Ok she made the second batch up for the second layer. She called me to watch. I'm doing great now ain't I? She is really in a good mood as that first layer baked out... top notch. Kinda like a successful trade. So, she fluffs the egg whites up with her kitchen aid egg beater then she dumps it into the batter. She claims it is important to not stir it up thoroughly. She (using her terminology) just folds it into the batter. Next she says it is very important to put a small amount of Crisco shortening in the pan bottom and edges. Then lightly sprinkle flour in the pan. She claims this is to keep the cake from sticking to the pan. Then she pours the batter in the pan, has the oven at preheated at 350 degrees then bakes cake for 45 minutes for a 14" round layer. Darn sounding more and more like trading. Mitigating damages. Right techniques. Correct context. I might go into cake baking instead of trading. I will try later and weasel the exact batter recipe out of her. She promoptly announced I was a lucky man. She worked outside in the yard and is now making a cake. I agreed I am a "lucky man" but shh..don't tell her but I made my own luck. Kinda like the markets; we make our own reality. Now she is shooing me out of the house telling me I need to get to town. Pressure every where! In the markets! In the house..from the wife! Life is full of pressure. Might as well have a cake and eat the icing too! I could not resist posting one more chart. Did I ever say BO's of ranges tend to fail within 5 bars and price heads back towards the range..even to the middle..and at times to the opposite side? Well here it is twice since 2:10 or bar 14:10.
Well here it is 3:07 Chicago time. The final mug shot. Again price trades almost down to the bottom of the range and now is heading back up before the close. I hope this little live PA storytelling is useful. Or at least the cake making. Just practice the concepts on a SIM over and over. That makes for perfection, better execution, less stress and easy decision making. Have a great weekend! I'm outa here! Did I say that before?
Yes FT = Follow through For example: In strong large bull bar BO of a range, if the next bar is a good FT bar (like another bull bar) then I will treat that Bo as likely gonna be a successful BO and will go long and not wait to see if price will reverse back towards or into the range within 5 bars.
@volpri When you average in, it appears three is your limit before you reverse and average in going the opposite direction. And, from what I've read, you double your position every time you average in. If you start with one contract, that would be followed by two, then four, then eight... and then sixteen in the opposite direction. Assuming the above is close to correct: Do you avoid trading when volume is low or volatility is high... is there a lower-limit threshold you use for volume? Do you use all-or-none limit orders to enter or just market orders? If the trade just doesn't work out and you pull the plug, what is your strategy for digging yourself out of such a deep hole (do you double-up again on the next trade)? I've read the average trade size is five or less contracts. Do you have any concerns about being targeted by HFT/Algos when they see such a large order come in, especially if you trade size during periods of low volume?
Usually 3 times "scaling in" is enough in a scalping world where I plan to be out quickly on price probing action. Sometimes I will go 5 or 6 times but that is more rare. No, I usually don't double up on each average entry. For instance, if I start my initial entry with 1 ES I will, on my second averaged down entry, usually add 1 more contract. On my 3rd entry I add another contract. So I end up with 3 ES contracts...total. Then I wait for a probe in my favor and try to get a profit on all 3 contracts but I will sometimes will settle for a profit on my last two entries, and a BE, or small loss, on my initial entry. Basically, I grab what the market gives me, once I am in the money enough to give me a decent profit after covering all commissions. If this procedure is done with 5 ES contracts it would be initial entry 5, second entry 5, third entry 5 for a total averaged down position of 15 contracts. MES is good for practicing live IMO but I will not recommend anyone do this live. Practice on a SIM. As far as commission costs at some point one is better of going to ES as 10 MES contracts roundtrip will cost more in commissions than 1 ES contract. The downside is a trader has got to have a large enough account to do this (averaging down) in ES and big enough to allow doubling up and reversing, when an averaging down position is a loser. The procedure I generally use for averaging down is described above. That said there are occasions where my first entry for example might be 1 contract. My second entry 2 contracts and my third entry 1 contract for a total of 4 contracts but that is not my norm. I generally just add the same contract size each time. Then wait for a price probe that gets me in profit. And I will usually follow this procedure below for entries (depending on market dynamics..how fast price is moving at the moment..i.e how it is making price) but with some variations. Initial entry. Second entry when price moves against me 1 or 2 or 3 points. Third entry when prices move against the "now" averaged down entry (consisting of my initial entry and my second entry..i.e. my new Breakeven point) another 2 to 4 points. This procedure I play by ear depending on how the market is moving. I don't want to average down too early or too quickly on my second entry (generally never less than 1 point against me) as I want to see the average price drop enough from my initial entry that will put me back in profit on any decent price probe in my favor. If I average down say after 1 point of adverse movement, after my initial entry, then BE will drop 2 ticks. If 2 points then BE will drop 1 point. A price probe can quickly get me back in the money because look at each bar. Always price going up and down as the bar forms. I have to capitalize on the bar creation that is happening because of price probing so therefore, I space my subsequent entries averaged down entries, at points that reflect the dynamics of PA at that time. The dynamics at the moment help me decide that point. For example, I may add my second averaged down entry at 1 point against me. Or I may add it at 2 points against me. Or even 3 points against me. The subsequent averaged down entries are distanced from the BE point. 2, 3 or even 4 points against the BE. It all depends on dynamics. The doubling up I speak about is when I have an averaged down position as described above in my second paragraph and it is not going in my favor. Price moves against me enough that I determine I am wrong. I have to then dump the 3 contracts that I averaged down in and reverse directions and on that reversal I will double up i.e. now have 6 contracts going in the new direction. I get back my loss on 1/2 the price distance move that was incurred while making the loss, and just a little more positive movement and I am in the profit again. This is generally how I handle averaged down losses. In summary, If I am wrong on the direction I simply exit my losing position then, reverse, doubling up the losing position size and await for a price probe that gets my loss back and puts me back in profit. A scalper CANNOT afford to hang onto an averaged down position and keep adding to it when the market action has proved him wrong on price direction. I have to dump it and go the correct direction. I am not in this business to be right on my opinions, I am in it to make money. If that means changing my opinion, then I will. This is the problem most traders will face with averaging down. The losses keep mounting and they keep adding until things spiral out of control and they suddenly find themselves with a loss so big it is hard to recover from it. I have to have rules that govern my averaging down and techniques that alert me to the fact that I have probably bet wrong on the market direction. Some would say why not just exit that first contract if wrong on the direction and enter again when the correct direction is sorted out? I could but then I have a real loss (not a paper loss) that I have to get that back on my next entry. Of course, I could double up on my new entry and get it back quickly. But often I would be right on the direction to start with, but off on my timing for my initial entry. Scaling in (averaging down) at least gets me in the market (and at a BETTER price) even if my timing is off on a precise first entry. So, if I get a good setup I will take a position because as it could take off immediately in my favor and I don't want to not have a position on. Or it could go against me a bit (giving me the opportunity to average down) because I still believe that my read on the market direction is going to pan out, once price starts probing in my favor. I can NEVER just keep adding averaging down more and more, just to avoid losing. That will at some point or another wipe out my account. Averaging down has to be strategic, otherwise it is a losing proposition. I have be decisive to add and decisive to take profits when handed to me and/or decisive to take a loss, double up and go in the other direction. If the market proves my original premise wrong then I must go with the market and to hell with my original premise. It was wrong. Now I have to correct. All this requires a sort of brutal engagement mindset with the market. It requires one training themselves to act this way towards the markets. The market is king. I just try to get in the kingdom and get some of the wealth it possesses. To answer your numbered questions in your post: 1) If it moves I will trade it. Low volume..high or low volatility....whatever. Such differences will affect the size of my SL as it has to be bigger in higher volatility contexts. I use SL's (stop losses) based on price action and not a set monetary or points amount. If volume is too low to trade the patterns on a certain TF I will go down to a smaller TF to trade patterns but don't like to go less than 1 min TF. And I have to see that the average size of bars in the PA is at least 3x a min scalp (sometimes I will fudge a bit on this criteria) AND that the distance up or down of price travel (that is the broadness ...whether in a range or channel) is at least 3x (I don't like fudging on this criteria) the size of a min scalp. Otherwise, it is too hard to make money scalping. I consider a min scalp size to be 1 point in the ES. 2) I generally always use limit orders OCO so when I place a trade I am bracketed with a PT (profit target) and a (SL) from the get go. I usually set both at 3 points in slower markets but maybe 5 or 6 points if things are hopping. This procedure is used to just get me in with a bracketed order (it is not the final setting) protecting me for a sudden adverse move but wide enough to give me time to make adjustments without getting stopped on a quick move against me). Once I get my initial entry is made I then adjust both the PT and the SL to what I consider appropriate levels for the dynamics of price action at the moment. and often more adjustment is made each time I averaged down. I am always asking myself before and after entry "according the immediate market dynamics (dynamics i.e. "how" price is being made not that it was made) do I think the market will make my PT before it would hit my SL taking me out?" After entry I may, and usually do, adjust my PT and SL as I see the dynamics playing out. There are other ways of doing this. This is just what I am accustomed to doing. 3) This question I think I answered earlier in this post. 4) My position size is determined by my account size and I hate to say it but how I feel at the moment. If I am giddy I may risk more. If I crawl my lazy carcass out of bed and am feeling tightwad I may only trade small positions for the day. If momma puts the pressure on me I best make haste and make some jack. For those that don't understand the lingo "If my wife pressure me through derision..hilarious laughing and mocking..or needing money then I have got to hurry and make some money to then turn the tables and mock her and/or be generous and give her some money if I think I can/or want to and were to decide too." As far as ES..... it handling 5 contracts is peanuts. It can swallow 50 before you can bat an eye. If size it a concern then I would scale in on multiple smaller entries at the same price as my previous entries or better prices. Hope that answers any questions.