You simply have a position trading view (multiday) of intraday trading (partial day trending) There, in fact, are seven levels of possible viewpoints. An important thing to consider when making a trading level choice is to also use the level above and the level below for guidance on the middle level you trade. The trading level chosen will have traverses within the trend of the level above and it will have counter trends as traverses within the level above. The level above defines your entries and exits on the level you trade. What about the level below where you trade. That is a vernier which gives you second chances to make money since, often the extreme prices of the level above are reached two or three times. You see this as chop now, but it would appear as S or R limits if you were annotating all three levels. If you decide to became a day trader rather than a position trader, you will find that trading is entirely different. Most ET traders are intraday traders. All trading no matter what level requires that three levels be attended to: and upper level which is a trend envelope; the middle level where traverses are traded; and a lower vernier level where multichances to be rewarded occur in case the first opportunity is missed. Annotating all of these sooner or later leads to the recognition that every exit is the entry for the next traverse and every entry immediately follows (simultaneous, ultimately) the just prior exit. All of this can be converted to a wholly different monitoring schema. All a person does is observe and analyze the mode of the market. The continue phase of both trends and counter trends is about 90% percent of the time passing. The end effects which you now see as long periods of consolidation are really otherwise and are just brief periods of the trend and countertrend "overlapping". Don't worry about understanding overlap at first; Pring, when I ask him about it, had never given it consideration, not even once. What is it like to trade symmetrically just monitoring continue most of the day and have brief periods of change during which trend or countertrend profits are taken. Find out by the crayola test. Draw the 20 to 40 zigzags on the better level and see that there is no consolidation but just peaks and valleys. The potential profits of the day are just measured by the sum of the zigs and zags. they turn out to be more than 1 point and they also can be quantified as a multiple of the ATR. You will have a neutral bias once this trading style sets in. Good luck if you ever consider it. This is how I saw it 50 years ago when I was starting out. It will never catch on as a possibility for most; I see that now. Its very relaxing since there is no anxiety, fear or anger you sometimes hear about. Comfort, support and confidence are the typical emotions once you are seeing that an exit is also an entrance. None of your ABC type considerations caused by using a position multiday fractal on intraday apply.
wow. what a post! thanks cd well, i have come to this type of view because for several years, trying to keep it strictly intraday, i have found myself in a very limited risk:reward relationship because of the trading costs, trading 60-15-5 minute charts. the way i found this position/partial daytrading view comfortable was that i could catch larger swings, and in time, by focusing on order flow i managed to reduce risks to a minimum. i sometimes catch 70% of the daily range (if the day is uni-directional). Also I could trade intra-day as i was not a very never a very patient guy.
Isn't there a quote that says something like "the first and last 1/8s are the most expensive". The trend is the Signal and everything else is just Noise. Who cares if you miss the first 10-20% of the beggining and end of the trend. The middle is huge enough if the sector that is trending is in a bubble - the middle is also largely devoid of any major retracements. Even if you're daytrading every month for every security has at least 4 huge trend days where you can break the bank by just holding trend trades and reinvesting profits by adding new positions.
I disagree. There are different time frames, different ways to interpret (the start of) a trend and different ways to exploit such perceived trends when they arise. Pointing an accusatory finger at only one such approach does not present a compelling argument.
You have a good rationale for what you do. The 60, 15 and 5 are in a good ratio do capitalize on my commentary. I know you use a slower set and probably in the same ratios. Compounding the 70% of daily range is what makes trading worthwhile. I feel any person learning should use a 2 to 5 day position trading experience in equities as the foundation. Once learned, the person may just swing the template over to the ES and shift down to trade the 5 minute fractal. Having a job and position trading equities for the time necessary is a fine way to begin. I appreciate and respect the route you took to become successful.
The problem is that you don't know in advance which move will be one of the 4 huge trends. So you have to take many positions to catch the big ones. But for many traders the losses in the bad trades ( in hindsight) are bigger than the profits of the 4 big moves. That's what is killing many trendfollowing funds. So it is not as simple as you explain.
As rahula says 4 day holds are always there. Their cummulative move begins and ends in very smooth manageble ways. After a while a person learns to just take the highest velocity parts of these trades by proper use of capital. Funds, apparently, are unable to do this as you say. Its hard to understand why they blow it. One of the better ways to capitalize on these opportunities is to enter just before opening gaps. Late in the prior afternoon is best. Seeing the signal is best done with a leading indicator of the gap that will be happening. Taking many positions to catch the ones that make the moves is not a good strategy; for me, it represents not being able to see the pre trend signals. I attached a volume based presignal chart that is useful for beginners. It applies to short list of equities that are getting ready to make their moves. Just follow the colored sentences in the middle for instructions. It is entitled "unusual volume" because that is the column heading Q charts invented for the use of the math behind unusual volume. code people are not usually traders and the sales department of Q charts still doesn't recognize the use of the tool. There is a back up illustrated transcript of its use located at a places where it can be downloaded. Maybe someone will put up a location.