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Stops VS targets
Thank you for your valuable contributions and your reading recommendations. It is very nice to get to know the perspective of a profitable trader. You already climbed to higher grounds while we are still struggling to find our ways through this "maze" of learning trading.
This was already mentioned by you kind of, just regarding the videos I might add: I think it is very easy with lecture material like videos and recordings to just "consume" the material like you would watch a movie. This was pointed out to me by a former professor of mine. It is dangerous to just watch the videos. Because that is not learning and that can only be the first part. I'm personally trying to take extensive notes and when re-watching a certain video, I switch from the charts and to the video back and forth and try to find the patterns that are discussed on my own chart and draw them in.
Thanks Kristof, I'm glad it's helpful. I've seen a couple of your posts and you're being quite diligent in your learning so keep sticking with it.
Looking at old charts can be very useful for reinforcing concepts. To use another sports analogy, I view reviewing old charts or using replay features on a platform or screen recordings as being like watching game footage, real-time SIM trading as being similar to scrimmaging, and live trading as being real game play. I spent significantly more time SIM trading than doing chart reviews, but annotating charts is certainly worthwhile. In your chart reviews, I recommend annotating the charts bar by bar as you become more familiar with the ideas in the course. I attached a random chart that I annotated awhile ago as an example of how I go about doing it (I think someone else posted something similar earlier in the thread) and there's more that could be written but it starts getting too cluttered. The longer you spend on a chart, the more things start popping out. On a completed chart everything is right in front of you so some of the things that are noted will be reflective of that, but even so spending the time doing it can make analyzing charts in real-time simpler as well since you'll see that the same ideas play out again and again. Annotating charts in real-time, especially with trend lines, MMs, etc. rather than a lot of words (it's too slow to type it out and can distract from what's happening at the moment) can be useful as well. It can also be very helpful to talk out loud about what's happening, arguments for and against both sides, and so on.
Thank you very much for your kind words and your suggestions!
I will start to annotate charts the way you demonstrated - this is a very good idea. I'm not sure in which book I read the tip that while trading, you should pretend to be a sucessfull trader / professor that is on a live stream with students and explaining / interpreting the current price action, i.e. talking aloud.
Again, thank you very much!
Happy to help!, let me start from the end of your post:
So whats his edge? He says he likes high probably trades. So by definition he has to have a crappy R/R yet he promotes everyone do the exact opposite.
This is the single biggest problem when learning from Al: He promotes swing trading for beginners but he has a scalper mindset and when you try to follow him in the webinar you find that he talks against almost, if not all, the swing trades that we should be taking (the ones that he later marks with a blue rectangle for beginners). I understand and accept why this happens but this is nonetheless quite frustrating when learning.
The trades highlighted in green and red are swing trades, tho some of them are high or low in a TR so you actually better scalp them. Also, when you are in a TR day, you don't rely on your stops (this is trending behavior), you better exit on strength at magnets. With this in mind, let's see the trades you pointed out. I copy below the chart with bar numbers so it is easily discussed (I will be referring to these bar numbers instead of yours):
So at arrow 1 the way I look at it is I would consider the breakout failure and a higher low for a good signal long. Stop below target 2X buy at green box.
You are low in a TR so 17 is an Ok swing buy for two legs up to 8C. The stop at the low of the day and this trade gave more than 2IR (Initial Risk). Trail the stop below 25 at 26 and exit at 8C during 28, or at 31L.
At arrow 2 he is buying at resistance so that makes no sense to me. Besides what does he do here if he did buy at arrow two and stop is below LL DB??? Get out below next down bar? Again to me thats seems ridiculous. But he'd also say RELY ON YOUR STOP?!??
28 COH (close on high) and broke above 8H, so it was BTC (buy-the-close). Next target Yesterday's close but you were high in a TR day in a possible 3rd leg of a Wedge 15 21, so if you bought you better exit on strength (2 or 4 point profit scalp) or 1 tick below any bear bar (31). Notice that the MKT turned down exactly at 18 ticks so allowed 28H bulls to exit with 4 points, with a 1 tick AR (actual risk). If you, rather, swung it, you exited BE at 31L.
How about arrow 3? This makes sense to me but never comes near 2R. Which doesn't make it a bad trade. Can't win them all.
25 is a H2 with good Signal Bar above EMA for the said second leg up, so stop below 25, not below 14. If you exited at 8C this was more than 2AR, which was very small. If you rather held, the MKT reached 2IR before turning down at 31.
What about 4? Are you getting out of longs. Or are you going short?
At 42 difficult to be long if you exited below 31L already, as you should. If you sold below 41, stop above 31, you would exit with a few ticks profit above 45 bear trap. Still this was around 2AR.
Here we go again as arrow 5 is somewhere I'd be looking to go long but according to Al stop below LL DB go for 2X swing?
45 is the second leg from 31 Wedge, 50% PB and a bear trap (they needed one more bear bar and they got instead a bull bar COH). If it was a trap, the stop then went below 45. Since 14 you have HH and HL but lot of TR PA so don't place your stop and rely on it below 25. Had 45 been a good bear bar, the MKT could have came back to the 14L. At 45H again the actual risk was negligible so you could scalp out with 2-4 points and the trader's equation would have been ok. Alternatively you could hold for a swing and exit below 51, top of the TR, and with around 2xIR profit.
6 again hes buying right into resistance. Wheres is stop and target?
Bears tried twice to push the MKT down, at 44 and 54, and failed, the MKT was still AIL so you can see 65 and 66 as a BO of a triangle 31 45 51 55 59, betting the gap with yesterday would close. Yet, 59 created a Wedge at the top of a TR so you exit below and this trade was a loser. At 69 bears tried againg but needed more bear bars and failed getting a strong bull bar 71, AIL, so you could buy again for the said tests of the Gap. The MKT turned before the target so you had to exit at 76 BE (if you didn't scalp out on strength).
And again at 7 are you getting out of longs or are you already out of longs and going short?
If you exited longs already at 76, this was STC so you could sell, stop above 75 and exit above any bull bar or end of day. Again profit around 2IR.
As you see, the trades that were not losers reached more than 2AR, which is the mathematical minimum needed. Several of them reached more than that giving 2IR... shot for those and you will be doing fine.
One last thing about using AR instead of IR in the trader's equation: People think that trader's equation must work with initial risk because this is what you lose when your full-blown stop gets hit but, as you saw above, this is not necessarily true. If you bought 66 or 72, you lost 2 points each, not all the way down to 55 or 69. And these losses were offseted by the small wins that you also got, like selling 31L or 42L. Of course, for this to happen, you need to manage correctly in real-time... and this is what makes learning how to trade a long term investment!
This detailed commentary of trades helped me a lot. This thread is one of the best threads.
Thanks Vaidyanadhan for your advice!