The Philosopher
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Best Thread Potential setups
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TD,
wouldn't this also mean that the people on the other side of these options would have an interest in BUYING spot to push price up and trigger their win?
Wasnt this sort of scenario pretty much what (apparently) caused that 160 tick bund spike down a while back, some large "if touched" option position at 114?
rawrschach
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I thought that was a fat finger....the one in march last year right?
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elitejets
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The October "87 Crash (AKA Black Monday)
I don't remember it personally but ...
In the weeks before the 87 crash the markets had been drifiting lower.
Friday 16th October was Options Expiry (like yesterday) and the Dow closed down about 100 points after being down 75 the day before. 100 points was a lot then. The following Monday the market dropped 500 points. The single greatest loss Wall Street had ever sufferred on a single day ...
A lot of causes have been attributed to the 87 crash.
* Derivative Securities. Initial blame centered on the interplay between the stock markets and index options and securities markets.
*Programmed Trading. Computers programmed to trade automatically when large trends prevailed.
* Illiquidity. Trading mechanisms were not able to handle the large flow of orders, causing illiquidity and exaggerated price drops and trading was terminated in many stocks.
*US trade and budget deficits. The announcement of a large US deficit on October 14th which led Treasury Secretary James Baker to suggest the need for a fall in the dollar. A reduced dollar caused foreign investors to pull out of dollar denominated assets.
*Valuations. Many analysts agree stocks were overvalued on a PE ratio basis.
*There was a new Fed President (Greenspan) who was unproven.
Legacy of the crash. The 87 crash taught politicians to choose their words and actions carefully and react immediately when threatened. The crash initiated a new era of market discipline.
-------------
I don't have a clue what is going to happen on Monday (so this is probably in the wrong thread, sorry) but I'm ready for anything.
Have a nice weekend,
Nicola
I don't remember it personally but ...
In the weeks before the 87 crash the markets had been drifiting lower.
Friday 16th October was Options Expiry (like yesterday) and the Dow closed down about 100 points after being down 75 the day before. 100 points was a lot then. The following Monday the market dropped 500 points. The single greatest loss Wall Street had ever sufferred on a single day ...
A lot of causes have been attributed to the 87 crash.
* Derivative Securities. Initial blame centered on the interplay between the stock markets and index options and securities markets.
*Programmed Trading. Computers programmed to trade automatically when large trends prevailed.
* Illiquidity. Trading mechanisms were not able to handle the large flow of orders, causing illiquidity and exaggerated price drops and trading was terminated in many stocks.
*US trade and budget deficits. The announcement of a large US deficit on October 14th which led Treasury Secretary James Baker to suggest the need for a fall in the dollar. A reduced dollar caused foreign investors to pull out of dollar denominated assets.
*Valuations. Many analysts agree stocks were overvalued on a PE ratio basis.
*There was a new Fed President (Greenspan) who was unproven.
Legacy of the crash. The 87 crash taught politicians to choose their words and actions carefully and react immediately when threatened. The crash initiated a new era of market discipline.
-------------
I don't have a clue what is going to happen on Monday (so this is probably in the wrong thread, sorry) but I'm ready for anything.
Have a nice weekend,
Nicola
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trader_dante
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rawrschach
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New resolution for this week: no moving stops to BE, I made only 10% of what I should have last week because of this...
I would have, on paper, lost less money if all my positions had taken me out at my proper stop.
I would have, on paper, lost less money if all my positions had taken me out at my proper stop.
trader_dante
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Guys,
Chocs post above makes me want to reiterate a very important point for people that are following the strategy that I outlined in "Making Money Trading" and have also done in this thread before I believe.
DO NOT MOVE YOUR STOPS TO BREAK EVEN UNTIL AT THE VERY LEAST, YOUR FIRST TARGET HAS BEEN HIT.
Break even is an emotional crutch.
It means nothing to the market whatsoever and do not be deluded into thinking that it does.
All that matters is where you are WRONG in your initial reasoning for entering and not where you can get a risk free trade.
Until traders understand this they will find it very, very difficult, almost impossible, to make money with this strategy.
Let me give you an example.
Look at the S&P below. This 1hr pin occured not far from the November low.
If one had decided to take it LONG then the first obvious s/r pivot would be the one marked above in orange.
The point where you are WRONG, is the point BELOW the pin which is where your stop should initially go.
As soon as the target (the orange line) is hit, you may now find yourself saying - I expect this to go above - however, if we do indeed find resistance here and fall, I will move my stop to breakeven as the market is not acting correctly if it retraces that far from the level (which is quite a way from where you got in).
So in this case, as the target has been hit, a breakeven stop is acceptable.
Now look at the next post...
Chocs post above makes me want to reiterate a very important point for people that are following the strategy that I outlined in "Making Money Trading" and have also done in this thread before I believe.
DO NOT MOVE YOUR STOPS TO BREAK EVEN UNTIL AT THE VERY LEAST, YOUR FIRST TARGET HAS BEEN HIT.
Break even is an emotional crutch.
It means nothing to the market whatsoever and do not be deluded into thinking that it does.
All that matters is where you are WRONG in your initial reasoning for entering and not where you can get a risk free trade.
Until traders understand this they will find it very, very difficult, almost impossible, to make money with this strategy.
Let me give you an example.
Look at the S&P below. This 1hr pin occured not far from the November low.
If one had decided to take it LONG then the first obvious s/r pivot would be the one marked above in orange.
The point where you are WRONG, is the point BELOW the pin which is where your stop should initially go.
As soon as the target (the orange line) is hit, you may now find yourself saying - I expect this to go above - however, if we do indeed find resistance here and fall, I will move my stop to breakeven as the market is not acting correctly if it retraces that far from the level (which is quite a way from where you got in).
So in this case, as the target has been hit, a breakeven stop is acceptable.
Now look at the next post...
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trader_dante
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In this example from last week, the GBP finds support at the bottom of the range and forms a 1hr pin after trapping traders on the short side.
The first target on this TF should be at least the top most part of the range (and even higher as if it gets up there then the chance of a gap fill is very high).
See next post...
The first target on this TF should be at least the top most part of the range (and even higher as if it gets up there then the chance of a gap fill is very high).
See next post...
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trader_dante
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Note how, as the move breaks half way into the middle of the range and you get around 100 pips into profit, the temptation to move a stop to breakeven to protect that big gain is VERY, VERY TEMPTING.
However, the fact that it is 100 pips up means sweet FA. We are still in the middle of a range. Back and fill is totally and completely normal.
Look at how price retraces, takes out the breakevens from the pin high, (blue box) and then rockets up into the target area and beyond (filling the gap too).
This is what happens in this strategy when you try to protect 100 pips without realising where you are WRONG.
You will take zero on many trades and full sized losses on the ones that go wrong and make nothing in the long run.
After the intial 100 pip move, aggressive traders could use the low beneath the trigger candle for stop placement as this is where you are WRONG - i.e. if the market comes back there then it is breaking the support at the lower end of the range and something is wrong.
This means that you need to be prepared to see a 100 pip gain go to a 50 pip loss.
If you can't handle this, my honest advice is look for another strategy.
However, the fact that it is 100 pips up means sweet FA. We are still in the middle of a range. Back and fill is totally and completely normal.
Look at how price retraces, takes out the breakevens from the pin high, (blue box) and then rockets up into the target area and beyond (filling the gap too).
This is what happens in this strategy when you try to protect 100 pips without realising where you are WRONG.
You will take zero on many trades and full sized losses on the ones that go wrong and make nothing in the long run.
After the intial 100 pip move, aggressive traders could use the low beneath the trigger candle for stop placement as this is where you are WRONG - i.e. if the market comes back there then it is breaking the support at the lower end of the range and something is wrong.
This means that you need to be prepared to see a 100 pip gain go to a 50 pip loss.
If you can't handle this, my honest advice is look for another strategy.
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trader_dante
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Let me tell you one more thing that I have been saying since I started "Making Money Trading" but which few people seem to actually listen too! lol.
The other day the head of our firm, a veteran trader who has taken millions out of the market, who wants us to make money since he is backing us with his capital, FORBID US to use the 5m TF or lower.
Forget the lower TFs.
Leave them to the traders that have been trading for years and are very experienced.
Make money on the higher TFs.
The very lowest you should be going is 1hr
You should be looking only at 4hr and Daily and Weekly at first.
Let me say that again.
NEVER LOOK BENEATH THE 1HR TIMEFRAME WHEN YOU ARE NEW TO THIS GAME.
(and if you are not profitable yet, consider yourself NEW to this game)
Forget that cr*p about wanting to refine your entries.
It is much, much, much harder to trade successfully on this TF when you are new to trading.
Do not even attempt it.
Trust me on this. Trading the higher TF is the easiest and least stressful way of trading.
Again. It is the EASIEST and LEAST STRESSFUL way of trading.
Why does LEAST STRESSFUL matter?
Because STRESS every two minutes causes emotional responses.
Emotional responses are detrimental to your P&L.
Higher TF analysis gives you TIME to make reasoned and logical assumptions about where the market will go next.
Use fixed percentage risk management so that the bigger stops in pip size mean nothing in monetary terms and remember this is a marathon and not a race.
Making twenty pence per day is acceptable while you learn and grow your account. Do not try to jump on the 5m to take every swing.
I tell you it does not take long to compound an account from trading at 50 pence a day to having thousands and being able to trade at much higher stakes...if you do things right and use this strategy in the way I have taught you can run an account from next to nothing to a level you can LIVE OFF in six months.
The other day the head of our firm, a veteran trader who has taken millions out of the market, who wants us to make money since he is backing us with his capital, FORBID US to use the 5m TF or lower.
Forget the lower TFs.
Leave them to the traders that have been trading for years and are very experienced.
Make money on the higher TFs.
The very lowest you should be going is 1hr
You should be looking only at 4hr and Daily and Weekly at first.
Let me say that again.
NEVER LOOK BENEATH THE 1HR TIMEFRAME WHEN YOU ARE NEW TO THIS GAME.
(and if you are not profitable yet, consider yourself NEW to this game)
Forget that cr*p about wanting to refine your entries.
It is much, much, much harder to trade successfully on this TF when you are new to trading.
Do not even attempt it.
Trust me on this. Trading the higher TF is the easiest and least stressful way of trading.
Again. It is the EASIEST and LEAST STRESSFUL way of trading.
Why does LEAST STRESSFUL matter?
Because STRESS every two minutes causes emotional responses.
Emotional responses are detrimental to your P&L.
Higher TF analysis gives you TIME to make reasoned and logical assumptions about where the market will go next.
Use fixed percentage risk management so that the bigger stops in pip size mean nothing in monetary terms and remember this is a marathon and not a race.
Making twenty pence per day is acceptable while you learn and grow your account. Do not try to jump on the 5m to take every swing.
I tell you it does not take long to compound an account from trading at 50 pence a day to having thousands and being able to trade at much higher stakes...if you do things right and use this strategy in the way I have taught you can run an account from next to nothing to a level you can LIVE OFF in six months.
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rawrschach
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ditto
bansir
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Hi TD,
Okay but I'm fairly sure I remember you saying at one stage that pin bars work in any time frame.
I must say however that your illustrations of why moving to BE too early is bad for your account are spot on. Perhaps the underlying problem folks like myself have is that we haven't fully accepted or 'embraced' the risk as we enter the trade.
I use a crutch of sorts, taking partial profits early and leaving the rest to run with trailing stop behind SMA's.
You've thrown a real spanner in my works re time frames. I'm still demo trading 1min and 5min FX using S/R and Trendline breaks plus RSI divergences. I find I have a very good month then a bad one and so wind up around break even on my account.
I may have to consider winding things out to 1 hour time frame in view of your coments. It would be a good experiment to conduct in any event.
Best Regards,
Neil
Okay but I'm fairly sure I remember you saying at one stage that pin bars work in any time frame.
I must say however that your illustrations of why moving to BE too early is bad for your account are spot on. Perhaps the underlying problem folks like myself have is that we haven't fully accepted or 'embraced' the risk as we enter the trade.
I use a crutch of sorts, taking partial profits early and leaving the rest to run with trailing stop behind SMA's.
You've thrown a real spanner in my works re time frames. I'm still demo trading 1min and 5min FX using S/R and Trendline breaks plus RSI divergences. I find I have a very good month then a bad one and so wind up around break even on my account.
I may have to consider winding things out to 1 hour time frame in view of your coments. It would be a good experiment to conduct in any event.
Best Regards,
Neil
Hi TD,
I agree with you. I have been using the strategy that you have taught for approximately 3 months trading on the daily TF. I have started small sometimes doing 30/50p a pip I rarely do over £1 a pip but I have moved my account from £500 to almost £700. This may not be a huge amount but I probably only do 1 or two trades every fortnight due to there not being many set ups on the daily TF.
This strategy works. Don't get me wrong I have losing trades but my winners win big. At the end of the day we have to pick what works for us but I like the fact that I can place a trade at the end of the night check it in the morning when I wake up and look at it in the evening when I come back from work. I trade on the hourly TF when I have time off work (which isn't often) and I find it a lot less stressful than trading on 5mins which is what I use to do.
But once again we all have to pick what works for us. But for me if it isn't broken, don't fix it. Happy trading to all for the week ahead.
I agree with you. I have been using the strategy that you have taught for approximately 3 months trading on the daily TF. I have started small sometimes doing 30/50p a pip I rarely do over £1 a pip but I have moved my account from £500 to almost £700. This may not be a huge amount but I probably only do 1 or two trades every fortnight due to there not being many set ups on the daily TF.
This strategy works. Don't get me wrong I have losing trades but my winners win big. At the end of the day we have to pick what works for us but I like the fact that I can place a trade at the end of the night check it in the morning when I wake up and look at it in the evening when I come back from work. I trade on the hourly TF when I have time off work (which isn't often) and I find it a lot less stressful than trading on 5mins which is what I use to do.
But once again we all have to pick what works for us. But for me if it isn't broken, don't fix it. Happy trading to all for the week ahead.
Yeah, good post TD.
With regard to moving stops - I think the rule of thumb "don't let a winning trade turn into a losing trade" is cause for alot of confusion. What I guess TD is getting at is don't bring your stop up right to your entry as soon as the trade starts printing in the black; I think TD and I share a similar view on stops (that is, put it where you are WRONG, not where your testicles start to shrivel), and so the only sensible extension of this perspective is "dont even dream about moving your stop until you have been proven RIGHT!".
What counts as "right" constitutes a post made a little earlier than a twenty past one on a saturday night; however, I will add into the mix the view that manually trailing stops can be a pretty simple way of keeping the expectancy on your side.
luckyd1976
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firewalker99
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chilltrader
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"(and if you are not profitable yet, consider yourself NEW to this game)"
I would like to modify this very slightly to:
"and if you are not consistently profitable yet, consider yourself NEW to this game"
It took me 1 year to realise this simple thing
I would like to modify this very slightly to:
"and if you are not consistently profitable yet, consider yourself NEW to this game"
It took me 1 year to realise this simple thing
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