IN THIS THREAD: IronFist learns (the elusive) PRICE ACTION

[vingbel]

Quote from IronFist:

The "pattern" I'm trying to learn first is "going long after successive HH/HL" (or the opposite for going short). But I am struggling with knowing when the trend has resumed upward and I should enter again (without cheating and using MAs).

I am also struggling with knowing where to put a hard stop. Previously I used the MA to stop me out (either for a loss or profit) and this made sense to me because it wasn't predetermined ahead of time. The market might move a lot or a little; I had no way of knowing ahead of time, but I knew when to get out.

I need some guidance on how to do it with PA. Maybe an algorithm or pattern or rule or something.

Intuitively I would assume that, saying I was in a long position, I would hold onto that position until Price Action told me to exit which is not using fixed targets or fixed stop losses. It would be equivalent to using an MA to stop me out, except I'm using PA and not an MA. However I don't know enough about price action to know how to do that.

Am I on the right path with that thought or not?

IF

Have you decided how many HL and HH to wait for before you enter? I saw you posted a number of choices, but everyone told you do find your own style. I'm curious what you're currently doing.

BTW, I've tried each with mixed results. One trader that I watch and whom has a fairly good record, considers an uptrend to consist of only the established low, followed by a HH, then a HL, then another HH, then one more LH. But he swing trades.

 

[mitsubishi]

Quote from mitsubishi:

Getting short here 870 was the price i was looking for and we are near the 2.30 reversal zone.The position is in profit but it will probably lose for a while expecting some chop.

Exit half the position as we hit a new low. I'll probably continue my ramblings in my own journal,there's probably too many cooks here to be of any help to IF

 

[Lamont_C]

Quote from IronFist:

The "pattern" I'm trying to learn first is "going long after successive HH/HL" (or the opposite for going short). But I am struggling with knowing when the trend has resumed upward and I should enter again (without cheating and using MAs).

I am also struggling with knowing where to put a hard stop. Previously I used the MA to stop me out (either for a loss or profit) and this made sense to me because it wasn't predetermined ahead of time. The market might move a lot or a little; I had no way of knowing ahead of time, but I knew when to get out.

I need some guidance on how to do it with PA. Maybe an algorithm or pattern or rule or something.

Intuitively I would assume that, saying I was in a long position, I would hold onto that position until Price Action told me to exit which is not using fixed targets or fixed stop losses. It would be equivalent to using an MA to stop me out, except I'm using PA and not an MA. However I don't know enough about price action to know how to do that.

Am I on the right path with that thought or not?

Last first, yes and no, depending on whether you are all in/all out or you prefer to scale out. If the latter, you can exit part at a target, exit another part at a lower high, exit another part at a break of your trendline or MA (it doesn't matter about the MA since an MA is just a trendline that moves), and so on. If you place all your money on one bet, you're going to be a lot more nervous than if you take an active managment role.

But you're still mixing things together. Figure out where and how to enter. If you're using higher highs and higher lows to decide, then you also have to decide how much risk you're willing to assume, because the more higher highs and higher lows you wait for, the closer you'll be to the top of that particular move. And even though you think you're reducing your risk by waiting for more and more confirmation, you're actually increasing it because you're entering much too late in the move.

Going back to the first chart you posted, and ignoring all the lines (you don't need any of them), where is for you the first acceptable place to enter?

 

[IronFist]

There is no scaling. I'm trading 1 YM contract.

 

[vingbel]

Quote from Lamont_C:

If you're using higher highs and higher lows to decide, then you also have to decide how much risk you're willing to assume, because the more higher highs and higher lows you wait for, the closer you'll be to the top of that particular move. And even though you think you're reducing your risk by waiting for more and more confirmation, you're actually increasing it because you're entering much too late in the move.

[/B]

Exactly! How many HL and HH do you usually wait for?

 

[IronFist]

Re: how to enter

I'm still trying to figure out what is best.

Say we're in an uptrend:

- enter after high of current candle breaks previous high of a retracement candle?

- enter after high of current candle breaks previous swing high?

- enter on open of new candle after last candle closes above previous high of a retracement candle?

- enter on open of new candle after last candle closes above previous swing high?

^ And that's just taking the smallest timeframe chart into consideration.

Unfortunately, I suspect the correct solution will be "some of those are correct in some conditions, and others are correct in other conditions."

And that says nothing or profit targets (see my previous post about that) or stop losses.

 

[Lamont_C]

Quote from IronFist:

There is no scaling. I'm trading 1 YM contract.

Pretend. If you trade all or none, you're asking for a whole host of emotional entanglements.

 

[KingZardoz]

Quote from temptingtara:


I suggest you study prior posts to see what the trigger entry and stop placement position is. It's stunning that you are asking this question! Do you study your replies? I'm not being rude... I don't mean do you read them; I mean do you study them? You'll not get better guidance and yet you're looking for an algo to trade PA??

You're missing the very powerful basics that litter your thread like a hen walking over gold dust pecking at crumbs. You don't need more answers. You need to understand and apply what was given, that's all.

Now take that IronFist and bash
yourself on the forehead

dead on. IF, you might still be thinking of discretionary PA trading as system trading. Two different mindsets IMO

 

[Lamont_C]

Quote from IronFist:

Re: how to enter

I'm still trying to figure out what is best.

Say we're in an uptrend:

- enter after high of current candle breaks previous high of a retracement candle?

- enter after high of current candle breaks previous swing high?

- enter on open of new candle after last candle closes above previous high of a retracement candle?

- enter on open of new candle after last candle closes above previous swing high?

^ And that's just taking the smallest timeframe chart into consideration.

Unfortunately, I suspect the correct solution will be "some of those are correct in some conditions, and others are correct in other conditions."

And that says nothing or profit targets (see my previous post about that) or stop losses.

Keep it simple and keep it specific. Again, using the chart you provided in your first post, where is your first acceptable entry? Or is all of it just a random scattering of price bars?

 

[IronFist]

Quote from Lamont_C:

Keep it simple and keep it specific. Again, using the chart you provided in your first post, where is your first acceptable entry? Or is all of it just a random scattering of price bars?

I can't answer because it's in hindsight now. So I know the correct answer for that particular chart.