Yes, I do agree... or put another way, the Line Of Least Resistance, LOLR as Db teaches. It does bother me that today, essentially the same thing happened. We ventured down, and came back up again. Just a little poke through the top it seems as this point, but looking at the price action from a distance, it seems so obvious to just buy at the low and wait till we got to the top. I am struggling with taking trades as I should vs. what I believe vs. being worried about what might happen. I do think I am damn close, just gotta fix myself a bit first.
I don't even feel like another review to be honest. My reviews are excellent, but what I see in real time is not helping me take the trades. The REJ at the previous day low should have been the trade of the day, worth over 30 points now that we are already at 3748. And yet, I micro manage everything, worry about every entry, and don't even take an entry to be worried about. In a way, I don't think I'm following price. When its going up, I think of reasons why it might reverse, I build a case for the opposite to happen of what is happening. The few times I did get in, fear of losing a few points stopped me out unless the trade worked instantly. But then all that happens is that I accumulate these little losses along the way, and refuse to get into a move like today that ends up being over 30 points already. At the end of the day, its easy to see how the congestion areas are just small little ledges, barely 4 points wide, but in the moment, it feels as if all my profits are being taken away, if I am even in profit to begin with. I'm in for the long haul though, so I have to figure out a way out of this rut. Jesus, there are only a few things that can happen.. it either goes up, or down, and if it goes sideways, then you don't really lose any money unless you are worried about ticks, which I clearly am. I have said it before that stepping back to look at the big picture, a 10 minute chart perhaps or the hourly, it helps to bring more clarity. Anyway... let me ponder some more about what I need to do.
I feel your pain kp, felt this way for some time. Its part of the reason I stopped posting, felt like I needed to step back, just wasn't growing like I wanted to or thought I should. Your analysis seems sharp, hang in there it will come around. Good trading
Great to hear from you Boru! I was just asking Niko yesterday if he had heard from you actually. Its great that we have the ability to analyze ourselves and do what is necessary. I think it will come too, as they say, its always darkest before the dawn. I can see the prize, I am circling it, I just haven't been able to swoop down and grab it yet. I think its only a matter of time ....
PREP FOR JUNE 5 So yesterday we hit a high of 3749, and although we came down a bit over night at first, not too long ago we shot up to 3757.50. Since we are making new highs, we have no idea where the resistance going up could be. On the way down we have 3740 that we spent so much time trying to breach, and then I'd say 3725, the apex of all those hinges that were forming, and then 3714. Db said something interesting in a post a little while ago... can't remember which post, but it was something like how price has to go to the other extreme, no matter how much traders want to buy it or sell it. I have to look it up again to get it right, but the idea from what I recall was that you have to expect a counter move to main trend... but once again... its hazy. The only reason I bring it up is that we are making all time highs here, and although I'm not quite sure where we are in terms of a daily channel, AMT will have us testing the other extreme sooner or later I suspect.
Lots of activity before the open... some sort of financial report I'm sure. Just before the open, I drew in this hinge, apex of around 48, and we already know 49 is a level as yesterday's high, so perhaps this should have already been a clue for today. (Sorry the chart ends up looking cluttered... just wanted to show the inserts as lots of info within the one minute bars) A - In terms of the hinge, we break up, break down, and that fails as well, so back up we go, so not sure how much affect this hinge is having, except that the apex is also the mean. I think to go long here, and am inserting the 15 sec chart to show where and why. B - I ultimately go long here. Following the rules, we have a clear RET. Darn-it, I picked the top again! I give it a bit of room though, 3 points, and finally close. Good decision. Of particular interest is that most of my scratches should be SAR. I am not prepared to do so emotionally though. If if I did reverse and it too failed, I would be too caught up in getting it wrong twice, wondering if I should have just been more patient, etc. Looking at this in greater detail, the entry is on the 4th overlapping bar, should this be a clue? Emotionally, I remember entering the trade thinking this might not work but that I should because it follows the rules and I don't want to be missing out. I could see I had some room before hitting the high at 57 from overnight in case we turned around there, so figured that at least I could get out BE if price comes back against me. Sadly, it was never in the green. But I am also trying to get away from seeing areas of potential problems because I cannot be worried about what might happen. I just have to focus on what is happening. Here, price is going up, but for 4 minutes its going sideways. C - So watching price drop without me, we hit a bottom here, just a touch above 41.50, a previous high from two days ago I think. Once again, looking at the 15 sec, the double bottom stands out. To play it safe, going long above 45 perhaps would be good, the double bottom is obvious by now, but at the same time, getting into a long even closer to 41.50 is better because if the downtrend continues, getting out just below 41.50 will be less of a loss. Reversals like double tops or bottoms I think have to be played with a bit of recklessness in that you take it not knowing it will work, but have a very tight stop. D - Quick climb up to D here, noting that its lower than B. E - Considered a short here, once again, based on the 15 second. If I entered at roughly 50.25, price does still go against me by 2 points, 52.25, but if I am giving it room like I did earlier of 3 points, this short ends up working well. The context is failure to make a high above B, and its look very much like a mean reversion day given our attempt up and down and back up again, so back down seems likely. F - Didn't consider anything until here. We drop below 3740, so watching closely now. Here is the thing. It looks like it will drop some more, so going short at around 36 seems like a good place to get in below the congestion, but since I believe it will go down, why not get in higher.. at a better price? So where I mark in my short is actually where I would think to place my trade. We form resistance here at 39.75 so shorting just below is what I'm thinking. Could be exited for even a point profit I think after the REJ at 34. From here on it, obviously being in a long was the only trade. Once again, after the short failing at F, going long, SAR, would lead to the trade of the day, worth at least 20 points. I was hesitant to get in anywhere, we are after all approaching the mean again and there are so many areas of congestion. G - Another thing to mention is that this REJ might be a DTDB here. We are expecting it to go down, we broke below 40 after all and had our little area of congestion and even broke below 37. So by turning around so quickly here, its a DTDB, and just taking it is prudent, no RET, not waiting for more info, just taking it after the obvious REJ bar, perhaps around 37 or so. I don't want to trade recklessly, but what I see over and over again is that getting in where it just kind of maybe looks like it might work ends up being the perfect place to enter, the place where you get the best price, and if you know what to look for and when to quickly get out in case it doesn't work right away, I think this might be a good technique. I am instinctively, as Db advises, looking at what should have I done, where is the good place to enter on the chart now that I see what happened. If I would be comfortable with loses and scratching easily, and more importantly, re-entering or even reversing right away, I do think my trading will be quite good. CONCLUSION I cannot overlook the simplicity of this at the end of the day, as all days. When we failed to go higher after I tried my long, going short there was the perfect place. Then after failing to go lower at G, going long there was also the perfect place. Maybe I'm being hard on myself because I'm using a chart in hindsight and picking the ultimate tops and bottoms, but I think there is a way to get fairly close to these levels.
PREP FOR JUNE 6 Yesterday ended up being quite the move up. Remarkably, the high of 3782 was alluded to earlier by Db, simply as a result of where the high of the channel would be. Today, Db posted another chart, and it being a day later and the lines being diagonal, that upper channel line is a bit higher. Overnight, we have a level at 3776 that we bounced off 3 times as support, and just now as I woke up, I see we have shot up 10 points, as a result of the reports earlier, not sure if it the jobs or housing. At any rate, we got to 3786, sounds very close to where the high in the channel might be today. I have to be careful not to have a short bias as traders might very well want to buy the price up even higher. Price can enter an overbought situation, simply meaning that it has gone above the upper channel line. But because of this, AMT would suggest that we should be heading to the mean, its just that we don't know how or when we will get there. So on the way up, we don't have anything to really use, but if we see weakness, on the way down we have 76 that I think will be quite prominent. Before price shot up, the overnight high was 84, giving us a midpoint of 80. Once we drop below about 70, we have a bit of air space until we get to about 55 where not very many trades happened yesterday on the way up, so if we do in fact drop, it might be quick.
So all of my prep is for a short in case it comes up, but as I said, I don't want to have a bias at the open. (To add to the levels, 48/49 would be another one on the way down. Its a high from a few days ago, and also the mean/apex of a range/hinge from yesterday. I would of course hope that I would be already in a short by this point if we got there and its simply a matter of seeing if there is any strength at these levels to get out of the short, or more weakness to hang in there. Having multiple contracts and exiting one at each level that shows strength while in a short is a good strategy, once I learn not to freak out over every tick on one contract. I will also have the inclination to add to a winning position, as in scaling in, because there is no sense in having only one contract when in a cascade. But what I wanted to address closer to the open is that we keep making new highs since price shot up at 77. We hit a congestion area from 84-87 that showed some weakness, but now we hit a high of just under 91. Its really amazing how all of this strength could change on a dime at the open, so I will be watching for this.
Ok, I can't lie, I for sure had a short bias, but at least I was looking for confirmation of this first. Once again, I will be showing 15 second inserts as I find this follows price better, and I do use it for entries, but I want to keep the one minute as my main chart because the 15 second chart can give you tunnel vision where you miss what is really going on. A - We open up and hit a high of 91. B - Because I have my short bias, and I see the REJ at 91, I get into a short here at 88. I have to hold it to the high at C of 90.50, 2.5 points, but I am trying to give price room and think my ultimate hard stop is the high at A of 91. C- Luckily it quickly drops from here. D - I continue to be patient and hold when price comes up to D, my entry point, but drops again. This bar opens and closes on the low, a good sign. d - We ultimately hit a low here, will reference this later. E - Price then continues up, and shoots past the high at D. In hindsight, I should have exited sooner. If I draw a SL connecting C and D, the line would break further down, but I'm looking for reasons to stay in the trade. Once the high at D is broken, I am now looking for reasons to get out, but don't until we hit E. In my head I'm thinking that we are so close to 91, that I should just hold on a bit longer to see if we form a DT, but the money risk is a bit high, so if this happens, I'm thinking I can just re-enter, so I'm out at E, looks like 89.50, a loss of -1.5 points. F - Of course we form a double top, attaching 15 sec chart to show this. Clearly I'm hesitant to get in, maybe because I'm thinking well I just tried a short and it didn't work, maybe thinking do I really want to be shorting when it just went up 8 points. Obviously price has to turn around somewhere regardless of how far it has gone in one direction. G - So now I watch price come all the way down, but I'm being not hard on my self at all. In fact, I have been making good progress in the past few days of just not caring. I know I'm down a few points, but really, I'm in this business for the long haul, and its better that I practice and fail than to always just stay out. So now that we drop below the low at "d", I am looking to go short again, and I'm sad to say, I just took it. (ie. market order) Clearly this doesn't work for me. I think the important thing to learn is market orders might work at a significant place where your entry stop might not get hit and its really moving, but a market order to get into a move just because is dangerous. I'm out for a loss of -1.75. Once again, I don't feel bad at all. Yes it was stupid, but I think I had a fairly good chance of this working since we dropped below "d", and rather than wait for a clear RET which gets me in at a worse price, get in right away. I think this might work better in case of REVs where its more important to get in. My technique I think will be as I said before, an entry so close to the level with a stop 1 point beyond the level if it doesn't bounce like expected. H - We come all the way back up to H. 82 at the bottom is a level outlined, yesterday's high, and the low we hit was 81.25. I'm not even thinking at the time of a REV trade, but it only takes about 3 minutes to get to roughly 90 here. I - So after H, we turn down and I note that H is lower than F, we didn't even make it to the double top at 91. I considered this short here, one point below the bar above, but I just considered it. Perhaps the exit could be at BE, but lets face it, my results show that I am mostly holding in for 2 point losses. J - We get to 91 again, to the tick. Clearly I don't have confidence in my REV approach because I don't take the trade. I am always looking for more confirmation, and then when I have it in the form of price moving away, then I am saying price is now too far away from the entry. I hope everyone reading learns from this stupidity. Perhaps I don't know if my plan on trading REVs is good, since I don't know what I will use to decide to take the trade or not, but I think its a good one, just needs to be more defined. Here the bars overlap so much. In a way, this gives me more chances to enter, but it also gives me an excuse to stay out since its not dropping. Do you see the stupidity??? If I can enter again I don't because price came back up, and when it comes back up, I also don't enter because I say it hasn't gone down low enough. Db, if you are reading, can you give me a tip about REVs? I know you mostly trade RETs, and you stay clear of ranges I think, but I'm treating this not exactly as a range, but a DT, or triple top now. How do you trade a DT or DB? The RET would be too far away from where the top or bottom is. K - Here I mark in another short I considered. Once again, it is so far into the move, and then we have the low at 81, but I know enough to not let that stop me, to worry about what might happen. If taken, price does move against me 2 points, and ultimately the trade goes nowhere. L - Watching very closely here as I'm still quite focused. I have my line all drawn in for the double bottom if it happens, but I just didn't know how to take this REV. Its not until M that I put in a possible trade to go long, who cares, its only a SIM trade I'm plotting in, but this goes against me 2.25 points at the worst. This highlights the importance of taking a REV trade right at where the reversal you think will happen. In the case of a DT or DB, the level is very narrow, usually within a tick or two (meaning that if the DB happens, price doesn't go usually more than 2 or 3 ticks past the previous price). But once again, I didn't really see 81 as being all that big, so the double bottom isn't a double bottom until price goes back up, and then its gone. N - Here is potentially a higher low from L, the double bottom. In hindsight, this is good confirmation, so once price stated to turn around back up again at 82 here, I think a long could and should have been entered. (If using the high above the bar at N, one point above, this would be 84.25 again as an entry... hard to see on the one minute, but quite clear in the 15 second chart) It works very well indeed. O - We have this dip here, but these two bars form a REJ bar. This eventually comes down again. P - I start tuning out now... but wake up again here at P. Thinking if I should take this trade. Do I go long? I saw a poke above 91, then down again, almost think to go short, but look what happens. It shoots up, perhaps everyone went short and its short covering? Perhaps its buyers really wanting the BO? CONCLUSION Sucks to lose money again as I was quite in tune with the market, so I'm inching closer. Db's suggestion to not be in chat made me focus more, it put all the responsibility onto me. I think he was a bit surprised to hear Niko and I chatting and trading at the same time. We were quiet for the first part, but yesterday for example, neither of us did anything at the low of 35 to capture the 40 point move. I kept looking for reasons to not enter a long, but perhaps if we weren't chatting I would be forced to think hard and eventually talk myself out of talking myself out of not going long (ie. I would see and take the long). Hope that makes sense. The drop never did happen today, if anything, we went a bit higher. No big deal, I was making sure to be open to whatever happened and although I didn't make money today, the loses were small. We are even more slightly above the channel, further away from the mean. Is a drop therefore more likely? Not sure. There could simply be a change in trend. As long as traders keep willing to pay a higher price, price will go up. But if we do turn down, the mean is certainly a place to at least hit first.