Thanks. Good to know. But how do you know if/when a TR becomes a trend and change from scalping TR to riding a trend? I found out I had to choose between the two because I don't have the ability to know the transition. Either one could be profitable (on paper trades, that is) under the right trading rules but they are different rules (for me). Any coaching is greatly appreciated.
@ironchef I don’t tell anyone to trade this way so don’t look as this as coaching because it isn’t. It is only for information purposes. In reference to your post #2103 and #2111 I assume you are asking for info. So here is some info below. What you do with it is entirely up to you as I am not coaching, nor telling, nor advising, anyone to trade this way. I have been busy last two days visiting my granddaughter on visitors day which was Thursday and then yesterday was graduation day. She shipped out this morning for AIT (advance individual training). We will hang around Oklahoma a few days in the Motorhome before heading for a few days in Arkansas then on to Kentucky. After that I am not sure where the sun, the wind, and the rain will take us. Maybe Tennessee, Mississippi, or LA. Perhaps I will be trading a little along as we move around on our journey and get from place to place. Anyway back to your question of the transition period when a TR evolves into a trend and when it might be an area to enter the trend for a swing trade instead of scalping. Here is a video link (versus me typing up these concepts) that I think gives pretty good explanations for strong Bo's. Strong BOs which occur only about 5% of the time in a session. Bo's occur about 10% of the time in a session if they occur at all.However, really strong BO’s occur only about 5% of the time, if they occur at all. I think that indicates why you will see me trading a lot in Trading Ranges. There are so many more opportunities in TRs aka as noise..LOL. The video link deals with that 5% of strong BOs. Weaker BOs I would trade a little differently. Really slow BOs I even trade a little different too. Weaker and slow BOs you can often identify them by the tendency to have overlapping bars, small spreads (low to high on a bar), thus smaller bars. Alternating bear..bull..bars. Lack of momentum …But price keeps going up. Almost like a SPBL trend or SPBR trend. The one thing that I like to watch and be aware of is; if a weaker type BO then evolves into a small pb bull trend or a small PB bear trend then it has become a very strong trend that just keeps grinding up or down and that can go on for hours even all the way to the close. One thing I might add on any BO is that I like to see gaps that hold between the BO point and the first and second PB. Especially, the first PB because that is where a BO has converted into a channel. On the video he doesn’t discuss gaps but he does mention when a BO has become a channel which is at the first PB. Enjoy the video. I don’t know the guy and he readily admits his struggle with these transition periods between a TR and a strong BO. However I think he does a good job explaining the corrections he is implementing and the concepts so I think it is a very good informative video. My preference is multiple entries and exits even in very strong BOs. A swing trade I define as a move with at least two decent legs in it. However, I rarely will swing trade even a very strong BO. I just prefer scalping them over and over as they are evolving, locking in profits. I know some traders cannot do that psychologically, because it is too much jumping in and out for them and affects their equilibrium. Too many decisions to make. But you have to understand that for years I have been for the most part a scalper scalping live and practicing scalping in sim trading and it is just my preferred way of trading. It fits my personality. I just like locking in profits and waiting for the next opportunity. So, even in strong BO most of the time I will be seen scalping it over and over as it evolves.
IMO practice keeps one’s skills honed. Even greats like Tom Brady practiced his skill sets continually. Traders today have the advantage to be able practice over and over on a live SIM. I well remember the days in yester year when we had to practice by actually writing down with a pen, on paper, our entries and exits and afterwards try to analyze what we did right and what we did wrong. To this day as I trade I also continue to practice live on sim also. “Practice makes perfect” as the old saying goes. I find it keeps ones skill set sharp and reinforces concepts, especially after a bad day of trading. So many things pull at us now days with so many ideas about trading and just ideas about life..W.V. and such. So, many things pull at us. It becomes information overload. Practice forces us to focus, concentrate, and execute. It seems like a constant barrage of info is hitting us, pulling at us, confusing us. IMO traders in today’s world have the opportunity to practice live trading on a SIM even though it is not with real money and even if trading on a SIM is not exactly the same as trading with real money. One piece of advice I will deal out is practice …practice over ….and over… any concepts about trading you are trying to master. IMO if a trader cannot make them work for him on a live SIM then that trader most likely will not be able to make them work for him using a real money account. Every trader is different and they need to master what works for them. They will then gain confidence in themselves and confidence their in their decisions as concerns trading. This was once again driven home to me as I listened to the Colonel at FT Sims give the graduation speech to my granddaughter and all her comrades in arms yesterday. He said: “I don’t remember the special speaker at my graduation from basic training many years ago but I DO REMEMBER MY DRILL SERGEANT.” (And he quoted his name) He also said something to this effect: “When you are in battle the skills you learned from your drill sergeant will help you to be victorious” I may not have gotten the latter quote exactly right but that was the gist of it as I remember, more or less. Now apply this to trading. The key words here are DRILL..DRILL…DRILL and SKILL..SKILL…SKILL. Together they both infer PRACTICE…PRACTICE..PRACTICE. Yesterday as we were near the time to say our goodbyes to my granddaughter she turned and looked at us and she said “I’m gonna be OK. I now have confidence in myself.” It still was hard to leave her but I left with a sense that she is no longer my little lovely granddaughter but she is now a young lady that knows where she is going and has the confidence to get there. Basic training instilled that in her in 10 weeks. Drilling..drilling..drilling..over and over. Here she is on her first day (green arrow). Looks like she getting yelled at with the rest of the trainees LOL. The second photo is her on Thursday the day before graduation. She probably doesn’t remember the name of the Colonel who gave the graduation speech yesterday but she will never forget her drill sergeants and what they instilled in her. Drill…drill..drill. Since she is becoming a combat medic one of the skills she had to learn was how to, and execute, the skill of picking up a 220 pound man and toting him to safety. Which she did among the many other skills she practiced and learned how to do them, and did them! I blotted out the names as the military is pretty strict on pictures.
One hell of a post! Bookmarked for days I need an extra motivating boost. Happy they put your thread in ET's hall of fame. A lot to be learned in this thread if anyone has the time to read all the way through it. Thanks @volpri !
Volpri, She looks like a "Sharp Troop" and she has the respect of her Drill Sgt, that is important. She will owe many years to the military once she finishes her medical training and schooling, but she will find that it was definitely time well spent. Good luck to her, but she likely won't need it. She is already on the right pathway. I hope she is keeping a "Journal" of her experiences because doing that now will help her no matter where she goes after all this. It helps keep things in good perspective over the years. Thanks. Former Proud Captain, USAF KDA
I got little free time so I will give an answer or answers to your question above. For viewers sake I am posting the chart again but with some markups on it this time. There are a number of things I might would do. This was a BO of a TR but it was a weak BO. A. If I were convinced that it would likely go up I would have exited with a loss on bar 6. This is the least likely thing I would have done. B. If I were convinced it would likely go up I would double or triple up (average down) on bar 6 (some selling on that bar tail on top) and exit on the next bar with a gain on my last entries and a loss on my initial. The gain would more than offset the loss. This is the more likely thing I would have done. Why? it was a weak BO but nevertheless a successful BO as bars 1-6 made gaps ...see green gaps from BO point (top of the TR) to low of all the bars after the BO. Why would I average down and even do so by doubling or tripling up? First, the BO was weak small bars overlapping bars 4 dojis in the series of bars 1-6, and dojis are 1 bar TRs indicates 2 sided trading) AND I would conclude the BO has at least a 55% chance of failing. Second, I would bet it would go down enough over the next 2 bars to get out of my averaged down position with a win. Third I like to maintain a high win rate. C. If I had not implemented B above when I saw 4 consecutive bear bars 7-10 with bars 7, 8, and 10 being bear dojis, I could conclude it will likely go back into the range and it would likely become a successful BO that then failed and I would hold for it to get back into the range. While I may have decided to trade it this way my most likely action I would have taken would be scenario B above. I usually will label it a successful BO if gaps hold above BO point for 5 or more bars and price doesn't have a move back towards the top of the range. However, that does not mean the successful BO cannot fail. It did indeed fail in this case and price went back into the TR. The PA here was a weak BO. Been in a TR for over 50 bars, overlapping bars, dojis, narrow spread on bars resulting in small bars, no momentum, no clear strong indication the BO would result in a strong move up, BO tuning south by 7th bar....etc. Good PA for averaging down short for a likely successful scalp and even if the original entry lost, the overall trade would be profitable and a winner. While a BO was due after that 50 or so bars TR it would likely be a stronger BO with momentum in order for the move to continue up after the BO.