nq has kept me from going long so far. I'm only half watching today between chores. I'm usually very cautious about trading triple witching fridays or quad as it is now. may take a small position short here if we loose 94 ES but am more concerned about surprising my wife by cleaning up the house today..
Yes. I set my alarms a couple of hours ago and have been doing other things since. Problem with the setups is that they're taking so long, they get stale. Unless something spectacular happens the last hour, I'll probably give the whole thing a pass. --Db
I took the short at 94.25, just got my 1st 3rd at 90.75, target lod for the 2nd and hold the last to stop, would be nice if we took out lod but I've moved my stop down to 93.75 just about that last bit of congestion so whatever the day brings I'll just let happen. my entry rational today was pretty much identical setup to yesterdays short.
--Db Hi Db, It looks to me like the es and nasdaq broke out within 2 min. of each other. I am not sure why you would not have taken this trade due to the action of the es. Thanks. Jerry
I very nearly did. In fact, I had the order entered. But by the time the ES confirmed, the NQ had already backed away, so I cancelled the order. I've found that when price marches up to a breakout point without a pullback, it nearly always (I'm tempted to say always, period) pulls back at or just after the breakout. Think of it as a bus which is going uphill. As it bounces along, it picks up more and more passengers to the point where it becomes overweighted. At some point, it has to disgorge some of those passengers. I'd rather wait until at least some of those passengers get off so that I can see if there's a rush of new passengers to take their places. If there isn't, I'd rather wait for another bus. --Db
Hi DB, I have been paper trading your method and notice you generally avoid the days when the system takes its worst hits. Do you have any ideas that a relative newby may use to recognize these days as my "Feel" for the market hasn't quite developed yet. I have thought of putting volume on the chart or an ma just to see if it has any slope or is flat as ways of staying out on days with low volume or no trends. Any ideas would be much appreciated. Thanks, Jerry
Low volume isn't necessarily a deal-breaker. What matters more is the desire of buyers and sellers to move the price, and that doesn't always require big volume. Rather it requires determination on somebody's part. Unfortunately, reviewing old charts doesn't help much here, though it can help some. You have to watch the bars form in real time, "forward-testing", in order to get a sense of the struggle, if any. And if price just sits there and you wonder if you've lost your datafeed, there probably isn't much of a struggle. What you want to see is price driving its way through resistance wham! Look at what price did on Monday, for example, at 1006 (NQ). There wasn't any crapping around there. Price shot right through and put you at or near breakeven in just a couple of minutes. Ditto with 0939 on Thursday, or the reversal at 1026. The problem here, though, is that you end up trying to second-guess the "system". Maybe price seems a little tentative at what you've pegged as the breakout point. And then bam! you're off to the races only you didn't take the trade, and there you sit. You're better off, then, taking every single legitimate trade in order to find out just what the system does when you've made it as mechanical as you can. If it turns in a performance which is acceptable to you, then you can trust it, and you don't mind so much taking even two consecutive losses because you know that disaster is not looming and your self-confidence is in less danger of being damaged. Therefore, rather than try to use whatever it is you think you're learning about reading the market to enhance your paper-trading of this system, I suggest you focus on the system, or on whatever variation of it you're using without regard to what you think about what's going on underneath. But take notes throughout the day of what seems interesting to you, such as the lengths of the bars or the lengths of the tails or the degree of overlap or the amount of time it takes to get from one price to another, or how price behaves at what you thought would be support or resistance. Don't allow any of that to influence how you trade, but, at the end of the day, look at those notes when you do your chart review and see if you detect any repeating patterns that may be worth using as modifications of your system. For example, do you ever make money in the afternoon if you haven't made any in the morning? If so, is it enough to make it worth waiting around for (which only you can answer)? I do tend to back off when trading seems listless, but this is not part of the system because I can't define what I mean by that to anybody else. I know that if I'm going to get to breakeven within a reasonable amount of time (e.g., less than 50 minutes), there has to be a minimum amount of "intent", i.e., somebody has to be pushing price one way or another. If it's just drifting, rudderless, then yes it can trip an entry and yes it can reach breakeven and yes it can drift into the profit column. But if no one has his foot on the accelerator, price can just as easily reverse and stop me out, or it can just drift interminably, and there I sit. But the only way for anyone to learn this is to sit there and watch the charts in real time, day after day, and see for themselves how price behaves, how the bars form, how long it takes to get from one place to another, and make copious notes of what they're seeing so that they have something to use at the end of the day and so that they have a record they can refer to days or weeks later when a light goes on and they think that they have stumbled upon a principle. What may help is for me to separate the rules of the system from the discretionary elements so that you have a clearer course and a better focus (with my hat off to SnoSur4). Use a 1m chart for the opening. For the NQ, enter a trade using a stop (or stop-limit) 2 points outside the opening range. When filled, place your initial loss-limit stop. As soon as a trend develops, switch to a 3m chart to draw a trendline. The 1m won't be used further. When this trendline is broken, place your cover stop below the last reaction low if long or above the last reaction high if short (3m chart). If and when the limit of the 10d average range is reached, tighten and trail the stop using the ends of the bars (3m chart), or, if you prefer, leave the stop at the last reaction high/low. If stopped out, do not re-enter in the original direction unless and until the new high or low is exceeded by 2 points. Take every trade. Do not use any indicators or moving averages of any kind. And that's just about it. Everything else is discretionary. For example, you may choose to ignore gaps and reversals, and that's perfectly okay; there's nothing wrong with making a nice profit and quitting for the day. You may choose to use an intial 5pt loss-limit stop, as I do, or you may choose 4pts. Or 8pts. Or 10pts (I suggest you use at least 4). You may decide to use a 5m chart. Or an 8m. Or 12. Or 20. Or 34. You may choose to wait until all the economic reports are out, or you may choose to ignore them. Up to you. And if this seems as though you have a lot of choices to make, you'll find that every system that touts itself as being "simple" requires these kinds of decisions. For example, I'm sure you've run across the MA crossover strategy. Sounds like the simplest strategy on the planet. But you still have to decide on the lengths of the MAs, on whether they're simple or exponential, on how to define a "cross", on whether you'll enter at the open or close or somewhere inbetween of the bar, on what length of bar you'll use, on whether you'll use a market order, stop, or stop-limit, where you'll place your initial loss-limit stop, how you'll stay out of "chop", how you'll define "chop", and on and on and on. And as you gain experience, you'll find that you're able to fine-tune your "simple" strategy into something that earns a more-than-acceptable amount of money, something which has become complex without necessarily being complicated (unless you try to explain it to somebody else). I know this is a far longer answer than you expected, but the question of "reading" the market is not easily answered. Perhaps by backing up a bit and re-explaining a few things, I've made it all a bit clearer. --Db