THT Market Education - How to WIN

[MongiIG]

On 18/09/2021 at 11:32, THT said:

OK lots happening in the markets this week - not going to have chance to write up every market, so I'll keep on with EURUSD and GOLD

EURUSD:

Minor double top which stopped the advance and stopped out the long from the swing #2 low off the trendline - Price has caved through the 50% level (1st attempt provided small profit) 

Outlook = the 50% level is STILL an active level - we are also approaching and have to consider the prev green swing lows as we are very close to that being a possible triple bottom to bounce from and then we are also near and close to black triple bottom territory - just below the black line is the weekly 50% level [not shown]

So apart from the gann 50% level - looking for potential reversal set-ups around/near the previous lows - for me these long poss trades take precedence over shorting at this stage

On a more higher level, "IF" a swing low forms without the swing low of #2 green being hit or exceeded then it's technically a bullish gann secondary reaction or Elliott Wave 2 formation with an initial target of the prior swing high #1 and the red swing high #2 still as ultimate potential target

also remember that the expectation from a double top is the target is the prior swing low - so if that double top performs to that expectation it will invalidate the secondary reaction option and form a triple bottom

Remember to survive and thrive in this game, if the market changes the outlook you have to change too, unless you'll be left holding positions for reason A when the markets no longer working out to reason A!!!! - This is a huge factor in why people fail to win in this game, you have to have multiple outlooks, no preference and just trade when a set-up appears, most people like to be right and as we can see this market is in a multiple possibility position, which most people can't compute

 

GOLD: 

We have had an unusial and rare minor quadruple top, the expectation there was for a gann 4th time lucky to happen, but it didn't, the reason for this was that the double top possibility was stronger than the 4th time lucky potential - market has caved to the 50% level of the prior swing and triggered a gann 50% trade as it rallied back through it - this level is in a tight zone from the previous swings labelled a/A

Outlook:

We have an active 50% trade - the expectation from this is a rally back up to the prior swing high which was a confirmed double top too - I didn't mention this previously, so I', hoping those watching carefully are picking up things (I don't mention everything!) - the DT worked and shorting it to the 50% level IS [was] a valid trade - take 2 mins here and think, long if the gann 4th time lucky trade triggered, if it failed, then we could potentially have a double top which you can short - this is absolutely acceptable thinking - you trade with the market, forming pre-conceived hard and fast ideas can stop you trading profitable trades - remember the market is in charge, we just piggy back along it

OK so if a rally happens from the 50% level, it will form a triple top possibility, so you need to be aware for a reversal at that level - This is NOT guaranteed to happen and price could go straight through and upwards

If price continues to drop then it will approach a triple bottom - again it does not have to do this, but more often than not the following happens, it will form a gann 4th time lucky attempt on the lows and more often than not price goes through that level so the expectation is to short it at that level

and more often than not when price crashes through a 4th time lucky point it then retraces back towards that level for it to then continue down

It is also perfectly possible for the market to create a quadruple bottom as we have seen of the recent highs, a gann secondary reaction / Elliott Wave 2 too - so like the EURUSD market we have to be open and flexible in our thinking and trade only when a confirmed set-up appears

Like anything don't trade other peoples plans, trade your own methods and set-ups once you fully understand them and have tested them thoroughly

Trade at your own risk and THT cannot be held responsible for other peoples trading

The purpose of this thread is to show you how swings interact and from which very profitable trading methods can be established from those swings of the market

THT

Hi @THT

 

Yes a lot is going to be happening this week. Central banks expected to steer FX markets this week, with the BoJ, Federal Reserve and BoE all due to meet to decide on interest rate policy.

Thanks for your outlook on EURUSD and Gold, very insightful technical analysis breakdown. I have promoted your forum post on our top picks.

 

Much appreciated for the outlook.

 

All the best - MongiIG

[THT]

OK FTSE100 over the past week or so - Daily chart

• Triple top caused the decline - target IS/WAS the swing low labelled #2 (see tip below)
• From the TT market fell, found support at guess what? A Gann 50% Gravity Centre - shown you enough of these to prove they work - If the level IS going to work price does NOT faff on or around the level for more than a couple of price bars, the faffing of the last weeks price action suggested the level was redundant 
• When you get clear sideways price action that can form a neat box around it [box not shown] then you can set buy and sell orders at either ends of the box with a target of the size of the box height either way, that was hit to the short side
• We now have a Triple Bottom formation - As it stands right now, the WEEKLY chart Indicator is oversold, the DAILY chart Indicators are oversold - this shouts that a bounce of some degree is highly probable/likely once a formation shows up
• IF a Triple Bottom is happening then the Initial target is the high or see hint below - of the triple top swing point, if that does happen, then it will ALSO be a Gann 4th Time Lucky attempt and we'd expect price to go through that point - as we are making an assumption before a bottom has actually been confirmed this might be wishful thinking, but it's what is going through my head as possibilities
• Regardless of what actually does happen - there's a bounce of some degree going to happen, this bounce may or may not yield further information on trade potential going forward - That bounce should happen sometime this week and possible into next  - This bounce ideally will form a Gann secondary reaction as that is a rule and a condition of ultra high probability of higher prices, anything other than a clear cut gann secondary reaction is a warning 
• REMEMBER I am only expressing my thoughts - price action might be ultra bearish and just collapse, if this happens then most of the above will need to be reassessed and evaluated based on price action of the market, but as it stands at close of business 20th Sept, the above is all relevant until price action proves it wrong
• You can place a box around this sideways movement of the past few months back to MAY '21 as any bounce which produces the swing file line to print (this is a 4% swing file), will also trigger the potential for a Gann 4th Time lucky SHORT trade - if price action does NOT print the 4% swing file line then the short gann 4th time lucky is STILL a potential - but its nicer when everything fits
• I'll keep you up to date as we have multiple markets moving into possible trade positions

HINT: If you've followed this thread, you KNOW swings sometimes EXCEED a prior swing point or Come very close to the previous swing point but just SHORT - It is perfectly OK to have your target at the CLOSE of the previous swing point in question, this is often higher than the low and just observe how often the market reaches the closing price of a prior swing and then turns! You could have the target anywhere on the price bar that formed the price swing low point, but often the high to close of that swing low bar will catch the reversal turn - applies to swing high points too

REMEMBER - we're NOT looking at price action "square on" If we were, all those arches would be pretty similar and massively tradeable - price twists its way through our vision on a 2 Dimensional chart, hence all the just "exceeds" and just falls "shorts" swings make

Indicators and price "bounces" - when watching an Indicator and a price bounce, the price bounce HAS to be bullish and relevant in accordance to the Indicator - Look at the prior swing lows #1 and #2 - the bounce followed by the small retracement of the bounce gave you the heads up - this rally and retracement were Gann Secondary Reactions! If when the Indicator turns bullish price is lack lustre such as price action on the 50% line of the past week, it is a warning that the reversal is not on - We KNOW that with the right Indicator settings and when the trend is bullish, price and the Indicator follow nice bullish rhythm's, anything different and its a warning and remember that PRICE rules over Indicators

Swing low point #2 - Take a retracement tool of the bull upswing up to swing high #1 from the low of upswing (this upswing was a Gann Secondary Reaction trade too) - price stopped over 1 pt, 1pt! of the Gann 50% level of that swing - the stop would have been 30 pts to make a potential 370 points!!!!!!!!!!!!!!!! or 12R

Remember we cannot predict these turns will definitely happen, that is impossible, but we do know if they do happen then make many R profits and that they do often happen, which is why you have to walk in front of the bus as very few traders have the **** to be buying long as the market tumbles

[u0362565]

Thanks again THT, Been looking at the 50% levels on s&p500. Quite a large retracement like FTSE. Went through two of my 50% levels from prior swing lows but right now seems to be turning on the 50% level of the 3rd prior daily low, we shall see. The more lines you draw though the more likely price will turn at one of them of course. If you do get false positives it would be nice to not lose money but that assumes you've already moved stop to break even and I find you can't do that too soon so sometimes I do lose and hope the accumulated losses can be made back so long as the market gets back to close to the former high. I'm not thrilled about having to rely on that fact but what else do you have to go on..

[THT]

@u0362565Yeah, there's a saying that the markets can remain irrational far longer than you can stay solvent! - remember 50% levels will NOT hold in a trend break down or a change from bull to bear market, so you have to be prepared for losing trades, that is just the cost of doing business in this game - which can be very frustrating - the key is identifying and remembering lack lustre periods as they are forming, this just comes with having losses and experience I'm afraid - this is the only good thing about paper trading a method, so you see how it works in all market conditions and learn from it in real time

Yeah I try to keep my charts to a min line wise, it can confuse you and as you've highlighted, shove enough lines on it 1 will catch a fall which if you don't have a winning trading method based on that line is pointless watching the line

These are the SP500 levels of the LAST GREEN up swing - this is a 4% swing file - If none of these hold, then the bigger picture needs to be rethought - which needs to be high consideration as we need a decent correction and possibly a sideways range at some point - I can't write any updates this weekend, but I plan to do a recap of most markets as we've had and having some interesting swings of late - as it stands at this moment only the last minor swing low has been taken out, which is bullish, future market price action can wreck that outlook quickly though!  

Price action at the 1st 50% line is not bullish - price action should resemble the ABC minor swing as soon as C hit the 50% level it rebounded nicely, this allows you to confidently get your stop to break even fast - I often leave the trade a few hours, then move it to the 50% level less 5 points, that way if you are stopped out your 25 point initial stop gets reduced to 5 points fairly quick as long as price action rises, and if you're stopped out it gives you room to set the next entry attempt etc - we don't like faffing around key levels, if its going to work I prefer it to work out, price that hesitates is not respecting the 50% rule.

When a prior swing low is taken out things change, will have a new up green swing emerge at some point and that is the basis from which to take market information from - the dynamics of the previous trend have now changed, to what extent we don't know, but they've now changed

[THT]

This is what you want to see price wise from a 50% level

GOLD 50% trade as mentioned above in a post - Blue line is entry, stop is now 5 points under the entry level - before I close off tonight the stop will be 1 point in profit and then I'll reassess it tomorrow - could collapse overnight you just don't know, but the target is the swing high used to calc the 50% level

[THT]

Here's a quick update on the MIDD FTSE250 ETF trade I mentioned a few weeks back on page 5 of this thread - all the trade info is back there for trade entry details etc

This one exited the other week for a 12R profit unleveraged on the original initial trade from the low

You could have bought the breakout too!!!!!!!

Its now come back to form option B shown on the original chart - Option C is STILL a possibility, but its showing signs of option B at the 50% Gann level AND at the old tops which often provide support

Charts bullish still - Target here is previous swing high unless stopped out on trailing stop - stop is 10 pts which is 50% of the 20 period ATR +1 pt for good luck

[u0362565]

16 hours ago, THT said:

@u0362565Yeah, there's a saying that the markets can remain irrational far longer than you can stay solvent! - remember 50% levels will NOT hold in a trend break down or a change from bull to bear market, so you have to be prepared for losing trades, that is just the cost of doing business in this game - which can be very frustrating - the key is identifying and remembering lack lustre periods as they are forming, this just comes with having losses and experience I'm afraid - this is the only good thing about paper trading a method, so you see how it works in all market conditions and learn from it in real time

Yeah I try to keep my charts to a min line wise, it can confuse you and as you've highlighted, shove enough lines on it 1 will catch a fall which if you don't have a winning trading method based on that line is pointless watching the line

These are the SP500 levels of the LAST GREEN up swing - this is a 4% swing file - If none of these hold, then the bigger picture needs to be rethought - which needs to be high consideration as we need a decent correction and possibly a sideways range at some point - I can't write any updates this weekend, but I plan to do a recap of most markets as we've had and having some interesting swings of late - as it stands at this moment only the last minor swing low has been taken out, which is bullish, future market price action can wreck that outlook quickly though!  

Price action at the 1st 50% line is not bullish - price action should resemble the ABC minor swing as soon as C hit the 50% level it rebounded nicely, this allows you to confidently get your stop to break even fast - I often leave the trade a few hours, then move it to the 50% level less 5 points, that way if you are stopped out your 25 point initial stop gets reduced to 5 points fairly quick as long as price action rises, and if you're stopped out it gives you room to set the next entry attempt etc - we don't like faffing around key levels, if its going to work I prefer it to work out, price that hesitates is not respecting the 50% rule.

When a prior swing low is taken out things change, will have a new up green swing emerge at some point and that is the basis from which to take market information from - the dynamics of the previous trend have now changed, to what extent we don't know, but they've now changed

Thanks for the comments, lots to think about. I'm probably guilty of not protecting my account enough, leaving the stop too long before moving to break even etc. But it is hard to do as you might get stopped when the market was going to continue on up and you have to start all over again. 

[THT]

14 minutes ago, u0362565 said:

Thanks for the comments, lots to think about. I'm probably guilty of not protecting my account enough, leaving the stop too long before moving to break even etc. But it is hard to do as you might get stopped when the market was going to continue on up and you have to start all over again. 

Oh yeah - trading is psychological warfare - you just need to see lots and lots of examples to form the mindset of "If this trade triggers, it should do this and NOT that" - That then lets you place stops very tight, which then gives you the R values - I know its hard, most professional traders can't and don't trade with as tight a stop as I do

The trick is working out if the trade is a perfect trade what will the market NOT do - that lets you place your stop at levels that the market should not come back down to

Take the gold trade above if that 50% level trade is right, the market won't come back down to the entry level, so you can get it to breakeven within a day of the trade and start trailing and if it does come back down to the entry level it will then trigger the set-up of another 50% level possibility - you just need to know the method inside and out which then provides the confidence to trade it - its then up to the market if it complies or not with our thinking, sometimes it does other times it doesn't, this is why as traders we accept lots of trades won't work out, some will and those that do, outweigh in terms of £ return the ones that don't work out

So you need an initial stop rule, a stop rule if the markets sets off as expected and then another rule to trail - the trail can't be tight as that will stop you out - some of my methods use a 2 bar trailing low stop and others have a much wider trailing stop  

[THT]

Lots in the news about the soaring price of Natural Gas - sometimes its important to put things into perspective (2nd chart) - Remember NO government can curb a market - Anyone notice their energy bills have increased all the time NG has been declining in price! Yep the energy game to YOU is and always will be rigged against you!

Natural Gas ETF - NGSP 

It all starts with a Gann secondary reaction................................

This crept into my scans earlier in the year - this is NOT a one off they happen on many many other markets

The absolute PERFECT scenario is:

• All time lows or 12+ month lows (Price)
• Gann Secondary Reaction from those lows

As you can see a buy and hold Investor scanning the market for a Gann Secondary Reaction off long term lows will be able to pick a few decent trades over the years and massively grow their accounts  you can work out how much this one has grown 

Long term daily chart - my personal household energy bills back in 2008 were'nt as high as they are today and NG's been declining all that time, something's, not quite right.................................my energy bills never fall only rise!

Back to our friend Mr WD Gann - back in 1954 (1 year before his death) Gann produced promotional material for his courses, inside that material he very very briefly mentions "Cornerstones" - The market formation below is just that, a cornerstone - it signals a turning/reversal point - again it is ultra high probability in what happens afterwards - those who saw this formation and patiently waited for a Gann SR have been extremely well rewarded - the old saying goes "Buy low sell higher"

Regardless of what Gann wrote about, the key here was the Secondary Reaction, anyone with knowledge of that set-up could of profited handsomely 

Notice when price corrected it "just" took out the prior swing low - this is what Gann referred to as "Lost Motion" or in plain English stop running - so this should teach you trailing a stop at the prior swing low might now be the best way to trail a bull market advance if its going to get going  

[THT]

Here's an update on the FTSE100 as mentioned above from Sept 20th

• Predicted bounce well and truly happened - Indicators foretold that move in conjunction with the pattern forming
• The Triple bottom didn't exceed swing LOW #2 - this is because we're not viewing price "square on" so we've got a very slight "twist" in price - so you need a method to catch it - this is why sometimes trendlines just don't work
• Price has now formed or nearly formed a Gann Secondary Reaction - this does not mean it will def work, there is a possibility that it could fail - hence stops and trailing stops must be in play at ALL TIMES
• We've got the Triple Top - Gann says 4th attempt on the same level and it nearly always goes through - we saw with Gold that this isn't 100%
• We've got a Triple Bottom too!!!!!!!
• We've got a channel/box formed - at some stage price has to break out of it somehow and at some point - again NOTHING in trading is 100% on the PRICE side, but at present the height of the box would be an initial price target if a Gann 4th Time Lucky breakouts out - the average of the swings is approx 400 points, so a target of 350-400 pts is not unreasonable - this is an Initial assumption and not a definite! It is perfectly fine for price to penetrate the levels a bit and then do something else
• Right at this particular point - I'm not using the Indicators - Indicators are great at turns, so I'll not mention them in context to this - just price formation 

• This chart shows a bit more detailing
• Price on Friday just tagged the Gann 50% level and bounced!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
• As trader, we don't give a **** about which way the market moves all we do is get prepared for our outlook and trade it based on the probabilities
• So far the average trading days of the swings is 18.6 TD's - If you take out the swing high #1 to swing low #1 the average becomes 22.5 TD's - this is just something to consider/observe not focus too much on
• For those Interested the swing file size is 4% on this FTSE100 chart (So moves of 4% and more force the line to change colour etc)
• On a side note - you would be encouraged to run a 50% retracement tool from the lowest swing you can see on this chart to EACH of the swing HIGH points and see where the 50% level falls 

I'm proving time after time that the 50% level is very significant - its NOT a FIB level

I'm not saying FIBONNACI doesn't work, as it does in the overall growth of markets, swings etc but as a one dimensional retracement tool its not the be all and end all that people tout and you can use the 50% level just as effective

EURUSD - I'll do an update on that in a week or two as its moved into a position mentioned on Page 5 in the last update I did on it - that may or may not come to anything

 

 

[THT]

OKAY DOKEY

Firstly the 50% level - nice 4R return from that trade (had to cash out Thursday as I don't like live trades when I'm away from the desk and went to Newmarket races yesterday/Friday -  It was a day out and a get away from the office thing for me

On the 50% level - just a reminder, this isn't my discovery, Gann mentioned it in the 1920's, others have published work on it in the 1970's maybe 1980's? (Not read so I don't know for certain, but its definitely been written about, I just haven't read as I got Gann's works and went from there)

Markets nicely poised around the middle of the channel for both scenarios to be applicable!

Lets see what the next 5 trading bars give us (if anything)

Remember: As traders we trade probabilities NOT forecasts or predictions - PROBABILITIES - reading the market can allow you to form predictions and forecasts, but price action HAS to back those up for them to be traded

[u0362565]

Hi THT,

Encountered some complexities with the 50% levels recently on the S & P 500. See my image. Market came down and bounced off it several times. Not so easy when it's not a clear cut single bounce. Just wondered if you had any insight on how you'd deal with these situations if you've come across this before. one option would be to not have too tight a stop and then maybe you'd stay out of the choppy water but you'd have to be happy with the fact you have a days worth of growth to then see that disappear although stop wouldn't be hit you don't know that in advance. Strong constitution required. If you use tight stops then you're stuck with the likelihood of needing several attempts to get in on the move with some hopefully small losses. Even now it's not clear when the recoverly to the high might come. Certainly not doing it cleanly.

[THT]

45 minutes ago, u0362565 said:

Hi THT,

Encountered some complexities with the 50% levels recently on the S & P 500. See my image. Market came down and bounced off it several times. Not so easy when it's not a clear cut single bounce. Just wondered if you had any insight on how you'd deal with these situations if you've come across this before. one option would be to not have too tight a stop and then maybe you'd stay out of the choppy water but you'd have to be happy with the fact you have a days worth of growth to then see that disappear although stop wouldn't be hit you don't know that in advance. Strong constitution required. If you use tight stops then you're stuck with the likelihood of needing several attempts to get in on the move with some hopefully small losses. Even now it's not clear when the recoverly to the high might come. Certainly not doing it cleanly.

Hi

This is the tricky part as this pattern happens - There's no guarantee the old high is going to be hit - market is taking a breather from the prev run[s] and price faffing around a 50% level isn't a bullish sign either, but if a trade entry signal has fired off then it needs to be traded/taken

There's no perfect way - You could trade 2 units, sell one fast and the other has breathing space - doing this dilutes profits though, but it banks some profits quick / you could trail a stop up and be prepared for it getting hit and then price reversing / use a wider stop or you could just get the stop to break even fast and re-enter if the level is hit again 

You need to figure this out as to what you are comfortable with and only you know that and what you are willing to tolerate etc

If you traded 2 units you could sell unit 1 at either 2 or 3 times risk - the risk on this market is about 15-20 points! for a tight stop, as you can see it hit that level on both bounces, then work out a trail rule for the remaining unit - most professional traders will trade more than 1 unit as they can bank quick profits rather than let them disappear - Sometimes I do this sometimes I don't! 

I absolutely advocate tight stops - even with multiple entries you can still make more than having a wide stop, but this just suits my aggressive attitude and trading nature - if you are comfortable with a wider stop then employ that method

On the entry bar it closed well above the entry - you could of moved the stop up to 5 or 6 points of the entry level, therefore reducing the amount lost if stopped out and the 5-6 points gives room to reset an order on the level  - this has the effect of minimising your average R loss value - whilst giving you max profit potential still - I employ this often and usually give it a couple of bars/days before trailing stop off

When you're calculating the 50% level based on previous swings and not the one immediately prior (such as in this case) then you have to be prepared for a more complex correction coming into play - it is likely to be bigger in both TIME and PRICE than the previous corrections and with that comes possible less straight-forward bounces, so this is just something you have to keep an eye out for - WD Gann said "When a correction is greater in BOTH time and price than any correction in the previous trend - watch out for a change in trend" this doesn't often happen and Gann was not perfect on this quote, but it does slow everything down to allow the market to catch up which often results in sideways ranges etc

I don't want to overcomplicate this for you - If It were me I'd trailing a stop up at a certain % from price, to get something from your troubles to start with, but be prepared to be stopped out once in a while and not get back into the trade - as you can see when it works it works - then you can look at more fancy stop placement methods that suit you going forward etc

This is all subjective and applicable to ones personal tastes and what they can and can't tolerate - its the one area of trading you won't find a definitive answer on!

If you're not happy giving back those paper profits then you need to devise some form of trailing stop or multiple unit method of trading to protect 

 

 

 

[u0362565]

It's making me realise it's one thing to see a potential setup and another to manage the trade if it doesnt shape up the way you expect so that's something I need to figure out. I agree on the stop value, I've used similar but if you're expecting a move that lasts several days the trail needs to be considerably wider and then when it doesn't move off the way you expect it's more about damage limitation which for me means switching to a shorter time frame and trailing closer. Basically I think my point is that managing your exit is more important than where you enter and you need to have a plan for when it doesn't go according to plan!

[THT]

5 minutes ago, u0362565 said:

It's making me realise it's one thing to see a potential setup and another to manage the trade if it doesnt shape up the way you expect so that's something I need to figure out. I agree on the stop value, I've used similar but if you're expecting a move that lasts several days the trail needs to be considerably wider and then when it doesn't move off the way you expect it's more about damage limitation which for me means switching to a shorter time frame and trailing closer. Basically I think my point is that managing your exit is more important than where you enter and you need to have a plan for when it doesn't go according to plan!

Yeah I know what you mean - people say the exit is key, but I'm of the opinion that its all equally as important as each other

you're thinking right

You always need to think that if the trend has reversed then bullish trades in a bearish environment/cycle don't work out as expected either, the prev bull run has definitely stalled - that doesn't stop us trading long though but it makes sense to have trailing stops just in case we're wrong - making 1R or a tiny 6 point loss is better than a few 1R losses - which get more than made up for when everything goes as expected

Re the 50% level when the trends up price doesn't retrace much as you can see from the chart you posted and every high then forms a 50% of its own - so having a stop a few points under the ongoing 50% level daily is a logical place for it - wait for the day to close, then move it accordingly

The problem with managing the trade is its impossible to be exact, so a tweak here, a tweak there etc which makes you second guess yourself

Over the years I've left 10,000's of points on the table through managing positions averagely 

 

 

[u0362565]

Thanks again

[THT]

Depending on how you traded this - here's another 50% level on the SP500 which has returned 4R in the past 48 hours

Notice the indicators at the 50% level on Tuesday and Weds -  2 period RSI oversold on Tues with a tick up close of business weds = ultra high probability of a rally! If you wait for the Indicator to tick up you often miss the move - just showing how the Indicator and the method work to confirm each other

Traders who traded the major 50% level at swing low #C as discussed in the posts above should have multiple R open profits

FTSE100 right near the Triple top too!!!! 

This is all getting rather Interesting

[u0362565]

I'm up 5R on US 500, but do I know how to manage the trade from this point, not really. I'm very good at keeping the stop distant hoping for greater recovery and then throwing most of that away when the market turns. As has been happening recently. It's tight or distant or sell some of it off.

[THT]

3 minutes ago, u0362565 said:

I'm up 5R on US 500, but do I know how to manage the trade from this point, not really. I'm very good at keeping the stop distant hoping for greater recovery and then throwing most of that away when the market turns. As has been happening recently. It's tight or distant or sell some of it off.

Are you on this trade or the one from the swing low #c?

What stop were you using in points? and

make sure you do not give it all back, you have to walk away with something if it goes wrong - as you can see compared to normal this is a complex trade rather than straight forward

When you took the trade what was the overall target point/plan? As you should stick to that, it does NOT mean the market will comply though

[u0362565]

Blue is entry, red is stop, black is target. The target is very optimistic but given that the stop has to leave a lot of room and perhaps my entry is not low enough as I'm above the swing low by quite a bit. I had an earlier position at the swing low but for that one I decided to cash it in early and I had some account recovery to do! 

[u0362565]

Sold it off, good enough R value for me. Looked like it was losing steam. If it retraces a little I might look to come back in. But the market hasn't been so bullish in recent weeks so could be risky. I guess we will see how it shapes up 

[THT]

14 hours ago, u0362565 said:

Blue is entry, red is stop, black is target. The target is very optimistic but given that the stop has to leave a lot of room and perhaps my entry is not low enough as I'm above the swing low by quite a bit. I had an earlier position at the swing low but for that one I decided to cash it in early and I had some account recovery to do! 

OK - makes sense now

I trade multiple methods that i trade and 2 triggered on the or around the 50% level through coincidence - I've cashed out the 50% trade as its hit and exceeded the prior swing high and done its job for me, the other trade is not something I've written about on here and its got a very wide stop so that one is live, but its not swing related

When you enter a trade you need to know how you're managing it beforehand - at the very least you need to be break-even now 

There WILL be a pullback at some point, its impossible to know the degree/severity of it in advance

so you need to work out either today or over the weekend how you manage it if you're aiming for the big swing high

Don't get swayed by the £'s on offer if that gets hit - see some of the "reasoning" below and think, if during a year a market gives you 12 50% opportunities that each produce a potential for 5R at a 50% win rate and you just take 5R from the winners - then net you make 24R, if 1R = 1% of your account then that's a 24% annual return, say you trade 2 markets, then that increases to 48% return and so on- professional fund managers and peoples Investments typically only grow at 5-10% + divis per annum, so just getting average trading results still out performs 99% of people out there and you don't have to try to be a trading genius to do exceptionally well, taking a good portion works!

You could use a moving average, calculation of ATR, eyeballing!, trailing 2,3,4,5,6 bar stop etc, use swing lows etc - theres no perfect solution out there, its what works best for you

What you can't do is let a 5R profit turn into a loss, at the very very worse break-even

OK - now you're out of the game, take a few hours over the weekend to think about trailing stops - if you plan to trade various methods, then it might be the case that all those methods need a different trailing stop method!

[u0362565]

Looking at us500 the last few weeks shows there are small swings that you could potentially trade on but the stop needed would be very different to if you were aiming for the highest high. I've tried to show these minor swings. I think the only thing to do as you've said in the past is to split the lots or have multiple positions, one with an agressive stop and the other less so to give the market room. I just need to pick something and stick with it. I don't know how you do this full time, well I sort of do given this thread but hats off to you. Really I want a computer to do it all for me so I don't have to tie my brain in knots over it.

[THT]

@u0362565

Hopefully you've designed and thought about the trailing stop aspect by now - here's what I do

Refer to the chart below and past price action - its not 100% and at some point you'll get caught out only for the move to work as thought, but that's trading for us!

I've deliberately not focused too much on trailing stops in this thread as that's the part people need to think about for themselves and is a key aspect to winning in this game

As well as those 2 trades the SP500 created a Gann Secondary Reaction on the minor swing #1 (blue) too - which hit target during yesterdays bar (last bar on the chart) for a 8R return and with hindsight! shouldn't of cashed out trade 2 on the minor 50% level at the prev swing high!

SP500 Index:

 

[u0362565]

Hi THT,

Thanks for the update.  What I'm getting from you is that the relative stop distance changes to be closer to the market after a time a bit like what parabolic SAR would do. What's a bit confusing is how you can have a tight stop when the market had a few days where it ranged as I've highlighted in my chart. I got stopped out on a few of these days but hard to avoid? You don't know this is what's happening until it's happened of course. Because my stop was tight it meant there was still some profit left in it although I sold prior to the market reaching the highest high. the dashed line shows approx where my 50% level was set. I'm away next week if there is a delay in my response so apologies upfront.

Edited October 23, 2021 by u0362565

[THT]

On 23/10/2021 at 18:30, u0362565 said:

Hi THT,

Thanks for the update.  What I'm getting from you is that the relative stop distance changes to be closer to the market after a time a bit like what parabolic SAR would do. What's a bit confusing is how you can have a tight stop when the market had a few days where it ranged as I've highlighted in my chart. I got stopped out on a few of these days but hard to avoid? You don't know this is what's happening until it's happened of course. Because my stop was tight it meant there was still some profit left in it although I sold prior to the market reaching the highest high. the dashed line shows approx where my 50% level was set. I'm away next week if there is a delay in my response so apologies upfront.

Hi,

The tight stop determines the end R value profit - making a few entry attempts is ok as long to a certain point - making a few entry attempts is perfectly ok, yes it creates a couple of losses but the pay off is often greater than having a wider initial stop 

The tight stop is only applicable to the initial risk and entry, once you're x R up you'd move the stop to breakeven and then protect open profits

For Example:

Entry 1000

Stop 980

Initial stop = 20 points

You might have a rule that says once position is up 2R you move stop to breakeven - so when the market hits 1040 your tight stop at 980 gets moved to 1000 and then you protect open profits going forward etc - then if the trade goes back to 1000 you'll get stopped and have another chance to re-enter

You DON'T keep the tight stop throughout the trade, its only applicable to entry as is quickly made break-even asap

you might have a rule that says - day of entry I'll leave the stop and apply trailing rules on day/bar 2 onwards - there's lots of varying combos you can use

This is up to you - there is NO perfect formula for trailing

You could use Para SAR - this is what you need to decide as a trader - best way to do this is to go back over numerous trades in the past that would have worked and work out what the market did so you can devise a suitable trailing method that gives breathing space but not detrimental to your profits - this takes time and effort, which is why I don't detail in this thread as it forces the trader to put something in, rather than it be handed out freely

Trailing properly can be the difference between a great trade and an average trade - this is why I don't detail it specifically, its up to the trader to decide what they are and are not comfortable doing/with

When the position nears an assumed target level it does not make sense giving back 50% of the open profit hence the trailing 1 bar low - the way you work out assumed target levels is by working out what the method typically does on past trades that worked - on the 50% method this is hitting or getting near to the prior swing high, the trailing 1BL eeks out a few extra R every now and then - other methods have other rules for targets

the problem we have as traders is we don't know how much the market will range on any given day, so you have to work that into your trailing stop 

Remember Its financially dangerous to trade methods you do not fully understand

[u0362565]

Hi THT, thanks for the info. It looks like a decent trailing method would once again have worked well on the US500 but I set a target and that was that. I'm out now until another big move downward that makes it worth entering, keeping an eye to the 50% levels. I think that's the right mentality anyway. 

[THT]

So far we've looked at multiple methods that provide ultra high trading opportunities based on market FORMATIONS of price swings

The KEY is having methods that work and managing them properly - you don't have to know anything about the markets to win - anyone can do, BUT, it gets complicated as people try to outsmart moves and the market and end up outsmarting themselves

Back in the 1980's/90's Larry Williams and Jake Bernstein published books for traders, here's one of the simple methods - remember you CAN adapt these to suit YOU and your style

Its called The MAC (Moving Average Channel) 

Settings as per the chart - Jake Bernstein said - Trade the channel and buy long after 2 consecutive CLOSES above the top of the channel (BLUE 8 SMA of the High)

As you can see the method works

Here's another variation:

Take a simple moving average and offset that by x% - in this case in the chart below i picked a 40 period simple moving average and offset by 2% above and below

Do you think you could design a trading method off that? Of course you could

Here's another variation:

This time we're using a 50 period dynamic moving average offset by 2% above and below the middle line - Again do you think you could design a trading method from that? I know you can

My trading software allows me to view these dynamic moving averages as an indicator - so in this case its set 50 price bars, the dynamic factor is 3 out of 5 for volatility and price must move 2 bars to register a change in colour of bar

As you can see they're ALL tradeable, choose your own settings and test

I remember I got offered one of those massively reduced trading DVD's, I bought it out of curiosity - basically it was a rip off of John Carters Mastering the Trade book,  with his "Propulsion" method being the star of the DVD, but they had to tweak it as to not directly rip it off exactly and the results we're ok, but not brilliant - so to give credit where credit is due this is John Carters Propulsion method:

As you can see there's lots of different ways to trade with moving averages - Its all about designing a method with settings and rules that suit YOU

Not all of you will be traders, what about the long term Investor?

Lots said out there about the 200 period moving average - its OK, but its not perfect - but it'll do for this post

There's loads of amateur investors with massive portfolios, probably in terms of the number of stocks in them as well as in £'s amount/size - I bet 98% of them all follow the market at all times and that means them seeing their investment portfolios reduce in value as plunges happen and crashes take hold - the smart thing to do is get out near the tops and back in again near the lows - of which the fund managers tell you can't be done or its not ideal to do that - of course its NOT, if we all did the best thing for our money it would absolutely WRECK the fund management industry! which is why you'll hear the following - REMEMBER I used to be a Financial Adviser, I used to hear this all the time during the big crashes and plunges!:

• "Its Time in the Market NOT Timing the Markets" - Utter rubbish!
• "Don't miss the big UP days" - I say avoid the big down days too!!

The chart below shows a 200 day simple moving average since 1982 for the SP500 Index - Those who've read my TIME CYCLE thread, know that the SP500 Index moves UP for 16-19 years, then sideways/down for 16-19 years and then repeats the cycle - the big turns/plunges can be timed - but even by using the very simple method shown on the chart (its not perfect, it CAN be made better!) you'd be OUT of the market on the big plunges/crashes 

Anyway, as you can see there's a whole host of very simple and easy methods to use to make money from the markets either short-term or long term and as mentioned at the beginning, the key is managing them properly and consistently 

There is NOT one special moving average out there - they are ALL lagging Indicators

 

[MongiIG]

2 hours ago, THT said:

So far we've looked at multiple methods that provide ultra high trading opportunities based on market FORMATIONS of price swings

The KEY is having methods that work and managing them properly - you don't have to know anything about the markets to win - anyone can do, BUT, it gets complicated as people try to outsmart moves and the market and end up outsmarting themselves

Back in the 1980's/90's Larry Williams and Jake Bernstein published books for traders, here's one of the simple methods - remember you CAN adapt these to suit YOU and your style

Its called The MAC (Moving Average Channel) 

Settings as per the chart - Jake Bernstein said - Trade the channel and buy long after 2 consecutive CLOSES above the top of the channel (BLUE 8 SMA of the High)

As you can see the method works

Here's another variation:

Take a simple moving average and offset that by x% - in this case in the chart below i picked a 40 period simple moving average and offset by 2% above and below

Do you think you could design a trading method off that? Of course you could

Here's another variation:

This time we're using a 50 period dynamic moving average offset by 2% above and below the middle line - Again do you think you could design a trading method from that? I know you can

My trading software allows me to view these dynamic moving averages as an indicator - so in this case its set 50 price bars, the dynamic factor is 3 out of 5 for volatility and price must move 2 bars to register a change in colour of bar

As you can see they're ALL tradeable, choose your own settings and test

I remember I got offered one of those massively reduced trading DVD's, I bought it out of curiosity - basically it was a rip off of John Carters Mastering the Trade book,  with his "Propulsion" method being the star of the DVD, but they had to tweak it as to not directly rip it off exactly and the results we're ok, but not brilliant - so to give credit where credit is due this is John Carters Propulsion method:

As you can see there's lots of different ways to trade with moving averages - Its all about designing a method with settings and rules that suit YOU

Not all of you will be traders, what about the long term Investor?

Lots said out there about the 200 period moving average - its OK, but its not perfect - but it'll do for this post

There's loads of amateur investors with massive portfolios, probably in terms of the number of stocks in them as well as in £'s amount/size - I bet 98% of them all follow the market at all times and that means them seeing their investment portfolios reduce in value as plunges happen and crashes take hold - the smart thing to do is get out near the tops and back in again near the lows - of which the fund managers tell you can't be done or its not ideal to do that - of course its NOT, if we all did the best thing for our money it would absolutely WRECK the fund management industry! which is why you'll hear the following - REMEMBER I used to be a Financial Adviser, I used to hear this all the time during the big crashes and plunges!:

• "Its Time in the Market NOT Timing the Markets" - Utter rubbish!
• "Don't miss the big UP days" - I say avoid the big down days too!!

The chart below shows a 200 day simple moving average since 1982 for the SP500 Index - Those who've read my TIME CYCLE thread, know that the SP500 Index moves UP for 16-19 years, then sideways/down for 16-19 years and then repeats the cycle - the big turns/plunges can be timed - but even by using the very simple method shown on the chart (its not perfect, it CAN be made better!) you'd be OUT of the market on the big plunges/crashes 

Anyway, as you can see there's a whole host of very simple and easy methods to use to make money from the markets either short-term or long term and as mentioned at the beginning, the key is managing them properly and consistently 

There is NOT one special moving average out there - they are ALL lagging Indicators

 

Hi @THT

I agree with what you said: The KEY is having methods that work and managing them properly.

A trading system or method is important for a trader because without it, there is no way a trader can expect to trade. Despite getting lucky a few times, one cannot expect to remain consistently profitable without following a trading system or a strategy.

Thanks for sharing the above.

 

All the best - MongiIG

[THT]

Gold had a fantastic reaction off the 50% gravity centre - fast quick multiple R profits being trailed

Next point of significance is the major weekly double top just under the 2011 high line - This is a 10 year old level that up until very recently has still affected the market - Shown on the chart in purple, It'll be very very important to watch price as it/if it interacts with the level in the coming few weeks

If price still doesn't like it then it will create a WEEKLY double top of which the target will be the Swing low labelled green #3 near the thick black line on the chart

 

EURUSD:

This could be at a critical point for a trend reversal

We've got price just breaching the WEEKLY 50% level - if this is active, then price would be expected to exceed the Jan 2021 HIGH @ 12400+ or close to it (This will take months to achieve if the level is applicable)

Price is now in the range of a previous double top from 2015/2016 

I'm not really a fan of trend lines, but this one has been respected multiple times 

WEEKLY and DAILY Indicators are oversold and in positions from where cycle rallies happen from