Christmas In March For Price TA Trader Wannabes

[Laissez Faire]

A very simple approach which works across all market conditions is buying swing lows and selling swing highs. That's where the risk is the smallest and the reward is the greatest. Typically, it also puts you in the market way before a pending breakout.

Of course, way easier said than done and in no way easy, although the basic principle is. One thing that could help someone on the way is to look for momentum to falter around key levels or after the market moved X amount of points (figure out how much your market generally moves before retracing). I would also look for breakouts to fail as those plays can offer some really good R/R trades. Especially on the short side.

By the time you're getting confirmation by most typical methods or indicators, you're late to the party. Being late to the party generally means poor entries which means tiny profits or full losses.

KISS simply does not work trading index futures with leverage (precision). That is, your method may become KISS after doing a ton of research, testing and trading accumulating a lot of experience with it. But that method/approach will be more complex than a paragraph saying buy support, sell resistance and chase breakouts.

At least that's why I believe and find to be true myself.

 

[NoahA]

A very simple approach which works across all market conditions is buying swing lows and selling swing highs.

This is honestly the basis of what I do, or rather, what I intend to do. But when I look at where my trades are placed, they are soooo far away from the swing high or low.

I would also look for breakouts to fail as those plays can offer some really good R/R trades. Especially on the short side.

1000%. So often traders put stops below swing lows, so you have to expect that to at least poke. Today is a perfect example. The low of 3974.75 broke... went sideways for over 20 minutes, and ultimately ticked down 3 points to 3971.75, but then rallied.

By the time you're getting confirmation by most typical methods or indicators, you're late to the party.

1000% again. It doesn't even have to be confirmation by indicator but simply by price. Look at what I showed in my charts above. At this point, it sure looks like it wants to fall further.

Even at this point you might think ok, it came back up for a double top, so you're not prepared to go long.

It does break higher, but comes back down again. So even still, the long isn't confirmed.

And it probably isn't until you see these higher lows that you can think with some degree of confirmation that the trend is now up. But jesus, does this mean you're going long at 3979???

 

[Laissez Faire]

I would be chasing the long side here.

This is honestly the basis of what I do, or rather, what I intend to do. But when I look at where my trades are placed, they are soooo far away from the swing high or low.

Maybe you should take these questions in a separate thread in order to not hi-jack @Scataphagos thread? I'm sure it would be interesting.

 

[Scataphagos]

So, we traded below 3974 (the number you pointed out) and the market snapped back up from that level. In other words - chasing a breakout would be a net loss here and the right trade would have been to buy the low of the range or as you would say "Buy support". But according to your playbook we should be chasing a breakout there.

So... you bought 3974. What did you use for a "stop and reverse", 3973.50?

The lower part of the consolidation is/has been "support zone"... not just "one F'n tic". You don't consider a "buffer" (stop) in case of false break... like occurred here?

 

[NoahA]

Maybe you should take these questions in a separate thread

Oh god no. I don't mind lurking but I've been around for too long to believe anyone can help. Lets face it, everyone trades differently, and its not even that I'm asking for help but simply pointing out how incomplete advice on these boards is.

 

[Laissez Faire]

So... you bought 3974. What did you use for a "stop and reverse", 3973.50?

The lower part of the consolidation is/has been "support zone"... not just "one F'n tic". You don't consider a "buffer" (stop) in case of false break... like occurred here?

No, I didn't buy it. Not trading today.

But in hindsight, the ideal short entry for me in the afternoon would have been the failure at 12:50 (sell resistance) at a cluster of key levels (prior day close and Open). Generally, I don't short near a low.

I don't see anything special about 74 other than being the LOD at the time. But, when the market traded below 74 and there was no follow-through, I would probably be looking to exit any existing shorts or consider a long as it was effectively a failure to breakout.

All in hindsight of course, but this is how I generally perceive the market.

I didn't understand the latter paragraph in your post.

Oh god no. I don't mind lurking but I've been around for too long to believe anyone can help. Lets face it, everyone trades differently, and its not even that I'm asking for help but simply pointing out how incomplete advice on these boards is.

No, really. I encourage you to do it. I think it could elicit some interesting discussions. Who knows. Maybe an able trader will see you really trying and extend a hand to help you out.

Personally, I think it would do you a world of good to drop the second charts and rather focus on the larger moves as shown on the 5-minute chart. If anything, use the second charts only for execution. A lot of the time the second charts and faster tick charts will be noisy. There's a lot of hedging/arbitrage on ES, so a lot of the movement you see don't really mean anything. Zooming out makes it less likely to get lost in noise and focus on what's important.

 

[Scataphagos]

I don't see anything special about 74 other than being the LOD at the time. But, when the market traded below 74 and there was no follow-through, I would probably be looking to exit any existing shorts or consider a long as it was effectively a failure to breakout.

That was the correct play. So what's the beef?

 

[Laissez Faire]

That was the correct play. So what's the beef?

Your suggested play in advance was to short a break of 74, though.

There's no beef on my end. I'm just suggesting that your proposed KISS method is too simplistic and requires a lot more nuance and sophistication to work for index futures.

 

[Scataphagos]

Your suggested play in advance was to short a break of 74, though.

There's no beef on my end. I'm just suggesting that your proposed KISS method is too simplistic and requires a lot more nuance and sophistication to work for index futures.

You know the market can "turn early" on a number you're considering... and it can also "overshoot", right? "Contain the overshoot"... isn't that one of the reasons you use stops?

There were 2 ways to "play 3974 correctly".
1. Buy 3974 with a reasonable stop. The stop would have contained the "break to '72" and left you long.
2. Buy 3974, reverse to short on the break of 74, reverse back to long when false beakdown? (if you want to call it that... I don't.) is recognized.

I guess I didn't pick my words carefully enough. I meant to convey "chase short on breakdown of the support zone", not "literally short 3973.75". Next time I'll try to say more precisely what I intend.

BTW... Did I literally say, "short a break of 3974". I don't recall that. Here's what I said in earlier post...

"...Up to the minute... sideways chop range has expanded to 3974-4004. The play now is "buy the bottom the range, sell the top of the range... chase breakouts*". All the rest is noise..."

Seems you took that to literally mean "short a break of 3974"... not the same.

 

[Scataphagos]

"...Up to the minute... sideways chop range has expanded to 3974-4004. The play now is "buy the bottom the range, sell the top of the range... chase breakouts*". All the rest is noise..."

Market is still in the same range (well, 3972 low). Same play until the range is broken... stops to contain "overshoots" included. (Noticed I mentioned "stops" this time?)