A simple price action approach

[nakachalet]

Quote from JoshDance:

It seems that the better short would have been a break of the prior bar, near 96.20 ... at the place you took the short, if I'm understanding you correctly where you took the short (96.07 or so?), price had already significantly broken the trendline.

Also, connect the lows of the 11:40 and 11:50 bars (see the 1m for a better view), and notice that you're shorting into that line. I made some similar mistakes on Wednesday.. just careless trades.

Finally, since you have volume up, look at the volume on that move down--not exactly what you would hope to see for continuation down.

Bik,

After the 0835 Higher Low and the 0845 Higher High followed by a flat to sloping up 20ema, I was looking only to go long at this point.. Pullbacks should be an opportunity to buy and not sell.

This had all of the underpinnings of a trend change and time to look for longs above 20ema on pullbacks. Hope this helps because this was how I looked at it.

Wolf
---------------
is there any other way to trade long or short that two or three potential traders, as on these last three posts, would agree on the same decision....?

some method that is not opened up to, too many different ways of interpretation thus would be less confusing to those anxious to learn, pls?

 

[JoshDance]

Quote from nakachalet:

is there any other way to trade long or short that two or three potential traders, as on these last three posts, would agree on the same decision....?

some method that is not opened up to, too many different ways of interpretation thus would be less confusing to those anxious to learn, pls?

In my reply two posts back, I did not recommend a short there, I said that the short should have been taken earlier, IF he were going to short on that premise (break of the TL). In fact, I was on the same page as wolf, only looking for longs, as I posted this around 11:20 (ET, as the poster's chart is PT I think):

http://www.elitetrader.com/vb/showthread.php?s=&postid=3231382#post3231382
http://www.elitetrader.com/vb/showthread.php?s=&postid=3231457#post3231457

As you can see though, Wolf was basing this on slightly different reasons, though we both arrived at the conclusion that trading the long direction was the more high probably direction.

But as you can see there was a good short opportunity just after 1:00pm (ET) as well, which could have been taken. As intraday traders we have to be able to change hats sometimes quickly in order to take advantage of opportunities in both directions, if that happens to be our trading style.

nak, maybe the best way for you to learn using these channels is to draw them yourself on your chart, and sim trade what you see. You're not going to get an objective approach here, as this is very discretionary, and you will have to make your own rules. That's what I've been doing, and I am learning a lot by doing, not only by watching.

Just want to add that if this trade had worked, we wouldn't be having this discussion. On another day, with different traders in the markets, perhaps it would have. Sometimes trades work out, sometimes they don't. No need to examine every loss and figure out what went wrong--better to base the trading on a larger sample size than one.

 

[bik]

Thanks for the feedback Wolf and Josh. It helps for me to get other perspectives.

 

[anglagard]

Quote from PABuster:

anglagard,
You posted good charts and also posted good questions. Good work.

Different people have different definitions of trend. One easy definition is, a clear channel you draw is the trend in that time frame. Within that channel you take trades in the direction of the channel so that you have enough r:r to hit the other side of the channel.

With that context, if you draw an uptrend channel, you skip taking shorts as thats counter trend signal if you are a trend trader. Otherwise take the counter trend signal and be nimble with exits & be tight with your stops.

B

Thank you for kind words.

Yes, when i started trading the markets I realized there are trends within trends, which makes it all quite confusing, yes the trend is your friend but with dozens of friends fading each other, whos really my friend! To end the confusion I have adopted the rule that whatever channel Im trading that is my trend.

I dont feel comfortable fading a channel trend at the outter line unless it also happens to be a trend based signal with the trend of a greater channel in proximity,keyword greater. Doing the opposite has led me to losses and uncertainty so I stopped doing that. Not due to lack of capital but due to not having a complete plan as of yet.

Have spent a great deal of the weekend studying this and I can say with good confidence that there is a lot of value in this. Still not sure how to deal with stops as many times the entry area works precisely and sometimes it seems like it won't work then ends up working. Any suggestions ? Do I keep using small stops then retry, if so how many times ? How can I differentiate between bad price action at the entry area and noise ?

Another thing I concluded is that projected shoulders are far more precise than opposite line projections, so Ive been concetrating my trading on them.

Oh well, back to my studies, can't wait to have a full plan ready so I can start doing this for real, even if its with limited size until i learn the ropes.

Cheers everyone.

 

[Xspurt]

Quote from anglagard:

Thank you for kind words.

Yes, when i started trading the markets I realized there are trends within trends, which makes it all quite confusing, yes the trend is your friend but with dozens of friends fading each other, whos really my friend! To end the confusion I have adopted the rule that whatever channel Im trading that is my trend.

I dont feel comfortable fading a channel trend at the outter line unless it also happens to be a trend based signal with the trend of a greater channel in proximity,keyword greater. Doing the opposite has led me to losses and uncertainty so I stopped doing that. Not due to lack of capital but due to not having a complete plan as of yet.

Have spent a great deal of the weekend studying this and I can say with good confidence that there is a lot of value in this. Still not sure how to deal with stops as many times the entry area works precisely and sometimes it seems like it won't work then ends up working. Any suggestions ? Do I keep using small stops then retry, if so how many times ? How can I differentiate between bad price action at the entry area and noise ?

Another thing I concluded is that projected shoulders are far more precise than opposite line projections, so Ive been concetrating my trading on them.

Oh well, back to my studies, can't wait to have a full plan ready so I can start doing this for real, even if its with limited size until i learn the ropes.

Cheers everyone.

Good questions, good observations and some of it is way beyond where you are at here and now. But if you can pick up that there is a lot more going on than the basics, as you are alluding to, then in time it will probably be something you will get the answers to.
Yes there are numerous trends in every time frame and various approaches have been used to try and catch the dominant trend (including rocket science applied to trading).

The most pragmatic for now is indeed to use the channel you are in as the trend to trade.

Reversing on a channel line that is running counter to your trade is always a better option than a channel running with your trend unless you have multiple hits and clues to expect exhaustion like tails, smaller bars/bodies and it helps to have more confirmation like prior levels or moving averages etc. Noise is generally bad price action. If it is not then it is usually ready for scalping BUT if good set ups fail then most times you are trading against a bigger trend.

If you are getting stopped out then look at adding S&R into your channel set ups. Multiple time frame reading can sort a lot of these difficulties out but again I have to say it is a big topic on its own. Notwithstanding that you soon get a decent read on a 2,5,15 minute set up. Find what time frames work best for your brain with a bit of experimenting.

If any of this is not clear post a few charts and I will try to get time to give better answers.

 

[ammo]

stops are my achilles heel,they force you in and out in the chop,i prefer not to use them except as extremes and if you are at the screen all day,just trade in and out with what you see,using extreme stops just in case

 

[Flashboy]

Quote from bik:

Thanks for the feedback Wolf and Josh. It helps for me to get other perspectives.

Similar to as Wolfpacker stated. Once that double bottom action occured.. then price came up and made a Higher swing high on that time frame.. You should be looking for longs.

I've learned this the hard way. What always happened and still does happen occasionally is I get tunnel vision and focus only on the immediate price action which would have also prompted me to look for shorts. but when you factor in the Price action prior to that (the double bottom) and the higher swing high..

That's what makes you pass on shorts and look for longs.

 

[anglagard]

Quote from Xspurt:

Good questions, good observations and some of it is way beyond where you are at here and now. But if you can pick up that there is a lot more going on than the basics, as you are alluding to, then in time it will probably be something you will get the answers to.
Yes there are numerous trends in every time frame and various approaches have been used to try and catch the dominant trend (including rocket science applied to trading).

The most pragmatic for now is indeed to use the channel you are in as the trend to trade.

Reversing on a channel line that is running counter to your trade is always a better option than a channel running with your trend unless you have multiple hits and clues to expect exhaustion like tails, smaller bars/bodies and it helps to have more confirmation like prior levels or moving averages etc. Noise is generally bad price action. If it is not then it is usually ready for scalping BUT if good set ups fail then most times you are trading against a bigger trend.

If you are getting stopped out then look at adding S&R into your channel set ups. Multiple time frame reading can sort a lot of these difficulties out but again I have to say it is a big topic on its own. Notwithstanding that you soon get a decent read on a 2,5,15 minute set up. Find what time frames work best for your brain with a bit of experimenting.

If any of this is not clear post a few charts and I will try to get time to give better answers.

Thank you for taking the time, very interesting points.

Your charts as supplements are always a welcome addition.

If you are willing, I will study them inside out.

 

[Flashboy]

What about 2 support levels. attached is a 5min chart of Tnotes.

As you can see a channel has formed.. and there is price support before reaching additional support at the bottom of the channel. With Daily trend up do you take the more aggressive approach and look to buy at 124.160 area?

 

[JoshDance]

Quote from Flashboy:

What about 2 support levels. attached is a 5min chart of Tnotes.

As you can see a channel has formed.. and there is price support before reaching additional support at the bottom of the channel. With Daily trend up do you take the more aggressive approach and look to buy at 124.160 area?

It would have to get back above 124'19 (yday's high '185) to prove to me it wanted to go up. Couple that with the fact that it did not make it to the top of this channel last time when it tried, and it would appear that a retest near the bottom of the channel would not be unexpected. This channel has a bit of a steep angle to look like a bull flag as well, so I would not be long here until it breaks the upside of the channel.