Bride of If You Can Draw A Straight Line
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Whether or not it was sim doesn't matter as long as it was RT and not hindsight.
When you say that you "took an early exit because of support on the 60 min was around 80", I suggest that you forget about conventional notions of support and resistance, at least for now. I've spent a lot of time on this over the years and I can't see that it's done much good, largely because of what people have been taught about support and resistance. Certainly entering or exiting in anticipation of some event or other at what one thinks might be support or resistance is a mistake. If price movement itself prompts you to enter or exit, do so. But don't do so simply because of what you perceive to be imminent "support" or "resistance".
ok I will ignore the S/R for now, I am assuming you mean for trading decisions. I will Just use PA to trade via the SLA. thanks for your advice. I have spent the last few years reading, lurking trying to learn how to trade successfully and I have come to understand I can't live in a vacuum. I think I need to start participating more actively to get any better at trading . reading over my chart from last night I am aware of how poorly I communicated myself . hopefully this will improve.
This doesn't have anything to do with boru specifically nor with the comments directed toward him re S&R.
However, after yesterday's chat session, it became clear to me that, after having simplified and re-simplified this approach over three threads, the problem is not so much the approach itself but the baggage that traders bring with them when trying to implement it. When someone tries to implement this and tosses in price targets and "support and resistance" and indicators of one sort or another and irrelevant lines and news and what somebody read somewhere and mix it all up with the fears and prejudices and preconceptions and addictions that struggling traders always have, the approach as posted cannot poke its head above the melee, much less survive. This is the most likely reason that beginners have little to no trouble with it, whereas "experienced" traders find it frustrating.
This may not be the simplest approach on the planet, but it's about as simple as they come, and it not only opens the door to successful trades but holds it open long enough for even the old lady on a walker to make her way through. The trader, however, has to apply it as is and not try to "improve" it, at least before understanding it. The trader must also put in a requisite period of observation in order to achieve a better understanding of how buyers and sellers interact, i.e., the dynamics of supply and demand. If he tries to trade during this period, which may last from several days to several weeks, or even thinks about entries and exits while he's in this phase, he will after months of effort find himself no farther along the path that he was when he started. This will not be the "fault" of the approach but a consequence of his addiction.
The plan itself has been laid out in detail in three journals of which this is the third along with the pertinent "rules". These rules are flexible enough to allow the individual to modify the plan somewhat to suit himself without going so far afield that the plan becomes useless (think the wicked stepsisters ripping Cinderella's ball gown to shreds). For example, one might elect to avoid trading chop if that's his preference while somebody else who feeds on it is free to do so. But the "proof" of the plan's viability is in the plan itself. If one knows the plan and its rules and can experiment with it without introducing his own baggage, he can determine its winrate and its P:L ratio all by himself. That his winrate and P:L ratio may not match somebody else's will be the result of the flexibility in the rules if he has understood what he has read.
There are those who literally cannot go through the observation phase without thinking about entries and exits. While I won't say that it's impossible that they will ever find success with this, it is extremely unlikely. Those who can't start over, and need to, will also find this next to impossible to implement. This is unfortunate, but there's nothing I can do about that.
However, after yesterday's chat session, it became clear to me that, after having simplified and re-simplified this approach over three threads, the problem is not so much the approach itself but the baggage that traders bring with them when trying to implement it. When someone tries to implement this and tosses in price targets and "support and resistance" and indicators of one sort or another and irrelevant lines and news and what somebody read somewhere and mix it all up with the fears and prejudices and preconceptions and addictions that struggling traders always have, the approach as posted cannot poke its head above the melee, much less survive. This is the most likely reason that beginners have little to no trouble with it, whereas "experienced" traders find it frustrating.
This may not be the simplest approach on the planet, but it's about as simple as they come, and it not only opens the door to successful trades but holds it open long enough for even the old lady on a walker to make her way through. The trader, however, has to apply it as is and not try to "improve" it, at least before understanding it. The trader must also put in a requisite period of observation in order to achieve a better understanding of how buyers and sellers interact, i.e., the dynamics of supply and demand. If he tries to trade during this period, which may last from several days to several weeks, or even thinks about entries and exits while he's in this phase, he will after months of effort find himself no farther along the path that he was when he started. This will not be the "fault" of the approach but a consequence of his addiction.
The plan itself has been laid out in detail in three journals of which this is the third along with the pertinent "rules". These rules are flexible enough to allow the individual to modify the plan somewhat to suit himself without going so far afield that the plan becomes useless (think the wicked stepsisters ripping Cinderella's ball gown to shreds). For example, one might elect to avoid trading chop if that's his preference while somebody else who feeds on it is free to do so. But the "proof" of the plan's viability is in the plan itself. If one knows the plan and its rules and can experiment with it without introducing his own baggage, he can determine its winrate and its P:L ratio all by himself. That his winrate and P:L ratio may not match somebody else's will be the result of the flexibility in the rules if he has understood what he has read.
There are those who literally cannot go through the observation phase without thinking about entries and exits. While I won't say that it's impossible that they will ever find success with this, it is extremely unlikely. Those who can't start over, and need to, will also find this next to impossible to implement. This is unfortunate, but there's nothing I can do about that.
I think that dogmatic thinking in terms of support and resistance in combination "where it has to go" is one of the main reasons people might have problems - at least I have.
One issue you discussed with niko recently was remarkable - at least for me. You said that one has to learn to scratch the trade if it after an entry does not make another swing high or low. Even if PA is not simple in general that is a simplistic way to frame it and even more to act without hesitation keeping losses to a few ticks only most of the time.
'Straight line' newbie here hoping for some clarification. I hesitated posting here because after reading numerous posts in the original and 'son' threads, it seems as if my questions should be addressed there. I also read that the 'ghost' thread is for higher time periods (hourly, daily, etc.). So -- I figured I'd start here.
I attached a chart for reference points:
#1. What constitutes a DL or SL breach? Close outside, tick outside, etc. (I know a trader has to formulate their own rules to some extent, but for purposes of the bride thread, what definition is being used?)
#2. I've seen mention of the 'crest' of a RET in an up trend for the basis of an entry. Is the goal to keep stepping down your entry price based on the length of the RET or to just use the HL of the first bar + 1 point? In this example, there are 2 bars that each have a subsequent LH.
#3. Is that considered to be a swing low?
#4. Price hit the previous HH (inside the DL), but then temporarily moved outside the DL. Is that a LSL?
#5. Price exited the DL, did not make a HH and went lower than the #4 area. IF not just exiting after a DL break, would price at that time be compared to the #3 area price and since higher, hold?
Thank you in advance for your time.
I attached a chart for reference points:
#1. What constitutes a DL or SL breach? Close outside, tick outside, etc. (I know a trader has to formulate their own rules to some extent, but for purposes of the bride thread, what definition is being used?)
#2. I've seen mention of the 'crest' of a RET in an up trend for the basis of an entry. Is the goal to keep stepping down your entry price based on the length of the RET or to just use the HL of the first bar + 1 point? In this example, there are 2 bars that each have a subsequent LH.
#3. Is that considered to be a swing low?
#4. Price hit the previous HH (inside the DL), but then temporarily moved outside the DL. Is that a LSL?
#5. Price exited the DL, did not make a HH and went lower than the #4 area. IF not just exiting after a DL break, would price at that time be compared to the #3 area price and since higher, hold?
Thank you in advance for your time.
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I consider myself a newbie as well, but I think I have been on the road a little longer so I will try to address your questions. Although DB will correct me if I am wrong.
1. You have to come up with your own rules via backtesting. For example if a simple 1 tick piercing of the S/D line is considered a break, how will it look in your backtesting results. What if you wait for "the close" of the bar and use the low or the high as reference point, does it improve, doesn't?
2. I will answer upon my understanding of what you wrote. Once the line is broken, you start looking for the RET in the opposite direction, for that you use as "reference" the high (for buys) or low (for sales) of the last "closed" bar, and you trail until stopped in (If you are not stopped in then is continuation or chop). Now you can do this using a tick chart under the same principles but different parameters.
3. Each RET will offer you a new swing low.
4. It is, but if you are gonna use it for exit, you have first to rationalize that at that point you are in a congestion, prone to fakeouts so you could be taken out of the trend if you just close the trade because it is hit. But then again, you will find out that via backtesting.
5. That is your fake out
BTW, you are forgeting about parabolic movements and their implications for RET entries. Give it a thought and see how that would change your chart and conclusions.
1. You have to come up with your own rules via backtesting. For example if a simple 1 tick piercing of the S/D line is considered a break, how will it look in your backtesting results. What if you wait for "the close" of the bar and use the low or the high as reference point, does it improve, doesn't?
2. I will answer upon my understanding of what you wrote. Once the line is broken, you start looking for the RET in the opposite direction, for that you use as "reference" the high (for buys) or low (for sales) of the last "closed" bar, and you trail until stopped in (If you are not stopped in then is continuation or chop). Now you can do this using a tick chart under the same principles but different parameters.
3. Each RET will offer you a new swing low.
4. It is, but if you are gonna use it for exit, you have first to rationalize that at that point you are in a congestion, prone to fakeouts so you could be taken out of the trend if you just close the trade because it is hit. But then again, you will find out that via backtesting.
5. That is your fake out
BTW, you are forgeting about parabolic movements and their implications for RET entries. Give it a thought and see how that would change your chart and conclusions.
Depends entirely on how fearful you are, which depends in turn on how badly you've been battered by the market. A beginner isn't going to worry about this. He may not even think about it. An "experienced" trader, on the other hand, may well freak as soon as price is one tick outside the line. He's going to have to make some adjustments to how he perceives and reacts to price movement. Therefore, I'd tell him just to get the hell out.
That's between you and your (manual) backtesting. I place my entry stop a point below the bottom of the highest bar -- the crest -- in the retracement (flip for a retracement in a downtrend). Others go with a tick, which to me is far too little. You don't want to be tripped into or out of a trade just because of a datafeed glitch.
But if you're reading the shifts in balance between demand and supply correctly, it really doesn't make much difference. The new course will happen with or without you. You just might get in a little earlier or a little later.
At the time it occurred, yes. A few bars later you'll discover that it was signalling chop.
At the time it occurred, yes.
Given the continuity of price, you're a bit too obsessive about ticks. As long as price is more or less holding to that trading range it's created, there's no particular reason to exit, esp since the rejections of the lower zone are so obvious. Actually, the rejections of the upper zone are pretty obvious too. If you can just wait until price exits this range, you will then find out whether you have any opportunity to fan your DL again or if you need to exit your long. The market will tell you, not a line you've drawn.
Same counsel applies if you do fan your DL. The "comeback" bars after that higher high would freak some traders, but price never drops below the low of that trading range, so there's no reason inherent in the price movement to exit. If one does, he does so because he can't handle the pressure, not because the market is telling him to. If he does hang on, then he has yet another opportunity to fan his DL (somehow that sounds vulgar) a few bars later when price makes yet another higher high.
Look for reasons to stay in, not to get out. The SLA will keep you from losses greater than a couple of points, and you can't make anything if you're not in.
I'll repeat what I said in my PM, tho. Anyone trying to make this mechanical will most likely drive himself crazy. It is possible, of course, to make it mechanical, but then it would be something entirely different.
Thanks Niko and Db for your responses.
And yes, I am a bit obsessive about ticks, but I'm working on it. And the idea of looking for reasons to be in rather than out hit me like a ton of bricks when I read it in a comment a week or so back
Watching price today in real time had a completely different feel to it. I wasn't trying to trade, but I was observing price movement to see if I could figure out who had the upper hand - buyers or sellers. I was better at it some times than others.
The initial up move seemed pretty straightforward. There were a few retraces, but price didn't pause much on the way up. The DL could be tightened, but aside from the more extreme movement at 0944, price just kept marching up.
The break of the tightened DL at 0952 wasn't a huge surprise after such a steady ascent. In addition to the DL break, 0952 seemed to have the most gusto of any retrace-like activity. I don't know enough to classify the 0950/0951 bars as a double top (I thought there usually was a retrace in between a similar high). But then activity just seemed to stall out. Price wouldn't really go higher and it couldn't push below the 0953 mark.
It did finally do so, but every time price would go down, the change of direction up was almost more violent. One bar down, 2-3 up. It bounced off the 50% mark and headed up, but couldn't break the high of earlier.
I know that the market was telling a story, but I can't seem to read at the college level - I'm back in kindergarten. Would someone kindly provide some hints of what was glaring to you but wasn't to me?
Also, I think I'm confusing duration, pace and extent. If someone would touch on those terms, I'd appreciate it.
Thanks...
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