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AHG - Profitable Strategy for Struggling Traders
- Thread starter Anekdoten
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B,
If price is trading in a channel, for the sake of argument, lets say a downtrend channel, expect it to bounce up and down with a bearish tendency. Now, to ensure your stops are small, even in a downtrend you want to short high, and in an uptrend you want to buy low, this is where the trendlines of the channel help. This is not the same with formations, a solid confirmed reversal formation is quite alright for entering at the lows but this is not the case of channels. Hence why I suggest the trendline channels usage as guidance. The formations price will form at the extremes do tell good info, so make sure you pay attention. In yesterday's case the downtrend channel formed a bear flag as it broke the channel to the downside, I was almost certain price was ready to fall, but it failed miserably. Naturally I took my small stop and realized that price was not ready to go to lower lows because if a confirmed bear flag failed, which is one of the most reliable formations for downside, the failure should be applied accordingly. The subsequent move was higher lows from the bear flag pattern until it finally broke out of the channel. However, that was predictable. As explained in the past, failures are sometimes as powerful or even more powerful than patterns themselves.
Notice that during rectangle consolidation, where price is bouncing off support and resistance there is no predominant side to choose between the two, in this case, look at the whole day and choose the side that has been winning all day long, if no clear definition, simply stay out and wait for better setups or wait for a confirmed breakout that aligns with the predominant intraday trend.
Anek
If price is trading in a channel, for the sake of argument, lets say a downtrend channel, expect it to bounce up and down with a bearish tendency. Now, to ensure your stops are small, even in a downtrend you want to short high, and in an uptrend you want to buy low, this is where the trendlines of the channel help. This is not the same with formations, a solid confirmed reversal formation is quite alright for entering at the lows but this is not the case of channels. Hence why I suggest the trendline channels usage as guidance. The formations price will form at the extremes do tell good info, so make sure you pay attention. In yesterday's case the downtrend channel formed a bear flag as it broke the channel to the downside, I was almost certain price was ready to fall, but it failed miserably. Naturally I took my small stop and realized that price was not ready to go to lower lows because if a confirmed bear flag failed, which is one of the most reliable formations for downside, the failure should be applied accordingly. The subsequent move was higher lows from the bear flag pattern until it finally broke out of the channel. However, that was predictable. As explained in the past, failures are sometimes as powerful or even more powerful than patterns themselves.
Notice that during rectangle consolidation, where price is bouncing off support and resistance there is no predominant side to choose between the two, in this case, look at the whole day and choose the side that has been winning all day long, if no clear definition, simply stay out and wait for better setups or wait for a confirmed breakout that aligns with the predominant intraday trend.
Anek
As point B was the low of the big trend. The H&S is, in a way, at the bottom.
Quote from Anekdoten:
Correct.
The possible inverse h and s and the triangle at the edge were the missing patterns in the chart.
However, just like H and S work better at the very tops, Inverse H and S work better at bottoms, so it's position is not optimal. The rest is still valid.
Anek
Quote from rverheyen:
As point B was the low of the big trend. The H&S is, in a way, at the bottom.
Valid point but I still prefer the head of the inverse head and shoulders to mark the absolute lowest point of the picture in study. It does look ok, particularly since it has confirmations from other patterns including the downtrend line break but definitely not optimal.
Anek
Quote from Anekdoten:
There is a lot of discussion on the journal regarding averaging up. It is absolutely the holy grail of money management. Now, it requires skill in reading price action and exhaustive dominance of your trading psychology because it will decrease your accuracy while requiring an accurate trader, therefore, it is most definitely for advanced traders. Units are added on additional confirmations that the trend is only getting stronger, protective stops are trailed based on support and resistance geometrics to protect your capital and your recent gains. It's only appropriate for certain days, days where there is panic or euphoria.
I would agree, somewhat. The NQ works better than the ES, which is too choppy; but crude works the best, imo.
CL tends to give immediate feedback (a minute or two) if averaging up is going to work or not. With ES there is so much back and fill that it would not work for me.
This is a nice journal--glad to see it back from the dead.
Quote from Anekdoten:
Valid point but I still prefer the head of the inverse head and shoulders to mark the absolute lowest point of the picture in study. It does look ok, particularly since it has confirmations from other patterns including the downtrend line break but definitely not optimal.
Anek
Tnx for the charts A.
Can't wait for monday to arrive!
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