Finally got in on a move after seeing this cascade down. The unfortunate thing is the double top at 3740.50... so obvious.... and yet not so obvious since I didn't short it. At any rate, here is a chart of the move down, together with a hinge/congestion area from a few days ago to show why we ended up where we ended up. As you can see, I shorted way too late, missed already so much of the move. Before this were two fairly big thrusts down.. over 800 contract for each trade that caused price to plummet over two points in only a second. That should have been my first clue! That happened between 36 and 32, and my short didn't happen till about 29. So my new total for today, instead of being down $(-19) is = $+112
Such a shame that I was locked into a short bias. This long, marked by the green arrow is the classic SLA entry. We have a SL break and a RET, so one point above here gets you in a long at 3718, and more importantly, never once does price go against you. Edit: Opps.. it looks like the line break and RET happen at the same time. Mind you, just a few bars later there is another chance at roughly 19.50... almost as good.
Didn't get as much done over the weekend as I wanted to, too busy making money the hard way, but after Friday, I had some ideas going through my head that I wanted to investigate, so I will have to keep an eye out for them today. Friday really bugs me because that double top at 3740.50 was the trade of the day, and I should have been in short after the second time that price couldn't penetrate. But can't be wrapped up in CSW. What I am learning from this, since this has happened at least half a dozen times now, is that the DTs or DBs just don't jump at me in time, and since this is such a obvious potential for reversal level, a decisive strategy has to be developed and implemented. This one especially hurts because the level was so obvious, it was an all-time high, everyone must have been aware of this level. Curiously though, when I look at the activity on the chart, there doesn't seem to be anything obvious that traders were doing. At any rate, overnight, we bounced off 3740.50 yet again and can't seem to go down. We are now in a fairly tight range of between 34.25 and 39.50, with I guess a midpoint of just under 37. Obviously, above us we have 3740.50, and below 18 and 15 stand out, then 3705 and 3660. On the channel front, (I changed my upper line a bit to reflected the highest point between the two swing lows as pictured, and also to fix the reversed colors), we appear to be in an OS state as we have left the bottom. So trying hard to not form a bias, but this, along with the fact that we keep trying for 3740 might show that the LOLR is up since we keep resisting down so much after bouncing off this all time high.
Such a crappy day for me, personally of course. Lets just get this over with quick and move on. A - Just before the open, we broke the high, but look at this bar, an obvious REJ of 41. B - First minute into the open, I plot in a first possible short. 3 minutes into the open, I plot in a second possible short based on the the double top. C - Considered this short as well. I am attaching the 15 second chart as an insert which shows all of this very well. Its as clear as day... shame I didn't act on it. Of particular importance is that the first short does move more than 2 points against me, but the second and third work with less initial problems. D - It all went down hill from here. So now I'm clearly frustrated that I'm missing out.. the drop looks so good... so I think lets just go short... with a market order for god sakes! Just as quickly as I'm in, I'm out. Worst place to get in, worst place to get out. Mark Douglas talks about how what you are afraid of the most is what you end up fixating on and is exactly what happens. Well, if you have been following my journal, you can see I get in at the worst times and exit at the worst times. This is what stresses me out about RETs that are well into the move and why I'm scared to take them as second and third entries. They can go against you for easily 2 points even though the trend is still in play. E - It gets worse. Now I'm chasing.. and chasing with another market order! As you can see, worst place to get in, worst place to get out. F - And just in case I haven't had enough, lets do this one more time. I think we should at least hit the level of 06 that I have outlined, so if I just go short here, I will make a few points and at least BE for the day. I'm out so quickly, right at the top of my exit bar. Hanging on just 2 seconds would probably allow me to exit for at least a point or two profit, but I know I'm being stupid to get in like this, so want to get out just as quickly since it didn't work, but I just had to try it anyway one more time. G - We ultimately hit this low, and although I didn't know it at the time, when I look back at the 28th now, I can see this as the low point on the 10 minute chart which is also the low of where a hinge starts to form. H - The next hour is just observation but I notice this hinge forming. I draw in my lines, see it break, plot a long here, and of course, it works. CONCLUSION No point in dwelling. Stupid mistakes based on emotional reasons. Initial entries were all good if taken right up at the top, and there is no excuse for getting into market orders chasing on the way down. (full disclosure.. it worked for me on Friday... how messed up is that!) The only saving grace is that my losses are controlled, 3 scratches for roughly 2 points each. I'm down $-(127). The money isn't the problem of course, its lack of discipline, first to not take the trades as my initial assessments are mostly good, and then of course lack of discipline with the chasing. Tomorrow I will be missing the opening which is a shame as this is where I'm honing my skills to get in. Edit: Since I enjoy this analysis so much, I should point out that on the second chart, I didn't draw in the apex of the hinge. You can see though that this leads to a congestion area, both following the exit of the hinge, and also today as price came down. (roughly the 16 to 20 level)
I wasn't able to be around for the open, and by the time I came back most of the action was done... but before the open, I did manage to see the hinge from two days ago, and the huge hinge from yesterday, and as is the protocol, once traders find value at the apex of a hinge, this area tends to provide areas of congestion in the future. Attaching a chart to illustrate what I'm saying. The action today ended up being another mean reversion day, with the apex being essentially the apex from yesterday. I find it curious that on the many attempts that we have tried to break through 3740 we haven't been able to, but at the same time, any attempts to go back down have been bought up. If we get to 3740 again overnight, this should once again provide a good trading opportunity, either for another short, or perhaps a long if the penetration has some backers behind it. As for today, I'm not sure what I would have done. The first 10 minutes would have caused me trouble I think, and I notice most guys ended up going long above 25 for at least a few points. I know my biggest problem is believing a move, which is stupid and something I have to really fix because its not helping at all, nor is it a good place to get in once you see the move is in full swing. I would like to think I would have seen the REV at 15 this morning, which was the overnight low of the range and have taken it, but I know I miss these many times, even though they are plain as day on the chart after the fact. That would have been a great 20 point move! Coming back down would have been hard for me to take as well, but its right there on the chart. In fact, that apex of 25 from yesterday, and seeing how much effect it had today, would provide great trades in being able to trust the reversals if you have a good suspicion that we will be returning to the mean. Anyway, enough of this babble. Hopefully I start and see these things in real time soon as well as I do on the chart at the end of the day.
It's not so simple, at some point the range is going to break, maybe the last time we test support, or maybe the last time we test resistance. My bet is on a break to the upside producing a tremendous short squeeze.
Oh yes, of course it will break. I am trying hard not to develop a bias though, I will just let price tell me. If its just a short squeeze and there isn't real buying for the purpose of buying, then we of course have to be prepared for the drop once we run out of shorts buying to get out. This is what is so nice about using price action.. you just watch and wait and react to what's happening, regardless of why or by whom.
PREP FOR JUNE 4 It seems like the hinge from yesterday is just carrying over. This puts the apex at around 3725, but just as I type this, it seems to be breaking out the bottom. There really isn't much else to say. For the past few days each attempt to go higher has turned around, and yesterday we only made it to 3736, but didn't go below 3714, so the range was less than the day before. Will just have to follow price to see if the traders at the open want to buy it up again, or perhaps it will finally break the lows of the previous days. Entries really at the most important. If you enter at a good place, you're in a potential move that is hopefully in your direction, so any RETs on second entries don't cause you too much pain of holding, and you also have time to get out in case price does go in the other direction. For me personally, the best entries really are where I just think "this might work" or "well, this right here is technically the official entry, should I take it?". Any entry after this is based on "dammit, I knew this would happen, lets just see how to get in now", and this usually leads to exiting for a loss after price comes back up to test the BO area, just before the continuation of the move. My trades over the past few weeks have mostly been not too great, but I think if I gave price a little more room, it would all be a different story as I have at least been trading in the right direction. Given the terrible entry points though, exiting seems prudent as I don't want to develop the bad habit of wishing and hoping and taking on a deeper loss. If the entry is good, the stop loss can be tight mind you. If the entry is bad, the stop has to be a bit wider for full confirmation that the trend is changing. I know for my psychology, I need that better entry. What I want and what I end up doing have been two complete different things. I can at least monitor this about myself, its just a matter of discipline now to change it. Emini a couple of days ago demonstrated how this discipline pays off by capturing over 40 points on the down move, then the up move, then down and back up again. What he did wasn't all that remarkable in terms of skill, he just followed the rules, but what was remarkable was that he did it. Because of the constant back and forth these past few days and weeks, the scratches can add up, but for long term survival and consistent profits, following rules is really the only way forward. Its a shame I'm fighting with myself so much, but not too surprising given who I am and how I got here. I'm just a day or two shy of the 4 month mark when I started to really think about trading seriously and made the decision to focus solely on the NQ and trade using PA as Db teaches, so I do still think I'm doing well. I know this works, I can see it, I just have to get out of my own way.
A - Not much happening around the open here. B - We do bounce off 17, our overnight low, but still, it seems calm so I'm not even thinking about acting yet. REVs of course would have to be taken decisively, but this level wasn't one of those where price kept bumping up against it and couldn't cross. It was only touched once, not exactly an established level. C - This Lower High allows for a SL to be drawn. D- Coming down to 14 was rather quick. Now the frame of mind I am in now is that this looks like a down slopping channel. I see my green line, previous day low, but all I am expecting is to go up, and then come back down through it, as would happen if the channel continued down. Instead, for 3 more minutes, we have a serious a slightly higher lows. What we also have is a series of slightly lower highs. I drew my hinge in later, because as you can see by my possible short shown, I was still thinking to go short. Because of this, I fanned my SL down (light pink), because had price hit the entry for the short, this bar would provide the lower swing high that would be used for the SL. E - Instead, price made another higher low on the next bar and shot up. It also broke through the non-fanned SL rather quickly. No way to get in, and even attaching the 15 second chart, there is no way to get in. LESSON - Looking at it now, this is obviously a REV at the previous day low. So taking a REV trade is one way to treat this. I have decided that if I see the REV, or this it might happen here based on a tick chart, I would only take a trade like this at an important level, and a PDL should be good enough, and I will take it maybe within a point, based on a RET in the tick chart, and I would have a super tight stop, just one point beyond the level. I didn't do any of this today, wasn't prepared for it, but I see it here, and I see it would have worked here, and the risk is only 2 points (trade entered one point above level if the RET is there on tick chart, stop one point below the level - hence a 2 point loss if I should happen to enter above but price goes down below). When these REVs work, price only penetrates the level by a tick or two, hardly ever a whole point I would say, so this strategy I think will work well, maybe not often, but getting into the long at essentially 3715 is highly lucrative. Another way to treat this would be a hinge as I have drawn in, but this was way after price had moved up. How do I trade an exit from a hinge? I would wait for a RET, but here it doesn't happen. I could maybe trade in on a 15 sec, but this too isn't fast enough. The problem with waiting for a RET is that often times, price comes back to test the exit level, so if I wait till I'm a few points away from the hinge to enter, the test might stop me out. F - Here is our official SLA entry. Would you know it.. it works quite well! I didn't take it simply because the day was so inconsistent, and if you read my journal, you know how much I like to have excuses for not taking trades. (well good trades mind you, I clearly don't mind taking stupid trades!) G - DL broken... RET doesn't happen. H - We made a HH, so we were able to fan our DL, but it breaks again. I - Here a short sets up, and triggers. It goes against you right away, but less than 2 points, and hopefully the exit would be for only a point loss when the line does break. J - Here a long sets up, triggers as well, but also would be scratched. And since we have two scratches in a row, better wait for price to go somewhere else. As you can see, price does just go sideways.... so this is a good rule indeed! Will follow this post up I think with more analysis as the day got a bit more interesting.