Quote from thecalip:
Yesterday, the Taiwan Index futures rally 12 points in about 3 hours. From 311 to 323. During this rally, there is almost no down bar on a 5 minutes chart. The momentums start around 11:30 index was 313, and in less than 2 hours, index at 323.
It is one of the greatest move in this index, unfortunately, I was not on it. I just stare at it and wait for a pull back which never came.
For all the experts out there, how would you trade it? Where are the safe entries? Or there is no safe entry after the move begun.
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I annotated your P, V chart. I only added some talking points because of where you are in trading. It is best to take things one step at a time.
1. The day starts long (see channel defining points as three blobs of yellow.
2. Use volume to determine that the day is long. See the two pink annotations (lines) Where volume is INCREASING to tell you a dominant (tending traverse) is under way; see the long annotation on price.
3. You use the P, V relationship to make money as the day progresses. You are making mistakes in drawing at the point I have drawn the vertical light green line.
Think about the following:
you need to always use the three blobs to define the channel. Two are on one side and the other is between them in time and on the other side. You are not being sure that the middle blob is between the first and last blob.
Since you have not reached the point of being able to draw channels correctly, you will continue to "freeze" during trading hours. You explained how you "freeze"; this is your physiological system telling you that you need to protect yourself since you do not know what you are doing mentally. this is quite common to see in ET. Read the allenhobbs journal and see how bad freezing can get and how much denial can come into the picture for someone.
I wrote up the "fix" for your drawing of channels. If you choose to proceed with this improvement you will begin to feel more comfortable since price will always be in the channel AND as you showed, the channels will overlap when one is ending and the other is beginning.
4. Lets deal with parabolas. they are fun and sometimes they do exceed, in power laws terms, the Naperian base exponentially speaking. this is a statement of the market "decoupling" from the participant's participation temporarily. That is "market externalities" have come into play. In the US the president's working committee achieves this status occasionally. Google the chairman (Paulson) to see the frequency of his communicating when he is in one of these spasms of creating externalities.
To deal with parabolas you use your channel charting annotations. I drew two pink lines that tell you the market is short and I did not do a fix on your mistaken channle because I want to keep you focussed on making money by using principles and not focused on learning to annotate.
5. You see in the short channel a retrace to the RTL. During this you are headed towards the RTL and volume is going to a MINIMUM. Here and now focus on finding MINIMUMS on retraces because at the time of this small volume, the traders have reached a disagreement on price. You will see the spread (not shown on your post) increases at this time in this market. you are collecting three items at this point: price retrace, volume minimum and increased spread. You are going to make money from this.
At this time you have been getting into your "freeze" state for about 11 bars. That is quite a while and a severe trading handicap. So lets convert this to an excellent type of trading instead.
If you are in a channel (you always are) you always have the right to trade its traverses. So start doing that with the help of volume. peak volumes mark the end of price movement to the LTL. Volume troughs mark the end of price movement to the RTL. It is certain that after a peak in volume a retrace will occur.
On the other hand there are two choices at the end of the trough. For an expert trader, there is no problem. For others, they have to be alert and think and observe. You know know this and you know WHEN this moment is at hand. And if you are doing as I suggest you are long and making money. this circumstance is the opposite of the "freezing" that you have been doing. It is a nice place to emerge into by making a few forwarding and important decisions all within your power.
6. as the moment passes, you observe that the minimum has past and you are in an increasing volume situation. This tells you what side of the market to be on by looking at the color of the volume bar (green). Green stands for long on your chart and you are already long. This lasts 21 more bars and you keep making money at a faster and faster rate.
7. Since you were "frozen" you stopped annotating. I am leaving it blank so you can think about being frozen rather than seeing how to do channels. If you were to draw the channel you would see a volatility expansion of the channel and price moving more and more to the LTL.
8. On any traverse of a channel on the dominant traverse there is always a possibility of a volatility expansion because MORE volume can come into the market than the increasing volume of prior dominant traverses.
9. you take the profits on the peaking volume. so to know it is peaking ahead of time you need to do a pro rata volume and know what the end of the bar volume will be.
Summary.
If you fix the things mentioned you will become a millionaire just like everyone before you did who fixed the problems. You can choose to skip this post as susanadt did when I suggested the same things to her. Thats life. The only reason I responded to you is that you are being honest with yourself and you only have about three things still to get straight for getting really rich.
Have a good weekend. Taiwan is a nice place to live.
