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THT Market Education - How to WIN

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This thread is to help those that are struggling to WIN and to BEAT the markets, it will also help you to look at the markets differently and understand what is going on from a technical analysis point of view

Now this WON'T be what you're used to - I don't use much TA that you find inside of all the trading books

Let's get a few things cleared up right now:

  1. I'm a Professional Trader - I trade my own money for a living - I prefer to trade daily charts as I don't need to be stuck glued to a screen all day
  2. I've done it for over 10 years, yes I've had bad periods, we all do, but I learnt from losing
  3. I do have a high intelligence of finance as I was a qualified Financial Adviser for 15 years - HOWEVER, NONE and I mean NONE of that experience or knowledge is used in my trading - apart from knowing that my SIPP, ISA and Spread betting accounts are tax-free vehicles
  4. Is it possible to forecast the markets? Yes it is, but NOT the daily or Intra-day price or time levels - my last 2 100% accurate, dead on forecasts were the 18th August 2015 plunge and the Feb 2020 highs - Both of these forecasts were made YEARS In advance of them occurring - happy to provide the evidence/proof, but NOT the cause
  5. If you are new to this thread, read it slowly and from the top down - it is ALL RELEVANT
  6. I'm writing this as i go along - it will depend on my will and time available as to how often i update this thread and add to (that includes answering Q's)
  7. I am open 100% to questions - ask away - but I don't want to be answering questions on various trading methods
  8. I'm NOT going to show you my best methods - I spent years developing and tweaking them, but I will show you some
  9. You do NOT have to be Intelligent or clever to win
  10. If you can follow rules, stick to plan of action and execute that plan of action without messing/tweaking or changing things along the way, then you have what it takes! - I think this is what all the textbooks call DISCIPLINE 
  11. I'll keep things as simple as I possibly can - there are some things though that require complication
  12. I will not accept responsibility for any trades you take - you don't have to listen to me or take or apply whats in this thread - you and only YOU are 100% responsible for every trade that you take or try out - i would make sure you are 100% clued up before pulling the trigger
  13. My direct writing style might not suit your reading style - there's hundreds of people out there that will tell you what you want to hear - I tell it straight in this game as it's a win or lose environment
  14. I'm going to tackle this from the small account point of view to grow the account - see why in point #6 below
  15. I'm also assuming that you have a certain level of knowledge - I won't be covering the basics, just the essentials
  16. I'm covering a lot of stuff here and there will be typos' incorrect calculation etc - mistakes are bound to happen - I'll try my best to make sure not too many and I'll correct incorrect info when discovered (the aim is for that not to happen in the 1st place, but I'm a trader not a author)
  17. I can't think of anything else to add

 

So Let's get into it:

KEY point to note = MOST of the **** out there on trading  DOES NOT WORK - Its why you're not making much money from this

That's right most of the junk you're taught in manuals, courses, books and online - just does not work well enough for you to make money from it properly

You'd probably be just as well off using a moving average cross over method (I'll show my favourite MA XOver method later on) 

Its most likely one of the main reasons why 95% of those that try to trade fail and lose their account - I'm guessing here as I don't know for certain and I have no plans to spend time Investigating - I'd rather watch paint dry than waste my time doing that.

 

FIRST POINT

Do you KNOW the EXPECTANCY of your trading method?

If you don't know or don't know what Expectancy is - you need to STOP right now and go look it up, digest it, swallow it and be able to recite it in your sleep - it is CRITICAL to you're success

If your trading method has a NEGATIVE Expectancy - you are going to lose and you may as well just buy and hold/Invest

I would recommend a sample of 100 trades or more to arrive at your expectancy figure

SECOND POINT

Get a copy of Dr. Van Tharps "Trade your way to Financial Freedom" because you NEED to UNDERSTAND the LAWS OF PROBABILISTIC RETURNS and probability

His book also covers POINT ONE above too!

 

THIRD POINT (There's going to be lots of points!)

 There's a lot of boring stuff before we get to the good stuff I'm afraid! 

If your method results in a negative expectancy - DUMP IT

FIND A METHOD THAT ACTUALLY WORKS

The Turtles had a very very successful trading method but it only worked 30-40% of the time - the system had a positive expectancy but you'd lose on 60-70% of trades take, this leads on to POINT FOUR

 

FOURTH POINT

You NEED to use and find a trading method that suits YOU, but more importantly your PERSONALITY

I love to beat the market, I love having one over on the market, I love finding the lows and trading them (Yes it can be done)

But, I'm also a very very very very (how many can I write?) bad loser - I hate it when I lose, I've managed to learn how to handle it - but I hate losing

So I HAVE to have a high win rate system/method as it helps me to cope with fewer losing trades

Now If you've read Dr. Van Tharps book I mentioned in POINT #2 - Then you will know that to have a high win rate system comes at the price of not having a higher R profit return - for me this is perfectly fine - as my main personality type for trading purposes is to WIN

Now in real life away from trading, I could not careless about winning - I don't need money or things to make me happy and I certainly don't need to be the best or most popular, but when i trade I need to win often

It would also be worth your while reading Mark Douglas's "Trading in the zone" too if you're reading Dr. Van Tharps book as the content is crucial to your success believe it or not.

 

FIFTH POINT

When I have a losing trade - I throw something, swear at the chart/screen, swear some more and that's it

If I have a loss when the market just, just, just nips my stop loss and then goes on to do what i was expecting - then I lose it for 5 mins and I'll go for a walk

But ultimately I realise, accept and understand that I AM 100% RESPONSIBLE FOR MY TRADING AND EVERYTHING THAT GOES WITH IT

If you don't accept responsibility you will blame everyone but yourself and when the game is simply win or lose if you can't accept that walk away - if something is not perfect trading wise, you HAVE to come up with a solution yourself

 

SIXTH POINT

RISK - this is huge - You need to understand RISK - again Dr. Van Tharp's book mentioned above covers all the risk permutations - all aspects of trading are Important

We'll cover risk management of a trade later on but for now this is mine:

  • I risk between 0.50%-2% per trade (Depends how many positions i have on, my total overall outstanding risk in the market etc)
  • That 2% is of my trading account - so  if my account is £10k then I risk £50-£200 per trade - end of story, simple as that
  • I class this 0.5-2% risk as 1R (1 x risk) 
  • Trading this way lets you live many many days until the fund is gone

Here's a theoretical example:

I find a set-up, the ENTRY is 100p, I work out where my stop is going, at say 85p - 15p is at risk (I call this my range of risk) so this 15p is 1R

So this 15p range of risk is 1R - on this trade I want to commit and risk £200 or 1R of my trading capital of £10k - £200 divided by £0.15p (15 points) = 1,333 shares to be bought or £13.33 per point spread bet I can place (if margin permits)

That's it - if I'm wrong (barring a gap or slippage) if I set that trade in like that I'll lose £200 if my guess, bet, gamble of direction of the trade is wrong and as I KNOW some of my trades will NOT work I'm prepared for this and happy to risk that amount of money

We'll look at where stops should be placed later on

Someone asked me if I'm so confident on a trade why I don't bet 5 or 10% - I DO go to 5% risk, not 10% though, but only on certain trades where I'm happy with the risk level, these tend to be buy and hold positions that I plan to hold for weeks and to get into the position that sort of stop is required

You HAVE to MASTER RISK too - if you're risking 10% per trade then 10 consecutive losing trades and you're out of the game - at 2% you need to lose 50 times to be out of the game

The above risk assessment is simple, but very valuable

REMEMBER - We ARE Gambling

You need to minimise risk and maximise potential 

I'm coming at this series from a small account point of view to grow it - Based on the above, when you have a £100k trading account then, it's very easy to hit the following figures:

  • Risk only 1% = £1,000
  • To make a 2R profit return = £2k 
  • Now most people could live off that, so people could if they wanted to reduce risk to obtain a decent income - its why I mentioned risk of 0.5%-2% - up to you, the bigger an account gets the less risk you can afford to take
  • It is definitely possible to make 1R per week net profit, which if this is at 1% risk then its a 40% profit year, if you trade a 40 week year - which smashes out of the park buy and holding, even getting half this amount smashes buy and hold over the long term - remember this interest is compound as well
  • The pressure is off

This does not mean that every week you make 1R profit or whatever, you might make 10R profit on a trade and no other trades show up until the 11th week - When we get into it, you'll see that I trade what the market gives, not what I want from it

 

SEVENTH POINT

We ONLY trade when our method shows up

The rest of the time we do something else - we do not trade, ONLY when our method or methods (I have multiple methods I trade) (that we know works because we've worked out the EXPECTANCY) shows up on a chart - we ONLY trade once we are 100% certain the set-up/method is in place

We make sure that our methods have the deck of the cards stacked in OUR favour and not the houses - which is perfectly possible in trader land

More to come in the weeks that follow - it will give you chance to read those books!

WATCH THIS SPACE..........

 

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If you really really really want to be able to trade effectively for a living then you HAVE no choice but to follow the rules - BUT, there are some "rules" that can be ignored!

That does not mean doing absolutely everything that you read about in the guides, manuals or books - Hell man, the ONLY time I've had a Trading "Journal" was when i was back testing and testing a presumed trading method - so that I could work out expectancy etc - I do NOT keep a trading journal, I know from the trades I've taken whether I'm up or down - I KNOW my methods work because i went through the pain of testing them years ago

and I know that if i trade them over the year I'll come out on top - I just have utter faith in the techniques and methods I use and I don't see the value in wasting minutes recording the trades, into something that I'll never look at

Take this week - SB on IG platform resulted in a £40 loss as I'm testing a couple of things on Intra-day charts, but in my ISA (with another provider) I've made and banked a £5,000 profit on the FTSE250 ETF (MIDD) - I don't need a trading journal to tell me that I'm up - also if you've not read my FTSE250 INDEX Market Analysis page then you missed my expectation of the market rising last week, because that £5k profit came from that analysis - one of my trading methods gave a buy signal and I bought.

You'll as we go forward that when i take a trade I type all the relevant info i want onto the chart window so its there in my face whilst the trade is LIVE, but once the trade is over I'll delete the info

We'll get into the nitty gritty from now on

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On 30/05/2020 at 10:50, THT said:

If you really really really want to be able to trade effectively for a living then you HAVE no choice but to follow the rules

If you want to trade for a living you're going to have to serve somebody (Bob Dylan song, love that guy)

You ain't gonna be setting up at home with your $20,000 of savings and turning it into $5 million in five years.  

Your going to be sat down in a prop trading firm office, and you're going to be dancing to some rich t0sser's tune - day in and day out, 12 hours a day for the rest of your life.

Enjoy!

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19 hours ago, THT said:

I prefer to trade daily charts as I don't need to be stuck glued to a screen all day

That's clearly the most sensible way to do it, but nobody is going to earn their daily bread from day charts.

Why not just admit that you built up enough 'reserves' over 15 years as a highly-paid FSI person to get to the point where trading it just icing on the cake for you?

H3ll, you probably aren't even trading - swing trading at best - investing is more like it, yes?  Like that Anton Kreil who teaches people how to hedge their portfolio so that they can make 8% a year - f*king peanuts for anyone who isn't already filthy stinking rich.

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42 minutes ago, dmedin said:

That's clearly the most sensible way to do it, but nobody is going to earn their daily bread from day charts.

Why not just admit that you built up enough 'reserves' over 15 years as a highly-paid FSI person to get to the point where trading it just icing on the cake for you?

H3ll, you probably aren't even trading - swing trading at best - investing is more like it, yes?  Like that Anton Kreil who teaches people how to hedge their portfolio so that they can make 8% a year - f*king peanuts for anyone who isn't already filthy stinking rich.

With respect. I have read many of your post's and I'm very concerned. Have you seen a psychiatrist recently, your posts are very negative and I'm concerned about your health.

Take care.  

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20 hours ago, dmedin said:

That's clearly the most sensible way to do it, but nobody is going to earn their daily bread from day charts.

Why not just admit that you built up enough 'reserves' over 15 years as a highly-paid FSI person to get to the point where trading it just icing on the cake for you?

H3ll, you probably aren't even trading - swing trading at best - investing is more like it, yes?  Like that Anton Kreil who teaches people how to hedge their portfolio so that they can make 8% a year - f*king peanuts for anyone who isn't already filthy stinking rich.

There's always 1!

It is perfectly possible to make a living from trading off Daily charts, yes it helps massively with big cash reserves as the risk gets less and less to produce the same monetary amount - That's the point of doing it!

I didn't have big cash reserves - and I quit being an adviser in 2010 as trading conflicted with advice I was able to give to customers and I was earning more from trading daily charts that I was as an IFA, so rather than working 12-16 hour days as a IFA, the smart decision was to quit and spend it with my family.

When you start as an adviser at the age of 21, buy a house, get married and then have 2 children - there's not  that much money sloshing around

Swing/Position trading is TRADING - Investing is buying and holding and I would not risk my money for <10% per annum returns

Your mindset is obviously only day traders can trade for a living, that isn't the case and the smart decisions are to trade what works for you - I prefer the daily charts, they free up my time to enjoy life - Square pegs into round holes and all that

The stock Indexes "swing" many times per year, offering high end double-triple figure returns per YEAR - you'd have to be an absolute Muppet not to consider taking the easy route for profits and building an account - why would you be stupid to toil away on Intra-day charts stuck at the screen waiting for the next trade, when all you have to do is spend an hour an evening looking at end of day data, enjoying the rest of your day for whatever pursuits you wish

Trading of ANY form - Day, Swing, Position - Is ultra hard, not all are up to the job or cut out for it, hence the exceptionally high failure rate, but they are all still TRADING

I don't buy and hold (Invest) not for well over a decade

Let's get 1 thing clear - I don't trade for the money, yes the money is required to live, but I don't trade to become filthy rich, Once I reach a level, I then trade and give the profits to charity or I stop trading for the rest of the year, leaving my money sat in cash earning peanuts

Plonker

 

 

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2 hours ago, THT said:

When you start as an adviser at the age of 21, buy a house, get married and then have 2 children

Haha I was still practically a baby at 21, most of the other people at university too.  Mind you I did get a house (flat) on a mortgage back in 2003 when they were practically giving mortgages out like candy - good old days!  We need to bring those good days back to get young people back on the property ladder.

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Posted (edited)
On 29/05/2020 at 17:57, THT said:

REMEMBER - We ARE Gambling

 

Right, hence the reason why sooo many 'successful traders' are making money on the side (usually from selling trading courses).  Who would be stupid enough to risk their lives (and the life of their family) on gambling?

Edited by dmedin

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2 hours ago, dmedin said:

 

Right, hence the reason why sooo many 'successful traders' are making money on the side (usually from selling trading courses).  Who would be stupid enough to risk their lives (and the life of their family) on gambling?

Trouble is when you sell courses or methods, you have to deal with the ignorance of stupidity of the public and especially traders desperate to succeed, but don;t have what it takes to make it - Which is exactly why I've no plans to get involved in that side - You could teach some idiots a method that makes 140% profit a year and they'd still find fault with it and say "It doesn't work"!!

 If you get trading right - you put all the advantage on your side, and you're exactly right, hence why I waited  until I had sufficient reserves so that I didn't put the family at financial risk - common sense really

No one makes money from the markets without betting on a preconceived idea of which direction it's going to move in and that is why everyone who takes a trade position is gambling - everyone

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OKAY - I'm assuming that you'll read those books, understand about expectancy, risk, position sizing etc as it's absolutely vitally Important - It's a massive reason that most people fail 

You need to treat trading as a BUSINESS, most people can't run a business either, so you have the double whammy of people failing to run a business properly, sticking to rules, techniques, trades when they show up (discipline basically) and a complete lack of understanding for risk and position sizing

If you end up blowing up an account It's most likely going to be because you've ignored running your trading business as a business (discipline and/of following a plan of rules),  position sizing, risk, trade management or the method your trading just does not work and has a negative EXPECTANCY!

You now need to MASTER the charts - I'm a 100% chartist / Technical Analysis Trader - I do NOT look at economic activity, information or analysis - the chart reflects all that in past price data

We will be basically "reading" a chart - It will be how I read the chart, that might differ from yours - there's multiple ways to read a chart - just remember, we're looking to be able to make money fast from it - we don't need to know why something happened

Chart below is the WEEKLY Time Frame of the FTSE100 Index

In this chart we're using an ultra simple method of defining the trend - It's NOT perfect though what about the times when UP transfers to DOWN, Isn't that hugely Important? Of course is it - Buying in a down trend isn't a profitable route to take for a short-term trader

But for some this exceptionally simple and easy method could help them to see through the 'fog'

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Some Use Moving Averages and Indicators to confirm/determine trend

(The MA's are: 10 Period Simple Moving Average of the H-L price bar, 21 Exponential Moving Average of the H-L (EMA), 55 EMA and 89 EMA)

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Whatever works for you

the chart below is the same FTSE100 WEEKLY chart of a 10 period Simple Moving Average of the High-Low, projected 10 bars into the future

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No one method is perfect - You just HAVE to find out what suits you and you're style/personality

Or you can show the swings of the market 

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did you know that W.D. Gann waaaaaaaay back in 1909, 111 years agoooooo - wrote trading courses that showed swing trading with the swings I've shown above and in the chart below - 111 years ago!

Psst! Shush - Don't tell anyone, but his methods still work today, in today's markets - Anyone using swings, swing highs and lows and 50% price retracement levels, are using the same methods he used over 100 years ago!

Did I tell you just how much of a genius that man was? Some of my most treasured trading methods were borrowed from his works

Now it is true Gann used Astrology in his analysis - I've never found that it has usable use in the markets - If I'm going to use some method then for me it has to massive out perform a coin toss and from the limited Astrology I've looked at it's not better than 50% 

Anyway we digress!

What I use:

Well I use a combination of things - I use the chart that shows the multiple MA's and the DTF Indicator and I use the swing chart above and the one below

The swings in the charts below are determined by the software i use and they use market volatility and a special filter based on price action to move from up to down etc - There's nothing wrong with setting the Blue swing line at say 10% and the Red/Green swing file at say 5% - this means that once price has moved up or down 5% then it will change, so in the chart below we see the swing low point in March 2020, the swing line colour was Red, that switched to green once price had risen by X% and the Blue line in the chart above would have altered its up/down swing once price exceeds 10%

For the Time being just focus on seeing their value as a trend line identifier

(We'll look at swings later on as they have much much more use than just identifying trend direction)

Now my charting software allows me to analyse all those individual swings too - So for any market I look at I can tell you the min-max and average swing size, BOTH the BLUE ones and the RED/GREEN ones - one use of this could be to identify the times of the year the biggest swings happen in, the day of the week with the biggest moves happen on, I could project a price rhythm zone on the chart to show me the price range the next swing up/down should conform to, I can do the same with TIME too - for a trader KNOWING the zone a low or high should arrive in can be exceptionally highly advantageous and guess what? - It throws the laws of probability massively into OUR favour

 

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Zoomed in view of the 2014 to present section of the chart above

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But typically I'm looking for a visual quick confirmation of Rising swing lows and rising swing highs for an UPTREND and lower swing lows and lower swing highs for a DOWNTREND

go through the charts I've shown you and satisfy yourself of this fact, higher highs and lows etc

Also as W.D. Gann said 111 years ago - When a reactionary swing is greater in BOTH Time and Price than the other reactionary swings in a trend then watch out for the trend to potentially change - its not 100% certain but its another good heads up

When price action ventures into the range of the previous swing, then it muddies the water and that's when trading ranges can form

Remember you can use whatever suits you to determine trend - I'm just showing you what I've found most useful - Remember "We're here to make money from the markets, and that MEANS being RIGHT"

 

I mentioned swing file analysis - this the the SP500 Index swing file since 1962 - Used in the right way you can us the stats to trade from to your advantage!

I have NOT tweaked the swings, I've just let the software select them, so there'll be a couple that you could refine to make the data more accurate - but for the purposes of this example, we don't need to - it's good enough as an example.

All about having the right tools to trade with as you wouldn't expect your builder to build your house with a tea spoon and knife!

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As you can imagine it takes time to produce these posts so I won't be posting for a while - as you enough to digest for the time being

Stay Safe!

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And when you take price action away the swings become even more clearer

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So Gann was a big swinger ... isn't it only 'clear' because you've got the completed picture in front of you i.e. benefit of hindsight?

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This was written 111 years ago - 99% of it still applies today - Ignore #1 Gann had a win rate of 90%+ he could afford to take huge gambles per trade and the fact could time the market.

It's my belief that if you stick to theses rules you'll be virtually there as a trader, the only missing part is a method that works and produces returns 

 

W.D. GANN'S MOST IMPORTANT
MONEY MANAGEMENT RULES


* Divide your capital into 10 equal parts and never risk more than 1/10th of your capital on any
one trade. This applies to all remaining capital as well.


* Always use stop loss orders to protect your trade and place it immediately after entering a position.


* Never overtrade by taking large positions. This would violate your capital rule. Remember "
safety first."


* Never let a profit run into a loss. When the market moves in your favor and you have a profit that
is double the amount of risk you were willing to take, move your stop loss order so that you will
have no loss of capital if hit.


* When in doubt, stay out or get out.


* Trade in active, liquid markets.


* Don't close your trades without a good reason. Follow up the position with stop loss orders to
protect your accumulating profits according to the rules.


* Accumulate a surplus of capital. This rule is very important. After you have made a series of successful
trades, put some money into a surplus account to be used only in emergency or in times of panic.


* Never average a losing position. This is one of the worst mistakes a trader can make.


* Never get out of the market just because you have lost patience or get into a market because you
are anxious from waiting.


* Avoid taking small profits and large losses.


* Never cancel a stop loss order after you have placed it when entering a trade.


* Avoid trading too frequently, getting in and out too often.


* Be just as willing to sell short as you are to buy long.


* Never change your position without a good reason based on set rules.


* Avoid increasing your trading activity after a long period of success or a series of profitable trades.

 

 

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9 minutes ago, THT said:

the only missing part is a method that works and produces returns 

Not buying your cr@p, buster.

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The timeless wisdom of W. D. Gann:

See the source image

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Right - so we've got the KEYS to SUCCESS nailed down in the previous posts - If you set the right money management, risk and applied those strict rules then you could trade a simple coin toss - I remember testing this method back in 2012, the rules were:

  • Every Full or New Moon (YES!) I would toss a coin and go long if heads came up and short if tails did
  • I used a % of ATR (Average True Range) for the stop and a preset target of 3 times risk (3R)
  • The system either worked or it didn't

You couldn't live of the off the system, BUT it did have a positive expectancy and ended the year in profit

A good idea is having this experiment on a chart for a year just to see how a simple toss of a coin (50% probability) can work in the markets

Before I show you a couple of simple trading methods, I just want to explain a couple of things about the markets

  1. There's ONLY 3 things a price bar can do - go UP, DOWN or end the period neutral
  2. Markets display mathematical points of force at the major turning points - I just cannot believe that people with a Scientific or Engineering background don't dominate this industry - My swing file is just but a simple VECTOR!

So How do you view the markets?

UP, DOWN, SIDEWAYS?

You're FORCED to - all you can view a price chart on is a 2 Dimensional chart - which shows price action moving in a UP/DOWN or SIDEWAYS fashion

When I understood this - things for me fell into place ( you might not be able to see it) - what if price action is actually 3 Dimensional and forced onto a 2D viewing platform - it explains why things aren't linear and exact

Take the big weekly chart of the FTSE100 Index in the charts above - Imagine that from 2000-2003 and 2007-2009 price was coming towards you and from 2003-2007 price was moving away

Look at the chart below - TRIANGLES show up often - Anyone with a high school education (debatable for some people though!) knows that Triangles are the building blocks of geometric platonic solid structures

Price reaches the bottom and then reverses - If we could "twist" our view of the action, we would see it clearer

Notice the Triangles, there are NOT square on to our view, they are twisted - this is what causes uneven/unequal time between lows

I'll leave this for your own research if Interested - but it is perfectly possible to trade highly successfully without knowing this - but it does help to explain those times when your stop is just hit and then prices reverse as you intended!

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Bonus Trade example:

The chart below is a zoomed in view of the chart immediately above, as it shows a highly profitable trading chart formation  - the chart is the WEEKLY chart of the FTSE100 Index

Guess What? As per WD Gann - this method came from the 1930's / 1940's period! 

All details are on the chart - This trade worked straight away, for the RR even at the 1 app target I'd of been prepared to be stopped out 5 times for those sorts of returns

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Load of old Bull?????

Here's the DAILY FTSE100 Chart from 2010, showing similar formation, but the ratios are slightly different because of the 3D nature on a 2D chart - again this one would have offered you a min of 8R return:

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In the next post I'll show you a couple of other high probability trading methods (basic skill level trades), which will complete this THT Market Education

(I've only skimmed the surface there's lots more methods and techniques that work in the markets - but the key thing is the EXPECTANCY and RISK aspects)

Wishing you well on your trading journey

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Trading is your responsibility - Here's a couple of methods that work and are half decent R values - but only if you use them correctly - in the wrong hands, people will **** it right up - Don't be THAT person.

The vast majority of people don't understand what is going on in the markets - that's evident when you read some of the posts on this site!

Markets can only do 1 of 3 things on any given day. They can move higher, move lower or remain unchanged. This
simple observation can be represented by a "normal distribution curve" in statistical
mathematics. The normal distribution curve is a theoretical frequency that is sometimes
approximated by data that is collected experimentally. This distribution is also sometimes
called a Gaussian distribution in honour of Carl F Gauss.  To introduce you
to the normal distribution curve, we may consider a simple experiment in which we place
10 coins into a box, shake them up and toss them into the air. We then count how many
coins land with heads facing up. We then collect all the coins, put them back in the
box, shake it up and repeat this process over and over until we have done it 1000 times.
We will find out that in general we get 5 coins with heads up about 250 times, or 25% of
the time. We will get 4 coins heads up about 210 times or 21% and 6 heads also about
210 times or 21%. We will find that we get 7 coins with heads facing up or 3 coins heads
up either about 120 times each or 12% of the times. We will find that 8 coins heads up or
2 coins heads up occurs approximately 40 times or 4% of the time each. Getting 9 coins
heads up or only 1 coin heads up will only happen about 1 time each or (0.1%). Getting
all heads or all tails is almost a 0% probability. 

Since getting heads or tails is a 50:50 chance, we see that getting a 50:50 split occurs with
the greatest frequency as would make sense. We can apply similar ideas to
getting an up close or a down close in the markets.

If we increase the total number of
coins in our box to a larger number like 1000-coins, a graph will approximate a bell
shaped curve.

Since heads and tails are evenly distributed the mean or average occurrence is awarded. As we deviate to either side (by 1 standard deviation) the frequency of coins with heads landing up decreases proportionately.

Many distribution graphs look like normal distribution curves, but are skewed to the left side or
the right side. This reflects an unequal frequency of occurrence as you deviate from the
mean. For example, the stock market historically has a positive skew towards up closes.
It closes positive 3 times as frequently as it closes down. You could use this very simple idea to exploit short-term trades against the trend or even enter longer-term trades with the trend after a reaction. The "advantage"
is simple math probabilities based on the concept of a normal distribution curve (Its also why buying and holding works over the long term)

 The idea is simple probability:
There's always 50% chance the next bar's close is higher than current bar's close and 50%
chance that it is lower. This is valid at any point in time. Thus the probability that two
consecutive closes are lower/higher is 25% and the probability of three consecutive
closes in the same direction is 12.5% etc.  At that point,
discounting any trending influences, there's 6.25% probability that the system is wrong
and 93.75% probability that it is correct. This simple
trading system illustrates how basic an approach can be to exploit advantages in the markets. This same concept can be used for predicting the winner in a sporting event, "Red or Black" in roulette, bets with or
against the house or the roller in craps, etc. As long as you follow the previously
mentioned Success Keys, you should make money.

The graphs of some distributions have more than a single hump. In a typical distribution, the mean and the mode are equal to one another because the mode measures the event
that occurred the most frequently. Measurements that tend to group in two areas are
called bimodal because there are two distinct ranges of measurements that are the most
popular or the most frequent. A common example would be student's report card grades.
There are some students that simply refuse to complete their homework or study, but
many other students who will complete their homework and score well on their tests. The
grades will be bimodal because one group of students will get D's, another group will get
A's and B's, and a few will get C's.

The markets are also bimodal because at any given point in time, you have a group of traders that are expecting higher prices, a group that is expecting lower prices, and a group that is undecided or neutral. The skew of this ever-changing bimodal distribution represents the overall opinion or sentiment of the traders participating in the market.


Contrarian philosophy is based on the idea that the overall opinion or sentiment of the
trading majority is wrong at the opportune time. In other words, trend changes tend to
occur in opposing directions when the market sentiment reaches an extreme. If the
majority is optimistic and bullish then a top is near, if the majority is bearish and
pessimistic then a bottom is near.

If everyone wants to buy, then whom are they going to buy from? If everyone wants to
sell, then whom are they going to sell to? Markets move limit up or down, or make price
gaps on zero volume simply because there was nobody to buy from in an up move or
nobody to sell to in a down move. The markets are simply skipping price levels to find an
agreeable price where someone will be willing to sell or buy. This particular information
will not necessarily make you a better trader, but it is intended to give you another
perspective. It is important to understand that the price action of markets "reflect" the
"feelings", "attitudes" and emotional energy of the various groups of traders participating
in the market. You must learn to keep your emotions out of your trading decisions at all
times. It is very easy to miss a good trade because you had a few losses. It is also very
easy to take an unnecessary risk after a few winners!

I'm not prepared to to show examples of this, but there are times when the markets move into a form/type that is massively in the probability of the trader and not the house

Looking at profitable trading methods:

Triangles can be very profitable, so can Pin/Hammer bars - Trade them in the right environment and they will work, trade them in the wrong "type" of market form and they won't do to well

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Right that concludes this post - I wish 99% of you all the best and profitable trading

If you cannot make money from the techniques and rules I've given, I would re-read and if still no luck, give up - as I said you don;t want to be that trader, trying for years over and over to consistently fail - someone famous once said "Repeating the same mistakes over and over expecting different results is insanity"  

I'm off on my summer break - this year at home - will resume full-time trading in September 

Stay Safe 

THT

 

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Back to our dear old friend Mr WD Gann - the trade below he documented in his trading courses 100 years ago and they still work miles better than most other methods out there to this day!

Refresher - WD Gann said "BUY Double and Triple Bottoms - BUT the 4th time price reaches the same level it nearly always goes through" ( which means short the 4th time @ a price level )

Sticking with the old guard, a friend who knew of the impending plunge (Yes it is possible to forecast those big turns) asked me how to trade it, I showed him the following chart - at the time the plunge had yet to happen - but the triple bottom had formed - The chart is the WEEKLY FTSE100 Index chart - Triple bottom #3 formed week of 4th Oct 2019, it finally caved in 4 months later! (patience is a key to success as outlined in prev posts)

The FTSE100 Index chart below worked nearly perfectly, the USA markets did not form this formation - for perfection you want confirmed swings as per the swing lines on the chart - notice #3 bottom did not produce a swing bottom as per #1 & 2 - the thing sealed #3 was price trading and closing above its [#3] swing high and then it simply glided into the new year and the time cycle zone

Now these 4th Time Lucky trades are rare - which is why I'm showing it to you!

They don't always work as with everything in trading!

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Gold WEEKLY chart below - trade from 2011 - This 4th Time lucky trade was PERFECT - for visual purposes of the perfect set-up

Remember all the hype around how wonderful Gold was back in 2010/11 - some of us were sat there watching as that WEEKLY Triple top formed and shorted that down to the 4th Time Lucky level - Remember Gann said "Short Double & Triple Tops" - This really was a beautiful and perfect triple top/bottom trading range

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Now EVERY single market and time frame that is liquid will FORM this 4th Time Lucky set-up at some point - adding swings to your charts shows you different perspectives of the market - this is why I mentioned them in a previous post

DISCLAIMER:

The Industry stats say 85% of traders who try to trade lose their shirts - I reckon its probably 95% in reality, that means 95% of people trying to trade end up losing their stake money or at best going round in a circle

I've got nothing to sell you, I don't impart my full knowledge in a public forum, because frankly I don't get anything back from doing so, so you can't expect me to reveal all the methods that I use to trade.

Not trading advice, no liability can be attributed to any failed trades you place of your own accord, trying to follow any methods shown or mentioned- you're responsible for placing your own trades and bets - all i'm showing you are proven methods that when used with the keys to success enhance your chance of survival in this game - Trading is a game of probabilities, managing losses and maximising winners is the key of which no one else but YOU are 100% responsible for

THT

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I've found a way to remove the blacked-out spot on your pictures and reveal the value of the RSI underneath.

I will reveal this hugely profitable secret to the world unless you agree to pay me a ransom.

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Hi @THT, just wanted to thank you for taking the time to explain your set of rules in great detail. Some of your comments have been said as well by profitable traders in other posts and podcasts that I watched/listened in the past. 
When you start a post labeling it as "I am going to tell you how to win"  it is very difficult for someone to believe that what is coming next is of any value, but reading it carefully I find similarities with many of what I heard before.

I'll be reading if you are willing to carry on posting your thoughts. Thank you again.

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17 hours ago, jlz said:

Hi @THT, just wanted to thank you for taking the time to explain your set of rules in great detail. Some of your comments have been said as well by profitable traders in other posts and podcasts that I watched/listened in the past. 
When you start a post labeling it as "I am going to tell you how to win"  it is very difficult for someone to believe that what is coming next is of any value, but reading it carefully I find similarities with many of what I heard before.

I'll be reading if you are willing to carry on posting your thoughts. Thank you again.

Thanks, much appreciated - Glad you enjoy the read.

Trading is a journey, find your style, test, test and test (manually not via a backtest on a comp) tweak and then exploit

One of the points of the post is that although we live and trade in the 2020's - the underlying principles of money management were written about over 100 years ago and they will always be applicable now and in the future.

I refer to Gann quite a lot - Gann wrote a number of courses and not all of his methods actually work - but some do and of those that do some have very very healthy positive expectancy returns

His 4th Time Lucky method shown in the post above on a weekly chart had a double figure R potential - at its basic expectation 

Here's one from the SAME time period and market as the chart above but this is the DAILY FTSE100 Index chart

So although I was aware of and seeing if the weekly 4th time lucky trade happened, I also took this one in the opposite direction in the build up to the weekly one

Info on the chart - apologies for any typo's I got disturbed 3 times putting it together (The family know not to disturb me when i'm at my screen, but delivery drivers and the post man don't!) 

*for reference in the chart - its a imperfect Triple TOP which leads to a 4th Time Lucky trade - AB&C are NOT a Triple bottom in my eyes - price needs to be more aligned and if the next swing had taken out #C I would NOT have classed this as a 4th Time Lucky trade as #C low was too far below #A&B for my preference

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I posted in a prev post about triangles and pin bars - in the chart above the Pin bar was a sign that price was going higher from #C low

Wishing you success on your trading journey

THT

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I can now reveal that the MAGIC SECRET TO STOCK MARKET PROFITS is to use an RSI value of - wait for it - 14!

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20 hours ago, jlz said:

Hi @THT, just wanted to thank you for taking the time to explain your set of rules in great detail. Some of your comments have been said as well by profitable traders in other posts and podcasts that I watched/listened in the past. 
When you start a post labeling it as "I am going to tell you how to win"  it is very difficult for someone to believe that what is coming next is of any value, but reading it carefully I find similarities with many of what I heard before.

I'll be reading if you are willing to carry on posting your thoughts. Thank you again.

 

You sound like someone who 'hangs around' looking to 'steal' the 'hard work' of people like THT.  

THT doesn't like people like you.  :(

 

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28 minutes ago, dmedin said:

 

You sound like someone who 'hangs around' looking to 'steal' the 'hard work' of people like THT.  

THT doesn't like people like you.  :(

 

I can see that you have posted in the last hour about 10 messages in random threads. I guess that is coming out of boredom.

I am not sure what you are after but I would prefer if you don't make assumptions about me and don't get me involved in  your posts. I don't see how I can reply to "THT doesn't like you". I hope you are joking and you are just trying to kill the time, otherwise I can flag you as the forum troll. If that is the case I will not feed you again.

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Best thing to do is read what people post - you soon work out those that haven't got a clue - I "ignored" him weeks ago, so I don't see anything he writes - just ignore him, don't bite

He'll fail to see that the reason people charge for information is because of the likes of him and his attitude, its definitely a reason I've not got involved with the public during the past 11 years, the world is full of people just like him

I would not loose any brain power on him or replying to him 

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Opportunity is all around us - the aim of trading is simply to win

Once again our good old friend from 100 years ago Mr WD Gann comes into play - The reason I'm showing you Gann is Three-fold:

  1. These methods actually WORK and
  2. You need to realise that methods from 100+ years ago are still smashing them out of the park to this day - there's a valid reason for this, as stock markets are auctions, then price will do similar things in the future as it has done in the past, the only difference to the party is different traders are buying and selling 
  3. Most people would be petrified of buying after a recent plunge in price

In this post all I'm showing you are WEEKLY S&P500 charts - This is for Investors as you can use DB/Triple bottoms to go long and just hold using appropriate trade management to protect profits and let the position move - for the ease of simplicity I've shown a target level - as you can see from the charts, price moved much more - I'll leave it up to you how you manage that one

I've also shown you the worst case R profit value return possible on these trades by trading the shortest leg of the swings and by having a stop of 25 points - you could have trimmed the stop - again that's up to you to work out/sort

If risking 2% of your account then 5R = 10% return - 2 -3 of these a year and you'll be massively outperform 99% of funds and fund managers out there, trade 5 different markets......

By tweaking the trade it is easily possible to make much more than 5R

 

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If its worked in the past, then it will show up and work again in the future, you just have to be prepared 

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A few weeks back I wrote about WD Ganns 4th Time Lucky trading method, with examples

The eagle eyed of you would have noticed the set up on a DAILY chart of GOLD (although no-one highlighted it!), as it's been building for a while

It took 2 attempts to get in (stop 12 pts) but with a target of 95 points = 7.92R which again is a half decent R value

 

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Simply basic price patterns can make you an absolute fortune in this game - look at the one above on GOLD!

This is 100% why I advocate using swing files - you get to see the market in a different perspective 

The chart is UK: WWH - the spread is way to wide to trade this 

The 2 high Lows trade to the left of the chart, worked, but you'd of broken even on the trade at worst - This is WHY money management is crucial in this game!

There's nothing special to this trading method - It's also an Elliott Wave (EW) method too, but often if you employ strict EW rules you wouldn't take the trade.

TIP: If you have software that can search for Elliott Waves, then set it to look for Wave 4's 

the blue W4 box on my software tells me that price is in the perfect price AND time zone for a EW 4

If price CLOSES below the #3 low then it would CONFIRM a bearish swing low 

For simplicity all we want is for price to validate the trade by trading LOWER than #3 and we'd be in the trade

Again simple money management rules - Stop = 25% of the 50 period ATR (20pts) / once up 2 x risk (40pts) stop goes to break-even +0.1 to ensure some sort of profit and then protect 40% of any open profit 

Opportunity, excellent R profit potential, excellent risk management = As good as it gets, doesn't guarantee a wining trade though

 

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Here's another 2 LOWER highs

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This is my 2% swing file on the FTSE100 Index:

Thought I'd show this as its messy!

As you can SEE - there are multiple 2 higher lows that just did NOT work for one reason or another - this is why money management is crucial

However, when it did work - the results were (profit target of 240pts, stop of 25 pts = 9.6R)

If 1R = 2% of account then you're up 19% in 4 trading days

Now the smart ones of you, will be asking yourself "How often does this happen in a YEAR on a DAILY chart?" 

The answer is go and look - This is the water, I've led you to it, it's now up to those that want to win at this game to investigate

Oh and YES, there are many more ultra simple trading methods in a year on a daily chart with these sorts of R profit value returns - the SP500, Nasdaq100, FTSE250, FTSE100, EURUSD etc etc etc all produce OPPORTUNITIES per year that return you 100%+ and nearer 300% PER market - Nothing more than a swing file on your charts! NO Indicators, No Moving Averages, just RAW price action

I think for this thread I'll leave it there - If you can't prosper with these ultra simple methods then you're doing something massively wrong and if you go back and check the rules to success that i started this thread with, you'll be messing up on 1 or more of them - REVISIT them and learn them

The one thing i will say is "To win big in the markets, you have to do what most others aren't doing - WD Gann showed me in his works the 2 Higher Lows / Lower Highs trade set-up, he wrote about it 100+ years ago! Along with many others that produce mega returns from the markets - I'm willing to bet very little is published out there on this subject"

If you go down the Gann route - contact me - it is fraught with bad information and works, this is because people devote a lot of years to researching Gann and when they get to the end and realise they can't work it out they still publish the sub-standard work they have been researching, which then clogs up the trading literature world and after reading 10 so called Gann books and getting nowhere people then form the opinion that Gann is a load of tosh - I was one of those people back in early 2010's, then I did something most others wouldn't bother doing, I decided to research and discount it all myself

I can tell you for a FACT:

  • That Gann angles WORK 
  • Time Cycles WORK
  • Price Retracement and Expansion ratios WORK
  • But only if you use them correctly, in the right context and conditions

Why did the SP500 Index stop dead in March 2009 @ 666pts?  Back in the 1900's WD Gann wrote of the "Gravity Centre" or the 50% level - there lies the answer

Good luck on your trading journey, most f you are going to fail because you're not applying the keys/rules to success - this is another fact.

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Here's a little bonus material Gann Angles chart for you

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If you KNOW the Time Cycle date and a simple Gann 1x1 angle falls onto THAT date (to the day) then you can be quietly confident that price is going to reach said 1x1 Gann angle within a few days of the date!

The KEY is knowing Time Cycle dates - the ones above AREN'T the Time Cycles Gann mentions in his works

THT

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