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

[bilbod]

Quote from vingbel:



1) Low/Support is established in what time frame?

What size chart to use for trading depends on the trader. IF already has a chart size he feels comfortable with and its OK for him to use it.

2) How many times does low have to be hit for you to consider it real support?

Once but if it is violated in both directions, I usually like to wait for it to be re-established before trusting it.

3) Support (or a low) can only be established if it's followed by one, two or three HLs. How many do use to clearly say you've bounced of support (as its happening) rather than still be asking yourself, is support going to hold?

I don't understand this question?

4) If so, which PB do you buy on? The first after the first HL, the second or third?

You can trade the 1st PB after a trend is defined (definition of trend is the BO of congestion or a previous swing high for up trend, opposite for down trend).

To get best results you need to understand the 'context' in which you are trading (what is happening on larger fractals - PA, S/R), take entries on smaller mkt fractals (already explained how to use 8R bars to get $50 stops) but to keep things simple to start with just use 1 chart, won't yield optimum results but will make it easier to learn how to recognize the setups.

Entry is a BO of the H/L of the extreme PB bar. Stop, 1 tick beyond the PB hi/lo. Trade 2 contracts. 1st target 10 ticks (this should be adjusted based on volatility, S/R targets are better but using fixed PT keeps things simple) then stop to BE+1, trail stop on the runner. Use bracket software to help manage the trade.

I don't have any YM charts so attacched is an ES chart with some examples. 1st profit target $50: 10 ticks YM = 4 ticks ES.

1st blue dot is a long trade, entry on the red arrow bar 1 tick above high of blue dotted bar, stop below it. Easily made 1st target.

Red dot would likely be missed by a novice, short on the arrow bar 1 tick below the red dotted bar, stop 1 tick above it. Easily made 1st target.

2nd blue dot short on the arrow bar, entry 1 tick below the bar to the left of the arrow bar, stop 1 tick over the dotted bar. Made 1st target with little room to spare (that's why you use bracket software).

3rd blue dot overshot support a little, short on the arrow bar 1 tick below the red dotted bar, stop 1 tick above it. Easily made 1st target.

Green dot is interesting. The trend has changed to up but you don't know it yet so you are still looking to go short. Short on the arrow bar 1 tick below the red dotted bar, stop 1 tick above it. Easily made 1st target.

If you want to see what the setups look like as they occur, cover up the chart to the right of the entry.

 

[IronFist]

Fantastic downtrend we are having today! How could anyone screw up and not make money???

I will show you!!

In hindsight I should have taken a short after that upside down hammer on the pullback. Oh well.

My strategy of entering short on the first candle that breaks the previous low would have worked the other two times on this chart that I didn't enter. But that's how stuff always plays out

 

[cashmoney69]

Quote from IronFist:

Fantastic downtrend we are having today! How could anyone screw up and not make money???

I will show you!!

In hindsight I should have taken a short after that upside down hammer on the pullback. Oh well.

My strategy of entering short on the first candle that breaks the previous low would have worked the other two times on this chart that I didn't enter. But that's how stuff always plays out

"upside down hammer" as you call it is called a shooting star, and is a very bearish indication that the market has reached a top, just like a hammer signals a bottom.

That candle where you took your 1st short technically was right, however, and I just learned this the other day from my "mentors" that a candle like that is bad. why? because it made not only hh's, but also LL's, meaning the market is widening...just another way of saying that now, price has just an equal chance of going up, as it does going down.

look at the candle just to the left of that red bar where you took your trade. The play here, and im new at this as well, but the play was to short that green candles low, and then place your stop at the highs of that candle...and of course move your stops down to each new candle high to protect gains (if u can)

you would have made a small profit, or get stopped

 

[IronFist]

Did my image show up in my thread? I posted it but I see a lot of people are downloading it, too.

Oh well maybe they assume it's a different image. n/m.

Hey cm69, remember my "old" system I was telling you about? It would have made a KILLING today. Look at how perfect those waves are.

Seriously.

It's mentally difficult for me to keep my chart free of all indicators. I'm what, like 2 weeks into this "price action" now, and I've had like 15 losing trades and 2 profitable ones.

 

[cashmoney69]

I know what you mean, but in a way its refreashing not having all that on my charts. Once we get good at this PA sh-t, lol, we will be able to see the markets in a different way, and almost always be in the trade before most guys who use indicators.

 

[Redneck]

Just a Suggestion Sir (and I admit it sounds completely idiotic but)


Try doing what is the hardest, most un-comfortable, AND certainly the most un-natural act in trading

Sell when others are Buying (but price will be bumping its head)

and

Buy when others are Selling (but price will be bumping its butt)


At first it will feel totally wrong and backwards - but it works

I went through my share of losing trades learning this

Good Luck

 

[vingbel]

Bilbod, Thanks for your response. When I have time, I have a few more questions for clarity, but right now, let me say this to:

IronFist,

Stop using candles. I did and it changed my trading. I saw someone on this thread or another thread say that they don't even use colored OHLC bars anymore. I haven't taken that step, but I do sometimes just use HLC bars (droping the open).

My point is this. For some people, bars are better than candles. Things appear clearer and make sense faster. That holds true for me and some of the other traders on ET.

It may be old school, as I notice a lot of older technical traders use them, but, maybe there is a reason they worked for so long. (To those who know the history of candles, don't worry, I know they date back centuries, but I'm just saying that in our markets, bars have a long history.)

 

[nkhoi]

Quote from IronFist:

Fantastic downtrend we are having today! How could anyone screw up and not make money???

I will show you!!
...

nice trade, it should work in a normal week.

 

[ammo]

on page 8396 of es journal i posted supp and res lines in spy explaining timeframe and dates used to draw lines,notice h/l of day and trendline supp/res mentioned,this was 90 minutes before the opening,when the thing starts moving,it helps to have these numbers ahead of time,if you have a position your babysitting,you cant go and look these up,but if you have them written down,you know where to place your orders

 

[bilbod]

Quote from IronFist:

Fantastic downtrend we are having today! How could anyone screw up and not make money???

My strategy of entering short on the first candle that breaks the previous low would have worked the other two times on this chart that I didn't enter. But that's how stuff always plays out

When going short, you don't short the low if any bar, you short the low of the high bar (so far) of the correction. Your 1st trade did not meet that criteria.

Your second trade was in congestion, that's a no-no.

What is congestion?

I know it when I see it, it's difficult to explain but I'll try to quantify it. If you see 4 or more candles in a narrow price range with a mixture of red, green, doji and near doji, you are probably in congestion.

It can sometimes be difficult to spot in real time.

Once congestion occurs, the trend is over. Wait for a new trend to form before trading.

Attached is the chart with white boxes around the congestion areas and 3 trades marked with white arrows that would meet the criteria. 2 winners, 1 loser.

If you are in a trade and congestion forms exit as advantageously as possible.