i use a similar approach as you do, one of my setup is a pullback following the trend direction. how do you decide that it pulled back enough? are you using the fib retracement tool? how do you define stops and targets afterwards? also, when you say it reverses on you too many times, does it typically completely reverse on you, or does it go further than your stop and then continues up? There is a big difference between going long at a top and having a smaller than required stop. i do have a lot of ideas, but please tell me more.
Susana, I view the market as one big Ponzi scheme and it all makes sense. I'm not saying "I get it" and have the answers and make a shitload of money everyday but am getting better. I also trust no one, CEO's, market pundits, buy and hold, forward looking CC's, etc....When I buy and hold, I feel like the one at the end of the Ponzi scheme and lose and "hold the bag". I WILL never get married to a stock ever. Cramer and those assholes pumping stocks can shove it up their ass with their iron-proof 4 horsemen BS. My best trades are very quick in and out ones lately. Take the trade for what it is. A +3k trade can turn on you in a matter of moments and turn into a -5k bad beat. Don't get greedy and stay alive. If you don't like the price action a given day, DON't trade. Don't be a degenerate gambler... The only way to make big $$$ and cut the risk is to get tipped off usually or just have a gigantic horseshoe up your ass. It's not an easy game and don't let anyone tell you different.
You will note that 98% of the stuff discussed on these boards is very vague. For example, there is only one person on this thread so far that has given you an algorithmic way to potentially make money. Even though the advice may be bad, at least you can test it. Can you spot him? I only have two sentences of advice. IMO: 1) Go work for a firm that makes money day in and day out. Your learning curve will be shortened by ten years. Do not under any circumstances take trading advice on this board, or people that offer to mentor you. 2) If option 1 is not possible, then learn to test ideas on your own using the scientific method, using software and historical data. Understand the limitations of this approach - I give you a clue, the data is the most important part, and good data is atrociously expensive unless you collect it yourself. This is expensive too as it has to be from a great source. Try to come up with ideas that are fundamentally sound. Learn what it means for something to be statistically significant, and don't trade anything that doesn't jump out at you. It will take you ten years to do it this way if you work hard, but there are no short cuts other than 1 above. Good luck. nitro
Trendlines put u in a zone, right now the spus are between 1321, and 1276 1/23 1nd 3/10 lows draw line ,support, 2/27 and 3/12 draw line resistance .those are daily line s/r ,3/5 and 3/12 gives the next res line at 1326, 2/11 and 2/22 lows give next res line at 1335, 2/11 an 2/29 lows give next res line near 1349, june and july lows of 06 give next support at 1249, that is the simple homework. now when its going up it will likely stop at a trendline and reverse temporarily or for real or blow thru, same on the way down. on the open it usually makes a range on the 5 min bars using new his .lows,chart those and ttrade reverses off those lines within the major ones u drew from the dailys, this is safe for the first hour,use tight stops above and below these lines becuase it will eventually break one,plan on taking a loss on that trade , be aware that their are roughly 3 trend days a month and dont get caught fighting the tape on those days, That is how i ttry to trade and its mildly profitable,i am learning to read rsi,stoch,macd and a lot of other indicators, if you watch the ym and its suppport is 40 points lower and the es is trading on its support and we start to go lower then the es will usually break its s/r and bounce when the ym hits its support. these are all technical reasons to trade and they work. Mentally you need confidence to trade, when u have a lull in that area its hard to make money, confidence comes from knowing you will b profitable.if you are not feeling that ,decrease the size and number of your trades and rebuild your confidence.
I typically look for a retracement of about 50% and place the stop beneath the last support. I then measure how much I am risking and see if a new high is worth the risk. If it is, I take it. Here are the problems I witness; Sometimes price can take my stop, making a lower low, and then continue the uptrend. This is I find too cheap and drives me nuts. Sometimes price can reach the high, find resistance, you actually don't know unless you give it a chance, then goes back to my entry. At this point it's most likely a break even deal for me. No real fancy work but that's how I trade because well, have not been able to find anything more efficient or logical. Pretty sad for three years or am I on the right track ? Susana
http://www.elitetrader.com/vb/showthread.php?s=&threadid=29005&perpage=40&pagenumber=1 http://www.dacharts.com/setups.php http://www.dacharts.com/articles/dude_on_basic_price_structure.pdf http://www.dacharts.com/articles/_22rulestrading.htm http://www.dacharts.com/articles/_38steps.htm I think you said you had already done a bunch of reading. But maybe you'll find some of the above links interesting. I think your on the right track to focus on price action and volume. http://www.elitetrader.com/ch/ You maybe interested in logging onto the Index Futures chat room during RTH and watching some of the guys making real time entries, exits and general market observations. There are a number of regulars in there that are consistent.
If you want help, I suggest you tell people precisely what you are doing. t That is to say, your entry and exit rules, and preferably chart examples of trades. Perhaps the best solution would be to set up a journal with your trades if you genuinely want some help. There are many traders who trade pullbacks successfully. So the question you need to think about is what are you doing that they aren't doing? In other words, what are you missing?
i am not expert or anything. BUT would like to comment that... your problems mean: you need to focus on better entry. This is the hardest thing for all traders. Predicting a trend is not as hard as ENTRY POINT.
SusanaDT, Spyder suggested that you use Price and volume. I agree. Since at this time you are focused on a particular point in time, take advantage of this by adding volume to your consideration. You (as well as silvermotion) do not recognize the difference between a retrace and a reversal. You may be recognizing a trend prior to the pullback that you see. Trends only last so long (including their pullbacks and resumptions). There are only so many pullbacks before the trend ends. Knowing when a pullback has ended a trend is important to always recognize. Again volume does this for you. So the foundation you are now building on is that you see trends and you see pullbacks. Volume can be used along with price that you now see. As a trend advances so does volume. When a trend retraces or pulls back it begins right after the max volume occurred on the advance. At the end of any retrace or pullback you will see that the lowest volume was attained or reached. This is where it is really handy to be able to differentiate between a resumption or a reversal of the former trend. Because you do not "get it" you are at great risk when you always do the same thing at this moment in time. What you find out (and so does silvermotion) that you get stopped out after making an action that was contrary to the way the market is telling you to take on the trade. Reading price action alone, it turns out, is not sufficient. You must use the other market independent variable (volume) to come up with the correct decision. I regard Nitro's post as humorous. But I will immitate it for more humor which can be found in the contrast. By the numbers. Before 1. though, rest assured that you are going to be successful. You are approaching trading rationally. 1. Agree with yourself to use volume in your future learning. Make it a point to justify this simply on the basis that there are two variables given you from the markets and, therefore, it is logical to use both of them and glean the information from both, in combination, can be obtained. If you do, then here is 2. 2. Within a trend, the price moves in the trend direction as volume increases, and price retraces within the trend as volume decreases. At the moment after a retrace within a trend, the volume will again begin to increase. by noticing the price direction at that moment you establish that the trend is continuing because the price stays on the left side of the trendline that you know already (this is a resumption) OR with increasing volume the price CONTINUES to follow the direction of the retrace that has already happened. Here in 2. you get to "GET IT" that as you look at the retrace you simultaneously look at the volume DECLINING. (Volume will stop declining on the trendline of price but you still observe this (Use PRV script)). At this point you use one personal option that you use by habit (so does silvermotion). I am asking you to make a decision to stop doing what you do and instead make one of two decisions: a. follow what you now do IF when you see volume increasing the price is to the left of the trendline OR b. IF you see volume increasing and price is breaking through the trendline to the right of the trendline, then take the OPPOSITE direction trade of the prior trend that you recognized. Accept 2. 3. You can know about what is going to happen in 2. before the point of minumum volume happens at that time in 2. whether either one of the two choices above is going to happen. To know this you have to accept a third concept about making money: trends overlap. This also says that the final retrace of a trend is identifyable. A trend begins and price moves with the trend. Then a retrace occurs. Then a resumption of the trend occurs. All trends exhibit these three things. From this point on the process can repeat or the final resumption could be happening. 3. tells you how to ID whether the resumption is the final one or if it is not. What you have to accept that you do not "get" at this point is that when the volume peaks on the resumption, then the price MUST make a complete TRAVERSE to the opposite side of the trend's channel. If price does not make it, then you have just completed the final traverse of the trend. Thie end of the resumption is, in fact the very beginning of the new trendline of the next trend. If you know this you, right then and NOW, take the trade by entering in the opposite direction of the prior trend. Summary. If is your choice to do these three things that you have not done ever before. You have to add a variable to your monitoring. You have to do analysis at the point of minumum volume to know what kind (long or short) to take as volume resumes. You can also choose to know when the final resumption (dominant traverse) of a trend ends in order to front run the herd that reverses on breakouts. It takes a person about 20 days to see all the variations on the theme of market days. At the end of 20 days you will have left behind most of the emotions you now feel because of failing to "get it". The ten year statement is a myth of the conventional wisdom. Mostly it boils down to the fact that you and most others cannot differentiate between a retrace and a reversal. Now you can and they still cannot. By using 3. you put yourself in a front running position. any time the market is range bound or moving laterally, you will find these three pieces of the puzzle to be the anti-whipsaw approach for making money. Trends have traverses as you tell us you understand. Spyder saw this about you. A traverse in the direction of a trend is dominant because volume is increasing during such a traverse. Non-dominant traverse are characterized by decreasing volume. these are retraces. Volume peaks end dominant traverse. volume troughs end non dominant traverses. Use PRV script to have a bouncing ball to see where the present volume comes to at the end of any bar. There is always a last and final dominant traverse of a trend that fails to get to the other side of the channel. It is called a Failure To Traverse (FTT). Good luck in "getting it".