No Doji, It all sounds great in theory but it's not as easy are you making it out to be NoDoji. I see tons of DTs who just end up failing, same with the DBs, only for them to become Head and Shoulders or Inverse Head and Shoulders and fake right back. In fact, I was once taught that just before a new HH or LL is in place, the PA looks like a DT or a DB, and you know what, its true! Come on, its not so easy, in fact, best tops come off a HH not a LH, and best lows come off a LL, just look at our indices history.
That's right, a lot of setups fail and that's what stops are for. I don't care if a double top or double bottom fails to hold, because unless a survivable stop can be placed at a max loss of $200 or less, I won't even put on the trade. Earlier today I completed my bar-by-bar chart analysis, something I do every evening and on weekends. I move all of the chart off screen except the previous five 5-min bars and I reveal the bars one at a time, decide whether to put on a trade at that point, and note my reason for the trade, my entry price, stop and target when a setup reveals itself. All my trades are based on trend following or trying to catch the first reversal after 3 or more pushes in one direction. The downside of this exercise compared to trading live is the price is static after the fact. When price is jumping around, it's tempting to mess with your stops and targets. The upside is I can't make a decision until a 5-min bar has closed. This reminds me of the importance of not entering a trade early and getting trapped or head faked. By doing this exercise over and over, I build confidence in trading all valid setups and letting my winners run. It might take another year or more of this before I achieve consistency, but I know it will pay off big one day. The number of times a DT/DB has signaled a reversal and the beginning of a new trend outweighs the number of times it's failed for me on an intraday basis. Again it's very important to wait for a complete bar to close out in your time frame before you call it a DT/DB. Price can move up to test a high, for example, forming a green bar, then pull back from right around that high, retrace most or all of the bar's green, leaving a doji and what appears to be a DT formation, suck in a bunch of early shorts, then move right back up again and break out hard, so by the time the bar closes it's fully green again and has made a new high.
Yes that's the book. You may as well start reading it now, I don't know about anyone else's experience reading this book, but I basically got through 3 or 4 pages a night, read each paragraph 4 or 5 times and got out a microscope to decipher the itty bitty charts that were always a page after the text referencing them. I like Velez & Capra's "Tools and Tactics of the Master Day Trader", Josh Lukeman's "The Market Maker's Edge, Alan Farley's "The Master Swing Trader, and Mark Douglas' "Trading in the Zone" and "The Disciplined Trader".
No worries, Schiz, I'm quitting trading and just wiring my money to you to trade. Thanks so much for helping out
Thanks so much for the recommendations, NoDoji. Maybe I'll blow those charts up and save some page flipping...and my eyesight.
Dear Ms. NoDoji, Would it bother you to post a chart of CL on a day or two that you traded it? Also, what's your problem with dojis? I basically use the same system as you, and can't complain as it seems to be the only system that has been putting money in my account rather than taking it. People here are right in complaining that talking about trend following after the fact is easier than doing it real time. Trading ain't easy. Who first said that?
The charts are already blown up. Check Al Brooks website. I don't have a link handy but easy to find.
A Doji signifies indecision; my goal as a trader is to be decisive Thursdayâs trades attached; times are MST, so Iâll use MST as my reference here. Also I was using a 3-min chart on Thursday because the overnight down trend and the rally off overnight lows were both very strong and a 3-min chart is helpful in entering a strong trend. Preparation: Overnight resistance was 86.27 and price had made over 5 pushes down from the Wed late night high into a shallow bottoming process between 85.35 and 85.32 between 2:40 and 3:00am. (approximate double bottom formed after a strong down trend). So I'm looking for long entries. Trade 1: Long @ 85.75, higher low after only one push up, expecting at least an attempt to test overnight R. Stop loss (SL) was a compromise @ 85.61 because the pivot low was too wide for me. Profit target (PT) was 86.05 just above the round number at an upper channel line overshoot zone. Waited for market open to trade further, then watched for a reversal signal because price had made yet another push up just after the open, but it was a shallow push (shrinking stairs as Al Brooks would say). Trade 2: Short @ 86.05 when sellers came in leaving a lower high after the HOD was put in, SL at the previous bar's high (86.14), PT @ 85.85, a few ticks above previous support. SL filled at 86.13 (reverse slippage?). Trade 3: The 3-min chart had head-faked me on trade 2, so I was back in on a double-confirmed setup, short @ 86.04 off another LH, SL @ 86.12 (high of entry bar), and PT @ 85.85, but the price action indicated such weakness that I moved my target down to 85.76 (the support zone prior to 85.82). Trade 4: Short @ 85.88 off two failures to break through the falling 20 EMA, leaving another LH, SL @ 85.96 (pivot high), PT @ 85.55, just above next support level to be tested. (There was an 85.66 level to be tested first, but I targeted the one before that because the selling volume was so strong. I was actually expecting an eventual test of the pre-market low. It turned out this level was indeed revisited on the final push down, but Iâd taken a break, missing that last move.) Trade 5: On the bounce, price looked like it might possibly break back up through the still-falling 20 EMA, so I watched for a bit and the moment it failed on a couple tries, I was short again @ 85.81 (another LH), SL @ 85.85 (pivot high), PT @ 85.43 (just above next support level to be tested). In a down trend you target lower lows on each new push down, so I was targeting a few ticks above the next support level to be tested. I placed a blue line on my chart at each previous support level I was targeting on the way down. There was a lot more to extracted from CL that day, but I took a break and then had do last minute tax stuff, so I called it a day. This was an exceptional day for me, possibly my best trading day ever in terms of following rules, taking all setups and patiently letting trades play out. The fact that CL totally complied with S/R levels Thursday was a big help. These days are rare for me and I readily agree that trading, especially mastering the mental game, is very difficult.
Very cool. Thanks, Swan Noir. Here are the links if anybody is interested. Al Brooks' site: http://www.brookspriceaction.com/portal.php Big charts: http://www.wiley.com/WileyCDA/WileyTitle/productCd-0470443952,descCd-DOWNLOAD.html
Yes, I've not looked at Brook's book but I should. I should revisit the use of premarket bars but I concluded that they aren't "real" at some point a long time ago and I've ignored them ever since. I don't trade the premarket because I don't want to get blown up in a low-liquidity situation if surprise news comes out either.