Selection Of Comments

There are times that I get feedback that people can learn from…I can learn from.

I was involved with in a comments chat with Rolando about trading and even though we look at things a little differently from an approach perspective, it was a conversation with a mutual sharing of ideas.

You can read the chat called Traders Talk and I think you will be able to learn a few things from it.  It was a respectful dialogue and I appreciate anybody who has an educated opinion about things…especially trading.

On the flip side……

There are comments that come in occasionally that people can also learn from that come from a different perspective.  I am going to cover two recent ones that I found interesting.

The first one was from someone who took issue with my posting of the free Forex trade setups that I found of interest.  There is no fee, people come on their own free will, some learn, some don’t, and if you don’t like something, it’s easy to move on.

Sometimes though they want to bang the drum…….

“9 set ups for the week and almost all of them have drawn back against your prediction at least 30 points”

That’s a fair statement as the setups did pullback, some many pips, as the week went on.

Some also re-established themselves as setups in the direction that was posted.

But does that invalidate the pattern being used?

Does a chart pattern failure not provide clue by itself?

That comment fails to address the evolving nature of the market.  Throughout the setups over many months, we’ve seen where price has taken off and others where price does not.

  • Sometimes the imbalance is there.
  • Sometimes it’s not.
  • Sometimes it’s there and evolves differently than anticipated.

These are not trades.  These are price pattern setups.  Setups don’t always go according to plan.

There is not a straight line correlation from a failed setup and any traders ability.  If they were to trigger 100% of the time and considering proper risk management protocols in place, you’d have reached a level of trading that nobody has or ever will.

The lesson is that over a large basket of trades is where you will find your edge.  The insinuation from this person reeks of recency bias and for those advancing in their trading, that bias is something to avoid.

…and then there are people like “pal” who would rather just make pips…..you can read his comment here.

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“show your win loss ratio”

Anybody who thinks a win loss ratio has any meaning on its own, is looking in the wrong direction but it’s something those with little to no experience, generally focus on.

A win rate of 95% is meaningless if those 5 losses exceed the profit of the other 95 trades.  Some traders need a high win rate because they are unable to deal with the random distribution that losses come in.

A loss, to them, means they were wrong.

Some can’t stomach being wrong, it’s ego, but in trading, you will be wrong on an actual trade, sometimes many times in a row.

The lesson is being adverse to loss will not support you during the string of losing trades we all take.  Accept the expectancy of your trading approach and when the losers come, assuming your risk controls supported multiple losing trades, you can survive long enough for the wins to begin.

Do a lot more work on your statistics than a simple win/loss ratio.  Even your P/L (something he asked for) doesn’t tell the whole tale.  It’s quite possible that a few outliers bolster the numbers to look more favorable and without them, your gains are modest or non-existent.

This is a big risk especially for those who over optimize a trading strategy on past data.

In the end, concerning yourself with your own numbers is a better use of your time.

 

“EURUSD he predicted a continued up trend with the flag set up. it has droped 120 pips since then with all signs pointing toward a continued down trend.”

I can’t imagine what he thinks of those that have been calling for a stock market crash for years.

It’s certainly easy to point to failed setups once they are underway but at the time of posting, wanting a long trade on the EURUSD as a swing trade was appropriate.  It failed to materialize as the week went on and that in itself shows something about the character of the market.

As swing traders, we are looking for one clean swing in the market regardless of trend direction given the right context.

This gives the opportunity to go over the chart that was posted.

The market on this daily chart is making higher swing highs and higher swing lows.  It also broke out of the highs in October.  Those are bullish, not bearish signs.  Given the impulse leg, was another move upwards at this point in the chart justified?  Absolutely.

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Whether it evolved from a simple correction or price rolled into a complex correction, a bull flag setup was appropriate.

Can EURUSD rollover to a downtrend?  Do “all signs” point to a downtrend?  There is a low to be taken out and you can pontificate that there will be a trend reversal but until then, you trade the chart.

The weekly chart

Does this chart still fall into the category of an uptrend?  Yes.  Break of weekly bull flag with momentum and we are having a retrace on the weekly chart which is a natural evolution of price.  Price continued to break from consolidations to the upside.

Again, you can put your bias onto the chart, you can pontificate, but this price action does not negate a continued move upwards.  It could fail of course, but until it proves it has failed, it hasn’t.

That said, at the end of the previous week, the last red candlestick had not appeared.  Keeping bias aside, what does a pullback continuation look like?  It looks exactly like that.

Back to the daily chart

Comparing the range of bull candlesticks to bear candlesticks, which ones are showing more “determination”?

Price has failed to show momentum to the downside and grind lowers can be difficult to trade.

The lesson is that setups fail but that doesn’t mean the trade failed.

Why?

There is a difference between setups and actual triggers into a trade.  There was zero entry into this setup.  Sometimes it takes longer for the setup to materialize, sometimes they don’t.  Bull flags and virtually any pattern, you’d want to know what a failure of the flag looks like as that is information.

It ended with,  What one needs to really think about is that beginners take this to heart and bad advice can bankrupt the beginners and a majority of these 9 set ups have gone the other direction.

Beginners should take that to heart and maybe it comes from his experience from blowing out trading accounts.  Bad advice that you take action on can bankrupt you especially if you don’t do your due diligence and trade blindly.

BUT It is impossible to go bankrupt on any setup going the other direction .

These are setups that require price action triggers that can be found throughout this website and will be unique to each trader as they test what works (for them).

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If you don’t find these setups of value, please don’t trade them.  Also, please don’t judge your own abilities from a handful of setups.  Keep an open mind, test your work, and follow your plan.

 

AUDUSD Setup

I will post the chart that is being referenced so you can understand where this person was coming from.

You fail to see that this is the low and I do not see it breaking .7530, why is it the low, well we have time and price squaring, it is 50 days since the high and many other factors coming into play, if you are truly a price action expert than you would know this.

I think it’s great he laid out his reasoning other than a “look, see?” approach.

I don’t think I’ve ever said I was a price action expert…….price is putting in lower highs and lows.  After a strong momentum push, price consolidated with bears having the slight edge when comparing candlesticks.

This is generally a bearish setup so it was treated as such.

I didn’t fail to see the low….I didn’t even consider it.  The setup was bearish and needed bearish structure/action for the trade.  Trading is not a mathematical exercise.

Since a price action expert should know that was the low and it wasn’t, am I one because I was right?

No.

I just followed what the chart was telling at the time.  Much like the EURUSD, I followed the evidence and using simple price patterns that, looking from a high level show a slight edge over a large basket of trades, I drew my conclusion.

Any setup I post here or take in futures are based on probability – not absolutes.  I actually fully expect to be wrong on any trade I take if there is an entry from the setup.  If this person kept buying the AUDUSD because it WAS the bottom, it’s been a painful trade.

Invitation To Traders

You are more than welcome to send over charts and your thoughts – using technical analysis – if you want to talk trading.  Use Jing where you can screen capture your chart and upload for free.  Place the link in the comments.

Feel free to comment on this website as well.  I do ask that you be respectful and if you don’t like what you are seeing, be an adult and just move on.

 

One Response

  1. Sylvester