how to manage false breakouts on NQ ES
- Thread starter pawpaw
- Start date
If posters go to B C pair to avoid screw ups at B time, then if the screw ups are cured, we can then trade through A to B to C. Darned if that doesn't make us ask about what is the C a precursor for. A fair amount of time it is A. Other wise it is a "D" genera. Don't worry.
I combine all this stuff on a matrix and you do not want to learn about that. For now lets get the BO failure taken care of.
To make money you need to go to where the market is operating. Let's grant that past comments by posters do not allow that for now.
The one thing that precedes everything above is how we get to an A state. BO's occur after the market has gone into a period of dullness and inactivity. the noise ratio is highest and often dominates all signals. The absolute signals are on neutral and the relativistic ones are running full scale blips in a random unconnected way. The one thing to look at is people. Potential particpants are not in the picture to speak of except that the two groups they divide into at all times are definitely in disagreement. This healthy normal thing gives us our marching orders. We also know of their recent views and where they have done the MOST to express them. and their least efforts were made at the times when the market was most extreme recently. The gangs all here and before a BO they are in total disagreement. It is a powerful time for one set of players. The very small group who first agree with each other from opposite sides of the fence.
We need, therefore to watch only one thing. All of my SEC citations come from this set of observations.
I would name it "critical mass sustainment" (CMS). Success or failure hinges on this alone always and it is easily measured as a leading indicator of price. Iwill give you the price indicator to compare it to also.
The best way to do this is to move to the operating point of the market. Skip that though because of the stress factor impossed to most. Stay where you are and just fall into line when it gets to your places.
I posted the maths for this in the early nineties. It has been posted in ET recently as a courtesy of some nice person. You don't need this unless you want to program it for being automatic. Lets keep it simple as a beginner thing.
I will move in to the focus by zooming from the longest term investing to the shortest. It all works the same. No one has to move from where they operate. I do move because I am a person who optimizes stuff.
the way people get to disagreement is by fretting. as they fret, the market gets dull and noise begins to show up. So you can see that. Fretting is called congestion. Experts love this stuff The market has a periodicity of moving laterally in ups and downs that have little amplitude and continue the move along CONSISTENTLY. You can see this. Our indicator of its progress to the BO we want is volume.
Volume ordinarily increases as a measure of continuing a trend. that is half the P, V relation. Volume decreases when change is coming up. When volume is steady the market will decline in quality and get dull and drift. In congestion the volume is low and not sufficient to allow the market to operate. so you will see a whole set of formations come up as congestion is not sustained because the volume is lessened. All the pennants, convergence and centering formation show you this. In fast paced markets trends first stall for a 3 to 5 min period
then the stall becomes a dip aftr the next spurt has occurred. All of these are marked as low volume and delcining volume.
We know a change is coming now. It is just "when" time. This is easy to know. You just look back in time and peg the previous volumes for each of the happenings. You calibrate yourself on volume. No one here is calibrated. And you do not look much at the market players.
Wilders RSI is terrific for corrolating with this stuff. Do not use the default he came up with. The one I use Pring wrote up about five years after most of us started using it. All defaults have to be changed to take into account electronic trading. For us we can use VDU (vey dry up) volume as an RSI alternative. There will be one bar that is lower than the noise level of volume. This is the calm before the storm. BO will be just after the volume resumes and picks up. This is the breeses of volume preceding the gusts coming. If you are on the operating pace you see all this. Most of you just get slammed suddenly.
Volume moves much before price moves. They do not move together. If you think they do you are in the wrong place.
I hope this gets you to see A coming into being. The BO occurs; we then have time to enter when and if we want.
Lets all enter and make money. as we make money all is well we pick off three points to see the channel that formed and as the trend picks up the traverses of he channel occur. The pairs of traverses, forth and back continue to make money faster and slower respectively. Scalpers say to us they can't handle this. Kelw. So be it.
the first traverse is during the BO and it is high velocity money making. The points per bar chit chat.
We have to look at the end of the traverse appearing and see if there is a slower money vleocity, a zero money velocity or a negative money velocity. How does the price get to and bounce off the right trend line?
Volume answers all these questions. BRB.
I combine all this stuff on a matrix and you do not want to learn about that. For now lets get the BO failure taken care of.
To make money you need to go to where the market is operating. Let's grant that past comments by posters do not allow that for now.
The one thing that precedes everything above is how we get to an A state. BO's occur after the market has gone into a period of dullness and inactivity. the noise ratio is highest and often dominates all signals. The absolute signals are on neutral and the relativistic ones are running full scale blips in a random unconnected way. The one thing to look at is people. Potential particpants are not in the picture to speak of except that the two groups they divide into at all times are definitely in disagreement. This healthy normal thing gives us our marching orders. We also know of their recent views and where they have done the MOST to express them. and their least efforts were made at the times when the market was most extreme recently. The gangs all here and before a BO they are in total disagreement. It is a powerful time for one set of players. The very small group who first agree with each other from opposite sides of the fence.
We need, therefore to watch only one thing. All of my SEC citations come from this set of observations.
I would name it "critical mass sustainment" (CMS). Success or failure hinges on this alone always and it is easily measured as a leading indicator of price. Iwill give you the price indicator to compare it to also.
The best way to do this is to move to the operating point of the market. Skip that though because of the stress factor impossed to most. Stay where you are and just fall into line when it gets to your places.
I posted the maths for this in the early nineties. It has been posted in ET recently as a courtesy of some nice person. You don't need this unless you want to program it for being automatic. Lets keep it simple as a beginner thing.
I will move in to the focus by zooming from the longest term investing to the shortest. It all works the same. No one has to move from where they operate. I do move because I am a person who optimizes stuff.
the way people get to disagreement is by fretting. as they fret, the market gets dull and noise begins to show up. So you can see that. Fretting is called congestion. Experts love this stuff The market has a periodicity of moving laterally in ups and downs that have little amplitude and continue the move along CONSISTENTLY. You can see this. Our indicator of its progress to the BO we want is volume.
Volume ordinarily increases as a measure of continuing a trend. that is half the P, V relation. Volume decreases when change is coming up. When volume is steady the market will decline in quality and get dull and drift. In congestion the volume is low and not sufficient to allow the market to operate. so you will see a whole set of formations come up as congestion is not sustained because the volume is lessened. All the pennants, convergence and centering formation show you this. In fast paced markets trends first stall for a 3 to 5 min period
then the stall becomes a dip aftr the next spurt has occurred. All of these are marked as low volume and delcining volume.
We know a change is coming now. It is just "when" time. This is easy to know. You just look back in time and peg the previous volumes for each of the happenings. You calibrate yourself on volume. No one here is calibrated. And you do not look much at the market players.
Wilders RSI is terrific for corrolating with this stuff. Do not use the default he came up with. The one I use Pring wrote up about five years after most of us started using it. All defaults have to be changed to take into account electronic trading. For us we can use VDU (vey dry up) volume as an RSI alternative. There will be one bar that is lower than the noise level of volume. This is the calm before the storm. BO will be just after the volume resumes and picks up. This is the breeses of volume preceding the gusts coming. If you are on the operating pace you see all this. Most of you just get slammed suddenly.
Volume moves much before price moves. They do not move together. If you think they do you are in the wrong place.
I hope this gets you to see A coming into being. The BO occurs; we then have time to enter when and if we want.
Lets all enter and make money. as we make money all is well we pick off three points to see the channel that formed and as the trend picks up the traverses of he channel occur. The pairs of traverses, forth and back continue to make money faster and slower respectively. Scalpers say to us they can't handle this. Kelw. So be it.
the first traverse is during the BO and it is high velocity money making. The points per bar chit chat.
We have to look at the end of the traverse appearing and see if there is a slower money vleocity, a zero money velocity or a negative money velocity. How does the price get to and bounce off the right trend line?
Volume answers all these questions. BRB.
If you define what you mean by "make a difference", then yes. Sperandeo, for example, defines trend change as a break of the trendline and trend reversal as a drop below the last reaction low, if long. You may not like that particular definition, but a simple retracement is not in and of itself a trend reversal.
Okay. We had a BO. End of formations occurred after the volume gusted up to fairly high values. We bracket in (during the window after volume picks up and before price moves) to not take any guessing risks. Or we enter after we see the direction.
Now we have to continue to make money through A to B. B is failure to BO. we watch the volume and we are calibrated. we know the min vol to sustain a BO and we are watching volume build to and exceed this value. we watch on the proper pace and we pro rate the volume comparted to the time elapsed on the bar. Don't go to another fractal necessarily. just look to see if the volume buid up is appropriate according to your personal calibrations.
What if????? We always have a plan as this slow motion thing transpires. I like to see the volume fade. It is just a neat thing.
When it does I am up for a period where I am on the other side of a lot of people. This is a time where "continuation" has ended and "change" has taken over. I know that congestion, whipsaw, convergence, pennants centering are in the cards.
During most trading we enter and exit. This is trend stuff. enter the beginning, ride along with "continuation" and when the trend ends we exit. QED.
But now volume is fading on the BO and the volume will not sustain the trend. Okay we are out of "continuation" and into "change". We do not use enter and exit as market tools any more. You better read this slowly.
we need an alternative for trading to entering and exiting. Well we have it. Lets say you are using a 25 value for some arbitrary MACD to go green. this is a "continuation" thingy. Itis an enter exit thing for scalping. by the way scalping is not a continuation thing; it is, in fact a useful tool only in "change" times between "continuation " times.
Our change strategy is to reverse instead of exit. think. All we need to do it time our reverse to always be on the "right" side of the Market. The market is not trending it is doing a whole set of possible things (look at he mant formations). Most people do not make money in A formations. Well some do though.
I am just upping the level of ET here for today. Once in a while it doesn't hurt to get to an expert level of chat.
The "change' portion of time in the market requires that you use a reversal strategy to just cruise along and stay on the right side of the market. It is like scalping scalpers who do the entry exit thing. They need someone opposite them and now you get who it is a little bit.
If a BO is turning into a failure to BO (a B), then you know this by the unsustainable level of the volume for a simple BO. the volume leads price. This fade in volume signals a reversal. double the contracts (oops you need some margin) and reverse the trend hold (whew, you don't need margin any more for the reverse). So you simultaneously exited and entered the other side of the market. This is tacking to get to the correct side. since volume leads price you don't need to be hyper.
How do you know when to quit? the end of "change" does come. you will see that when there is just noise in the market you can't make money. This is the only time random walk actually applies. The macro folk do not know this as yet. we do sideline when the market is just noise. And we know this period just precedes the formations of A.
I know i didn't detail it out enough. but i wanted to get the failure to BO handled with a first pass at least. I is not good to continue to side step stuff that shows up for you. the message of stuff you become conscious of is this: you are never aware of anything you cannot handle. If you have an awareness you, if fact, are capable of dealing with it.
As you know I am here to get you all to be millionaires. Gary Smith in his book commented on making about 900,000 in a day net. LOL... well It takes me about 20 trades to get into that situation and 30 trades to get out. You know, as a one day event.
The fact is that you can use knowledge of the market to just turn your brokers into limp noodles. You will enjoy frosting thier cakes once in a while. They will never know how it's done either.
Now we have to continue to make money through A to B. B is failure to BO. we watch the volume and we are calibrated. we know the min vol to sustain a BO and we are watching volume build to and exceed this value. we watch on the proper pace and we pro rate the volume comparted to the time elapsed on the bar. Don't go to another fractal necessarily. just look to see if the volume buid up is appropriate according to your personal calibrations.
What if????? We always have a plan as this slow motion thing transpires. I like to see the volume fade. It is just a neat thing.
When it does I am up for a period where I am on the other side of a lot of people. This is a time where "continuation" has ended and "change" has taken over. I know that congestion, whipsaw, convergence, pennants centering are in the cards.
During most trading we enter and exit. This is trend stuff. enter the beginning, ride along with "continuation" and when the trend ends we exit. QED.
But now volume is fading on the BO and the volume will not sustain the trend. Okay we are out of "continuation" and into "change". We do not use enter and exit as market tools any more. You better read this slowly.
we need an alternative for trading to entering and exiting. Well we have it. Lets say you are using a 25 value for some arbitrary MACD to go green. this is a "continuation" thingy. Itis an enter exit thing for scalping. by the way scalping is not a continuation thing; it is, in fact a useful tool only in "change" times between "continuation " times.
Our change strategy is to reverse instead of exit. think. All we need to do it time our reverse to always be on the "right" side of the Market. The market is not trending it is doing a whole set of possible things (look at he mant formations). Most people do not make money in A formations. Well some do though.
I am just upping the level of ET here for today. Once in a while it doesn't hurt to get to an expert level of chat.
The "change' portion of time in the market requires that you use a reversal strategy to just cruise along and stay on the right side of the market. It is like scalping scalpers who do the entry exit thing. They need someone opposite them and now you get who it is a little bit.
If a BO is turning into a failure to BO (a B), then you know this by the unsustainable level of the volume for a simple BO. the volume leads price. This fade in volume signals a reversal. double the contracts (oops you need some margin) and reverse the trend hold (whew, you don't need margin any more for the reverse). So you simultaneously exited and entered the other side of the market. This is tacking to get to the correct side. since volume leads price you don't need to be hyper.
How do you know when to quit? the end of "change" does come. you will see that when there is just noise in the market you can't make money. This is the only time random walk actually applies. The macro folk do not know this as yet. we do sideline when the market is just noise. And we know this period just precedes the formations of A.
I know i didn't detail it out enough. but i wanted to get the failure to BO handled with a first pass at least. I is not good to continue to side step stuff that shows up for you. the message of stuff you become conscious of is this: you are never aware of anything you cannot handle. If you have an awareness you, if fact, are capable of dealing with it.
As you know I am here to get you all to be millionaires. Gary Smith in his book commented on making about 900,000 in a day net. LOL... well It takes me about 20 trades to get into that situation and 30 trades to get out. You know, as a one day event.
The fact is that you can use knowledge of the market to just turn your brokers into limp noodles. You will enjoy frosting thier cakes once in a while. They will never know how it's done either.
