A simple price action approach

this in hindsight of course, but I would have tried this I think...

 

It's like driving Jack. It seems so simple until you try it and then you realize there are a pile of things going on all at one time that you have to become familiar with. After a while it becomes second nature. When I look at a chart I am aware of the effect different time frames bring to bear on the pa. That is a huge subject on its own and causes traders more confusion than probably anything else.

The next thing I want to be aware of after I have a sense of direction are the swings as this is where the money is made. Overall you are doing fine in your attempts to draw lines and the first point of confusion is not distinguishing a wiggle from a swing. Try to see the main departure points for a move and work from there and then when you have a good grasp of that you can look a the minor wiggles.

I have added some lines to your chart and just using what we have visible I have marked the minor swing Low and the Major swing High. You can see the minor channel up and sell out of the channel and the major channel to the low.

When pa takes off like a bat out of hell from low and you added a trend line to the minor pull back, it's not well connected so delete it. Your 2nd up from the bottom still is not well connected and these lines are very steep. Does the bigger trend indicate exceptional strength or are we looking for weakness? If you expect weakness then beware of a reversal and look to ambush it.

I have added two other channels at better swing points.

 

Ok,
So I need to try and pay more attention to wave size. In other words, the size of the swings that I'm trying to connect. I can see that your channels make more sense. I just didn't see them. Thank you!

 

i like the enthus shared by so many here.

this ought to be a very interesting idea and endeavor.

just remember though when you are trying your hardest to decide which sticks to be used for trendline drawing, that the gravy train does not leave the station without your trendlines, ok?

wish you success in catching your higher highs and your lower lows and in getting on the gravy train on time.... hopefully each and every time as well....

 

It may not be true.It could be anything.It could be for a new trend, it could be for the end of a trend,it could be for a range..

 

you, my virtual trading friend....

appear.... to have been there yourself before many other pretenders....

and done that many a time already.... also before many other followers and pretenders.... as well....

i tip my hat in esteem and appreciation.... with humility and bewilderment, of course.

 

In the past I've been screwed by getting so focused on a smaller or larger time frame, I forget what my main time frame is telling me! I've learned to always be trading on the right side of my main time frame, focusing only on a smaller time for range trading and key entry signals.

The key to turning all our individual trend lines and interpretations into profitability is how you manage the trades. Limit the losses when price fails to provide follow through and be prepared at any time to reverse sides when indicated.

Here’s how I interpret the price footprints at the beginning of Jack's chart. It's a 2-min chart, so it’s a scalper’s point of view, but the concepts behind it are the same in any time frame:



Start at the left and assume you have no access to anything that happened before that initial green bar. Also assume you’re going to allow 30 minutes to transpire so you have a little price action history before you begin.

By the time the 15th bar closes you have 30 minutes of history. What do you see at this point?

1. Price broke downside out of a small containment range, but buyers stepped in with enough conviction to drive price back up through range resistance.

2. Price is pulling back into the range and the red bar closes near the low of that range.

What to do:

1. Draw a line connecting the range resistance to the higher high (HH) before price began pulling back.

2. Draw a parallel line across the swing low of the downside breakout.

Now you have an initial channel to use as a guide.

What does the price action to this point tell you?

1. The likelihood of a down trend was dashed by the strong buying pressure that led to a break of range resistance.

2. If range support holds, price should test and break the previous high, reaching another higher high.

3. If range support breaks, the lower channel line is “in play” and needs to hold as support if a higher high is still likely.

4. If the lower channel line breaks, chance of upside action diminishes greatly and the previous swing low is “in play” as a line in the sand for the bulls.

What can you do with this information?

1. You can anticipate the range support level will hold, buy right there near range support (~11990) and place a stop loss just below either range support or the previous swing low, depending on your risk:reward parameters.

2. You can place a buy stop order a tick or two above the high of that red pullback bar, so you’re only entered into a long when buyers step back in with enough conviction to indicate price is likely to least retest that higher high, with a stop loss just below the range support level. If price continues to pull back, you can trail the buy stop until either a long position is triggered or all support levels break and you look to enter short.

3. You can place a buy stop a tick or two above the previous high for a breakout play. This is a low reward entry because there doesn’t seem to be a strong trend in progress here.

Assuming one of these scenarios places you long, what is a reasonable initial profit target?

You should expect at least a test of the previous high. If price breaks the high, a reasonable initial target would be the upper channel line (unless there are S/R levels “in play”, not known from this limited chart view, that would lead you to choose a different target). So it looks like my minimum target would be ~12001.

So price breaks out and prints a new high, breaks the upper channel line and offers me the chance for additional profit. I can take profits, take partial profits, or trail a stop now to see if the market is offering more.

Now if I keep all or part of my position on, when price pulls back a little, tries to test the new high and fails to go higher off that nice little ascending triangle, the fact that the triangle broke down instead of producing a further up move tells me that this is not yet a well-defined uptrend. I would likely take my full profit on the triangle break and wait for further clues to price direction.

It takes only 3 points to draw a channel: A high and a LH with the parallel line drawn across the pivot low between them; a low and a HL with the parallel line draw across the pivot high between them; a high and a HH with the parallel line drawn across the pivot low between them; a low and a LL with a parallel line drawn across the pivot high between them.

However, it only takes two points to draw a single trend line. Notice how an upper trend line drawn across the high and the slightly higher high of the first three bars on this chart provide the level at which the range breakout finds resistance. You can draw a tend line across two consecutive price bars. This is a method of anticipating early entries into possible trends.

I pointed out the textbook 1-2-3 reversal setup (common after two or more strong trending legs), as they can be very profitable, though it feels a bit scary to take that trade at the hard right edge. Not so scary when you see your P/L get green in a hurry.

Additionally I included a picture of the web woven by a spider on caffeine to show the uncanny resemblance to my charts as the day progresses.

 

What is the reason for it?

 

This is the log provided by you in anothere thread.The log represents enter and exit strategy and this is nothing else but a smal scalping.I do pretty much the same.So what is left to help repair my damaged brain,Jack?

 

This was a cycle 1 (of 10 cycles used to go from beginner to expert). In cycle 1 (Dominant trading only) the beginner is NOT allowed to trade non dominant parts of trends.

Notice the word "WAIT". the beginner waits through non dominant segments.

In this exercise, in the trading group's office there were four charts on a 4 by 8 piece of plywood. All nodes had alphabet ID's so the treaders could log their day using rows on the log and always know that they know.

you belief system is inductively based as are most people's minds. Too bad. A mind cannot become differentiated (like driving a car) when a person believes inductiion is how the market works. Too bad.

The mind does not have an erase function.

Wait!What the hell are you talking about,Jack?You call .3 net a Dom trade??And where did you get 16 Dom trades in one session?I only see a couple of the Dom trades,the first one for e.g. is starting at the bar #3 and SHOULD last thru the bar #9.You took the middle trades down the road,with .1 - .3 net or loss.

Why did you take those trades?You took these trades,because as per your defenition:

"Several caveats exist for trends. They can accelerate or decelerate. For a new trend to continue, the point 2 of the parallelogram must be out side of the prior parallelogram container"

For waht my answer was:

"It may not be true.It could be anything.It could be for a new trend, it could be for the end of a trend,it could be for a range.."