Thank you trend2009, Well, no sense in bullshitting around. I am not making money, partially my own fault, still learning and grinding with it. It is best to be honest when giving opinions about trading to others.
Simplemelike if yu draw it as a bull channel or if you draw it as a Trading range (and it was both) you entered long in the middle of either. I am assuming you were thinking 2nd entry on a H2 (Or H1 depending on how count it )from a PB In a bull channel. However the odds would have been more in your favor going long at the bottom of the bull channel and exiting around the middle (your entry point). Where you got stopped out with the loss is where I would be looking for a new long entry as it is again at the bottom of the bull channel. But I would wait a bit before going long to see if it breaks out of the bottom and does so with FT. Why? Because bull channels are bear flags with a likely eventual, successful BO, being south. Therefore, where you were stopped out at is the bottom of the channel and is tge area I would go long IF a BO attempt south out of the bottom fails. That is I would first look to fade the BO bygoing long. But, to take a new Long position I would want to first see if the bear flag (i.e. the bull channel) is gonna fail or is the bull channel gonna end and price resumes south. In the latter case I would then short for a measured move south. Why? Because that is the “unexpected event.” Why is it the unexpected event? Because BO attempts of a bull channel out of the bottom fail 70% of the time And price heads back up towards the channel within 5 bars and will likely go back up to at least the middle Of the channel or even the top of the channel. The bull channel has been going on for over 100 bars AND the channel is flattening out and already looking like an evolving range so I would be thinking this bull channel (Aka bear flag) could be ending any time and price may head south or is going into a prolonged sideways move. So, there is two scenarios; bull or bear. To go long you want the BO attempt (of the channel or evolving trading range) to fail within 5 bars and price head back up into the channel or range. For shorting you want to see the BO attempt south succeed and to do so with FT (follow through). Then short for a MM south. Either way the focus is the bottom of the channel or range (depending on how you draw it) and what price does at that point. I want to be going long and adding to the position (i.e. averaging down) in the bottom 1/3 of the Bull channel OR bottom 1/3 of the range if I think think the odds favor the long direction and shorting if I think the odds favor the short direction. Only subsequent price action can convince me which. You can flip the concepts around if price is at the top of the channel or range.
Hello Volpri, I always cherish your input. Thank you sir For that long trade, It does not matter where I entered, it would have been a lost any way and the stop loss hit before the profit target. I like to use bracket orders and set and forget it. First purple dot: low probability to enter long, as 7 prior bars are bears 2nd purple dot: good entry 3rd purple dot: good entry. The trades was decent and it was a loss. I do not like over think things. The trade will either win or lose. I do not like averaging in trades. Too much work. 1 or 2 contracts per trade, depending on risk amount I took the orange dot trade and loss as well. I manage to recover the losses on the 3 blue dot trades. And ended the day up $300. I just trade whatever makes sense and what I see and keep Risk = reward. I prefer the high probability trades, meaning show me what you got before I enter.
Thanks volpri, I definitely agree with waiting of follow through on those breakouts. I have been burnt alot on that.
as it turned out it was both a long and short opportunity, which happens often. the long scalp was one it traded back up into the range towards the middle and exiting at your orange dot. So it was a good long scalp. the short opportunity happened after the subsequent successful BO south out of the bull channel/TR. Then we got the measured move down from where the BO began (bottom of the channel) to the first PB then at least same distance down from PB. As far as averaging down it is generally not a good thing unless one has a lot of confidence in the PA read AND a plan on what to do if it goes against you and the discipline to execute and take the loss. I average down on probably about 1/2 of my trades. But then again I am an intraday scalper. The ES is generally gonna revert back and forth even in bull of bear channels or ranges. but averaging down is not everyones cup of tea so I understand. hope you do well and glad you recuperated your loss. good job. one thing you might want to consider in TR's or channels the higher probability is usually fading the edge. there are some setups in both TR's and channels that can be taken in the middle of either, but that is generally less probability even though PA appears to confirm the High probability by showing what it is doing first. But by trading in the middle probability is actually lowered whereas the same setup at the edge is higher probability. Just something to think about.
Thank you volpri for the input, When you scalp, do you keep your RR = 1 or less than 1? Yes, I struggled a bit on the trade management part for while. Last year, I was trading like this: Risking $250 per trade to make $100. RR<1. It worked for awhile until I had like 4 losses in a roll. Then i tried the trailing stop for awhile. It was decent, but I kept giving back alot. So now I am just tracking 1RR and 2RR, and MAE and MFE per trade. I figure if I can get my win rate up high, 1RR is suitable for me. I can always increase my RR after evaluating my trades data.
I usually shoot for a 2:1 or 3:1 reward to risk initially, but that is only in my initial setup when I am taking the trade. That is I consider initially taking a scalp IF I think it will likely give me 2:1 or 3:1. Once I get in the trade I look at actual risk (how much it actually went against me before moving in my favor) then I will adjust my profit target to give me a 1:1 or 2:1 reward to risk based upon my actual risk endured, or even more, depending on the dynamics of “how” it is moving in my favor, i.e. slow and grinding or swoosh. I always try to get at least a 1:1 actual risk but will take more. Now I am talking about STRAIGHT scalps here, not averaging down. Things change abit when averaging down. Then I have to look at my risk on each averaged in position and may have a terrible R:R on my first entry ..a little better on my second entry and better yet on my third entry. The latter two make up for the bad first entry r:r. Alternatively, once I get my averaged position built I can figure my R:R from that spot. And try to get a 2 or 3 (reward) to 1 on risk). On averaging down As a general rule I am willing do: entry #1 add entry #2 add entry # 3 then make 2:1 on entry #2, 3:1 on entry #3 and BE on entry #1 or make 2 ticks on entry 1 to help cover comm. That is to say I made three entries and ready to lock in entries 2 and 3 on decent R:R but dynamically price is stalling and I only have 1 tick profit on entry 1 then I will lock the profits in and exit all positions and look for another opportunity. I gauge my final R:R on dynamic PA that includes actual risk and mathematically I am generally ok if making at least 1:1 on straight scalps and 2:1 or 3:1 on some of my averaged down contracts. If I am averaged in and things are going swoosh...well I let her run but if stalling I’ll grab what I can and quickly.
On averaging down the reason I do it because I trade on principles correlated with dynamic PA. For instance, there is an established range and prior to that TR there was a bear trend. I am viewing that range as a sort of bear flag with a likely continuation of the bear trend. I see it as a pause in the bear trend. So, I am willing to short in the top 1/3 of the range and add to it as it moves against me towards the top. I may add 2 or 3 times. Why would I do this? Because I WANT A POSITION ON..ANY POSITION and I will take a position from any point in that 1/3 top of the range. See, it could head back down before reaching the top of the range. If I try to make a more precise entry and just wait for price to get to the top of the range I may miss out on a move south. I want in. I am not too worried about a precise initial entry, on my initial entry. I am willing to take a position and average down. And willing to BE on my first and make $ on my second and third averaged down entries. If after my initial entry in the top 1/3 price immediately goes my way at least I have SOME position on and will thus just make it a straight scalp as price heads south. Now once an established range gets 35 to 40 bars or more the odds of successful BO (one with FT) of the range being north or south are about 50% regardless of the previous trend before the TR was established. So a trader has to keep that in mind to.
Thank you volpri, I am still learning the actual vs initial risk. For example, i took the trade at blue dot, initial stop at orange dot. Initial RR:1 target is at purple dot. After price goes in my favor, I change stop to yellow dot (actual risk) and new profit target at RR:1 at red dot. Sounds right?
Basically yes. Once you see your actual risk and can measure it in points or whatever, then you extrapolate that upwards (in this particular trade) from your blue dot entry. So that would be your new PT (Based on dynamic PA) right around your red dot area and right at the top of a bull channel line. Which is a good exit point for a long position but considering you got 7 consecutive bull bars after that dynamically calculated yellow new SL you may want to bet it will at least BO of the top of the channel a little more Before heading back down. Pushing that top channel line higher thus you may want then adjust your red PT to a 2:1 R:R since the dynamic PA to reach it was 7 consecutive bull bars with gaps between the closes of a bar and the close of the previous bar and the high of a bar and the close of a previous bar and such PA was more than once in those 7 bars Indicating continual buying pressure. I would probably move my adjusted red PT to 2:1 making a second adjustment Based on the dynamic PA taking place on those 7 bull bars. Hopefully that makes sense. I always like to continually be comparing dynamic PA with my initial projected PA. Dynamic rules like a king. It issues the final orders. My initial projections for entry help me select a decent trade with a potentially decent R:R but what actually happens overrides all projections. I am not a slave to my projections. I must follow dynamics. But projections help me get initial odds in my favor on trades.