I will start this thread because I want to keep an order in my process of formation as a trader; previously I have done a thread where is most of the material regarding to the observation phase done by me Price Action - NQ: http://www.elitetrader.com/et/index.php?threads/price-action-nq.289300/ In this order of ideas, for the moment here will be posted some aspects regarding to the Entries/Exits and back/forward - testing results. BTW: All the material posted here is based on the W and Db material
DEVELOPING A PLAN. Taking as reference the “Developing a Plan” by Db (http://www.traderslaboratory.com/forums/wyckoff-forum/15535-developing-plan-trading-journal.html) I´ll follow it as a guide in order to make my trading plan. The first step is to decide what kind of trader you want to be. What do you want to accomplish with your trading? - I want to make a living Do you have any idea what sort of trading is most comfortable? - For me the short term trading, because it fits more to my personality. For the moment I won’t have time to trade on an intraday basis, however, after a few months I will dedicate all my time to this endeavor. Notwithstanding for now I´ll make replay market during the nights The second step is to decide what you're going to trade and when you're going to trade it. Have you found an instrument? - NQ because of its characteristics. Have you yet found a time (5m, hourly, weekly) or tick (1t, 200t) or volume (1K, 100K) interval that gives you enough trading opportunities but also gives you enough time to think about what you're doing? If you want to limit your trading to the "morning", are you physically and psychologically prepared to trade all day? If not, can you shrug off whatever opportunities you may miss by limiting the amount of time you spend trading? - 1m (taking into account the context given by the daily, hourly and 5m). - Trade the first 90m because I´ve seen in my observation phase that usually during this time the trading is more active and usually a great part of the day breadth is given in this period of time. - Also I want to trade the first 90 minutes because of the focus. In my observation phase I reviewed the all day; however, I lost the concentration when I was approaching to the close and is worth noting that this was an exercise done in hindsight during a few hours on the day (putting the comments and understanding the PA), therefore, after some hours I was losing the focus and not paying the attention that requires the PA. - I´m aware that sometimes the opportunities arise during the afternoon hours when the trading activity pick up, but I have to be respectful regarding to the concentration that the Price Action requires, therefore, at least for the beginning I will focus primarily during the first 90 minutes. The third step is to develop your system. A system consists of (a) a set of rules that you use to select profitable positions and (b) a set of rules that you use to manage the trade once you're in it (again, whether you call it a system, a method, a strategy, a plan, a scheme, an approach, a procedure, or a modus operandi is not as important as sitting down and doing it). Working on it ... Coming soon
Nop, these days I have not read a lot in the forums because I have been doing some work but if you dont mind, could you remember me what you wrote?, I appreciate it I suppose is this But regarding to this, the SLA/AMT should work doesn’t matter the bar interval, because it follows the imbalance between demand and supply. Right?
Once one has worked with the SLA/AMT for a few months, or even a few weeks, he may find that he is able to pick up on behavioral nuances easier and faster than he thought. Why this is, I don't know. But some clearly go with this faster than others. If and when he is able to do this, he may find that the AMT half provides a better fit, and the SLA will become secondary. Or he may find that AMT is a continuing mystery and rely instead on the SLA to keep him out of the weeds and on the straight-and-narrow. I say this here because I may say things during the upcoming discussion that are not strictly kosher according to the master that is laid out in the SLA/AMT pdf. So if you start thinking Wait a minute, he said . . . , keep an open mind. Stay flexible. Breathe deeply. I used hourly bars in the pdf because they are far easier to use than anything less and easier even than daily bars, though if daily bars are fine, then go with that. But bar intervals less than 60m present problems. The most obvious problem is that there are far fewer opportunities for entry, the chief reason being that there are far fewer retracements. A 1m interval will of course present far more twists and turns and moves and countermoves and so on than a 60m interval. This presents far more opportunities for entry and profit. But it also presents far more opportunities for loss. The undisciplined trader who also carries emotional baggage will not likely do well under these circumstances. Add to this the fact that the SLA is a trend-following approach, not a scalping approach. If price spends the day in a range, as it so often does, the trader will have nothing to do if he relies on the SLA since the SLA goes out of its way to prevent him from trading ranges. The SLA, therefore, on the whole, presents far fewer opportunities using a smaller interval than the AMT approach does. Sometimes price launches itself into a trend right out of the gate. Sometimes it does nothing until late morning. Sometimes it sits there until the NY session is nearly over. So those who focus on the SLA without incorporating AMT into their trading aren't going to have a whole lot to do. (For what the AMT does all by itself, see the first post.) The prep begins as all prep does, whether trading the SLA, AMT, or both: the weekly chart. Here I'm posting the weekly from the previous week, of the 6th (the weekly for the 13th couldn't be done until the end of the day). It shows that, while we had been in a down-sloping trend channel in the daily, the previous three weeks had failed to make a lower low. This led me to postulate that we might be creating a range, which is what accounts for that tentative demand line at what looked to be a good spot (I mean three weeks is three weeks; seemed to me that something was up, no pun intended). In the meantime (meanwhile, back at the ranch), the dailies had been working their way higher. The first is from the day before. The second is of the morning of (pre-trading for the 13th). It this makes no sense, just go with the pictures. They're self-explanatory. And then the hourly, to see what traders were up to during the night: And then we focus on the territory for the upcoming session. A few minutes before the NY session begins, a range has formed between 54 and 59. But there's also a half-assed range from earlier in the night between 46 and 52 that may be important later (doesn't really matter what bar interval is used for this; 30m is too big, 1m is too small): And here's where the trouble starts. Those who want to trade the SLA intraday are faced with a range from 54 to 59. Unless and until price breaks up past 59 or breaks down below 54, there is no trade unless one focuses on the AMT approach (post #1). If one insists on trading the SLA anyway, the losses can most likely be minimized, but the profits aren't going to amount to much, if only because by the time there's been a retracement after bouncing off the top or bottom, price is very nearly to the other side. Therefore, whatever profits might be made will be minimized as well. Let's instead revisit the 60m bar interval, the one used for the pdf. In this particular example, AMT is helpful in locating a range. Once price breaks out of it, the SLA takes over, sort of like a tag team:
And the "first post" referred to above: Today was a practically perfect day for the SLA/AMT as virtually everything that is important was covered. Unfortunately, there's just too much to put on one set of charts, so I'm going to offer two sets, one focused on AMT and the other focused on the SLA. Postscript: It won't take long before people forget all about February 13, 2015 (like tomorrow), so I've added a 5m chart of the landscape before the open. This shows where the whole 54-59 thing came from: at what level are buyers no longer willing to pay the ask, at what level are sellers no longer willing to lower it.
Trading plan Main principle of the trading plan: Given that the 1m bar interval, “presents far more opportunities for entry and profit. But it also presents far more opportunities for loss” (Db. 2015) the use in conjunction between interest zones (S/R) and PA is necessary in order to filter the trades. Time Interval: Ø Trades: 1m Ø Context_ Prep: Weekly, daily, hourly, 15m or 5m Trading time: Ø 90 minutes after the Open Doing the Prep (Context): Ø Determinate the next levels: · Over Night: H, L, 50% · Previous Day: H, L, 50% Ø Find the most immediate TR previous to the Open Ø Determinate other levels of interest regarding to the AMT. E.g. TR – TC of medium and long term. Plan the trades: Ø With the information of the prep, answer the next questions: · Where am I going to go Long/Short? Why? · Which is going to be the entry that triggers the trade? (defined in the rules below) · What is going to determinate your discard of the position? (Answered bellow- discard) Ø Broken: it refers when after the Break of the Supply/demand line, the RET is triggered Ø Range:If there is a Range wide enough and the entry is not at the median of the TR, then take the trade and hold the position until the other limit, without worrying about the exit defined in the rules above because the behavior on a TR, especially in the mean is choppy Ø Choppy: when there are two consecutive losing Trades in opposite directions, and a HL and a LH are done. Ø Trend Lines: The lines of supply and demand are defined in any of the next scenarios Ø Retracement: is defined in any of the next situations (I also give them names in order to identify them easier) - The entry regarding to the trading plan (RET) is in the green dot The pdf is attached
The names that I gave to the types of RET is just a way how I identify the price action; but is a need to understand that all of this is based on the continuity of the price. BTW: Thank you for your question