I think the stuff Db's talking about is about as elemental, tried-and-true basic TA as you can get. The principles are so straightforward that they seem to lend themselves to making strict mechanical rules, but this is somewhat illusory and that's where it seems to get "complicated". Probably should be tracked as mechanically as possible, but actual executions will be better with more experience and the ability to subconciously "drive the car" and be aware of various things without having to think about them so much.
Well said. I agree. I just had a bit of an epiphany over the weekend after reading all of the first Simple thread. Previously, I had 4 charts up with a half dozen indicators each. I am down to just an ES and an NQ chart with just volume and no other indicators. Today was obviously not a good test, but just using parts of what DB has gone over in these threads I cleaned up. And it is such a relief to have that big mess of indicators off of my screen. This method is definitely simple in that respect. I feel like I have such a clean view of the market now.
Well, I guess I should say I'm not sure if today was a good test or not. It was a fairly atypical day compared to the last couple of months, but I have only been trading futures for a few weeks. Do you feel like your style performed differently today than most other days or is today pretty typical? Incidentally, I pretty much blew the big swing up this morning. I only got 4 ES points out of that big run up. I bailed too early. But I nailed that nice double top on the NQ this morning by shorting the ES and grabbed most of that move down. Thanks for setting me free from my indicators, Db.
It was more than fairly atypical. In the six months I've been fooling with this, no other range has come close. As for being a good test, that depends on what you mean by "good test". The opening low was 22, so the target was 50. Unfortunately, if you didn't play the gap, the entry point would have been two points above the opening high, or 46.5. If you've chosen to exit at the target, you'd have made 3.5. If you've chosen to use an end-of-bar stop, you'd have made a little less. But there was no reason to leave the theatre as the movie wasn't over. Even if you had exited according to your rules, the price never did break the trendline. Since you had money in the bank from your opening trade, you could have chosen to risk it by re-entering two points above the 1018 high. The trendline wasn't broken until 75. These trendlines are important not just because they're straight lines but because they're measures of trader conviction. When an uptrendline is broken, you have to ask yourself whether you are being tricked into giving up your shares (or taking a short position) or whether you are seeing buyers back off for more "fundamental" reasons (that's where the reaction lows and highs come in). But in this case, the line wasn't broken until 1115, so there was no particular reason to exit if one was in the trade. I go into this not to fog the mind, but to explain why the trendlines are important. Understanding that can help avoid the impulse to get out too soon. --Db
Well, I have to fess up. I didn't trade your ORB exactly as you have stated it. I tested a few weeks of January using your rules and I don't have enough confidence in the exact parameters to trade it yet. I am going to go over my notes again tonight and try some of February. I think I have a good understanding of most of the rules, but it is hard for me to tell exactly when the opening range is established. That is one of the softer points of the strategy that takes some discretion, and it will take me some practice to get that part down. The reversals are what I am more comfortable with at this point. I know they aren't really part of the "core rules" as you have stated them. Hopefully with some more study and practice I'll be able to nail the ORBs something like you are able to.
Doesn't have to be. If you're mechanically-minded, just set a time like Mike and Natalie did, say a 20m bar (0950) or a 30m bar (1000), then buy or short that bar. You don't have to exercise discretion unless you want to. --Db
I may end up doing this to start. I do *want* to exercise discretion, I'm just not sure I have enough experience to do so yet. I haven't been able to determine a good time period to start with. I'll try to spend a few hours doing that tonight. I think what you have presented is a great framework for trading, but I also think that discretion and experience can make this puppy really shine. I'm trying to get the mechanical part down, then build slowly with the discretion. Hopefully I won't hurt myself.