I feel like you just placed me in a swivel chair and spun me around as fast as you could. Didn't Wyckoff just use the danger point? I'm not sure when the stop wouldn't matter....seems like it always would? When it comes to MAE, at least on the hourly, 10 points seems to be the point at which it recoils if its not "going". I'm reminded of you quoting Teresa Lo "If it doesn't go, you don't want to be there." My thinking with trading the hourly comes from the way you day trade... Find the range (AMT), which is usually formed overnight on the NQ. Since I like to trade trend and not reversals, I wait for the first retracement (SLA) once price breaks out of the range. I don't want to trade a smaller interval. I think I'm going to revisit my original idea I posted at the beginning and tweak a thing or two. Can I just have some confirmation that the way I'm thinking about the range/retracement is correct? That would make me feel better.
Yes, he did. But one must consider his own risk tolerance. If the trader's stomach starts to turn over once price recoils on him past a certain point, then all the metaphysical discussions of stops turn into so much crap. If you can tolerate 10pts, great. If you can't, then you're going to have to find a back door. If the entry's right, the stop never even comes into it. Price just goes. (That's a clue) Yes, I think of Teresa often. Confirmation? No. I'm going to let you twist. You can do this. Begin with static charts, then replay a few. If you find some that are exactly what you're looking for, replay them several times. Learn exactly what it is you're looking for. Only then will you be able to recognize when it occurs again. And it will occur again. I will say, though, that I avoid ranges like the plague. I'm not a scalper. Never have been. And the whole range/retracement thing just doesn't work in ranges (unless of course the range is 100pts wide). Others just love them, and more power to them. I wish them well. If any of that helps, that's all to the good. But don't do something just because I do it. Don't do anything just because somebody else does it. Find your own path.
One reason I'm tempted to just use the danger point is because when volatility picks up, the MAE will obviously change. There's also instances where price will back up, but not reach the danger point, and continue on. I can tolerate it as long as the points earned is considerably more than points lost overall. I'd rather not keep having my MAE taken out when I could have just stuck with the danger point to begin with. Is replay all that necessary when using the 60m interval considering the point is not to have to babysit it? Shouldn't static charts be alright? Thanks again, DB. Here I go again on my own. (Whitesnake anyone?)
Depends on how curious you are. The bar doesn't just arrive. It forms. And watching it form can be enlightening. However, if you're going to trade the 60m and enter on the 60m, replay would be about as exciting as watching grass grow. Speeding it up might be of benefit, as long as you remember that you're getting a warped view of how long these bars take to form. But if you're not going to be watching them form in the first place, this may not matter. Remember that there is at least some element of play here. Unless you're determined to have a fully-functioning trading system in place by the end of the month, play with it. See what effect changing this variable or that variable has on the results. There is play involved in the formation of all hypotheses. Take advantage of that.
You're on to something big here. The stop always matters. In fact, it's much more important than anything else in your plan.
"Will price simply turn gently and head back where it came from? It might. Or it could plunge 500pts to the bottom of the long-term trend channel. Given the 80pt drop, though, it could just drift sideways for a while. Once you've tested the extremes as we have, you just have to play it as it lays. The easy part is most likely over." @dbphoenix You posted this in the Ghost thread way back when, and it has me thinking. When you test an extreme (like the Weekly channel when trading the Hourly), and price turns, that is essentially the "mean reversion" and seems like you're saying that's the "easy money". During these moves, one definitely wants to look for reasons to stay in the trade. Once price has reverted to the mean however, it get's trickier, is that what you're saying? Because once you're at the mean you're then dealing with mean excursion?
Yes. And no one will point and laugh if you exit at the mean and re-enter once you leave it. There's no guarantee that price will move all the way from one limit to the other. There have been fewer of those one-ways than the U-turns at the mean. If you don't trust AMT, you can use the SLA to judge when to exit. Just make sure that you have reliable, tested criteria for exiting and aren't doing it just out of fear. Stay in the trade as long as possible.
I see. So you're essentially looking to enter at the extremes and ride out the mean reversions according to AMT. Which is also just following the trend AKA Line of Least Resistance. That makes sense. The Context water is becoming much less muddied already. YES! Any advice for mean excursions? After some quick observation, it looks like waiting until the Daily swing points around the mean are cleared would be a safe/reliable option?
Yes, the LOLR would be to the opposite of the channel. However, don't base your tactics on faith. In a bull market, or at least this bull market, price doesn't reach the lower limit very often. On the other hand, in the '07 to '09 bear, it pretty much lived down there. Don't take anybody's advice on what is safe or reliable. If you don't do it yourself, you won't trust the information. And if you don't or can't trust it, it has no value.