If You Can Draw A Straight Line . . .
- Thread starter dbphoenix
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All the congestion between 20 and 27. When one gets good at riding these waves, he can "surf" these movements, entering and exiting as the imbalances demand. But beginners are better off taking the easy and high-probability trades. Let the professionals -- and those who'd like to think they are -- battle out the chop.
Nothing builds confidence like winning. Win first and take the higher risks later. If one is forced to watch instead of trade, so much the better.
I have so far defined chop signals in RT in two different ways, I wanted to know if I am not wandering far away from the good path.
1. DT or DB, as soon as I spot these, I turn into chop-alert mode, if is a DT followed by a DB I just assume i am in a rectangle like formation and suspend trading until a BO is confirmed. Some times the DT or DB have a HL, LH scheme as counterparts (what pattern addicts call an ascending or descending triangle).
2. LH followed by a HL and vice-versa (Some times this turns into a hinge, some times, is more chaotic, and the HLs / LHs are immediately poked, as if someone was trying to catch some stops. This is the one I have more trouble with.)
What I have incorporated so far into my plan, is to stop trading as soon as I spot any of these behaviors, but then the entry into the next move comes at the HL or LH just before the BO of the pattern, so I end up missing my entry. (I am not trading BOs now, got burned too many times, guess I will have to learn how to if I want to avoid the chop altogether)
Any comments would be appreciated.
1. DT or DB, as soon as I spot these, I turn into chop-alert mode, if is a DT followed by a DB I just assume i am in a rectangle like formation and suspend trading until a BO is confirmed. Some times the DT or DB have a HL, LH scheme as counterparts (what pattern addicts call an ascending or descending triangle).
2. LH followed by a HL and vice-versa (Some times this turns into a hinge, some times, is more chaotic, and the HLs / LHs are immediately poked, as if someone was trying to catch some stops. This is the one I have more trouble with.)
What I have incorporated so far into my plan, is to stop trading as soon as I spot any of these behaviors, but then the entry into the next move comes at the HL or LH just before the BO of the pattern, so I end up missing my entry. (I am not trading BOs now, got burned too many times, guess I will have to learn how to if I want to avoid the chop altogether)
Any comments would be appreciated.
I look for a breakout>pullback entry using a 1min chart.
Although I don't trade NQ, an example from today would be:
Between 10:20 and 11:15 ET there's some sloppy consolidation with channel/range highs between 32.00 and 32.75, which finally breaks upside from a significantly higher low (between 11:15 and 11:21).
I now watch the 1min chart for a setup where price pulls back to the 32.00-32.75 area without closing much lower and I then trail a buy stop to get long. This would finally position me long during the 11:50 bar. Normally it's not that ugly and doesn't take that long for a setup, but the holiday trading is light.
Well, you're correct in the signs you look for that generally signal chop. If one looks only at bars and levels, this seems arbitrary. But if one translates it into trader behavior and what traders are thinking, it makes more sense.
In any case, entering in advance of a breakout is tricky. It helps if a reasonably large number of people see the range and the trading within it and the efforts made so far to exit it. But nobody's going to see a 1m range except for the people following a 1m or 15/30s chart The 15m people are not likely to be aware of it. The 60m people definitely won't be. And if they're not going to be there to help you and your trade exit that range, then you aren't going to have very many torpedoes in your tubes when the time comes.
As for trading BOs, I still don't like them. I'd rather wait for the retracement afterward. Granted it may show only on a 15s chart, but it'll nearly always be there. That little hesitation that looks back and says No, I'm done with that.
As for your earlier question about entering off a higher low, you're probably wishing you hadn't listened to me. In fact, there are probably a number of people snorting and thinking what a putz; got it completely wrong; line of least resistance is down my ass.
However, the line of least resistance WAS down. Still is. When price bounces off the limits of a range, whether the range is lateral or, in the case of a trend, diagonal, the LOLR is the opposite extreme with a rest stop at the midpoint. Granted price sometimes bounces off the midpoint, and those can be good trades. But it's unusual for price to launch itself off the midpoint. It happens, but it's not something one can depend on.
In this case, price eventually after waffling around all yesterday evening and overnite and this morning snuggled into the midpoint at 20, which I posted two days ago (ahem), and buyers decided to try once again to penetrate the upper limit of this range. And, again, they failed to do so, providing another shorting opportunity just like yesterday (I believe I said at the time that that pattern would repeat itself and was worth examining).
And here we get into the realities of daytrading as opposed to all the "Here's a trade I took" charts that will undoubtedly spring up all over the place, like crocuses in spring. Yes, the entry you wanted to take turned out to be a good one and, yes, you probably wish you had taken it. But even if you had, would you really have been willing to sit there and do nothing for ninety frigging minutes before price finally got off its butt and moved away from that 28-34 congestion? Really? If so, I'm impressed. I can't do it. And most people can't. It all looks great in hindsight, but in real time it can be torture.
But that's where the trading plan supplemented with a little self-knowledge enters into the equation. If a trader craves action, he's not going to sit for ninety minutes waiting for price to do something. He's going to make who knows how many little trades and get stopped out of all of them so that by the time price does move he's so pissed that he'll probably manage the trade entirely wrong and even end up losing money. How much more sense it makes to set an alarm for 40 and go do something else and return to the session if and when price reaches that upper extreme. After all, once price hit 40 it took only twenty minutes to reach its limit and another five to reverse. That's reasonable. That's doable.
The question then is not what should I have done or what was the right thing to do but what do I want and what am I willing to do to get it, and that requires a little more self-knowledge than one usually finds among traders, particularly beginners. If for example you know good and well that you are not willing to sit and wait and wait and wait for a trade to "ripen", then whatever anybody else thinks about what you should have done is moot. You're either going to have to change who you are or shrug it off and move on to the next opportunity, like the aforementioned short off the upper extreme, which is a higher-probability trade than a launch off the midline of a trading range.
Edit: I should add here while I still have time to do so that you ought to go over the day from left to right and determine just exactly what you would have done had you entered where you wanted to. If, for example, you had entered at 18, would you really have held on all the way to the top? Or would you have exited at the break at what would have been at the time your demand line, exiting at around 27. And if you had done so, where would you have re-entered? And how long could you have stayed in? These are the kinds of questions that have to be answered when reviewing a trade, not just how far did price eventually go.
True datâ¦
Human mind is capable of only focusing on one thing at a time â effectively
Also the reason we must always keep trading as simple as possible (KISS)
Too much crap clutters the brain/ thinking/ reaction times
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Wellâ¦. thereâs meat to grill, and a lake to enjoy
Happy & Safe 4th Yâall
RN
db, Your comments are dead on so far. This is a woulda, coulda, shoulda chart for today trying to express some aspects of channel trading that I believe are consistent with some of your method. Any of it look absolutely wrong to you?
I'll not post charts on your thread if you had rather not have them. Just doing it to better understand ideas.
bmw
I'll not post charts on your thread if you had rather not have them. Just doing it to better understand ideas.
bmw
I'd love it if people were to post charts. I won't be posting many more, if I post any at all. I'd rather see what you guys are looking at. Otherwise I'm more or less talking to myself. One doesn't really now whether or not he gets it until he tries to use it. So post away, and I'll try to be gentle.
Having said that, you've got way too much on your chart, and the more you have, the more likely you are to make the wrong choices.
For one thing, there's no reason to concern yourself with channels on the intraday. Your primary concerns are the midline of the daily trend at 20 and the upper extreme at 40. Anything you do inbetween will be a result of how you interpret the jockeying for position between buyers and sellers. They may create minor support and resistance levels during the day and very likely small trading ranges like the one they created between 26 and 33, but don't take your eye off the prize, which, if you want to shoot for it, is the upper extreme of the daily channel (the upper extreme of the hourly channel is a bit higher, but the daily holds the trumps, unless buyers decide to force price into a trend reversal, which is a new game; in the meantime, play the cards you're dealt).
As for your "3 points" thing, not exactly. The trend is determined by the first two swing lows. The channel is determined by the intervening swing high. So "2" should be the second swing low. "3" should be the swing high inbetween. And don't forget that trendlines do not provide support or resistance. That's not their job. Their one and only job is to track trend, and, secondarily, to alert you to any potential changes in trend, including both trend change and trend reversal. Don't ask them to do something they're not designed to do.
Too bad the market closed, by the way. I'd love to have seen where price would have come to rest with another three hours of trading.
I commented your chart that was included in your post.
NOTE: I have fundamental and foundational differences in analysis vs DB.
Be that as it may, here ya go.
Trade On!
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