Indicators are liars! Support and Resistance Trading for the S&P emini

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Quote from daniel33:

Could you please offer some examples ?

Daniel
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Here is the ES over the last 11 trading days with an explanation of the entries and exits. Fourteen trades in 11 days.

The labels, not the entry points and exit arrows are all computer generated. This computer has been taught to read price oscillations and their relationship to their last sequential oscillations, in real-time.

One "aggressive trade" was marked here out of the fourteen. If you CAN read price then picking that particular trade should be relatively clear.
 

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Quote from ProfLogic:

Here is the ES over the last 11 trading days with an explanation of the entries and exits. Fourteen trades in 11 days.

The labels, not the entry points and exit arrows are all computer generated. This computer has been taught to read price oscillations and their relationship to their last sequential oscillations, in real-time.

One "aggressive trade" was marked here out of the fourteen. If you CAN read price then picking that particular trade should be relatively clear.
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At first I thought you meant the little blue and red arrows near the price bars were entries and exits (which would have been pretty lousy). Are you referring to the arrows near the oscillator as exits? If so, what are the blue and red arrows near the price bars?
 
Quote from sandygray66:

At first I thought you meant the little blue and red arrows near the price bars were entries and exits (which would have been pretty lousy). Are you referring to the arrows near the oscillator as exits? If so, what are the blue and red arrows near the price bars?
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The blue & red arrows on the price bar portion of the chart are where the Price Oscillation labels first print. That is where that particular (Trading) oscillation begins. Yes, those would be pretty lousy trades. This is why the indicator is used to confirm the completion of those particular oscillations and the relative strength attributed to each of them.
 
Another great trading session with the levels performing well in the premarket aswell as the main session.

OK below is a demonstration of the levels WITHOUT using a set up at all to get you in at better price, using JUST the levels alone.

Using a 1.25 stop and all profits CAPPED at a maximum of 4 points profit (some of the trades took MUCH BIGGER profits)

Please be fair with this demonstration and get up a 1 min chart and work through the trades notice that on many occassions the stop will get taken out by just 1 tick, this demonstration is just about the levels so the performance will not be as good as it could be if a proper set up was used and if the trades were cherry picked.

Today has NOT been chosen for any special reason, I have done this only because of an email I received today for someone asking how to use the levels. These trades are to show the power of using just the levels WITHOUT a setup

<strong> Before the Trolls come out I urge you all just to get a 1 minute chart up and work through the levels, and see for yourselves. </strong>

Starting at 6:30 am we had a great gain from 48.00 - 1 tick of heat, maximum 3.50 gains

7:13 another long from 48.00 2 ticks of heat, maximum 1.75 points gain

7:31 Another hit of 48.00 1 tick of heat, providing maximum of 1.5 points gains

7:54 48:00 level was broken taking a 1.25 point loss.

8:08 45.50 level broken taking a 1.25 point loss

8:42 45.50 became resistance taking 0 ticks heat, providing 4 points maximum profit.

9:56 42.50 became resistance 0 ticks heat, providing 4 points maximum profit.

10:08 42.50 again used as resistance taking a 1.25 loss.

10:19 45.50 taking 0.25 heat providing maximum 2.25 gain

10:25 45.50 taking a 1.25 point loss.

10:35 42.50 taking a 1.25 point loss

10:43 45.50 taking a 1.25 point loss

11:01 48.00 taking a 1.25 point loss

11:26 55.75 taking 3 tick of heat providing maximum 4 point gain.

11:58 48.00 taking 0 heat providing maximum 4 point gain.

12:46 48:00 taking a 1.25 loss

12:47 45.50 taking a 1.25 loss

12.51 45.50 providing a maximum 4 point gain

12.54 42.50 taking 0.5 points heat, providing a maximum of 2.50 points gain.

13.09 42.50 taking a 1.25 point loss.

13.27 45.50 taking a 1.25 point loss

13.38 45.50 taking a 1.25 point loss

13.45 48.00 taking 0.25 heat, providing a maxium of 2 points

14.03 48.00 taking a 1.25 point loss.

14.04 45.50 taking 0.5 points heat providing maximum 1.75 points profit

14.11 45.50 taking 0.25 points heat, providing maximum 2.75 points profit

14:14 48.00 taking 0.25 heat providing 2.50 points profit.

14:22 48.00 taking a 1.25 loss.

14:35 45.50 taking 4 ticks heat providing maximum 4 points profit.

14:41 48.00 taking a 1.25 loss

14:59 55.75 taking 1 tick heat maximum 4 points profit

15:17 55.75 taking 3 ticks heat, maximum 4 points profit

15:37 48.00 taking a 1.25 loss

<strong>Overall Total profit would be 32.5 points</strong>.

I did not take this many trades! I took a handful that provided the best set up and what I believed was the maximum profit opportunity at much better prices in many instances than those described as I used a set up. I only use the levels as a guide and base my entries upon my set up.

I am not trying to sell anything here, I just want to show everyone here the power of including Support and Resistance in their arsenal.

Its taken me a while to work through the chart documenting the trades so their may be a couple of errors. If you are going to make a comment please do so only after you have worked through all the trades on a 1 min chart.

Thanks and have a great weekend everyone

Please remember these trades have not been cherry picked, just all the potential trades at the levels, with no refinement using a set up to get a better price and all profits limited to 4 points.
 
Quote from ESResistance:


Starting at 6:30 am we had a great gain from 48.00 - 1 tick of heat, maximum 3.50 gains

7:13 another long from 48.00 2 ticks of heat, maximum 1.75 points gain

7:31 Another hit of 48.00 1 tick of heat, providing maximum of 1.5 points gains

7:54 48:00 level was broken taking a 1.25 point loss.

8:08 45.50 level broken taking a 1.25 point loss

8:42 45.50 became resistance taking 0 ticks heat, providing 4 points maximum profit.

9:56 42.50 became resistance 0 ticks heat, providing 4 points maximum profit.

10:08 42.50 again used as resistance taking a 1.25 loss.

10:19 45.50 taking 0.25 heat providing maximum 2.25 gain

10:25 45.50 taking a 1.25 point loss.

10:35 42.50 taking a 1.25 point loss

10:43 45.50 taking a 1.25 point loss

11:01 48.00 taking a 1.25 point loss

11:26 55.75 taking 3 tick of heat providing maximum 4 point gain.

11:58 48.00 taking 0 heat providing maximum 4 point gain.

12:46 48:00 taking a 1.25 loss

12:47 45.50 taking a 1.25 loss

12.51 45.50 providing a maximum 4 point gain

12.54 42.50 taking 0.5 points heat, providing a maximum of 2.50 points gain.

13.09 42.50 taking a 1.25 point loss.

13.27 45.50 taking a 1.25 point loss

13.38 45.50 taking a 1.25 point loss

13.45 48.00 taking 0.25 heat, providing a maxium of 2 points

14.03 48.00 taking a 1.25 point loss.

14.04 45.50 taking 0.5 points heat providing maximum 1.75 points profit

14.11 45.50 taking 0.25 points heat, providing maximum 2.75 points profit

14:14 48.00 taking 0.25 heat providing 2.50 points profit.

14:22 48.00 taking a 1.25 loss.

14:35 45.50 taking 4 ticks heat providing maximum 4 points profit.

14:41 48.00 taking a 1.25 loss

14:59 55.75 taking 1 tick heat maximum 4 points profit

15:17 55.75 taking 3 ticks heat, maximum 4 points profit

15:37 48.00 taking a 1.25 loss

<strong>Overall Total profit would be 32.5 points</strong>.

I.
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Wow…Although I am generally a supporter of the approach you have outlined here, and think there is valuable information contained within, I just have to point out how these numbers are very deceptive, and how on balance to make this type of strategy (or any type of scaling out strategy) work, you need to need to filter your trade entries in such a way to get at least up to 75 percent correct.

Going by your stated trade management of 1/3 at 3 ticks, 1/3 at 5 ticks, and 1/3 runner, and further assuming you’ll never get the maximum amount for the runner (Ill allow for half of max gain as a reasonable average for the runner), and then assuming every trade that didn’t go beyond 2 points will B/E on the runner, the results are actually pretty bad for this day.

I am including commissions of $5.00 per contract, and frankly I’m not even including the fact that there will be many trades that wont get filled with such tight limit orders which is likely to erode performance even further.

This means for a 3-contract trade, a 1.25 loss becomes 3.75. Trades that provide a 2 point gain or more equal the total gain you have listed (i.e. 4.00 point gain = (.75 +1.25 +2.00), and trades that do not move 2 points =2.00 gain (.75+1.25+ B/E).

For the 32 trades you have listed (approx 50/50 win-loss), the results are

53 points gains
60 points losses

7 points of loss x 50 = (350)
Commissions = 3 x5x32 = (480)

Net loss =(830)

Again, its not so much that I am discounting the validity of the strategy, but instead highlighting how the listing of 32.5 points of profit is deceptive, and I’m also trying to point out how absolutely critical it would be to maintain a very high win/loss percentage for this type of approach if you chose to scale out in this fashion.

I’m sure you will point out that you are more selective with these trades in real life (although I’m not sure how you filter them), and that some trades were more then 4-point gains (I suspect missed fills for both good and bad trades would offset whatever extra gains you would make on the runners for a few of the bigger winners), and again, my main point is it seems that to make this strategy work, you will need to be very good on your trade selection on balance- which is not always an easy task to accomplish.
 
EMC2

My point with that statement was to show the power of S/R levels, IT WAS NOT about the management of trades or using good entry methods. There is no way I would ever take that many trades, or have such poor entries as I stated in the example.

I was merely demonstrating the potential of using S/R levels, that even with a blind strategy of taking every trade at the level their is potential.

I have mentioned on many occassions that I am selective in the trades that I take. Selective because I have set ups that I look for and without the set up at the level I will not take the trade. My main focus in every trade is to not lose money, hence my management style.
 
Quote from ESResistance:

EMC2

My point with that statement was to show the power of S/R levels, IT WAS NOT about the management of trades or using good entry methods. There is no way I would ever take that many trades, or have such poor entries as I stated in the example.

I was merely demonstrating the potential of using S/R levels, that even with a blind strategy of taking every trade at the level their is potential.

I have mentioned on many occassions that I am selective in the trades that I take. Selective because I have set ups that I look for and without the set up at the level I will not take the trade. My main focus in every trade is to not lose money, hence my management style.
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ER,

I very much understand you trade selectively, have a very specific setup you use, and consider not losing money on every trade paramount above all else.

I also have no doubt you are a very good trader.

I just feel your example proved exactly the opposite of what you were trying to show, and instead showed how a blind strategy with S/R levels can potentially lead to trouble.

Therefore, it seems to me it becomes very important to determine things like (1) Are you taking the first pullback to a new S/R level after a breakout, or after an extended move to an S/R area, or if the S/R turns, and support becomes reisistace or visa-versa, or will you try to take many pullbacks to these levels? (2) Are you taking trades against an obvious trend that is in place intra-day? (3) Are you taking support trades after an uptrend has been in force for sometime, and may be losing momentum on a non-trend day? (4) Are you taking trades that align with other widely known fib or pivot levels?

I could list many other conditions.

Therefore, if over 30 S/R developments occur in a day, and you plan to scale out as you suggest, my point is you need to develop some type of overall approach where you hardly ever take your maximum loss on the three contracts, and preferably enter trades that intially move in your trade direction at least 75 percent of the time.

Since you trade this way for real, you can tell me if Im right or wrong, but if Im right, then blindly following this strategy does not in the end make sense or offer great potential, and it is far more important to develop some type of trade selction approach that puts your odds in your favor to win.

Im sure this entails learning to read the bigger picture in the market as well as develop a trade entry approach that somwehow gives you enough time to determine if the market is likley to reverse at your S/R points with enough time to still get a good fill near these levels.

In both cases, it just seems there is alot more to this than blindly accpeting the potential of S/R levels every time they are reached, and again I know you feel this way, but to me your example of trades actually pointed more to the difficulty of this approach rather than to the ease of it, only because you need to throw into the mix how to screen for the best trades...
 
Hi everyone

Insane day in the markets! Please be extra cautious.

Please find attached levels for today.

Always remember to use the numbers as a guideline for potential areas of high probability plays

Always use a set up based upon your system to enter a trade.

Good trading all
 

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Quote from ESResistance:

EMC2

My point with that statement was to show the power of S/R levels, IT WAS NOT about the management of trades or using good entry methods. There is no way I would ever take that many trades, or have such poor entries as I stated in the example.

I was merely demonstrating the potential of using S/R levels, that even with a blind strategy of taking every trade at the level their is potential.

I have mentioned on many occassions that I am selective in the trades that I take. Selective because I have set ups that I look for and without the set up at the level I will not take the trade. My main focus in every trade is to not lose money, hence my management style.
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The measure of a Trader ( real money I mean) lies in the practicality of their post.

Theory becomes applicable only when it is tempered with practicality and practicality is borne of experience from trading with real money.

"Look-back" trading and Sim trading become harmful very quickly if the Trader does not move on to the markets (real money I mean) and gain actual experience.

regards
f9
 
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