Ok this is what happened while I was gone for breakfast. As can be seen still sideways action. Range has been going on for 40 or so bars. Price action hoovering mostly in the top 1/3 of the range. Certainly opportunity to average down in the top 1/3 and exit with profit at least two more times. I have other things to do so I am stopping for today. Maybe if I get a chance in the afternoon I may make a trade or two. We will see. This is 4 trades. Although I didn't draw colored lines for the first trade (can be seen better in post #448) it was one of the averaging down trades. All 4 trades profitable. All winners. Three were averaging down and one was just a two contract short scalp. See averaging down can be profitable, in the right circumstances and senarios. But a trader should always have in place and in mind exactly where they will exit with a loss should price move against them. A trader CANNOT afford to hang onto an averaged down position that has moved against them enough to invalidate their original premise. Just take the loss and reverse doubling up or even tripling up is what I usually do. A trader should not just average down to be averaging down. Remember this is little tiny MES and small positions. Never once did I have more than 6 contracts. But it would be no different if it was ES. Nor would it be any different had I traded large positions. ON MES I made $447.50 before commissions. If the same trades would have been ES with same position sizes the profit would have been...……...well you get the idea. There is no point in me doing it with ES as it would seem to be so out of reach for the average retail trader on ET. So, I am just showing how one can use different tactics trading ranges in the MES. I have not yet covered all the tactics for range trading but learn these well and maybe practice them on a SIM. I will try to show some more in the coming days. Then we have to look at tactics trading BO's. And tactics trading channels and the latter we have covered to some degree. Remember, the market goes sideways...then breaks out, then channels, then sideways again. That is the basic market cycle or phases. A trader just has to be able to identify and see these phases and employ tactics that work best in each phase. Even then, a really good trader, most of the time, has a 40% chance of getting it wrong so he has to know WHAT to do when he is wrong. How to take a loss and how to recuperate that loss quickly. Folks can say or believe what they want about win rate but I had rather have a high win rate than a low one. Win rate, for me is one of the most important metrics in trading, especially in scalping. In scalping 1 to 8 or more points in say the ES it becomes almost imperative that a trader learn how to have a high win rate. And that he learns to take his profits as the market gives them to him. None of us can say with certainty what the market will do on the next 5 minute bar. But we can learn to capitalize on tendencies. And remember in scalping (manual HFT I call it 1 to 8 points I don't care what you call scalping.. this is my definition of it), a bird in the hand is worth two in the bush. It simply doesn't matter what happens after a profitable entry and exit. Forget the "I should have held for more profit". Such declarations are "what if" concepts. But, "what is" concepts are what the market is ACTUALLY in real time giving you in profits, at this moment. Take it. There will be plenty of more opportunities for scalping all day long. Usually, 20 to 40 opportunities on a 5 min chart. What more can you ask for? To end the day profitable..and with a high win rate...and can take momma to Dillards instead of dollar general. The lady is happy and the trader is eating that ribeye instead of a 3.00 fast food Hamburger. Not to knock dollar general as they serve a needed purpose, but momma prefers Dillards. Happy trading the rest of the day!
A quick comment. Why did I short the second and third trades in the bottom 1/3 of the range? What was the rationale? Don't you go long in the bottom 1/3? Yes, that is the general idea. However, there are exceptions. Larger and immediate contexts are important. See we had a gap up open on the RTH's 5 min chart. Then a rally. Then we had 2 strong legs down. While the second trade and the third trade took place on the 20th bar (orange lines) and 21st bar (blue lines) of the gray range box at the time of the trades the gray range box had not been drawn (remember need 20 bars AND need to see a move back up off the bottom). So, while it appeared that we were going to head back up and form the range it could have just as easily kept going down. So, by that second trade OF THE DAY (20st bar) I have to decide what is likely a range or a break south? Looking at the two preceding legs down form the high of the day I reasoned that the last leg being fairly strong would at least give me enough move down for a quick scalp even if we head back up in a range. And if it doesn't head up into a range then I am positioned with a short for the move down. So, I took two quick scalps here (trades 2 and 3). After trade 3 which was 21st bar then I drew the range box once we started back up on that H1. So, basically in trade 2 and 3 while in hind site it looks like I should have been going long instead of short I didn't do so because I had not decided yet that it was going to morph into a range. And the preceding bear leg to me was strong enough to warrant a couple of short scalps. Of course, after the trades I drew the box once we started back up so in the chart once the box is drawn it looks like I shorted in the bottom 1/3 of the range. So you trade what you have at the moment then use range trading tactics once the range is confirmed. in this case I need to see price go back up after 20 bars. Hope that explains what could look like a discrepancy but it really isn't.
Another trade top 1/3 average down 6 contracts. Profit at this point in the session 560.00. Total contracts bot 24. Total sold 24. Commissions $47.04 Net $512.96 Done for the day 6 trades. All winners. 2 straight shorts. 1 long averaged down. 3 averaged down trades shorts. On losers average down! Well that is what the gurus say. ROLFMAO There is another way to look at these trades from this RTH's 5 min chart. This type of price action is also called a small pullback bull trend. These are strong but grinding trends. Another way to trade this is go long on every PB and average down if need be. Then exit on swing highs and reload on PB's or just hold and add to the position on succeeding PB's then exit near end of the session or exit on a reversal. Since it was a slight slope Small pullback bull trend and not a steeper slope one it could also be traded as a range. That is what I chose to do. There is a third perspective if you trade it from a 24 hour chart. For fear of confusing folks I won't delve into that in today's PA. I just simply chose to trade it as a range using range trading tactics.
Here it is the same chart but clean. See the Small Pullback Bull Trend? Gap up open. Trades down thru the 20 EMA (somethimes that happens and sometimes it doesn't reach the 20 EMA then a reversal and up we go. At that point (by the 10:20 bar) it can now be classified as a Small Pull Back Bull Trend day. The tactic is like I said go long on PB's (even averaging down long) then exit on swing highs or hold and just keep adding on PB until the end of the session or until a reversal happens or a PB is getting to big. Personally I prefer to scalp over and over all day long. Going long on PB and exiting on swing highs. Then repeat. Again, the principle of a bird in hand is worth two in the bush. Lock in them profits. I simply don't care about the extra commissions. Brokers got to make a living too. Do you see this Small Pullback Bull Trend? Do you see how to trade it?
Pull back is first black bar, entry buy stop above it. Entry Buy stop with green arrow, stop loss red arrow. For this context scenario, I will trail the winner by 20 ticks, and then move stop up accordingly.
Thank you for sharing. A few questions: 1. Why did you go long in the red box I show? 2. Why did you not go short on any of the red arrows I drew below? For my setups I would have went short because of the bearish momentum and breakout of the support at either two red arrows. Do you prefer to trade with trend of the day only?
To question 1: I went long because a range had been established by then, price was still in the bottom 1/3 of the range, it was a second entry H2 opportunity after two legs down from the top of the range, and it was an averaging down long opportunity. If needed be I would have kept averaging down. Plus the bull bar reversal that preceded it was the biggest bull bar since open over 22 bars back.
The second question:I will answer when I get back to my motorhome where my Ipad pen is located. Your question pertains to the 24 hr or overnight chart of the same price action.