Making Money Trading

[rawrschach]

Hi t_d

What do you mean by 'never offer the liquidity'?

Does #6 mean that you don't trade lower timeframes professionally? (How low is low - hourly?)

All traders should have not only a trading plan but a set of rules and/or observations that are a constant frame of reference.

I have mine above my desk at work.

These rules and observations are controversial at my firm, for reasons that will become immediately obvious, but they enable me to make money and keep it.

1. IGNORE THE NEWS

2. OBEY THE LEVELS

3. NEVER LISTEN TO OTHERS OPINIONS

4. LOSERS TAKE PROFIT

5. MOST MARKET PARTICIPANTS LOSE MONEY

6. MOST MARKET PARTICIPANTS DAY TRADE THE LOW TIMEFRAMES

7. UNDERSTAND FEAR

8. STRONG HANDS NEED LIQUIDITY

9. NEVER OFFER THE LIQUIDITY

10. IF YOU ARE IN A TRADE, DO NOT WATCH IT

11. IF YOU ARE RIGHT AND YOU ARE NOT TRADING YOUR LIMIT, YOU ARE WRONG.

 

[jonj]

Hands up who got shaken out by the "RETRACEMENT BUS" on Eur/Gbp. Frustrating since we are now making new highs. (see chart 1)

This happens time and time again - infact some of you that are taking this strategy and making it your own may want to experiment with closing half the position at the first problem area and then buying it back when price retraces to its original entry which I would say it does, the majority of the time.

I had an argument with a colleague that sits opposite me yesterday regarding this: he is of the firm opininon that if you have +80 ticks on the table as we did on this trade, you cannot let it go to breakeven or worse, a loss. I've heard that sentiment echoed many times on this board and by other traders. Well, if you are playing for short term gains then that may be true but when I argue I don't do it based on unfounded opinion, I do it based on my OBSERVATION and EXPERIENCE in the market. I'm not a know it all - I just continue to learn from the market and try and work out ways to beat it. And the way to profit from the longer term moves is by realising that when they get underway there will be a jostling for position - as one great trader once said, the biggest back and fill is at the beginning of a new trend and I think this is often true even when an old one resumes course.

Have a look at these moves and see just how a good profit comes back to breakeven or a small loss before the real move gets underway. Notice how the entry is a mere two or three candles before and how market participants are shown a good profit and lulled into a false sense of security. They tighten their stop or protect their profit. Then they lose their position. The market moves without them and it often moves BIG.

What's the saying? Fool me once, shame on you. Fool me twice...

good post TD,this is a problem i encounter with bull /bear traps on price breaks.Big stops? or two trades? that is the question.
my argument is this,if the price retraces 80 pips,then why not try to make a peice of it TWICE?once by selling before the retracement and once by gaining the pips again when the move takes off again.
this way you get the added security off NOT being in the trade until it does take off again.(if you know what i mean??)

 

[jonj]

and the pinbar of the week award goes to .......

 

[rwgold]

Pin bars are bars not candles.

It looks like a fine pin "bar" to me. Notice I said "bar" not candle. Bars do not have bodies.

Draw the trend line connecting the highest bar in the trend's resistance level and the high of the most recent high and and wait for the breakout and then for price to reach the price of the high of that bar on the rise to confirm if this is indeed a change in trend upward. Then based on the other things you should be looking at decide whether it is advisable to go long.

Rico

 

[rawrschach]

From what I've read on here and J16, it's not a valid pinnochio bar unless it has a body which overlaps with the body of the previous bar...

 

[jonj]

From what I've read on here and J16, it's not a valid pinnochio bar unless it has a body which overlaps with the body of the previous bar...

not sure if this is a reply to my post ??the body of the pinnochio bar/shooting star should be within the body of the preceding candle,idealy the eyes would be equal.the shadow should run at least up to a key pivot level preferably through it to make an ideal setup,this is my understanding of the pin bar setup.

 

[rawrschach]

It was to rwgold, but you explain it better than me ^^

 

[jonj]

It was to rwgold, but you explain it better than me ^^

sorry,without the quotes i didnt know who was talking to who

what do you think of the pin of the week??

 

[rwgold]

Price action and the pressure gradient.

:cheesy:

It was to rwgold, but you explain it better than me ^^

Again, pin bars are bars not candles. Candles have bodies while bars do not. There are several different types of candlesticks which can effectively give the same signal as a Pin Bar gives but they are not called pin candles. Take a look here:

Introduction to Candlesticks - StockCharts.com

Part of the confusion might be related to the term "body" when open and close would be more appropriate and help to properly and more easily get the point across and correlate to the price action that is actually occurring which is the whole basis for taking a particular meaning from the occurrence of a pin bar.

It all boils down to price action, there is nothing else that matters and in price action everything is reflected, both fundamental and technical.

Every bar tells a story of exactly what went on during its time frame and based upon interpreting the psychological aspects of what transpired comes the edge needed to place profitable trades. No one can predict the future of anything with certainty. Trading is a game of chance due to the lack of ability to make these predictions. The edge a trader has is what makes him the house and more likely the winner in the zero sum transaction that trading is.

Someone wins and someone loses in every transaction. Figure out what the crowd is thinking and you will have a better chance of guessing correctly what they are going to do next, buy or sell. Pressure moves the market and the the gradient from lower to higher pressure determines the direction of the movement.

Rico

 

[jonj]

Part of the confusion might be related to the term "body" when open and close would be more appropriate and help to properly and more easily get the point across and correlate to the price action that is actually occurring which is the whole basis for taking a particular meaning from the occurrence of a pin bar.

here we have a diference of words,i use the term pin bar but post charts with candles,,sorry for ant confusion

It all boils down to price action, there is nothing else that matters and in price action everything is reflected, both fundamental and technical.

i agree

Every bar tells a story of exactly what went on during its time frame and based upon interpreting the psychological aspects of what transpired comes the edge needed to place profitable trades. No one can predict the future of anything with certainty. Trading is a game of chance due to the lack of ability to make these predictions. The edge a trader has is what makes him the house and more likely the winner in the zero sum transaction that trading is.

yawn:

Figure out what the crowd is thinking and you will have a better chance of guessing correctly what they are going to do next, buy or sell.

i try not to guess the future, just be prepared for whatever outcome i see viable.

 

[nine]

Jonj, personally I think you should:

1. Carry on posting candles and keep using the term body. It is frequently used, has one meaning, and is thus something that people should learn.

2. Take yawning to the point of sleep when things get too trite.

Lets remember that there is not ONE crowd. There are a number of different groups of different strengths interacting in any market place. Some of those groups are machines. Also, "Every bar tells a story of exactly what went on during its time frame and based upon interpreting the psychological aspects of what transpired comes the edge" is pretty pretentious as well as plain wrong! First a bar or candle just shows the ohl and c. Second, one bar is rarely enough to read a story so you rarely get more than a hint of what's transpiring in the marketplace. And plenty of experienced traders will tell you that there is no need for "interpreting the psychological aspects of what transpired" to trade well.

Sorry, I'm obviously overreacting to pretentious regurgitation of some text book on trading.

 

[mp6140]

Mp --- Walter Mitty Lives !

:cheesy:


Every bar tells a story of exactly what went on during its time frame and based upon interpreting the psychological aspects of what transpired comes the edge needed to place profitable trades. No one can predict the future of anything with certainty. Trading is a game of chance due to the lack of ability to make these predictions. The edge a trader has is what makes him the house and more likely the winner in the zero sum transaction that trading is.

Someone wins and someone loses in every transaction. Figure out what the crowd is thinking and you will have a better chance of guessing correctly what they are going to do next, buy or sell. Pressure moves the market and the the gradient from lower to higher pressure determines the direction of the movement.

Rico

======================================================================
i have to take some issue and some agreement with what you state

T_D's method (does it matter if its a pin bar, a royal whoopee or a rectal exam if its a reversal candle ?) tends to offer the newb a very decent chance at winning instead of losing, and while i enter much earlier than his system instructs, thats for me and i have a ton of years experience doing so with a good idea as to what to look for, which the newbs do not ---- so my vote is always FOR his system, no matter what one calls a candle !)

that said, youve said the words that trigger the pavlovian response within my little brain and by magic, force me to sit and type and post my feelings !

while people LOVE to say trading is a zero sum game IT IS NOT because you have NO IDEA of why that other trade took place --- were you buying someone elses SHORT COVERING, allowing them to make money while you played the opposite game, perhaps aon a different timeframe ? You have NO idea why that trade took place, and no idea if the person won or lost, so by definition, you have simply gained the shares you wished and the other sold the shares they wished !

Lets please look at this scenerio --- you choose to go long based on the H1 chart, and switching to a shorter timeframe observe the currency moving downward and appearing close to bottom on the 5 minute chart. Seeing a good time to buy your long, you enter at a decent and low price. Having done that, with what youre saying, youve "beaten" another person, but how about if that person were short on the 5 minute, knew the end was coming and needed to cover their short ? ---- YOU just provided the cover they needed, so you BOTH have just gotten what you wanted ! YOU got in as cheaply as you could and the other trader SOLD and covered at the lowest price they would see for a while !

WHERES THE ZERO SUM ?????????

in forex (and stocks for that matter) often you are simply buying into the mms pool of shares, which they bought at a much cheaper price, thereby allowing THEM TO WIN if it were a "zero sum game", but your purpose is now to watch those share prices increase which means NOW YOU WIN --- so the reality of the situation is you both win, and therefore there is no single combatant who walks off the field of honor with m'ladys kerchief.

IT JUST AINT A GAME OF WAR, but simply how best to move from one side of the street to the other, hopefully making profit in that move. To many books have been written by frustrated desk jockeys who probably wanted to be doing clandestine operations with any secret service in remote jungles, and didnt face up to the simple fact that they were doing nothing more than moving money around for profit, and not killing bad guys !

ive seen a thousand references to "the art of war!" the ancient oriental treatise on how to pulverize your enemy and win fame and fortune from your emporer, but in trading we have no emporer or positions of power ---- just profit or loss, and as soon as the desk jockeys understand that they didnt choose to work with the clandestine ops organizations, they can release their "walter mitty" pretensions and concentrate on whats really important - - - -

their xmas bonuses !

but onwards --- i have battles to fight, cities to rape and pillage and honors to be bestowed --- gosh, dreams are so difficult !

oh -- one last thing ---- if you figure out what the "crowd" is thinking, youre way behind the curve --- figure out what the SMART MONEY is figuring, and you make out like a bandit !

enjoy warrior

mp

 

[jonj]

Lets remember that there is not ONE crowd. There are a number of different groups of different strengths interacting in any market place. Some of those groups are machines. Also, "Every bar tells a story of exactly what went on during its time frame and based upon interpreting the psychological aspects of what transpired comes the edge" is pretty pretentious as well as plain wrong! First a bar or candle just shows the ohl and c. Second, one bar is rarely enough to read a story so you rarely get more than a hint of what's transpiring in the marketplace. And plenty of experienced traders will tell you that there is no need for "interpreting the psychological aspects of what transpired" to trade well.

 

[superspurs]

Hi SS
Nice, price breaks through trend line then comes back to test it with a pin if I understand you correctly.
Have you had much success with this?

Best Regards,
Neil

exactly,td has mentioned breakouts before in this thread,stating that he likes to get in on a retracement,it also ties in with what he says about the retracement bus.another example

 

[jonj]

exactly,td has mentioned breakouts before in this thread,stating that he likes to get in on a retracement,it also ties in with what he says about the retracement bus.another example

that is a great pin!have you seen these happen often or back tested them??

 

[jonj]

heres another (kind of )e.g.if i understand you correctly,its not really a pin bar but afectivly the same situation

 

[superspurs]

still looking at refining the setup to sort the wheat from the chaff,ie with trend or reversal

 

[jonj]

in more than half of all pattern breaks the price wil retrace back or near to the break zone,some will just continue to retrace and bust the pattern.Most retrace off some R/S .this kind of pinbar setup would be a great way to identify the bounce and get a good entry point in the continuation.
good luck,will keep an eye out myself.

 

[mp6140]

MP -- is it a "retro" pin ?

nice touch on the reversal T_D.

the process is normally attributed to one "muddy" (and called the muddy method) and comes from an earlier time.

muddy recognized that after hitting a high, a stock would retrace, reach a point that was not always support and go back up for a second run.

i learned of this from a younger nephew of muddy, who used the method and explained to anyone who wanted info --- muddys method was based on the "zone" lying between two moving averages that the price would retrace INTO, thus alerting one to watch for the stock to go "green" in morning trading.

Going "green" simply meant clearing the previous days closing price and being the first day to do that, after it had dropped from its high --- invariably one gets the usual 2.5 day runup in price, and so i integrated muddys ideas into my own system, just so i could claim i had TWO barrels to my shotgun !

A VERY EFFECTIVE METHOD FOR THOSE WHO ASK --- watch for the pins and watch for the currency to clear its previous days closing price (u can even set an alert) and then enjoy the ride !

a simple "google" search should recover much information on "muddy's method" if so interested -- combining the moving averages with T_D's method should provide a very visual method of telling approximately when a reversal may occur !

enjoy and trade well

mp

 

[mp6140]

nice touch on the reversal T_D.

the process is normally attributed to one "muddy" (and called the muddy method) and comes from an earlier time. (50's or 60's as i recall)

muddy recognized that after hitting a high, a stock would retrace, reach a point that was not always support and go back up for a second run.

i learned of this from a younger nephew of muddy (called "mudtruck"), who used the method and explained to anyone who wanted info --- muddys method was based on the "zone" lying between two moving averages that the price would retrace INTO, thus alerting one to watch for the stock to go "green" in morning trading.

Going "green" simply meant clearing the previous days CLOSING PRICE and being the first day to do that, invariably one gets the usual 2.5 day runup in price, and so i integrated muddys ideas into my own system, just so i could claim i had TWO barrels to my shotgun ---- remember being a bit friendly with mudtruck back then !

A VERY EFFECTIVE METHOD THIS IS, btw --- watch for the pins and make sure the currency clears its PREVIOUS DAYS closing price (u can even set an alert) and then enjoy the ride !

a simple "google" search should recover much information on "muddy's method" if so interested -- combining the moving averages with T_D's method should provide a very visual and secure method of telling when a reversal may occur --- stockfetcher.com, a paid scanning service for equities, even has a "muddy filter" pre built, to use to scan for those stocks ready to meet the criteria !

since moving to forex a number of years ago, i havent done much with stocks except to maintain my childrens trust fund (mostly metals and oil) so do not believe they have gone over to scanning forex yet ---- as it was an exceptionally good service (translation -- simple and honest) it would be great if thousands of us descended upon them and demanded forex scanning abilities, and what the heck, throw in commodities, indicis, the footsie and whatever floats your boat !

there ARE forex forumns on stockfetcher (i just peeked) but ive sent an email to ask of forex is accomodated along with the rest ive mentioned ----- we shall see !

enjoy and trade well

mp