there are probably quite a few who read this thread and would rather see "real time calls." But I spent a couple of years in another thread giving "real time" and "before the fact" calls; and in the end, it was too tiring, too distracting, and took me out of the zone.'

Couldn't help but agree wholeheartedly with this. It is one thing to battle your own pride and learn to accept losses as part and parcel of the game we are in, but to know that many people are following your live calls, even willing for it to be wrong so they can mock you etc (that's 90%+ of the posters on ADVFN!)... nah, not for me either!

I had my own blog, mostly somewhere to be a diary, but realised it was even happening to me there too. A bad trade hit me harder than it should have been because of my pride...
The old adage; 'those who can, 'do', those who can't, 'teach' sprang to mind... and i didn't want to be one of the 'teachers'! You know the blogs i am talking about, especially EW types, they will have an alternative count for everything and happy to label their work in hindsight claiming it was a success... Looking for memberships and subs to make a living.

Too much of a distraction indeed... and besides, i follow the 1min charts now, hardly time to take a screenshot and post the likely outcome before it's already happened!

There is more useful information here on this thread, than anywhere else that i have found and best of all, it is a mechanical entry system. Entry points are black and white. The discretion is whether or not to take the set-up. This why i liked the CCI trigger in the first place. Determine your risk, take the trade on trigger and it either works or it doesn't! At least you know beforehand how much you might lose.

Anyway, good weekend to all and GL.

Not the best example (shapewise) of an inverted cup and handle, perhaps, however, this is what it is, merely not such a rounded shape!
The important part is the fresh low. Look for a pullback shortly after printing the fresh low.

I do not want to clutter the thread introducing Elliott wave theory into the mix and will not do so in the future, however, once learnt, you can not help but to view things in this perspective. It then helps to build a picture of what to expect next. In this case, i used it to enter into a powerful downward thrust.

The double 123 is a strong indicator and when it also touches the flagline already in place before pulling back for point 2 (of the larger 123), we now have two entries at the same place; a break of a flagline and a 123 trigger, this combined with the pullback after a fresh low, is a great trade.

Here's the chart;




By the time the second 123 gets triggered, MACD has crossed to the short side and as Harold will agree, now gives support for likely trend continuance with impetus, especially as it crosses below 0, indicating weakness in the market.