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

[k p]

Yes, I can certainly see how I'm getting caught in the pattern game, but I am always trying to look at it from a behavior point of view, trying to see where traders are rejecting price levels and hence offering areas for opportunity at these levels.

After you pointed out the swing low at 4054, this area provided an excellent place to take a long since it was rejected after several attempts to go lower, and it was of course just personal fears of why I couldn't hold it (it was a good step forward at least to take the trade), but this range is at least 50 points wide so certainly its trade-able, no?

I understand how in terms of trading daily charts this is considered scalping, but capturing 10 or 20 points in one day would for me be an excellent result if this was consistent. I just feel that in order to hold through a larger stop by trading a daily chart, I will have to learn to trade the one minute chart. In some ways this is proving counter productive, but at the very least it gives me much more opportunity to practice and the stops are much smaller (even though of course I am stopped out of perfectly good moves by just a hiccup).

If I may ask one more question, since this channel we are in now is a fairly long term channel, what would breaking out the top of this range signify if it doesn't come back down into the channel and towards the mean in the short term future? I do believe that this is the definition of an overbought market, and nobody can say how long this can remain overbought for, but if price doesn't return to the mean, or even the lower line, then it would be fairly significant to have to redraw such a long term channel, no? (I suppose my question in a way has to do with how much we can trust a break above this range if it so happens when a break below this range and a return to the mean and the lower line should be in the cards given AMT) (Sorry about the long winded questions) ops:

 

[dbphoenix]

You're asking the wrong questions. You say that "capturing 10 or 20 points in one day would for me be an excellent result if this was consistent". But it's not consistent. So you are doing little more than reinforcing bad habits.

If you don't buy/short where you're supposed to buy/short, any other entry is going to be inferior. That doesn't mean that it can't work, but the probabilities for success will have been reduced. If you didn't buy when you were supposed to, and I did give plenty of notice, then you can wait for an exit from this trading range. However, you'll be at the top of the trend channel and you'll be overbought, so the risks are higher.

As I've said again and again, start with the macro. If the macro isn't right, don't trade.

 

[k p]

Gotcha... and you're right, the only consistency I have shown is to lose money.

I guess that I've just been going over so much of the material from the Ghost/Son threads and you made amazing comments on many charts and had some great discussions with fortydraws as an example where you analyzed the one minute charts at great lengths. I have all of these charts annotated and in my book as per the attached file.

Just as a quick example, this post here really stands out for me since there was so much discussion about this trading day on Sep 6, 2013.

http://www.elitetrader.com/et/index...w-a-straight-line.276076/page-95#post-3869645

I especially like these two lines...

"what I saw first and foremost was failure"

"This makes the retracement at 0900 an obvious short. Or one could view it all as The Dog That Didn't Bark."

So I am trying to go forward with this as a template during my trading session, trying to figure out what traders want using the one minute chart and I haven't put in very much time into the daily charts and looking for trades here other than to use them for identifying where price has been and major swing points.

There is just so much amazing information in those threads Db that I don't think going down this road would prove unprofitable if the fears of money loss and being wrong could be set aside and I just followed the behavior as you outline so well.

 

[dbphoenix]

But where does it all start?

The macro. The less one focuses on that, the more likely he is to gamble.

 

[k p]

Just so I have this straight then, would any trades today then not be appropriate since we haven't broken out of this range?

Here is my chart form today, and I took a successful long marked above the rejection of the overnight low right at the open just above "A". Since this was a brief penetration of the overnight low and price came back up very quickly I was able to make 7 points in what seems to be a proper trade. (But of course this is only one example from a sea of many bad trades)

I guess I just can't get my head around not taking any trades in the past week just because price is stuck in a range. Surely there was enough on the one minute chart that made you enter a trade this week?

On Sep 10, the second chart, we have two bounces from the 54.50 level at "I" and "N" that lead to profitable moves, the second one of course leading to a huge move up. (My long at N lasted a whole tick... don't ask... major fear issues) But given the importance of this level, going long since there was no penetration after repeated attempts seems like an excellent trade even if we are in a trading range in the macro sense.... no?

 

[dbphoenix]

There's no reason for me to trade this range when I entered a month ago. Yes, trades might be found, and they might even result in profit. But so what? You're completely ignoring the macro, and there's no point in my continuing to repeat that.

I stopped following the journals long ago because I didn't understand what people were doing. But it seemed to me at the time that what I said about wanting to trade more than make money still holds true. You want to be busy. You want to be in. Whether or not you make money is a minor consideration. Until you figure out what it is you want out of all this, I can't see that continuing to lose money is going to get you anywhere.

It is not my intention to sound discouraging. However, after all these many months, you still have no trading plan. This wouldn't matter so much if you were trading the SLA. But you want to do something else. Therefore, you have to begin at the beginning with backtests. And you haven't done those. Since you haven't done those, you have neither done the forwardtests, much less created a trading plan. So I'm baffled as to why you're still trading. If you've been trying to prove to yourself that you'd fail if you didn't follow the protocols, you've done that. So stop doing it. Do the research, do the testing, create the plan. Then you'll be ready to trade, albeit on a tentative basis. But this Hoping For The Best stuff has no purpose.

 

[k p]

Thanks for your time Db and I do see what you are saying.

Not having a trading plan is perhaps the biggest drawback and the source of much of my fears. I guess I always thought I could try a few things as I learned, and what I have learned is that this in fact doesn't work, as you point out. The SLA chopped me up on some days, preventing me from being able to take trades that would have more than covered the losses, and I was trading more via the P&L versus focusing on trading well anyway. But focusing on SLA via the macro makes perfect sense and eliminates much of the nerves.

Thanks again for your time and I do hope you continue to point out where good opportunities exist. I couldn't find the post where you mentioned a month ago to get in, but I did see references to continuing to stay in, which for me was already too late since I didn't get in when I should. So if you have the time, please do drops hints whenever you can!

 

[dbphoenix]

See posts 21 and 24, here. As for seeing the posts at the time, it should not have been necessary. You know how to draw a trend channel. You know what to look for. But if you focus entirely on the trees, you're going to get lost.

 

[k p]

Thanks for looking it up, and I did in fact see this, but I didn't read between the lines enough to understand what you were saying. In the past couple of months I had stopped focusing so much on the channels, mostly because much of the time is spent between the mean and the upper or lower bounds so once the best trade is gone, its hard to know what to do between the mean and the channel extreme. So instead I was just focusing more so on what price was telling me from the overnight action and recent rejections.

On top of this, my platform doesn't allow me to chart years of data, (I can only add 2 contracts of the NQ to build a continuous contract in the free version of Multicharts), but I know this isn't an excuse since its very easy use investing.com as you do to show us your charts.

But as you say, I am focusing on the trees. Even if I caught a good move off the bounce of the mean on that very day, I just haven't been in the frame of mind to hold contracts over night so I would sell with whatever profits I made that day, and then of course the next day would be wondering if the uptrend would continue or not, trying to look for a good place to get in again.

Actually, now as I think more clearly, I had been following the channels and on Aug 1 I had posted this chart to my journal. But then price dropped out of the channel, and you note this very same thing in your post, and because I was unable to go further back with my charting, I wasn't even aware of the longer term channel. At any rate, it wouldn't matter anyway as I wouldn't have bought and held since I wouldn't be trading the daily chart.

But its amazing that you bring all this to my attention so thank-you yet again Db.

 

[AfterLOS]

From Double-Bottom in 2009 to Double-Top in 2014?

Major Resistance @ 4,600 + Double-Top territory + Massive wedge on monthly + zoomed out view to 1970-2014 = Topping formation of this size NEVER seen before

Wave projection target = 550

Close shop, escape to bear cave and gorge = close all Longs NOW = first drop will wipe out 23% profit

Staying in beyond this point = higher risk = is akin to your wife coming home 700 pound heavier than yesterday - but you still stay and make love to her. Gross! I wouldn't be surprised

Composite arrives @ Fibonacci confluence
perfect pitchfork on monthly + 423.6% & 261.8% confluence NOW = TODAY
double-top territory applicable NOW as top monthly bar of year 2000 is pierced near 50%

Composite daily with wedge aka EDT with the 5 waves shown with the 5th spilling out
261.8% hit.