CL Redux
- Thread starter schizo
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Iâve been conversing for a few days with plsnobull over on the âPosition Sizingâ thread and rather than continue to post on that thread off-topic, Iâm inviting him/her over here for an illustration of precision price action scalping concepts (similar to the stuff posted by several folks on Metalâs âSimple Price Approachâ thread).
S/he does not believe itâs possible to have a long string of profitable trades during a strong trending move, nor to suffer little damage in choppy price action. In fact, both are possible with understanding and experience.
Here is an illustration of precision price action scalping concepts during what Al Brooks might refer to as âbarb wireâ. If youâve ever been whipsawed badly, it very likely happened in a price environment similar to this.
Earlier, I made a post here about the price action in a very ugly range. The overall PA indicated long only trades because price had broken decisively through pre-market resistance and made a significant new high and a pullback to that previous resistance zone would constitute an uncomfortable (for longs) but perfectly normal retrace of price. However, a scalper can trade long or short in chop.
As precision scalper you have several reasonable choices here:
1. Position long near the low of the range (96.95-97.00)
2. Position short near the high of the range (97.12-97.19)
3. Buy a break of the previous new high (97.24)
4. Sell a break of the pit opening bar low (96.80)
5. Place bids very close to the 96.85 level with a tight stop
6. Wait for clarity
As a precision scalper you need to position at a level that allows you to escape fairly unscathed. The range was wide and ugly enough that headfakes (failed breaks out of the range) were quite likely. Buying or selling the first break out of that range is dangerous.
Here is a picture of the 5-min price environment at the time:
Notice the reconnaissance is based solely on price; there are no indicators needed. Trend lines and parallel channel lines are useful guides so you can watch how price reacts at those levels.
S/he does not believe itâs possible to have a long string of profitable trades during a strong trending move, nor to suffer little damage in choppy price action. In fact, both are possible with understanding and experience.
Here is an illustration of precision price action scalping concepts during what Al Brooks might refer to as âbarb wireâ. If youâve ever been whipsawed badly, it very likely happened in a price environment similar to this.
Earlier, I made a post here about the price action in a very ugly range. The overall PA indicated long only trades because price had broken decisively through pre-market resistance and made a significant new high and a pullback to that previous resistance zone would constitute an uncomfortable (for longs) but perfectly normal retrace of price. However, a scalper can trade long or short in chop.
As precision scalper you have several reasonable choices here:
1. Position long near the low of the range (96.95-97.00)
2. Position short near the high of the range (97.12-97.19)
3. Buy a break of the previous new high (97.24)
4. Sell a break of the pit opening bar low (96.80)
5. Place bids very close to the 96.85 level with a tight stop
6. Wait for clarity
As a precision scalper you need to position at a level that allows you to escape fairly unscathed. The range was wide and ugly enough that headfakes (failed breaks out of the range) were quite likely. Buying or selling the first break out of that range is dangerous.
Here is a picture of the 5-min price environment at the time:
Notice the reconnaissance is based solely on price; there are no indicators needed. Trend lines and parallel channel lines are useful guides so you can watch how price reacts at those levels.
Quote from NoDoji:
Here is a picture of what happened next, illustrating the importance of either positioning early counter to the range extremes so thereâs enough room to escape any failures with very little damage, or waiting for clarity (Al Brooks key recommendation during barb wire):
Wished I would have waited for clarity. Instead, I suddenly found myself short of band aids..
Wolf
Interesting analysis NoD. Bottom line for me on days like this is ... nothing in the middle works (unlike on classic trend days where you have to jump on early pullbacks ... which was deadly today). My best shot on these tight range days is to wait for a slight pause at key levels and jump in fading with a tight stop. Key generic levels today which might have been predictable fades were: retrace to pre-mkt high, the 50% full session range, the day high re-test, and that late day test of the O/R high, which formed a nice H&S. There were a few little channel plays but only for scalps. Kudos to you Brooksians if you're able to avoid barb wire on these kinds of days but catch the p/b breakouts on trending days (which by definition need to fail first before barbed wire is formed). Anyway, 70-tick range days in CL are usually not the easiest no matter how you slice it.
I'm curious about the origin of your channel lines from today. I get that the 2 lows for your trendline are the 6:30 and 7:55 pivot lows which appear lowest on your chart, but that seems tied to the time frame for this particular screen grab, or am I missing something? Looking at the full premarket and RTH session, the 6:30 eastern pivot L was a minor level at best, imho. Rather, if you took the 2:20am eastern L and connected it to your 7:55 pivot L, then the parallel off the early early 24-hr session pivot H @ 22:40 (late yesterday), that pretty much nailed where that 1st RTH H came in @ 97.24. The ultimate HOD was simply the channel high of RTH up to that point (lower TL = 9am L to 10:30 L, parallel off 9:05 H).
Today I had 3 trades off the open, the opening hook long @ 96.86, then I bought @ 97.09 as soon as the 9:05 ET bar closed (that's a paper-rock-scissors strategy not a part of my plan), which was a scratch, then I bought 96.08 at 10:00 based on the sophisticated "it's not going down, so it should go up soon" strategy
Which I eventually scratched because it was going nowhere and the chart was so ugly by then, I decided to read this thread, reply to our long lost friend Callmate and post my opinion of what price would do as soon as I shut down and left.So my method for avoiding the mess was to walk away from it.
Since I didn't trade after my post here, I can only say what I likely would've done using clever hindsight analysis. I wouldn't have bought initial breaks out of the range and I wouldn't have placed limits near 96.85. I very likely would've taken a "second mouse" long @ 97.02, 15+ ticks higher than you professional trend line anticipators, but it feels "safer" to me to trade that way.
I definitely would've shorted the break of 96.85 off the sweet little 1m channel between 11:00 and 11:10 or so, but may have given most of the profit back holding for a deeper target.
The reason my LTL was drawn off the 6:30 and 7:55 lows is because those were the two pivot lows in my chart window when I turned on my platform. I use a narrower time window now so the bars are larger, easier on my eyes. If I'd connected the lows you describe and I'd shorted a break of 96.85, then I definitely would've placed a 20 tick hard target because that's where that particular TL led at the time and that's where the buyers stepped in.
