This is 5m chart. Trading range behavior before it is actually a TR on this 5m chart. Up and down. Tails on top. Tails on bottom. Dojis (at least 6 of these bar can be counted as doji's.) alternating bars...bear bar, bull bar ....bear bar, bull bar. Race up...race down. Emotions: Disappointment. Confusion. Scalped: Trade#1 shorted 2contracts 5778.25 added two more short (averaged down) @ 5783.50 Exited 4 5780.25 Lost on initial entry but profit from averaged down entry made up for it and trade rendered 4.5 points. An example of why I average down. Initial entry 5778.25 was a bet that the opening bar was indicating a continuation of price south. trying to get in early on what looked like a trend south. But it didn't do that. So, on the 8:35 bar I shorted two more betting it would test back down since bar 8:30 was a bear doji tails on top and bottom in other words a 1 bar trading range. A trading range is two side trading. So, at this point up 4.5 points Trade #2 Three bars of TR behavior although not yet an established TR. But easy to see each bar is a 1bar TR. On bar 8:45 I go long 1 contract on this 1 bar TR. Why? Price near bottom 1/3 of bar 8:45 and all previous bars show two sided trading so likely will test top of those previous bars since the open or at least up towards the middle enough for a scalp. I average down another contract on bar 8:50 @ 5775.50. I exit both contracts on bar 8:55. Make more on second entry and a little on the initial entry. See the benefit of why I average down in this type of environment that has alot of two -side trading i.e. dojis...overlapping bars..tails on top and bottom. Trade #3: Short in top 1/4 of TR behavior on bar 9:00. Exit on the next bar 9:05. Just simply playing this TR action from the open while market decides what it is going to do. Trading noise! Trading chop! LOL! At this point by the third trade up 11.5 points in 35 minutes of what many call chop or noise! Dinero can be made on what many consider untradeable action. I don't believe in noise. Money can be made on most any bar. Opportunities abound. I only believe in movement. I believe in grabbing what the market gives me. I believe in a high win rate. I believe in winning and avoid losing as much as possible. I believe in averaging down because it puts probability back in my favor that price will move enough in the correct direction to get me out of a paper loss or at least a smaller paper loss, and possibly a gain on the initial entry and a gain on the averaged down position. However, averaging down has to be done in the right environment. There are times it is best to just take the loss on the initial position. I see I made another scalp while typing this. Will show it shortly. I just entered set a PT and started typing this post up and the target I see was hit. The point here in this post is to show that the market can give me trading range action that I can capitalize on before that behavior becomes an established TR. And if I am nimble and can make quick decisions I can profit from this type of TR behavior even BEFORE it becomes a TR. Caveat: It consider all this a PB (on some TF) consisting of TR behavior UNTIL it becomes 20 bars in duration on this particular time frame. Notice I have the EVOLVING trading range already drawn in as a rectangle BEFORE is an established TR. What is an established TR? 20 bars of sideways movement! Also, if you look at this on a 1 min chart it is ALREADY and established TR on that 1m TF.
Trade#4 And here is the other trade made while typing the previous post. At this point by end of this trade up another 5 points for a total of 16.50 points in the session (trade #4 2 contracts each making 2.5 points so a 5 point trade). trade #4 was shorting two Cs at top of TR behavior @5786.25 exited both Cs @5783.75. By the time I screen shot this chart we are in 24 bars sideways movement from 8:30 opening bar of RTHs (regular trading hours) so I would go ahead and call this an ESTABLISHED TR on a 5m chart. So, from 8:30 to 9:25 16.5 points made in 55 minutes trading while many traders who call this noise sit on their hands and let opportunity after opportunity to slip by while they could make these points in first hour and trading and then go fishing! If I had traded large size ...well ...you can see the profit potential..trading noise. I will stick for now to small size as that is what many traders have to trade. An established TR means than the inertia is there, and this sideways movement is no longer a pullback. It means that whatever previous action there was before the open most likely as little to zero influence on this sessions PA. IT also means that any coming BO of the established Trading Range has 50/50 chance of being out of the bottom or out of the top. So, the next thing is to trade the inertia until there is a successful BO then swap to BO trading. Remember the market cycle. BO...TR...BO. In this case it was TR so now I know to look for BO but I keep trading the TR using trading range techniques until there is a BO. Inertia is there. Markets tend to keep doing what they are doing until an outside pressures changes that. TR indicates buyers and sells consider price is at fair value. In that environment price will continue moving to where the most transactions will take place. So, probing back and forth. I capitalize on that type of inertia and behavior. There will come a time that some institution will move price to another level, and we will see a BO of the TR. But once that move ends, we will be back in a TR. So, again the market cycle TR...BO...TR. The breakout portion (trend) usually consists of two parts: a spike and then a channel (channel at 1st PB from the spike) and that channel subsequently evolves into the next TR. Notice the legs in this established TR. Twenty bars sideways and 3 legs usually means trading range.
And the established TR continues. The TR rectangle at this point can be broadened to include the overshoots out of the bottom and top but I leave it as it was to drive home another point. That point is: within 5 bars of breaking out of a TR price will usually go back towards the edge of the TR or into the trading and towards the middle and sometimes all the way to the opposite edge. But even if it just goes back to the edge that it broke out of that is usually enough movement to get a good scalp especially if I have scaled in (averaged down) as it moved against me. So, any move back towards the edge can render me a profit even if I lose on my initial entry.
I likely have to stop now as I have other things to do. Hope you find the above posts informational. I may make another trade or two if I can. Just have to see. Got other things to do.
I did take another trade. One contract long at the bottom of the TR 5776.50. After entering this long there was an opportunity to average down and make more but I missed it. I looked away from the chart and it had made the low of bar 11:10 so I placed a limit order to go long on 3 Cs adding to my previous long and waited to see if it would get filled. Why? I was betting that within 5 bars it would move up to the bottom of the TR or into the TR. You can see my open limit order (green line) to get long another 3 contracts, so I am attempting to triple up. Martingaling, I suppose it could be called if there is such a word. Unfortunately, it never came back to my limit order to add 3 so I had to cancel it and just wait of the 1 contract I already had. The next chart will show it cancelled and also show what happened to my 1 contract. Lesson to learn: WATCH THE CHART!
And here is what happened after I cancelled the open order to average down 3 contracts more for a total of 4 contracts. I was stuck with waiting to see if I could make some dinero on my initial entry of 1c. The following charts shows what happened. It continued to move in my favor on that 1C so I grabbed what it gave me and exited at 5779.50 for a gain of 3 points on that contract. I am finished for the day. Extracting 19.50 points from 8:30 to 11:10 (2:hrs and 40minutes) of noise! Five trades ALL winners. High win rate! See, there really is no noise. No such thing exists. IMO best to dump such a concept into the garbage basket. Having it destroys many potential trading opportunities. In truth, there is only movement. As a trader I have to have tactics that let me capitalize on all types of movements. Volatility movements, momentum movements, slow grinding movements, sideways movements, BOs of all sorts, channels of all sorts, TRs of all sorts. The market cycle is my friend if I can learn read it correctly. Point to be made if managed correctly money can be made on most any bar in the 81 minutes of 5m bars in the RTHs.
Just have to post one more chart. Look to far right. See the BO out of the bottom. By the fourth bar after the BO bar, even though the 4th bar is bear doji, price is heading back towards the bottom of the trading range. By the 6th bar it is well into the TR. Can you see the opportunities I have for going long on a BO out of the bottom of the TR and even averaging down? Have a good day. I am shutting the computer down. THE MARKET CYCLE IS MY FRIEND. INERTIA IS MY FRIEND. TR TECHNIQUES ARE MY FRIEND. AVERAGING DOWN HAS THE POTENTIAL TO BE MY FRIEND IF DONE IN THE RIGHT CONTEXT. Price is now 43 bars or so in a TR price action. INERTIA! Market tend to resist change at least enough for many scalps. I would now be looking for a BO south OR north but would continue TR techniques until that BO happens. Remember 80% of BO attempts in a TR fail. Novice traders go long at the top end of a TR BO and short at the bottom end of a TR BO but that 5 bar back to the TR whipsaws them. Think about it!
It has gotten awful quiet on this thread since that post that showed Al Brooks face. Do traders dislike him that much? IMO they would do well to listen to that video.
IMO they would too. To anyone learning from brooks, you can watch his videos at 1.5 or 2x speed to help accelerate the learning process. I'm on my second lap and still picking things up here and there