One of the strongest trends are SPBT. They can be grindingly slow but they are very strong and can last the entire RTH session. It is program buying. Bullish institutions are buying. Every bear attempt to reverse is erased. In the ES these SPBT happen about 3 times or so a month.
I hate strong trend days
- Thread starter VEGASDESERT
- Start date
SPBT?
Trends will always reverse at some point. They have too. But there is such a thing As inertia in the markets that push to MM’s. And PA will Likely Indicate, with decent probability, when a trend is ending. Also when it is starting. A trader has to keep in mind the market cycle for the larger picture to see this. Markets range then Trend Then back to range theN trend again repeat...etc The trend is usually composed of a BO or strong spike then when first pb starts the trend goes into a channel. That channel will continue and gradually get flatter until it forms a range again.
SPBT =Small pullback trend, or SPBTD = small pb trend day. To further distinguish SPBL = small pb bull trend, SPBR = small pb bear trend. Example: The chart below is a SPBR (small pb bear trend) : ES or MES stays below 20 ema the entire session until just before the close. Strong bearish institutions selling all day. Program selling. Every attempt by the bull to reverse it (pb’s) is simply met with more selling. I took 13 trades. All were shorts. On some I averaged down short. Same chart with explanations is posted in my journal. I could not take all the trades the PA afforded as I had other things to do.
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If we look at days with only one major swing and which opens near one extreme and closes at the other - I count 4/113 down trend days and 5/113 up trend days so far in 2020.
Thursday was one such day.
I'll try to test this at one point but it's starting to look like an overfit (too many parameters/conditions). Sure, markets trend and range but the clarity of when and how long is far from clear. Also different instruments behave differently AND change behavior over time. VIX trended well and I traded that but then it went to range for years.
Entering a strong day doesn't have to be complicated. From the ES chart I posted (but on a 1 minute basis, not 5) take first RTH bar's midpoint (3160.25) as an entry on second bar. Thereafter it only went down to 3158.25 or two points of heat. Or alternatively take midpoint of first 5 one minute bars midpoint (3162.00) as entry on sixth bar. Thereafter it only went down to 3160.50 or one and a half points heat. Trail as you go using ........ whatever is your preference.
Doesn't always work out but that is what a stop is for.
Doesn't always work out but that is what a stop is for.
That is precisely the problem with trying to program an algo to trade PA. Too many parameters/conditions for the software. The human brain is 100’s of times more powerful picking out and reading patterns. Algo’s will work for a while then quit working. Discretionary PA trading will be with us many more years. At least as long as we use charts in trading. PA on charts is doing what it was doing 80 years ago. It will continue to do the same thing tomorrow.
All charts and all instruments do the same thing. Trends and ranges. Some are more directional in their moves like Naz as opposed the S&P but they both trend and they both range horizontal.
That's equivalent to saying that some price action trading can not be coded / programmed.
Yet, in the wake of quantum computing...the above soon may not be true but we won't know that until quantum computing is available commonly to the researchers and Wall Street.
wrbtrader
That same old discussion.
Well, I would say the human brain is more versatile in that we can be subjective but the same subjectivity is also our problem.
Algos that are backtested thoroughly and have solid reasons for working will do so for decades. Adjustments may or may not be needed. Same is true for discretionary trading as well, charts from 80s don't look much like that charts today. Everyone who traded back then admits that it was different.
And all instruments are definitely not the same thing, that's just ignorant. There are equity traders who try to trade oil and fail, forex traders who are clueless about indices etc. There are commonalities but that's about it. EURUSD and some momo pharma stock have almost no similarities...
If I'm wrong, then you must be trading everything globally, if not, why not? Why leave money on the table?