learning to read price action with p/f charts

This is a discussion on learning to read price action with p/f charts within the Technical Analysis forums, part of the Methods category; emotions....looking at the charts you have posted.the price action looks to choppy,even on the 0.5.the auto trendlines and the counts ...

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Old May 13, 2010, 5:52pm   #78
 
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Re: learning to read price action with p/f charts

dentist007 started this thread emotions....looking at the charts you have posted.the price action looks to choppy,even on the 0.5.the auto trendlines and the counts dont look to be too much use imho.my own opinion is to take the trendlines off.you can put them back on with one mouse click,also take off the vertical counts
i think these are confusing the chart.if you look at some of the charts i have posted..the columns are longer.ie go up a box size or two,and time plot.lthen break them down manually into bullish and bearish sections,with 45 degree trendlines,also make sure you have enough look back to have the whole trend,whether it be minor,intermediate etc.i guarantee,that within 5 seconds,you will know exactly where you are going to trade.
with these nervous markets,i have changed my rules slightly.i wait for the p/b after the breakout.you usually find that the p/b zone can be picked up using the 45 degree trendlines on other box sizes.it seems that the market will not make a decision until it sees where the p/b is..just my opinion
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Old May 13, 2010, 5:55pm   #79
 
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Re: learning to read price action with p/f charts

dentist007 started this thread emotions...also do some analysis on eurusd.this has been the lead for some time.it makes up a big percentage of the dollar index
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Old May 13, 2010, 5:56pm   #80
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Re: learning to read price action with p/f charts

Quote:
Originally Posted by EmotionIsTheBigEvel View Post

The problem I have with following Du Plessis strategy is that you are buying on a break out. After a breakout you often see a big retracement which not always will come back. What I found out is that you get whipsawed a lot if you keep your stop under the bottom of the pattern you used to enter the trade.
Hi ETBE,
Absolutely spot on!
Here's one idea for you to mull over. It's not a solution as such, just something to cogitate on. Take any chart of any instrument - including your ES (???) charts. Look for two things:
1. An uptrend with a bullish support pattern in place, i.e. an uptrend with a printed bearish resistance pattern is no good - it negates it.
2. A downtrend with a bearish resistance pattern in place, i.e. a downtrend with a printed bullish support pattern is no good.
Now, take the uptrending example. Wait for a pullback to print, i.e. a column of red Os. In line with the main rule, they must not breach the low of the previous column of red Os. Assuming a 3 box reversal chart, go long immediately a new column of 3 Xs print indicating the uptrend has resumed. If you're cheeky, you can even put in a limit order a point or two (depending on the instrument traded) beneath the price that creates the reversal. Visa versa for short trades.

The logic is very simple, namely that the momentum is with the bulls in uptrends and with the bears in downtrends. Look at any chart and you will see that if condition 1. above is met, there are precious few columns of Xs that only have the minimum required of three. A few years ago, I did a study of two years of FTSE 100 charts and, from memory, the average reversal was 5.5 X's in an uptrend and a fraction more in downtrends. The flip side of this is true in that you'll have quite a lot of columns of just three Os in an uptrend. Combine this with S&R, supply and demand analysis etc and you might have the bare bones of something workable. If this doesn't make sense, let me know and I'll try and annotate a chart to show what I'm on about.
Tim.
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Old May 13, 2010, 6:25pm   #81
 
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Re: learning to read price action with p/f charts

dentist007 started this thread exactly what tim has said.
enclosed is the es index..not the futures.go up or down box sizes until you see something interesting

10 min data.2points by 3 reversal.i put on the trendlines.you can see the bullish and bearish sections quite easily.note the latest high pole hardly retraced.a good signal to go long..imho
now you have the bigger picture,then go down box sizes and time plots
also remember ...holy grail.he had a good strategy.chart is bullish with consecutive bullish signals and consecutive rising lows,especially on lower t/f.vice versa for bearish..one other holygrail rule...wait for consecutive signals when in chop

Click the image to open in full size.
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Old May 13, 2010, 6:31pm   #82
 
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Re: learning to read price action with p/f charts

dentist007 started this thread one thing i have also come across recently..once the lowest bullish support line is broken.the price action goes really wild.its as if all bullish support in the market goes away,and all hell breaks loose.you can see it quie clearly on the es chart i posted.i have seen it wiith eurusd recently aswell
vice versa for bearish resistance line
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Old May 20, 2010, 1:38am   #83
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Re: learning to read price action with p/f charts

Hi Dentist and Tim,

Thanks for your nice responses!

To be honest, it was some heavy stuff I had to overthink reading your advises! Also as you pointed out Dentist, referring to Holy Grail, i started last weekend to re-read the first half of that thread. It was heavy because the thread is huge and because this second time you catch the information out of his thread where I was struggling with, the first time I have to admit you didn't point so much notice to certain thinks he said because I was missing the hard parts of PnF trading.
After reading that thread and over thinking the responses from the both of you I have to admit that at a certain moment during my study of PnF I have taken a side way that put me of course. I have the idea that I am on the right path again, but I still have the idea I am missing something...while the feeling is that I am almost there...maybe there is still hope

Quote:
i think these are confusing the chart.if you look at some of the charts i have posted..the columns are longer.ie go up a box size or two,and time plot.lthen break them down manually into bullish and bearish sections,with 45 degree trendlines,also make sure you have enough look back to have the whole trend,whether it be minor,intermediate etc.i guarantee,that within 5 seconds,you will know exactly where you are going to trade.
You're right Dentist, after going to bigger box sizes direction is much clearer, but there the other problems begin! The market I am focussing on is the E-mini SP500 (ES). On Monday the 0.5x3 was a good box size to see the trends. On Tuesday the 0.75x3 was the box size to watch and trade the signals on. Today you would chose the 1x3 to get nice clean trends.

The problem as you are aware of is that by the bigger the box size the bigger your risk on a trade...
And because if you scale up a box size and only follow that to trade on you will become whipsawed on that box size...
I know HG used to watch charts one box size bigger to see the trend and would trade one smaller. While retesting / forward testing the new reconsidered information the last three days I find myself mostly scalping on the 0.25x3 on signals that occur on the 0.5 and 0.75...
The only thing I think a problem is, is that I don't get those big runners anymore that would make the whole day. Advantage is that I don't get whipsawed anymore! And I have to be very carefully to not overtrade, the most dangerous thing watching so many different charts together and always see a chart giving some interesting setups.

Other point where I could use some opinions about, the charts I use to trade are tick charts. But when I also watch 1 minute and 15 minute charts with the same box sizes, I will see some whole other information about direction and patterns. Some line up with the tick charts some not. The disadvantage about the minute charts I find is that they are lagging, the reason why price action is preferred above indicators. If you buy on a minute chart when a signal is given, the signal can be disappeared if the minute hasn't closed yet, and will never be given again. But when you wait to buy till the minute has closed you will enter to high in the market with the risk entering at a high after which a retracement will start...

Quote:
The logic is very simple, namely that the momentum is with the bulls in uptrends and with the bears in downtrends. Look at any chart and you will see that if condition 1. above is met, there are precious few columns of Xs that only have the minimum required of three. A few years ago, I did a study of two years of FTSE 100 charts and, from memory, the average reversal was 5.5 X's in an uptrend and a fraction more in downtrends. The flip side of this is true in that you'll have quite a lot of columns of just three Os in an uptrend. Combine this with S&R, supply and demand analysis etc and you might have the bare bones of something workable. If this doesn't make sense, let me know and I'll try and annotate a chart to show what I'm on about.
Tim, It sounds very simple indeed. Doing it is another thing
The thing you said, looking for S&R was one of the things I was in doubt with, what kind of S&R should you look for. But HolyGrail explained it very good in his thread, it wasn't the way I would anticipate S&R but it seems to work very good. Don't know this is the way you are using it, but he says that you have to look on the left side from the breakout if there is a lot of room till the next bar top / bottom because if there are a lot of bar tops / bottoms above each other with not much room then you would be in an area with a lot of resistance.

Quote:
...holy grail.he had a good strategy.chart is bullish with consecutive bullish signals and consecutive rising lows,especially on lower t/f.vice versa for bearish..one other holygrail rule...wait for consecutive signals when in chop
Thanks for pointing to this Dentist it keeps you out of chop very easy! One of the pieces I didn't notice before.

Quote:
one thing i have also come across recently..once the lowest bullish support line is broken.the price action goes really wild.its as if all bullish support in the market goes away,and all hell breaks loose.you can see it quite clearly on the es chart i posted.i have seen it wiith eurusd recently aswell
vice versa for bearish resistance line
Interesting! The thing I came across is that pillars on larger box sizes often are false double top/bottom break outs on the smaller box sizes, the most loved signal from HG. And that those false break outs often reverse to the top where they started. And when the reversal doesn't go to the top at once it would mean that it wasn't a reversal but just a retracement so that the way down will be continued.

Other point I would like to ask, are you guys using the bullish percentage or SR pnf indicators? Do they have given you any advantage? And because I prefer to trade the ES, where should it be based on? There aren't so many indexes awake at the same time and giving helpful information.

Last point I would like to discuss is about scalping or trailing it by a reversal or by placing a stop under each new column of '0's, I saw that this was also a question where HolyGrail was fighting with. Personally I find that trailing with a stop under the last '0' would stop you out a lot with small gains and losses. On good days you catch the big runs and make a good day but on the chop days its heavy. Last three days I have been scalping, putting winnings much faster on the table by looking for S&R but then it is much harder to not overtrade because you see that you leave a lot of gain on the table while not getting a good new opportunity to get in again. How do you guys handle this, or have you got any good advice on this point?

Thanks for your time guys, I really appreciate this!!!
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Old May 20, 2010, 7:20am   #84
 
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Re: learning to read price action with p/f charts

dentist007 started this thread etbe...from what you are saying...you are learning fast..well done
it is all about ..interaction between price on different box sizes..
as i can see it,you are doing the right thing..it takes practice
imho,it is more about eliminating the charts that nothing appears on.ie there could be overlap from a different box size,time plot etc etc,or simply nothing new that you did not know already
if you see the trend on the 1 point box,then co-ordinate with the 0.5 to get a less $ risk.
odds on if you see it on the 1 point,there will be something brewing soon on a low box size
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