The Really Useless Thread

sisse,

I would risk adding another position ($100) at .1300 since I profited $200 and took one position off already. Thanks for the info! Keep it coming!

Also,

I would like you look at my chart on S/R; wave, Swing High on Day chart that I posted a few pages back to primejarvis's comment

Thanks Pharm0r for you time intrying to show me your perspective.

Everyone trades with stop loss. Three ways to do it: 1) You set a Sl and limit your losses this way. 2) Your account balance. Your account balance (margin requirements) sets the ultimate stop loss for you and will not reward your patience for things to reverse and go your way. I suppose its possible to leverage so low with positions so small that the market could do just about anything and have no risk of wiping you out, but then, what's the end game there? 3) Your life expectancy. You could die of old age and leave your drawdown your reluctant heirs while you patiently wait for the (inevitable? Is it really?) turnaround.
Death. The last stop loss.
I set them with my trades. I do look at my stop as my risk, and consider the stop to be where I control % risk. Pharmor said that's the wrong way to look at stop loss. Why Pharmor? I don't get it.

@ Entry
Risk: $300
Return:0

@ TP1
Risk: $200
Return: $200

@ Scale in 1
Risk: $100
Return :$0 +[200 locked for risk from entry]

@TP1
Risk: $0
Return:$200 + [$200 locked from scale in 1]

@TP2
Risk : $0
Return : $800

@TP3
Risk :$0
Return: $1400

Sit tight ?!! if FA and TA is relevant then Trail or clear all on game changer ...

made a mistake on partial calculations or not will edit the post in few , holding a glass of beer isn't helping !

Absolutely NO !!!!

--> Read back post again. The only job is first to reduce and manage RISK

--> If you scale in again in @ point A your RISK will GO UP not DOWN !!!!! Why?

If you add a position your will be holding shorts x4 and your risk moves from:

Original risk: $300
After TP1 and Scale in RISK: $100
If you Scale in @ A RISK: $100 + $100 from the new position = $200 ...You failed to manage/reduce risk !!!!

Right. You stay put. Is nothing to see or do from a risk/trade management perspective. (forget about FA and TA for now, this is not a trading map)

Indeed.

So last question in this point:

1. Q4: So after we chop around in point A for a while price sell off and we manage to get to TP1 b and one more time we bounce back and overshoot to 1.135x (Point B)
2. After a few failed attempt to take the handle price start retracing back to one more time 1.13 from point B. What would you do this time? Scale in for the 2nd time, Trail or Clear all?

sisse

Hey Fisher, first of all congrats because you are almost 100% profit in a little more than a month. second of all, you said you never use sl, but i see that sometimes you take only a few pips sometimes 2 or 3, in those trades that i imagine are very quicly you have time to set your sl? or those trades are trades that dindt reach your tp and are going against you?

...and we rolled. Equities closing soft on the highs with risk knocking at the door in Europe.

We are set for a very key European session tomorrow that will set the M roll across the board. All eyes on DB tomorrow as the level of noise during today's DAX close triggered major alerts and coincidentally we have German Bank holiday on Monday ....

All cards on the table across the board, only OIL in their own isolated party after the major news. Expecting major movers and shakers any time ....

sisse

We'll wrap it up with the next update on the Dissecting the market conversation ...

Three to Swing: Waves, Support & Resistance Levels, S&R Zones, and Trendlines (Continuation)

Attached Image (click to enlarge)

4. Support and Resistance Zones ...

1. In general if you have a setup to get in a trade, and price is trading inside this zone, you may have a very good entry given the reduced risk of placing your stop. On the other hand, if you are already in a trade and you are using multiple timeframes and price enters in this zone you may consider closing your position or at least banking some profits.

Nonetheless, and probably the more important information you can have with S/R zones is filtering a fake Break or anticipating a valid Break when you are using a longer timeframe for direction.

1. For example in the case of a fake break of a swing high, price can breach the swing high but if that bar CLOSED BELOW the resistance zone is a FAKE Break (happens every day).
2. On the contrary if price breach the swing high and closed INSIDE the resistance zone the break would most of the time be imminent (happens occasionally and only when markets are “behaving” especially outside of major news or the opening and close of the markets),
3. Of course if it closed ABOVE the swing high the break is already confirmed (happens every day especially when the move is driven by fundamental reasons or when there is change of trend direction).

Some very important notes on S/R zones:

1. The timeframe is key. S&R zones are worthless if you are trading very fast charts because of the tiny range. Also the most widely used and longer the timeframe the more important these levels become.
2. Recognizing a fake, imminent or confirmed break in a second timeframe is not a reason to take a trade. Triggers are completely independent of this analysis.
3. If you are using a single timeframe, S&R zones may be lagging most of time and will only serve to confirm a trade you already in or exit a trade when you confirm a false break.
4. Don’t confuse S/R zones with S/R levels. The latter are more important for price analysis because they will define if prices are making HH/HL/LL or LH.

5. Trendlines

While S&R levels give you a horizontal perspective, trendlines give a more vertical approach. For trendlines you connect 2 swings (in the case of the chart 2 swing Lows).

I know these are basic concept but in these very essential notions you can find the roots of most problems in this analysis.

1. For example, based only in this chart you may think to go long in the next test of that trendline [case a] (which is valid idea) but price can go but not break the Horizontal Support level, breaking the trendline and still be a valid long setup [case b].
2. In other words the valid setup for longs is because price is making HH and HL!!! ; And not because the trendline is broken you should start looking for shorts, not until you have new swings pointing to a different scenario!!!! [case c].
3. The second fundamental trendline analysis issue is defining the relation between swings and timeframe. Here is when everything gets messed up:
4. All swings in your current timeframe will be reflected in a lower timeframe but NOT ALL swings from your current timeframe will reflect on a higher timeframe.
5. This means that you can connect an “unlimited” numbers of swings but you need to recognize which swings correspond to your current timeframe and which one are from a higher timeframe. In other words if you connect a major swing to a small swing you may end up with an INVALID trendline.

​
Real Example of S&R Zones
While writing this post, I fortunately came across with this excellent trade on the euro (6EM0) (and excellent case of S/R zones in action in an imminent break). Today GMT+1:

Give it a try. Apply these 5 basic notions in any chart without indicators. You will be surprise with the results. Of course new questions will arise like how do you pull the trigger? Or how do you deal with choppy conditions? (Remember that choppy is not ranging … ranging is as tradable as any trend). How do you define a good target? Is it worth using a second longer timeframe? Are the instrument, timeframe and time giving enough room (true range) for entries and exits? .

Despite these questions I can guarantee if you master these 5 core notions you will have solved most of the direction issues in the analysis (AND WITHOUT INDICATORS !!!) and you can then focus in the more micro technicalities such as how to pull the trigger.

TBC ....

sisse

no no no- that is not what I meant. I was trying to illustrate a point, not saying the way you look at stop loss is incorrect.

Sorry I was away at the dentist.

I'm not saying I don't use stop loss @fisher, I'm saying I think a stop loss that is time and outlook dependent maybe a better solution then a technically based stop loss.

That being said, a proficient technical trader (such as a seasoned mofu trader) can spot who is winning and where most times, so trades are 1. avoided or 2. exited before draw down 3. almost never entered in an awful spot or 4. waited on. The fact is, EU at this point has a tiny tiny tiny chance to move up 1000 pips. Infantile chance. So why bother taking a loss UNLESS something fundamental changes (maybe US govt implodes or something)...which is obvious enough to reverse outlook.

Scale in 2nd time .

So that you can predetermine a % of capital you are willing to risk on a trade and stick to it. And to limit drawdown which among other downsides,has an opportunity cost.

I must say this , anyone who followed and understood how to spot and apply the 5 basic notions that Sisse explained alongside the risk/trade management , SHOULD be

able to filter a lot of noise from his trading habits from now on . [not to be offended but if you're 'lost in translation' then you better try harder or find another career]

For those who didn't understand some key words in his posts throughout the year , including me sometimes, [ how he defines an outlook , a bullish/bearish close ,

imminent breakout alerts etc...] , they would be in sync with his posts after such illustrations.

You can check his previous posts and see what he meant exactly on his daily remarks for reference .

I[we] need more of this and I wish we could get some of his knowledge on how to master the FA side but that's another topic ...

This is not the thread to ask such questions. Please go to the right thread and ask your question there.

What? what is the right thread?

Sisse Thank you for valuable lesson.

Jmbo

Well, seems he's much bettere questioning then answering.

thanks sisse: gourmet trader stuff is basic but refreshing and risk management is a very good topic

Q4: if mantra is "reduce ad manage risk" in B may do nothing (probably my choice) or i can scale out two position for -50 each so i close at BE even if i'm stopped out later.

A question: what if i took profit two times at TP1 and reloaded two times? now i would be up for 400 against a 300 risk, do you consider scale in at entry price several times or is a no no?

dax opened -161.0 down .....

Edit : imminent break down alerts.....

Very strong opening range in Europe as widely expected since the close yesterday. DAX and CAC on the run via DB. All eyes on DAX 10000 that is naked for a test. A Losing that floor opens pandoras box in world equities.

However a Lehman run on panic will kill have collateral damage as it will pretty much kill FED hikes this year. For now Frankfurt in full control flirting with a panic leg in Europe...

sisse