No teasers here. You're looking for the same things that everyone has the potential to see. However, it is all about the context. For instance, you mentioned that: The above worked in those instances, but there are many times that they will not work and instead of putting trades going in the opposite direction, you have to instead take the opportunity to double up in the same direction. How you determine when to do this is all part of the context. The context may include may things: candle size, formation, time taken to form that candle within a particular time frame, how that candle formation is assumed over the last moments before it's close, volume compared to the bars prior to it, positive/negative volume over the last x number of bars, various SMA/EMA on different time frames, trader/investor sentiment on different time frames, number of legs on various time frames, entering/exiting trades on the extremes, entering/exiting trades on breaches of personal data and the list goes on. She didn't tell me personally, but I dug it up from her mentioning it multiple times and went on to do a lot of research on it. In doing that, I think I created my own style which was still similar to what she was/is doing, but different enough to where we will not have the same entries and exits. She considers herself a scalper, I like to hold for protracted moves. The "bait" is nothing more than simple Price Action. Vancouver?!!! A trader has the luxury of doing that My own list includes: Istanbul, Tokyo, Nice and Mombasa. Maybe one day I am a sucker for the sun!. I am a different person in the absence of it. Enjoy your weekend.
Wow.. that is quite the in-depth analysis of context. As you say, its frustrating when it doesn't work. This is what caused me so much trouble when backtesting because nothing works often enough so I always stalled. Given that trendlines are also somewhat arbitrary in how they are drawn, there is no reason to think with certainty that they will hold. So although its important to be aware of all of these things, nothing is written in stone or seems to happen with at least an 80% success rate to make you feel confident. Of course, given your incredible win rate, a collection of factors therefore have to come together, and this I guess in a way makes it clearer. Its not just one thing, but when 3 things line up, that probability goes in your favor considerably. This I struggled with for a while. Db and ND essentially have different motives. They may have similar entries, but different targets for the trade. I found it easier to get my but in gear with backtesting based on the things that ND was showing because there were some firms metrics in place such as the idea of risk:reward ratios, as well as a clear idea for where the exit should be, which therefore establishes the risk:reward ratio. Following SLA as Db teaches, a simple line break is perhaps the worst way to exit I think, especially right after entry. After you've got 20 points or more, no problem there, but right after entry, price often will go against you breaking whatever tight trend lines I might have drawn. So there needed to be a better way to exit. In fact, it wasn't until I had a better grasp of where an exit should be that I could focus on doing any kind of statistical analysis. But I think the way to make serious money, and work less, is of course with the wider view. It might take all day to realize the full potential of a trade, and it might even take a few days. But I certainly see that often times, the overnight action can capture even more points than what could be possible just trading the first couple of hours after the open. So trading less, and yet making more money is an idea that isn't lost on me, but this of course can only happen with a good entry. Anyway, point being that for me personally, realizing the differences between Db and ND but at the same time incorporating what they both show is what took so long to work out in my mind. I'm still of course not there yet, but the ideas no longer compete, more like complement. Going forward, I will spend the next few days pouring over 5 minute charts. The entry on the 1 minute I have have a fairly good idea about now, so I need to widen the view. I am fully convinced that this is actually the only way to trade. Perhaps studying order flow or whatever else other than looking at charts might work for some, but I know that price action is all I need.
Not trying to pile on here, but is there any reason you didn't take a few days, a week, a month to test out your rules in SIM and see how they played out? Perhaps find out IF you'd follow your rules or how you'd react to price movement against your entry? I guess I'm not understanding the need to be trading live right now when you're still in the infancy stages of figuring out how you want to do things.
Well.. you do raise an interesting point. There are pros and cons, so let me list a few as I see it. So first, fills in SIM are never a problem, but I see in live trading that they are a problem, so this might skew results. Second, if you take emotion out of trading, which you should, there almost is no benefit to SIM. You can see what happened on a chart at the end of the day, so you can almost test your rules via backtesting. Of course forward testing is always advised, but if forward testing results don't match backtesting results, there is probably something wrong with the method to begin with, and hence the backtesting probably has problems. Sure, SIM allows you to test your order entry, your reflexes, but this is just a mechanical issue, and if my issues were mechanical then I could understand why SIM would help. But my issues are emotional and trading plan related. SIM wouldn't help with emotional issues... there simply wouldn't be emotions with losing fake money. Its true that if my first 10 trades went horribly wrong even if I did everything right then I would be happy that I'm in SIM, but the backtesting should have taken care of this, in other words, if I had a backtested trading plan, I shouldn't get so many failed trades in a row. Its only by going live that I'm able to see where the problems actually are. In SIM you would never feel the desperation for that last tick, or you might never want to exit after just being up 5 points and think lets just wait for hours to see if this trend continues. So SIM might net me 20 points in a day no problem, but I wonder how able I would be to carry this forward into real live trading. I just haven't come across a journal where someone did everything right in SIM, and then started trading live and was able to replicate the results. In some respects, its true that I'm impatient and want the results right away. But I think there is value in taking the loss, accepting it, realizing it, but making sure that its small enough that it doesn't cause a huge and dent, and most importantly, that you learn from it. I did have a discussion about this with another member through e-mail and he did give me wonderful quote about how Neil Armstrong I think it was put his success on countless hours in the simulator to practice the moon landing, and this is why he was able to remain calm when doing it live. But this example it different, there was only one chance to get it right. I could be absolutely wrong about this, but its how I want to do it. I think I'm training myself to accept the loss, and likewise, I see that I have to train myself to also take the profit, hence why I am now intent on letting my trade get to either stop loss target or profit target. (these are small targets at the moment) Going forward, the idea of course is to play the bigger moves, but this starts with an entry, so I'm working on the entry.
Not much to report today. Given my busy weekend, I wasn't able to work on much other than just think about the all important context. One idea that I had was simply plotting the data that I have for my 1:1 win rate of 66% on an hourly chart and seeing where these trades fall. I like this idea because I think there will be a big difference between the success rate of trades that are taken at the extremes versus trades that are just in the middle of nowhere. The problem is that my 66% win rate is very much of a scalp given the small wins, so I might not even be plotting relevant data. So if instead I perhaps use my 1:3 risk reward trades which had I think a 34% or so win rate, and plotting these, it might be better, the idea being that the 1:3 trades were the ones that were trending well since price was able to reach 3 times the stop value and in many cases continued even further into the trend. The idea that I'm going forward with is to make a sort of map of where the successful trades happen, just like on a crime show they might plot crimes committed and start to see a pattern such as it happening in certain areas or blocks within a city. Clearly a short taken at an extreme where price just drops is a great trade, but I need to figure out if this short looks any different than a short in the middle somewhere. Perhaps it actually won't look different, but the fact that I know we are at an extreme will make all the difference. Shorts at the extremes where price drops clearly have a better chance of working than a short in the middle of a channel. Today for example, we opened essentially in the middle of that channel Db pointed out. (I include a chart with some rough lines drawn in... but these don't really follow the rules of drawing channel lines) I feel kind of dumb because I hadn't seen it as a channel until he pointed it out. I was fousing on the larger channel we were in for the past year, and just focused on breaking that upper level or bouncing back into the channel when we hit the upper channel line. I was also focused on the lateral/horizontal levels. I could see that each day we made slightly higher highs, and then we were even starting to make higher lows, but I kept looking at it from a level thing/stuck in a trading range. The funny thing of course is that once you go sideways long enough within a channel, you end up hitting the lower level of the channel given that it slopes up. Anyway, so for today I wasn't eager to trade but here is what I got. O - Going into the open, we do have an up trend. I also did a quick calculation that 4260 was the 50% of the drop yesterday from top to bottom, and we had already breached that. (this isn't shown on my chart though) A - Here is a short I just want to track. The DL goes right through these price bars, so its not a legit trade set-up for me, but lets just see what happens. I mark this in because we are starting to get a series of LHs and LLs on this one minute chart, and although we tried down first after the open and then tried up, since we rejected up, if we come down to fill this trade and break lower, this could be the direction price continues. It would trigger on a quick down move, maybe not even fill, but price doesn't go far. B - This is the first opportunity to go long, and I did have a trade entered above this bar and I'm just watching to see how price is moving. When it breaks the low of this bar of B once its at the bar C, I think this is good because price is making a good swing low as opposed to each of these bars before having a higher low. I never know quite where to put my stop when I don't have a real swing low and just higher lows on the bars. C - So after I saw this low form and price came back up, this bar closed very quickly. This now made the proper entry be actually much lower than where it would have been above bar B. Given that I now missed the trade, I had to cancel it. Even if price hit my entry which was above bar B, the risk would have been much higher than it needed to be given the how small bar C is. If I had changed the trade quickly enough and the trade filled, it would have clearly been a loss. D - We so drop quickly down but inch our way back up. (I've got a busy day today and hence will stop here.) SUMMARY Given that we were in the middle of this 3 week channel I figured we might have a choppy open and this is I think what we had. Even when I just focus on the 5 minute chart, I can see how the drop down to 58 after the open borke a swing low on the 5 minute chart. I can see an entry on the 5 minute chart to go long above the 4th bar, but I just haven't tested trading the 5 minute chart. I do for sure need to be looking more at context and the higher time frames, just need to figure out a way to do this, and of course a way to backtest something. I could just see how well SLA works on a 5 minute chart, so this might be useful, but I still think the absolute best way in the end will be to trade the 1 minute chart and get my entries there, but only take the trades that show we are at important extreme levels on the 5 minute or hourly chart. Its kind of like this. If I took a whole week, and plotted all possible entries on a 1 minute chart just based on immediate trend and using the RET entries and previous swing points as stops I might end up with lets say 100 trades that set up. If I dial this down by using the 5 minute chart as a filter to eliminate trades that set-up on the one minute but appear to just be in the middle of chop on the 5 minute, I might cut my trades down to 25 easily lets say. Then if I further use the hourly chart for context, and now only take the trades that setup based on either price reaching the extreme of the channel or bouncing off a defined level of support or bounce off trendlines on this hourly chart, then the trades might be further filtered down to 10. So now of these 10, will there be a win rate of 80% or better? Now the trouble is that I'm not even sure what to use as a filter exactly just yet. I can see today for example that the trend is up, but the 1 minute chart made it look like we were heading down. So if I eliminate any shorts and just look for longs, how would I eliminate not getting caught in that long at C that fails? Or perhaps I just gotta take it, but be prepared to go long again? Just now I see that I could have actually even tried to go short at E that I plot on my chart. This isn't anything I was thinking in real time anymore, but given the failed trade at C and coming down hard at D, I have lots of reasons to short at E, which would be another failed trade. So seeing as we are in the middle of the 3 week trend channel I could be prepared for chop and just stay clear, or I could wait to see the setup on a 5 minute chart versus just the 1 minute chart, or... well I'm not sure. Once again, I gotta be careful with trying to make every single day work. Some days will just be messy and some days will have losses. So perhaps I don't have to make a choppy day fit into a trading plan and figure out how to make money from a choppy day, I just have to know enough to stay clear and reserve my capital for going in big on good days. Today isn't actually that choppy, its just that a few trades set up that go nowhere, even though there is a clear up trend when you zoom out. After the short I mark at E, each RET that sets up a long works for my 1:1 trade. By this point of course, too many trades have failed so the confidence might be shot, but perhaps by now we are also clearly trending up again so its safe to trade in that direction. The worry of course is that this will be a wide up slopping channel and I would be going long each time just below the upper channel line. The 5 minute bars have lots of overlap even though the up trend is clear.
I've got 3 lines on my chart, 2 DL's and a horizontal support line at 88. O - At the open, we drop just a few points and come back up. Price does curiously bounce off the shallow DL drawn, or we could even say it didn't even hit as low as the 88 level, but I'm splitting hairs here. All that needs to be said is that price tried lower and we found too many buyers. (lets face it, with 3 lines, chances were that something would happen at one of the lines!) A - So now we are heading up, through the OH, and I'm just waiting for a RET. B - We hit this high here and start to come back down. I mark the 50% level of this move up down below at 95.50. C - So here is the 1st RET with an entry 1 point above that fills... unfortunately on the high tick. D - My stop was set at 2 ticks below this low here. The thing is that in real time on this chart, this low was one tick higher at 95.50, so my stop was at 95. I saw too many times in my testing that price would dip one tick below a swing low and reverse, so it makes sense to spend an extra tick of extra loss in case I will be stopped out, but this may prevent some stops from hitting. E - So on the way down, price does actually hit 95 for a fraction of a second, which of course triggers the stop loss order at market, and because it filled even one tick higher, there were hardly any trades at the 95 level. So this sucks because price reverses up quickly, but it would have never hit my 1:1 profit target anyway. The reason why I mentioned the stop loss in such great detail is that if placed 2 ticks below the actual low of this bar now with the updated data, the stop would be at 94.75, which never would have triggered the stop order. It never did reach profit target once again, but perhaps I could have gotten out at a better price once I saw a few failed attempts to go higher. CWS..... This trade did look good though because price at D turned back up which was the 50% level of this up move, and there were also a few points of space to test the high at B again. Regardless, the trade did set up so it has to be taken. So I am at -$84. Moving on... F - We were stuck in that little range of 94-99 for a while until we dropped down below. We get this RET here, and I mark in a possible short, but I'm not thinking to jump in again. This trade should obviously be trailed up on subsequent bars. G - Here would now be the upper most portion of the crest, and an entry below here would fill and set up a very nice trade. H - Here is another beautiful tiny RET. Looking at it now, we do have a series of lower highs and lower lows by now, and dropping below that range that formed between 95 and 99 is another good reason to really take these shorts. We ended up hitting a low of 79 and then quickly coming up. This is making price essentially try up and down, and come back to the opening level. SUMMARY So I'm in a bit of a quandary. I've got my backtesting from that first trade that sets up from a break of the trendlines that encapsulate the overnight action. But this of course only sets up maybe one trade, and depending on how the lines are drawn, I might be getting into a trade late anyway as perhaps that first RET happens below the line I'm waiting for a break of. This trade also gave me only a half decent win rate for only a 1:1 profit. I'd have to exit the trade and miss an entire big trending move, which isn't how I want to trade. I do absolutely see that trading less, getting into a big move early and then just being patient is the way to go (unless the trade goes sour right away of course). I don't want to be messing with too many price action setups on the 1 minute chart, but I certainly do want to use the 1 minute chart to initially get into the trade. The backtesting showed me the value of backtesting, and especially the value of a well placed stop, and solidified the all important RET entry. But it does have its problems, and even further on the chart, at J, a short might be called for which quickly fails as well if taken (maybe its not the best trade given the quick rejection of going lower and the quick rise up... but it still is a RET entry in now a trending move down). This would have been a low risk trade though given the small bar above. Of course the worst thing to do would be to start changing the underlying concepts of entry just because a couple of trades failed today. That wouldn't be thinking in terms of a series of trades which is really needed for a proper trading mindset. Perhaps there really is no quandary. Perhaps the first trade should have been taken, and it just turned out to be a losing trade. But perhaps the short at G was also the way to go, and this would have set up a profit of least equal to the loss and hence even me out. It may sound like I'm rationalizing the loss because I can't accept it. This isn't the case, its only one trade that didn't work out. But the problem is that I'm not taking the next trade. Based on my backtesting, I do think that if I took each trade as I should, the first one that I have tested after the open, I would end up not doing horribly, but this certainly isn't going to get me anywhere, so I need to add more. What I'm saying is that I have confidence in that first trade based on the stats of my backtesting, but then this leaves me with nothing to do for the rest of the day and no way to keep following price if the first trade didn't turn out. I know that when I failed with following strict SLA, its because I hadn't formulated a very clear idea of where my stop would be (a line break is really not the best way to exit, especially if the lines are tight) So perhaps I need to go really go through and figure out what I could accomplish with a better defined way to exit. The reason why I say this is because I really do need more than just my first RET entry. Being able to follow price, whether is going up or down is essential, all the while staying clear of chop, or if already in a trade, not letting chop throw me around. Anyway... looks like I need to go back to testing. I will either have to learn to take each trade as I should according to the RET, or come up with a very good set of rules for why I should skip certain trades.
Ok.. so here is some analysis. Of course what I should be doing right now is making and testing a trading plan, and that is very much in the works, but let me just spit out these words. So first the 5 min chart. Yesterday was very much of a hinge, and when you draw in the lines you can see how overnight, price came to find support at what would be the apex of that hinge. This now forms our OL, and as you can see since I took this snapshot already after the open, we have a DB at this level. I was watching it intently, and saw that price only penetrated by one tick. I didn't take the trade because I don't have a trading plan worked out for this, well I do actually, in my head, but I haven't run stats. (Back when I thought I would be brilliant to just take trades at the overnight levels, I saw that it worked sometimes, and sometimes it didn't. What I never got around to was actually running the numbers on even just 50 instances of this trade.) I think this is a very low risk trade when you drill down into a lower time frame chart, even a tick chart if you want. (I don't have tick charts anymore now that I had to switch to the different free version of MC though). But even the 15 second chart is instrumental in seeing that a buystop above a 15 sec bar that hits the OL with a stop just below this bar is a well defined trade with low risk. Its very much the type of trade that fortydraws would show, especially with the tick chart. Everything in trading is a contradiction. Stuff on the one minute chart, although I don't want to call it noise, but much of this stuff can suck you into seeing trends that aren't there, so going with a higher time frame is always advised. But if you have your levels right, the precise entry can be a low risk trade with a high profit factor. This is one of these cases I think where the lower time frame chart is instrumental. It of course won't happen that you get a double bottom at every overnight low, but to spend less than 2 points to find out, and have that turn into a 10+ point move like today is a trade with numbers that are quite favorable. Anyway, going into the open on the one minute chart now. A - After the open, we try up, poking through my 5 min SL, but we don't make it far. B - If I look to the left, I can even see that we don't go above the previous high, so on the 5 minute chart, as well as here of course, we see the down trend from overnight intact. C - So for the purposes of my mental masturbation as one member who has been e-mailing me likes to call it, lets put in a short here! (Since its a slow day, let me do a quick tangent. I still maintain that what I'm doing here isn't a waste of time. The problem is that I don't know what to do about it. When I say lets try for a short here, what I should have in the back of my head are statistics that tell me if this is in fact a trade that has an edge given the context of how its setting up. On one of my slides that I made from stuff that Db had posted about a chart in real time, he has a minute by minute running commentary, and when something significant enough happens on the chart, he would ask "what are you going to do about it". So this is thinking in real time, but the only way to know what to do about it isn't to think through it now, but to access that part of your brain that has the backtesting done for this type of event and if there is an edge from putting on a trade given the context, then you know what to do. This for me had been how I have been able to rationalize the whole idea of backtesting and thinking in real time. I hope I'm not getting this all wrong because it allows for a way to put all of these things together so that they don't contradict.) D - So that short was a great trade, but of course we now hit that OL as discussed above. If watching the lower time frame chart, then there is reason enough to stop and reverse, collect your small profits from the short and get into a long. Yes we are starting a down trend right now, so taking trades in the opposite direction of a trend that is establishing is risky, but once again, if you know what you're doing, nothing wrong with breaking a trading "truism" (I don't even want to call it a rule because every trend stops of course and sets up a trade in the opposite direction) E - Now if I'm just watching the 1 minute chart, here would be my first op to go long after the DB and REJ of the OL. Is a pretty big bar given how slow today is though, so with an entry above this bar, its more than a 4 point risk. At the same time, if price comes up enough to trigger this trade, then we have sufficiently run out of sellers and the fact that we came up this high would show that buyers are eager. F - So now here is the first RET after the DB. This is the third chance to enter now. (1st was based on a 15 second or tick chart. 2nd was above the 1 minute bar. And now here is the RET) The nice thing is that this bar is quite small which for my entry method means a small risk. Now of course if I'm falling back on my backtesting I just finished, this RET doesn't happen above the SL, but since I'm not taking trades today live, I can absolutely mark this in as a legit trade. G - Next RET is here, and this one is fully above the SL. If my entry criteria is 1 point above, it doesn't fill yet, but if its only 1 tick, it does fill. As for the stop, we don't have a swing low yet... we only have the low on this bar. H - The low breaks, but it does form a swing low here. Once again though, as I said a few days ago, I'm not sure what happens first, if the fill happens first, or if hitting the low of the bar happens first. It doesn't much matter in this case because we went lower anyway. I - So on this bar, the low breaks the low at H, so any longs might be stopped out by now. But here is the thing. The low on this bar nicely tests the SL from above, or even the break of the SL, which ever way you want to call it, so if we mark a long above this bar and price comes up to trigger, it certainly can be a legit trade. A 1:1 profit might just squeeze out depending on if I'm using 1 tick entries and stops or something more like 1 point. Its a bit more risky now I would say though given the lower low here at "I" if I'm gonna call "H" the first swing low. This might be looking too much into the micro, but it does look like the first swing low to me. As a last note on this chart, I mark in the 50% level of this up move from the low at D to the high at 4302. We break below, but then turn back up. Sometimes these 50% levels work to the tick, other times they don't.... oh well. SUMMARY I really gotta laugh how when I'm not even thinking about money or taking trades, just plotting them where they should be based on what I see is happening, things don't turn out too badly. What I like the most when I'm in this frame of mind is that I am in no way affected by a trade that doesn't work out, I just keep working and take the next one that sets up. I have a very clear idea of where the stop would be, so this is a huge move forward, and although I don't add up the points to see what would actually happen if the trades were taken, I think I could be profitable. Anyway... so back to working on the plan. Looking over the charts last night, some days I would just get chopped up so much it was painful. Other days, adding contracts on each RET as price just trends up or down would be like picking up money from a bank machine that is just spitting it out. Keeping in mind that Lescor had an average winning day of $3000, and yet an average losing day of $2000, if we cut this by a factor of 10, is it possible for me to average $300 on good days and lose $200 on bad days? I know I can certainly lose $200 on a bad day, this is only 10 points.. LOL... but if I'm not discouraged and keep taking trades, then making 15 points on those good days is more than possible. (The number of bad days of course can't out number the good days) Anyway, I just mention this because each time I get down to testing, I get discouraged when I run into trouble. But I know that I might not even need to fix anything, its just a string of losses in an otherwise profitable plan. I think that I have to keep going back to the drawing board to fix my trade criteria, to either be more selective with the trades I consider, to add more filters for context, to adjust the entry and exit points, etc. (Saying all this tough, I don't yet have a solid plan... I just have my ideas that I just keep adjusting my parameters on. Although I did extensive testing on the first setup, this by itself is not enough to trade with day in and day out. Too many good trades are missed, and there isn't anything about re-entering or taking a trade in the opposite direction. I need to add more to take advantage of other things that happen and of course to take advantage of the bigger moves. Essentially, I do have to test SLA further.)
We know http://en.wikipedia.org/wiki/Spray_and_pray It a Thanksgiving - clear your head...., get some rest.., eat a turkey or two Shit (the mkt) won't be any different - and will still be there Friday..., next week..., next year RN
I simply don't understand all the micro-analysis you're doing. Shortly after the open this morning price breaks through the descending pre-market trend line with conviction (by about 4 points) and then pulls back to the breakout level 4295.25 on the 1min chart. So you trail a buy stop 1 tick above the 1-min bars and you're long at 4297.75 or so. You place a 5 point stop and target and you get your profit. Or you trail your stop below the 5-min bars and end up scratching the trade on the break of the 9:50ET bar low. Or you hold the position as long as no previous swing low on the 5-min chart breaks down (you're still holding and you're up over 10 points). Just pick a couple ideas and test the heck out of them. Apply rules until something works consistently. Breakouts and "hook" turns off pullbacks to breakout levels provide positive expectancy if you take the time to develop a simple plan around them. You won't get perfection; you won't get no losing trades; you will get a positive expectancy trading plan. The fact that you can't do this and use sim trading until you master it leads me to believe you have a gambling addiction. Looking back at static charts is great for IDEAS, and it's great for gathering stats on a set of rules, but it's not valid until you can apply the rules and make money in sim.
God dammit... I hate it when people point out my own contradictions! ND has done this to me several times as well. You said something yesterday or the day before about stop losses that was really smart... but I forget exactly where it was now. At any rate... you'd be the perfect person to ask RN since you also trade equities. Not that I am going to deviate from the NQ since I've put so much work into it, but given what I've seen several people write now about how futures is where you are facing expert traders, more so than perhaps trading equities, would you agree with this statement? Hence, is it easier to exploit the price action setups in equities where you might find more unprepared traders than in the futures markets?