show me one thing the market does over and over that puts the odds in my favor. This is what one person (the OP) wants so he can begin. If you want to just look at price (the dependent variable) to shift the odds to your favor, then what I post below is a good beginning. Also, more than BE odds were requested. I'll post two examples so that readers can see there are many ways to make money. You look. To increase odds as a goal Take out the half of the bars that are unimportant. Only do making money on the half that are important. To make it easy, let the computer do the "looking" and let the computer color in the "box" of the bar you throw away. 1. (((H.1 >= H) Or( L.1 <=L)) and ((V.1 > V))). Four shapes are in this expression and I threw in volume just to not trip anyone up even a little. I color these in lite yellow. Notice these pairs can overlap as well. When they do you have higher odds since another bar is out of your picutre. the Present is H, L and V. The prior bar is H.1, L.1 and V.1. 2. If (V.1 > V) is false, then you must not throw away the second bar. Regardless of anything else, look for three bars where you can use their occurance to turn and make money doing late price turns or stop losing money if you gotinto a trade wrongly. Again this is just to exit something you got into by anyway you ge into something and you are focussing on making your odds better. 3. Short to long. ((H.3 = H.2) < H)) And (( L.3 > (L.2 =L)) Here are two consecutive stitches where the first is Red and the second is Black. 4. Long to short. (( L.3 = L.2) > L)) And ((H.3 < (H.2=H)) Here are two consecutive stitches where the first is Black and the second is Red. On 3 and 4 you will be a little uncertain since you are skipping using the independent variable as a guide. I make the boxes of these two a different lite color than yellow. Between ends of trends, you keep the odds more in your favor by watching each new bar make trend progress.. Use the definition of trending bars. When you do not use any of these examples, you do not have good odds, as Nodoji instructed you. At that time, and by following Nodoji's instructions, you are seeking edges in price. When you get one thing the market does over and over, then you begin to think , as you say, of the odds.
Uh-oh. Here we go again. one of the fun things about ET is there's always entertainment--- fights, conspiracy theories........... I have read through some old threads it seems people like to think Nodoji is someone else in disguise here are the people I have seen her accused of being: Anekdoten Redneck Jack Hershey Al Brooks Oliver Velez being a dude in real life being a closet vendor and now... Cornix did i mis any??
1. 5min time frame, rising 20EMA, place a buy stop 1 tick above the last new high, with a profit target equal to the stop loss. The size of the stop loss will be dependent on the instrument traded; do your own statistical research to determine the size stop that keeps you in most of the trades that successfully hit a profit target equal to the stop loss (it's a bit like a middle school math problem, meaning anyone of average intelligence should be able to figure this out for a given instrument). 2. 5min time frame, rising 20EMA, price breaks the last new high by more than just a few ticks, cross-check a 1min chart with a 1min 20EMA on it and when price pulls back to within a couple ticks of that 1min 20EMA without breaking a previous 1min swing low, place a limit order to buy a tick above the value of that 1min 20EMA, with a profit target equal to the stop loss. The size of the stop loss is determined as described above for your chosen instrument. It should not have to be very far below that 1min 20EMA. If price closes below the 1min 20EMA after an entry is triggered, and the stop is not hit, place a limit order to exit the trade break even (if possible). If price breaks a previous 1min swing low after an entry is triggered, placing a limit to exit break even is optional. As long as the 1min 20EMA isn't breached, the trade is still valid. For down trends (falling 20EMA), simply reverse the process. So these are two things the market does over and over intraday that have a positive expectancy (price hits profit target before hitting stop loss more often than not). You'll likely find that for most instruments, there's room to increase the profit target beyond the even R:R ratio. Let's look at Friday morning (the first two to three hours of the day is generally the most technically reliable time window to trade) and see how to apply these two tactics to the ES, using an 8-tick stop and target. Trade 1) In pre-market we have a mildly rising (nearly flat) 5min 20EMA which is pulled slightly downward by a rapid range breakdown at the market open. Since this is a strong new low in a well-defined overnight down trend, at the close of that bar we can immediately employ⦠Tactic 1: We place a sell stop @ 1499.50 (1 tick below that new low). Tactic 2: During the 9:43 bar price pulls back to within a couple ticks of the 1min 20EMA and we place a limit order to sell 1503.00. We are definitely filled by the 9:47 bar, but price closes above the 1min 20EMA during that bar (an also breaks the high of the previous 5min bar, meaning a deeper counter-trend pullback is likely), so we place a limit to exit break even and the trade is scratched prior to the stop loss being hit. Trade 2) Price breaks through the 5min 20EMA and the overnight down trend line during the 9:55 bar, which pulls the 20EMA slightly upward. We have a possible trend reversal, and watch the price action to see if previous resistance (1507.25) and/or the 5min 20EMA (around 1505.25 at that point) can hold as support. If the trending move is really strong, price may not even pull back to those levels, but in the early stages of a possible new trend, price will most often stage a pullback to one of these levels. Tactic 1: We place a buy stop @ 1510.25 (1 tick above the last high). Tactic 2: Does not apply because we havenât yet broken a previous high in a rising 5min 20EMA environment. The break of 1507.25 resistance simply widens the premarket range that broke downside. We could end up with nothing more than a wider range. We need that initial high in the rising 20EMA environment to break before applying this trend continuation tactic. The 5min 20EMA support levels holds and price moves to test the previous high. Weâre filled @ 1510.25 during the 10:30 bar and our 8-tick profit target is achieved during the 10:36 bar. Trade 3) We now have a confirmed uptrend (a higher low followed by a higher high that isnât a failed breakout of just a few ticks). Tactic 2: During the 10:47 bar price pulls to within a couple ticks of the 1min 20EMA and we place a limit order to buy 1511.75. In the meantime, while weâre waiting for a fill, a 5min inside bar prints at 10:45 bar close. Itâs an inside bar (bullish) and itâs a 5min pullback bar (the close is lower than the open), so we can consider the 1513.75 high of the previous bar to be our new high print and add Tactic 1 in case the trend is too strong for price to fill our limit order. Tactic 1: We place a buy stop @ 1514.00, 1 tick above the previous high. Weâre filled @ 1514.00 during the 10:53 bar and our 8-tick profit target is achieved during the 11:00 bar. Trade 4) Price pulls to within a couple ticks of the 1min 20EMA during the 11:08 bar. Tactic 2: We place a limit order to buy 1515.50. Weâre filled during the 11:09 bar, but price breaks the previous 1min swing low of 1515.50 by a tick. We have the option of a) scratching the trade break even if price fails to rally off the 1min 20EMA, b) stopping out for a 2-tick loss if price breaks the 1min 20EMA before testing the high, or c) trying to get out break-even if price closes below the 1min 20EMA without hitting our stop. Since the break of 1515.25 is also the break of a 5min bar following a measured move overshoot in a strong trend, my discretionary choice here would be to stop and reverse counter-trend short @ 1515.00 to take advantage of a deeper pullback to the 5min 20EMA. However, note that even taking a full 8-tick loss still leaves you with an 8-tick profitable morning using two common with-trend scalping tactics. This is one of dozens of positive expectancy day trading methods based on the market doing something over and over again more often than not, though the distribution of winning and losing trades may be quite random at times.
It's hard because the business is full of snake oil sales people, yet a legitimate mentor is exactly what's needed to get a head start, so the whole thing is a catch-22 scenario.
you know this is actually a good lesson in starting simple as building blocks to "how the heck do i trade in a systematic fashion"
its true, the nature of this business is secrecy and that is the biggest problem and what snake oilers feed off because nobody is going to tell you anything. if someone is telling you how to trade, guess what, you are taking there shares potentially. not good. so yeah, its a catch 22 like you said.
I was once asked if i was NoDoji by that scourge of small traders .... emg!!! But no, I'm not as generous a person as she to give for free my own research and tactics. Many thanks, ND
No Doji... let me compliment you on a framework which looks like it could work. do you have filter out choppy times or choppy days? Your framework looks like a solid momentum framework... much more complete than most... but does it not get torn to shreds after a good trending period.
I have many contextual filters for my trading, I know how to avoid chop and I know how to trade chop as well, though I rarely do. I also trade several additional setups, both with-trend and counter-trend. I don't trade these tactics exactly the way I described because I mainly trade crude oil and although these tactics would be fine, I prefer slightly different methods so I catch every possible with-trend continuation setup, and the method I described may miss quite a few, especially in a really strong trend. The tactics I describe automatically filter out chop because they require a rising or falling 5min 20EMA in a trend where we have a low and a higher low as well as a higher high (vice versa for shorts). When a strong trending move ends, these tactics let you know because you'll eventually end up with either a scratch trade or a losing trade. By then you've usually had two or more winning trades, though. After a good trending period, you then have counter-trend opportunities, more with-trend opportunities following a deeper pullback, and sometimes full trend reversals where you can then apply the tactics the other direction as shown for Friday's price action. When the 5min 20EMA is flat, you're in no man's land. The flat 20EMA alone becomes your signal to wait for clarity. Open a spreadsheet, apply various stop/target levels, find something that produces net profit over time and then learn to execute aggressively without worrying about what it "feels" like in real time. It works amazingly well.