The purpose of this journal is to 'find my glasses', so to speak, and learn to read price action. I have observed long enough to find that a 1 minute chart affords more practice but also more mistakes. Ultimately I will use an hourly and 5 minute chart. My understanding of using the SLA method: The use of demand and supply lines to gauge who is currently in control - the buyers or the sellers. Once you know who is in control, then place the appropriate trade using the appropriate use of retracements. Trading ranges, trend channels and AMT theories add valuable information.
Yep, that's about it. Though what bar intervals you use don't really matter since they're all bundled tick charts anyway. The only difference is the size of the bundle.
Thank you Db and boru. Looking forward to reaping the benefits. This reminds me of my first trip at the end of the high dive. The whole swimming class watching for my jump. I stepped off the board, my head narrowly missing the end of the board on my way down. I plunged safely into the water. Will add more to my journal when I can copy and paste my journal text and learn how to post a chart.
Notes in Hindsight Premarket: YH (Yesterday High): 3633 After the close of yesterday, price drifted lower Near midnight price made a LL Double Top around 3am, attempt to move above LL of 3615 2 more LL and LH before 8am Best short entry on a move below 3609 at 3am Trading Market (before 12pm) Baroo, Trading day, 2/13/14 New Low @ 3596.75 @ 8:30am (not watching market yet) Price moves up to and then down from SL, first entry: open short @ 3602 Price moves down until just before opening bell, fails to make new low. closed short at BE LRH was broken on the same bar (DB later points out the TDTDB) Market swoops up. Missed 4 retracements on the move up 9:45am: Sideways for 10 minutes at sensitive spot of yesterday (3622) DL broken but price stays sideways (retraces slightly) Fan DL 10:00am: Price moves up strongly. Entered a Buy stop and filled (25.50) at what I thought was a RET at the time. Price stays above 3622 and midpoint of the up bar - lucky but I was hoping at the time. Risk down to newly fanned DL was higher than I would like. Another buy opportunity on a ret after the next strong up bar. 10:15am: Another strong Up bar to 3635, drops a few points and breaks the DL (LRL about 3627) 10:30am: Reversed position - Mistake (wait until a move below LRL @3626) 10:40am: Closed new short Market tries twice at the test of YH and then moves firmly ahead at 10:50am Enter a buy on the first RET @ 3640 Market moves up to 3645.5 and then meanders back. After a couple of RETs and a move below a LRL @ 3640 Reversed the trade @ 3641 Closed Position during chop (3640-3646) Summary: At the open Market behaves differently than expected. Best entry, Buy, was about 9:40 on RET. Leave Reverse trades alone for awhile Didn't lose money today. Copy & Paste truncated after an apostrophe. Once I removed those or typed them in manually the post displayed as intended
During a week of outside distractions (work, family, computer malfunctions) I turned off chart lines and put chat in the background (for a day or two) while I observed price on a 5minute chart. It was easier to see sensitive levels in price develop and the reaction to these points along the way. During this process, it is necessary to resist the urge to multi-task or you miss the subtleties. I also tried using dictation as a tool to log my observations during real time. Quick review of this log is needed to process my observations as I am somewhat wordy. It is also necessary to put what I am seeing in context as it is too easy to just describe 'up, down, up down'. In addition, in hindsight, I replayed the last down leg on the hourly chart, from the end of January to February 7. My focus was to watch the trend change by noting the highs and lows. My hope is to use these easy guideposts later to weed out the good entries from the bad. I find myself often in information overload from my observation, others observations, and trying to record information in a usable manner to review later. It is very helpful to watch chat to either confirm my own observations or point out what I missed. This however is just more information to process. Focusing solely on the DL/SL's should help my focus but the market isn't as cut and dry as following the crosses leads one to believe. It is my goal to learn to discern when these crosses are likely to be turns or just retracements. There is an art to this - it is not black and white, cut and dry.
Whether it is cut and dried or not depends on what the trader needs and how damaged he is. The SLA can be very near mechanical if the trader needs it to be, and the decision-making process becomes effortless if one follows the rules. However, if trading it this way takes all the fun out of it, then, as I said to Gears, you'll have to become more intimate with price, and that's where the information starts pouring in. There are levels to this, and even the most experienced trader has the option of backing up to a level that is more relaxing rather than hammer away at it for every second of the trading day. This is particularly helpful when the picture is anything but clear. As for the turns and rets, there is a procedure for that if I understand what you're talking about. But first I need to know just what it is you're referring to. Can you provide a troubling chart or two?
If one is unable to distinguish water from fire, how it is one to know it is water that quenches the thirst?