Lol, I just couldn't help it. I'm learning to ride the trend, I will do more trend following trades when I can use a bigger SL. As I'm doing tiny scalpers, trend doesn't seem to be very important.
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- Thread starter hurricane_sh
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I'm surprised to see a person with your experience say this. Just because it opens with a huge gap up, there is hardly even a 60% guarantee that it will continue. Filling the gap is first on my mind. But then of course you don't know if it will start to fill the gap from the first tick, or continue to run for an hour. So you can easily have what looks to be a trend day up, that then turns on a dime. In my opinion, the gap, by itself, doesn't provide any useful information, and the trend in the same direction is also no guarantee. So as you say in your next comment, both bulls and bears can make money if skilled.
But if we go to the charts, there are really only about 2 areas outlined by the gray rectangles that didn't fill. Even then though, of all the others that filled, some only partly filled, and some took days to fill, which doesn't help a day trader much.
So in my opinion, the gap isn't a crystal ball, and neither is the look of a trend for the first 30 minutes or an hour.
Gaps are a form of impulse and indicates an imbalance in trade. And for a day trader, being aware of the gap and where price is trading relative to the gap is extremely valuable. Of course I am aware that not all gaps fill. But you ought to use statistics rather than your opinion when it comes to analyzing the chances of a gap filling the day of the gap or not.
You can use a program such as excel, and use size of the gap to categorize various gaps, and also whether the gap is outside or inside the prior day's range, and then use a 15 minute opening range as a secondary data point; and from there calculate the odds of a particular type and size of gap filling the day of its occurrence when that gap hasn't closed during the first 15 minutes of RTH. Excel lets you track ORB breakouts, breakouts that trend, reverse, etc. Very flexible program and easy enough to learn.
That is information you can take to the bank. "In my experience," you say. Well, in my experience, our memories and the opinions produced by such memories are often very poor and thus often inaccurate reflections of reality.
This is an information game. That is all technical analysis is - analyzing information. But most do not look at it as pure information. Most are looking for patterns but with no appreciation for the data that is building the "pattern." We somehow come to look at a price chart as something magical when it is no different than a chart that tracks the incidence of an infectious disease or the voting trends of baby boomers. It is all simply information.
Now, what information does it show, and what do we wish to be able to infer from that information? Ask yourself what any single data point at its smallest increment - the tic - represents in fact. Ask: "What is price?"
Trend days themselves are worth tracking and study. So while you are at it, I'd suggest doing similar data runs of open <=> close using price relative to today's open and yesterday's close and using price at various intervals throughout the day to calculate how frequent or not these intraday U-Turns you imply might happen.
When I started tracking I bought years worth of historical intraday data and have since then kept it myself. That was several years ago. Perhaps there is a free source you could find today. The data was not cheap. Again, excel is a wonderful tool if you'd like to add mathematical statistical support to your odds calculation rather than opinion.
As far as the adage that "gaps always close," I'd not base a day trading plan on it, that's for sure.
I will tell you also that if you knew what I know, and what I know is based on nothing other than my having done some work that you have not, you'd see that chart you posted much differently than you do.
I'm not special. I'm not smarter. But with respect to intraday and day to day price action as it relates to the S&P 500 index and its derivative futures, I am simply more well informed.
nice turn of phrase.
much easier said than done, even for those of us who know better, right?
You make it sound like all your analysis gave you a better than 80% chance of knowing what was going to happen after the opening bell, or rather, after the first 15 minute opening range. I'm saying that you probably didn't have a better than 60% chance. You already admit that day trading based on "gaps always close" cannot be done, so we are back to knowing that price can either go up or down.
You made this call the other day that hit the stop, but you didn't update with any other calls.
https://www.elitetrader.com/et/threads/es-journal-2019-2020.328086/page-2076#post-5075814
I would think that will all your analysis, it should be giving you a much better than 50% win rate. (I realize the risk to reward though wasn't a straight 1:1)
But all I'm getting at is that it wasn't fair to call out the guy for going short on a day that gapped up with a trend forming because neither of these two facts gives any random long trades an 80% chance of winning. If you were so sure after the first 15 minutes, you could have made a bold call and been the thread hero, but ever since that post I quote above, I see no mention of other calls. (Your oil call was solid though)
I was stopped out - anyone watching would have known. I don't usually update an exit if I posted a hard limit.
I wasn't calling him out so much as pointing it out. The easy money is always the line of least resisatcme and it was higher lows all day after the pullback off the open.
Even though looking toppy, "the set up on the daily almost requires a trend day up with a bull body close," and "this [long] is about as close to an 80% trade as you will find."
And from today ...
I do ok. I don't win every trade by any means. But I do win many, and when I do, I'm not taking just 2 points as a rule.
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I trade with NQ and he does considerably better than "OK". A wise man or woman would listen to what he writes.