Making Money Trading

[lurkerlurker]

Hi guys,

Nice pin on gold daily, ticks all the boxes.

FYIO.

Yeah, we saw that earlier. Not a bad pos by the looks of it. Lets see where we close. What "time" does a daily gold bar close anyway (no pun intended)?

9PM? Midnight?

The order is in. I am risking 230 pips on this trade, so I will use 1 unit. This keeps the risk within 10%.

I will sell a break below 870 with a stop at 890. The entry stop is 16 ticks below the low of the day to avoid shakeouts, and the stop is 9 ticks above the high of day. The spread is also included.

At £1pp, the trade will be managed on the daily timeframe. Exposure, but not enough to panic me I would think. First problem area will be ~852 which is the support following the last breakout and consolidation. The stop will be moved to BE at this stage.

The next problem area will be the zone between 830 and 840. If price breaks below that I will trail the stop to just above the new resistance around 852 and will wait for further downside price action to develop.

If I am filled short, Bernanke better not tell us he will be destroying the dollar further tomorrow. I do want another really really aggressive rate cut so I can buy the Dow, wait, then sell it back down again.

Anyways, this gold trade is risky because there is hardly any confluence up here. This is "picking a top". The other day I wanted to buy the upside break of the inside bar, but TD reminded me it wasn't a pin bar setup and that is what I trade at the moment.

Now I have my pin bar setup. I'm looking for 250 pips out of this net of spread. Best of luck to all others taking the trade.

Also, please find attached TD's example of RSI divergence (and I accidentally deleted all the zones and lines off my chart to make this).

I've just done the actual divergence, but this could count as a 3 peak if you call a higher high on the price with a double top on the RSI a divergence. If so this has two - a class B then a class A divergence, for a 3 peak.

 

[smbtnt]

I will be taking this pin along with the Crude, the latter looks like a HS on the daily. Fingers crossed for some commodities battering tomorrow.

 

[lurkerlurker]

I will be taking this pin along with the Crude, the latter looks like a HS on the daily. Fingers crossed for some commodities battering tomorrow.

I'd hold off on the crude for now my friend. PDL support has held twice intra day, and there is a bounce off the 365 EMA. The ascending wedge pattern I posted the other week (calling a $5 fall) over in the energies board is still holding - a downside break of that would give a target of $92 and possibly below, but I'd like to see confirming price action first.

Also, crude daily is not a pin bar.

smbtnt may have a good trade given the recent gold/oil correlation....

 

[smbtnt]

I'd hold off on the crude for now my friend. PDL support has held twice intra day, and there is a bounce off the 365 EMA. The ascending wedge pattern I posted the other week (calling a $5 fall) over in the energies board is still holding - a downside break of that would give a target of $92 and possibly below, but I'd like to see confirming price action first.

Also, crude daily is not a pin bar.

smbtnt may have a good trade given the recent gold/oil correlation....

I am more bearish on Crude than Gold. 94.70 is the 1st s/r stumbling block for me on the former. Any bullish action in that zone might warrant intraday bullish attention.
If I want to see the flop then I better match the raised pot.

 

[trader_dante]

Lurker, I am joining you in the Gold setup. I was going to call it on here but you beat me to it!

 

[trader_dante]

Eur/Jpy *Order update*

This order to go long on Eur/Jpy has still not been triggered and I am, as of now, pulling it out of the market.

The pin bar still hasn't triggered and at this point it is clear that the market is now ranging and the original trigger point would result in less of a reversal trade and more of a breakout trade (see chart 1)

Chart 2 is the situation on the hourly. This is now commanding my attention.

 

[trader_dante]

Pending order update

I've still got two orders in the market.

Sell 4 March London Sugar at 325.4. Stop at 329.8
Sell 1 Gold at 871.6. Stop at 892.0

 

[counter_violent]

I've still got two orders in the market.


Sell 1 Gold at 871.6. Stop at 892.0

This highlights perfectly the problems with entering trades against the parabolic phase of price action...assuming the order triggered and is now -$14.00 @ $885.00

Plan of action ?

cv

 

[trader_dante]

This highlights perfectly the problems with entering trades against the parabolic phase of price action...assuming the order triggered and is now -$14.00 @ $885.00

Plan of action ?

cv

Plan of action is, as ever, hold until either the stop is hit or the position moves into profit.

I have found that in six months of trading in this way, I have come out on top.

So as I have said before, regardless of the outcome of any particular trade, I will still continue to do as I have done before, unless my P&L over time shows me that something is WRONG.

In which case I will re-evaluate what I am doing.

Many traders are not comfortable trading AGAINST the trend and if that is the case, then don't do it! There is plenty of money to be made trading WITH it, believe me!

 

[zebra7860]

NEED A HUGE FAVOUR -

I realize that this is an odd request, but with a thread like this with numerous posts it's a common practice. I would like to ask anybody if they have summarizedTrader Dante's method in a Ms Word document? If so, is it possible for me to receive a copy? I have missed some valuable pointers of his due to the many posts which can lead a person off the path.

If any kind soul can help, you can post it here for the benefit of others, or you can email me privately at [email protected]

Thanks in advance
Al

 

[trader_dante]

My mother just rang me up to tell me how she has heard about a 26 year old city trader that has leapt to his death after being unable to cope with the pressures of the job.

Very, very sad news.

 

[Dinos]

Hell, if its that bad, change jobs

 

[trader_dante]

Trade update *March London Sugar*

The "left eye" was broken to the upside BEFORE the short order triggered.

As a result, I have put my stop above the high of day at 331.

 

[lurkerlurker]

This highlights perfectly the problems with entering trades against the parabolic phase of price action...assuming the order triggered and is now -$14.00 @ $885.00

Plan of action ?

cv

I was thinking about this earlier. My "trading plan" which I have backtested involves taking the signals. This was a signal. I think this trade will lose, and I don't like picking tops in a commodity bull run exhaustion phase. However, lets say this trade makes a decent profit, and I didn't take it, but backtested a system which was only profitable because a few trades like this went into profit and traveled really far -each trade could be the beginning of a big move, and introducing too much discretion would skew the results of the system.

The system I am trading doesn't know about parabolic exhaustions. Perhaps if it did, it would be a better system, but so far I have something which is simple and profitable overall. There will be losing trades.

Plan of action - keep the stop where it is until there is a daily close below 852. I can't do anything about getting stopped out - if it happens, it happens. I'm not risking more than I should on this trade, so if I get stopped it is just part of doing business.

 

[lurkerlurker]

My mother just rang me up to tell me how she has heard about a 26 year old city trader that has leapt to his death after being unable to cope with the pressures of the job.

Very, very sad news.

Very sad news indeed. I hope she doesn't worry about reading about you in the papers when you start your new job. What is sad is that it was only ever money. I'm sure Nick Leeson felt like jumping a few times, but he is still around and doing okay for himself....

 

[shadowninja]

:-0 No job is worth one's life! Very sad news.

 

[lurkerlurker]

Losing Pin Bar

The gold trade lost. Not surprising. Betting on dollar strength relative to the "safe haven" reserve currency wasn't bright. Taking a signal with no exit plan before Bernanke spoke wasn't right. Shorting a top in a parabolic exhaustion phase wasn't right. Taking a pin bar without confluence wasn't right. Selling a market with long only commodity funds and sovereign wealth funds being buyers immune from profit taking wasn't right.

For my own account, taking a daily pin bar when I have only backtested setups from hourlies wasn't right. Other than that, I took the setup and followed the plan. The only thing I did wrong was taking the trade. Position sizing, stops, entries, etc were spot on. At least I can execute properly from time to time. Not the point though.

There will be more opportunities in the market. This is but one trade. However, I've modified my trading plan to protect myself and my account. So far I think my discipline has been pretty good, with the exception of last Friday and the aftermath. Those of you wishing to read about the changes I am making to my strategy can do so here.

I know one T2W member in particular who will be despairing at me taking one of these "pins" in isolation. Sorry. Won't happen again.

 

[Dinos]

Hi Tom

Ouch, not nice, very sorry to hear about the loss, I know everybody has their own style and we all perhaps try and use each others knowledge to help one another. fwiw, I don't take any trade of the daily charts, the highest I use is the one hour chart, looking at your trade, I agree the daily suggested sell, however I would have taken the trade off the hour at 12.00 @ 885, the reason I'm specific about the time is I use stochastic set at 14,3,53, the fast crossed the slow(53) at this moment, the trade would have been closed at 13.00 @ 866.5 on the stoch advancing beyond the 20 (oversold) line, a profit of 193 pips.

Simply, by adding an indicator to the pin bar, you can give yourself a trading advantage imo.

 

[trader_dante]

Losing trades and standard deviation

The gold trade lost.

It certainly did and it cost me £204 (204 ticks)

Not surprising.

Certainly not. Some trades lose. It's called PROBABILITY.

Betting on dollar strength relative to the "safe haven" reserve currency wasn't bright.

Why wasn't it bright? Because it didn't work?

Shorting a top in a parabolic exhaustion phase wasn't right.

You call that a parabolic exhaustion phase? Try Chart 1 of the Usd/Cad. I'd say the blow off here is more extreme but the pin bar calls the market bottom and it comes on its own with nothing to back it up, just like the Gold one did.

Take a look at chart 2. This is the gold market back in December '05. That looks like a very sharp and extended rally and what does it culminate in? A position that went well over twice the amount risked.

Have a look at chart 3. Another extended run. Another pin bar that attempts to "pick a top". And another win.

Chart 4 shows the last major "parabolic phase". The nose doesn't stick out too far on this pin bar but is it not still calling a top?

Are you detecting a theme here?

Taking a pin bar without confluence wasn't right.

Wasn't it? It worked well in the last four examples.

Look at chart 5.

There is no confluence there either. We're just over 1,200 pips up from that entry right now. How many points did you lose in your Gold trade? 200? If you've got the patience to stay with a move when it starts, it will pay for the times that you fail. Picking a top like the one in Gbp/Usd would pay for 6 failed attempts with 200 tick stops.

And the Gbp is still falling the last time I looked...

Selling a market with long only commodity funds and sovereign wealth funds being buyers immune from profit taking wasn't right.

But I did EXACTLY that (in reverse) and made the biggest profit of my career to date in a single trade. I BOUGHT a market (Wheat) despite reading every day on the CBOT that commodity funds were heavily SHORT and ADDING to their positions, even as my profit increased

For my own account, taking a daily pin bar when I have only backtested setups from hourlies wasn't right.

Is this the real issue here?

I know one T2W member in particular who will be despairing at me taking one of these "pins" in isolation. Sorry. Won't happen again.

Losing trades WILL come along.

And traders that tell you NOT to pick tops or bottoms by trading pin bars at swing highs/lows in isolation will come along also.

I'd do your own research and come to your own conclusions, Tom.

Let me tell you a little story.

Back when I started my first journal on T2W I made a call to trade an inside bar that appeared on the daily Usd/Cad chart. The plan was to trade it with a long and short order on each side.

The first post I made was met with the response: (I won't name the person here)

"I've absolutely no idea why u r trading usdcad in the morning.
because the us market is closed usdcad is forced to move by random.
u can do everything u like but trading in the secondary market is a waste of time and it is stupid by the way.
i dont get wat people like u r thinking and doing"

Shortly after, I got my FIRST ever REPUTATION comment which went as follows:

your credibility is zerooooooo u cant offer anything but u r talking like a winner, loser

Why am I telling you this? Because the market went straight down for 1,000 pips. The bar the order would have been filled on is marked in Chart 6.

As it happens I thought I could only place orders on one side and opted for a long only order so I missed the trade. But that is not the issue. The person that rebukes me points to operating in the secondary markets and in the morning as reasons for not taking a trade. And yet it would have been a highly profitable trade.

Is he wrong? No. Maybe his comment is valid but the point is a trader should listen to THEIR own experience when they have the results of it infront of them.

Listen to yourself. Not other people.

I have a trading history infront of me.

No matter how many people tell me what I should or shouldn't be doing, this is what I answer to.

 

[lurkerlurker]

Hi Tom

Ouch, not nice, very sorry to hear about the loss, I know everybody has their own style and we all perhaps try and use each others knowledge to help one another. fwiw, I don't take any trade of the daily charts, the highest I use is the one hour chart, looking at your trade, I agree the daily suggested sell, however I would have taken the trade off the hour at 12.00 @ 885, the reason I'm specific about the time is I use stochastic set at 14,3,53, the fast crossed the slow(53) at this moment, the trade would have been closed at 13.00 @ 866.5 on the stoch advancing beyond the 20 (oversold) line, a profit of 193 pips.

Simply, by adding an indicator to the pin bar, you can give yourself a trading advantage imo.

Thanks for that. On the lower timeframe using just price action I could have entered short on the break of the hourly pin at 1AM and moved the stop to BE coming into support. I'm better sticking to the hourly instead of daily. Indicators are something I might look at in the future, but for now I am just trading price action. Most oscillators filter price to show momentum or rate of change - that can be seen in the price with practice.