Gee, I wish I could trade in real-time

So here's something that happened today, 8/2/13.

Between 14:30 and 14:50 EST I entered long trades for TF, YM, and NQ, YM being the largest position. Without getting into specifics of why, part of the plan was these were the last trades of the day. (I'm a flat-eod futures trader if you don't know). All my setups are long, my risks are defined, it's Friday, and it's been a good week. The plan is solid, things are moving my way, life is great.

As a flat-eod trader, just after 15:30 EST I start tightening things up. YM is dinking along but it is taking out previous bar highs tick by tick. The plan has a mental target of 15575, which if you look at the pre-market you'll see. 15:39 EST mental target is tagged! Perfect, I'm ready to close shop. At 15:42 I'm out at the target! Cool! Go pull up a YM chart and look at 15:44 until the close.

I followed my plan. That by itself makes it a good trade. Risk was defined, I picked my entry, managed risk as necessary, picked my exit, and made profit. I shake my head with a lopsided grin thinking about it though. But am I going to change my eod procedure? No. Am I going to rethink my setups? No. Will the same thing happen again? Probably, since Im not going to change a thing because of a pinch of "bad luck". Do I "know" that what I do and the way I do it works? Yuup.
 
Here’s the real-time thinking behind a real-time NQ trade entry level called while chatting with a fellow trader. (Chart is PST.)

The chart looked like this when he mentioned that NQ appeared to be coiling for a breakout and said it looked more up than down. I agreed, noting that the higher low was “steeper” than the lower highs of the triangle(s).

What would signal a long entry for me, I said, would be if price broke out, then pulled back to the breakout line without closing below it (Breakout Pullback setup).

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First, price broke the near-term trend line rather weakly and consolidated, then made the push through the more significant trend line, also quite weakly. There’s the long signal for a test of (and likely break of) the pre-market high. So here we are in real-time; how do we get positioned with lowest risk, especially considering the breaks of each trend line were weak?

Once I get a signal, I quickly check price levels to see if there’s a level of confluence, meaning a level where there would be at least two reasons to put on the trade. First, I look at the previous price turn off a pullback and note the level where the bulls reasserted their strength by pushing price through the high of a pullback bar. The pullback bar that got broken upside, creating the price turn, is the 8:50 PST bar and the high of that bar is 3122.00. Then, I notice that the near-term upper trend line right here, right now, in real time is at 3122.00.

If my plan involves entering at a price where I anticipate S/R to hold, I place my limit order a tick above that level (in this case, 3122.25).

If my plan involves entering upon confirmation of price holding at a S/R level, I prepare to enter via a buy stop order based on the method my plan dictates.

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Price pulls back to the key level rather quickly and when it’s bid 3122.00 and offered 3122.25, I say to my friend, If you’re an anticipatory trader, you buy right here.

(The inset shows the price action off the low of the 5-min bar at the right edge and indicates a confirmation-type early entry on a 1-min chart.)

Price closed nearly 15 points from either entry level.

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Quote from NoDoji:

(The inset shows the price action off the low of the 5-min bar at the right edge and indicates a confirmation-type early entry on a 1-min chart.)
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From one experienced trader to another.

The problem with all these "confirmations" in small timeframes is that not only must the micro-turn hold but price cannot turn into chop.

Turns are easy to spot, there's a million candlestick books that explains them Ad nauseum.

The great barrier is that not only must the turn hold but price must be ready to react now or chop will get you as well. This is very prevalent in price action (especially in charts as fast as the 1min), yet when it's discussed by kind experienced traders like yourself in the board it is often overlooked, and I cannot help but wonder why...

Bottomline, the lower you go the more present the chop becomes.

Thank you.
 
Quote from Trader.Fighter:

From one experienced trader to another.

The problem with all these "confirmations" in small timeframes is that not only must the micro-turn hold but price cannot turn into chop.

Turns are easy to spot, there's a million candlestick books that explains them Ad nauseum.

The great barrier is that not only must the turn hold but price must be ready to react now or chop will get you as well. This is very prevalent in price action (especially in charts as fast as the 1min), yet when it's discussed by kind experienced traders like yourself in the board it is often overlooked, and I cannot help but wonder why...

Bottomline, the lower you go the more present the chop becomes.

Thank you.
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The reason I don't care if it becomes chop is because I have a plan for setup (price environment), signal, entry, stop and minimum profit target. If my plan involves entry using the price action on a smaller bar interval chart, then I'll use that price action to enter if triggered. If my plan only allows for entry based on a trigger on my main bar interval chart (5-min), then that's how I'll enter. Either way, it's not noise or chop or anything else to me until proven to be such by further price action after I'm in.

The price action in my example (price breaks out of two triangles with significantly higher lows on the way to the breakout) was indicating a greater likelihood of further upside to test the pre-market high as long as nearby support levels hold.

If the place where I would consider the trade void altogether or where I would consider price more likely to continue to range back and forth (chop) is within my risk parameters, then I must assume the risk or I become the gambler instead of the casino by picking and choosing from among my valid setups.

Worrying about what might happen will prevent me from taking any trade. If my stop is hit before my minimum target is hit, then I wait for the next setup/signal and I place my order accordingly.

If the price action indicates actual chop is occurring or if a new opposite signal appears, but my stop loss hasn't been hit yet, then I will exit my long position early and wait for the next valid setup/signal.

There is no way to know in advance whether a signal will lead to a profit, a loss or a scratch (mixed signal exit). The only thing I know in advance is the probability that price will hit profit X before hitting stop loss Y according to the hundreds of trades worth of analysis I've done.
 
Quote from NoDoji:

The reason I don't care if it becomes chop is because I have a plan for setup (price environment), signal, entry, stop and minimum profit target. If my plan involves entry using the price action on a smaller bar interval chart, then I'll use that price action to enter if triggered. If my plan only allows for entry based on a trigger on my main bar interval chart (5-min), then that's how I'll enter. Either way, it's not noise or chop or anything else to me until proven to be such by further price action after I'm in.

The price action in my example (price breaks out of two triangles with significantly higher lows on the way to the breakout) was indicating a greater likelihood of further upside to test the pre-market high as long as nearby support levels hold.

If the place where I would consider the trade void altogether or where I would consider price more likely to continue to range back and forth (chop) is within my risk parameters, then I must assume the risk or I become the gambler instead of the casino by picking and choosing from among my valid setups.

Worrying about what might happen will prevent me from taking any trade. If my stop is hit before my minimum target is hit, then I wait for the next setup/signal and I place my order accordingly.

If the price action indicates actual chop is occurring or if a new opposite signal appears, but my stop loss hasn't been hit yet, then I will exit my long position early and wait for the next valid setup/signal.

There is no way to know in advance whether a signal will lead to a profit, a loss or a scratch (mixed signal exit). The only thing I know in advance is the probability that price will hit profit X before hitting stop loss Y according to the hundreds of trades worth of analysis I've done.
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All very true and vocational but how does your plan avoid "Death by a thousand stops" while not missing moves by limiting the number of re-entries ?
 
TF

If the current bar – on a higher TF

Is not making new highs
Is not making new lows
Is not breaking the range / H or L of the previous bar

What does that tell ya is occurring on your trading TF


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I say this knowing the difference between Timeframe and Bar interval , but using vernacular all are accustom with


btw, this is but one example how to tell, intraday pivots is another

yet another - and the ubber obvious - what is price doing

RN
 
Quote from Redneck:

TF

If the current bar – on a higher TF

Is not making new highs
Is not making new lows
Is not breaking the range / H or L of the previous bar

What does that tell ya is occurring on your trading TF
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Consolidation, which means using a stop based on where the noise is occurring could be counter-productive as you would get stopped without any meaningful action movement.
 
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