how to manage false breakouts on NQ ES

this doesnt answer the dilemna of false breakouts,,,, but now when i see price unable to break the previous pivot after 3-4 touches i just close the trade... small consistent profits keep the concentration and momentum of trading.

 

I was wondering when somebody was going to point that out.

 

From what I gather, false breakouts occur when the volume does not sustain the move - either you get out or reverse. So, you have to keep an eye on volume (which is a also primary indicator like price since it is not derived from anything else)


pretzel

 

OK, thanks

Here's a similar way to skin the cat. There is a discussion on "head-fake" in the article which is equal to a false BO.

pretzel

 

if it's a 'fake-out shake-out" reverse, if it's just a fake-out, close or wait till your stop gets hit.

 

Trading divergences... easier said than done. when it try it, i get fried half of the time, so i must be doing something wrong. Perhaps you can elaborate on how to trade them profitably.

 

Larry and ditch,

From what I have seen of people, going from the rookie level of trading to adopting more than one application of market tools for trades is a conscious change in operating.

Most people never do. The vaste majority of people just use one strategy all the time.

Because the P.V relation comes in two parts, at some point this has to be recognized.

Part A is what most people use:

If volume is increasing, then the price trend will continue.

Part B is not commonly handled by people:

If volume is decreasing, then the price trend will change.

The corrollary that I add to complete the relation is there to just give consideration to all cases that are possible:

If the volume is constant, then price will drift slowly downward. This is not very important but it helps.

The three trends possible do follow this set of provisos.

The "continuation" phase dictates being a trend follower: The "change" phase dictates a reversal stategy.

You can peg any person posting by their views on making money. Not many people are able to clear up the myths they have been given in their lives to be able to have a clear deck or fundation from which to operate. Seykota rums "free" sessions on this very matter because it is so important to him.

To adapt to making money all the time as the market operates requires the two interchangable strategies. By keeping logs of stops, you can bring your consciousness of the operating mode of the market to the fore. By seeing the sequences of continuation through a series of signals from a minimum of chosen indicators and the market variables, price (standing for value) and volume (standing for people), you clearly come to understand beginnings, durations and ends of trends.

The failures (the terrific punch line of this thread) to "continue" are signalled by ommissions and flaws. Like when the lighthouse keeper, on a foggy night, jumped out of bed and shouted "What wasn't that?". All of a sudden, the fog horn failed to go off and was broken, causing him to jump and shout (JS).

When you log stops and have sequence lists, you can annotate JS's as flags. That was my HOV exit. That is the stuff I put on other peoples graphs ( I am not good at getting mygraphs through the browse etc).

The market is as someone says (driving a car), you do get skilled at it in a KISS way. I got two traffic tickets once. An enforcer pulled me over on a six lane highway and said "you are too old to have a drive a car like this. I was behind you and you changed lanes and passed and then went out of sight. I couldn't keep up with you." What were you doing? LOL I said i was just getting out of congestion and returning to the right side of the road.

At driver school they said I should have contested the guy since he didn't record my speed etc.

I have a 750 il which has the works (special order performance tires etc). The three transmissions give me flexibility in the mode I choose to get out of congestion and I'm set up to not let the tires spin when 12 cylinders go to work at no mileage what so ever (gas consumption needle just disappears).

I think of my car as an antedote to redneck pickup cowboys in AZ; they are surprised when I leave where they choose to dominate the road.

The deal is this: as the months go by; we need to get equipped to make money all the time. The deal is a practical one; we just learn to stay on the right side of the market at all times. You will find that this finger tip control comes from minimizing what you have to monitor and consider. Your decision making will be autoimatic I can assure you.

Electronics is helpful these days as well. An audio on the pits is not where it is anymore. ES is not a pit thing even. It is an invention that we can all utilize. A well designed vehicle for making money and going on down the road. In a few months I can suggest to you that you will be able to hear the hydraulics pumps kicking in.

This has been a very productive thread. There's no dilemmas that come up in making money by the way.

 

This is a good read. Lets say you are considering the substantive content as an add on.

what you would do then, if you operated in an anticipatory manner, would be to see and understand what happens "before" a "volatility BO". Well what does happen?

To save you a little time looking about, you have to get the key words to be able to research it.this is tough stuff to get a handle on because sometimes it is hard to find associations.

If you know you need to know, then there is no way around not knowing. All of this makes you grow into an orientation of getting the job done correctly. Filling in gaps. Chucking "safe" stuff (the survival stuff you continue to push because you are safe using it even though it is not too swift).

The pairing of stuff for volatility BO is volatility compression. The compression comes first. When you see compression you are going to have a BO soon. This puts you in the place where your radar is giving you the precursor to what you will get as a signal to make money.

This stuff comes in two sizes as usual: absolute and relativistic (like MACD and STOC, respectively).

I made the Connors Hayward volatility compression stuff (from hedging) into a MACD like absolute from their relativitic offering.

The simple observable precursor without indicators and signals is this: The bars on the operating fractal get very short from top to bottom. They also go through a congestion convergence and centering. The stuff for volatility BO relates to indicator signals so if you read conners Hayward ("investment secrets of a hedge fund manager", Probus , 1995, pg 27 is neat graph) you can see how to use the BO indicators in anticipation.

 

THERE IS SOME SHITE DISCUSSED HERE! I see that we've got the 2 tick newbies out in force alongside the academics who don't even trade. Exellent BS to waste your time.

First off: trading Breakouts is the ONLY way to trade. All you buggers looking for the pullback are wasting your time. You just want to feel clever catching the turn. I bet you don’t make any money. If it’s real, it ain’t pulling back, Jack. As for the buggers who trade with 2-4 tick stop-losses: don’t make me laugh!

You wanna make money? You gotta buy high (the higher the better) and sell even higher. You gotta sell at the bottom and buy even lower. The idea is the catch the momentum moves. Let everyone else scrap over the middle shit. And you gotta aim for enough profit to make it worthwhile. $200 a contract in the ES or forget it. You should attempt this only once (or max) twice a day. If you want to make more than $200, trade more contracts not more signals. The key is to know which breakouts. Here’s the jist (not nec all my fine tuning):

5 min chart, standard Bollinger Bands with middle line a simple Mov Avg in place of the middle Boll line. Nothing else needed.

Buy Signal:
Wait for a bar whose high is sticking above the top Bollinger line and whose mov avg line is up compared to the last bar. Wait for a minimum of one bar that has a lower high (to generate a pivot high), and also wait for a bar whose low is lower than the pivot high bar. This can happen within 1 bar or 15 bars. I usually prefer to wait at least 2 bars after the bar high in order to create a proper pivot (this is discretionary). Buy 1 tick above the pivot high on a breakout. Sell automatically for $200 profit. Trail the stop behind any strong up bar (open at bottom, close at top, decent range) otherwise keep it $150-$200 away or behind a pivot low. Reverse logic for sells.

Now here’s the key. Look for ONLY one trade from 09:40 – 11:30 EST and only one trade from 20:00 – 22:15 EST. Do not trade any other hours or any other signals no matter what. This is what is known as having patience and discipline. Make your $200 in the morning then piss off until the last 2 hours (or don’t come back at all). Will you miss some moves in the middle of the day? Yes you will. The aim is not to be a clever arse. The aim is to make money by focusing on strong momentum moves. Let everyone else tear each other’s hair out in the middle hours - while you go to the gym. You wanna trade when the institutions come into the market and drive it. That means the first two hours and the last two hours. It helps retain focus.

Best tip of all:

Apply the first trade to the DAX because you can make a shite load more money. Most Yankee Doodles don’t even realise that the DAX and ESTX50 markets trade until 14:00 EST. Many yanks have probably never even heard of "Eurex" the worlds biggest (& 100% electronic) futures exchange. Yet these two symbols are fabulous markets to daytrade. Way better than ES and NQ. They’re electonic, liquid, and available through your existing US broker (if not, move your account). They are less choppy and less subject to false breakouts. DAX is for the big boys: it's a big grizzly bear (with c. 100,000 daily volume). ESTX50 (c. 500,000 daily volume) is the perfect ES substitute i.e. it moves about the same money. You don't have to live in Europe to trade these markets from 09:40 - 11:30 EST. Just make sure you collect the data overnight.

June 3rd attached: a day when neither target was hit in the ES. [Anyone can handpick a day to show how great their idea is]. I chose this day to show what happens in a less than perfect scenario. You still made money in the ES, but you would have made much more money taking the same signals in the DAX or ESTX50 because those targets WERE hit.

Final tip: use IB as your broker and run www.ninjatrader.com to manage your orders. You can get Eurex quotes from IB for free and pair it up with cheap charting software like SierraChart (so you can see what I'm talking about in the DAX & ESTX50 without sploshing dosh). And no I'm not the developer of NinjaTrader. It's just a kick-ass order entry program. Kind of like Bracket-Trader on steroids.

Now let's go back to the tick traders and academics for some more BS. After all, I've got so much free time between my trades to laugh at their nonsense

 

Simtrader

Two questions:

1. What times do you trade the ESTX50 and the DAX?

2. Do you also use the 5-min timeframe for these?

pretzel