I've never conducted a statistical analysis of it, but if the R:R is acceptable I will enter off a TL if a 1-2-3 pattern sets up. The example you show at "I" would require too wide a stop loss for me on the initial 1-2-3, but the little arrow you have at M is enticing because it's a FBO of the range high and a test of the range low is likely.
"Surely there'd be a lot more one would need to know in order to become profitable!" How to automatically put the name of the quoted person without typing? People confuse necessary conditions with sufficient conditions, and the average trader write plenty of options without compensation when it is not with a loss. In a zero sum game, it is clear who would win.
Ok.. here we go. But first a warning. This journal entry might piss lots of people off because I'm going to be saying "I" a lot. I'm going to be saying "let's try this"... and I might just say "I think". The point of all of this is not because I can't detach myself from the market. I know the market doesn't give a fuck about me, I know the market doesn't even know I'm in and I'm in no way trying to project myself onto the market. All I'm doing is saying, in language that you guys might find more appropriate, "if a short is entered here, does it reach a predetermined profit area before a pre-determined stop loss target would trigger." Essentially what I'm doing is forward testing both the 5/1 BOPB entry, along with some other ideas that are in my head that have so far been working out quite well. One of these is the idea of trading in a range, essentially taking a RET entry on the way up or down, but making sure there is enough airspace before the the potential target area is reached, and with an appropriate stop in mind. As you all know, I'm having trouble with formulating a plan because I just can't seem to think in absolutes in my head. There are too many variables to write down so I'm not sure how to put this all into a strategy to test. So I think my plan will have to heavily rely on my brain, which in a way might be bad because its subjective and the trades might seem random, but I think I'm building a very firm grasp of what it is that I'm looking for as my entry and exit criteria. Then its just a matter of tabulating how often things turn out positively or not. (bh_prop... I'm getting around to the spreadsheet idea! I'm just lazy right now) A - The first 5 min SL from overnight pokes through here, but price turns back down. Hmmmm... B - This is a swing low on the 5 min chart that is used for my 5 min trend line. C - That 5 min SL penetrates, but doesn't setup a trade, but I will use this new swing high now above for a new 5 min SL. O - Coming into the open, I really had my mind set on hunting for a short. As price started to climb, I was looking for it, completely missing that we actually bounced off, or rather, just above, that 5 min DL. The long never setups up mind you, but it is 30 points up. D - Going right trough the 5 min SL, still no place to go long. E - Now this is interesting. To the left is 4 minutes of congestion and we finally reach a top at 3739. I mark in a short below this bar, just to track, because it seems like a high probability that we will go test that low at F again. My risk would be quite large if I set my stop at the top of this bar, and the reward is basically the same if I set the target at the low of the swing low at F. This trade does work out. I'm not trying to call a top here, but given the congestion area, given the poke higher, and given that price comes back down to trigger the entry, it makes sense to at least try for F again, and it traders should choose to go higher after this, let them. G - Here is a tiny RET for a short. On the one hand I've got the high of this bar stopping in the middle of that congestion area, so a failure to go higher, but on the other hand, there is really no airspace anywhere to take advantage of a profit target. The short would work nicely for a good 10 points though, but I still don't like these tiny 1 tick retracements. H - This is quite a congestion area here, and it curiously happens above the 5 min SL. I've seen this often now since monitoring these 5 min trendlines, but I have to really look back to see if there is anything to it. I - This long marked isn't really set up exceptionally well and I don't think I even thought of it in real time. But since no shorts would trigger below the congestion area, if I track any possible longs by trailing a buy stop one points above the highs, this one would work, and of course the target area is at least the bottom of the somewhat breakout area at "F", or even a retest of the high at 3739. J - This here is a beautiful range, so lets watch for exits. Its unfortunately not wide enough to trade, unless I was gonna go in for a point or 2. K - This bar breaks out the bottom. The next bar climbs back up and goes just a touch back into the range, seeing I guess if anyone wants to buy. L - As price comes back down it stops a bit higher to form that lovely RET before going back up again to form a slightly lower high here on this bar. M - So if we enter a order to sell short at this RET here, it fills, but yikes, a double bottom. This is why RETs that have much more airspace are quite desirable. If price fails to make a higher high, or in this case a lower low, if you have a few points of air space, you can get out in time. Here, forming that double bottom gives no chance for escape. Now perhaps my stop is at L so I still have time to give price room to come down again, but I'm giving price time while already in the negative. I would much prefer being patient if I'm a couple of points ahead. N - This is the interesting bit. The stop would be hit on that short and hence its a loss, but price only stops at the mean of this trading range. Just as I pointed out yesterday, watching for this now has opened my eyes. This would also be a good time to take account of what is happening. We first hit a high or 3739 above E. Our trading range at J had several attempts to go higher but all those failed. The first short at M didn't work, but we only come as high as N. P - Therefore, if I put in a sell order at P, this may just work. Its difficult to take another short after one was just stopped out for a loss, but this trade is of course an independent trade. As I'm typing all this up, I notice that I don't even have a trend line drawn in, so when I do now, I note that the DL isn't even broken yet at P. When price comes down to trigger and fill, price does break through the the DL though. This is I guess why following price is more important than following lines. The up trend ended a while ago with so many failures to break above 3740 and I shouldn't need to wait for this DL to break before trying for a short... I should let price tell me. (this is a language I'm still learning) If my stop would be at the high of N, this is 8 points away from my entry... a huge stop, but if my target was therefore 8 points, it easily makes it there. These 1:1 trades only are worthwhile of course if my win rate is well about even 75% I'd say. Q - We only make it down to here before turning back up. R - But we still end up forming a lower high. So trend is still down, but these are pretty big bars to be messing with and the huge RETs are just primed for stopping you out. S - I kid you not, here is the 5 min DL from before the open just extended. I never used to track these because price was already too far away, but many times now I see that they still come into play. Price essentially bounces off almost to the tick. So not only did price respect this DL at the open, here price also reverses. I'm not saying trend lines provide support, but with enough eyes watching them, they might have inspired enough people to start buying. A long above this bar would be silly given the strong down move and I'd need to see lots more before I consider a change in trend, but you know, I've seen this happen often enough at one of these long term trend lines that I really need to look into this. T - WTF???? A 20 point bar? Followed by an 18 point bar? What the heck is going on? No news release I don't think.... did someone just announce world peace? For the next hour, price is moving so erratically that I have no idea what is going on. Price is jumping around so much that there is no point in trying to make sense of this.
KP.... couple of comments 1. as you noted... price movement yesterday and today is very volatile... given this volatility, a lot of analysis at the 1 min level can be just noise in volatility and not mean anything... things like double tops/bottoms and the 18-20 point bars. Price was moving so fast and jumping up/down by 5-10 nq ticks and the resulting bars may not mean much. 2. are you doing all of this analysis after the fact or in realtime at the "hard right edge"... i ask this because some of the analysis seems like you already know what will happen in the future, like drawing in a new SL. I am an old guy, so I could not do the in depth analysis that you are doing in real time. 3. you said that you were doing forward testing of the 5/1 bopb entry with some other ideas.... if you are really forward testing, then I have to ask... is all of this analysis connected to that forward testing as it should be. meaning can you connect each and every comment to the forward testing of this particular entry, Or are you just analyzing each and every thing that you can see on the chart.... cheers toucan
Excellent questions toucan... let me see if I can answer properly. 1. Yes, the noise is a huge factor.. I cannot agree more. That little double bottom at M was a bit of a stretch. I guess that to get over the fear, I am not going to stick around long enough to find out if in a trade. So in a sense, I do have a firm stop in place which would have been hit once price re-entered the range, but I think that just seeing this little double bottom might make me hit close early, taking a smaller loss than necessary. Of course if I was actively in the trade I'm not sure if I would be quick enough, but better safe then sorry. (actually I do know from the past that I usually stare for a few seconds and the stop loss is hit automatically... but perhaps the reaction times would be better now) At this point in time though where I marked this trade at M, price hadn't been moving erratically yet to the best of my recollection. It was only after that huge 20 point bar that the whole "mood" of the market changed. But you're right, these one minute bars tend to be "noise", which ND really got me thinking about, so they don't provide trend, but they provide great entries. The trade would really have to fit within the parameters of the 5 min trend. Hunting that short at M was failure to breach 40 over several attempts, so I think I have the wind at my back if I'm thinking about a short. The second short at P of course worked much better. 2. This is a tougher question. I don't have all the words written down of course, but to the best of my recollection, when I plot in that little arrow, it would be as if I placed the trade live. Sometimes the trade doesn't trigger, and I think in the past I may have just removed the arrow, but if it fills and yet still doesn't work, I'm fairly certain that I have been leaving them on the chart. Now don't ask me about stuff a month ago, I think I was looking at things much differently before then, but going forward, I really have a much clearer idea of what I'm looking for and I'm trying to be honest. This doesn't perhaps exactly mean that I would place the live trade just yet, but it does mean that I am seeing something that makes me think this trade here is legit. So when I look over these charts, I can almost do a tabulation of what worked and what didn't.... almost a spreadsheet in visual form. The DL at P, this is true, I didn't have this drawn in, and I think I said this in the journal when I plotted the short at P. I wasn't looking at this DL, I was just following price and trying to figure out what its telling me (Db does say to lose the lines as soon as possible). But at S, as price was coming down, I extended the 5 min DL even before price made it down that far. I saw in real time it bounce off. I thought in real time, before it happened, "what would happen if I went long above the high of the previous bar". I didn't mark this long onto my chart because it just isn't setup properly, but I clearly knew where such an entry would be. When these bounces happen off a 5 min trend line, my gut feeling is that they tend to work, at least for a few points, but this of course has to be tested. But yes, most of this is happening at the hard right edge. You see, I know that rules have to be followed, and taking a trade that is in the opposite direction of the trend is very risky without at least a 123 confirmation, and its especially good when you see this on the 1 minute chart. But I know that when you reach an important level, price can fully stop and reverse. If you have a clear idea of where that is, you can get away with almost a 2 point stop and get into the move almost clairvoyantly. I believe this, but I clearly cannot do it just yet. So when I write the way I do with so many "I"'s, which seems to have pissed off some of the people reading, I'm not making this about me... I'm just trying to share what is going on in my head at the time. There has to be an "I" in there somewhere, because I am after all the one that has to place the trade. What I think matters, but what I think has to come from the statistical back knowledge of knowing what to do. I am trying to align how I think about price action with what is really happening and have this thinking be based on my analysis. So each time I say "I think", what I really will be saying in the future is that "this price action right here often leads to price dropping further, so here is a good place to go short". I hope this sounds little better and doesn't make it seem like I'm still out to lunch on this. I cannot stress enough that I am working extremely hard to train my brain to think about what price is telling me and not to feel. In fact, once the thinking is even done, then I will just know what to do. Some setups already working like this for me because I have seen them so much, so there isn't much thinking involved, there is just doing. But to get to this auto mode, thinking is I think (tee hee) still necessary so that it can be programmed in. You know its funny because when I lost the bulk of my money, my brain would think here is a good place to put on a trade. Then I would watch to see what happened, and after it worked, then my emotion wanted to get in on it cause I felt like I was missing out and wanted to be rewarded with my keen insight. Of course the proper place to put the trade on was gone, so when I entered, it was far too late. But I feel that if I in fact act at the same time that I think, without waiting to see what happens, perhaps this will lead to consistent profits. Now of course I am even so much better at reading price action too... but not enough has been tested yet, so I still have to think a bit more before I always just act. 3. This question confuses me a little. Today for example, no solid BOPB entires triggered that I could see. At the open, price never penetrated the DL. At "D", it blew right through the SL without offering a pullback and chance to enter. At S, same thing, we bounced off the DL. So there so far hasn't been a chance to try a BOPB entry today based on 5 min trend lines. If anything, the trendlines have provided amazing reversals, but the BOPH entry actually provides a continuation of the trend as it breaks through the line, not the reversal. Now saying all this, there is certainly a flaw that is of the "survivor bias" type of problem. Perhaps my brain is only remembering the stuff that works better. I try and be as accurate as i can with the trades I place, and sometimes I place them but just comment that I'm only seeing where this goes, not exactly a legit trade I would put on. The best thing to do would be to sim, but I haven't been able to get it to work. My broker does provide a sim account, but for some reason, real time data doesn't transfer over into the sim account. Maybe its just a glitch I can fix though. If I simmed for a week then these results would be much better of course. Hope this provides some answers.
Progress ================= Now Keep your plan simple.., define the set up - your actions - the conditions you trade the set up Don't try to capture every possible mkt gyration in your plan - there are simply too many - instead focus on what you're looking for.., what you will do..., how you will protect your ass..., where you will take profit NOD gave you a road map - do the work to own it ============= And Yeah - I broke my word of not returning RN
You're excused... because your highlighting of my points that are important, and what you say, is advice that makes sense and I can understand.
KP... i'm an old guy and probably wasn't good at asking my questions question 1 was trying to get you to think about the fact that the market is always changing and sometimes what worked in a slow/low volatility market doesn't work in a really fast/high volatility market. I haven't traded index futures in the past 2 days due to the increased volatility screwing with my setup/entry analysis. question 2 wanted you to be sure that all of your analysis is done in real time, as bars are forming at the hard right edge of your chart, given that you have skipped over the setup/entry design part and the back testing using old charts and jumped into real time testing (ie written trading plan). question 3 was taken from what you said about "forward testing bobp entry with some other ideas"... I thought your were just testing the bobp setup entry process, but your analysis seems to be all over the place looking for many other types of entries or analysis not directly connected to the bobp setup/entry. you said in your answer below that "no solid bopb entries triggered". i would have thought your analysis would have been much much shorter and more to the point as to when/where potential bobp entries were forecast and what happened to cause them to fail. and everything redneck said toucan
Well have no fear... I think your questions were really quite good and I enjoyed searching through my brain to try and find answers! I certainly like your further qualifications though... 1. I fully understand. At the same time, price action is still price action... and higher lows and higher highs still stand out. The trouble of course is that these bars are huge! Looking at the chart when its all zoomed out, it doesn't look much different to me. But when I look at the scale and see its been 80 points up.. yikes! The 5 minute bars especially look quite nice, and it looks just like any other day to me. But in real time, the volatility is huge, the bars are huge, and the stops are certainly much bigger than anything I would be comfortable with as well. But ahhhhh... the huge opportunity if you are on the correct side of the trade! 2. I love how you summarized so well what I'm doing. This is exactly what I'm doing... and I'm doing it backwards! I'm trading to see what works and what doesn't... then I'm trying to figure out why it didn't work, and then I'm trying to build a set of rules to take advantage of works and keep away from what doesn't. I'm taking bits and pieces of stuff I read, stuff that other people show me, and I'm trying to see how much of that I can see myself. I am also having this epiphany almost. Price can only go up or down... or stay sideways for a while. Then it makes a moves, comes back to test that exit... if it fails, then it tries the other exit... and basically, as Db says, traders are in the business of looking for trades. If they can't find them at one level, they go find them at a different level. The trouble is really when you trade with your P&L. But when you can step back, it flows not too badly. I also see all the different ways that retracements present themselves, and also what this means to the big picture. By trying to trade a really tight SLA, I'd often be stopped out. But I see now that these minor movements don't ever threaten the main trend. I think the trick is really identifying what means trouble to the trend and what doesn't. By knowing this, you know how to set your stops. And when you can do this, you won't care what happens in between. Just let the algos mess around with the scared traders and weak hands and let them work it out while you're waiting for the big prize! (much easier said than done!) 3. LOL.. yes... this is true. If this was the case, my journal entry would be "no trades today". There is so much more to take advantage of though.. and I know the more I practice, the easier it will be for me to take advantage of it all once I'm ready.
I’m going to address this – but first Your journal… your sole goal here – is only about becoming a trader – everything else is bullshit.., and useless Once finished with this – please get back to the task at hand ================================== Traders do one thing… and one thing only = we produce a PnL Could be P…, or it could be L – but that is what…, and all – we do Why would a “trader”…, be reluctant to show the very thing they produce – especially if that “trader” is espousing the way it should be done On two occasions I’ve posted my daily PnL and asked he do the same – no response Now – if by the off chance you ask to see my PnL for today…, yesterday – think I could / would post it? Second He has said (and stood by) 3 things that are absolutely impossible for day trading…, but if one doesn’t actually trade – all 3 sound plausible – they are not Third He has told me things don’t work – that I use every day Fourth You’ve heard me speak many times about losers – why – because I have them Fifth Why talk down to those you’re supposedly helping I’ll chew your ass in a heartbeat.., but I would never talk down / disparage anyone trying to learn this – it's hard.., its frustrating I respect that.., and those trying Sixth Why sell a book – give the thing away – I can assure you a trader can make that…, and many times more – in a week.., if not a day eta - there are more - but this will suffice for now ================================ Like I said – we could go off on many tangents The sole purpose/ goal here – is for you to become a trader Period ========================== Oh..., one final note KP When I first started trading - I was scared shitless... my palms sweaty..., my heart beating out of my chest We've all gone through it - please know..., it does subside with time RN