Thanks for your kind words, but they are making me LMAO in light of today's trade. -$153 Today I jumped outside the box. I only traded near the close today, and decided to go LONG on GS @ 177.79 when it pivoted off oversold near previous support, because it was in a strong uptrend all day and the market was sniffing back toward highs. Now, as providence would have it, I had also been watching UAUA and somehow I entered 800 in the Qty field on GS instead of UAUA (normally I trade 200 shares of GS) and when I put on the trade I was long 800 shares (didn't even realize it at first) with a .15 cent stop, which was hit pretty quickly with slippage for the nice loss you see attached. I'm going back into my box now where my biggest problem was letting my profits run. And thank God for hard stops!
Best to trade early. Then if the day starts out bad you still have plenty of time to fight back and score. Same deal applies if the trader hits a big run early..................Then the setups in the afternoon best be good ones because you are risking not only money but the time you invested in the mornings trades. In the afternoon, if you give back profits you will probably play a tighter game because again........time is working against you. Some times i will need to brainwash myself saying.............there is more there.....go for it, the worst you can do is give back money. Then you are in a better state of mind. Time for football.......... Not a fan of Alabama, but will take Alabama over the "Shorthorns".
I just wanted to say I have often found Bighogs post to be right on the money. For free he has tried to tutor many here at ET. I guess I agree so much because I also am a trend follower. I trade mainly the NQ I like the way it trends. I never try to call bottoms or tops and never had much success at countertrend trading so I gave that up. I like to get in on the trend after the first retrace then I use the low or high bar that becomes the pivot bar and I use the high or low of that bar to enter in on.The secret is to keep losses low until you get the big winner. Pivot points are a huge part of my trading. I look at 5 min chart for some really good pivots also the 10000 volume charts. Then I drill down to the 1000 volume for entry. Anyway it would pay to listen to Bighogs suggestions.:
I just need to clarify one thing the bar after the pivot is the entry bar. If trend is up you have a pivot on a retrace let the bar after the pivot finish then look for an entry always with the trend.
I agree BigHog has tried to mentor my stubborn ass for about a year now and I still don't take advantage of joining trends or adding to positions at pivot points, etc. Pacman, I have a few questions: Do you day trade or swing trade? If you day trade, do you use a multiday chart to determine trend continuation and entry points? Or do you wait a certain amount of time and then go long or short when the first pivot leaves a higher low or lower high? Or...do you drink from some other secret Grail of Trend Following Success? I read in Al Brooks' book (I think it was in his book), that entering with trend on a pullback always feels a bit scary, because price has moved the opposite way of where you want that continuation to go. You mention waiting for the pivot bar to complete. How do you find an entry at that point; do you use a very small time frame chart for entry, or just jump in once the bar completes without failure? I usually enter when the price hits the 20-period moving average and support or resistance holds there. I don't wait for the pivot bar to complete.
Went to trade AAPL early on and the DOM in IB locked. The bid/ask was locked and although the numbers in the Bid Size and Ask Size kept changing, the price ladder froze. UAUA was also frozen. I tried other stocks, and they were fine, and my other 2 DOMs were also fine. By the time AAPL unfroze, a nice .70 cent move had occurred without me and shortly after that I out of the office, so no trades today.
Retraces are welcome news if we missed the initial breakout or looking for a spot to add-on to existing trade. First, identify if we just had a leg up or down. Just a small move does not make a leg of a possible new trend. In other words we must have a trend to have a retrace. A swing within a range, even if the range is wide is NOT a trend. A mkt trading in a range is just a number of players trading each others money back and forth. Such a mkt will not draw new players (money) in to expand the range. When the range shows a breakout, other players eyes will get wide-eyed and prepare for action because something or someone is changing the sentiment of the mkt. Lets say we see a new high for the day after we were in a small opening 5 handle range for the first hour. The new high is going to immediately get all of the SHORTS attention, the shorts were conditioned to not pay attention to the previous high because they saw that price maybe 2 or 3 times before in the range and they held firm. Now the shorts are getting squeezed and some will bail real fast and help the new LONGS as well as the old LONGS. A new high should bring in new LONGS to sustain the move. Ok, lets assume the move travels the length of the previous ranges 5 handles. I consider that a new leg. The fresh leg now consists of more new longs and happy old longs than before so the longs are in control of the mkt. The shorts are either near dead or new and nervous. The shorts that hung in for this new upmove will probably stay in until a NEWER high occurs because once most traders have seen a price move against them and backs off they are willing to hang onto the hope roap for price to come back to them. The newer shorts are betting price just went to high but because of the just witnessed upmove have tight STOPS just above the last high. Visualize a retrace coming. Ok, the longs just used up most of their buying power and price settles down for a consolidation. The shorts are not defeated but licking their wounds. The longs are getting braver and want more. Price drops back some and draws in new shorts believing price has topped out. Assume also some of the longs are adding-on to their old positions with the fresh profits now showing in their accounts... new buying power. The longs know another leg up will smack the weak new shorts and will kill off the old near dead shorts as they bite the bullet and bail. New legs are usually fast starters because you have a combination of new longs jumping in AND shorts buying their way OUT. Retraces draw in food for a continuation of the trend. Once the trend quits getting fed the move will show a reversal because then the shorts have run out of powder to fight the longs and the longs detect the change in sentiment and add to the reversal by cashing in by selling. Rinse and repeat. Over and over. Thats a retrace in a nutshell. Make a run.......regroup, bring in new blood to feed on, repeat the trend. After a leg, always assume that side of the mkt has the other side by the shorthairs and are in control.
Fantastic post, Hog. This makes it easy to visualize the price action we see every day. I'm always afraid to join a strong trend on later retraces because it seems price has gone too high or too low to go further, and so at that point I'm looking for counter-trend entries. I miss so many really great final pushes as a result. Sometimes those final legs are the best of all. Looking at ES end of yesterday, it had a huge final push into the close. I use the term "huge" loosely, relative to the ES action lately
I never get in on the breakout I wait for the retrace on the N.Q. I look at the 3 to 5 min chart or the 5000 to 10000 volume charts as my charts to determine trend. When pivot has formed I enter in one tick past the high of the bar after the pivot assuming you are in an uptrend. I usually use the 1000 volume chart as my chart of entry allthough I have used 233 tick charts to enter in on. For me the key is cutting my losses quick and not trying to tell the market what to do. If you've never traded the N.Q. you might want to try it.
Thanks, that makes sense. I've sim traded NQ very briefly, and I did like it. Really no reason why I couldn't trade NQ instead of ES other than I have all my ES charts in various time frames set up to my liking and arranged nicely on my screens.