Here's the link to the referred chart Prof. http://elitetrader.com/vb/attachment.php?s=&postid=2204730 I'm specifically interested in: 1-The period between 9:45 and 10:00 and the rules there. 2-What is rule 5 "definition in the book" of a PPF bar just before the confirmation that trigger a buy on the open on the next bar. Thanks and sorry about the confusion as I'm a newbie at this forum. JW
No problem. I make no reference to scalping in my book because I personally prefer to trade a little longer term. Scalping is more stressful and unnerving. The scalping chart rules simple put you long on the Histogram Prime oscillation (color changes below the Prime line) with an exit on the next color change. Shorts put you short on the Histogram Prime oscillation (color changes above the Prime line) with an exit on the next color change.
OK. Understood. Now. Can you clarify "rule 5" (copypasted below from your rules). And/or tell me the name of your book, so that I can further my understanding? "(5) Look for PF Bar or Bars - PF Bar definition in Book" Thanks JW
Can't mention the book here but I can explain the PF reference. PF is Price Failure (Price failing to make a specific bar HH or LL compared to the last oscillation). I'll post some graphics explaining it better later today. Its my in-laws anniversary and we are going out for lunch. Just sitting by the computer doing some clean up.
OK thanks. I'll await your response re. PF bar setup. Something else. Looking back again at the 9:45-10:00 a.m.scalping chart period aforementioned: Are there any method/reasons why no shorts were taken and only longs were marked by you?. I can see at least two color changes at prime levels (+10) in the histogram where short entries were available but not marked for some reason. So, I must be missing something for sure. Thanks for your patience while I grill you over the details. JW
This trade is still short with a stop at 878.75. Hopefully we will re-adjust the stop down later today or tomorrow but regardless, it's a nice little run.
I'm confused, likely because I'm overlooking something really simple. In the graph depicting the "perfect trade": Why are the two histogram color changes at around 9:44 (the 2 entries before the blue arrow) not "perfect trades" as well?. They seem according to the rules. http://elitetrader.com/vb/attachment.php?s=&postid=2202770 Thanks for your response. JW PS: Please let me know where I can find out what a "PF Bar" and a "confirmed PF Bar" (the bar just before the execution bar on open) is acording to rule 5. I'm the only one asking these questions, so...the info must be somewhere or else I'm very thick or ignorant of a simple piece of info.
JW, That particular trade started with the Histogram Oscillation at about 9:44 am. The first oscillation needed to be followed by a PF (definition to follow)which it was not so when the Histogram oscillated again to black we again waited for yet another (2nd) oscillation back to green and then another PF. We had that on the following the 818.50 bottom but I didn't mark it on this graph. Once I define the PF you will be able to pick out the exact entry bar for that trade. By taking the first long (not marked) the exit would have been immediately upon the Histogram oscillating back to black about 9:54 am. This trade would have resulted in either a break even result or very small loss at worse. The second long, taken from the 817.75 bottom was what I call a "continuation" of the first trade because 817.75 was a weak attempt at price making a new bottom. Weak because it didn't make a new bottom by a full 7 ticks. I designate anything less than a breach of 7 ticks as a Breach PPF or a Weak Breach. This compounded by the Convergence of the Histogram Oscillations between 818.50 & 817.75 and BOOM, here is where we see the strength increase to send price back up for "X" period of time. The large blue arrow on the price portion of the chart shows the PF Bar. I also call this a "sore thumb". This is a single (or multiple exact matching price bars) that challenge the oscillation low (or high if at resistance) at 817.75 but make a LL as compared to the previous bar. (HH as compared to the prevous bar if at resistance). The bar immediately following the PF bar, if it doesn't match or exceed the PF bar is called the Confirmation Bar because it confirms that the PF was really a PF bar. As long as the PF/Confirmation bar sequence is created, the open of the next bar immediately following the Confirmation bar is where the trade is entered. The exit is taken either upon ANY oscillation or if in Prime, any oscillation failure. This means that in this trade the exit could have been executed about 10:18 am on the PF at Prime resistance or where the large red arrow shows on the PF following the Divergent Histogram Oscillation. Notice how regardless of either exit point the result is almost the same. I teach traders not to argue with the chart. The first time the chart tells you to exit . . . FRIGGIN EXIT! Believing this though comes with experience and trusting it comes from confidence though consistency. Hope this helps.