A simple price action approach

[ES.Dreamer]

Quote from FreakofNature:

Which trend though ?

Wise words but not as simple as you make it out to be.

FoN

Mixing time frames is asking for complexity, keep it simple and I won't call you stupid. (inside joke there)

Stick to one time frame and choose the biggest most structural channel in that time frame. That is your main trend, consider any smaller channels inside as retracements, resist them, let them fail, then continue with the main trend, I mean channel

I've learned along the way that trading multiple time frames is not the way to go.

ESD

 

[PABuster]

Quote from ES.Dreamer:

Mixing time frames is asking for complexity, keep it simple and I won't call you stupid. (inside joke there)

Stick to one time frame and choose the biggest most structural channel in that time frame. That is your main trend, consider any smaller channels inside as retracements, resist them, let them fail, then continue with the main trend, I mean channel

I've learned along the way that trading multiple time frames is not the way to go.

ESD

Well said. True words. Trend is your friend. Since channel is your trend, channel becomes your friend.

 

[Xspurt]

Quote from FreakofNature:

Which trend though ?

Wise words but not as simple as you make it out to be.

FoN

To keep it simple, the dominant trend in the time frame you are trading.

I already covered this using the SPY as an example earlier in the thread.

 

[NoDoji]

Everyone already answered for me

Only trade in the direction of the trend in your chosen time frame. Use smaller time frames for precision entries when your chosen time frame is setting up, and use larger time frames for key levels that may help you hang onto winning trades longer (airspace to the next S/R level on a larger time frame can mean a long, strong move in your smaller time frame).

Trend following really is simple once you study your instrument(s) well and learn the setup patterns. When I traded counter-trend I'd take huge heat on a trade to end up with a small profit or a very relieved b/e exit. There came a point where I was tired of the stress of holding a big unrealized loss and I wanted to learn how to be the trader on the other side. It's not easy to master in that it requires many hours of study, detailed note-taking, and rock-solid discipline following your plan, but it's really worth it.

Just as you can learn to predict the weather with pretty good reliability based on patterns, you can learn to predict price action based on patterns as well. I think the fact there is now so much programmed trading just makes it all that much easier.

 

[dv4632]

I'm going to do a series of 5 posts to demonstrate what I was thinking/seeing during one of my bar-by-bar walkthroughs. So no one can see what happens and allow that to subconsciously color their assessment! No 20/20 hindsight goggles allowed.

I've got a large slightly downsloping channel in purple. I decided this was the dominant channel. A second up channel in red, with a double lower line that connects bodies not wicks.

Now price is at the upper limit of the purple channel. It has been in this channel for over 14 hours. Prior to this consolidation period was a steep down move.

What is your plan of action here? Do you short if the low of this bar is taken out? What if there is a breakout on the next bar, do you go long? Or do you not see any trades here?

 

[dv4632]

FYI - the trade is at the far right edge of the chart in each example. Just in case you didn't know.....

Here is the next chart. If you look to the left you can see what happened to the last trade.



In this example, we see price near the lower rail of the up channel. The last bar of the pullback closed green, and its high has been taken out.

Are you long here?

 

[dv4632]

Once again, answer to the last question can be found on the left of the chart.

Here, we have price seeming to form a new up channel. The dashed up channel doesn't seem to be working, so I've made it dashed, last step before deleting it.

So here we have price at the lower rail of the up channel. It has been trading in a sideways range here for almost half an hour.

Are you looking for a long here? If price takes out the highs of the sideways range, would you buy?

 

[dv4632]

These are just potential trades I saw during my walkthrough of one days action. Should be interesting to see if anyone else saw anything different.

In this chart we have another up channel. The lower limit has just been touched. Long entry if this bar's high is taken out?

 

[dv4632]

Another chance to go long at the lower rail of an up channel. This is the fourth touch of the line. Too late in the move, or do you take it?

 

[oraclewizard77]

Might be easier if you create a little arrow on where you think the trade is, and then I am willing to comment.

Otherwise in real time, I might have gone long the engulfing candle if I was watching the chart at that time or the re-test of the moving average.

Of course these charts don't show my indicators so I am basing my replies on price action.