Ideas for increasing trader performance

This is a discussion on Ideas for increasing trader performance within the First Steps forums, part of the Reception category; Originally Posted by trader_dante EUR/GBP Taking a top down approach, the market has found significant resistance up at 0.9026 and ...

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Old Jan 13, 2010, 6:04pm   #31
 
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Re: Ideas for increasing trader performance

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EUR/GBP

Taking a top down approach, the market has found significant resistance up at 0.9026 and formed a bearish engulfing on the daily time frame. The next big daily level is quite a way lower at 0.8839. This pair loves to range so I think it has a decent chance of making it down here.
Quick update on call above...this is going to make a play for 0.8839. Keep an eye on this. Very critical level. There is going to be alot of action there.

This and the stocks (see last post) is where you want to be concentrating at the moment
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Old Jan 14, 2010, 12:33am   #32
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Re: Ideas for increasing trader performance

I've asked them to re-instate the old username, but incase they turn me down I though't I'd add to what TD has mentioned already (also I have a question I want to ask so trying to knock up a few brownie points - if only there was some sort of system for that!). I think it's safe to say that our strategies are fairly similar, so these few points should be pertinant for anyone taking an interest in what TD has said already.

I don't have a disclaimer as long as his, so if you don't like it ignore me.
++++++++++++++++++++++++++++++++++++++++++++++++++ ++++++++++++++++++++++++

in no particular order:

What's Hot and What's Not? Before you mark in your levels, eyeball the chart and decide if it is trending or stuck in a bracket; some things are trending, some things are ranging - cull your "possibles" to "probables" right here.

If you are struggling to pick out levels...don't worry about missing some - just make sure the one's you've got are sensible. As a first step, I always (always!) look for Support becoming Resistance (or vice versa). Search for BBmac's posts and take a look.

There are different types of level. In addition to SbR / RbS (w/ fibs), there are also trendlines, Value Areas (POC's) and even moving averages... once you get the hang of plain S/R, you can use the same techniques in different situations - it's worth learning.

You can use levels to trade patterns. For example H&S (and their failures), flags, pennants... different incarnations of the same phenomena.

Market structures are fractal, Market factors are not. A 15m chart will look pretty similar to a weekly chart if you take off all the numbers - however the factors that are the driving force behind prices change dramatically over timeframes. To quote Benjamin Graham "In the short run, the market is a voting machine, but in the long run it is a weighing machine". Know where your skills lie in the pecking order of price determination.

As a general rule, for price levels of all types... Longer timeframes > Shorter timeframes; Recent levels > Distant levels; Always move DOWN timeframes, never up (i.e. don't look for an hourly level to show up on a weekly chart).

Levels don't last forever!

Good signs: Being tested from the other side (e.g SbR / RbS); Untested from same side (e.g dbl btm / top)

Bad signs: Eroded by time - if the mkt doesn't pay attention to a level you have in, neither should you; A line in the sand... is likely to be crossed - a level that has been tested for the 4th time is less likely to hold in it's 5th.

++++++++++++++++++++++++++++++++++++++++++++++++++ ++++++++++++++++++++++++

Good posts TD

G
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Old Jan 14, 2010, 3:40am   #33
 
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Re: Ideas for increasing trader performance

trader_dante started this thread Good posts MrGecko and good to see you back!

I'm off to bed now...must be ready for the mornings rally in the FTSE
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Old Jan 14, 2010, 3:51am   #34
 
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Re: Ideas for increasing trader performance

Tom, MrGecko: please keep the good stuff coming. The examples are an incredible tool to get unstuck.

Ilya
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Old Jan 14, 2010, 3:51am   #35
 
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Re: Ideas for increasing trader performance

Tom, MrGecko: please keep the good stuff coming. The examples are an incredible tool to get unstuck.

Ilya
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Old Jan 14, 2010, 7:04am   #36
 
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Re: Ideas for increasing trader performance

Hello Tom,
I am reading your blog "Making money trading". I have read 65 pages till now and intend to finish it soon. In the beginning of it, you said that you use fibonacii retracements, r/s, ema, in confluence with pib bars. Till now, what I have read, you don't mention much about ema. So, in context of that I have a quick question.

Let's say that in EURUSD you take 21ema, and then may look for the confluence of pin bar with it ema and fibo retracement. My question is that why look for confluence with ema here? What does it tell us? I can fully understand that we look for pivot points, swing high and lows, r/s but why ema? ema is just a secondary indicator telling us the history. Is it because we have other traders who use ema and we also wish to see what they are watching?

Since the blog "Making money trading" is closed now, so I thought to ask you here. Feel free to ignore my question, you are under no obligation to answer it obviously.
Thanks

[QUOTE=trader_dante;1031684]Good posts MrGecko and good to see you back!

I'm off to bed now..QUOTE]
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Old Jan 14, 2010, 10:41am   #37
 
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Re: Ideas for increasing trader performance

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Hello Tom,
I am reading your blog "Making money trading". I have read 65 pages till now and intend to finish it soon. In the beginning of it, you said that you use fibonacii retracements, r/s, ema, in confluence with pib bars. Till now, what I have read, you don't mention much about ema. So, in context of that I have a quick question.

Let's say that in EURUSD you take 21ema, and then may look for the confluence of pin bar with it ema and fibo retracement. My question is that why look for confluence with ema here? What does it tell us? I can fully understand that we look for pivot points, swing high and lows, r/s but why ema? ema is just a secondary indicator telling us the history. Is it because we have other traders who use ema and we also wish to see what they are watching?
Hello swedendenmark, the reason I don't mention the EMAs is because I don't use them anymore.

My trading has changed quite a bit since MMT although the foundation and basic principles I still apply are very much the same as those found within the thread.

I haven't read the thread since I wrote it but from what I can remember, I would say that the main differences between the way I trade now and the way I outlined in MMT are:

1) I don't trade directly off the daily (or higher) time frames any more. I merely use them to look for entries on the hourly now.

2) I don't trade as many markets. I now watch and trade just twelve markets.

3) I don't use moving averages any longer. The reason I took them off is not because they don't work. The concept of the 50 trending and the pullback to the 10-21 zone is a powerful one and led me into many good trades. However, over time, I take things off my charts because I believe the simpler the better and I wanted to try and perfect the reading of price alone. I don't advise that everyone that follows MMT suddenly take EMAs off their charts. They are a great thing to have on your charts while you are in the learning stage because they give you an important frame of reference with which to watch the markets rhythm.

4) Although I still use Fib levels my use of them is limited. This is for the same reason above. I am trying, over time, to take things off my charts until I am left with nothing but the price.

5) I no longer use candlestick patterns for my entries. That is to say, I don't trade using pin bars or inside bars etc. This is the main difference that everyone will notice. The reason I stopped using them is because I started to be able to anticipate where the market was going but wouldn't get the perfect setup. When I saw that they were holding me back in this regard I moved on. However, do not underestimate how powerful a tool they are and how much they can help you.

6) I don't trade using stop entry orders any longer. This is directly related to the fact I don't use pins etc any longer. I trade just watching the price and entering with market orders when I feel it looks ready to move in my anticipated direction or limit orders if I am confident in a level.

7) I don't use the same philosophy behind my trade management. That is to say, I don't apply a trailing stop principle as methodically as I outlined in that thread. I tend to exit around levels.

So, some of you might be thinking, what do you still do that is the same and is it worth me reading the thread in the first place?

What I still do that is apply the principles that I have always said were the most important parts of that thread:

- I still use support and resistance and still draw it exactly as I outlined in that thread

- I still use the concept of the retest on all market patterns that I see

- I still use a top down approach looking first at how the market is shaping up on the daily time frame and then moving down to the hourly to fine tune

- I still use a whole lot of patience to only get in at what I feel is the right moment which can mean stalking a market for quite a time.

Having noted what I do now and how it differs, I still maintain that a new trader should follow what the thread advises. If you follow and apply the principles you will be able to grow an account and even trade for a living.

Let me repeat: nothing that I wrote in that thread has stopped working.

If you are new to this, keep the moving averages on your charts and keep plotting your fib levels. They show you areas of confluence which increases the probability of a successful trade and is one of the most powerful tools in your arsenal.

Keep using the candlestick patterns - they are confirmation for you and they are very powerful.

Have the discipline to trail your stops in the way I illustrated - it will help you to catch the big moves.

Over time, you may find you begin to slowly change your style. Some elements you will keep, some you will take off, some you will add that never existed for me. Some of you will move up time frames, some of you will move down them.

In essence, you will begin to find your own way which is the most important part of all this.
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Last edited by trader_dante; Jan 14, 2010 at 11:31am.
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Old Jan 14, 2010, 11:24am   #38
 
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Re: Ideas for increasing trader performance

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Originally Posted by trader_dante View Post
2) I don't trade as many markets. I now watch and trade just twelve markets.
Hi Tom,

I agree with everything you have said about taking things OFF your chart, I did the same and at first it was difficult, but over time you begin to feel more natural with your chart, almost like a friend you've known for years! If you're using EMAs, Fibs, etc all the time and they stop working, the average trader is likely to panic.

I just wanted to ask you about this part I quoted though -- what markets do you trade? I am only sticking to Forex as I hate to hold positions overnight on other markets since they could gap, but I do want to start reaching out to others. What are your favorites?
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Old Jan 14, 2010, 11:39am   #39
 
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Re: Ideas for increasing trader performance

I'm enjoying reading this thread right now because it is basically confirming lot's of things I have learnt over the last 12months since I decided to learn to trade on price alone. It is hard work but ultimately worthwhile as it has provided me with a degree of flexibility to trade in any market conditions which I am now finally reaping the benefits of.

What I also draw from this thread though is just how experiential learning to trade price is and nomatter what great guidance is provided by Tom and MrGecko, there is still no substitute for having a go and making an @rse of it.

What I also found invaluable over the last 12 months was learning about the structure of the market and what really drives price around, including the mood of the market, the correlation with other instruments, the news and getting a feeling for the ebb and flow of things.

Keep up the good work boys. Very philanthropic and nice to see something put back in rather than lulz or trolling.
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Old Jan 14, 2010, 12:05pm   #40
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Re: Ideas for increasing trader performance

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Hi Tom,

I agree with everything you have said about taking things OFF your chart, I did the same and at first it was difficult, but over time you begin to feel more natural with your chart, almost like a friend you've known for years! If you're using EMAs, Fibs, etc all the time and they stop working, the average trader is likely to panic.

I just wanted to ask you about this part I quoted though -- what markets do you trade? I am only sticking to Forex as I hate to hold positions overnight on other markets since they could gap, but I do want to start reaching out to others. What are your favorites?
Or you could leave them all on and add to them and get 6 monitors so it *looks* like you're busy, despite the fact you only work off 1-2 hr tf's (using one pc and or laptop) using price action and one MA...
Part of conversation with 8 yr old Son; "so you guess that *it* either goes up or goes down and decide when's the best time to jump in? And you might lose money or get some?" "er....well its a bit more complicated than that Son"...
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Old Jan 14, 2010, 12:11pm   #41
 
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Re: Ideas for increasing trader performance

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Hi Tom,

I agree with everything you have said about taking things OFF your chart, I did the same and at first it was difficult, but over time you begin to feel more natural with your chart, almost like a friend you've known for years! If you're using EMAs, Fibs, etc all the time and they stop working, the average trader is likely to panic.

I just wanted to ask you about this part I quoted though -- what markets do you trade? I am only sticking to Forex as I hate to hold positions overnight on other markets since they could gap, but I do want to start reaching out to others. What are your favorites?
I trade:

S&P500
FTSE 100
DAX
++++++++++++++++++++
GOLD
CRUDE OIL
++++++++++++++++++++
BUND
++++++++++++++++++++
GBP/USD
EUR/USD
USD/JPY
EUR/GBP
USD/CAD
GBP/JPY

I can tell you that while I traded the exact same way I outlined in MMT (e.g. hourly pins/inside candles at decent s/r levels with confluence) I kept detailed records on what markets I did best in. I did this not on a monetary basis but on a ticks/pips made basis for more accuracy.

Obviously I am not sure how statistically valid any of what I am about to say is for various important reasons:

- Sometimes you miss wildly profitable signals in some markets
- Sometimes you have lapses of discipline that lead you to take less than average signals leading to losses in others
- By random chance you can catch a huge move (an outlier if you like) in one particular market
- Some markets have more volatility (ticks/pips movement) than others which could skew the results.

However, for what it may be worth, the best performing market of all these for me was USD/CAD. So while I can't say it is the easiest or the one that will make you the best returns I can tell you is that it came out infront closely followed by GOLD. These two markets were way infront of the rest for me in terms of performance.

Of those markets all listed above I have been profitable in every single one over time with the exception of the S&P500.

There were a few markets I was net negative in over time. As a result these are no longer in my list of markets I trade. As I just said the main one was the S&P500 (The only reason I still watch this is because it is very important as a reference for when I trade the FTSE or DAX).

The other two main culprits were USD/CHF and AUD/USD. I performed so badly over time in these latter two pairs that I stopped trading both of them. Today, I still feel some anger when anyone makes me look at USD/CHF as nothing I ever did in it seemed to go right. As a result, this is my least favourite market to trade.
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Old Jan 14, 2010, 12:35pm   #42
 
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Re: Ideas for increasing trader performance

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What I also draw from this thread though is just how experiential learning to trade price is and nomatter what great guidance is provided by Tom and MrGecko, there is still no substitute for having a go and making an @rse of it.
Totally. You know, I spent my first seven years making an @rse of it.

And guess what?

I still make an @rse of it. The only difference is, I make an @rse of it less often.

I'm paraphrasing Livermore when he said...you make a mistake and over time and especially if you are quick learner, you stop making it...then you make the brother of that mistake...you learn and move on...then you make the cousin of that mistake...and so on and so forth.

I'll make mistakes in trading for the rest of my trading career. I'm fully aware of that. But it's about making sure your mistakes a) don't cost you too much when you make them and b) you try not to make the same one more than once...
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Old Jan 14, 2010, 1:17pm   #43
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Re: Ideas for increasing trader performance

Excellent presentation, Tom!

Coincidentally, while still making my way through the behemoth J16 thread over @ FF (which imho is recommended reading material for all traders, both new and experienced) and watching some of Jim's free videos for the second time, last week, all of a sudden the principles of (ppz) break/retest became obviously clear to me. It was awesome to place a couple of lines on my chart, and then witness price breaking through, coming back and testing it again -to the pip-, before taking off again.

Not only does this seem to be a highly reliable phenomenon, but if you look closely, you'll see that it's happening everywhere, all the time. Not only after a trendline has been broken or after a breakout from a consolidation/congestion/traffic area, but also frequently during a trend will price pull back and touch the price level of the previous swing high/low. Even when there does not seem to be a retest of a former resistance/support/trendline, if you zoom in to a lower timeframe, you'll almost always see that price did in fact do a retest before taking off again.

Cheers,
Boy

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Old Jan 14, 2010, 1:37pm   #44
 
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Re: Ideas for increasing trader performance

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Excellent presentation, Tom!

Coincidentally, while still making my way through the behemoth J16 thread over @ FF (which imho is recommended reading material for all traders, both new and experienced) and watching some of Jim's free videos for the second time, last week, all of a sudden the principles of (ppz) break/retest became obviously clear to me. It was awesome to place a couple of lines on my chart, and then witness price breaking through, coming back and testing it again -to the pip-, before taking off again.

Not only does this seem to be a highly reliable phenomenon, but if you look closely, you'll see that it's happening everywhere, all the time. Not only after a trendline has been broken or after a breakout from a consolidation/congestion/traffic area, but also frequently during a trend will price pull back and touch the price level of the previous swing high/low. Even when there does not seem to be a retest of a former resistance/support/trendline, if you zoom in to a lower timeframe, you'll almost always see that price did in fact do a retest before taking off again.

Cheers,
Boy
Thank you for posting DHB. I think it's an incredible experience when you finally see and understand this properly for the first time.

Now you can see it, don't take your eyes off it...this pattern is the key to the markets rhythm and you'll never view the markets the same way as you used to again.
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Old Jan 14, 2010, 3:12pm   #45
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Re: Ideas for increasing trader performance

Honestly, the day I really got it, I walked around with a huge smile on my face. It is indeed a immensely powerful experience, and the (touch) trading implications are -after a sufficient amount of proven demo consistency- very potent.
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