At the risk of confusing you I can also trade a higher high BO point by taking a short entry at the higher high BO point WHEN price is at the top of a range or channel, adding to it as it moves against me betting that it will trade back down to the BO point simply because it is at the top of the range or channel, and most BO’s of a range or channel fail within 5 bars. This too works because of price probing by the institutions but mostly because of where price is located at in the phase of the cycle i.e. the larger context. Bulls are probing a BO out of the top and bears are pushing back filling the gap between my BO point entry short and my averaged in entries after the initial short entry. Conversely if PA is at the bottom of the channel I can go long at a lower low BO point..adding to it (averaging down) expecting the gap will be filled and I will get a successful scalp as price is at the bottom 1/3 of the range. This is akin to just trading long in the bottom 1/3 and adding to it waiting on a move towards the middle (i.e. trading the outer limits) except it is using a lower low as the trigger point for entry. Because of the larger context or, in other words, the price location within the current phase of the cycle. The thing about price BO's they can be traded often on either side of the BO point because of price probing and they can be traded almost anywhere in the range or channel. They are a means to trade thereby offering other trading opportunities without being limited to just trading the outer edges of ranges or slightly sloped channels. Just think through what I write above. This is possible because of bar by bar analysis, which some think is useless....ROFLMAO
Here is the chart with the trades in MES trading BO's of previous highs and lows. This technique of trading BO points is more akin to what I post in post#1231. It is doing so as price moves higher in a channel or range and can be done anywhere in the channel or range. Note it is a different technique of trading BO points than that explained in post #1230. The end goal is the same...i.e. to make profits as institutions go back and forth probing fair value. The process is a little different though. Just study both ways of trading BO points. My initial entry was a short entry on a successful BO looking for a second leg down. That second leg didn't materialize. Instead price headed back up into the channel. Price then traveled back up through the channel BO point. That is typical when the unexpected happens. In this case since it was a successful BO (had not reversed towards the channel within 5 bars) I shorted. On the sixth bar it reversed! I therefore had to change tactics and I began shorting previous highs BO points as price went back up into the channel. I did this over and over as price moved up adding to my position (red numbers are my short entries above previous BO points to the left of the red numbers). I didn't draw the BO point for red number 2 entry but the entry was made on higher then the precious bar's high so the BO is there. So, I traded succeeding BO points entries are red for short and numbered entries 2,3,4. Then once price dropped down closing the gap I took partial profits on bar 9:55 making money on entries 2,3,4. See that gap between red entry and the high of the bar 9:20 (which was the BO point not drawn in) closed enough where all entries 2 thru 4 could be profitable. Alternately I could have taken partial profits once gap on each BO point was filled. As it was I waited for the for the exit to reach close tp the BO point on bar 9:20 (high of that bar). Next we got BO point #3 and I added short at the red 5 and 6 entries taking partial profits again at the green exit #2. Then we had BO point 5 and I added short red entry #7 Then we had BO point #5 and I added nothing there. I then exited ALL remaining positions at green exit #3. I made money on every single contracts expect my initial short entry on the BO south of the channel when I was expecting a second leg down. I exited that initial entry 1 position with all remaining contracts on green exit #3. It was a small loss on my initial entry but the the profit on exit 3 was well enough to cover that loss and make quite a bit more. Bottom line all entries made money excepts my initial entry and it's loss was small. This is one way to trade BO points on the short side as price moves up in a slightly sloped channel or a range. Not generally a good tactic to use in steep or narrow channels, narrow ranges, or when larger context of the cycle is in the BO phase. Trades can basically take place anywhere in the channel. So this isn't aiming to just fade the outer limits although if trades takes place at the top or bottom it looks like fading. If the move would have been down in the channel then this technique would be going long on or near previous lows and adding to the long position then waiting or the probe back up. It is, as I presented it, a counter trend trade taking advantage of price probing as institutions go back and forth probing for fair value.
After reading again my post #1230 I see where I was not clear. Here is the portion of that post. " I took several of these in MES this morning and the entries and exits are in the chart above in my post #1229. I will post a more detailed chart later today of these MES trades. Since there were several trades of this sort in MES, and wishing to not complicate showing the process, I decided to make one trade in the ES, to first show the concept. I think it will make it easier to see the idea and then later I will post the chart that is annotated and has the MES trades on it." The red portions could be confusing. While A Bo trading concept was shown in my post #1230 that concept was not the same BO point concept of my MES trades in post #1231 and #1232. It should read I took several trades in MES this morning using BO techniques and the entries and exits are in the chart above in my posts #1229. I will post a more detailed chart later today of these MES trades. Since there were several trades of the BO point technique in MES, and wishing to not complicate showing the process, I decided to make one trade in the ES, to first show the concept. I think it will make it easier to see the idea and then later I will post the chart that is annotated and has the MES trades on it. However, the MES trades will show another way of trading BO points. I don't want to confuse folks. I am dealing with two different ways in post #1230 and post#1231/#1232 on how to trade BO points. Just want to make sure that is understood. Upon reading it again it appears that the technique used in chart #1230 was the same I used in the MES trades of #1231 and #1232 (with #1231 explaining the process of the 1232 trades..ie the MES trades) and they are not. They are different techniques from #1230 trades but both are still trading BO points. Just want to clarify. I hope I ain't confusing folks even more. It is hard to undo something that was written wrong after folks get the error in the minds. Anyway maybe this explanation will help.
Sir, @volpri -- No one, including myself would first share an "EDGE" and then be so conscientious in delivering it for FREE ! Thanks.
I want to now post a chart of todays price action. And show a technique I use when trading BO's when the market is in the larger BO phase of the cycle. This is not the same as trading BO points so don't get confused about it. However, it can be used in trading any successful BO, not just phase BO's. But it is NOT the same as trading BO points in my recent previous posts. Those techniques were simply capitalizing on price probing by institutions. And remember those techniques are used in broad channels or ranges. However, in successful BO's I am betting on BO continuation. Hope that is clear. OK, first the larger contexts. That is, what the phase of the market cycle? From the far left of the chart until bar 8:20 we see the market cycle is sideways or in a range and has been for several hours. On bar 8:25 an up move starts. RTH's open at 8:30 Chicago time and price begins what looks like a possible BO of the range. By bar 8:45 ..a large bull bar closing on it's high and higher than all the bars to the left makes it apparent that strong buying is taking place. Institutions are buying. We get a small implied PB on bar 8:50. Look back several of my posts to learn about implied PB's. They are simply an actual PB on a smaller TF. The intermediate context here (a trend BO..which is a chart pattern) and the more immediate context i.e. strong bull bar closing near its high followed by an implied PB. So, it is appearing that we are heading into a BO phase of the cycle. By the next bar 8:55 this is a FT (follow through) bull bar enough to convince me we are in the BO phase of the market cycle so I begin to trade it as such. I took 4 trades. All winners. This is a technique I like to use in strong BO's, especially, when it is a BO of the market cycle. I will trade in the direction of the BO using a wide SL and add to the position, if price moves against me. Then I will exit once price continues the BO direction and price action gets my first entry into the money. If it is especially strong after my first entry is in the money I will even let it run a bit more before locking in profits. Once I lock in the profits I repeat the process over and over. Why not just hold and let it run reducing commission costs? Because BO's can have deep PB's. And often will have strong reversals. I just prefer working price in increments as price is moving, locking in the profits in case we see a deep PB or reversal. I will do this over and over. Plus my brokers get to eat ribeye steak instead of bologna sandwiches (aka as round steak) ROFLMAO. So they are happy and me too as I am locking in profits. I will trade it this way until the BO goes into a channel phase or into a range phase skipping the channel phase. However, it actually went into the channel phase on bar 9:05 with the first ACTUAL PB of the BO on this 5 minute chart. I don't know how far the channel will go but eventually we likely see a range or some sideways action as bull take profits. But I quit trading here so I could type. As long as it is a strong BO even if in the channel mode (as in a steep channel) I will trade it more like a continuation of the BO. If the channel broadens before getting into a range then at that point I will use channel trading techniques. All my trades on this chart were using BO techniques. As you can see I will, over and over, average down on PB's (implied or actual) and exit on surges in the direction of the BO locking in profits. I do this over and over keeping a wide SL in the event of a deep PB. If a PB gets over 70% of the previous (in this case bull move) then I will dump the position and entertain the idea that a reversal may be starting and I may need to double and go in the direction of the reversal, getting back any loss quickly, and soon be back in the money. I think the chart with the entries and exits is pretty self explanatory. This is basically momentum trading in BO's locking in profits. Should there be a reversal or deep PB any loss will be less because profits already made will somewhat offset them. Another alternative is just use a trailing SL and ride the momentum. That too is ok but not my preference. I am a scalper and I like scalping and will grab my profits, as the market hands them to me. If it keeps giving them, I keep grabbing. Brokers are happy. I am happy. Those shorting (in this case) are unhappy. I like trading BO's this way because it gives me the opportunity to compound. That is, I am locking in profits on a price move north (in this case) then exiting with a profit followed by another entry again at a better price when the market pull back from my previous higher exit. Thus in essence, I am sort of compounding by using the profits made in the previous trade to make more profits. More $$ can be made doing this than just holding with a trailing stop as price runs. J.M. Hurst talks about this in his book. "The Profit Magic of Stock Market Transaction Timing. It only sells for around $900.00 dollars on amazon! ROFLMAO. I paid way way way less, years ago. Anyway, he proves that by many entries and exits, more money is made than holding and riding the wave, or momentum. He convinced me years ago and well... it suits my love of scalping 1 to 8 points in the ES, over and over, locking in profits, and compounding while at the same time keeping the brokers eating ribeye steak. Win win all the way around! I got to go work in el garden but will check later and see what phase the market morphed into after my last trade. I have not checked yet and here it is 12:25 as I was typing most of the morning then eating breakfast so as to have some energy for my gardening. Maybe will post another chart later on describing the phases that evolved but I doubt any more trading today for myself.
Your welcome. I am getting older and sometime make mistakes explaining and when I read again my posts I catch my mistake and have to fix it, otherwise, I risk confusing people. There is so much stuff on trading in my head that sometimes I jump ahead or jumble things up a bit. When that happens I try to straighten it out.
I never made it to the garden. Just could not seem to get my lazy carcass in gear. Not feeling physically the best today. Anyway, decided to take a few trades this afternoon, but in the ES. Took three. All winners and all profitable. Trade #1 was just a straight short scalp fading the out edges of a now established range. Trade#2 was trading a previous low BO point in the upper 1/3 of the range and waiting or to close the gap of the BP point and travel a little more. It was a two point scalp. Trade #3 was quite a profitable trade as it was trading a precious high BO point and adding to it as price went against my position. I added twice. Then awaited for the gap to close. Also remember in the larger context of things (Range) it is a BO attempt. Will the BO fail and trade back into the range? 80% do within 5 bars. So, not only is the trade #3 a previous high BO point trade, it is also it ALSO a fading of a range BO out of the top of a range. I'm done for the day. Three profitable trades in the ES using different techniques. Earlier it was 4 profitable trades in MES trading the BO phase of the cycle. I think I will lay off from posting more trades for a few days. My brain gets weary explaining how I trade, in ways I hope is understandable. I'll be back when the mood strikes me again. God willing. Anyway, I have given enough info the last several days for you all to digest ...meditate on...and practice on a SIM. Sim the dickens out of the concepts. Remember, the larger, the intermediate, and the immediate contexts as you execute setups on the SIM. Correlate all that info. If market does the opposite then exit, and have a plan to mitigate damage. Mine is usually exit, then double position size and go in the direction of the market. Getting back the loss and then profit. You got to be flexible like a reed bending in the wind. Have a plan. Then another plan. If plan A doesn't work then try plan B. It is all about possibilities in the market and the probability of the possibilities working out because of what the institutions are doing. They cannot hide! The problem is we just do not know "when" and "how" strong an institution will do a play. How much market pressure they will exert. But we can see it afterwards usually in time to jump on board. Happy Simming!
Hi Volpri, Im inspired by your journey you share with us, you have a lot of experience, and a sharing heart! I'm new at trading, a few weeks trading MNQ100. You have a whole lot of info, and I'm a little lost, where to start. Can you direct me to a post or rather a few posts, here in your thread, for a newbie, with a simple strategy i can start with ? I would love to start somewhere with a simple strategy but unfortunately, i don't know where to start. I assume im not the only newbie wandering into this amazing thread, not knowing where to start. Can you give me some guidance, God bless you for all the sharing you do here!
OK with this chart I am done for a few days. But I wanted to show the phases of the market cycle again in this last chart. It is shown on my MES chart (along with my MES BO phase trades but ES and MES are basically the same as they track together for the most part. They are so important. Guys this happens over and over. It is that larger context of which I have spoken about many times, in previous posts. It is the first thing I want to see before I start trading a session. Where are we in the market cycle? If I have to look at a 24 hour chart to identify the phase I will do so. I need to identify the phase of the cycle because that determines the techniques I will use to trade at the moment. Also, I trade mostly a 5 min chart but will, at times, glance at a 15 min, 30 min and 60 min chart. They each have their own phase of the cycle. It is not necessary to look at the market cycle from a larger TF perspective but there are times it can be useful. For another perspective. I traded the ES in that top right range after the range became established (20 bars). Those trades I have already shown in my post just above this one. It is usually best to wait for 20 bars before using range trading techniques otherwise, it could just be a PB in the form of a flag. Once I see 20 bars the odds are it is a range and I can use range trading techniques. I am used of identifying range behavior, it so there are days I feel really giddy, and will start range trading say on 15 bars. But generally, it is better to wait for 20 bars of sideways movement to declare it is a range. HAPPY TRADING and keep your broker eating Ribeye steak. There is plenty of money to go around in the markets. Who knows when I lose it may be YOU who took money from my account and put it in yours. If you did then you deserve it!
Hi,MACD, I am curious that ,since you got the edge, did you make winning trades based on this edge now? My self simply could not understand what OP says.