In a really strong trend, price doesn't pull back much. This is where inexperienced traders just watch price run and run without them and they have no idea how to get in. They want a deeper pullback, but if they get a deeper pullback they think it's a trend reversal and won't get in there either. More common, though, is beginners trying to pick tops or bottoms. Price pushes to a new high that feels "too high" and as price pulls back a little bit (usually a bar or two in the opposite direction on the small time frame, like a 1min chart), they think they're catching the reversal. In fact, they're entering where the trend followers are about to add to their winners. That's why even buying a new high or selling a new low in a strong trend works so well. Worst case, you can get a scalp off the counter-trend traders' stops being run, or can exit b/e at some point if the trend weakens. In a strong trend, the market nearly always makes a second attempt at the last new high or low before reversing. Strong trends do not die easily, unless a very key level is hit (such as a 60-min or daily S/R level), or a true reversal setup confirms. Here are some of the ways I've entered in strong trends (uptrend for example): > Buying the break of that last new HOD that printed (buy stop) > Buying the close of the first 1min pullback bar following a strong push up (marketable limit order) > Buying a couple ticks above the previous high (limit order) (this would be a couple ticks above the arrows on your chart after price breaks those levels) Before I had a lot of price action trading experience I would watch a strong trend run and run without me. I once watched an uptrend in oil for two hours, waiting for a reversal setup to sell short, because the inventory report was "bearish".
NoDoji, Why keep looking for new setups? Why not focus on the few you have that work well for you, and work on approaches to increasing size?
For one thing, so far I've been unable to overcome mindset issues related to increasing size beyond a certain level. FWIW, I do trade one of my setups with larger size because there's great liquidity and it's my best-performing setup.
Ha Ha, that is so true. I got my "grubstake" back in the 80's shorting Crude when margin was $1,000/barrel down to exactly $9.95. It was a pure lucky trade- I didn't have a clue back then. Thought indictors were the holy grail. I even read Larry Williams book. LOL I can only figure Crude long term- that is fairly easy for me (and a lot less work too).
nodoji, what do you think about wedge 2nd entry reversals on the 1 minute?? <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=3750908>
Very detailed and experienced setup, and I am sure you execute setups like these daily with great success. However, though this bar-to-bar analysis could bring you decent profits, however, it takes a lot of mental and psychological effort/stress to execute every trade with such a system. On the other hand, there is huge computing power available, and it could really work magic and make trading much easier, more profitable and enjoyable. It would be a great waste not to take advantage of such powerful resource that was not there 20 year ago. In any event, I would agree that you have a great feat in establishing and executing your bar-to-bar system with consistent success.
Ballroom waltzing: B2BRB R2RBR ... <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=3750939>
Looks like what I call a 1-2-3 setup on the 1min chart and I use this setup frequently to enter trades and to take profits at certain key levels.