I suggest that rather than introduce additional elements to the decision-making process, each of which would have to be backtested and forwardtested in isolation in order to control the variable, a more efficient and expedient alternative would be to follow the rules more closely. In this case, you do have an SL break followed by a DL. A short DL but a DL nonetheless. The DL is broken by the 1535 bar. The focus then turns to looking for a retracement for a short, not for a long. Therefore, the retracement that occurred two bars later provides the opportunity for that short. If the 1534 bar had merely touched the DL before continuing upward, that would have been a good opportunity for a long. But that's not what happened. The next bar instead plunged five points, and the bar thereafter, after trying to make a higher high, instead fell back to "close" lower than its high. This was observable in real time. But even if all this had been misinterpreted or ignored, the long would not have been triggered if the entry had not been so tight. Keep it simple. Don't try to fix what ain't broke.
Thanks Db. I do try to keep myself as close to the tested rules as possible. I guess that one was a bias on my part towards a long. I'll take it as a lesson learned. In general I am pleased that for most of the week I was not thinking that price should do this and that because we are at a certain level , but instead I was focused only on what it actually did. It definitely makes things a lot simpler and calmer.
Monday 7th April 2014 NQ100 Market Preview On the daily chart we have moved below the long term channel from June 2013. We have a swing low of 410 in Febuary, and this would be the first aim if we continue downwards. If we do not go down directly, we could also move up to test the lows of the channel from March which are around 530 at the moment. I geuss it depends on how much fear the 100pt fall on Friday put into the market participants.
I guess that I should be looking at the longer term channel meam, which I did not look at until pointed out on the chat. There are various old congestion points closer to the current timeframe which may also provide some support, especially the recent one around the end of January.
Those ships have likely sailed. The professionals have already sold, so I suggest you stick with AMT. That doesn't mean laser-like focus that excludes everything else, but the aircraft carrier has the right-of-way regardless of how many dinghys are in the water.
Monday 7th April 2014 NQ100 1 min chart review Not as busy as Friday, but still plenty of action. Made it back up to the recent channel low, but couldn't hold inside the channel more than 10 or so minutes, which would indicate some weakness. Lets see if they fight to get back into the channel tomorrow or give up and look for lower pastures. 1. Opened up quickly to 16 and retraced 11 pts and then back up to 24, a previous swing low. 2. Fell and paused at 10, before falling through LSL down to 499. 3. Price moved back up to 11 retraced at the support line and then moved higher. This retracement was above the low at 9:32. 4. Eventually paused at the bottom of the March channel at 32. The DL was broken for a possible short, but it wasn't triggered, and price moved on up back inside the March channel. 5. Price stopped rising around a recent daily swing low and fell to break the demand line. We have a retracement for a short which went nowhere. 6. At 10:27 we have a break out and a failure to get above LSH. This gives an opportunity for a short. 7. Short reached 18 and moved back up to test the channel bottom. 8.Bounced off 50% point from last swing high, and channel bottom. 9. Two further rejections at the 50% point of 42 down to 10. Possible short each time.
Tuesday 8th April 2014 NQ100 1 min chart review We never made it back into the June channel today, nor did we fall to the November channel midpoint. Previous highs and lows provoked reactions when tested. I am not so sure I would enter on reversals yet, but it is worth noticing them as they happen. The easist trade t enter is probably the double bottom at overnight lows with a higher low retracement around 10:30. Even if it had not made anything, it was still a clean entry. It might be worth waiting for a "good" entry each day. I will review my old charts to see if they occour, and are worth backtesting. 1. Opened up to 10 the top of the overight range and fell to 500. 2. Moved up and through 10 and onto a swing high from yesterday at 20. Stayed quite a while at this level before falling fast to below 10 again. 3. Tested 10 from below and fell down to the overnight low. 4. We quickly rejected the overnight lows, and rose to 10 yet again. 5. Started to form a hinge, and then tested the upside and failed. 6. Lots of wide overlapping bars now, although we have moved up gradually to 16. 7. DL broken and a quick fall back to below the 50% point, and then retracing back up to 14. This kind of behaviour is difficult to act upon. Stay out. 8. Finally broke down and fell below the lows but was rejected straight away. 9. We had a double bottom, and then a higher low allowing a long entry. 10. Looking at the chart it seems like price made a nice smooth rise, but there were pauses along the way especially at prices which had previously been significant. Several times it looked like the DL might be broken and a short triggered, but we continued to make higher highs until we reached 35.
Agree on the 1030 Rev being the best entry of the day. It's cool how instead of rushing the process by jumping into taking trades, you are spending all this time observing.
I haven't rushed in, but I also need to move on soon and get started. I am following the rules as stated, so endless observation may lead me to overthink this. Time to kick myself into action, and get to the next level.