Gringo had a really nice post a week or so ago, near the beginning of this thread, where he spoke of getting in close to the extremes or danger levels. The irony is that the risk in taking the trade is actually at its lowest just when it seems to everyone else around you that the risk is surely at its greatest. The real Evel Knievel trades yesterday were those who were shorting the market, getting stopped out, shorting the market again, getting stopped out again (I did that one time for two quick losses in a row before I figured I had better learn the difference between a retracement and a reversal, but I have a feeling there are a lot of people who do that all the time and throughout the day and the only thing that stops them is the closing bell). I went back and found Gringo's post - it is journal-worthy to be sure. Anything that reinforces the main points of what we need to accomplish to succeed is worth repeating and remembering and repeating some more, lest we forget it EDIT http://www.elitetrader.com/vb/showthread.php?s=&postid=3874965#post3874965
I have been thinking about the Danger zone as well. Seems to be quite a fine art. Today, for example, there was a HH created at 0938 EST that was just 2 ticks below the PM R. Then there was a LH at 0840. So there was confirmed R at an anticipated level. Now while most of us practice getting into the Rev based on the 1 min, it often leads to higher price risk entries. While we are entering off an extreme zone, we are not entering at the extreme . I tried looking at some situations this weekend, but no luck so far. Though it seems to be an attractive area for research...
I posted elsewhere that I often make suggestions that are ignored. I may repeat them, but eventually I just let it go because I know that the target of the suggestion just isn't ready to hear it and, eventually, if he keeps at it long enough, he'll discover the truth for himself, which is why all price action traders -- i.e., real price action traders -- all end up trading pretty much the same way, because the market demands it. If the trader tries too hard to be cute or is too cautious, he will be made to pay, and he will either man up or drop out. One can read about Ah-Ha's until his eyes bleed, but unless and until he reaches those moments himself, it's just more "market wizard" filler. If he does reach them, they will become a permanent part of his modus operandi, and he will never forget them. If he doesn't reach them, he will trade like a cat on a hot tin roof.
Earlier today I said that in Wyckoff terms you have preliminary support, a climax, a technical rally, and a test. Both the climax and the test are legitimate entries for those who don't have fear issues. For the rest, it's like Indiana Jones stepping off the ledge in The Last Crusade. For me, one of W's most significant contributions was this structure that he created for trading extremes, something missed by people like Joe Ross (which is why his entries so often fail). No, one may not enter at the highest or lowest tick, but to think that one can is for the delusional. However, one can get pretty damn close with virtually no risk.
DB: Would you please point to the link about W's contributions on trading extremes? Would you please elaborate how you would trade extreme or point to the link if you have talked about it before? Thank you very much.
Wyckoff: By learning to judge all sizes of market waves, you will gradually learn to spot the time when a rising market or a rally, and the time when a declining market or a reaction, has halted and is about to reverse. These are the turning points. You draw from the tape or from your charts the comparatively few facts which you require for your purpose. These facts are: (1) price movement, (2) volume, or the intensity of the trading, (3) the relationships between price movement and volume and (4) the time required for all the movements to run their respective courses. We need to examine charts to study price and volume and duration, and get familiar with all sizes of market waves to spot turning points. It sure takes lots of time. DB: Would you please help to share how you traded NQ today's opening if you traded it? Thank you.
Sliver futures give much cleaner signals. I am of the opinion now that perhaps even to trade SLV the ETF, it might be better to pay more attention to the futures than the ETF market. It was becoming apparent for NQ and QQQ that NQ had better signals but it appears to be a general case where the futures market hold more information regarding the interplay of supply and demand via their price movements. These movements are visible throughout the day in terms of the futures leading to a better representation of that particular market. Here's the chart for silver futures. Later I'll post a chart for the SLV ETF for comparison. Gringo
Here the daily chart for SLV. The general direction of price is clear but not the preciseness of it. Notice the gaps and the discontinuous nature of price on this chart. I may be tempted to start avoiding it because the best entries arrive while the market is closed. The only advantage is that this move fast and doesn't require a futures account. Gringo
Futures represent continuous flow of price, whereas the ETF is an 8 hour snap shot, which allows for 16 hours of trade to go unaccounted for in the ETF chart. That's my guess, at anyhow.