Changing Strategies

NoDoji · Nov 5, 2013

Quote from MarketAddict:

How do you come up with these levels?

What do you mean by the backdrop of previous price action ?

And do you put your stop at the previous swing low/high?

I studied swing highs and swing lows and looked back on both the 5-min and 1-min chart to see if I could find reasons why one side would overwhelm the other at those levels.

I found several reasons for such defense, including trend lines and parallel channel lines (when applicable), previous S becomes R (and vice versa), psychological S/R levels (.00 and .50), confirmation entry prices (such as a previous 1-2-3 entries or candlestick entries), places where traders got trapped* and desperately want to get out at or near break even, etc.

I have a max stop and most of the time I use that because it allows for more break even exits that might have been stop outs if the swing high/low were used as the stop.

I don't trade counter trend off new highs or lows. If I did, one tick above/below the swing high/low would be my stop loss, period.

* Example a while ago in CL: Look at the pin bar at 11:10 ET and how early bottom fishers may have got long 93.65 on a break of that bar's high. If they didn't scratch the trade, they're getting nervous. Most of their stops are below the LOD at that time, despite the fact that the lower trend line drawn across the 10:15 and 11:10 bar lows indicates a survivable stop would have to be placed a bit lower. There a nice stop run right into that LTL during the 11:33 bar and any longs still holding at that point would be quite happy to exit near break even (93.65). Anyone needing a pocket of liquidity to distribute more contracts will gladly take the other side of their break even exits, which might be why price mysteriously stopped rising at 93.65 at 11:42am.

Study this stuff for a few hundred hours (using a spreadsheet to accumulate stats) and you will become a master intraday scalper

MarketAddict · Nov 5, 2013

Quote from NoDoji:

I studied swing highs and swing lows and looked back on both the 5-min and 1-min chart to see if I could find reasons why one side would overwhelm the other at those levels.

I found several reasons for such defense, including trend lines and parallel channel lines (when applicable), previous S becomes R (and vice versa), psychological S/R levels (.00 and .50), confirmation entry prices (such as a previous 1-2-3 entries or candlestick entries), places where traders got trapped* and desperately want to get out at or near break even, etc.

I have a max stop and most of the time I use that because it allows for more break even exits that might have been stop outs if the swing high/low were used as the stop.

I don't trade counter trend off new highs or lows. If I did, one tick above/below the swing high/low would be my stop loss, period.

* Example a while ago in CL: Look at the pin bar at 11:10 ET and how early bottom fishers may have got long 93.65 on a break of that bar's high. If they didn't scratch the trade, they're getting nervous. Most of their stops are below the LOD at that time, despite the fact that the lower trend line drawn across the 10:15 and 11:10 bar lows indicates a survivable stop would have to be placed a bit lower. There a nice stop run right into that LTL during the 11:33 bar and any longs still holding at that point would be quite happy to exit near break even (93.65). Anyone needing a pocket of liquidity to distribute more contracts will gladly take the other side of their break even exits, which might be why price mysteriously stopped rising at 93.65 at 11:42am.

Study this stuff for a few hundred hours (using a spreadsheet to accumulate stats) and you will become a master intraday scalper

Thanks for your explanation

.. I have been back/live testing your 5 min 1 min ema strategy (if you want to call it that).. Today I saw some good trades that was winners.. Today we made a double bottom at 7:12am est so I started to look for longs.. The first long was at 8:03 am winner, second long at 8:20 took a loss (which is ok)..

Now I'm looking for shorts.. The first short was at 9:45 when the 5min had a problem closing above the 20 ema.. I rode the winner all the way down probably 20 ticks or a little more.. Another short at 11:06 for a quick 10 tick scalp( 1-2-3 forming and 5 min engulfing for more confirmation).

Can you comment on these trades please.. Were they good? I'm trying to see things through your eyes and see how you look at things.. Also can you tell me a couple of trades you took today?

NoDoji · Nov 5, 2013

Quote from MarketAddict:

Thanks for your explanation .. I have been back/live testing your 5 min 1 min ema strategy (if you want to call it that).. Today I saw some good trades that was winners.. Today we made a double bottom at 7:12am est so I started to look for longs.. The first long was at 8:03 am winner, second long at 8:20 took a loss (which is ok)..

Now I'm looking for shorts.. The first short was at 9:45 when the 5min had a problem closing above the 20 ema.. I rode the winner all the way down probably 20 ticks or a little more.. Another short at 11:06 for a quick 10 tick scalp( 1-2-3 forming and 5 min engulfing for more confirmation).

Can you comment on these trades please.. Were they good? I'm trying to see things through your eyes and see how you look at things.. Also can you tell me a couple of trades you took today?

The first long was solid because the 5-min 20EMA which was previously resistance should now hold as support on a long trade taken at 8:03, therefore a stop loss below that EMA, even a tick below the previous congestion low, wasn't too wide.

The second long was more problematic. The 8:16 bar should've produced follow through. The close below the 1-min 20EMA at 8:18 indicates a strong likelihood the 5-min 20EMA will be retested. If I went long where you did, I'd have scratched the trade on the break of the 8:20 bar low, unwilling to take a larger loss for a ride back to the 5-min 20EMA. If you trade with a wider stop, say 15 or 20 ticks, the market lets you get out at a similar price on the pullback following the EMA break.

The 9:45 short was OK. I didn't want to short right into where the 9:20 traders got long, so I waited until 9:53 to short.

That 11:06 was great in hindsight, lol, but in real time it was conflicting signals for me. I ended up shorting 93.60 for a break of the low, and didn't expect more than a scalp out of it, which I took

Some other trades that might make sense to you was a short at 8:55 (94.20) pullback to the previous double bottom you referenced, expecting it to now become resistance. That was a rare anticipatory trade for me. Also short @ 93.53 at 12:32, which felt very edgy at the time, like it could run either way, but my stop was acceptable. And short 93.26 at 12:51.