Ghost of If You Can Draw A Straight Line
- Thread starter dbphoenix
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The chart is a bit different if read left to right. As I said this morning, I don't like to trade ranges, and the stopouts here show the reason why.
Your first short is correct, but it's exited 6pts later. Not great, but 6pts is 6pts. One then looks for the first long, which I show with a green dot. This is exited for a loss of about 2pts. Then one looks for a short, and this occurs just above the lower limit of the trading range. This is also exited for a loss of 2pts (it should be obvious by now why this doesn't work well in ranges, tho we're still in profit; nonetheless ranges should be traded via reversals, not retracements). The next long then occurs at 52 and is exited at 56. So even though the win rate here is only 50%, the P:L is 2.5:1. Remember tho that these are four days in one day. If you're serious about this, run it for three or four weeks, in replay or sim, and see how you do.
That's a pretty good start. You might want to move this to the Ghost thread if you are interested. The 52.75 short was triggered at 10:11 not at 9:58. I think DBP did take this entry but it was a scratch for him.
There is also another entry (short) at 1:20 that is triggered at 51.50. I'm still in this short.
As for the short at 51 at 9:58 price broke through 53.25. (this level was the bottom of a range defined at 11-12 pm). The next bar briefly tested this level and I put out at stop limit 1 point beneath the low of of the 9:58 bar which was triggered 1 minute later. The temporary supply line was breached at 10:03 which is where I exited. As I said earlier - this wasn't a well-defined pullback and a trade I should not have taken. I bought nearly at the low of the swing but by following the rules I didn't get hurt too bad.
Thank you, DB. Why would you look for long, when it's clearly in a down trend, and in the process of a pullback for a potential second leg down? SLA do not have to account for HH/HL, and LH/LL confirmation, before placing trades with the trend? I thought, it was price action based.
Schaefer
Looks like you're genuinely interested after all
Traded in real time, the bottom of the range would have been at about 54. At the time of your short, you would not have known that price would fall to 45. Therefore, you would have either prepared to reverse at the first bounce off 54, which turned out to be 50, or you would have exited at the break of your first SL, which, as it turned out, was also at 54. Once the SL is broken, you look for the first ret in order to go long. Once the SL is broken, you are no longer "clearly in a downtrend; that's sort of the point. You have no way of knowing in real time whether this is going to reverse in turn and lead to a continuation down. You find that out three bars later when your DL is broken and you then begin looking for the first ret to enter a short. Yes, you could just hold on after your first SL is broken and hope that price continues to fall, but you have no reason to expect that it will, and, in the meantime, you have a long eight minutes to wait until it does.
If you do this in replay without knowing what comes next, you may be better able to see what I mean.
The demo was done using a 5m bar.
Please take this with a grain of salt. I'm answering as best I can as a learning opportunity.
DBP isn't looking for a long there because we were in a range. However if part of your plan is to trade ranges then you would go long off a reversal rather than waiting for a retracement. If you didn't notice it was a range then you would have never been filled.
I'm not sure what you are looking at that makes you think we are clearly in a downtrend? We have a poke out of the top of the range (HH) and then a poke out the bottom (LL). But regardless the lines will tell you which way to look.
EDIT - too slow
Looks like you're genuinely interested after all
.....Traded in real time, the bottom of the range would have been at about 54.
Okay, thanks. I see now, you're all going by the trading range from the pre-market. I hardly pay attention to pre-market ranges, as from my experience, they don't hold much weight unlike the RTH price ranges.
I'm always interested in other people's methods. A few weeks of sim trading on the side doesn't hurt anyone. But my core knowledge will always be candle stick analysis, which I had learned a lot from Mark, and moving averages.
Schaefer
So there's the difference. I was wondering. AMT posits that there are two states available to price: trending and ranging. Each is played differently. Candlestick analysis has nothing to do with it, nor do indicators.
Thanks for being polite. It's a nice change (you'll know what I mean).
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