I'm going to start the backtesting process; so for now I will start posting from February 3rd of the year 2014 Prep - Context Plan the trades. Trades Red dot: Short Green dot: Long Black dot: Exit
Since you're only beginning this stage, I won't say much because I don't want to rob you of discovery. Those who want to "help" do so with the best of intentions, but they don't always understand the value of process. However, I do want to point to a couple of things that may be the result of misunderstanding. First, the "midpoint" thing, if by that you mean the 50% levels, is nothing more than a gauge of strength and weakness. In terms of trade entry, it doesn't carry the weight of entering at an extreme, but it isn't automatically disqualified simply because of that. If something comes up that is a "tell", such as that double top on the 5m at 25, the fact of the double top is more important than exactly where it occurs, i.e., the "midpoint" of the ON. Consider what price is doing, where it's doing it, what the odds are, what you stand to lose if you're wrong. If you determine that the odds are in your favor, go ahead and take it. The worst that can happen is essentially a trifle. Second, swing points. If at all possible, let price make one after you've entered, particularly if price is well away from your entry. If you're using the SLA and you have no swing points (which are created by retracements), then you're simply tracking the tops of "bars", and this isn't going to last long, and then you're out of your trade. Instead, be patient. Focus on price instead of your trade. Observe how far price is coming back toward you, not fearfully, but dispassionately. This is where the 50% levels can be most useful (as distinct from the medians of ranges and channels). If you look back at the 5m, you'll see that the retracement that prompted you to exit was not only nothing more than a normal and expected retracement but that price didn't retrace anywhere near 50% of the decline before continuing to fall. Therefore, focus on the 5m, let that first short go, and wait for the first retracement on the 5m. Then enter there -- your second short on the 1m at 05 -- and let the trade unfold. This gives you a more stable line, or stride, and takes you all the way to 75. If instead you focus on the 1m throughout, you'll end up scalping, and this is not a scalping approach. Focus on the road, not the engine.
Db, thanks for your words and your time, I really appreciate it Thanks for the words, It's really motivating receive this kind of feedback and makes me want to keep moving forward in this journey. BTW: You and Db are always welcome to post in this thread
The trendlines on your weekly should be transferred as is to your daily, i.e., if the UL on the weekly clears all prices, it should do the same on the daily. Otherwise the weekly serves much less use.
February 4th Prep - Context Plan the trades. Trades Red dot: Short Green dot: Long Black dot: Exit Note: Regarding to the red circle - Reentry From the observation point of view, what happened there (Red circle)? The sellers were able to make a LL, however the price spikes the previous high, but there was no follow through to the upside. Therefore from the PA point of view the price continues in a downtrend, consequently the short should be taken if we were stopped out quickly. But for now I don’t want to point this trade in the chart because this is not included in my trading plan and I want to follow the rules in order to have more precision when the time of statics arrive.
Is a question that I make myself in order to see what happened in terms of PA, but if you have a comment is welcome I think it is similar to something that you wrote me some time before; but in that case was for the bullish side of the mkt
The key is to think of it in terms of PA, not bars or lines. Traders made one attempt to move price past the ONH (let's just leave it at "traders" rather than get into all the buyer-seller motivation thing). This fails. That does NOT mean that the UL of the range can be lifted. Rather it confirms that the UL is exactly what it seemed to be, 54, and the strength of it is confirmed due to the fact that price falls back below it. When the next attempt is made, it is downright feeble, and it fails far faster. This failure on the second attempt is more than sufficient reason for a reversal trade, even though you don't have a nice, pretty, regular, well-defined range. The entry, therefore, should be somewhere up here, around 52 or so. Entering at 30 is way too late, and that's one reason why it fails. You've moved 20pts without a single retracement, and unless there is a powerful continuation thereafter, there will be at least some waffling here as traders are beginning to buy, which is why you have that "outside bar". It's called "preliminary support". There is one more retracement four bars later, then a climactic plunge and reversal, which occurs at least in part by the buying that's going on down there.