The Trader's Academy - by Traders for Traders

What exactly would you like to know my friend?

Has anyone come across a EA that works like this
what I'm looking for is a EA that closes all trades on all charts at the same time.
Which also gives me a profit and loss total as it runs.
And I can close it with just one click of a button.
thank to anyone who can help me.

Would be good to know more specifically what you are looking for, but here's my take on the term. PA is a subjective topic in the sense that it can mean "whatever pattern you come to see in the fluctuation of prices" - what patterns you discern depends on your perceptual and cognitive habits.

Some people look at candlestick patterns, such as pin bars. Others look at breaks of candle lows/highs. cat, above, looked at 'strong candles' in the anticipated (based on past price action) direction.

To make it more objective, some people look at price patterns in relation to price levels or moving averages. What I was recommending above could be considered price action in relation to a moving average channel. Support and resistance trading is an example of price action in relation to price levels.

Does that help?

I've just followed Medici over here. If I might play devil's advocate for a moment and without having read the entire thread I'll offer the following for discussion, regarding PA amongst many other things:

Oh, absolutely. What I would recommend is

1. Going over a few months, at least, of charts to get a clear understanding of what patterns repeat
2. Clearly and objectively define the patterns that appear profitable into setups, including rules for entry
3. Do the statistics, in terms of suitable stop-loss and target profit, hit-rate, and frequency of occurrence
4. Evaluate each setup in terms of average daily profitability, downside risk, etc
5. Decide on which ones to trade and build a business plan (i.e capital required, minimum and expected cash flows, risks, etc)
6. Work towards flawlessly executing your plan by forward testing it using a lower risk level
7. Get started trading as a professional

The absolutely wrong way to go about things would be to start playing the market, demo account or not, based on, for example, the many excellent examples posted here by cat - without doing the necessary preparation as indicated. Developing some kind of subjective intuition as to when to enter or not, rather than going by objective rules, is the road to disaster. There are two reasons why:

Assuming you have been successful over many months using subjective intuition only, there will be a pattern to your track record. That pattern can be analysed to generate the output of the preparation work suggested here. It is better to be consciously aware of those patterns than not. In the words of Aristotle: "We are what we repeatedly do. Excellence, then, is not an act, but a habit."

To make trading into a conscious habit rather than an intuitive pursuit is absolutely essential for psychological reasons. When you use intuition, rather than rule-based thinking, you are much more likely to suffer stress, as your subjective judgement is involved rather than well-tested rules. And when your stress level goes up, your capability to act rationally decreases radically, and you may get into a state of fight-or-flight. If so, one mistake may turn into several and cause a small or large disaster to your account, before you have a chance to reflect on what's going on.

Price Action

1 The breakout
2 The pullback

Are you willing and able to share your objective rules?

?

Excellent post by the way Medici. This brings to mind one of Mark Douglas's quotes, where he talks about the absolute requirement to be able to accept the risk before putting on a trade, something that all traders are only able to do once they have mechanized their trading system, and although one can never know whether a trade will be successful or not, there should never be any hesitancy about whether to take it - either you have a signal to trade, or you do not. Trades based on intuition, rather than upon formula, breed fear, confusion, frustration, and consistent losses. Building that formula is a process and takes most people many years.

" To whatever degree you haven't accepted the risk, is the same degree to which you will avoid the risk. Trying to avoid something that is unavoidable will have disastrous effects on your ability to trade successfully "

How do you backtest a JPG?

Can you write down your criteria for when to buy and when to sell?

In plain English if English is your first language, or in pseudo-code if you're a computer programmer?

Well is not a jpg is a png.

The image is very clear.
Simple and basic Price Action (not a system).

About when to buy and sell is up to you my friend.
You can buy the breakout or pullback.

Now you need start working to find the above PA in real time.
I wish you good luck in your journey.

Thank you for kind words, and for pertinent quote. Very useful and worth committing to memory. But there is a vast difference between trading as a conscious habit and mechanized trading, I think.

Note that Douglas says "To whatever degree..." As human beings we can never totally eliminate risk aversion, so it's a matter of managing it. There is a neurological explanation for this, which one can read about it Daniel Kahneman's book Thinking, Fast and Slow. Managing one's risk aversion is something which requires consciousness, and believing that mechanical trading eliminates the emotions related to risk is a mistake. The algo traders I've known have watched their babies as closely as mothers watch their newborns - turning them on and off based och subjective risk assessments rather than anything objective.

Also, one cannot eliminate risk aversion by will, only manage it by consciousness or mindfulness. What one consciously suppresses, expresses itself unconsciously. I come to think of a particular prop firm in the City, which coaches its traders to trade without emotion. Not unsurprisingly, a larger than expected proportion of their traders calm their nerves with a few drinks at the end of the day. That is not a recipe for long-term success. And even without the drink, the stress suffered by the body will lead to trader burnout sooner or later. Personally, I want to finish the trading day relaxed and ready to enjoy the rest of the day. So I attend to my stress levels, and I quit for the day if they reach a certain level.

There is a very good book about these matters called Trade Mindfully, that I would strongly recommend. This book also elaborates on the relevant material from Kahneman's book, which is a bit of a dry read.

We all also have some degree of intuition, and over time it develops further and further. This is not to be eliminated, but used as a resource. Which definitely doesn't mean that one can break one's own rules whenever one feels like it. Rather, it's about perceiving market behaviour, and its changes and variations. The market doesn't conform to our rules, and it may behave in an erratic or unusual way. Also, it changes over time. EURUSD is different in 2016 from what it was in 2012, which was different from what it was in 2008. How to adapt, learn, and develop with the changes - that is a skill that is constantly needed, also on a daily basis. For example, the intuition gained from developing a system for EURUSD in 2011-12 helps me adapt to the increased volatility in DAX in recent weeks. Going through the development process outlined in my previous post is a very good way to develop one's intuition - as opposed to watching the market day by day.

Thanks for your good wishes, but we seem to be at cross purposes here.

I wish you good luck on your journey also. However I've already been where you suggest I go, and you haven't yet answered my question(s).

Your PNG at first sight seems (to me at least) to correspond to Medici's step 1.

Here is his step 2 once again:

Thanks for the tip Medici. I hadn't previously stumbled across "Trade Mindfully". I've read "Thinking..." though, and I even bought my eldest daughter a copy of the paperback for Xmas!

For those who aren't into "dry reads", here's a video of Daniel Kahneman in conversation with Nassim Taleb. Another interesting author! (IMHO of course)

In the attached shot which was a Frankfurt open short on the Dax on the 13th of this month, can anyone tell me why the first trade, taken off of the 20 sec 200ema, was a winning trade, but why a short taken in the same direction off of the same MA lower down would have produced a BE at best, or a loss. There are two reasons that can be seen on this chart, and another two that cannot be seen which would have meant that this was not a place to be selling.

In the first trade, higher time frames were in a downtrend. Price found support at 10,095 level, bounced, made a HH/HL but did not break any key structures. The HH which coincides with the 200EMA is therefore a signal to sell, and more can be added on the immediate tightening of price and breakout that came after.

In the second trade, price found support at 10070 region, consolidated, attempted a break lower. This break-out failed, and price quickly reversed. A failed break-out typically means a larger retracement from a higher timeframe is probably to be expected. We might therefore expect the 200EMA from the timeframe above to provide some resistance (which it did.) The short from the 20 sec 200EMA is unlikely to work because we also broke above key structure of the downtrend at 10085 and made a HL/HH. A short from 10095 is possible but since price did not make LH/LL afterwards, it should be exited at some price between BE/small profit.

In fact, if we can pre-identify the 10070 region as key support on a higher timeframe, we can even go long on the break-out to the downside and it recovering into the consolidation area expecting it to fail, with stops below the low.

More can be added after the break of key resistance at 10085 and some after HL/HH. 2/3 can be taken off at the higher TF 200EMA, and then added back again when price tests the broken resistance/now turned support at 10085.

Great stuff shellsnail, very in-depth. Anyone else before I give mine?

This works for me

Relative Strength Index RSI(14)

When RSI tags 70 or higher you have confirmed existence of uptrend (impulse wave(s)).

IF then RSI in correction holds above 40 and turns up, you have possible confirmation of the end of corrective wave(s) (ABC type of correction is my favorite but be careful, you could also have ABCD or only one corrective wave in strong trends).

When RSI tags 30 or lower you have confirmed existence of downtrend (impulse wave(s)).
IF then RSI in correction holds below 60 and turns down, you have possible confirmation of the end of corrective wave(s).

Also pay attention to divergences between PA and RSI when RSI is in oversold (30) or overbought (70) territory. You could be looking at meaningful correction or ever reversal of PA.

Fibonacci retracements and extensions

After you have confirmed trend (70 - uptrend, 30 - downtrend) and price action (PA) has established price bottom, you apply Fibonacci retracement levels. Then you wait for PA to retrace to 38.2 %, 50 %, 61.8 % or 78.6 % and enter a trade (50 and 61.8 % are my favorite levels of retracements. I only take a trade at 38.2 % retracement if trend is VERY strong). Set stop loss above 78.6 % or 100 % retracement level.

Identifying which retracement level if any will hold is the most tricky part of Fibonacci trading. When you see trend line, support/resistance, 50, 100 or 200 simple moving average in proximity of Fibonacci level, there is good chance that level will hold (I usually wait for short consolidation around Fibonacci level or some candlestick reversal pattern at Fibonacci level before I take a trade).


After establishing legit entry point you have to establish possible take profit point(s), here Fibonacci extensions come into play:

If PA reverses at 38.2 % retracement there is good chance price will reach 138.2 % extension.
If PA reverses at 50 % or 61.8 % retracement there is good chance price will reach 161.8 % extension.
If PA reverses at 78.6 % retracement there is good chance price will test price bottom again or reach 118.1 % extension.

Fibonacci extensions are only general guides where PA could consolidate or reverse. You have to pay attention to resistance/support levels, 50, 100, 200 simple moving averages and existing price patterns on the way.


Moving averages

Moving averages are very important trend verification indicators. They also tend to work as support/resistence, so we have to pay attention how PA behaves when it touches them (bouncing off or breaking through). I use 21 exponential moving average (EMA), 50, 100 and 200 simple moving averages (SMA).

I usually take only short trades when price is under 200 SMA, and long trades when price is over 200 SMA. PA corrections tend to find resistence near 21 EMA and 50 SMA in strong trends. If 50 SMA is broken, you could be looking at more meaningful correction or even reversal if PA breaks above/under 200 SMA.

The best trading setups are usually when PA enters a trend then retraces 50 or 61.8 % percent and you have a cluster of 50, 100 and 200 SMA behind these Fibonacci retracements.

Multiple time frames

Fibonacci levels work better on higher time frames (less market noise, institutional traders use higher time frames). I use daily chart to define longer term trends/consolidation ranges and take trades on 4-hour chart (I also look 1-hour chart for fine tuning entry point) only in agreement with daily chart.


Speculative Sentiment Index (SSI) and COT

In addition to Fibonacci and RSI you can use the long-short ratios graph to trade counter the crowds. Retail traders are usualy wrong and institutional traders are usualy right in the long run. So why not trade in the same direction as big boys do? You can find free SSI at Dailyfx, Dukascopy (SWFX Sentiment index) and Oanda (forex historical position ratios) and COT data at myfxbook


Risk/money management (MOST IMPORTANT PART IN TRADING)!

Take only trades with risk/reward ratio 1:2 or higher (I usually only take trades with 1:2.5 or higher).
Be prepared to be on the wrong side of the market more often than not, but as long as your win/loss ratio is higher than 33 % (risk/reward ratio 1:2) or 25 % (risk/reward ratio 1:3) you will be making money in the long run.

Make sure that 3 % is maximum capital exposure on anyone trade and 6 % maximum exposure on all open positions (I never risk more than 1 % per trade).

reasons for taking the sell shortly after 7am London time, just after the Frankfurt open.

 

1. momentum was down prior to the open, shown on the 1 minute chart and the 3 minute chart, with the 3m 100sma having just come over on toip of the price, a good bearish sign.
2. A tell tale pop up at the open, which gives the pros at the exchanges a good entry point - there is very often a fake move like at the Frankfurt and London opens.
3. There is room for the price to move - the 3m 200ema is about 25 pips away, and the 5m 200ema is 50 pips away.
4. All my major moving averages are in order, ABOVE , the price, so very unlikely that it will break north through them ( why would other traders want to take it that way when everything is pointing south?)
5. There are several shooting star candles, something I lawys look for, but not in itself a signal to trade, just further confirmation.
6. The time is right, just after 7am, so a decent move can be anticipated. The closer the time gets to 8am and the London open, the least likely there will be a significant move, and no one trades close to the London open, always better to wait as it often spikes.

Reasons for not taking the second fall away from the 200ema -

1. The time - 07.45 and too close to the London open
2. Diversion with MACD - even on a time frame such as this one, these diversion signals are powerful
3. The 100sma ( blue/orange dotted ) is now beneath the price. It was on the very first opportunity, but only just, and it was not beneath the 20ema ( blue/red ) as it was on the 07.45 green arrow.
4. There was now not enough room to move - far too close to the 5m 200ema, a big potential support area, and so it proves here.

At the London open, the momentum on the small time frames pointed to a Buy, and there was an aggressive spike down, followed by a couple of bullish candles on the 20 sec time frame for the entry. The H1 200sma above capped this buy trade, and anyone who was trading the Dax on this day will know that the price sold away from that key technical level to drop more than 400 pips by the end of the trading day!!

You're welcome

And thank you for YouTube link. I won't watch it however. Just the mention of Taleb is enough. A well-marketed individual with little in terms of deliverables. He got lucky as an options dealer in the late 80s, then engaged in a heavily self-promotive quixotic crusade against those he secretly admire - the quants - only to promote himself as superior to them based on his supposed philosophical reasoning. To quote the following link - "Taleb is a philosopher in the same way the drunk sophomore at some college bar trying to diagnose you is a psychologist." http://blog.morallybankrupt.org/2010...sim-taleb.html

Now, is this a matter of taste or personality clash, or what? As my next link suggests, and I know many examples of evidence for, the people who know better than Taleb are too busy making money to waste time refuting him. https://scottlocklin.wordpress.com/2...ative-finance/

And there are plenty of points to refute IMHO. If you want to get a taste of the details of that, there was a debate in Derivatives Strategy back in 1997, after Taleb had attacked the main risk model, VAR, in use everywhere from BIS to your typical hedge fund - in fact its use is a regulatory requirement for most institutions. See http://bundlr.com/clips/4fff5a5110ca120001000828

Taleb's book on Dynamic Hedging is very good though. Written before he engaged on his crusade... And ironically he has in recent years beefed up his quants skills and is now, when he's not on tour, trying to turn his ideas into quantitative models. How marvellously beautifully in contradiction to his early tirades!

Apologies for rant...