It's a thing then. Spelling stuff out like this does actually help, otherwise it's just a vague subconscious thought.
Spot on with the chasing thing! I honestly think that most of my loses have actually been because of this. Second issue, which is tied to chasing, is not taking the initial break. I will have to look at those links you posted before to understand what you mean by the "lower high hook", but it does essentially sound like just a retracement to the breakout level and showing below this, and if the trade doesn't trigger, then no more sellers can be found. I really enjoy reading about your understanding of the market ND.. so please keep it up! (ie. what the pros are doing, how the algos are performing so much of the trading)
So I wasn't going to trade today, but the GF was over and she had always wanted to see how this works, so I figured why not just show her how its done with a live trade. We spent a bit of time watching and even she started to just notice this channel that was forming so I let her try a trade and just did what she told me to do. A - We shorted here... B - And got out here. She was mad at me because she wanted to hold for longer, but I saw price hit a low on the bar before the so of course I wanted to start just taking a quick profit. Its funny because I could easily see how we have such a different mind set. Of course it wasn't her money on the line which made it easy, but she could clearly see that taking profits quick isn't the way to make money, and this is after all what I have been preaching to her for weeks, and explaining how Db says that you have the make the choice of either just wanting to trade, or wanting to make money and just all these others things that I knew I was doing. So I'm explaining to her constantly of what the right thing is, but not that I'm exactly doing it of course! Anyway... so we caught a good trade and made $56, but of course I'm telling her that you also have to be prepared for the trend changing. This upslopping channel isn't going to last all day. As it turns out, price just dropped shortly thereafter, and had we just kept the short, it of course would have produced much more profit. But since we entered the short to play the channel, getting out close to the bottom of the channel was called for. C - Later in the day I noticed this hinge forming and drew in my lines to capture the bounds of the hinge. Once I saw price breaking out the top I would have known to get in right away, but of course be prepared to get out and even go short in case the breakout failed, but I did nothing about it of course since I have to define all of this properly first in a trading plan. The exit is clean and the trade was worth at least 8 points. D - By the time we get to here, I outline the bounds of the trading range. E - It break out here... would I take it? I haven't done the research yet, but I can sure tell you that once I saw it re-enter, the chance of the a try out the bottom was that much more likely, and you can certainly see some pretty good selling out the bottom now. It didn't go far, but having clearly identified the range and knowing that a failed breakout from the top can lead to a try out the bottom would hopefully allow me a scalp a few points from this, or perhaps even set up a good move if it continued. Either way, I would be prepared to take the short hopefully once I saw my long failed. So lots of studying to do, but I think I have some good ideas that I just need a develop a plan for.
So I'm just preparing a post about behavior for the chart yesterday, and I wanted to provide the inspiration for it. It is a post from Db last year that I still had in the back of my head. I am sharing one of my "study slides" that I have made from this discussion. I do hope Db doesn't mind, nor Niko whose chart this is. I believe its from the Ghost/Son threads. The area outlined in red provides exactly how I think behavior can brought into all this without following just a setup mentality. In my next post is in my analysis of exactly this same observation. Also, the sentence before "how much risk are you willing to assume, how involved is your ego, and how light footed are you" is just pure golden! I have mentioned many times now about being "nimble". Too much confirmation of a move leads to getting in at a much worse price and hoping for continuation. (this is my problem) But of course getting in early might lead to a higher rate of scratched trades and little losses, but if the ego isn't involved at all and the exit, re-entry, or entry in the opposite direction can be made just as quickly, then you're in the right frame of mind to make consistent profits.
BEHAVIOR So I've been thinking about this all day in my head. How do I incorporate behavior into my analysis if I'm just looking at static charts and one minute bars. And then it hit me. I'm not sure if this is what Db would say, but this seems to work well enough for me, and I got my inspiration from this in the previous post. O - So after the open we have a quick drop. There is a lovely RET in there that can be taken at "a", but since I wasn't really trading today, I wasn't even looking for it. But suppose that we walked in 30 minutes after the open and saw this lovely up slopping channel forming. Gosh, since ND has been helping so much right now, dare I say that I think this is almost a "bear flag" from my Al Brooks days, but perhaps I have it wrong... but that just jumped into my head! LOL A - Ok... so here we see a quick rise after hitting the low at 4104. B - When we go down, we notice how much time we spend in the bottom half of the range. C - Another quick rise up... D - But its down once again, with more time being spent down here yet again. Sure we have higher lows and highs, but each higher high is rejected so much faster. E - Exactly the same thing. F - And once again, more time spent down here. In fact, here it looked like we might not even make it up again. G - Here we can't even reach the previous high. H - But at the same time, we don't go down as far. So drats, it looks like we have a trading range within a trading range. I - This is where the GF said to short (which was the beginning of the 20 point move down by the way!), and of course we covered down lower just playing the channel, not thinking we were setting up for a big move down). J - But once again here, we fail to make it past half way. K - Here is our initial break of this DL if you want to call it that, or a break of the channel line as well. (these channels are really not appropriate for one minute bars I find, but I just drew it in because it was easy to draw for my analysis but just a trend line would be better. L - By the time we get to L, I've almost got a micro hinge and a drop out the bottom here. Shorting here is I think called for as we have multiple reasons now to take a short. The next bar is tricky though because it comes right back up. If the short isn't take right at L, suppose its taken half way down on that next bar, with price coming up, I'd be sweating a bit, but if taken just ticks below the break of the yellow line, the loss at the worst is only a tick or two. Now we could also play it like this, and ND is certainly pointing this out so well with her charts. That thick cyan line is poked at K, so lets be the second mouse I think she would say and wait for it to come back up, which it does, and hence getting in at L is now the second mouse entry. If you're reading ND.. is this is a "second mouse" entry? M - Getting to here, we have almost a second micro hinge with the tiniest poke out the bottom before coming up. This might scare me out of any shorts I was already in. But we have to remember two things (none of which I think I can think through so clearly in real time just yet). The hinge exit can have an apex test, and the exit from the first DL break, the thick cyan line can also have a more significant test. N - This climb up to here provides both a test of the apex and that test of the trend line. P - Shorting here, we can say we broke the micro trend line of the previous 4 bars, we can say we tested the apex of the hinge and bounced off, and we can also say we came up to try and re-enter the channel and go above the trend line and that didn't stick either. Perhaps this is why the drop is so good. We failed on so many fronts. Now is this too much analysis... perhaps paralysis by analysis? I do love doing this after the fact, but in real time its all a different story. But for me, the important thing is that analysis in the channel, how we can see the behavior of what happens as we climb up to the upper line and go down to the lower line. Q - Shorting here in this RET would very likely stop us out for a loss. R - By the time we are here, am I even looking to short or am I thinking long already given that strong rejection bar below?? S - Of course once we drop lower we can use this swing point, but no way to know about this swing point until after we were much lower down. (this is where I have trouble drawing these trend lines.... I can draw them perfectly in hindsight, but in real time, I tend to make them too tight, and think a break means something when it fact a little climb up just gives us a swing point to use for the down trend) T - But of course by the time we get to here, that swing point and subsequent trend line slopping down provides excellent confirmation until the break. The break happens on the bar before T, but I couldn't squeeze my letter in there. U - This is the failure to make a lower low V - And here we have a lower high. Both the 123 setup and SLA would say to take a long right about here which does work for a good number of points but the macro trend for the day ended up still being down. Gosh, if I could do this day all over again I'd be rich!
A - Heading into the open we have a DL. B - 4 minutes of bumping up against 4083. (what a juicy short it would have been up here). Note also that it is only 2 ticks above the OH. The overnight levels do often provide the best trades! But I have seen that just randomly taking reversals at these levels isn't solid enough. Is seeing price unable to penetrate 4083 for 4 minutes a good enough reason though?? C - Break below the DL. Looking for an entry (don't think I will trade today though), but there is nothing there, too much overlap. D - By this point, it sure looks like a micro hinge... such a pretty one though, but quite small so not sure of the significance. We drop below, and if I shorted here, I've got a bit of a ride back up of a few points going against me. E - We have pretty much a trip up to the apex of this hinge and back down. F - So suppose we short here. It would go against us again, but come back down in a few minutes. G - This bar below is interesting because in the minute prior, we had a huge drop, but price retraced all the way back up. This does happen often if the drop is too quick, and I note that the high of this bar is at the same level of where we found support a couple of times in the previous few minutes. The drop continues though. H - Such a nice hinge formed during the past 12 minutes, and here we have a little poke below. This gets bought up though. I - So now we have an exit out the top, and it looks good. I'm a little weary because we have a good down trend so far from the open and going long means going against the trend, but I guess this 15 minute hinge can be said to reset everything because price went back and forth for a while. If I entered a buy stop here, it would never trigger, but if I wanted to keep my entries tight, I think the entry would have already been made a few ticks below, and also after seeing the poke below the hinge at first and then coming back up would have made me think an exit out the top is more likely and given me reason even to go long right at the exit. J - It quickly fails though and drops out the bottom for a good move down here. K - Seeing this bar above K, it hit a high just above where the apex would be, so shorting below the bar seems like a great move, but it fails right away and we can even draw a DL going up. L - This is quite the juicy trade here. We have the break of the line, and this bar above here even goes up to the DL from below. It goes above the breakout level, but stays below the trend line. Shorting below this bar sets up an excellent move down. Its the classic 123 setup, as well as an SLA trade. Hmmm.. how could we know it was so good? There lots of places today that fail this exact same "setup". M - Hesitation here at the OL and a minor bounce of 3 or so points before price ultimately turns backs down and heads lower. SUMMARY Ok.. that's enough. I'm getting feeling left out here of this 20 point move down from the open. I want to be around for the open every day to do this in real time and practice this, but of course the only way forward is to develop the trading plan, so this is how the rest of the day will be spent today.
Well it looks like I'm not quite ready yet based on my performance today. It isn't so much that I don't know what to do, its that the real time nature of what is happening throws everything to the wayside. Its kind of depressing that I can't even trust myself, but well, here it is. A sweet and short summary for a change! A - Bought here. B - Out here... and also hit reverse as I thought that we maybe ran out of steam. In hindsight of course, I saw lots of rejections down there between 33 and 36 during the overnight action, so once we bottomed out at 34 just after the open, it was a strong trend up so I shouldn't be looking for the shorts at all. C - This where is where I get out of the short. D - Try a long here again. E - And I'm out here. F - Above this bar you can see a short entry given that the DL is way broken now and that long failed and price kept coming down. G - Below here is where I got out of the short. H - I try one more time for a long, and another exit for a loss. SUMMARY So I'm down -$230 today. None of these trades were set up that well. I'm just buying above bars, but not exactly above retracements. If I had gotten in initially a little sooner on the first long, say after the pink SL broke after the open, I would have more than likely just held on since I know I have to be patient. Once the first long was put in too late, which was unfortunately at a top just before a 4 point retracement, everything fell apart and patience was no longer available. Its too bad really because if this wasn't a strong trend day, then those breaks of the trend lines and hence my reversal trades might have in fact been profitable. The short I took at F also wasn't too bad because this was taken after a lower high (the one at D). But when I look at the exit on the bar below G, this was the place to in fact do a reverse again and go long (but this looks good only in hindsight I guess). Just that one tweak to the day though, hitting reverse as opposed to exit would have turned today positive. But of course by this point the money loss was an issue. No need to dwell on today as I think I know what the problems are. The sad part is that I so far haven't shown the ability to fix them.
Well... hmm... that is a good question. Based on my chart today, I am clearly not. It is of course in the back of my head always. The 123 that ND told me about the other day is the classic SLA entry. Going with the trend and hence buying above the trough in the retracement is also the way to make the easier money. But I am wanting to get into a move when I think the reversal is coming. And I also see that by waiting for the proper SLA entry I would be getting in far too late sometimes. So I'm mixing a few things together and then I get the entries all wrong. I do think that worst of all, watching those bars form is the biggest problem. I'm sure if I go over the chart today and write down where the entries should be, even if I keep the lines tight it would have still turned out much better. Watching price move in real time is having too much of a negative impact, but of course this is what's key! LOL
Do you want to have the SLA as sort of a backbone to your trading plan? What's helped me in terms of real time price movement is just looking at the ticker and essentially keeping my eye open to rejection/pressure/hesitation and then watching the pace of it for changes in activity. I look for this around areas of context, swing points, halfway points at lines etc etc, how price moves toward/away from/at/ around and thru these points. This gave me more direction as I started to want to see certain behavior and when I do or I don't see what I want that causes me to have some sort of action. For example the first long op today. You saw the pressure up from the area around the overnight low which travel up to the high point of the consolidation from about 4am. At that point we hesitated and price does not ret even to the 50% mark. From there my entry was triggered at 44.75. Price continues its upward move but for me it wasn't taking off like I'd like it to so in my mind I am thinking we might come back and test the area around 43ish. Price came against me 7 ticks after being up 5 points but I expected it so I wasn't freaked out by it. I know what I want to try to obtain from the market and if 5 pts became a loss of a point or 2 so be. I know my plan when I do win a trade wins far more than 2 points. Had we traded lower and more aggressively I would have exited but that did not happen. Once that next push up happens for me trading becomes a lot more enjoyable and fun/so much easier to manage and not from a profit standpoint but from the point of you can then let price do some things/bob and weave since it's moved away from your entry which is essentially the most emotional point on a chart (for me it was). I still get a bit emotional at the time of entry but with time I know that will subside once my plan is fully finalized. The key is to truly focus. If you're asking yourself questions while you're trading then you're not focusing on price movement. I used to question everything and in trying to answer them in real time with a trade on it caused all kinds of issues so I decided to go back to the beginning all the way to the observation phase w the addition of context, disregarding entries and exits, just watching price move. I came up with questions and sought out the answers. Also what helped was figuring out truly what I want to try to obtain from the market. Do I want to surf the waves everyday and deal with the choppy days etc? Do I want be a trend trader and if so understand that during chop and rangey days my strategy won't be as effective however with that strategy you'll know "today" is just not shaping up to be a trend day so it's perfectly fine I lost a few trades? If I want to catch the bigger moves study where/when/how these moves get started but also study the days they don't happen and understand those days just as much as the trending days. From there you'll have a better idea of when to play it a bit tighter vs loose etc. I know I am not one of the experienced traders here, and I've had similar experiences/feelings as you have had and just want to share what has helped me improve. Keep at it and remember have fun with it.