Learning to read Price Action with P&F Charting

Quote from HolyGrail:

I came to ET about 2 years ago with the hope of picking up enough tidbits to become a day trader when I retire. I am definitely a type A personality, and I know I will go nuts if I don't keep my mind occupied. I think trading can keep my mind sharp for many years. I have been swing trading since 1997, but I wish I knew then what I know now.

Since I own my own business I currently have the best of both worlds. I can trade much of the day without affecting my business to any great length, and I have a great income coming in whether I am successful at trading or not. I am advantaged in that I don't have the pressures to succeed other than the pressures I place on myself. I have been successfully trading futures for only 5 months so I can't say I am , or my methods are the holy grail, but I do know at least for me my trading became consistently profitable when I allowed myself to trade with, and only with P&F charts.

I've tried just about every possible way to trade, but nothing gave me any indication of potential consistency. I did notice that some of the most successful traders only needed price to make money so I finally began pursuing charting techniques that would display price in such a way the eventually I would "get it" I looked at renko charts, tic charts, candlevolume charts, three line break charts, kagi charts, and finally point and figure charts.

This journal is being written to help those that want to learn how to read price with P&F charts. It's not going to be a "hey look what I made today journal". There will be no live trades called. I don't have time to work at the office, trade, and post. I will only answer questions during lunch, if I am available and in the evening.


If there is not any interest, I will stop the journal.
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You sir, are a scholar and a gentleman. I'll read through the thread after market hours, but just wanted to mention great job.

st

P.S. I applaud your supreme tolerance for the village idiots that will no doubt show up! :D
 
Quote from HolyGrail:

We were in no man's land on the price. We were at new highs so I would have probably had a 3 point trailing stop on it which would have only yielded 4 or 5 dollars.
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Thanks for adding this, I was interested in what you'd say about profits on that trade. Do you use trailing stops with your stop moving to higher low method, or either-or?

Also, getting away from the method a little, could you ballpark the risk you take per trade (most interested in intra-day futures)? As in, what money management do you use with this method of trading?
 
Quote from Stealth Trader:

You sir, are a scholar and a gentleman. I'll read through the thread after market hours, but just wanted to mention great job.

st

P.S. I applaud your supreme tolerance for the village idiots that will no doubt show up! :D
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Thank you for those kind words. If you didn't know already, I value your opinion a great deal.
 
Quote from atonix:

Thanks for adding this, I was interested in what you'd say about profits on that trade. Do you use trailing stops with your stop moving to higher low method, or either-or?

Also, getting away from the method a little, could you ballpark the risk you take per trade (most interested in intra-day futures)? As in, what money management do you use with this method of trading?
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Since I trade off of a .5, .75, and 1.0 stop, and since I do not want to be stopped out until some sort of bearish sell signal is given(assuming I am long) the absolute mininum stop I would have is 3*.5 +.5 if I was trading off of a .5 chart.

3*.75+.75 or 3 points on a .75
3*1+ 1 or 4 points if I taking my signal off of a 1.0 chart.

I should mention that I do add contracts on pullbacks to get a better price basis, but only after that reversal has then reversed. You could just continue to add in a reversal column, but I like more of a sure thing. No one ever knows when the current column is going to end, so I like to see that reversal column end before I commit more contracts to a trade.

All of that may have sounded confusing so if you need an example let me know.

edit: for those that don't want to take that much risk, I do have scalping methods we will talk about also which will not have as much risk.
 
I understand what you're saying, but I don't think I was clear. I attached what I was meaning. Where do you move stops after you're in the black? (assuming my chart if right.)

Also, are all exits "stop outs", or will you have pre-defined exits?
 

Attachments

Quote from atonix:

I understand what you're saying, but I don't think I was clear. I attached what I was meaning. Where do you move stops after you're in the black? (assuming my chart if right.)

Also, are all exits "stop outs", or will you have pre-defined exits?
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Since we have only 1 x column to beat before a new high was reached I would have trailed this stop by my reversal amount or 3 points.

On most setups I use targets. On this setup which has the greatest potential to become a high flyer I trail by whatever would be the first reversal
 
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