Here's a something from my trading journal that may be helpful to you: Statistical analysis provides the information necessary to create a profitable price action trading plan. If you test a setup that looks promising by analyzing, say, 500 consecutive appearances of the setup, noting maximum favorable and adverse price swings off various entry methods, describing the price action context surrounding each trade, and identifying contextual filters to exclude trades under certain unfavorable conditions, you are quite likely to end up with a positive expectancy trading plan at some point. Thatâs the easy part. The difficult parts are learning to identify the valid setups in real time, and trusting the positive expectancy of your plan by trading all appearances of your valid setups according to your rules. A humorous analogy of this is offered by Dave Barry in his book Stay Fit And Healthy Until Youâre Dead: âAnd remember how, in Biology Lab, you were supposed to take an actual dead frog apart and locate the heart, the liver, etc. as depicted in the elaborate color diagrams in the textbook? Of course, when you cut it open, all you ever found was frog glop, because that is what frogs containâ¦â Well, your positive expectancy setups as seen in real time, at the moment when youâre supposed to actually initiate a trade, often look like âfrog glopâ compared to the perfect after-the-fact chart annotations provided in trading books and on-line resources everywhere. As a result, itâs tempting to second guess the trade signal, hesitate, miss the proper entry, watch the trade working nicely, and find oneself in a state of mind that is not conducive to disciplined trading. If you havenât yet screen-captured various forms of your setups at the hard right edge (before) and following a successful result (after), do it now and memorize those âbeforeâ patterns until they no longer look like âfrog glopâ. When you see a valid setup forming and you find yourself thinking âYeah, butâ¦â, have those screen captures handy to remind you that this is exactly how itâs supposed to look. Then look at the âafterâ picture*, take a deep breath and place the order. *Of course, the positive "after" result will not always transpire, but you don't want to look at pictures of the failures when your goal is to inspire yourself to put on the darn trades! Another thing that may be helpful is to talk out loud about what you see in real time, as if you're teaching a class of traders. That helps keep me focused.
So price finds resistance in the same place as it has for the past four days (our counterparts on the other side of the globe appear to be blessed with the best entries). Support has been variable +/- 5pts. By now, of course, one would have to be a complete dolt not to pick up on these daily patterns, and since the market is not a charity this may well be the day when it pulls the rug out from under those who expect a repeat of the week's giveaways. Therefore, ride the trends if they occur, but be on the lookout for crosscurrents and undertow. It's also worth noting that both the ES and NQ have been trading sideways at the levels of their May highs after breaking their respective June trendlines. What this means I have no idea, but if the markets were going to fall, I suspect they would have.
Overnite supply line broken at the midpoint of this trading range. 0846: higher high by a couple of ticks but lower low, so no long entry. 0850: at trend swing low. 0855: lower swing low. This provides a "real-time", clutter-free example of what I've posted many times regarding a break of a supply or demand line but an inability to exceed the immediately-preceding swing high or low. As long as those swing points hold, there's no compelling reason to exit the trade. Granted price may reverse itself and test those swing points again, but that's later. This is now. 0901: price worming its way back below the supply line. Technically one could fan the supply line at this point to include 46, but given how tentative price is being (not unusual for this time of morning), we'll be conservative. 0904: and price breaks the original supply line again. Will it find resistance at the last swing low? 0908: the change in momentum is obvious. It's the waiting for traders to make up their minds that leads to inattention.
I rely heavily on indicators for my trading. TL's are of secondary importance in my system. But having said that, it never ceases to amaze me how different methods can give the same entries. Nice thread btw. JP
0913: still within the range of the midpoint. Supply lines aside, we are now in a range from 45 to 40. These levels, then, become more important than a supply line if one is not already in the trade (which would have been 55 after the umpteenth test of resistance). This is, by the way, "chop". 0921: getting ready to break the higher supply line. If there's a higher low here, that would be a good long for the aggressive, ahead of a break of 45.
Hi DBP - Sorry to have to post this in your thread but as a new member here I'm not allowed to send PMs. Anyway - I haven't received your e-book. Let me know what I can do to help. YT
0951: working its way up to the swing high at 52. 1006: has moved past 52, retraced, and trying again. Above the 50% level of this downmove. 1011: demand broken but price holding above 50% level. May exit the trade and stand aside or hold.