More so now than ever before, the market tends to move via phase transitions. The Non normal distribution of opportunities makes it essential to be positioned big for cascades. At the same time, there is enough regular movement in the market to keep the trader's profit generation factory running at capacity. The idea is to participate in the market and funnel smaller profits to the 'fat pitch' fund. Then, to have the courage to be a pig by pressing, pressing, pressing. Long term goal is to dance along the entire spectrum of the market with complete freedom. An excellent related article: http://www.mercenarytrader.com/2014/01/the-trouble-with-rocks/
On the other hand, AMT forecast the top last night and we are now 40pts lower, and all one has to do is draw a straight line. Or, if drawing a channel, two.
Sure - the likelihood of MR increased the attractiveness of placing a bigger position today - or of letting one's current position ride out. While lines and channels are a great reality check, reflecting on the motivations of traders has improved my awareness. This helps me manage trade expectations. If one gets good at managing expectations, then the game can be played all the time - no need to wait for the big swing.
http://www.sierrachart.com/image.php?l=1398337795254.png Yesterday's after market surge is showing signs of persisting. Not much profit taking ON. Price has broken 3600 and is not showing any signs of falling back inside. LOLR is up. Trend has more weight than MR today. The surprising surge from yesterday along with the ON breakout has been disruptive to expectations. Good potential for action today. Price has Reversed the fall from the highs of March and is now just above the 50% level. While this suggests balance in the longer term, the manner of the surge back up suggests short term strength as leftover shorts capitulate. Immediate action indicating weakness in the ON breakout. Watch for Range between 3588 and 3608.
FT Day 159 April 24th http://www.sierrachart.com/image.php?l=1398353611203.png Review: 1. Repeating the same mistake on Opening Reversals off PM levels. Be aggressive only when trade is in direction of larger LOLR or when there is balance. Missed an easy short re-entry because of the unnecessary long. 2. Premature Reversal of Dominant Trend. 46 had a high likelihood of being hit. Early participation takes me out of the game when it really counts.
I won't pursue this, but given that you've spent a year getting to where you are, I strongly suggest that you reconsider abandoning the SLA/AMT in favor of something that you haven't even begun testing. Good luck anyway.
Principles have not been abandoned. One can't really abandon momentum, retest and Mean reversion. Just experimenting with recipes from the same ingredients. Got to push the envelope.
Where I am at: I was going through all the major trend days from Jan on wards and it is striking how Price's position at an extreme often precedes these big moves - often right through the mean and to the other side. Given the workings of AMT, this is to be expected. This is the perfect combination of MR and trend. Even if the price environment changes to lateral ranges, the same principle will apply. Lately, I have been introducing a bias to my prep work and it's been expensive, mainly through missed opportunities. But I have no basis for a bias - no research, no stats. If I want nuance, there is enough of it within the PA itself for me to get creative with. Through repeated practice I now have confidence in my ability to read immediate PA and manage risk. Exits need some work, but am getting better. But all this maneuvering will only amount to small profits at best. That is not enough margin of safety, especially if the goal is to trade size. Trading size at extremes is the missing piece. So the goal going forward is to regain a neutral outlook during prep and to be open to all possibilities. I can always express my view on the intensity of the LOLR via trade size - no non PA directional bias needed.