Although the thread can seem intimidatingly long, most of the answers you are looking for are in James' charts and posts in the first 50 or so pages. That should give you a good grounding and then if there's something not answered there people will always be willing to help you out here.

DBHLC is a double bar high lower close as someone else mentioned. Bearish bars are not typically used as triggers for trades, just an indication of a bearish move in the market, and inside bars are the trickiest of all to trade and best left until you really know your way around pin bars and Bullish and Bearish Outside Bars.

In the first few pages of the thread James goes through the various bars. A bearish bar is listed there and is simply a bar that shows that price went down a lot during the bar (It's a bar with open and close at opposite ends of the bar). There are also bullish bars that show price going up. I didn't mean that bearish price action signals are better than bullish price action signals. Not at all. Have a look through the bar definitions in James' early thread charts and it's explained visually and more clearly.

What I meant was that the "bearish bar" and "bullish bar" are not signals to trade, whereas the bearish outside bar, bullish outside bar, bearish pinbar and bullish pinbar all are (when found at the right location and with confluence).

For anyone new coming in, I really really recommend reading as much of this thread as you can. Most of the basics are in the first hundred pages or so, and then after that there is tons of great information. I can say that of the best traders here, almost all of them have read the entire thread through, and many of them have read it through several times (albeit when it was smaller). As a small tip, although the seniors here are incredibly generous with their time, they will inevitably be much more helpful to you if they see you've put in some time studying the thread first.

Good luck. Hand on heart I can say that everything that you need to be a profitable trader is in this thread.

Both the close and the open of the bar need to be within the previous bar to qualify as a pin bar. The other part of a pinbar is a nice long nose that juts out past the previous bar. The posts and charts from James at the beginning of the thread make it very clear.

On your chart the bar around the 1st April is a good example of a pinbar and it signalled a nice move too. But a pin bar on its own is not usually enough to trade. We need to see confluence from other factors that show that it is in a good location. Primarily we look for Price Pivot Zones (PPZs) and also sometimes other factors like divergence, MAs, fibs and things like double tops. There's more of an explanation in the first hundred or so pages of the thread and gems scattered throughout the thread.

The bar you highlighted is a bearish bar and is not typically used as a signal to enter a trade.

I can make a few suggestions based on James' first post on this thread.

Firstly, put away the four hour chart and focus on the dailies and the weeklies. It's what James suggests. The signals are more reliable and it's a much better place to learn the method.

James doesn't use floor trader pivots in this type of trading. Although there are many different variants of this method, I would suggest sticking to the basics of how James trades and keeping them off your charts for now. Having said that, many people use what James teaches to enhance their existing systems. After all what he teaches is a method not a system and can be adapted to fit in with anything you currently trade. But if you do not have a profitable system already, then I would suggest learning this from scratch the way James suggests.

Finally, inside bars are amongst the trickiest formations to trade and I would suggest leaving them aside for now. Perhaps focus on pinbars (the easiest to recognise because they are so visual), outside bars and double bar high lower closes (DBHLC) or double bar low higher closes (DBLHC).

Hope that helps,

Aaron

Fibionacci retracements are a tool used often by traders and available on your MT4 platform. Explaining them is probably beyond the scope of this thread but given your questions, I think you would find www.babypips.com a great resource to answer some of the basics of trading.

The material here assumes a very basic knowledge of trading and how the platform works. You don't need to know much but it helps to have a grounding, and babypips will give you that.

Confluence means supporting factors that give your trade a higher probability of success. Bouncing off an MA, or a fib retracement, or crucially being at a price pivot zone.

I would suggest a look through the educational resources of babypips and then the first hundred pages and more of this thread will begin to make more sense to you.

It really is about practice and comfort level and there are no hard and fast rules. Which is why a long demo period is so important. There are hundreds of trade examples in this thread and you can see over the course of the thread unfolding how they played out so I would recommend it. And I can say that almost every question you've asked is answered there in the first few pages of the thread so I'd spend some time there and things will become clearer. There are some really brilliant trading minds on this thread and in my experience they jump up to help those who they see have put in some hours studying the thread first. I would start with reading every post that James links to in his opening post. Good luck.

PS If you want to see good example of someone who came to this thread and approached the learning process with diligence and reaped rewards, then look over the posting history of Jduester.

I hear ya. It is frustrating if you aren't capitalised. But it's better you hear the truth early. If you're looking to turn 2k-3k into a a few hundred grand and do that quickly then the chances are it won't happen.

I think there is a temptation to say that 'hey james has hundreds of thousands, so he can afford to be picky. I only have a little, so I'll just have to take more setups' But remember each setup can lose as well as win, and the chances are that the more setups you take, especially early on, the more likely you will lose all of the 2k-3k.

There are plenty of people who can promise you systems that turn you into a millionaire overnight. If you believe such a thing is possible then you will no doubt go looking for them. And they will be happy to take your money from you.

Personally I think extreme returns in this business are possible, but only after years of studying the basics and being aware that it increases your risk profile. Most people when they get to that level feel it isn't worth the hassle.

James pays us all great respect at the beginning of this thread by telling us the truth. And that truth is that there is no chance of making a monthly living from this with a 2-3k account. None. And he may have saved you a lot of heartache by telling it to you straight.

There's nothing to stop you looking for other ways of making a living, and then learning this material (it takes a while) so that when you have finally have more money you can supplement your income with a little glance on the daily charts every day.

It is deeply frustrating, but only because your expectation was different. If I told you it took 7 years and a lot of money to train as a doctor you wouldn't be frustrated because that's what you expect. But for some reason people think of trading as a shortcut to riches. James is respectful enough to tell them otherwise.

Good luck with however you decide to play it.

I am travelling so don't have charts to hand here. But bullish outside bars are typically looked for at swing lows to indicate reversals.

Fib extensions are best left aside for now. They can be used for targets but most people here use support/resistance levels for that. Use fib retracements for confluence if you like, and make sure you're drawing them correctly. Plenty of examples in this thread and also a good free introduction to this and all other basics on www.babypips.com

And please please please do this on demo for a few months first. It's very nuanced and delicate stuff and takes a little practice to get to grips with the basics. I am super cautious so have spent a very long time on demo learning. I may sound like a broken record, but as James says, if you do not follow his minimum requirements you have no one but yourself to blame when you blow out an account.

I'd also look into money management techniques to make sure you have your position sizing correct, and also follow this thread to know where your stops are best placed (usually at the other end of the bar). There's so much to get under your belt at the start which is why demo is crucial. You don't want to be one of the 95% and by following the material here diligently there's no reason why you should be.

For those thinking of jumping on Ryan for his trading of 3 minute charts it's well worth checking out his post history. He is the real deal, incredibly experienced and James16 has said publicly on the thread what a great and experienced guy he is. Mike's spent a little time on the phone with him too. (Look at who vouched for him)

The key is that he found a style of trading that suits his personality. If any of us tried it it would probably slaughter us. Ryan is definitely unique.

Took him a while, as he said (there are more pieces of his story in his post history) but boy was it rewarding when he got there. He's one of the few who prints money from doing this (his ROI is in his post history). During the four years that it took him to be profitable, he had a mentor who was guiding him the whole time, but still couldn't get it. But he reduced his outgoings to the bare minimum and gave himself all the time in the world to learn.

I was really inspired by Ryan's story and postings. At first when he showed up I privately thought the same (here's another guy hawking some crazy 5M system that'll never work) but I learnt through the responses of the seniors not to be so quick to judge. Was a real lesson for me.

He has the discipline to look at a 5M chart all week and not take a single trade. That takes a special kind of skill.

I think the way these guys (the seniors) trade is completely reachable for us new folk, as long as we give ourselves a chance to stay in the game while we learn. Most blow out their accounts by jumping in too early, risking too much, handing over their money to cowboys to trade for them. I've been there believe me. I'm lucky to still be in the game. But I am. And if I follow James' instructions there is no need to lose another penny while I learn.

Nice to see you my friend and good luck with the rest of your exams.

I wanted to add something here about the minimum requirements based on my own experience.

Daily and weekly forex trading as we do here is a low frequency trading strategy especially if we are super picky like we're taught. Mbqb11 for example had his last daily/weekly forex trade around 6 weeks ago (can't remember if you posted that here or PF Mike and if you want me to edit to remove it I will).

Think about that for a moment. If you're trying to trade like Mike and be super picky (an admirable objective) and you don't get a daily/weekly trade in over six weeks, and at the same time you're trying to fulfill James16's 3 months minimum requirements on demo... then there is a real danger that you're putting undue pressure on yourself.

After all, Mike has losers too. No such thing as a 100% win strategy in forex. So what if his next trade is a loser and there aren't any for another 3 weeks. A losing month right? And back to the drawing board for the minimum requirements.

I post this because I had a loser on the AUDUSD BEOB that a lot of people took, then I went on vacation for a while and came back thinking "Okay, 3 more weeks to make the loser up and get a profitable month to go live". That's dangerous thinking IMO. It's not the way I'd trade live, and it puts undue pressure on taking iffy trades. What if no trades appear and I am picky? Back for another 3 months demo? I think it's madness to put myself under that kind of pressure. I have belief in the way I trade and am confident of my edge over time. Putting pressure on myself for the next one to be a winner can only end in tears.

I think my answer is to take my full 6 months demo results as a whole, and to also factor my hundreds of backtested forextester trades into the picture. And when I do go live, as suggested I will have a small percentage of my full capital to trade with and will build up from there.

It's just a thought because daily and weekly forex can often provide 1 or 2 trades a month and losers do happen. I'm curious to hear your experiences.

Good luck this week everyone. Lots of pairs at very interesting levels.

I know that Mike is probably too classy to mention it but on the James16 private forum there is more discussion of his and others' intraday trading (4H and 1H)

I have no affiliation with that site other than as satisfied customer. I know Jim hates the idea of promoting it so I will remove this post on request, but I thought given the interest in 4H and 1H styles it would be useful to let people know.

What a great eye you have Jaroo. How do you manage all the period combining? If it was me I'd spend ages combing all these combined charts. I know some, like 2 day pins, are easy to spot. But a 3 day pin? That's smart. Do you see it visually first and then slap on periodcon, or do you plough through the combined timeframes chart by chart.

Nice work.

Regarding the USDCAD pin:

It's at a great location and I would expect some reaction at this level because of it. We've got that. But it is it a reaction before continuing down or a full blooded reversal? I would like to have seen a bigger bar myself simply because of the sheer power of the downtrend. Looking back, the bars that reversed trends like this have been huge.

My favourite types of pins occur at retraces on the main trend (usually at nice fib levels). I've had my fingers burnt while demoing these smaller pins at the end of huge downtrends. Last year the yen pairs threw up a few and as Mike pointed out UCAD has done it in the past. I got burnt while demoing and then thought "Why am I fighting such a huge huge trend?". Doesn't mean I can't pick reversals using this technique, far from it. But the stronger the trend, the stronger the signal I'll need from the bar to suggest an out and out reversal.

So I won't play this. Which doesn't mean it won't work. But having observed this kind of situation before, I wouldn't be surprised if a few of these appear before something much bigger signalling a reversal.

I also think playing any kind of entry on this before the high of the bar is broken would be crazy, but that's just me.

I remember that pin. As I recall, James took it, Mike didn't... Just goes to show there are so many ways of doing it.

It was at the end of a mammoth downtrend. And I think there might have been a pin a few days later that was bigger and played out if I remember rightly.

That's what I was referring to Lou. Old resistance, not just in the period you mention but further back too. Not really looking at that round number so much as UCAD has been ploughing through everything so far on its way down.

I can't post charts at the moment but this post has a great chart that showed why I think it's a good location. I just wish the nose was much longer.

http://www.forexfactory.com/showpost...ostcount=31804

Unfortunately there's no easy answer to this. It really is more of a 'feel' thing. You can often see price respecting S/R levels from 10 years ago, not because it's magical, but it's because what a lot of traders are looking at.

A round number or SR level isn't a brick wall it's merely another piece of confluence for your picture. When these confluences line up we have a high probability trade. And even those fail.

After a while of practicing you keep seeing the same setups again and again and you develop an instinct. There really is no substitute for practice.

Always great to see you here Ryan.

I'm just curious, with 5M timeframe and percentage risk, do you calculate your position size on the fly? And how do you crunch the numbers so quick? Do you just know what position size a 10 pip stop, 11 pip stop, 12 pip stop would be on the pair you're watching?

I am a loooooong way from trading like you but I follow your posts with interest.

Regarding the GBPCHF setups today.

This is something I've been stalking for a while. The 1.75 level is a great level and if you zoom out you can see clearly how it was respected in the past. And this pair has been winding up nicely for some time now. I've been waiting for PA, perhaps after a breakout of the 1.75 level and then a retest before it heads on.

I'm demoing the 4H so I took the pinbar retest of 1.75 there. Normally I wouldn't take a 4H and a daily trade together but one is demo and one is live so they are serving different purposes now. So I took the daily inside bar. I play inside bars very rarely but this one had a nice look and was at such a key level.

The more I do this the more it seems to be all about the location. Price action is the trigger but the location is the key.

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I agree with this Ryan. I got burnt today playing that GBPCHF IB long as part of the breakout and retest of 1.75. Daily timeframe trade. 1% of my account. But what I was looking for was for 1.75 to be a key level to bounce up from. If this had panned out I was looking to buy and hold for a long time.

Over time I can be wrong a lot more than once with that kind of trade. I may yet re enter if I see good PA off that level.

I was trying to get stops to break even quickly and take profit at first target but it was shredding my nerves. Taking 0.2R on every trade and getting terrified of the inevitable losers wiping out all my winners. Pressure to produce a 90% plus win rate is hard, even if you can do it.

Losing is part of trading. The holy grail that everyone seeks is the way to trade without losing. It doesn't exist, or we'd risk 100% on every trade. So we play the game of probabilities, making sure our win rate and risk to reward ratio produce a positive expectancy, and then set to the business of making sure our minds can handle the ups and downs along the way without going nuts.

My risk strategy boils down to %R on my account, and not bothering with trades where I have to slam them to break even after 15 pips. I'd like to see a little more potential (R:R) because I am discovering I like to let things breathe a bit.

Something I've never understood about killing a trade if price doesn't go as you expect....

...isn't this interfering with your plan? I mean, either you have a stop in place for 1R or you don't, right? If you have a mental area where you're going to kill the trade if price doesn't do what you'd expect then isn't that just a smaller stop, albeit a mental one, for a smaller percentage risk. And doesn't it encourage emotional trading?

And it wouldn't it have meant that you would have killed yesterday's USDCAD before it had a chance to come back on you?

I am not doubting it at all. When Ryan and James16 and Jarroo all advocate something then I know it's right. I just want to understand it a little better because I've never been able to get my head round it.

Also, I take what Ryan says about big bars and small RR, but isn't that exactly how James16 trades? Half off at first target?

I think I know the answer already which is that this is a method not a system, there's no right or wrong way to do it, and everyone must test and customise to their own personality.

But I'd love to hear from you guys. I know the internet is hard to guage tone on so please don't think for a moment I am saying you guys are anything other than 100% right on this. I just need a little help getting it through my head.

Thanks.

PS Hope you don't go Ryan. Many different levels of ability here, and your posts really get me thinking a lot. I hope you find a way to get back as much from the forum as you give to it.

Gold dust. Thank you.

I'm testing the tight stop theory at the moment. So, for you it goes to quick break even as well. Makes sense because of RR levels.

These bars seem so huge tonight and I am so used to playing a big bar in the "classic" way but I am really trying to refine and test things because I want another approach, and I am not comfortable taking entries before the breach.

So with USDCAD you would have taken the breach with a tight stop, been stopped out, then got in again when it came back...and now you'd be sitting in profit. Am I right?

Thanks for the help. This helps define my backtesting, which although helpful, gets pretty tedious after the first thousand trades.

The EURAUD and Cable were the ones that appealed to me. I've stepped away from charts so can't post for you Jarroo.

There were so many signals tonight. And the other "less discussed" part of trading (after RR that we've been talking about) came up for me today. Psychology. My first live trade was the GC daily IB long yesterday and it was a 1% loser. It rattled me more than I thought it would. 6 months of demo, a year of study and I thought live would be no different. But even with manageable risk it made me lose a little confidence. I think Jduester went through a similar first month. And then the mind demons start creeping in and I start looking at threads and thinking.... wonder what rac says about this setup, wonder what jarroo has said, wonder what Mike is saying. I put a couple of trades on, read a post by Rac on PF and nearly put a 3rd on. Before I thought "this is crazy. my own analysis made me pass on this and I am thinking of putting a trade on because of something I read on a forum? Am I a signal follower or a learning trader?"

I really think asking someone's opinion of whether to put a trade on hampers rather than helps the learning process. And I speak as someone who's done it a thousand times. Posting charts asking "What do you think?" will more often than not get a polite encouraging answer on here from seniors, but it's dangerous to get reliant on it. I speak as someone who's been there. Try putting the trade on (on demo), seeing how it plays out, then asking what you could have done. And I'll reiterate, I speak as someone for whom "forum confluence" has been my achilles heel. Itoften wouldn't feel like a good trade to put on unless everyone on all forums was yapping about it. That's no way to run a business.

It got to the stage one day where I thought "damn this. I will succeed or fail but I will do it on my own analysis." The anxiety of a trade taken because rac posted a chart is too much. And anyway, it'll probably end with him making profit and me making a loss. If it wasn't my decision I won't have the conviction to hold.

The psychological aspect of this stuff can play with your head without you realising it. It does mine. I often think of Ryan losing consecutively for four years even with a mentor. How many long dark nights of the soul must there have been thinking "am i simply not cut out for this?". James16 lost hand over fist for 8 years. Think about that. 8 years!. I can only imagine the pain, family members telling him to stop, the interventions. Hell they may even have tried to cart him off to Gamblers Anonymous. And look at him now. In my darker moments I try and remember these journeys.

As Jim said, this is the "hardest easy money you'll ever make"

(Sorry Jarroo, I ended up rambling off topic a bit... )

The only thing that I am concerned about on NFP day is if I am placing an order and the entry is close to price around NFP time. Then I might pull it, but otherwise my stops are so far away that a news spike is of no concern.

And it feels so good to employ a total news blackout.

Someone said about news that the markets don't move in reaction to the news, they move in reaction to how the news is perceived by market participants. I can't imagine how you could accumulate all the data and then anticipate everyone's reaction and formulate it in such a way that you create a reliable system with a positive expectancy. But then that's why I am a chartist. Others are geniuses at assimilating news. I believe Jacko does well with this.

Try the guest side of the James16 Group private forum. Plenty of amazing free videos there. Google it, I don't think Jim likes the link to be posted here. (He doesn't want the free thread to seem like an advert for the private group)

Also try Martin Pring's youtube channel. MJPring is the username. His stuff is what Jim's teachings are based on. He goes into a few more things regarding indicators which you don't really need but he's a good guy.

And finally these guys were recently recommended by Clockwork71 over on his thread for learning about various markets. http://www.learningmarkets.com/

I would thoroughly recommend Clockwork71's blog for audio files. He has a great attitude and has assimilated this material really well and created his own style.

Hope that helps.

This was a big one for me too Ryan because Jim often takes these small RR winners. I tried trading like this and it worked for a while, but the odd loser wiped away 5 winners. I just couldn't stand that. 6 hard earned winners, some of which ran and ran after I got my profit and then boom all that work gone. Basically the equation is, as you know, small RR means you need an extremely high win rate.

Now Jim has been trading for 26 years and so his win rate on daily forex is 95% plus. And he hardly ever takes a full loss, pulling the plug early if the trade doesn't go his way. And he also has other systems and ways of trading. So it fits nicely. And a good bar in a good location is as reliable as anything else in the market.

Others do different things. Stop placement not necessarily at the end of the bar is something Jarroo does, looking for hard and fast breaks. Lower win rate, much higher RR. The recent UCAD short trade could have paid for the entire year if done that way. Or playing the retrace, which is slightly more risky because it isn't a pin bar until it's breached. But high quality lower time frame price action on a retrace of a daily bullish outside bar with fib or PPZ confluence is a great way to do that.

It;s about constructing a system from this method. Everyone plays it differently. But you're absolutely right. The low RR levels can be murder if you haven't got an amazing win rate, especially when trades don't appear that often. It's something I am looking at. I shorted the UCAD but got out way too quick so I am looking for a way to keep myself in without scaling out (which from my backtesting just hits my bottom line)

I am amazed with how humble you are in learning the dailies considering your extreme success on the lower TFs already.

There are various things to suggest in terms of reducing the stop; consider the left eye of pin bars which often act as support, or the preceeding bar high/low of an outside bar where price often retraces to, or even a 30-40 pip stop with confluence like jaroo. And allow MM to do the rest. These can greatly increase the RR but lower the win rate. Mind you, if you can stay in something like the UCAD short who cares.

There are so so so many ways to do this.

Hope that helps. Just throwing stuff out there. feels very weird to be "advising" someone I've looked up to for so long from my very very limited experience. But hey, we all have something to offer. Glad you're here.

No problem Ryan. The higher timeframes bring their own problems...sitting on your hands while watching your trades go into drawdown, cutting profits too early, but having never traded the lower TFs I can't compare. The biggest problem is when, using your friend as an example, you miss one of your 4-5 opportunities a year because you were out that night. After waiting say 5 weeks and no trades appearing nightly, then you think "hey it doesn't matter i'll just head out tonight" and boom your trade turns up, you miss it, and there goes your psych.

I think, as you say, the great thing about PA coupled with SR and James16 Price Pivot Zones is that it applies to any market and any timeframe. And it never never stops working. Now that's my kind of holy grail.

Enjoy your weekend.

People trade the weekly directly and also use it as a pointer. The recent EJ Weekly pinbar had everyone in it. I think most use the monthly for direction if they look at it.

A nice daily pinbar at a 50% retrace of a weekly one is a great way to get into a weekly trade early. But generally if I see a nice weekly pin, I'll play it straight. If I am already in the trade (like the current cable setup) I might reduce risk. My cable daily pin is at break even so I have no risk exposure there. I just want to make sure that if I go in on the weekly a failure doesn't wipe out my daily profits, if that makes sense.

Hope that helps.

(I am spending far too much time on this forum lately. Eat that Mikey... )

It's not just a question of what is most profitable. In fact it's largely an issue of psychology and account size. Jim tends to get his stop very very quickly to break even and take some off the table at first target. It may not be the most profitable strategy but it's the most comfortable for him and he has a large account size and so a few pips means a lot to him. Jim can't stand too much drawdown so he kills his trades early as well.

The bottom line is, we are not machines. If you're not comfortable with your profit taking strategy you will screw it up.

Let's take the recent UCAD short as an example. It ran and ran and ran. To stay in that you need a strategy that would also involve you handing back loads of profit on other trades throughout the year. Think you can handle that? Or would you keep looking for bigger moves all year, getting frustrated at the amount you gave back, and then at the crucial moment of this trade think "dammit I am not letting another one get away from me, I am banking while I can" and then watch it stop you out in modest profit and run for more.

Mike lets his trades run a lot more, but then he is pickier with trade selection and he allows himself to take a full loss if it doesn't work out. Jarroo has tight tight stops on his trades but consequently he gets to his targets quicker and takes his profit when the trades start to pull back. He also gets a few more losers from trades that break and retrace but the increased profit and position size are worth it to him. He also discovered that he hated 100 pip drawdowns on trades. I can relate to this. My EURAUD is in drawdown right now and I don't like it.

Jduester (Josh)takes 1/3 off at 0.5R, 1/3 off at 1R and 1/3 off at 2R not just because he tested what the "mot profitable strategy is" (he did) but because he wanted a mechanical exit plan that takes the emotion out of deciding when to close the trade. He's now looking at whether this is indeed the most profitable.

That's why Jim recommends that when you start out, you keep it very simple because your focus is on trade selection. Then when you learn to pick trades that are yielding a good few pips, you try and work out an exit strategy that magnifies profit and suits your psych and doesn't hit your bottom line too much. He is giving us a way to start that takes most of the subjectivity out of trading.

But sooner or later we will learn that trading is an art not a science. And we need to work out what suits us and how we are going to pay things. Usually we develop some nice hard objective rules to offset the subjectivity and avoid emotional trading. (eg Jim always looking for bar confirmation...Mike not taking outside bars where the close isn't higher/lower than the high/low of the previous bar...or clockwork71 setting weekly PPZ levels as lines on his charts and then only taking 4H trades off those levels all week. No level hit, no trade).

Partial profits, for example, hardly ever makes financial sense. Why do so many do it? Because it gives them psychological comfort (they make something off every trade), perhaps it gives them the confidence to let the second half run because they've already banked the first, maybe their pip values are so high that even a small profit really means something, or perhaps they want to make their profit taking mechanical like Josh. All these are fine. But you'll find that the experienced traders know the tradeoff they are making. They feel more comfortable even when they make less on their bottom line. Clockwork and Mike don't take partial profits. Clock said that he stopped doing it when he realised "Do I take partial losses?"

I use that as an example to illustrate the futility of looking for "the most profitable exit strategy". It's like looking for "the best sweater in the world" rather than finding one that suits you.

If you are toying with exit strategies, like me, here are some options to get you thinking:

1) Take full profit at first PPZ. If you like this and have a high win rate perhaps backtest a smaller stop size at a key SR level within the bar. This will result in low RR and puts a huge pressure on you to have a high win rate as a full 1R loser will cancel out a few winners. Maybe you'll be cutting your losers quicker and never taking a full bar loss (see Jim's most recent video in the members section)

2) Take partial profit and let the rest run (see paragraph on partial profits above)

3) Be pickier on trade selection and let it run. This allows for a little drawdown (which believe me is a lot hairier with a big account) but hopefully you're picky enough to get the big moves. You can tuck your stop behind key resistance/support levels and EMAs as price moves on through. Price comes back to test these levels as it ploughs through and old support becomes new resistance.

4) Have a mechanical exit strategy like Jduester's with fixed R levels to take profit at. Advantages are that it takes all the emotions out. Disadvantages are that it ignores SR levels and what the market wants to give you.

5) Use a trailing stop, either manually or with MT4.

6) Use a volatility based indicator like the BAT (it's here on FF and you can search for it). I have no experience with this.

7) Trail your stop behind the high/low of the most recent bar. Or perhaps the most second most recent bar. There are many ways to experiment with this.

8) Experiment with tighter stops or retrace entries that allow you to have a much larger position size and therefore much more modest pip targets for higher percentage returns. This is an aggressive trading strategy and will reduce your win rate. How well can you cope with more losers? My guess is it depends on whether your account is $10,000 or $500,000

To summarise:

There is no right way, there is only the right way for you.

Exit strategy is as much dependent on comfort zone as profitability.

Trade management is situational. Mike uses different styles depending on how he feels the trade should be managed.

Your exit strategy will affect your trade selection. Jim will take trades that Mike doesn't because he moves his stops to BE much quicker.

Whatever approach you pick (quick targets or let em breathe), try to be consistent. It will play with your head otherwise as you switch from letting them breathe to quick targets just as the runner of the year shows up.

And my personal advice...backtest backtest backtest....and then demo demo demo.

Hope that gives you guys something to chew over.

Aaron

Keep us posted on how you do with this Ryan, because very few people here play IBs and I am seriously looking for a set of rules for them because I think they can be really lucrative if played and picked well. Jim uses them I know.

I've always thought your 5M system would work just as well on higher timeframes. A little divergence and BB confluence could be a great way to handle all these IBs.

So much to research. Time for me to put in the hours this weekend.

I once lost around $18k in a day. But it wasn't my own trading, it was some clown who was trading my money. And every cent of that 18k was beyond pre-arranged max drawdown levels (so imagine the total loss). And he went pretty much bankrupt so couldn't pay me back a cent.

I was an idiot. That's the last time I ever let anyone trade my money. Still hurts to this day.

And that's why I'm here....

Happy weekend everyone

Firstly, I see that this is your first post so welcome to the thread. This stuff can seem overwhelming at first but we have all been where you are and with a little time, practice and dedication this stuff starts to jump out at you. You are already in the right place and that will take months and maybe even years off your learning curve.

On to your questions:

I wouldn't have played either of those bars.

The first bar is more of a neutral bar because the open and close are within the middle of the bar. The nose is very small too with the high of bar barely sticking out past the high of the last one. Doesn't really show price rejecting any level to me. On those factors alone I would rule it out.

I would also zoom out your chart a bit more to see what level we are at. Look for the big picture and see if you can identify Price Pivot Zones....ie previous areas of support and resistance where price flipped. These should be the number one thing to look along with seeing whether it's a tradeable bar.

The second bar is not a pin bar because the low breaks the low of the previous bar. It is actually a bearish outside bar, because it completely engulfs the previous candle with a close in the lower third of the bar. The low of the bar was never breached so it would have been a no trade for me, before I look for anything else.

This early in your trading I would recommend not playing bars before the breach of the bar low. Remember its not technically a pinbar until it breaks. Setting a pending order below the bar with a small buffer would have kept you out of the trade.

Price did show a reaction to the 365 but it was within the bar itself as you can see.

I would recommend examining the thread and your old charts to see the kinds of pinbars that signalled reversals. See how big they were and at what critcal levels they were at. And then concentrate on bar identification, so that you know exactly what a pin bar is. Watch the guest videos on the james16 group private forum (they are free and will help you hugely)

In my opinion these were not failed bars at all but were untradeable. A little work and I am sure you'll be able to spot the good opportunities from the bad.

Good luck!

Welcome to the thread plus50!

As James said, this thread is a sincere and honest attempt to help people.

Since I came here and joined the PF I have really not felt the need to try any other material. Sure I read around with trading books, but they are mainly memoirs and psychology books. I don't feel the need for another system or method. For my money, everything is here.

Well done for turning off the live account and starting demo. It's crucial to success in my opinion. With real money it's so tempting to say after a few failed trades "screw it, this doesn't work, it's just another scam" and walk away, thus denying yourself the learning curve. You just bought yourself the best gift you possibly could....time.

I also from time to time attest to the extraordinary atmosphere and respect on this thread. I still look around on FF occasionally and am amazed by the bullying and lack of respect from people who claim to be teachers. Or the lack of clarity as simple concepts are marked in some kind of coded language, making things unnecessarily complicated. (or worse in some crazed "swinging hipster" language to show how cool the poster is). This stuff should not need explaining, it is clear, simple, and is taught here with patience and respect.

The people I really feel for are the ones who leave here and return to the jungle. Sure there are many many other ways to learn to trade and many other respectful teachers but they are very hard to find, buried as they are in the ocean of scamsters willing and people with "systems" that have worked for 3 months all lining up to take your cash.

I think those have come through here, no matter how far down the journey they have gone, appreciate how special this is and are keen to continue the great work. And the seniors all look in still and are very active. James is here every week, Mike continues his inhuman response time to posts (I think there are two of him personally, one that sleeps while the other is working), raczekfx, clockwork71, jarroo...and all the others I haven't mentioned. Clockwork71 even has his own breakaway "Silent Service" thread and it is gold dust.

No matter how "stupid" the question, or no matter how little the person posting seems to have read the thread, you will hardly ever see them beaten over the head here or angrily told they should come back when they've done the work. Flame wars rarely break out. And humility is in abundance. It's not just a great place to learn to make money, it's a great place to learn how to be a decent human being while doing it.

Anyway, welcome. I really hope you find what you need. As you may have realised, I'm the verbose one....

Aaron

No problem. It's www.forextester.com

I use it a lot. It saves me a lot of time by telling whether an idea is worth taking on to demo/forward testing. And it's great to test exit strategies with too.

Best of all of course is that it is chart time. Burn the same setups into your mind over a few hundred backtested trades and you'll see the same patterns appear again and again.

Aaron

I like that chart Josh and have used it myself.

The only caveat I add with thes figures is that sometimes we plot our previous live trades, demo trades, backtested trades or whatever against this formula and we come up with very precise figures regarding expectancy and the percentage of a certain drawdown and the percentage of a losing streak.

It's an incredibly useful tool and I use it a lot but I think it can give us a reassurance that can be misleading.

We are discretionary traders here. We don't trade moving average crossover systems, or anything with such a systematic trigger. We see, we evaluate and assess, and then we pull the trigger. Many of us have discretionary exit strategies too. Do we trail stops behind SR levels? Behind two bars? Or we just watch the action and see? Perhaps we have a fixed target system like yours.

We also have low frequency trading here. Sometimes 1-2 trades a month and even if we trade lower timeframes, often no more than 10 trades a month.

So my point is that these precise figures of expectancy are only useful if we remember just how discretionary our trading can be. They are a rough guide at best. Real results often fall outside the parameters of these results even in the most systematic and methodical systems but with a highly discretionary method like ours they are almost certain to. And with such a small trade sample as our method yields they can also be misleading. My discretionary trade selection will be very different in a year's time which may be only 50-100 trades down the line.

That is why I think psychology plays a much stronger part for us than most. We don't just have to deal with "get signal pull trigger". What if our bar evaluation radar goes off through fear, or perhaps we kill profits a little too early. All these things are going to affect the subtle mechanics of our trading.

As long as we accept that these things are organic and that trader discretion and small sample size will skew things inevitably, then I think the percentage formulas and expectancies are terrifically useful and I've got a lot from them. But I always remember to take with a pinch of salt the idea that for every dollar risked I make a 0.46 dollar return or whatever. Or that I have 17.62% chance of X losing trades.

I suppose it's just margin of error. And I allow in my statistical model for there to be a very big margin of error. So when evaluating results from these formulae I look for significant discrepancies and not minor ones.

None of this is to disagree with Josh, in fact i think he's on the same page as me with it. It's just to add to the conversation. Through reading the archive of this thread and PF there is more than one story of a promising trader who arrived, did well, and then got lost in tweaking mathematical formulae to deeper and deeper levels. And then vanished. Read the great novel that is the James16 chart thread and you will see a couple of these stories unfold.

(Actually that's another useful thing to watch if you're new and have been directed to read this thread from the start. It's not just about the price action info. It's about who "got it", what they did and asked, the pitfalls they went through, and also who didn't. It also helps to see that it wasn't that long ago that the masters were where you or I are today. There's a post I love, not on this thread, where Mikey asks for suggestions for reading matter. Someone says Market Wizards and Reminisces of a Stock Operator and he says "thanks I'll check them out". And the rest is history... )

I agree Ryan. Looking for certainties in this game is a seductive but deadly trap.

One thing I remember Mike once saying: "I try to see every setup as just another trade that could go wrong".

In one of his recent PF webinars he also laughed at how many absolutely surefire setups he had seen that did exactly what they were NOT supposed to do.

This is why I imagine even someone like James would blanch at the thought of risking 10% on a trade, no matter if it was the best setup he had ever seen in 26 years of trading.

Don't get me wrong Josh, I am completely agreeing with you and didn't think you were making claims that the chart was gospel. And personally I think the correct road is to do the research and then take it with a pinch of salt, or large margin of error, just like you do. I didn't mean to take an opposing position, just to add a nuance to your argument.

In fact I think the danger is that someone could read our conversation and think "screw expectancy I don't need that". Far from it. It's the same when people make reservations about backtesting not reflecting real live conditions and then someone says, okay so I don't need to backtest. The truth is I'd rather backtest to build confidence and just not get too atached to the results. Much better to do all the work, then throw out what I don't need or has limited use, rather than avoid it all because of a couple of reservations.

And if anyone is observing the back and forth discussion, Josh and I are on the same page about most things, this included.

I was taught by the best....

Thanks dude.

I would say one thing Ryan, from my observation of dailies.

It's been like Christmas this month, especially the last few days. But there are long dry patches too and sometimes that can really test the patience. I think this is an unusually juicy time because so many pairs are hitting these great big important levels and giving off bars too.

But then again, I'm talking to the guy who regularly watched the 5 minute chart for a whole week without taking a trade. That's superhuman levels of patience. Waiting weeks for a daily trade is going to be a walk in the park...

Start at the beginning of the thread and work forward. The first hundred or so pages are rich with material.

Then watch and read all the material in the free guest section of James' website here:

http://www.james16group.us/Guests/guestmaterial.html

Welcome and good luck.

I would say this. There's no one I would trust to pick a winner more than James16. He has been doing this 26 years. And he hardly ever goes above 3% risk.

If the big boys of the thread scream at us when we suggest 10% risk there's a reason. I'm all for testing to find different methods and ways of doing it. But if someone with experience is telling me that risking 10% is not just aggressive it's suicidal.....then he has my attention.

Besides, all this doesn't factor in the psychology. 2 losers at 20% down. That can be brutal. And also, when you have a fat account see how you feel when your trade is in 50k drawdown on 10% risk.

I think risking high amounts plays with your psychology, it plays with your trigger pulling and it plays with your trade management. It's simply not worth it when compounding with 1% risk can take you to the moon quicker than you know.

Posts like this are why I keep coming back here. All the best on your journey Jay.

Aaron

Amen to that.

Wise man he who knows he knows nothing.

I would suggest taking a look at some of the other threads on FF. And some of the other forex service providers in general. Then I think you might realise how unique you are.

You don't need to do this. You could make much more money from what you offer. You don't just teach a reliable method, you teach respect and courtesy. And those who learn from you follow your example and are happy to carry the torch.

I've observed from experience that people who give a lot often have difficulty in receiving. So I hope you can appreciate and let in this warmth and gratitude. You change lives.

Aaron

Same as you Josh. A lot of my setups in drawdown. All are really good quality PA so if I take the hit (not full bar losses, I won't let that happen), then I take the hit. EURAUD, AUDUSD weekly, GU short.

Out at break even for GU daily short. Decided not to take profit at 5800 because of the weekly pin. Added a small position on breach of that weekly pin which is in drawdown. Half my normal risk with stop on the end of the weekly pin nose. May re-enter at my daily BE level if I see convincing reversal sign.

Price does what it does. We play our high probability setups and let our edge and time take care of the rest.

As Ryan says, we don't get hung up on one trade, win or lose.

I place stops above the nose, entry beyond the breach, one position with no partial profits.

I've tried a few other ways and this is the style I've settled on.

I also am pickier with my trades and look for longer runners. I use to take small profits but found that when a full loss came along that wiped away five winners it really got to me.

But there are many ways to skin a cat in this game. And it often balances out across many trades. Which is where I like to see my results from, not from the individual trade.

I used to have two positions and take partial profits at first target, but then i went back over all my backtested and forward tested trades and discovered that it hit my profits hugely to do that.

And as clockwork71 said "Do you take partial losses".

Not to knock the strategy of taking partial profits, but those who do it successfully, know the tradeoff they are making and are happy to make it because it is what's comfortable for them.

Test what works for you, and then stick to your guns. James16, mbqb11, raczekfx, jarroo all trade in very different ways based on the material. Only the individual can tell what is right for them

Firstly bjohnl, I'm new here and just working things out so bear that in mind with what I say. I'm no old timer like mbqb11, jarroo or james16 himself.

It really is situational. Depending on what I think the trade is going to do, I make a plan, before pulling the trigger. And then I do my best to stick to it. So I have a level marked out where I would look to go to BE or take profit. Last couple of months I had been moving to BE and taking profit too quickly getting small winners. Then along came a loser and wiped a lot of my hard earned gains out. So I am refining my strategy. It's more of an art than a science.

James16 recommends that when you start out with this you move your stop to BE at the first area of support/resistance that could halt your trade. Jarroo quotes from that post all the time. I think it goes: when we reach the first area where out trade could have trouble we can either a) take full profit b) take partial profit and get our stop to break even c) just put our stop to break even. That's the best place to start.

But then I also know that someone like mbqb11 gives his trades a little more room to breathe and doesn't go to BE as quick. But he's super picky, only picking trades that he feels will run.

Hope that covers some of your question. Sorry it's not an easy answer. I am also rambling a bit because it's 3:30am...

I've been so tempted to get myself a new setup. I am on a 4 year old computer with a single 19" screen. I also have a mac laptop that doesn't have MT4 but is perfect for forum use, and a netbook with GSM for portability and emergencies. That's it....lol.

But I've seen so many people put themselves under pressure by buying all the kit before they've earned a penny so I said that as my business starts to yield returns I will reinvest it in computer equipment. Profit for me first then upgrade. No profit, no new screens. A good trader makes money no matter what the kit.

But Jim's setup did make me envious...

Hi Kean,

I think this is a very valid observation and shows that you're really onto something and thinking about stuff the right way.

I hope you don't mind if I use your post as a springing board to get some of my own thoughts about this issue in order. None of this is specifically directed towards you, it's just organising the junk in my head

In my experience the learning curve begins with entries. That is, identifying the bar correctly (what is a pin bar, outside bar etc), looking for good confluence, learning to identify PPZs.... then we begin to realise that we could pick every bar that James picks and still lose money while he makes it. So we work out that what is crucial is trade management and exits. Usually this is the point where we have been trading profitably but we see that we're not quite squeezing as much as we can out of the moves.

I'm at this point on the learning curve myself so I can identify.

The truth is that exits and trade management are an art, and it really comes down to comfort zone. James has a large account and hates seeing a trade go into a loss (don't we all) especially if it was a winner at first. He teaches a trade management system whereby we kill trades that don't work quick, and take profit quick, or at the very least get stops to break even. It's what he calls day trading off a daily chart and requires close watching of your trade once it triggers. He uses alerts to inform him when his key levels are reached (eg through www.alertfx.com)

I believe the reason he teaches and recommends this for newcomers is that it has a high win rate and so builds confidence. The small losses offset the low risk to reward ratio. So he hardly ever takes a full bar loss and makes up his profit from a high win rate and low risk to reward ratio. We all know in our psych that winning feels good and losing sucks so this method is a great way to build confidence when you're new.

A crucial component to it however is killing the trade early if it doesn't work. Otherwise you can end up with five 0.2R winners being wiped out by a 1R loser and that can be crippling to the confidence.

Jarroo (and I am putting words into his mouth here) made exactly the same observation as you did and thought "well if I am never going to let my full bar stop be hit then why don't I just place a tight stop at an SR level 30 or 40 pips behind my entry, and then I'll get a much higher risk to reward ratio because of my bigger position size." So different things become important to him. A good hard break can take a trade to 1:1 very quickly. And if he gets his stop to break even and perhaps takes some partial profit, and then if it keeps on running, because of his smaller position size he can make 5:1 or even 10:1.

Now the negative side of this is that sometimes the trade reverses and hits his tight stop loss before continuing into profit. These price action bars often retrace. The recent EURCAD and USDCAD bars had deep retraces and you would have taken losses if you'd "killed" the trade. Patience paid off here. If you're like mbqb11, when taking daily trades you don't want to be daytrading so you don't kill it so quickly (although you may trail your stop down behind the bars thus reducing your risk), you are much pickier about entries, and you let your bars breathe a bit more before moving stops to break even.

So when someone asks "should I take this bar?" the answer really has to take into account how you manage it. Mike would turn down a bar that jarroo would take simply because of the way they both manage their trades.

The key part is to find what works for you, what you're comfortable, and stick with it. Say you kill trades early and you're just taken two losses on the UCAD and the EURCAD this month, only to watch them succeed and see James post charts on them. You're frustrated. Dammit you say, I'm gonna let the next one breathe. And of course that one doesn't bounce. It just ploughs on through your stop loss.

And you go mad.

There's no way to guage your results if you're chopping and changing this way. You need to just put each loss behind you and trade your method and see if the edge plays out over a period of months. It's tough when you get a string of losers, especially from trades where everyone else is making hay, but sooner or later the reverse will be true. An edge plays out over time, and with our method that edge is comprised of entry, SL position, TP target, trade management, full or partial profits... so many factors. Find a winning package that you feel comfortable with and you're there.

It gets really complicated because to an extent trade management is situational. I took a break even on the recent GU BEOB only because when the weekly pin appeared I wanted to give it a little room because I felt we could break 5800. That's a lot to hand back, and if the weekly pin didn't appear I would probably have taken some profit around the 5800 level. I look at a trade and then see how I want to play my targets. With trend, counter trend? Breakout play? How far to first SR levels? Traffic? All these things affect how I will manage it, when and where my stop will go to break even and when I'll look to get out.

My edge will play out if I stick to my guns, because letting trades breathe will give me a nice runner before long. But changing to taking profit at first target might result in me banking early on a big runner next week, and that'll drive me mad. It also won't make sense. Strategies are not about individual trades, they are about months and months of trading.

So you're absolutely right. What James is effectively doing (if he risks say 2% on a full bar stop) is trading with a risk of about 0.5%. That is functioning as a mental stop (the point where he "kills" the trade) with a hard physical stop at the full 2% (he calls it insurance). Looked at it that way his risk to reward is pretty good. You can place your hard stop where James places his mental one but I am guessing he doesn't do that to give himself some options just in case. You could also trade a full 1-2% position size based on the place James puts his mental stop. Jarroo does this I think. But then you'd better be trigger happy with your break even button because you don't want the trade to reverse on you if your stop is that close.

So after that long ramble, the answer to your question is....yes there is. Psychology, comfort zone, whatever makes you feel best about the way you trade. But if it feels more comfortable to you to have a hard stop 30-40 pips behind your entry, then go for it. And print out every chart Jarroo every posted....

I hope that helps. I am really very much in the same place as you and am grateful that your post allowed me to get my thoughts around this in order.
Someone like mbqb11 who works a lot with traders on the learning curve says that he watches them go through the same processes...and that there seems to be a path that they all take. I suspect he would say to you and me that thinking about this stuff means you are further along than you realise, even though it feels like a bit of a conundrum at the moment.

I think he's using floor trader pivots which are different from James16 PPZs. James16 PPZs are areas where previous support and previous resistance occurred. Floor trader pivots are a mathematical calculation based on the the high and low and close of the previous bar (traditionally (H+L+C)/3 ) and are more useful with the index markets than forex, although many do use it in forex. The indices are more centralised so everyone's looking at the same line, based on the same previous daily bar.

I may have misunderstood here and you may be well aware that the weekly pivot line on Brian's chart is a floor trader pivot so apologies. But as it is something that is often a source of confusion I thought it would be a nice time to put it in the thread.

When I saw Bryan's avatar I had a little private bet to myself that you'd be posting about it James...

If I knew that, then I really have been spending a lot of time on this thread.

Almost the single biggest advantage for me in finding James16 has been that my days of looking from thread to thread wondering if it was a real system or BS are now at an end.

That is more of a relief than I can describe in words. Sometimes I look at some of the other threads on FF, even the ones that teach a ripped off version of the price action James teaches here. The attitude, the craziness and the BS on some of them just makes me sick to my stomach.

When friends ask me about trading, I tell them where I am on the learning curve and how I can help. I say that I cannot do any of the work for them but I can point them to reliable resources, namely this thread. Then I tell them that by just doing that, I may well have sliced 2-3 years off their learning curve.

This material takes a long time to practice, demo and get right. If we invested that time in every system we saw, just to be absolutely sure we'd investigated it properly, then we could end up spending a long time in the wilderness. Listen to James. 8 years. 5 grand a system. A six figure sum lost. Days curled up under the desk in the foetal position. Criticism and abuse from wife and family. Loss of faith in himself.

By starting this thread, James has given us the potential to avoid all of that. We still have to do the work. But at least it's not wasted work. Wasted work on useless systems, again and again and again, hoping we'll one day find one that actually rewards our work.

Not a day goes by that I don't think how lucky I am to have found this place.

I wanted to add my thoughts on 4H inside bars just to help anyone new looking in. Dale has been trading a lot longer than I have and knows all this stuff already but I hope he doesn't mind me using his post as a springboard for some points. He's also referring to 4H double inside bars which Jarro is also testing and which seem to work well. I wanted to add something about single IBs on the 4H timeframe in general.

Firstly, I am not a big 4H trader but there a few things I've learnt from the other guys.

Inside Bars are kinda tricky and a lot of people stay away from them even on daily or weekly. But on four hour they show up all the time (look back over your charts) and are next to meaningless on their own. An inside bar shows price winding up and building up pressure for an imminent breakout. If it does this over a whole week that's a much bigger sign than if it does it over four hours. And crucially there are times when the market is quieter during the day, the Asian session being one of them, so an inside bar on the four hour is bound to show up sometime during Asia after the volatility of the late New York session (especially the friday NY close bar).

I think the best way to use an inside bar is in some kind of combination, either as a DIBS trade, or as a double or triple inside bar (like Jarroo is currently researching and like Dale posted), or even as a tip off at a critical level on daily or weekly. Looking at 4H charts there are a ton of IBs on there and if you just played all of them with straddled orders you could get burnt.

DIBS uses inside bars in the first six or seven hours of the London session, in the direction of the daily trend, and with a heavily trending pair. And even then it has a low win rate but great RR. That's the kind of heavy heavy confluence you need to play Inside Bars.

When I read the beginning of this thread I thought that I needed to identify all these patterns and look for them. I think all the bars are different and some are easier than others. In my opinion the two greatest bars are pinbars and outside bars. In fact they are all you need. Then I think it's helpful to add the others slowly and looking at what each one needs to make it playable. But the simple power of outside bars and pinbars at heavily confluenced swing highs and lows cannot be underestimated.

Thanks for letting me spring off from your post Dale. It really does help me to get my thoughts in order when I post and hopefully will help people who are really new too.

Agreed Jim. And I didn't mean to imply they were untradeable at all. In fact I am testing various types of IB right now.

I remember when I first came across this thread I wanted to trade all the bars, all timeframes and in all locations.... It finally started to click with me when I focussed on one type of bar at a time and built up slowly. I just wanted to put that out there for anyone that was new and going through what I was when I started.

Those I4Bs are great. The I46Bs are even better...

Hi Kean,

I am still testing outside bars for ideas around tight stops and retrace entries so bear that in mind when I answer. As always your question sparked some other thoughts, so this is less of a direct reply and more of a riff on what you were talking about.

Outside bars are trickier because, more than any other type of bar, price tends to retrace into them. You can use that to your advantage by looking for a lower timeframe entry with good price action between the 50 and 61.8 fib say. The only time I would do that is with a daily price action bar on the retrace of a weekly outside bar. I'm not that comfortable with retrace entries just yet.

Because retraces are common with OBs then playing a tighter stop is harder. Pinbars, in my observation, tend to provide the kind of hard break that favours a tight stop. Another area OBs often retrace to is the low of the previous bar (in the case of a BEOB and vice versa). It's like anything else, SR levels are crucial.

DBHLC and DBLHC function in this way too. Retrace entries are of course tricky to catch because there is no guarantee price will turn around at this level. Some people have said that they win as many as they lose from this extra entry style so they prefer waiting for the breach. Now a retrace entry after the breach, giving the opportunity to add in to an existing position.... that's something to look into I think.

Regarding what you say about A+ and non A+ setups, I think it's very viable. The only thing I would be wary of is the non A+ setups. I think at the start it helps to learn to be picky picky picky, and a trading plan that allows you to take "non A+" setups may have you stumbling into some crazy bars (like Mike on a Friday night, but that's another story... ) I've been there and done that. Taken bars I had no business taking in any conditions but assuming that my tight trade management would allow me a look-see. It's brutal. For example, the recent EURCAD and EURGBP pinbars (I think) were to my mind less than A+. Jarroo said so too. I didn't touch them. Had I touched them and decided to play them tight then it would have been BE or a small loss. And they eventually paid off. To many people's trade selection criterion these were A+.

I guess my rambling point can be summarised as follows: A trade plan that allows you to take a bar you're unsure about just so long as you "play it tight" could be a recipe for disaster. Pickiness and patience are great. I assume James16 could take almost an of the iffy price action bars we squint at and wonder about and make a profit or get to BE at the very least, but he doesn't want the risk or the hassle. Mike has been trading the 1H successfully for a long time and he's backing off that timeframe now to concentrate on the highers. He even did well with 5M/15M but didn't like the hassle it involved. Ryan prints money (best percentage returns I have ever seen) on the 5M but he wants his life back so he's coming to daily.

The point being, fewer and fewer trades, all easily managed are where all the seniors are. Mike once presented a renowned trading psychology and MM expert with a variable trading plan (so much risk for A+ bars with such and such trading strategy, so much for A bars, so much for B bars) to which the guy's response was "why take anything less than the A+ anyway"

From my research the way to go is to use the advanced techniques to finesse the "A+" bars (I use these grading terms very loosely because I don't quite believe in them. One man's A+ is another man's B-. It all depends on our management style and what you look for). Raczekfx does this with retrace touches off weekly PPZs and high grade daily PA bars. Or Jarroo playing a tight stop on an "A+" bar for higher RR and passing on anything less.

An iffy bar will always be an iffy bar and no amount of trade management will prevent it from being a riskier play. Thinking we can finesse our way out of a lower probability setup is in my opinion a tricky road.

And regarding your question about large stop size, it has never bothered me. A chart is a chart to me and moves are often commensurate with the size of the bar. So a large outside bar with a 500 pip stop may yield me a 500 pip move. On a smaller timeframe the chart could look exactly the same but the pips per bar would be smaller. It doesn't matter to me. In fact I hardly ever look at pips but always at percentage R. Of course there are occasionally mad untradeable bars like some of last year's 900 pip specials, but these are the exception. If you utilise correct money management then whatever the bar size it should still be a fixed percentage of your account. So 500 pip outside bar = 1%, 90 pip pinbar =1%. Then you start looing at the move in relation to the size of the bar and many of them give around 1:1 which is enough, with a good win rate, to be very profitable from.

It's like when people talk about huge spread. Spread is usually related to the average daily move of the pair. So big spreads are cancelled out by big moves. The exception to this is when your broker widens spreads at specific times of low liquidity and news and I tend to stay out during those times anyway.

Hope that helps. Still madly jetlagged and just waking up so will review later and may edit if it's incoherent....

Actually, mad though it may seem, that was an I46B...smaller than the 46 previous bars.

I'm still hanging on to that one too Ryan...

I've never been drawn to fixed R levels as targets because I'd rather base my exits on where SR is. And I like a situational element to my trade management.

But that does leave me open to emotional trading and the more I do this the more I like rules and structure. As Jim said on a recent video (or was it Mike, I've watched so many recently I am getting confused.. ) if you have to think more than one minute over a setup then it's probably not one of the absolute best. I'd like all my trading decisions to be that simple. The more I think the more trouble I get into. I think that's why doctors, lawyers, MBAs often fail at this business. They succumb to the human desire to make it more complicated than it is.

If anyone could make me think about fixed RR targets it's Josh simply because he does so much research. So its in the back of my mind and will be added to the already overflowing testing pile that sits on my desk.

My birthday post will come later. Too much to say to fit in as a footnote here. But raczek's post really made me laugh.

"It really is dirt simple folks."

"Hardest easy money you'll ever make"

Those phrases just make me smile.

Jun 17 2005 10:41pm
And so it began...

I don't think anyone knew where it would go, how many people it would help, how many lives it would change. How amazing to think it began with that one casual moment.

I was trying to think of what to to post and I thought the best thing would be to write a list of what makes this place so great.

1) A simple, easy to learn method that can be traded in both trending and consolidating markets. All you need to know to be profitable is here.

2) The efforts of James16 himself in boiling down all the complicated and difficult stuff he knows into a very simple, easy to learn form. Look at the early charts and the language he uses and see how he has refined and refined the way he teaches to make it accessible to newcomers. You won't get that anywhere else.

3) The seniors. People who learnt from James' example and, long after they had learnt everything they needed to print money, stayed here to teach and help the others. In clear and simple language. No big swinging dicks here. There are so many who consistently maintain their presence here, selflessly helping others.

4) The respect and humility with which everything is taught here. Look at some of the other threads, even the ones that rip off what James teaches. See the anger, the bullying, the ego, the casual abuse of newcomers. And compare that with how questions are answered here. How Mike dealt with Alter's query a few pages back. Nobody here abuses a sincere and questioning newcomer. Everyone understands that we are working hard to change our circumstances and our lives.

5) The passing of the torch. Seeing people come up and grow. People who's first post not so long ago was along the lines of "well what is a pinbar anyway?" and soon are growing, learning, helping others. This thread keeps producing great traders, and crucially, traders with a great attitude.

6) No trolling here. Hardly any questioning of the method, hardly any "This is BS! Price action doesn't work!" No filters, no deviation, it just stays on course, to the point and doesn't descend into flame wars.

7) All levels of experience. Nobody can tell who is teaching who here. It's not just James teaching everyone else. He looks in from time to time, posts charts and answers questions. But this is not a one man thread. Everyone is here to teach and to learn. Look at how Ryan, a phenomenally successful trader, is here learning the dailies. Amazing.

Which brings me onto what I think is the best thing about this thread.

8) You.
The person reading this screen. This thread lives and dies by its members. Every single person who contributes, and even those who just read, make this place what it is. This is not a classroom, it is a community. I have forged strong friendships here. And believe me, when you start to trade, everyone in your real life circle thinks you're crazy...so you really do need the support of fellow traders. There are far too many to mention so I thank each and every person who has ever posted or who continues to post to this thread. For the last 10 months I have read every post, every day. And long as you people continue to post, that is exactly what I will carry on doing.

So in answer to your question in post one James, "What does everyone think?". I think it's pretty damn remarkable.

Happy birthday James16 thread. Writing this has brought tears to my eyes.

This video's a real beauty. And it's free so no excuses not to go check it out....

5am and I'm reading the thread. What have you done to my life Jim?

I completely identify with this Tom. I have even watched a weekly trade on the 15M TF.

People think that the practice period on daily and weekly is because the signals are more reliable and because the hurly burly of intraday needs more skill and discretion that comes from practice.

This is absolutely true. But IMO they key part of 3 months demo and further time going live on daily/weekly is patience.

Night after night of opening your charts seeing nothing and closing them. Day after day of watching people make hay on the intraday through the thread. It totally changes your trading mindset. You learn that trading is more about passing than actually taking trades, and you learn to watch less than perfect setups sail by, even when they go to the moon.

That is a skill that underpins absolutely everything else you do in this business. It's the good habits that provide the foundation for success. See how easy it will be to pass on hundreds of ify 4H pins if you're doing this now.

And as for watching the charts, I do it all the time. But why not try and wean yourself up? Look at them at every hourly close for example. And then work up to every 4h close.

It also depends on your style. If you're Mike you'll take a daily trade and move your stops at the end of each day. If you're Jim you're a daytrader off the daily chart and you'll be watching like a hawk at key levels. Jarroo too. You need to watch it regularly if you're looking for 30 pips off a hard break.

In my experience, everything in trading is a phase we move beyond. Which is why it's so important not to risk real money in the early phases. You're doing what we all did. That's another plug or reading this thread from the beginning. You get to see everyone's learning curve across the last 4 years.

Just some waking up thoughts. Hope they make sense.

Jim,

A few questions for you. You style is clearly quite hands on once the trade breaks and not of the set and forget type (unless PA is A++, then I guess you can split the positions, set TPs and relax). So do you stay glued to your computer waiting for the break, or do you use alerts? Which sessions do you watch and what do you do when it comes time to sleep? Do you pull the order or sleep with an alert?

I am testing your strategy because I like the RR. So far I have two options. Two positions each with 30-40 pip stops based on SR, one with TP 30-40 pips away, the other with no TP. Set order at NY close and sleep through Asia. Or have the full position on and an alert set for the break or just watch until it breaks, pulling the order if I sleep. (unless it is triple a grade PA).

Also, are you getting pickier in trade selection recently? It seems that you're passing on more trades. If so what brought this change on?

And finally, when you're looking for 30-40 pip hard break moves, does the spread factor into your thinking more? Especially for the higher ranging pairs.

Sorry for the barrage of questions. Thanks as always for your efforts here. I really like your charts and analysis.

Aaron

I'm in the AUDUSD weekly which is a similar setup. And I would take it every time it showed up. It sucks to be in heavy drawdown. If I had a style that involved small RR TPs then I would probably have killed it before now, but my current style is more like Mike's. Pickier entries more room to breathe. My stop is at the end of the bar because that is a significant area of resistance and because I believe that this setup means price will give me profit before it breaches that level of resistance.

There are two lessons I see if this trade ends in a loss (which as clock pointed out it hasn't yet)

1) Just because a trade is a loss doesn't mean you shouldn't have taken the trade.

2) Even A+ setups fail.

We deal in probabilities across hundreds of trades. Looking for every trade to win is the definition of holy grail hunting. If your plan/strategy is back and forward tested then you should have confidence in trading it through the occasional loser or losing streak.

This is also why we have good money management. I risk 1% of my account per trade, no matter how good it is, because every setup is a trade that can fail. And it's also why we have Jim's minimum requirements process.

The mistake that we can make, and which I have made before, is to change our trade management strategy when we see losers. Then we switch to a different style never allowing enough data to see if our strategy would have been profitable over time. We go mad hopping from style to style and never gaining the experience that comes from trading one method over years, refining and refining.

This has been a month when some really superb setups like the GU and AU weekly didn't pay off (yet) whilst some of the more borderline bars and continuation bars have really yielded profit. Sure, times like this test the patience if you're a pickier trader. But it's only a month. Let's talk again in year's time, when we all have enough data to evaluate properly....

Aaron

I was just logging back in to edit my post and make this exact point...but Mike beat me to it. Even on a Saturday...

Price rarely reverses out of nowhere. That's the amazing part of this method, we can almost always tell why price turned around. It's just whether we think our signal will trump the first area, as shown on Mike's chart. In this instance I thought it would. But I knew from looking at the chart that it would be an area to watch.

Study of this method means that price is rarely going to turn around without us understanding why. Now that's a holy grail worth talking about.

The it's just up to us to decide what we do at those potential reversal points. As in Jim's "This is critical" post that Jarroo always quotes.

I'd just reiterate, if you are working on a style that allows letting high probability trades breathe a little more, and the drawdown on the GU or AU weekly has made you sick to your stomach, now really is not the time to switch styles just on the basis of some drawdown. Give it time, over months, and then see. Otherwise you'll take a quick TP at the next one and it'll end up being a runner. And that way madness lies.

And also to reiterate for those holding either of these trades. SL hasn't been hit and neither has TP. It ain't over till it's over.

Perfect Jim. Thanks.

I think timezones play a huge role in this. For me my daily bar closes 11pm my time, and the Asian session, which happens while I sleep, is often quiet. So I need a strategy that allows me to sleep and wake before London open. I don't want to be micromanaging a trade that breaks in Asia. Trader comfort zone. As always. So many ways to make a living in these markets with this material.

Have a great Sunday.

This is a price action related thread based on the material James16 teaches. It's outlined in the first 50 or so pages of the thread and in the free guest section of his private group www.james16group.us

The method allows for the following of many pairs and some commodities and even the occasional stock. It's characterised by a largely indicator free approach, relying on price action bars at key locations known as pivot zones. It's an almost purely technical approach so there is little discussion of fundamentals here.

If you're interested, read the first hundred or so pages of the thread and if it fits your style and personality, follow along on the daily posts.

Hope that helps.

Oops thanks Tyler. I've adjusted my post.

No matter what the stop loss it should work out as a fixed percentage of your account, in my case 1%.

The bar you mention is the reason Jim recommends starting on the daily and weekly timeframes. All timeframes work with this stuff but we have to be much much much pickier when we drop below daily.

Can you see that big dive a few bars before your pinbar? That was a big bullish daily pinbar which retested the key 1.75 level. That's what your tiny 4H bar was trading against. At the moment that big daily pinbar is locked in a battle against the recent highs. If it breaks them we could go a long way.

Also, the style you are picking is super aggressive and will kill your account if you are not very experienced in this method. Retrace entries are playable but they are extremely difficult on lower timeframes and they will result in a much lower winrate.

James' suggestion is to start on daily and weekly timeframes only and play the pinbars and outside bars placing your stop on the other end of the bar, and your entry on the breach. Then you'll learn to see the good setups from the bad. If, after a few months, demo and a a few months live, you are profitable doing this, then you can look at lower timeframes with all the experience you have gained.

People always think that they need more opportunities to trade which is why they go lower TF too soon. I know, it's what I tried to do, starting with a system that was on the 15M. But more opportunities to trade can be more opportunities to lose as well. And for every loser you need a winner to cancel it out. Your losers are making your winners go for nothing. (As someone once said to me "A ten mile walk in the woods is a ten mile walk back"... ). So standing aside, and picking rifle shots on the daily, can give you a higher percentage return a month than trading all timeframes.

It requires more patience, but almost every successful trader on this thread started that way. And many of them, after a long time, now play more aggressive entries. Some of them were so profitable on the dailies and weeklies, with non aggressive entries, that they don't bother doing anything else.

Those are just a few thoughts sparked off by your last few posts. Thank you for giving me the opportunity to get them out. There's been a lot of focus on aggressive entries recently so I just wanted to pitch in with this. Welcome to the thread and I hope you find it helpful and useful.

There are so many ways to play basic price action. Ghous is right to point out that price reversed exactly where expected, and if you took the daily GBPCHF trade you can't have been surprised that it did that.

Clock is also right that if you took that trade near a swing high looking for that small RR then it's an awful lot to risk for a small RR. But there are many ways to look at this.

You could be a "stop to break even quick" kind of trader. And so as the trade broke hard you moved your stop to BE looking for a longer move. You got stopped out at BE. Oh well.

You could be someone who looks for a hard break of pinbars so you had a 30-50 pip stop looking for a hard break. This one gave a hard break and if that was your style you would have made a nice return here by taking profit at the highs.

Or you could be a breakout trader. You've seen the 1.75 level is a huge area of interest on all timeframes and have been looking to get in. You know that price often pulls back to test the breakout level and you see it here testing 1.75. You know there will be trouble at the previous highs but you think 1.75 has been broken and retested and if the highs are broken, then you buy and hold this all the way up to 1.94

That's three styles already before we even think about 4H trendline pullbacks (of which this was an example). But whatever your style, you manage accordingly. And crucially, whatever your style, you can't be surprised that price reversed at the highs. That's what Ghous is getting at. This isn't a failed anything. It did exactly what we expected. Will it return to retest those highs and move on? That's your call.

I personally took this as a breakout/pullback trade. My stop is at the nose of the bar ,below 1.75, and I am looking for a big move off this key area. I am willing to risk that 1% to see if we get it because I believe 1.75 is going to act as resistance. If we get strong bearish price action on a high timeframe I'll re-consider. If I lose, I lose. I thought this was a strong breakout/pullback signal and the RR on these trades can be great so I'm willing to risk my 1%. Given that this is my plan, it would be madness for me to move my stop to break even at the highs. Madness for me, not necessarily for you. I need to give this room to breathe, especially given the strength of that uptrend. I was expecting a bounce and some drawdown. So trade management is all about your plan, what you're looking for, and then just watching the edge play out over a series of trades.

This is where the whole A+, B+ etc grading of trades doesn't work for me. This is definitely not an A+ pure price action trade. But 1.75 is an A+ SR level. It's certainly an A grade breakout/pullback trade, although a low a bit further below 1.75 would be nicer. So it's impossible to grade really. So much depends on management. If your stop is 30 pips into the bar and you're looking for a hard 60 pip break then your definition of an A+ is going to be very different from someone who's looking for a bigger move. Remember, Josh just banked his last position on the EURCAD trade, the same one that James16 took a loss on. Is Josh a better trader than James16? Did he manage this trade better than James 16? No. Their respective edges will play out over time. In this instance they both played their plans to perfection which means they were equally good here.

And one last word on the stop placement. My stop is at the end of this bar for a reason. It's because the nose of the bar is a key support level. Look how the GU and AU weekly pin trades have been saved by those pin noses. The style I trade, I'm not in a hurry to move my stops up. I try not to until I have a new SR level to hide my stop behind. This is a conscious decision because I don't want alerts waking me up in the middle of the night to baby my trades. So I get pickier.

My style is developing and I am a new trader. But this much I am realising. If I am not willing to take the full loss on the trade then I am probably risking too much. I don't trade 2% for this reason. This is a dangerous game to play with scared money.

And one more thing, while I am ranting. When price reverses and goes into drawdown on some trades a lot of people ask "why did this fail?". It didn't fail. It went into drawdown. Your trade is a calculated gamble that price will hit your TP before your SL. If you can;t cope with losers, or with drawdown then that's something you need to change if you want to be in this business. GU weekly isn't dead by these criteria, neither is AU weekly.

Over time you develop an idea for what parts of trading you can tolerate or enjoy, and what parts annoy you. Maybe you enjoy complicated analysis. Maybe you enjoy keeping it simple. Who knows. But when you know from practice, you build a trading style and method that fits your personality. And you rinse and repeat.

That's the beauty of what is taught here. Traders of all personality types can create a system from James' method. Aggressive, conservative, chart watchers, set and forget types. Price action works for you all.

Okay...rant over....

Every time that one gets back to break even I get itchy. But if I closed it and it dropped I'd be mad.

When those weekly inside bars break we're moving.

It's Mike isn't it? I knew it.

(And btw, my screenname had people sending me flirty messages when I first started on here. Before they realised I was a man. It's actually an acronym of my first name and my business partner's first name.)

Aaron

Me too, Jim, me too. I even had a look through some old pages to see if I could work it out.

I clearly have too much time on my hands.

(PS. And yes (in relation to your earlier post) that is exactly what I am working towards. A handful of management styles that can be deployed situationally. On my spreadsheet of trades taken I have a ton of extra columns for different styles. It's for exactly that reason. To collect information and have an arsenal of trade management styles)

I like this on the daily, although a nice inside bar with the open and close up in the direction of the trade is something I like to see as a momentum build up.

The thing with the 4H is that often there are dead bars depending on the time of day you take it. So I am not quite sure how to play that yet. Which is why I am accumulating demo data on trading that TF.

My thing is, I don't want to have a trading plan that allows me to change things too early on. It's a recipe for emotional trading for me. I want to take a trade in the confidence that it's going to work and then let it play out. If I look for a reason to leave early then I almost always find it.

I've got a EURCAD pending 4H short on at the moment and it's really unlike to break in the bars that form during the end of NY and towards the beginning of Asia. But I like the setup so I may sleep and see where we are at London open when I wake.

Thanks Mike.

I've had some great teachers.

Raczek made this point too and said that in his little group of traders, farmers do the best.

I actually think it's the reverse. Doctors, lawyers, engineers...they all want to make this more complicated than it is, assimilate all the information fundamental and technical and get on top of it. They don't have the ability to relax, rinse and repeat and watch their edge play out. Trading really can be simple in its execution, once we've done all the hard work in getting to that point.

A major red flag for me in choosing who I listen to as a trader, is people making it overly complicated. Or using elaborate trading jargon that needs to be read three times to be deciphered. I find myself asking "What are you saying? What do you mean? Why are you hiding behind all these technical terms?" And conversely I am drawn to those who really present things simply and clearly.

It's a UK show. Makes you feel very good about what we do here. Those guys were basically red meat thrown into a trading room and asked to pick a stock. They based it on reading the newspapers.... And one of them was called out for not putting on any positions. So much for sniper shots.

The agony they went through when the positions went against them....that we can all recognise. And hardly anyone watched a chart. It's worth watching to get confidence about what we do here.

The trader they worked for was called Lex Van Dam. Which is surely a made up name...

I never mention it to women. Ever. . Although if I had to, I like Mike's definition, "I buy and sell money". Sounds cool no?

Luckily my main job is as a theatre, televison and film actor which sounds far more interesting (even though in practice it isn't). In fact you wouldn't believe some of the places I have posted to this thread from, and you wouldn't believe who some of the people were that asked me what I was doing. At least one Oscar winner now knows about James16...

Bundy. I edited it for clarity.

If it's any consolation Marco, you should hear how much I swear when I'm talking to my friends. Some of them have elevated it to an art form...

You're right, these things are all relative. I was really impressed with this post and your attitude. This thread seems to attract mature people who can resolve potential disagreements without getting defensive or resorting to flaming (I remember how Supreme reacted to the criticism of his multi coloured posts in a similarly mature way).

Back to business!

Already out Matt, already out.

Decided to cut my risk and so moved up and took a smaller loss. Not a big worry with my style which has lower win rate higher RR.

But it'd be nice to see a winning streak soon....

You and me both my friend.

My live account daily GBPCHF took a loss because I moved my stop up. I also moved it up on AUDUSD weekly because I thought if it breaks 8000 again I don't want to be in it. So two losses.

A difficult month for me live but as a poker player would say "I played the hand right and I lost" so all part of the plan. It'll come around if I don't go chasing it.

I had a quick TP on my 4H demo at the recent bar lows looking for a smash and grab profit. I banked that at 0.5R. And now look where it is. Would have been around 5-6R to the 1.8. Ah well, I'm collecting demo data to see if I can go live profitably on 4H and that trade would probably have skewed it all....

Also, isn't amazing how the learning curve seems to have exactly the same stages for everyone. I am currently in the "only take 3 hour naps and never sleep the night" stage, which I read you went through as well.

Take a tip from me Josh.

When you start trading 4H, pick a time slot and stick to it. I've just tried doing the "4H bars on 3 brokers" routine and not only does it scramble my head because it's had to effectively see price developing, it just kills the sleep and availability patterns. I felt like I was jumping down a timeframe to 1H even though I wasn't.

New plan is to sleep after setting daily order and wake pre London. Then check Alpari bars at 7am, 11am, 3pm, 7pm and daily close at 11pm. That way I get a feel for the flow of 4H price bar to bar. If it looks a really interesting and key then I'll switch over to fxpro or ODL just as I do on the daily, but I won't check them religiously.

The 4H is great. So many more opportunites and with all that patience I've learnt through months of demoing dailies it just seems so easy to wait for the good ones. That time solely on daily demo really pays off.

So full steam ahead on 4H demo and daily and weekly live.

I don't think there's a trader on this thread who didn't learn that lesson the way you did....

Blah blah spread...whatever. That's what I thought. And then the same thing happened to me and I learned real quick.

When you factor in spread and a buffer to confirm the breach, then some of those iffy pins, with a tight space to the first sign of trouble, get ruled out straight away because you're effectively entering at first target. Shows the importance of taking a trade with room to run, especially if you're doing a full bar stop.

Ah Seinfeld....

I wanted to crystallise a few thoughts floating round in my head by writing about them and hopefully it'll help others too.

We all want to cut our losses and let our winners run. That's the key to trading right? But people say it like it's as easy as throwing a switch. It's not. It's a bit like when I work as an actor and I get told by a director to "be in the moment". Yeah. Great. Now tell me how.

Because there are arguments on both sides here. Look at that recent GBPCHF pinbar long that reversed at the highs. And the weekly AU and GU. These bars all ended up retracing over 90% and then, in GC's case, shot to the moon. The AU and GU gave you good opportunities to get out for break even or with a small loss and they may yet play out profitably. So cutting your losses on these would have resulted in losers, right? And aren't we supposed to give trades a chance to play out? Isn't our stop loss the price we pay for seeing a trade, and killing the trade early becomes a sign of emotional trading?

Well yes and no.

The same case can be made for winners. We all want to be in the big mover. In fact show a chart to anyone who doesn't trade and they'll say "wow if you just held from here to here you'd be rich". I bite my teeth rather than asking them how they would handle the 50% retrace. It all looks so easy with hindsight. But we also don't want to constantly take small pieces of the big moves and then watch as the full bar losses wipe out our profits.

I believe the key is to have a way of trading where all the parts offset each other and make you both profitable and comfortable. I've written about this theme before. Jim doesn't mind about RR because he cuts trades rarely taking a full bar loss. Mike allows trades to breathe and so doesn't move his stops up so quick.

My point is that if you took Jim's "quick profit don't worry about RR" style and added it to Mike's way of letting his trades breathe, then you would probably not be profitable. Nor would it work the other way round. You can't look to get into a 1000 pip runner if you kept moving your stops to break even after 20 pips.

Adding all the components and finding a style that works for you across months of trading, keeping you profitable and comfortable, is absolutely key. I try to think forward. You've been trading a year or more profitably. It's comfortable, easy, even boring. When you see that vision are you happy with the amount of chart time you're spending? Or are you thinking, "man I see that other guy make the same percentage returns from an hour's work a month". It's so exciting at the beginning that we spend hundreds of hours in research and chart watching. But it's good to develop a style that will be sustainable over the next few years. Clockwork71 is great when he writes about this and his Silent Service thread is superb.

I know I am working for quality of life. I want to have a home in the US and a home here. I want to be able to travel and look at my laptop a few times every day and have a simple structured hassle free way of making good profit. So I look for strategies that I don't have to baby. I don't want alerts waking me up in the middle of the night for the next ten years. So I adjust my trade selection accordingly.

This stuff works. And if you work it, it will work for you. So how do you want your life to look in the future when you have that big account. Do you still want to be watching five minute charts and peeing into a bottle? Or do you want to be spending time at the lake? Yes, Ryan is a fabulous example. He went from living in his car to having 2% of his account be the price of a car. And a nice one too (no matter what bobster says... ). He could go on and make $100 million. But I am guessing he has everything he wants and he wants to sit back and enjoy it now. So he goes to the dailies.

I may be putting words into their mouths, but I think that for Jim and Mike, having nailed how to trade, they get their greatest joy from teaching others and watching them grow. This thread and the private group is more than a full time job for Jim and believe me he doesn't do it for the money. So my point is, think of the future and where you want to be. How you want to be living. And bear that in mind when you're putting together your trading style. None of us want to burn out.

The thought that started this, before it went off into a tangent, was one small mental click that helped me with the idea of staying in bigger runs. We always think "oh my God it's run so far, I need to close out". But think of it this way. When you move up your stop loss to lock in profit, you ARE banking the profit. And you're getting to keep a speculative position open for free. No messy searching for ways to re enter. You've closed out and banked the part you have locked in. And you have a risk free look see entry on any future action. When I thought of it like this it seemed a no brainer.

It's those little ways of looking at things that unlock it all for me. And move me closer to my goal of effortless, low risk, high reward, low maintenance trading. It's fun right now and I spend all my time looking at this thread, backtesting and chart watching. But soon, when it gets old, I still want to be able to make the same amount of money from a minimum of effort.

And join Ryan on his big private lake....

Rant over....

This is what happens when Jim finds the marching powder...

That guy has four sets of alimony to pay. If he isn't a member of PF he sure as hell needs to be.

"I'm sorry. We've run right out of Waldorf"

Nope, that was my face when the GBPCHF took off without me.

Don't get me started on you Texans big guy.

I haven't laughed this much in weeks

PS Three pages appear while I type one long post. If there's anyone popping blue pills here it's the James16 Chart Thread

I'm not back on till tomorrow night. Then I'll be sat in the dressing room between scenes chatting to you all.

The artistic director of the theatre (and director of quite a few movies himself) finds it hilarious. He always refers to my dressing room as "my office". So would you if you saw the two laptops and papers spread across the table. Maybe I should post a picture sometime.

The well timed and well placed nap is an art form. It's part of the culture in the Mediterranean where everything stops for a post lunch siesta. those guys know how to live.

That's creepy. I have been testing the exact same thing. I have a whole demo account dedicated to it.

Are you in my head Jim?

It works pretty well doesn't it. Although because I sleep during Asia, I have a SR based reduced stop when the trade is placed (in two positions so that one half closes automatically at first SR). The if it hasn't borken by London open I switch off the autopilot and go to manual...

All on demo, and just another style to add to the toolbox.

Kinda cool that we were both on the same page about this though/

I'd agree with everything you said Mike. I should have made myself clearer when I posted, my tone didn't quite come across. I meant it in the same spirit of exasperation at its over simplification as you did. As in "we're told told to cut our losses and let our winners run. we're told that's the secret to trading. but what the heck does that mean and how do we get there". So I wasn't holding it up as they key to trading at all. It's kind of like telling someone that the key to trading is to "have winning trades and make money". You articulated it much better than me.

I also agree with you about risk management being the key to trading. I remember an old story about 10 years of backtested result of the following system: Toss a coin at london open and go long or short depending on the results. The money management was a TP twice the SL and there was a little tinkering with average daily range in there. But it was a simple money management system with the entries left to chance. And guess what? It was profitable.

This was posted on forex factory once as an anecdote. It was followed by three pages of "Can you tell me more about this system please?", "If you filter it with stochastics you get better results" and "What time do you take London open as?"....

Hi Tom,

You're right to notice the strong correlation on the yen pairs and it's pretty much true that they all work together.

Like anything else in trading it's how you manage it. I risk 1% per trade, so if I did take two then it'd still only be 2%. If you're risking 2% a trade then it's 4% which could be more of a cause for concern. I am usually aware of this on yen pins and pick the best one. But I can and do sometimes take two, depending on the setup and the quality of the PA. I certainly wouldn't take 4 or 5 even if the PA was absolutely golden.

More important in my opinion is recognising the quality of the PA, whether we are in traffic etc, and then deciding where my stops are going to break even and where I am taking profit.

Hope that helps

Hey Mister Hog,

Welcome to the thread. I'm so glad to see you getting involved and asking questions. It really is the best way to learn.

I struggled and still struggle with fear of pulling the trigger. I think you're a member of PF aren't you? I would check out Fiji's psychology section for this. It's awesome. In my case, fear of pulling the trigger is simply fear of being wrong. And then I run a chain of events from there...."If I am wrong, then I'l lose money. If am wrong repeatedly I will fail, my dream will be over, I'll lose my capital, I'll go bankrupt, I'll lose my house". And on and on. No wonder it got scary! Of course being wrong is absolutely part of trading. There have been and will be many losses but over time the edge plays out. Only time builds confidence. One thing that helped me was to have two demo accounts. The extra one was for speculative trades, borderline PA and what the heck trades. It kept me away from that fearful paralysis place where I wait for days and am scared when the trade came along. I didn't place too much stock in the results of that account, it just became a way to practice pulling the trigger. And occasionally things graduated from there to back and forward testing.

These were definitely trafficky pins. I'm not a great fan of grading trades because I think it all depends on how you manage them. But that said, these weren't A+ trades. However a better way of saying it is that these weren't buy and hold pins. There was a lot of traffic to the left and so there was a chance they were going to reveres quickly. So you adapt your strategy accordingly and go for a quick take profit or at the very least get your stops to break even quick. MAnaged that way they were perfectly playable.

I think at the start it's best to wait for pins at clear swing high or swing low points and in tons of space. They don't always work but there is a higher probability of them working and further to run when they do. They are also easier to manage. Each one can easily run to take profit 1 or 2 times your stop size.

Remember, two or three of those a month and you're at 4 or 5 times your percentage risk. More trading isn't necessarily profitable trading.

Good luck and feel free to ask us if you need anything!

Just what I needed to hear. My first live month has been brutal and nthe temptation to switch is strong.

Some parts of the learning curve just happen when you go live, no matter how much you learn and demo I guess. I am returning to meditation and yoga to keep my head straight because the revenge trade demon is jumping up and down on my shoulder.

I feel less bad about being taken on this one now. I had the same first target more or less. And I killed it early too. A little further back than you Jim but I didn't take a full bar loss. I knew it was a sideways market, I saw the first area of trouble and I planned accordingly. So in my eyes, it was a success not a failure, even though it was a loss. They smart though.

The GU which I passed on (NU was showing better divergence) did its business to what would have been my targets.

I don't know how you two will react to this, but I have to say that it's been a great comfort to me that in my first month live, the losers I have taken have also been losers for either you or Mike. In a couple of cases I managed them exactly the same way as Mike, without knowing till afterwards.

I know we're supposed to find our own style, and I'm not trying to copy anyone. But knowing this really helps to keep the faith and stick to my plan. After all, I haven't been taking crazy bars that you guys wouldn't touch with a bargepole, and I haven't been managing them in a nutty way either.

It's a probabilities game and I am not going to change anything because of a weak month. Particularly after all that time on demo and backtest.

Don't like either the UJ or the UCAD (that nose is just way too small and it's sitting on top of the round number).

Nothing for me tonight. Going to spend the weekend getting back ing ood shape physically and mentally.

We've got breakouts coming. And I bet price will move hard.

You're a real asset to this thread Ryan. Thanks. Awesome advice.

I know Jim's big on floor trader pivots for the S&P and the minidow. But as you said, I am waiting six months to completely nail forex before I even think about anything else.

PS I think you're on your own on the AU. Mike and I bailed when it bounced for the 3rd time off entry and broke above 8000. I think you'll have the last laugh there. Big moves coming.

Do you use %R money management Jim?

Is that 15 pip a fixed percentage of your account? You'd be swinging a big line if it was, right?

Biggest laugh I've had today.

Yep, on my aggressive SL demo that one ate me. And my SL was exactly there. But the odds on this thing are intriguing. Interesting how often the bar break SL lines up with old daily, 8H and 4H resistance.

Hi Kean. These PPZs are often so close to round numbers and that's where the orderflow often is. I do mean 1.15. I tend to always put my PPZs on these round numbers. In fact, try drawing lines with the really big round numbers (1.15, 1.2, 1.25 etc) on your chart and scroll back through time. You'll be really amazed.

It's totally possible to trade with only these round number lines and price action, especially intraday.

Hey Josh,

I am in this phase to and wanted to chime in. Two parts to this post. The first is just some random thoughts on perfectionism that your post and some replies sparked. Next post is my more specific findings so far from demo. None of this is directed at you, in fact I think you taught me some of it, but I love posts that send a few thoughts flying round in my head and make me want to write them down in this, my "online journal"

We both share this view but I am putting it out there for the thread. Lower timeframes are nothing to be afraid of if you graduate to them after the proper preparation. James lays out the minimum requirements. If you can fulfill those and you want to move down, then go for it. They are the same. Just quicker, with more signals and therefore you have to make decisions on the fly. I personally believe the concept of price action being less reliable on the lower timeframes is a myth. (And not to put words in his mouth but I am pretty sure James16 has said this again and again in the thread). You just need to know where your PPZs are and react accordingly.

I also believe James when he says that going to lower timeframes first without learning to do this on daily and weekly is a huge killer of novice traders.

Personally, and I realise my views will not be shared by all, I think that it's okay to trade daily, 4h, 15m, 1m...in fact whatever you like.... as long as you do it on demo. That's what demo is for. Do you think you've got a scalping strategy to beat the market? Great. Put in the months on demo. Demo is my sandbox. I have 3 or 4 different demo accounts each for a different strategy or style and as long as it doesn't get to overload me too much, that's where I do my research and development. I think of it like a big corporation. As I am rolling out my new product I have several other products in different stages of development. After all, if all you do is dailies and weeklies, there is time to try new things out.

Which is a long winded way of saying don't be afraid. I was for a long time. Try out every little idea or hunch you have. Don't slavishly imitate someone. Take what works and build from it. There's a reason every one of the seniors trades a different way. They played around and found their comfort zone.

But James' minimum requirements mean that we don't have to lose a penny of really money while we're working this out. Doesn't mean we won't. I lost a ton, like many others, because I was an over eager idiot. But then I swung the other way into the super cautious camp. And that was just as much a trap for me. I wasn't even going to open a demo account until I had read every book there was and absorbed all concepts. Just perfectionism jumping up to bite me again.

Now, I have to remind myself that if I am bored and want to have fun then I can open a demo account and click madly at the screen all day. It works for me to kill my perfectionism and get it out of my system. Then I go back to my live trading and R&D.

Next post...

Hey again Josh,

I'm not that far ahead of you with this. I'm in the 4H testing and demo phase as you know. Here's what I have picked up.

I tried looking at multiple brokers so that I could have all the 4H time slots sewn up. Drove me crazy. Not only was it information overload and too much chart watching, but I couldn't get a sense of price developing across my charts because I had four different GU charts alone. So I dropped that and now I just go for my one broker.

I skip Asia. I also skip the 4H bar on the daily close, because I don't like placing orders between New York close and Asia open. I like to see momentum from my bars and I also like to manage trades bar by bar. Placing a trade at 11pm my time is not a good recipe for a night's sleep. There could be exceptions to this of course, if I feel I am at the beginning of a long term move. I make sure I am back at my desk for the pre London open bar. Then I watch the bars during the London/New York crossover until London close. So effectively, and according to my time (London time), I am watching 7am, 11am, 3pm and 7pm. Two weeks of watching is going to show you exactly where the dead time is.

Although I watch all pairs, on my intraday demo I am heavily biased towards the majors. So unless it's an absolute doozy I'm not looking for an AUDCHF trade for example.

There are so many signals and opportunities that the 4H in my very limited experience, needs some serious structure. Both in entry and exit style. Mike is heavily biased towards trades at round numbers, Clockwork71 plots weekly PPZs on his 4H charts and waits to see bars appear at them. No weekly PPZ no trade. Mike has also experimented with mechanical exit strategies on the 4H. Trailing the stop behind the high/low of the second bar back is sometimes useful.

I am experimenting with all these. I want to find something simple and structured so I can look at my charts for 5 minutes every four hours. I don't want to be agonizing. That way my daily mood can affect my trading too much. And I want a way for the market to take me out (one of the great strengths of your 2 day exit strategy)

So at the moment I am following the big round numbers and the big PPZs and looking for good quality price action on Alpari. I am making a rule not to tamper with my trade until the next bar close. And I am looking for about 2R or more a trade although as always I take what the market gives me. I don't want this to be a high frequency trading strategy and one or two trades a week will make me very happy. Like you I am also investigating the possibility of getting into big moves from 4H bars when the opportunity arises.

I am finding that trade management is really situational. It all depends what the chart suggest to me. But I write my management plan down and then follow it. Keeps me from going crazy.

My general principle around the 4H is that if I am out and about, I want a strategy that allows me to whip open my netbook and spend 5 minutes looking to se if there are any trades. Simple, easy and sustainable across time.

I would think your exit strategy on daily wouldn't work so well on 4H. That's only my instinct. It really depends what the market can give. Perhaps a different strategy depending on whether it's trend or counter trend? And a thought on the exit strategy, given what you said about curve fitting. Perhaps you are only evaluating exit strategies that can be easily backtested. I saw the 10 in your document and I didn't find much room for situational trade management. I can see the advantages of this approach (paid off handsomely with the recent EURAUD) but I wonder if a whole area of discretionary exits has been excluded from your research because it's very hard to quantify in that way. Just a thought.

We're on a very similar journey with similar approaches. I really look forward to seeing where you go with all this. Let's stay in touch and compare notes.

And another trading week begins. I'd like to se some breakouts this week. The rangebound action since the big weekly AU and GU pins has been driving me crazy.

Slow week. And I don't play direct breakouts so I am waiting for the breakout and then the pullback on these consolidating pairs.

Just got to keep patient and avoid iffy trades. In fact I've written that on a post it note and stuck it to the side of my monitor....

Some of these 4H bars were tempting but they point right back into that thick consolidation. Too many roadblocks and I'm being careful not to play the first bar that comes along just because it's been dry while we've been ranging.

So patience. I'd like to see a more solid break away followed by a retest.

The longer the consolidation the harder the move. Price is winding up and will tip its hand when it is ready to move.

By the way, I don't have GBPCAD with my broker Jon but that looked nice. What was the divergence like on the 4H?

Pretty scary isn't it? In my opinion it makes structure and rules even more important. Like Mike looking specifically at big round numbers. Makes it easier to filter out trades.

I'm just loving these posts SP. And for anyone who thinks they are off topic.... this is exactly the kind of freedom I want my forex trading to buy. Simple effortless and allowing me to travel and have fun.

GU looks like it'll wait a day or two yet....

You absolutely nailed this one H. I can't think of a thing you missed in your analysis.

Of course it may still lose (see recent weekly GU pin). But great job.

I'm still demoing 4H but I didn't take the GU because it was heading back into all that thick consolidation. Ah well.

I took the EURJPY which looked better to me. That's meandering at the moment and my risk has been reduced on a 2 bar trailing stop. All demo on the 4H of course.

I know Mike passed on the GU for the same reason. I am curious, for those of you that took it, did the range that it was heading back into mean that you pushed your stops to BE early?

And rustyjeff, do you use reduced stops on 4H a lot? I can see the second eye/previous sing high confluence. Just wondering how often you see the scenario here the stop is hit before the trade goes back in your favour.

Just trying to find my comfort zone with 4H trading while I demo.

Aaron

Hey Ryan,

I am away from charting computer right now so am stealing rustyjeff's 4H chart. the sell order is his.

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Good to hear Kean.

One piece of advice I have is to not take on too much at once. 4H can be overwhelming at first as Josh and I have found, and it's good to do it when you feel like the main parts of your daily trading are in place (in my case it was after I went live daily). Daily is automatic for me now. That's not to say I get it right, far from it. But I need to think about it less. Which makes it easier for me to concentrate on 4H.

Which is a long winded way of saying don't try to learn it all at once. IMO the best part of demoing dailies is the patience you learn from waiting days and days and days for a trade.

Remember that just because a trade went into profit doesn't mean you blew it. Far from it.

This 4H bar had a ton of places it could have stopped. Swing highs soon after break. It ploughed right through them this time but what we're looking at is whether 100 of this type of trade would be profitable and in our plan.

Personally I saw a pinbar trading right back into a range. Could have easily given way to a breakout and retest before going long again. So by my trade criteria it was a pass. After I pass it doesn't bother me whether it was a profit or loss.

What can tend to happen, and believe me I have been there, is we see a few of these trades take off without us and then we think "wow I am not missing out next time", we take the next one and....well, you can guess the rest.

This was neither a good nor a bad pin to play. A+ for some B grade for others. And at the end of the day profitable is profitable. But the question to ask is "was this within my plan" because that can be the only vlid question we can ask ourselves.

Not directed at you specifically but a thought sparked off by your post. As someone who initially struggled with seeing trades take off without me this one took a while to get. Many many trades are going to take off without me. And many trades that I take will lose. But I don't judge my trade selection on whether it wins or loses (although if after 6 months I see the same setup performing again and again I might review). I judge my style in terms of consistency over many, many trades.

Great trade for anyone that did take it though....

I just caught up with this. What's the new approach Ryan?

I just want to add something to all this:

There seems to be some kind of rebellion brewing in the thread to the idea of trading the dailies. "Fine for you James, but you have a large account. What about me?"

This is what kills 95% of new traders.

And, as he will tell you, it killed James for many years with his small accounts. Everyone is here to make money, to better their lives. I completely understand that. I have no judgement on anyone on this thread, but it is a fact that most forex scam artists (system hawkers, black box sellers) get their money by promising you untold riches in a heartbeat. You sign up, pay them a few thousand dollars (after all, I'll be a millionaire in a year) and, well, anyone who's been around knows the rest.

A couple of facts to chew on:

A rate of return that makes $5,000 to $1,000,000 in 12 months makes you the richest man in the world in 3 years. Richer than Gates, richer than Buffet.

Anyone telling me that "this is how the pros do it and they make big money" will always make me wonder why "the pros" just took a trillion dollars of bailout money, why most of my large hedge fund manager friends are recently out of a job, and why Bernie Madoff had the world at his feet.... promising returns of 10% a year.

Why weren't all these rich people giving their money to "the pros". You know, the ones who turn $5000 to $1,000,000.

Madoff conned everyone because they desperately wanted to believe it was true. People will always make money telling you what you want to believe.

Behind every private trader who does make amazing returns (and I know astronomically high returns are being done every day on this thread) is someone with years of experience, and more than likely years of failure, behind him. He or she has learnt slowly and built up their skills, hardened their psychology and is now reaping the benefits.

James16 teaches things a certain way, not because "the dailies are the best way to get rich quick" but for one simple reason. And if you can't see what it is, ask yourself this question:

If you are not profitable on the daily and weekly timeframe WHY do you think you'll be profitable on the lower timeframes?

There is so much to learn about psychology and mindset. If you're doing a regular profitable and comfortable return on the higher timeframes then sure, look lower. But that shouldn't take you more than a few months to learn. Of course, you want to get rich now, because you have no time, because you need the money. So you skip that part of the learning curve and jump right down.

Forgetting that someone like Ryan failed week in, week out for four years before he mastered what he does. And that was even with a mentor. Ryan has even taught friends how to trade by standing over their shoulder telling them when to buy and when to sell. And they still lost money while he made it.

There's much much much more to this game than the system itself. And it's all the extra stuff that makes us as traders. which is why we start high and work our way down.

There's a reason you're here. It's because you recognise sincerity and authenticity above the usual BS of forex scammers. Otherwise you'd be on one of those worthless signal sites, or buying a black box system. That discretion and patience is what will make you rich. Impatience will kill you and your account. Make sure that you have the ability to evaluate individuals and reach a sound and coherent judgement. It's hard. When Ryan showed up I thought he was a fake and an idiot. Man, was I wrong. I have nothing but respect for him now and read every one of his posts to learn from him. But one thing I didn't do was jump straight down to the 5M and start trading his system with live money.

There's a reason James talks about large accounts. And I think it's highly disrespectful to him to say that his philosophy is "you need a large account to make money". That's simply not true. He is simply saying that you are going to trade differently with a large account than you are with a small one.

It's all about respect for your losses.

Oh well I lost $60. No biggie. That's very different to "Hell. I lost $30,000". And with respect, anyone who says "hey it's just a percentage and you won't be thinking any differently no matter what the account".... I just don't believe they've experienced it. Sure you get to the stage where you forget it's money, but that is a psychological mountain to climb.

James teaches it a certain way not to keep you poor, or to slow your development. He's not hiding the good stuff for kicks. He just wants to give you a chance to stay in the game while you learn. And very few will tell you the truth like he does. No one is asking you to stay on the dailies forever. Just three months of demo and a few months of live. Prove you can do it. If you haven't got six months to spend proving you can do it then find another line of work. You haven't got the patience for this.

You don't walk into med school on day one, open your text book, and then in the first fifteen minutes of class ask "why aren't we performing surgery. I have a friend who is a surgeon and he makes hundreds of thousands a year. This is BS! You're keeping the goods from us!"

It takes time.

You've heard it said that the novice trader thinks of what he can gain, the experienced trader thinks only of what he can lose. Well that's why novice traders jump down to the lower timeframes without having proved themselves on daily and weekly first. They have zero experience, a psychological mindset made of paper, and they lose and lose and lose. THAT is how "the pros" make their money. From those who are willing to toss their capital away.

Of course you may be different. And you really need the money now. And it seems so simple. And it'll take you years to get rich on the dailies alone. And screw everyone, you'll show them. You'll come back in a year having made that million and you'll stick it right in James16's face and say "SEE? I TOLD YOU"

You may be.

In which case, come back and tell us all about it.

Because from where I'm standing, if you were a trade, you'd be a slam dunk short.

What a great post Mark.

Nobody here is saying that we should stay on the dailies forever. It's just a great place to start and learn while protecting our capital.

As James has said time and again, if we can't do it on the dailies, there's no way we will ever be able do it on the lower time frames.

I'm just moving down to the 4H on demo and all that I have learnt on the dailies is making the learning curve much much quicker. It really does accelerate if we start in the right place.

And we haven't even begun to talk about the power of compound interest....

I'm probably not being clear about this. Let's get one thing straight.

No one is saying the MM should be any different with a big account. 1% is 1%. So when you have a million dollar account you are risking $10,000 per trade (if you risk 1%).

You can of course choose to risk less if you want to but neither James nor I are saying that you should risk less with a big account. As Clockwork said 1% is 1%.

This is about emotional tolerance for drawdown.

If you have a $3000 account and your trade goes 85% of the way to its stop loss, you are going to feel different than if you have a million dollar account and the same thing happens. I know it shouldn't make a difference to the psych. It just does. And I think (this may be controversial) that anyone who hasn't traded a large account just cannot appreciate this.

Those who trade larger pip values (I'm one of them) will tell you that there is an added psych component to trading a large account. That's why James hates his losers and gets to BE quick. It's just a lot of money.

I'm not advocating that anything should be different at that level in terms of MM. I am just saying that there is an added psych hurdle. James would say that a large account makes you treat your losses with respect. He personally wasn't able to do that with a smaller account. Which is why he kept blowing those smaller accounts.

So in answer to your question, the MM stays the same no matter where you are. But the psychological challenges are different when it's a lot more money. That's why seeing it as numbers and probabilities rather than actual money made and lost can really free up people.

Losing 30 bucks on a trade and losing 30 grand on a trade just feels different. Even if they are both 1%. There is a psychological adjustment to increased pip values. Be aware of it and it won't take you by surprise.

I see some people complaining that a member was banned. It's even been said that all those who disagree are turfed out etc.

I just wanted to mention a couple of facts on this issue.

Mike, Jim, Clockwork71, Jarroo, Raczekfx ... all trade in completely different ways. Based on PA and SR sure. But if you go into their styles, they really have created such different methods from the basics here. They never get into fights about who's right.

I would also suggest you check out the post history of Ryanmcd.

Ryan came into this thread talking about trading the 5 Minute chart. He was pretty no-nonsense and almost abrasive in his post style. He ruffled a few feathers. There was even a fight or two. No one kicked him out. James leapt to his defence (which really does make a mockery of this idea that James is the higher timeframe guy who bans anyone who doesn't agree with him).

A history of this thread shows a huge amount of different styles, some controversy, disagreements, challenges.... the whole shebang. But abuse is not welcome. Thank God. There's a reason this thread is different from a lot of the others on FF. And a reason that a lot of the people who have had their lives changed by it still show up to post and help others.

James put it better than me "Be a prick and I'll kick your ass".

Nothing stops anyone from starting their own thread on this site. They can even link to it from here.

I consider courtesy and respect to be the foundation of this thread and am glad that there is someone at the gate ensuring that it is maintained.

Back to trading!

Hey Mea,

The amount risked and the profit target do not tell the whole story.

The extra figure that helps add everything together is the win rate.

When win rate and RR are combined you get a true picture of your trading. If James16's win rate is around 95% (and it is) he doesn't have to worry about RR.

Now if your win rate is 50% then your RR has to be 1:1 to break even.

It comes back to comfort zone. And this is where the large account makes a difference. Let me try and explain with a couple of scenarios:

Let's say I have two ways of managing my trades:

In the first style, my winners could average 0.3 times my risk (0.3R) and I could win 95% of the time. That means that over a hundred trades, risking say 1% a trade, I would make 23.5%.

I the second style, I could average a 1:1 risk to reward ratio (making 1R on average per trade) and my win rate could be 61.75%. Which means, over a hundred trades, averaging 1% a trade, I would make.... you guessed it 23.5%.

I made up this example to illustrate a point. RR is taken in consideration with win rate. Two drastically different RR approaches, with different win rates, can result in exactly the same profit. This is where Van Tharp comes up with his expectancy formula.

So you get to choose, from the many different approaches, one which fits your comfort zone. You can see how two different styles can produce the same profitability. So then it comes down to asking yourself whether you are more comfortable with a high win rate or whether you prefer a lower winrate but to make more on each trade?

That's where the large account comes in. It's just going to affect this choice. Your comfort zone will be different. James doesn't like to lose. And he doesn't like to see his trade go twenty or thirty grand against him. So he has found a style that suits his comfort zone. And crucially, it makes him just as profitable as someone who has a lower win rate, higher RR strategy.

So it's all about comfort zone. And in answer to your earlier questions, both styles involve the same 1% risk.

The final thing to factor in is frequency of opportunity. No point building a great system if a trade only appears twice a year.

As you see, all these things balance each other out. There are so many ways to skin a cat in trading, and many many ways to be profitable. If you put the various styles of trader on this thread under the microscope you will see great variety in win rate and risk to reward, but all the seniors will be profitable. They have found a way of taking this material and making it work for them so that it fits their comfort zone. I would even go so far as to say that if you pick a style that you're uncomfortable with, just because it's more profitable, then you're going to end up screwing it up. Finding what fits your personality is an ongoing part of the learning process. And another great reason for reading this thread all the way through. You see the evolution of many different traders.

The point James is making is that account size is going to affect what is comfortable for you in terms of trading. That's all.

I hope I explained that okay.

Looks like Rac's crystal ball extends to more than just the markets....

The best thing about broker leverage is that it allows me to keep less of my cash with the broker. Personally I prefer to keep as much in my bank account as possible and keep the minimum required to trade with my broker.

My risk is 1% per trade and I am low frequency trader, so there's really no need to risk my full line in a broker account.

Different brokers have different times for bar close. So one may show a daily close at 5pm EST whilst another will go towards a daily close an hour or two later. This can make the bars look different. Forex is not a centralised market so little discrepancies like this will always happen.

There is no need to watch multiple brokers. That will just play with your head. Pick one the has daily close close to the close of the NY session which is 5pm EST (fxpro closes then) and use that.

Remember that price is the same all over (barring a pip or two), and two different broker charts are just different visual representations of the same thing. Most people here just play things as they see them on one broker.

I hope that helps.

Aaron

(Again, the following post was sparked by Josh, but not directed at him. He knows all this, it just got me thinking... )

Ryan lived in his car for a little while I think.

I am pretty sure he didn't have a wife and kids in there with him though.

It's great to dream big. Even if you have a small account yo van make magic with steady monthly returns, small additions to your account and above all else compounding.

For example, if you start with a $5000 dollar account, and can add $100 a month to it. And if you're making 4% a month and compounding it, guess what that is worth in 5 years?

$76,397.21

Then after those five years maybe you can start to add in $200 a month to that account because you're doing so well. Still compounding, and still at 4%, can you imagine what it'll be like after the next five years?

$851,268.32

In ten years.

From $5000.

At 4% a month

With a modest monthly add in

It really is astonishing when you start playing around with compound interest. Truly. Which is why I think the dailies are powerful, and perhaps the 4H if you have a mobile computing solution. Focus on getting a small percentage return every month from about an hour's work a month (that's how long clockwork71 spends). Keep it real simple, don't give up any jobs, have something you can rinse and repeat and manage easily, maybe flipping on your MT4 at every 4H bar close for 5 minutes. Remember you're in this for the long haul.

Have another job that you can do while your account compounds. Doesn't it sound more sensible to compound slowly over time than it does to quit your job and try and turn that 5k into a million over a year?

And if those are the results from 4% a month with a monthly add in over 10 years, can you see how people who claim it's easy to make 20% a week are simply wrong. Sure it can be and is being done but it's incredibly incredibly hard to do it consistently and you have a high chance of either losing your money or burning out.

Two more things:

Imagine the same figures if you started with $10,000. Same 4% a month, same monthly add in:

5 years: $129,995.34

10 years:$1,404,581.05

So this is just a little something to inspire the smaller account holders after all the talk this week. The only thing you have to do is keep in the game financially while you learn. Don't blow out, learn, and let compound interest take care of the rest. Fear and greed are the things to watch.

If you want a fun weekend assignment, play with a compound interest calculator online, and see what one single $100 loss at the beginning of all this can do to your bottom line after ten years. Losses are compounded too over the years in that they become missed profits. There's a reason to respect your small dollar losses if ever there was one.

My answers in bold

Aaron

Tia:

4% a month,
observe all m-m rules,
stay with 2% acc stop/loss on every order, never over-leverage with a bigger position than acc,
I am not sure you understand money management properly. If the most you risk is 2% (for example) then the most you lose will be 2% of your account. That is not even remotely close to a position bigger than your account. Learning proper money management is crucial to survival. No matter how big your stop loss it should always be a fixed percentage of your account in monetary terms.

only trade daily/weekly T/F...
trading 6hr a day in London 10am ~ US noon session...

If you are only trading daily and weekly why does it matter which sessions you trade? Surely you look at the charts once a day, at the daily close?

add this all together are they possible?
I am not proven so I am not so sure.

It's always dangerous to have monthly expectations. You take what the market gives you. But if you are risking two percent of your account, then 4% a month is very very possible.

to me I think 1-2% a month average over a year is very good if risk is low (aka draw-down)

I agree. With 12% a year you are doing better than most on Wall Street. Bu be wary of trying to avoid all drawdown. Some drawdown is inevitable. Even A+++ setups fail. This is a game of probabilities and you will have losses. We use good money management to ensure that our losses don't hit us too bad

if I can do 1%/month or 12% a year I'll put all money in, but now not convinced yet....

This is what demo is for. Reading post one of this thread outlines an approach which it is highly recommended that you follow. This helps build your confidence and convince you without risking a penny.

For now conecentrate on learning good money management and position sizing. Make sure you understand concepts like asymmetric leverage and granularity (google them). And learn and demo the basics. The rewards flow after that.

Try this.

Trade only the dailies and the weeklies. Nothing lower. That teaches patience in and of itself.

Give yourself 5 "bullets" a month. That's 5 trades each month. No more. If you see an A+ trade after your 5 bullets have been used, then you can't take it. That'll make you more selective.

And read post one of this thread and follow the minimum requirements. That really builds patience.

I personally believe that following your rules is the most important part of trading. Losing happens to everyone, but if you're losing because you get impatient and can't follow your own rules, then you simply shouldn't be trading live money. Work it on demo until you have worked up the discipline to follow your plan. Impatience and ill discipline will kill your account.

We've all been there, believe me. And we all revisit it from time to time as well. But I can't stress how important it is to stick to our plan and our rules.

Change how you view a successful trade. Don't view a successful trade as one where you made money. View it as one where you followed your plan, whether you won or lost. If you didn't follow your plan and made money anyway, then that is an unsuccessful trade. Sometimes the worst thing that can happen in this business is that we can be rewarded for breaking our rules.

Just a few pointers. I hope they help.

Aaron

Kean,

(And this goes for anyone who asks a similar question)

If you like someone's style and want to know more, go to their profile and click on their post history. Then spend a little time reading everything they've written.

I've done it with James16, Mbqb11, Darkstar and lots of others. It's a great way to spend a few hours. And it's the easy answer to the "where can I find more?" question.

June was an unusual month for daily and weekly setups but overall they work better and cruciallyn they can signal big big runs. Check out the beob on oil monthly last summer. But 4h setupa do seem to come around much more often. And a quick hit to 1:1 seems to be much more easy to fin on 4h.

Just my observation. I'm new to the 4H though.

On his PF webinars Jim often mentions that it doesn't matter which oscillator you use for divergence. He uses MACD but he says stochastics, RSI are all just as good. I think it's not one to get too hung up on.

People use the oscillators for other things but according to James, divergence is pretty much all they're good for. I think the overbought/oversold conditions can be useful too, but they are often just visible from a naked chart.

I would just add a couple of things to this:

With more aggressive stop placement comes a lower win rate. Higher risk to reward ration, but lower win rate. That's the trade off. I am sure you've noticed this from your extensive backtesting.

So I think maybe the reaction you're getting is to do with you saying that this stuff is really hard and asking for input on a loss. A lower win rate means some losses and some wins and coming out on top over the long run. When someone posts a loss and asks for input on what went wrong, often the only answer is "it's a loss". Your performance will be measured across months of trading. As you yourself say, there is much more to this than Win-Win-Win, especially with aggressive stop placement.

That's where the backtesting and demoing you did should give you confidence, more so than any forum reaction to your individually posted loser would do. Trust your data and your plan, view losses as just that, and review after 6 months.

There's a psych point here as well. When things get tough in trading, and they do for all of us, (and here I can only speak from my own experience), please be wary of the "people only post winners here and only a handful are making money" line of thought. This will kill you. It will slaughter your mindset and lead to revenge trading or even worse, throwing a bunch of negative energy out onto the forums. "If it was so easy all of us would be millionaires". That's the beginnings of this kind of thinking.

I hope you take my remarks in the spirit they are intended. I sense that things might be a little painful right now, and the reaction to your posts has perhaps taken you by surprise.

Good luck with everything.

Aaron

Just waiting waiting waiting here....

I still find it the hardest part of trading. Watching the market move and waiting. The little demons get to work telling me "hey everyone is out there making hay" but it's just the ego talking. Don't try and supress it, just hear it, say "thank you for sharing" and move on. This much I have learned. Never get into an argument or a fight with the ego. Just nod and do your own thing.

That may not make sense to anyone but it does to me...

So lots of "nearly" trades but nothing for a few days that fits my criteria.

So I wait.