Ghost of If You Can Draw A Straight Line

[niko]

This is also where context comes in. This takes place at about 10m in, which is the tail end of the maximum confusion period. Do traders approach this level hesitantly? cautiously? Or do they race toward it, perhaps because they couldn't find trades below that range? And when they find everybody's gone, do they sit, or does the next bar plunge 4pts? All of this must also be factored into a quickie probability estimate.

Is it really necessary then to wait for the break of a line? a decline of X more points? Or is one justified via calculation rather than feelings to place a sellstoplimit below that second bar and see what happens? What are the risks if it doesn't work out?

The main risk here is that after you found out that up was not the way to go and decided to commit with a short expecting a downtrend, it doesn't occur (there is no LL) and you get trapped in the chop. In which case the validity of your trade goes down the toilet.

Something like the blue bar (attached chart), would be what you don't want to see happening after your entry is triggered.

 

[dbphoenix]

The main risk here is that after you found out that up was not the way to go and decided to commit with a short expecting a downtrend, it doesn't occur (there is no LL) and you get trapped in the chop. In which case the validity of your trade goes down the toilet.

Something like the blue bar (attached chart), would be what you don't want to see happening after your entry is triggered.

Which is where the context and the probabilities come in. Since they can't get what they want at the mean of the pre-market range, it is logical that they would try the mean of the primary channel which is/was at 3490 since there will be more trades there than at the upper limit of the channel, if they ever get there, at 3560.

This is not to say that a try for 3560 is impossible, just less likely. Even so, even if a short placed below these bars were tripped, what would be the downside? Three points? And what would be the upside if price fell? 14pts, even if it had not continued to fall to 86.

Granted one has only seconds to make these decisions, but if he hasn't determined the limits of the pre-opening range and its mean, and if he hasn't determined the upper and lower limits and mean of the primary downtrend channel, he won't even know that there is a decision to be made. All he'll see is a lot of random up-and-down whipsawing. The more prepared one is, the better position he's in to take advantage of opportunities that arise.

I should also point out before leaving this that after price eventually attempted a rally that ended at 3518, traders settled back to the midpoint of the move from low to high at 3500, and stayed there for 90m, a level to which they returned after another scouting expedition to the upside and at which they remain at this time.

 

[green.green]

For some reason I thought you were suggesting not taking the short and waiting for the mean and I was confused. If there is enough room to make some points you take the short either here or on the retrace. Then you see what happens and maybe get long.

 

[eminiman414]

Which is where the context and the probabilities come in. Since they can't get what they want at the mean of the pre-market range, it is logical that they would try the mean of the primary channel which is/was at 3490 since there will be more trades there than at the upper limit of the channel, if they ever get there, at 3560.

This is not to say that a try for 3560 is impossible, just less likely. Even so, even if a short placed below these bars were tripped, what would be the downside? Three points? And what would be the upside if price fell? 14pts, even if it had not continued to fall to 86.

Granted one has only seconds to make these decisions, but if he hasn't determined the limits of the pre-opening range and its mean, and if he hasn't determined the upper and lower limits and mean of the primary downtrend channel, he won't even know that there is a decision to be made. All he'll see is a lot of random up-and-down whipsawing. The more prepared one is, the better position he's in to take advantage of opportunities that arise.

I should also point out before leaving this that after price eventually attempted a rally that ended at 3518, traders settled back to the midpoint of the move from low to high at 3500, and stayed there for 90m, a level to which they returned after another scouting expedition to the upside and at which they remain at this time.

I am starting to really see now how context and prep are so crucial in the decision making process.

I'd like to post a replay chart if I may and if it is not warranted it can be ignored but...

I was attempting to trade this just reading price and not thinking in terms of bars or retracements or lines etc. What I saw here was two instances where selling pressure came in after a double top at lower and then lower prices. This happens to be around an area slightly higher than the mean of a channel I have drawn from May/June 13. Once I recognized this I said lets hit sell market and place a stop above the double top. My entry was on the bar associated with the second lower high after the double top. The stop placement took care of itself and in my head if buying pressure moved price up to 75 I would be out with an exit that would make sense no just pick an amount I don't want to lose. Price made it back to the mean of the overnight range where it hesitate which I was ready for and we continued lower. Maybe I go lucky but I had my reasons for entering. Trade turned out to hit the bottom of the TC. Not sure how one could create an entry criteria as the one above but I feel like what I did represents an improvement.

A question I have with regards to hesitations and "pushes." Are the hesitations because traders are finding trades at these particular prices? And then these larger pushes in shorter periods of time (one, two or three long 1m bars) do they happen because traders are I'll say in a hurry or actively moving price in a given direction in order to find prices where more trades can be found and when we do find them we'll see either more hesitation or rejections etc???

 

[r3algood]

Where we are now this morning (see attached image)

My pre-session evaluation is that we have found support at the TC mean and may look to test the top of TC, or at least work our way north over the course of the session.

My alternate scenario is a ranging day around the TC mean.

I look forward to trying my best to let myself follow the market and not try and impose any biases I may have. The market moves, I follow the market.

 

[niko]

The last few days have served a very interesting purpose, even though I think I have something really good cooking, I still cant get to the "marrow", I am not sure If I need to get to the marrow to make a living out of this, but I am pretty sure I cant actually rest my mind until I do, because even if I can take some money of the market knowing that the puzzle is still there, unresolved, will eat me.

All this for saying, I am gonna go back a couple of steps and work on characterization and observation until I can see things as I should.

 

[dbphoenix]

Today's Gorilla in the Room:

 

[game]

Db - Since confusion seems to present the best opportunities, what is your take on forming a strategy to trade opens across multiple markets? Say the DAX, CL and NQ.

While it may be tough to characterize all these markets in detail, perhaps a more superficial knowledge of a few is enough to have a go at the Open. Have you yourself ever gone this route?

 

[green.green]

Today's Gorilla in the Room:

I'm trying to follow the gorilla to skull island but I'm lost. We have an overnight range, we try down and can't find trades, we spike above the range and can't find trades. We do this three more times resulting in the big blue swing. The midpoint of this is the top of the range. We get above yesterday's high and can't hold forming "skull island" We have higher and higher bottoms etc.

I see all this but what does it mean? The market looks weak (I took the skull island trade but didn't hold) but I'm not putting it all together. (I'll read the latest file as I hear this is addressed). This uncertainty makes me a scalper. I've been making 3-6 point trades not out of fear but out of confusion. I imagine you sold skull island and are still holding.

I guess this is a long-winded way of asking how does one take the bits and pieces and turn it into an actual trade locator? There are tons of double tops and bottoms but most aren't worth a hill of beans.

I spent some time looking at the longer-term view and it looks like we are just forming a coil with a slight upward lean. Also - since tomorrow there is no trading it seems likely that we don't do anything for the rest of the day.

 

[dbphoenix]

Db - Since confusion seems to present the best opportunities, what is your take on forming a strategy to trade opens across multiple markets? Say the DAX, CL and NQ.

While it may be tough to characterize all these markets in detail, perhaps a more superficial knowledge of a few is enough to have a go at the Open. Have you yourself ever gone this route?

If I were a lot younger and a lot more stupid, then maybe. But the more important question has to do with size, because if you never get to the point where you can trade enough size to do this for a living, then it's all been just a diversion because there's nothing on television.

So, if you can do substantial size trading three markets at the open simultaneously, then sure, why not?