Good Evening Volpri, Thank you for response. Just to make sure I understand you correctly. I want to make sure I understand the Whittling Technique. Do you have example video or chart analysis where you use the Whittling Technique? Thank you,
Yes you haven't checked out my youtube videos? I show the technique in them and have the links in my journal here. Check out the links a few pages back. You will see the videos and any will take you to my youtube channel.
It suddenly dawn on me that both you and @Laissez Faire were right. Looking at my two averaging down trades, I would have been better off if I reversed, followed the BO and scaling in, let it ran. There is a way of combining the best of both worlds.
Say price is in an established TR (20 bars 3 legs sideways) and we get a BO north of the TR. And let's say I had started shorting in the top 1/3 to 1/4 and had also been scaling in (averaging down). So I have this averaged down position on then next comes the BO north what do I do? I tyically give price at least 5 bars to head back towards the TR top and/or into the TR. If it doesn't and the low of the subsequent bars are holding above the BO point (top of the TR) i.e. there are gaps between low of bars and top of the TR then I am seriously looking to dump the short positions and get flat. If by all apoearances it seems like price is not going back down to the top of the TR or into the TR enough to render me a profit then I am begining to consider that a successful BO has likely taken place and I will anticipate a continued move up. If I made the decision to dump my position then next: I will usually DOUBLE up sometimes even triple up my previous size, go long, and on just a small move up I get back my loss and with a little more push up I am in the money and I just scalp out. Or, I hold at first pause (Profit taking PB after the BO) and wait a bit to see if we get a MM on up. The doubling/tripling up gets my loss back quickly because now I am in correct flow with PA I am now swimming with the current not against it. The reason I don't exit before the BO and reverse it BECAUSE 80% of BO attempts of a TR fail within 5 bars. So, I hold my short position until PA proves to me that I now need to dump my short positions and get long. I wait for an established (TR 20 bars 3 legs up/down) before I start using TR techniques. LOL sometimes I fudge just a little bit but you have to understand I am used of spotting and seeing TR behavior even a few bars before 20 bars and 3 legs. However, a newcomer to trading TRs is better off to wait for the 20 bars with 3 legs before utilizing TR techniques. Why? because before 20 bars the sideways move could just be a PB from a previous trend and price subsequently continues the previous trend before the 20 bars are reached. See I want PA to prove to me that we are not in a PB from a previous trend but we are actually in a TR where I can employ TR techniques. However, understand that it is only by 20 bars that I can then see the 80% FBO's attempts. And since the market resists change and HAS inertia (and it has been moving sideways for 20 bars AND every BO attempt TOP OR BOTTOM in those 20 bars HAS failed it is likely that PA will continue sideways enough for some scalping using TR techniques. Often for another 20 bars or so the BO attempts top or bottom will fail. So, I capitalize on this inertia by utilizing TR techniques. Nevertheless, there ARE times that right after the TR is established (20 bars 3 legs up/down) that on the next few bars or even the very next bar we see a successful BO. So, if that does happen then I have to switch tactics exit my positions and reverse and go with the flow preferably double or triple up my previous size I just exited from. I do that doubling/tripling up technique because I do not want to wait for 2 hours to get back some loss I had to take. Because if I have to wait 2 hours to salvage my loss then I miss out on FOT and FOT is where I can make money during the session because I am going for small profits over and over again.
And also understand that sooner or later a BO WILL occur. Price cannot stay is a trading range on any particular TF indefinitely. It will break out. It may come after 25 bars of sideways motion and FBOs attempts top or bottom OR the BCCESSFULBO (as opposed to a FBO attempt) may come 30, 40, 50, or even after 60 bars of sideways motion. I watch where price is hanging at the most within the TR to give me a heads up of which side the BO will like come when it does come. And I am looking at the amount of bars in the existing sideways move to sort of gauge the likelihood of the successful BO direction. After 30 or more bars I am anticipating a BO north if the majority of bars are hanging in the top half of the TR. Why? Because that tends to indicate that every decline toward the bottom half of the TR is being bought. Pressures are north. Another thing I do is count the bear and bull bars within the TR. Are there more bear than bull bars? How many dojis and the doji's position in the TR. Why? Because dojis are 1 bar TRs in themselves (that fact can be seen by dialing down to a smaller FT). A world of warning TR will often have legs that race to the top or race to the bottom and novice traders WILL think BO is coming and they will take a position north or south only to get whipsawed out when the BO fails. Therefore, I like price to prove to me that a BO is a successful one. That tendency to raise to the top also hoodwinks traders into not shorting in the top 1/3 or 1/4 of the TR when they should be shorting but they are tricked into thinking a BO is imminent so they go long then it becomes a FBO and bam they are whipsawed right out of their position. The opposite happens on races to the bottom. They are tricked into not going long in the bottom 1/3 to 1/4.
Hello Volpri, Thank you for the explanation. Question: 1. When you double/triple size and go long, will you still average down if price goes against you? Or is the double/triple size traded when a stop loss on the entire position? Thank you,
Typically no I won't average down a double up or tripled up size. I get a quick profit or I will exit and wait for another opportunity. There are exceptions but I am speaking in general terms here. But to double up or triple up I usually want price moving in my favor after I have exited with a loss on the average down position with a loss. I want to see that the BO is in fact moving in my direction so any position taken double up or tripled is usually on a stop entry order after price is going in my direction. I only use PA SLs but that doesn't mean I will wait for price to get to it before I exit with the loss. I hardly every use a set (in points) SL. Why not? Because the I want price to tell me where to best put my SL. There is usually more than one place to put it. Typically it is at a swing high or swing low but usually there are more than one swing high or swing low that are reasonable areas to put it. I use a PA SL not a set SL like 3 points or 5 points. Those type of set point SLs don't work for me. I have to give the trade room to work. With set SLs I find I get stopped out then it goes in my direction right after I take the loss. So, if an institution is going to move price they will move away from a swing low or swing high far enough that it will render me a profitable scalp even if they move it towards the swing low and swing high first. If they reach my SL or look like they will reach it, then perhaps my premise is wrong, and I just need to get out. Which swing high or swing low I pick for my SL depends on the volatility of the moment and the momentum going on. Higher volatility will require a bigger swing high/low as a SLs. I will also adjust my S depending on volatility and momentum that occurs AFTER I have entered the position. One other factor is the size of my position. In a double up or tripled up position I want it moving rather quickly in my direction after my entry because I am assuming more risk.