Seems I may have figured out how to post a chart. I put this together for two reasons: (1) to show how retracements and reversals are formed and (2) to provide more backstory on the trades you've been posting the last couple of days. You'll note on the main chart that price has broken the demand line and held in a sideways direction for several days. Even though the demand line has been broken, this is a potential RET entry. And on the next day, price rallies and a RET entry would have been triggered. However, this trade fails immediately, suggesting that it is instead a potential reversal, and a reversal entry would have been triggered the following day. But this doesn't work either, so you end up in a hinge, with higher lows and lower highs, a hinge which remains intact today. So far. In other words, in real time all you have to go with is potentials, not certainties. You can expect and you can anticipate, but you can't know. Understanding this enables the trader to exit the trade without a lot of emotional self-indulgence. It's just business. The other point I wanted to make with regard to the value of backstory is that by going back to the origins of whatever trading environment you find yourself in you can form better and more realistic expectations. Here, for example, there was loads of potential for substantial moves at the beginning. But as the RET trade failed and the REV trade failed and the hinge formed, the daily ranges became narrower and narrower. Knowing that you're in a hinge, even if that hinge is evident only on the daily, and that the ranges are becoming narrower helps you to avoid unrealistic expectations regarding the upside or downside of your trades. And if the ranges eventually become too narrow to trade, just stop and wait for all of this to be broken, at which point more substantial moves will make themselves available as price begins trending again.
Foresight http://www.sierrachart.com/image.php?l=1370021015849.png Replay http://www.sierrachart.com/image.php?l=1370027785237.png 1st R: 2721 (pre-market zone) 2nd R:2725 (overnight zone) 3rd R: 2730 (mid point of TR from Jan 1st) 4th R: 2757 (R of TR from Jan 1st) 1st S: 2716 (overnight zone) 2nd S: 2705 ( S of TR from Jan) 3rd S: 2687 (from TR from Dec)
TR from 3021 to 2987 MP: 3002 Overnight S: 2985 Pre-market S: 2995 Replay http://www.sierrachart.com/image.php?l=1370045395355.png
The whole tendency of culture is to substitute the map for the direct experience of the territory. John Magee Bessemer, the discoverer of the method of producing cheap steel said: "I had an immense advantage over many others dealing with the problem inasmuch as I had no fixed ideas derived from long established practice to control and bias my mind, and did not suffer from the general belief that whatever is, is right" Foresight: Price at 8:29 a.m.: 2725 S1: 2712 (Yesterday's S) S2: 2705 (Bottom of current 1 month TR) S3: 2688 (Top of previous TR) R1: 2731 (Pre-market R & MP of current TR) R2: 2742 (Yesterday's R) R3: 2755 (Top of TR) Replay: http://www.sierrachart.com/image.php?l=1370116565488.png
Hans Zinsser writing of the great French bacteriologist, Charles Nicolle, said: "Nicole was one of those men who achieve their success by long preliminary thought before an experiment is formulated, rather than by the frantic and often ill-conceived experimental activities that keep lesser men in ant like agitation....Nicole did relatively few and simple experiments. But every time he did one, it was the result of long hours of intellectual incubation during which all possible variants had been considered and were allowed for in the final tests. Then he went straight to the point, without wasted motion. That was the method of Pasteur, as it has been of all the really great men of our calling, whose simple, conclusive experiments are a joy to those able to appreciate them" Prep: Price before open: 2731.75 Price around mid point of 1 month TR. It is also right at the apex of a hinge since the 24th. Could mean a powerful move either to the top or bottom of range. S1:2727 (Pre-marktet S) S2: 2721 (S from 25th) S3: 2713 (S from 24th) S4: 2705 (Bottom of TR) R1: 2740 (from 25th) R2: 2755 (top of TR) http://www.sierrachart.com/image.php?l=1370210118842.png
Price: 2734 before open S1: 2730 (pre-market) S2: 2727 (strong S from premarket and 28th) S3: 2712 (from 24th) S4:2705 (bottom of TR) R1: 2740 (Overnight) R2: 2746 (28th) R3: 2755 (Top of TR) 0831 Drops 6.75 pts to S zone. Look for retest and reversal. 0837 Sell stop hit 0841 Exit short and look for long on Reversal off S 0843 Going down to 2725 for test 0850 Reversal underway 0857 Exit 0900 Parabolic move back down to S zone 0903 Decisive break through S. Next level 2721 0904 11 pt move in 7 mins. Don't take RET here 0906 Missed the move so don't jump in now 0923 Failure to make HH. Look for Reversal on RET 0927 Sell stop 2724.75 0936 Exit and stop after HL is made Thoughts: The long Reversal was an aggressive entry. It was based on the performance of the S level in the past. The bottom was about 2 points away from entry. So less price risk. But I am unclear on logical levels for stops and how to balance being stopped into a trade with info and price risk. Everything - the outlook, the entry, the exit and the management has to flow from one central principle. Otherwise I will be neither here nor there. It has to be cohesive. I need to think about what balance of price and info risk fits with the principle of taking trades off S/R zones. Understanding will lead to confidence. http://www.sierrachart.com/image.php?l=1370287653229.png
S1: 2976 (31st low & PM's S) S2: 2969 (TR bottom) S3: 2965 (23rd and 24th low) R1: 2993 (PM R) R2: 3022 (Top of TR) 8:40 Sell stop at 2981 8:42 At S zone of 2976. 8:46 Goes through S. Could go to TR bottom of 2969. 8:48 Exit on break of DS 8:49 Price momentum down and now at TR bottom. Look for retest and Reversal. 8:51 Strong REV no opportunity to catch it. Price crosses MP of downswing. Look for long on RET 0900 Sell stop 2976.25 0902 Back at S and TR bottom. 0903 Exit at break of DS line 0915 Break above TR back in range. Opp to go short may be coming up. 0915 Sell stop at 79.75 0918 Exit 81 0929 Sell stop 77 0936 All the way down to level where strong S was shown last time. Should I exit now or wait for DS break? 0936 Exit 70.75 0941 At lows from 23rd and 24th. http://www.sierrachart.com/image.php?l=1370307597546.png
Constraint breeds creativity Unless poets are stumped by the form, unless they are forced to look beyond the obvious associations, theyâll never invent an original line. Theyâll be stuck with cliches and conventions with predictable adjectives and boring verbs. This is why poetic forms are so important. When a poet needs to find a rhyming word with exactly three syllables, or an adjective that fits the iambic scheme, he ends up uncovering all sorts of unexpected connections. The difficulty of the task accelerates the insight process. You break out of the box by stepping into shackles. ~ Jonah Lehrer, Imagine: How Creativity Works I am in a position to define my strategy and tactics. My current view is that Price action discretionary trading is dynamic, where decisions are made and revised within the ever changing present, reflecting subjective conditional probabilities. Subjective does not mean vague. There has to be clarity on the 'fertility' of the context. Different elements of varied proportions fusing together to create a high probability condition. So the 'rules' have to encompass rather than limit. They have to be robust by being both flexible and precise. Flexible enough to allow for the confluence of different currents, while precise enough to make decisions that can be reviewed. More than anything else, rules have to be sourced from observations tied to principles. They cannot be arbitrary. Everything has to flow from the core principle of recognizing trader emotions in price action and anticipating the result.
RET strategy version 1 Conditions to use in: Trending state: A state opposite that of chop. Chop defined as presence of HH & HL or a narrow trading range - generally less than 6 points. Entry Tactics: Time: Wait for at least the 3rd bar to form before placing stop. First is the move, second is the retracement, third/fourth,etc is the move in the direction of the stop. Range: Smaller range preferable over larger. This is the range of the pullback and not the initial move. Ideally, looking for a range compression, a stark contrast between prior range and the small range of the hesitation. Pace: Speed with which a pullback is brought back. Hanging/stalling price also indicates quality of entry. Extent of prior move: Do not enter the first immediate RET after a parabolic move. Do not jump into RET's if the best entries were missed earlier. Exit Tactics when trade is working: 1) Crossing of DS line 2) Break of a swing point or past S/R level. 3) 50% + RET of move. 4) When at an S/R zone that has shown an ability to bounce price off. Exit tactics when trade is not working: 1) Breaking of immediate DS line 2) Moving past immediate S/R zone formed by the pullback Context factors S/R zones from the past and present Structure of waves via steepness, duration and extent.