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

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Quote from ESResistance:


I'm guessing you mean a tick extreme which then pulls back to the midline and offers the opportunity to get in with the new trend (bigger move)? Sounds like a a good trend trading method. Personally I am a counter trend trader. I like to be in "at the turn" taking profits at my first 2 targets whilst everyone else is umming and ahhing as to whether they have confirmation to even enter the trade.
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What I meant was that we often have two pivots that are within 4 pts of each other. If I give a +/- 2 pts "zone" around each pivot, it's possible that 2 pivots overlap. Maybe +/- 2 pts is too big of a zone and this shouldn't be a problem? I noticed it while looking at some of the trading in September.

Because I am entering my trade at the inflection point, when the sellers overwhelm the buyers and vice versa. I like to really stack the odds in my favour before I enter a trade S/R, $tick extreme, price extreme. Price action look good? Then its of to the races!
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What I meant on this one is that let's say the BB limit for TICK is 300 and we get a TICK at 400.

What if the TICK eventually goes to 800? We'd be entering at 400. So my idea was that what if we wait until the TICK starts going back to normal. In this example TICK goes 300.. 400.. 500.. 600... 700.. 800.. 700.. and maybe it'd be better to enter on the 700?

I'm really interested in this approach. I like to trade the Russell 2000 emini and therefore I'd like to pick my pivots myself.

If I understand correctly you base your pivots entirely on eyeballing the 1 hr & 4 hr charts? And that when you mark something in the confluence like a MV pivot or Fibb that it's just a coincidence that you got the same one?

Do you have any advice for how to do this for another future? I'm going to give it a try, observing not trading, just to see if I can do it.

I used this idea (getting S&R from 1 hour charts) to confirm some of my trades today. It was nice to have the S/R as an additional confirmation. Gold respected resistance so I added on a contract to my short. Dollar Index (DX) blew through resistance at 83 so I reversed and went long. And Silver (ZI) had a few false breakouts. On Silver I was trading purely on the resistance and I got burned there, hence the need for a more complete setup. For silver and DX there aren't TICK so I'm brainstorming to think of what I can use beside BB.

Thanks
 
The +/- 2pts zone is due to current crazy market conditions. At the start of this year my zone was +/- 0.5 points, over the course of the year volatility has steadily been increasing, and as such my zones also. I expect the volatility to calm as we near the end of the year, and hope to get back to the +/- 0.5 zone. The +/- 2 point zone is a very short term adaptation.

I dont really get too deep and specific with the tick I find if I give myself too much to think about when entering a trade I hinder myself. Best to keep it simple.

The confluence numbers are simply for reference, they tell you when "other" players are entering the market using those numbers. If they happen to coincide with our numbers, they offer greater odds. Also I use them as a reference for my intraday numbers.

Applying this method to either the Nas, Dow or Russel should be pretty straightforward the method should be exactly the same. I have noticed you seem to trade many instruments, For me personally the ES provides a very consistent income, it has decent volume and responds very well to S/R. I do also trade fx but thats more for fun and swing oriented. If you want to make a real consistent living out of this imho stick to one instrument as your bread and butter. Learn its personality inside out and you will prosper.


Quote from cunparis:

What I meant was that we often have two pivots that are within 4 pts of each other. If I give a +/- 2 pts "zone" around each pivot, it's possible that 2 pivots overlap. Maybe +/- 2 pts is too big of a zone and this shouldn't be a problem? I noticed it while looking at some of the trading in September.



What I meant on this one is that let's say the BB limit for TICK is 300 and we get a TICK at 400.

What if the TICK eventually goes to 800? We'd be entering at 400. So my idea was that what if we wait until the TICK starts going back to normal. In this example TICK goes 300.. 400.. 500.. 600... 700.. 800.. 700.. and maybe it'd be better to enter on the 700?

I'm really interested in this approach. I like to trade the Russell 2000 emini and therefore I'd like to pick my pivots myself.

If I understand correctly you base your pivots entirely on eyeballing the 1 hr & 4 hr charts? And that when you mark something in the confluence like a MV pivot or Fibb that it's just a coincidence that you got the same one?

Do you have any advice for how to do this for another future? I'm going to give it a try, observing not trading, just to see if I can do it.

I used this idea (getting S&R from 1 hour charts) to confirm some of my trades today. It was nice to have the S/R as an additional confirmation. Gold respected resistance so I added on a contract to my short. Dollar Index (DX) blew through resistance at 83 so I reversed and went long. And Silver (ZI) had a few false breakouts. On Silver I was trading purely on the resistance and I got burned there, hence the need for a more complete setup. For silver and DX there aren't TICK so I'm brainstorming to think of what I can use beside BB.

Thanks
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I have noticed you seem to trade many instruments, For me personally the ES provides a very consistent income, it has decent volume and responds very well to S/R. I do also trade fx but thats more for fun and swing oriented. If you want to make a real consistent living out of this imho stick to one instrument as your bread and butter. Learn its personality inside out and you will prosper.
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This is great advice. I was daytrading ES only. Gold, Dollar, etc. are for swing trades, ideally lasting for months.

With this crisis I'm kind of reversed. I have a swing trade on for ES so I was looking for alternatives.

I've heard that TF (Russell 2000) trends better and is less volatile than the ES. For my current style of trading I use channels, and if TF trends better I was thinking it'd be easier to trade using channels.

I was thinking that using one technique one could easily apply it to many markets. I'm talking about for swing trading. Daytrading is a totally different thing and I agree that it's best to trade one. I just haven't been that successful daytrading futures especially ES. But I'm giving your technique a try using a sim.

Today I programmed the basics of your strategy (price BB, tick BB, and the S&R) to do some backtesting. I get positive results but I only have your data for September (I think October is too volatile for meaningful tests). I'm afraid the positive results are due to over-optimization so I'm still investigating.

One person asked why the pivots change and you said you take into account how price reacts to the pivots. This makes the backtesting really difficult. I'm going to try to come up with my own levels and use the same levels for a couple months so I can try to do some more testing.

Just for the record I know backtesting and real trading are totally different. My goal isn't to prove or disprove anything.

I'm just learning how to program strategies and do backtests so I thought this would be a good challenge. I'm learning a lot in the process. It took me 4 hours just to figure out how to draw the pivot lines!

Things like what happens if I change the parameters. What happens if I don't use the Tick? Or if I don't use the pivot? Etc. If I get any interesting results I'll gladly share. For now it's just for practice.

The pivots worked pretty well today, although I didn't see many instances where price went outside the BB. I did see price hitting resistance and then breaking out and when it broke out it really took off (talking about ES). Very cool because without your pivots I wouldn't have had any idea what there was resistance there.
 
Some questions I have recived that may help others...

How far back do you usually start for your first S/R when looking at a day? Do I start with a 1hr chart over a weeks view? Do I go over a several month view on a 1 hr chart?

I usually look at 1-2 days prior to that trading day, it all depends upon the general range of the market, lately with the crazy volatiliy we have had 100 point ranges, and making lows we havent seen since 2003, When going back to historical levels(3yrs+) I only use levels from the 4hr chart.

Essentially I go back as far as I have to based upon where the market is. Generally its only a couple of days, I usually have a few weeks of data up to compare the history of a level.

Spotting the lines on a daily business from visual recognition is a skill in itself I would assume? Sometimes when I look at charts I feel there are several different spots that could hold as support and resistance. Any tips to spotting or rules of thumb to draw them in.

-Be Obvious - If everyone can see it is likely it will work well. We are are not trying to be complicated or covert. My style of trading is not about seeing things that other do not. It is about being one of the first to react to what everyone can see.
-Spikes (long wicks)
-Areas that have been used as Support AND Resistance.
-Number that are close to big whole numbers e.g. 950, 1000
 
thank you cunparis, I found all that at my broker.

Thanks to Esresistance to keep posting.
we are a lot of people who are silent but however grateful.
 
i noticed how the market bounced of the VAL of 953 as if it was a support. Can the VAH be a support too, and not be a resistance, and do you know places where i can find market profile for free?
 
Comments welcome. Am I on the right track here?

Thank you ESR for this amazing thread and a big thank you to the contributors who made this such an enjoyable and worthwhile reading experience. I'm learning so much thanks to you.
 

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Oh geez, another Fibonacci freak.

1, 2, 3, 5, 8, blah blah blah

If I handed this guy a chicken bones and told him they define market movement, he'd probably believe in it.
 
Hey snaggle

Firstly great name.

You are certainly on the right path : ) Keep practicing and this analysis will become second nature, even to the point where you dont need to draw the lines.

One thing I would say is that I am big fan of wicks. They are very noticable and very graphically show the fight between the bulls and the bears, also they depict a very important area of "market balance".

I define market balance as the tipping point, where the bulls finally overwhelm the bears or vice versa - The tip of the wick essentially.

Why is this important? well if it was an area of "market balance" once it is likely to be again.


Quote from Snaggleteefs:

Comments welcome. Am I on the right track here?

Thank you ESR for this amazing thread and a big thank you to the contributors who made this such an enjoyable and worthwhile reading experience. I'm learning so much thanks to you.
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