ALERT - Nasdaq/QQQ getting ready to take out all time high.

[k p]

If you entered at D or F, the rest is irrelevant. If you're trading more than one contract and haven't already planned your scale-out, then do so now. And if price reverses on you, plan in advance how you're going to scale back in.

Thank-you.

Sadly I am just getting chopped up trading the one minute charts, so I'm not in at all. But seeing as we are at the top of the channel, and so close to this most recent swing low that you pointed out, I am looking to see if I can get into a short if price shows weakness. Of course I fully understand how the bounce just above that swing low today is a sign of support. Its unfortunate to see this great move up for the past couple of weeks and yet be down in my account, but I'm only down and hardly out!

I see that when one gets these levels right, the rejection of the level and hence a reversal is a solid trade, and if penetration does occur with force, price doesn't mess around and keeps going. If price is very close to 54 tomorrow morning, or if the overnight action provides a distinct level of support or resistance that is tested multiple times, I should be able to put on a trade with confidence if we approach the level. You said something a year ago in a post where you just "sits and waits" for price to approach a level before you do anything and this has always stuck with me. Lets see where price goes. Thanks for the help!

 

[dbphoenix]

The trader always has choices. And while he has no control over what the market does, he is always -- or should be -- in control of what he does about it.

Someone trading a tight SLA would already be out and waiting for a retracement. Someone who is trading a looser SLA would be waiting to see if this last swing low holds, and, if it doesn't, enter a retracement thereafter. In any case, there are three primary scenarios: (1) price returns all the way to the lower limit of the trend channel as it did in March, 300+ points, (2) it returns to the mean of the channel as it did in July, around 200 points, or (3) it resumes the uptrend, the potential here being much more limited unless one can tolerate a much longer hold. Since this is a mean-reverting instrument, the odds favor a return at least to the mean, though not necessarily right now.

Exiting a long because one is afraid of giving back his profits is a different matter from exiting because conditions warrant. The SLA provides a guide for making these decisions.

 

[k p]

I find it absolutely incredible that when you get the levels right, this is almost easy! Price bouncing off just above the all important swing low that you mention last night of 4054.50 is what I consider such a low risk trade and for me, provides a clear entry and an obvious place to put a stop loss. I'm eager to see if price comes back down again to test this level once more closer to the open as the best trade is already gone unfortunately. I'm noticing that it has gone up 10 points, so reached the midpoint of the overnight range but is having trouble holding, so this could be a clue.

 

[k p]

Here is what I'm looking at this morning, and I like how I've got 3 levels all bunched up together at the bottom!

 

[dbphoenix]

Current charts:

 

[dbphoenix]

Still no reason to sell . . .

 

[k p]

Still no reason to sell . . .

Db, I think I read somewhere you say something along the lines of having to look at both what price is doing, and what it isn't doing. I know that for a one minute chart, a tight trading range can just be traders going out for a coffee break... as you put so well before ... but on a daily/hourly chart, we have been stuck in this range now for 7 days. So even though price hasn't broken the previous swing low at 4054, it also hasn't been able to keep going higher, past 4113, hence its not going up or down.

Is there anything you can say about this behavior? Or is it just a matter of waiting to see which way it breaks, either above or below this range and then seeing if there is a continuation of that trend?

I notice that yesterday it failed to reach the top of the range before turning back down, but today it failed to reach 54 before turning back up. So we have a case of a lower high and a higher low, hence a hinge, although this is preliminary. Can this be a clue? (In the case of a hinge, it might almost look like it broke to the upside on the 30 point move up today in the afternoon, but hinges in the middle of a range just don't look that good to me since they are often just bunnies within the trading range.)

 

[dbphoenix]

Not looking for clues and nothing to say about the behavior except that it's going sideways. If it makes a lower low, sell. If it doesn't, don't.

There is no inherent advantage in trading a 1m chart. If one isn't doing well with it, I suggest he use something longer, even daily.

 

[k p]

Thanks. I have had people reply to my journal saying that things are clearer on a 5 minute chart. So as you say, a larger bar interval might be called for when one isn't doing well, which I'm not, but I will stick with it a little longer as my failure is forcing me to stop making the same mistakes.

I am under the impression that using a daily chart would lead to stops that have to be huge, and so by using the one minute chart, I can keep them much tighter (I am although not quite sure where to place stops or entries on a daily chart since the 1 point rule isn't valid for these large bars).

But of course what isn't lost on me is that all of these little losses add up and knowing what I know now, if I just use this daily attached chart as an example, that indicated long by following the SLA rules sure is a good trade!

 

[dbphoenix]

The signal may come from a daily chart, as did this one, but that doesn't mean you have to enter off the daily chart. The point is to enter on the bounce off the mean, which occurred a month ago. How you do it and when you do it is up to you. But you guys seem to be trading patterns and ranges so you're losing money. Trading during the last seven sessions was largely a wasted effort unless you're scalping.