March 26, 2020 MES 5 min chart Here is a trade I took this more. I will explain later. I am going to eat breakfast and have to run to town. Might get another trade or two in the afternoon. Regardless of what the market does or doesn't do after I exited this trade I have to stop and do other things so I exited it and won't enter another until later in the day if I see an opportunity and have time. So...+$416.25 before commissions. First chart shows the full long averaged down entries (green horizontal line) and the second chart shows the exit at one whack.
Gap up from the open. First reversal that appears to at first be strong will probably in fact be minor and fail. 11 bars up and really only two qualifying reversals (for a 5 min TF marked... 1 and 2) and two minor implied reversals marked IR 1 and IR 2. So I start adding (averaging down long) on the 12th bar and exit on the 13th bar, tgen resume averaging again in the 13 th bar.
My post 432 was referring to chart above on post 431. I did not get to finish post 432 as I stopped and ate breakfast and now it won’t let me edit the post. So I will post over and add to the post. Mar 28, 2020 at 11:19 AM for Price Action 3-26 Look at the chart again. Gap up from the open. First reversal that appears to at first be strong will probably in fact be minor and fail. 11 bars up and really only two qualifying PB’s (for a 5 min TF marked... 1 and 2) and two minor implied PB’s marked Ipb1 and Ipb2. So I start adding (averaging down long) on the 12th bar and exit on the 13th bar, then resume averaging again in the 13th bar. Why? 1) Well it is a relatively large bull bar compared to all the bear bars at this point. 2) Every PB (actual and implied) are minor 3) Up to this point we have 7 large bull bars all closing above their midpoint. 4) There gaps between the high of a bar and the high of the previous and or the high two bars back. Selling pressure has been minimum. 5)price is above all three MA’s except for bars 3,4, and 5 since the open. 6) if you look at the prev PA back 42 bars or so from this 13th bar well price has broken above that high made. Therefore, all signs point to strength in his opening rally. So, any PB appearing to be larger or appearing to be a reversal will likely be minor so I start averaging down on this 13th bar again after first locking in the profit from the averaged in trade on the 12th bar. Remember, I grab my profits as the market gives them to me. I generally do not let my profits run and cut my losses (except in certain cases). I lock in my profits and add to my losses. Counter intuitive, I know. Breaking the gurus’s rules, I know. But we are talking about scalping 1 to 8 points (and more in high volatility). And we are talking about being a trader that has developed the skill to read price action. Otherwise, averaging down can be dangerous to one’s account. So, I am averaging down on the 13th bar (after locking in my profits from the previous averaged down trade). I draw horizontal lines on the chart (grey lines) to measure a 50% PB level from the low of the session to the high of the session up to this point. I am watching as price approaches that point. A 50% pb has alot of merit in intraday trading. I don’t use FIB numbers though. By the 16th bar we see price touching the 20 EMA but STILL above a 50% PB. I add my last contract to my long averaged down position. I am now 5 contract long and losing. The very next bar is a bull bar and we start heading back up. I look to exit my long once my first contract has made at least enough to cover commission on itself. Therefore, I exit on bar 22 without hesitation again locking in my profits. I hope this brief explanation explains “why” I would average down twice in this context. While I am aware the explanation is hind site but the trading execution was live. My goal is to show “how” and “why” I take the kind of trades I take and I hope it provides a reasonable rationale. My profit up to this point in the session was $416.25 before commissions. Not too bad for MES and less than an hour of trading. A word about losses. If price would have traded below 50% (in THIS context) and below IPb1 I would at that point been thinking of exiting my averaged down position with a loss and doubling up and going short. If held long thru Ipb1 I would be out by Pb1 no questions asked, as my premise is wrong. In the latter case I would then wait and see if price reverses back up around that bottom grey horizontal line, and if so, I would consider we are probably going to have a TR (trading range day) and I would look at getting in back long doubled up again at the bottom of the range. If it breaks below that grey line after my loss and continues south then I would double or triple up short. I would soon get my loss back and be in the money again. *note: implied Pb means that on a smaller TF the chart would shows an ACTUAL Pb. An actual PB is when the low of a bar goes below the low of a previous bar, in this particular case of a bullish move. In a bearish move and actual PB would be when the high of a bar goes above the high of the previous bar. In case you are wondering. I didn’t have time to take anymore trades on 3-26. Here is a chart of the entire session with volume added and showing my trades explained above.
March 31st 2020 MES 5 min chart Here is what a busy scalping trading days looks like for me. traded 356 contracts. Profit $4,500.00. - commissions $368.40. Net $4,131.52. Too many trades to explain but in the RTH's I had 3 losses or so with the biggest I think was around 700 or less which I promptly got right back exiting the loss and going in the other direction with more contracts. Today's price action is what I called stair stepping ranges. It is basically range trading.
Here is a case of a MTR (major trend reversal) that fails. In a MTR you want to see a 1) break of a trend line 2) and a PB that preferably goes thru at least the 20 EMA. 3) I also like to see the PB have 5 to 10 bars or more (on a 5 minute chart) 4) next a test of the previous high (if it was a Bull Trend) or the previous low (if it was a bear trend). 5) Then I want to see a signal bar followed by an entry bar. If a bull trend MTR then the entry is on the entry bar as it gets one or two ticks below the low of the signal bar. If in a bear trend then the MTR entry is one or two tick above the high of the signal bar. Stoploss, for both is generally a few ticks above the high of the signal bar (in a bull trend) and a few ticks abobe the low of the signal bar (in a bear trend). The benefits are: 1) small risk (tight SL). When it doesn't work the loss is small. 2) good chance of at least a two legged move down or up (if the MTR is a successful one). 3) the potential of a small risk so good reward/risk trade 4) You get plenty of time to think about the trade before entry. The cons are: 1) Can be wrong 60% of the time. That is the MTR fails. So low probability. You may have to make several entries before one works. 2) Not that many trades in a session. 3) the setup takes a while to unfold. In this chart I would see the trade developing and take a short position on the entry bar. Unfortunately this MTR failed. However, there is a way to mitigate that failure and still come out making some money even when the MTR fails. I will show a second chart with a another twist on how I traded this same chart today with the trades marked on it. PS on the chart the MTR should be labeled LH MTR (lower high MTR) not LL MTR. I just don't want to redo the chart. Just a typo.
Here is another twist on trading a MTR setup that I see developing but has not yet reached the point of a MTR. Once I see that break south of the channel and it is successful (i.e. maintains a bar out of the channel after the initial BO bar then I can envision a developing MTR soon coming. If I am a scalper (which I am) I don't have to wait for the MTR setup to evolve before I trade. When I saw that doji bear bar stay completely south of the channel bottom then I can reason to begin shorting, as the BO of the trendline (bottom line of the channel) will probably go further south BEFORE it comes back to test the previous high at the top of the channel. So I start shorting and cover as PB ends. So, next comes the test. I could go long on the test up to the point of the MTR setup and then exit. Or I could just short the rally up and keep shorting and adding until it reaches the MTR setup. Then stop shorting and hold for the ride down (hopefully a two-legged ride) and then cover with a good profit. In this case I chose to short and keep shorting the test. However, when the LH MTR setup was complete and the first leg down started price stalled so I exited my short position at one wack. Made money on my last 4 entries and lost a little on my initial first two entries. Still did well though.
Well it is 10:18 chicago time. I finally crawled my carcass out of bed ..showered..waiting on breakfast. Will now look and see what trades I may take today. But as we await I will post a RTH's chart from yesterday's trades to complement the two charts above. So here is MES 5 min 4-8-2020 RTH's with all trades. After the MTR failure as explained in the the two 24 hr charts above I went on to trade the continuation up (just didn't get in on H1 and actually got in on H2 late...can't remember..might have stopped to eat breakfast after the profit from the MTR failure). Anyway, made some $$ as price traded up into a range. All long trades as you can see in the upper half of that channel after the MTR failure. First trade was averaging down long then exiting. Next three were straight longs and exiting. All profitable. That brings us to the developing range. In the gray box I started shorting as PA was at the top of the channel (orange lines) before I could actually draw the gray box. I shorted several then covered. Then shorted some mor and covered. Both winners. The as price went down towards the bottom of the gray box (but before I could draw the gray box I went long as IF I were trading a PB from the channel (note this is before drawing the gray range box as it cannot be drawn until we have some sideways to down PA for around 20 bars). So at this juncture I am trading a PB form the channel to the 20 EMA. So I take a quick straight long and exit at the bottom. Then another quick long and exit on that larger bull bar in the range (10 bars into what appears to be the developing range) Both trades profitable. Next I short on bar 12 of the range (bear bar) average down on a 50% PB on bar 13 of bar 12 then exit (cover) on bar 14 (green triangle). Again profitable. Then on bar 14 I enter short averaging down (see the 3 red triangles) and cover on bar 15 making money on last two entries and losing a little on initial entry but still a profitable trade. That is a winner. Averaging down. Then on bar 20 (of the gray box) I shorted and at this point I can now draw the gray range box and since price in the upper 1/3 of the now established range, I short and cover on the same bar 20. Again, this was a straight short (no averaging down) and was profitable. Then on bar 22 price is in upper 1/3 of range so I short and cover on same bar. Then on bar 23 I take another quick short and cover scalp on the same bar. At this point I stopped. Had other things to do. So in trading I used different tactics:..PB trading....trading with PB if it was being made with larger bars...(such as in the first trades on the chart) AND going against the PB as in the second set of trades as price tested the prev high in the MTR (as seen better on the two 24 hr chart above), The trading long and averaging too on the tight channel up after the MTR. Then in the range (gray box) as PB's in the direction of the PB's and also against or fading the PB's too while averaging down. Once we got to 20 bar and I could draw the gray box I resorted to range trading shorting at the top 1/3 and scalping. I quit a few minutes before the move to the bottom of the range but that was all the time I could spend trading. It is now 11:02 chicago time. Still no trading today as typing up this explanation. Will now take a look at the markets. But not for long breakfast is about ready.
11:13 just made my first trade averaged down profitable. Gone to eat breakfast will post trade shortly.
Ate breakfast. Fried egg, sausage, cottage cheese. Took my meds.,..and vitamins. Here is the first trade. Average down (small averaged in short) the exited in two parts. Tactic. Range has been established (gray box) on 24 hr chart. price at the top looking to short and cover on moves towards the middle as I await a BO of the range. Range now has about 41 bars. BO could come anytime or range behavior could continue for more bars. It is now 11:34.
It is now 12:14 Here is my second trade. Averaged down short at the top of the range betting BO will fail. 80% of BO attempts fail but eventually one will succeed. Good odds. Exit entire position at the green triangle. Again a profitable trade. If I would have gotton caught on the wrong side...say the BO succeeds ….I just exit take loss double or triple up in the BO direction. Don't want to follow this down too far as bottom is getting close to EMA and it is bullish, slightly. So, exited when had a profit on all the entries. This is scalping. At least my definition of it. Or you could call it manual HFT. LOL