Trading NQ via Price Action

Oh ohhhh... SMA!!! I hope Db doesn't read this! LOL...

The line breaks are tricky. I could see a few different ways on how to draw the lines, so this really bothered me because I knew I just wasn't doing it right. I also saw in Bon's journal that he was pretty good about taking exact SLA entries and he would often get chopped up. Not faulting the system at all, just acknowledging the limitations.

With ND really explaining to me the difficulties of 1 minute charts, I see it in a whole new light. The 5 minute bar chart to catch trend, with the 1 minute for entries is I think the sweet spot. I also like what she is doing with her trend lines and the way she looks for entries.

This is all still very much SLA like given that SLA is essentially just going in the direction of the trend via the entry of a retracement. But having additional stuff to go on about where the swing point could be, or the confirmation of a trend end or continuation via a 5 minute chart versus the 1 minute chart will I think really help to prevent over trading and getting chopped up.

I have therefore wanted to see how well SLA would do on a 5 minute chart. I know Db's PDF uses the hourly charts, and this is solid, so I think a higher time frame really helps with the chop factor of taking mechanical SLA trades.

 

My god.. these 5 minute trend lines are just providing the best trades today. They are here on the one minute chart, since this is what I would use to take entries from, but I can see so many trade opportunities.

K - I tried one here, but didn't hold long enough. The entry was a bit far away from the SL, but the stop could have also been the high of the trigger bar. At any rate, although price went against me on the next bar, this trade was still worth a good 7 points.

L - The exit could have been here, and because price penetrated but didn't stay below, a long could have been considered, but the bar closed so high that an entry places you at pretty much one third into the move.

Lets see what happens as price comes down here again.

Now I should mention that the lower line I have had to redraw a few times, but after this, it continued to provide excellent trade opportunities. I see so many trades here now that just work so well. Such a shame to have lost a chunk of money today.

 

last note lol. Each trade I made notes as to where the signal was in relation to the context on longer intervals as well as what was in front of me on the 1 min. The context did not stop me from taking or trade or not. When I add this to what I have so far I'll review the signals which were successful vs not, which started the trend, what started the consolidation, where, what time etc etc. I basically have an idea of what the findings are going to be and it's going to be in favor of the combo of AMT (context) combined with entering trades around those areas via SLA, but I essentially have to see it for myself.

 

I think if DB was here he'd say something along the lines of it doesn't matter which interval you choose price is a move not a slideshow. Forget the interval and the lines and just focus on the movement of price. (obv you need to choose an interval to look at just saying lol). The same 5 min swings that you draw your 5min trendlines on can still be seen on the 1min so on and so forth. The price of that point is what's important.

 

This part is really big. Much of my fear comes from not knowing what will happen. Of course you never know, but when I have a clear idea of what my entry is, and what I need to see if it is working or not, and know when to exit, and most importantly, know that this is statistically positive, then it should be easy to just keep pushing forward and any exit for a loss just means one step closer to a gain. Its funny how right now, I pass up on the trades that seem well set up, but I take the trades that are too far into the move as to be "safe" from an exit point of view. I hope that these losses I have now via real time trading with money will in some way help when I finally have something solid. I certainly don't think I can do any worse once I actually have a solid plan! LOL

 

Absolutely right, but just for me, the way I was drawing some lines, I made a trend out of something that wasn't there... a micro trend!

But yes, I put my 5 minute lines on the 1 minute chart since the swing points are all the same (its also important to note that Db says trend line are in your head, the swing points are in the market, so swing points take precedence over the trend lines). So what I will hopefully not do is try and put trend lines within these 5 minute lines. I will just basically wait for something to happen at these 5 minute trend lines. Almost like waiting for price to hit AMT level extremes.

 

to me it's a lot easier to use swing points instead of trend lines just for the fact the smaller time frame trend liones will chop you to death. although i do use trend lines for my 1st entry

 

Ok.. lets do a bit of post analysis/back testing using 5 minute trend lines for trade setups and 1 minute bars for entries. (I am leaving my lines exactly as I had them drawn because this is what I saw today to remain faithful to the live environment, even though after reloading the data things have shifted just a bit)

I'm also not sure if I should stick with a 1 point entry away from a bar, or drop down to 2 ticks. ND uses one tick, so I figure halfway between Db and ND would be good. Less gives you a smaller loss when price turns on you, more ticks might save you from not entering a losing trade from accidentally getting caught. Ok.. lets just do 1 point for today.

O - So we have the open, and its 4 minutes of chop.

A - I use this swing point with the previous low for an initial trend line.

B - Since we have this high at B before the open, I can bring bring a clone of this line up.

C - If I want to be really aggressive, 8 minutes into the open I can take a short here, but perhaps at this point, I am seeing too much buying pressure to think it will reverse here.

D - we break the DL here and I'm looking for a pullback which comes at the down arrow. It wouldn't trigger though before price comes back up. I will then use this as my new DL/LTL.

E - In real time, I already that this pink resistance line drawn, so a third failure to go above this level, not even reaching the parallel UTL would call for a short below this bar.

With a point away, the entry is 15.50, and if I want a stop just above this bar, it would be 19.50, so a 4 point stop. Yes I do have over 4 points to get to the bottom, but ouch, 4 point loss to have to sit through. (the good thing is that its well defined, and I will either let it hit profit or loss)

F - Jesus, look at the precision, it bounces off this new LTL. Lets hope I exit quick for my profit. Now am I quick enough to go long above this bar?

The entry would be at 14, but the low of the bar is at 9... so that's 5 points. Its easy to see that it works, but who knows what I would have done. For statistics sake, this is a solid trade, but based on a large stop, it might not make sense.

G - No problem going through that resistance level this time.

H - We break the OH, and also now break this green line. Mind you, since the green line broke down at D, perhaps this trend is no longer in play.

I - So does a long set up here? We did retrace back down below the UTL, but it perhaps has to be taken, but then a stop should perhaps below this bar, so an entry at 24.75 and and exit at 21.75 makes this only a 3 point loss.

At the same time, you can see the range forming, so an exit just below the range or below the OH also makes sense, which is what I did, but then I had to take the 5 point loss.

So although I know this trade is a loser, before I know how it turns out, it still looks good unless someone else can point out why it doesn't.

J - A short here could be justified now, but the 5 minute trend line is quite far away, so perhaps its just a continuation trade, not perfectly set up given that its taken in a congestion area, but it works.

K - Another short op here. We are well below the trend line, and given that we seem to be trading in channels today, the expectation of going to the bottom makes sense, but this too is now shorting in the middle of nowhere.

L - Wow, we bounce off here. In real time of course I'm seeing price come down hard. (I took a short somewhere here I think and it cost me money! I didn't have my LTL extended but jesus, if I did and I saw price coming down to meet Mr. LTL, I think I would have resisted. Well, it cost me $50 to learn that lesson!)

But jesus, look at how well this works. I have more faith in these 5 minute trend lines, so although the long at the green arrow seems like a crazy trade given the strong down move, the fact that price climbs up so high and so quickly after hitting the LTL should be good reason. The entry would be 16.25 and the low of that bar is 11.50, so ouch, this would be another 5 point loss. But baby, does it ever work. Had I also not just shorted, I would have been in a better frame of mind. The short wasn't set up, so for this analysis, it never happened, and seeing the bounce off the LTL should be a good reason to go long.

M - So price makes it to here, can't tell you why, and can't say where my exit for the long would be, but maybe I would ride it up and make sure to take a 5 point profit as it comes back down to cover the 5 point risk I had on. This would put me getting out just below the low of this bar at M.

So after price is long gone, I can use this swing point to now draw in my SL, or UTL from "I". I can't take any shorts on the way down because it didn't hit an upper line, nor do I know where it is.

N - I do see this hinge and draw it in, seems to break out the bottom, but lets not trade it for this exercise.

P - Break below the LTL, but price comes back up. Then another break, but no RET.

Q - Ah, finally a RET and its even below the line.. sweet. Lets take the short. Entry at 10.75, stop at 13.75.

Well we are stopped out, but lets now use the low to the left of Q to redraw our LTL.

R - Ok, so given the new line, we have a bounce just before R (it bounces off exactly... these 5 minute lines I think people are really watching and I think I am finally drawing them right!) Will I be quick enough to think a long above this bar is good enough? Things sure are looking like we are in a bit of a range now.

At the same time, with a short not working, does this mean a long looks better? The low at P is in fact a higher low.

Also, let me add this. The hinge that formed looked quite nice, and if price exits from the hinge and doesn't continue in the direction of the exit, going out the opposite end is now more likely. So this should give some confidence in the long. (mind you, a hinge in the middle of a trading range just isn't that good... so lets scratch that)

S - So the long worked and broke nicely above the range. Now we get a bounce from, wow... just below the UTL. So lets try for a short. Entry would be at 18.25, and the high of the entry bar puts my exit at 20.50 if the exit is one tick above.

T - Wow, another chance to short. Now here is the thing. This move up to T makes my previous short very nervous. We do in fact hit 20.50... but I might hold just because I see the downward slope of price and thinking that the top of the UTL is my line in the sand. If I exited for a loss, would I still short again after price stops me out on the highest tick but comes back down? Who knows... but this would have been a solid trade as well and it works!

U - We make it to the lower line and can exit the short, just in time before price goes back up. Will we attempt another long? The UTL sure is coming close to the LTL, the two are closing in, so this is one big hinge now.

The long is marked, and it would fill but quickly come down. The trend now of course has been down for the past hour, so lets hope this last long wasn't taken. The stop would be too far away as well mind you, so that is reason enough.

I don't add up the points, but it seems like I would be quite into the positive as opposed to where I sit today with my $169 loss (I made a dollar from that one scalp that set up properly and could have been a much bigger profit)

Let me see what I can do with the rest of the day even tough I wasn't around.

 

Toucan, please continue to drill it into me about having a trading plan.

Just going over this with even a half ass planned but having something it guide me produces results that are just so much better. Not only are the results better, but I'm feeling better, and being in the right frame of mind is half the battle. After that first long that was a 5 point loss hadn't made me short so quick and instead I waited for the proper retracement, the day would have turned out much better. So just little tweaks are all that is necessary. But of course, those little tweaks only come from having and planing and knowing what to do.

Thanks for continuing to follow my journal. I just hope others out there are learning from my lack of discipline and seeing my stupid struggle makes them do it right from the get go!

 

Greetings KP,

If the Trading Plan is not written, then it’s always subject to being adjustable. If it’s always subject to being adjustable, then it’s no better than being random. If it’s no better than random, then how can you ever hope to replicate your gains, or worst, not understand your losses?

Random trading is seductive and addictive, partly because it makes it relatively easy to claim responsibility for the trades that work, because you did put the trade on {Boosting the ego}. But by the same token, it allows you to reject responsibility for the trades that didn't work out....because they were not from your plan {Protecting the ego}. Thus the cycle continues.

The written Trading Plan is the very first step for a trader to accept full responsibility for the results of his/her trading. This is due to the fact that you are stepping up to placing yourself on the line because,...you realize it is you who creates the game you are playing. You become directly responsible for turning the “ticks over time” on your screen, into a "pattern with probabilities game" that you can win…most of the time.

When you really start to think about it, you'll then begin to realize that this is how one is able to conduct a successful and profitable trading campaign "with the overall odds in their favor". Each trade is thereby a part of a pattern probability series that has a overall positive expectancy.

The result of any single trade is not that important when taken in the context of the overall profitable series. One then learns the all important "Mental Skill" to trade from a series of trades perspective, versus a trade-by-trade view. The Center of Focus thereby changes to insuring the consistency of each individual trade with that of the series, and not the singular results of any given trade.

KDASFTG