Mademan and DB: Thank you very much for detailed description. I understand it much better than before. Sorry Mademan. I missed one e in writing your name in my previous posts.
I have been doing some screen time during the last week and trying to understand where is it that I have lost track of the approach. I think so far the entries are no longer a problem to me (finally after a year .), I mean I think I can get good entries, and given the fact that trends are usually short in duration, (my analysis is that trend days are not the rule), I should focus on REVs, I am also analyzing RETs after BOs but for those I am not quite sure given the propensity for failure. Based on this, the next step is to be able to ride the trend as long as possible and avoid being scared out of a position once a deep RET comes during a trade. For this I am looking for reason to stay in the trend and there is where I think S/R become critical, as what looks like a REV (DT, DB, HL, LH) could really just be a RET that is taking longer to consolidate (if i look a higher interval chart it will just look like a RET in the making). This I guess, will improve the ability to stay in the trend, but then the question that arises is: If I wait until the trend i am riding gives me all the signals that it is finally over (minimum information risk) I will not be able to get in at the beginning of the Reversing trend and if I try to get in then my entry will be suboptimal as I will be getting in in a RET as the REV that started the trend happened when I was still in my last position. Am I making sense here or I am just lost in the woods?
Niko, You'll never know for sure whether the pullback is a deeper RET or a reversal. Pay more attention to S/R levels and price going against your position closer to that level calls for more caution than a pullback in the middle of a trading range. To avoid all this use SL/DL and exit when they are violated. Re-enter when price resumes its previous course. You'll never be able to remove the uncertainty you're trying to remove. Perhaps use partial exits and keep exiting as price forces you out. Now this will make it harder to re-enter earlier so you'll have to take that chance and make the entry when around S/R price shows signs of reversal. You always can exit. Keep that in mind. Who cares if you are exiting a few times as long as you catch that one move that is going to go on for some time and within a few points remove the losses from those multiple entries and exits. Gringo
G, thanks, your insights will be taken into account, as always. Today is an example of what I was trying to describe. My thinking is that the entry came at the REV around 8:45, from there and after a small hinge broke out at 8:54 buyers started pushing harder, by 9:05 came the first stronger than usual RET, if one had a tight line following the strong move the 50% rule would have kept the trade open. Prices broke out of the congestion and started rising again, the next scary RET came at 9:45, but once again assuming one has the wave starting at 167 that RET will also mean that the 50% level holds. Then at 9:54 comes the first sign of trouble as Vol increases dramatically, perhaps a SC in TR will go trough my mind. After this, downwaves are stronger than selling waves and finally at 10:07 sellers make a strong push. Here once again the 50% level from 167 holds (depending on exit rules some traders would have exited some others would have stayed in) Then buyers go their merry way until the time of this post, when the long would still be effective.
Now you know price has gone up quite a bit. You also had a DL from 8:40 onwards. Start paying attention to that DL now. Price also for now closer to 10:56 having trouble continuing up meaningfully. It's still in an uptrend but the up wave is shorter and price drop is steeper. So stay alert now. 1. Long DL broken. 2. Price shaking a bit and cauging. Next rise will give you clue as to whether the party might be coming to and end or perhaps a trading range is in the offing. Gringo Edit: Keep your eyes on 86-88-90 area.
Yep, thanks, I agree with the fact that taking some and reentering is a good alternative, but my preoccupation has to do more with the fact that there is a point when the trend ends, and if one is still holding contracts waiting for example for a 50% RET of the whole move one will never be able to catch the new trend and will most probably enter in a poor location when one is finally available to take a new position. For example, right now, sellers are pushing hard (10:55) a LH just formed and the 50% level of the last upswing from 178 is gone. This could be THE REV, or perhaps is just a RET or a TR forming (given the hour). But lets assume this is a REV, then the entry was at 188, If one waits for the 50% level of the whole move to be broken, (174) one will be very far away from the point of entry into this trend, so perhaps, one should just be thankful for what one made in the upswing and let the market go down without you. Or perhaps there was something special about 191, something that made it important (more important than 187) that would trigger the idea of closing all the remaining long contracts and take the short at 188.
Regarding your first comment about losing track of the approach, that may be true. I developed this approach for those who have trouble distinguishing between reversals, retracements, and breakouts and who have only a vague understanding of support and resistance, if any (along with difficulties distinguishing between up and down). Therefore the straight lines, and the title "If You Can Draw A Straight Line", the rest being "You Can Be A Successful Trader". Even so, though I've posted a detailed trading plan, few people can follow it, probably because they bring too much of themselves to it. As for focusing on reversals, they have nothing to do directly with this. If you look for them, you'll find them, but that doesn't mean that they are actually reversals. The first condition of a reversal is that it breaks the line. The second is that it moves in the anticipated direction. If it doesn't, it's a potential continuation, i.e., a retracement. If it doesn't make a higher swing high or low, it's chop. This approach is about straight lines and retracements. Though an understanding of support and resistance is helpful, it is pertinent primarily to provide a starting point to the trading session (the supply/demand lines do not provide support or resistance; they track supply and demand). Once the trading session has begun, it's all about following price via the balance between supply and demand and nothing else. With your first trade you sought, again, to enter a trading range and either trade chop or navigate your way through it. I don't know why you continue to do this, but as long as you continue to do it you will be whipped. There are no trades here until price exits this range at 0859. Where is the first trade after that? P.S. I'm not going to address the other responses. The task here is to clarify your particular confusion. So I'll focus on that task. Whether or not there is also confusion in the other responses will I hope become clear.