I'm no pro. Grain of Salt blah blah. Lose small, move on. You aren't going to be right 100%. Make your winners count. Today was hard. I struggled. When I'm wrong I try my hardest to take the loss and move on, and remind myself that the market doesn't give a damn about me. Ergo, I don't give a damn about it. I can also look at price action and wait patiently for my next setup/signal and determine if I'm ready to execute without a second thought. Because I know my plan has been tested and works. (i'm still testing BTW, I'm just trying to help the psychology). Gotta plan? That works? -Jdawg
Yes, you're absolutely right, you can't be right all the time. I have found as well that after the trade doesn't work, the best thing to do is to see if a trade in the opposite direction is justified. This often is the case, but psychologically I'm not ready to take it yet. But I certainly see how once I learn to be in the right frame of mind, when I take myself out of the equation, things should get easier.
Well going forward, I think I will just try and focus at the extremes. Here price will usually either reverse, or penetrate. I will watch the tick chart, and as long as I get in within a point of the level my stop can be tight. Most of my loses comes from holding on too long, so getting in at an extreme should make it easier to let a trade go that isn't working right away. I also need to focus both on getting back in, in case I'm stopped out but the trade was still good, and also taking the opposite trade. When at the extreme, if you don't get a reversal and I'm wrong about that, breaking through the level and continuing is another high probability bet. Today, once we got to the overnight high, it wasn't pretty, but the preceding price action should have already told me that this might be the case. But having looked back at enough charts, lots of juicy stuff happens at previous day highs and lows and also overnight highs and lows. The only unfortunate thing is that sometimes the best trade is already gone, the reversal is well under way by the time I wake up so then I just have to sit on my hands and wait again. There are of course the 50% levels as well, so identifying other extremes would be great as well. But essentially, trading at the extremes is what I'm thinking is the only way to do this consistently.
So when you look at the attached chart, the red level at 3983 was already on my chart and it clearly is causing major hesitation. There is one slight poke of 2 ticks, but reversals when we got to within 2 ticks would have been profitable. My does keep rebounding less and less though. I'm incliced to put a level of support at 78.75, mostly because of that firm rejection of that one bar, but it could also be as low as 77.50. At any rate, we have this range now of roughly 78 to 83 that we need to clear. There is another level at 91, not too far away. It hurts to look at the hourly chart as its pretty much just straight up, so all this work seems alomst pointless if I just took a long term approach. I did hit a bit of a snag. I was reading over old material, especially quotes from Db, and he outlined that using PDH or PDL isn't really all that predicive, or something like this. Basically, these don't seem to be extreme points. It is true that a PDH is only one instance of price turing around, and for a level of resisitance, you'd want to have multiple instances of price not being able to penetrate, but on my charts, I do see that price either reverses here, or goes successfully through. Perhaps this isn't often enough though to base a trading plan around. Going through the material, there were excellent discussions last July to Sept, the focus really is on areas beyong which trades cannot find trades. And as Db has always said, looking at rejections is vital. So I'm not wrong with my approach, and focusing at these extreme levels is exactly how this has to be done, and I know what to do when we get there, but I think I'm gonna need to work hard to identify these levels. Today we have an overnight high at 83.50, and that level at 83, and the congestion here is obvious, so we should either break through or reverse down. This being a top from almost a month ago, its obvious lots of eyes are on this level. Just recently, price reversed from 82.75 and is coming down... shoot.. have I missed the trade already???
Here is the tick chart from that little spike down that was rejected complete with the level I had outlined as possible support given the previous rejection. On the one minute is also a volume spike, and not that I'm using volume, but this is showing lots of interest at this level. Drats, this was worth at least 3 points now, and being in a long down here is being in a good position for price breaking through if it does since this is the long term trend after all. Mind you, being in a short at 83 is also a good move, or would have been for the past hour since price kept coming down as can be seen obviously in the one minute chart I just posted in my prep. I am almost inclined to move the level of support up now by a point to 79.75 since we seem to be forming support here now.
Thanks! Yes, that is the problem, given such an important level, both sides might be fighting hard and hence it could take a while to work through all the trades until a winner emerges and price finally goes higher or lower.