A simple price action approach

[1a2b3cppp]

Quote from baro-san:

To me price doesn't seem random. You don't have to predict it; try to trade what you see (where the market is: long or short), and let the market carry you wherever it goes.

That's guru-babble.

"trade what you see"

In order to "let the market carry you wherever it goes" you have to be able to predict direction, otherwise you're being "carried" into losses.

Suggestion: if you want to make it in this or any other field stop clowning around, and start doing the work.

I'm already a successful trader. However, if I could predict direction, I would be a much, much more successful trader. Much more successful. Instead of scaling in, averaging down, and hedging, I could just go all in in the direction that the market was going to go. Hence my interest in this thread.

 

[NoDoji]

Quote from 1a2b3cppp:

Aww snaps, it totally just blew through that downward trendline that everyone was talking about.

Symmetrical triangle breakout. That's what you're positioning for in a triangle when the range narrows significantly. If you were short the upper trend line, your stop loss wold be a break of that trend line and you'd reverse to a long on the breakout. If price continued down to the lower trend line, you be prepared to take profits on your short if that line held, and to let the winner run if it broke out downside.

Quote from 1a2b3cppp:

In order to "let the market carry you wherever it goes" you have to be able to predict direction, otherwise you're being "carried" into losses.

I'm already a successful trader. However, if I could predict direction, I would be a much, much more successful trader. Much more successful. Instead of scaling in, averaging down, and hedging, I could just go all in in the direction that the market was going to go. Hence my interest in this thread.

You have to be able to predict (that's what trading is, your prediction that price will go there), but you don't have to be able to predict successfully. If we could always predict successfully, we'd all be much, much more successful traders. Fortunately, it's not necessary.

Trade what you see and let the market carry you. If your prediction fails, your stop loss limits your loss; if your prediction is correct, you achieve your target profit or better. If you've done the work necessary to define a highly survivable R:R, then the profits will appear regularly.

Whether trend lines and corresponding channel lines are honored or break is irrelevant. Be prepared to act on either scenario, using a stop loss to take you out of failures.

When trading this way, you don't need to average down or hedge.

This thread demonstrates several frameworks for designing a solid trading plan. You have to do the work to adapt the framework to your instrument, your preferred time frame, and your personality at this point in time.

Nobody who's posted here or anywhere else can successfully predict what the market's going to do at every S/R level. What the profitable traders here can do is trade based on probabilities with reasonable profit targets and protective stops to provide an additional money management edge.

Metal caught my attention because I'd only recently begun to seriously pay attention to TLs and channels and I saw his framework and went running with it. I now use this concept so much that by the end of the day my primary chart looks like the web of a spider on caffeine.

It's transformed my trading and taken me to a whole new level. But I had to do the work. I didn't challenge metal and say "What about THAT trend line? It failed! So there!" I didn't ask him to call every trade in real time and prove it.

I dug into my charts and adapted the framework to my existing strategies, resulting in methods of extracting more money from the market each day.

 

[LEAPup]

Quote from NoDoji:

Symmetrical triangle breakout. That's what you're positioning for in a triangle when the range narrows significantly. If you were short the upper trend line, your stop loss wold be a break of that trend line and you'd reverse to a long on the breakout. If price continued down to the lower trend line, you be prepared to take profits on your short if that line held, and to let the winner run if it broke out downside.



You have to be able to predict (that's what trading is, your prediction that price will go there), but you don't have to be able to predict successfully. If we could always predict successfully, we'd all be much, much more successful traders. Fortunately, it's not necessary.

Trade what you see and let the market carry you. If your prediction fails, your stop loss limits your loss; if your prediction is correct, you achieve your target profit or better. If you've done the work necessary to define a highly survivable R:R, then the profits will appear regularly.

Whether trend lines and corresponding channel lines are honored or break is irrelevant. Be prepared to act on either scenario, using a stop loss to take you out of failures.

When trading this way, you don't need to average down or hedge.

This thread demonstrates several frameworks for designing a solid trading plan. You have to do the work to adapt the framework to your instrument, your preferred time frame, and your personality at this point in time.

Nobody who's posted here or anywhere else can successfully predict what the market's going to do at every S/R level. What the profitable traders here can do is trade based on probabilities with reasonable profit targets and protective stops to provide an additional money management edge.

Metal caught my attention because I'd only recently begun to seriously pay attention to TLs and channels and I saw his framework and went running with it. I now use this concept so much that by the end of the day my primary chart looks like the web of a spider on caffeine.

It's transformed my trading and taken me to a whole new level. But I had to do the work. I didn't challenge metal and say "What about THAT trend line? It failed! So there!" I didn't ask him to call every trade in real time and prove it.

I dug into my charts and adapted the framework to my existing strategies, resulting in methods of extracting more money from the market each day.

Agreed, and good post!

 

[1a2b3cppp]

Quote from NoDoji:

I now use this concept so much that by the end of the day my primary chart looks like the web of a spider on caffeine.

I have seen that study (where they gave the spiders different drugs and observed the webs that they built), and I know exactly what you're talking about

 

[crazyAtrader]

It's interesting reading these posts, you can see the newbie colors all flashing in neon lights from miles away, yet they claim knowledge while displaying so much ignorance to price action.

Newsflash!

You don't just fade trendlines you examine the action happening around such tests so you can react to the unknown and determine surprising events from such studies.

I used to be a beginner too, we all were, difference is some of us did not act like all mighty and knowledgeable when those that did know the game spoke.

On a side note, who ate your tongue metal ?

Crazy A!

 

[NoDoji]

Quote from crazyAtrader:

On a side note, who ate your tongue metal ?

Crazy A!

He's busy counting his elusive spondulicks

 

[Xspurt]

Quote from baro-san:

Volume helps. Higher time frames (weekly) help too.

Correct - that's what gives us a much clearer picture of what comes next.

Add one more detail - lower time frames.

 

[Xspurt]

There are two reoccurring themes in this thread. Confusion about How to draw a trend line and How to trade it.

For a trend line to offer a trader the chance to profit we need 2 clear swing points and then a potential 3rd. We can trade the 3rd based on PA signals combined with multiple time frame analysis.

When we have 3 reaction points and PA is making a 4th approach we have a confirmed trend line and the PA signal carries more weight.

When we have multiple reactions on a line it can mean the market is exhausting itself or building up a coil of energy to continue with force. You learn to read which it is primarily from multiple time frame reading and volume.

An additional factor is the angle of the trend line e.g. 3 inclines to a major reversal and 3 pushes to terminate.

Trend lines build into patterns and channels are a more developed form of pattern trading, but it all starts with proper line drawing after you have learned PA signals.

For example, attached is the close of my prior chart. The higher time frame (daily) offered a short intraday trade and reversal back up.

So we have lower highs and lower lows forming a flag channel. What is the normal outcome of a flag? If we know that we know the likely outcome of the attack on the trend line.

How do we dig deeper for stronger conviction? By using multiple time frames, volume and one other factor if it is available: related markets or sectors.

 

[nakachalet]

Quote from Xspurt:

There are two reoccurring themes in this thread. Confusion about How to draw a trend line and How to trade it.

For a trend line to offer a trader the chance to profit we need 2 clear swing points and then a potential 3rd. We can trade the 3rd based on PA signals combined with multiple time frame analysis.

When we have 3 reaction points and PA is making a 4th approach we have a confirmed trend line and the PA signal carries more weight.

When we have multiple reactions on a line it can mean the market is exhausting itself or building up a coil of energy to continue with force. You learn to read which it is primarily from multiple time frame reading and volume.

An additional factor is the angle of the trend line e.g. 3 inclines to a major reversal and 3 pushes to terminate.

Trend lines build into patterns and channels are a more developed form of pattern trading, but it all starts with proper line drawing after you have learned PA signals.

For example, attached is the close of my prior chart. The higher time frame (daily) offered a short intraday trade and reversal back up.

So we have lower highs and lower lows forming a flag channel. What is the normal outcome of a flag? If we know that we know the likely outcome of the attack on the trend line.

How do we dig deeper for stronger conviction? By using multiple time frames, volume and one other factor if it is available: related markets or sectors.

Great pix.

When are we supposed to be drawing those TL, pls?

Should we be drawing them as we were locating the higher high and the lower low, while we were trying to focus on the trade at the same time?

Or it is more probable and more practical to draw those TL at the end of the session, so as to ascertain perhaps a new direction, pls? Thx for the great pix.

Am also wondering why so many upfront fees required trading rooms always employ day chart to illustrate their winning points and their favorable trandlines....

but then in the trading room itself, they are mostly using 3, 5, 15, 30 and other minutes charts to trade....?

Interesting indeed.

 

[Xspurt]

Quote from nakachalet:

Great pix.

When are we supposed to be drawing those TL, pls?

Should we be drawing them as we were locating the higher high and the lower low, while we were trying to focus on the trade at the same time?

Or it is more probable and more practical to draw those TL at the end of the session, so as to ascertain perhaps a new direction, pls? Thx for the great pix.

Am also wondering why so many upfront fees required trading rooms always employ day chart to illustrate their winning points and their favorable trandlines....

but then in the trading room itself, they are mostly using 3, 5, 15, 30 and other minutes charts to trade....?

Interesting indeed.

Depends on the style of the trader. Metal will leave the trend line/channel and allow price to move through it so he can take the signal when there is a re-entry.

I adjust trend lines to take into account movements that I consider make for structural change so I am more active intra-session. I want a PA signal and the trend line to confirm each other and that makes for an earlier trade rather and waiting for a return through a trend line - that's when later traders follow my trade.

With a bit of practice it becomes easy and fast to see how to set up your trend line structures. Remember, it's all about confirmations and failures - that's where the money lies.

We are only scratching the surface of a very big subject. Consider a trend line trade in the same way as you would trade a horizontal S&R, except the line is slanted. I don't want to go too far ahead as some are already struggling, but you will need to learn when is a break a true break or a false break, and that only comes when you understand multiple time frame structures.

A 5 min break can look like a prefect confirmation on the 15 min. Check the wick!

I wouldn't be interested in a room unless they could demonstrate on a free trial what they are able to do live.

Good questions. Practice will develop your eye and experience will show you the power of broken trend lines to come back to life again.