Is price movement really random and unpredictable?

[volpri]

I'm an old geezer, so my memory could be faulty, but I've had that stuck in my mind all this time.

I pretty old myself! Sometimes I will do odd things to highlight what a wrong action can do. Take that second trade today. It was a BO but not an extremely good BO. I had more than one chance to exit with a 1 point scalp but I got greedy and held for more. It went against me and I had to average down to enough get out, with a profit instead of a loss. I should have taken that 1 point profit considering the BO wasn't strong and just stalling around. Grab that profit and wait for another opportunity! My technique is to scalp 1 to 8 points over and over.

 

[volpri]

@volpri, it is very generous of you to give us a roadmap for scalping.

I decided not to scalp, it is too fast for manual trades on index or stocks. I returned to trade 1 minute time frame trend following but added your roadmap for trade selection.

I use a very simple scheme (@SimpleMeLike, this one is for you ). I trade every cycle from open. The only decision I have to make is whether I should go long/short at open. Quit when profit/loss target is reached or after x trades. Profit/loss depends on BO (trend vs TR) & tightly controlled stop losses. Usually I am done within an hour.

This morning I tried your logic. Short answer, it seemed to work better. Long answer, jury is still out.

Word of caution, I am no day trading expert, only done it with sim and live for 6 months so be careful if you copy me.

Best wishes.

Just remember 1m charts require faster decision making. And a big bull bar or large bear bar on a 5 min chart is a trend on a 1m chart and can have PBS on 1m or no PBs, and is also likely a PB on a 15 mi chart or 30m chart.

 

[ondafringe]

I pretty old myself!

Yes, I know. We've talked before. I'm the one who told you about berberine.

 

[volpri]

Yes, I know. We've talked before. I'm the one who told you about berberine.

OK you still taking berberine?

 

[volpri]

Where is that crash some many pundits were rolling off their tongues?

 

[ondafringe]

OK you still taking berberine?

Absolutely... three years now...

 

[doubledoubledoublecup]

I keep a wide hard stop in place for whatever, as some things are unknowable and cannot be factored in to a premise for taking a position. My Sls are PA stoplosses. Many times the initial SL is upside down in terms of R:R. But when the trade is over often times that reward to risk is erased out and replaced by what I call "actual risk" That is what I actually suffered in adverse movement against my position + 1 tick. When I then calculate my R:R based on my actual risk the R:R many times flips to the positive side by a decent amount.

Why do I use wider price action stops? Because bulls and bears push the market around until one side wins or a while and then the other side wins for a while. This probing around can create deeper PB and deeper DDs. I want my trade to have time to work without getting stopped out. Probing in the ES makes it extremely difficult to get entries with a tight SL that won't get stopped out before profit gets made. So that is why my trades use a PA SL which is usually a wider stop than a set monetary stop.

How do I handle the risks and DD with a wide stop? I have the wide SL in place to give the trade a chance to work. However, that doesn't mean I will actually exit at that wide SL. If things are not playing out according to my premise, the premise that caused me to take the trade in the first place, then I will often just exit way before my wide SL is ever hit. Much of that depends on the momentum against me and are there a consecutive bigger bars closing in the opposite direction of my entry direction. When I think my premise has been wrong I must exit right away even way before my big SL is hit.

The probing in an index can at time be quite volatile and I don't want to just exit a good trade with a loss, if my premise is still intact. Look at that last trade I took today. My SL had to be wide but I added on in an adverse move against me and not just added, but doubled my position size. The momentum against me was not so strong that I felt that my premise was voided. PA was still telling me there would likely be more upside at least enough to get out with a profit on second entry and a BE on initial entry. I watch not only price but I watch "how" that price was made. The reason I average down is to make a losing trade a winning trade but it must be done in the right PA context. I cannot just average down on any old trade. Context of PA is extremely important.

The other thing is if I decide to take my loss often I will then double up and reverse in the right direction, when wrong. Thus, I get my loss back in short order and much of the time printing money again.

Say I am 4 contracts long and the market goes against me. That isn't a problem. It does that sort of stuff all the time. It is extremely difficult to get an exact perfect good entry that immediately goes in my direction with no adverse reaction against it, before profit taking (but it does happen at times!). Now if price goes against that 4 long contracts position far enough and with enough momentum to tell me that my premise is now wrong then I exit with the loss, reverse directions, and sell 8 contracts and soon am at BE or in the money. That reverse action is independent of how I entered those 4 long contracts (i.e. at one wack..averaged down..martingaled..etc)

Thanks for the detail answer. I like how you use the "noise" action of the index on your side. Do you always enter your original trade small so you can average down when the market goes couple level against you?

 

[SimpleMeLike]

My technique is to scalp 1 to 8 points over and over.

Good Evening volpri,

How are you doing sir? First of all, I always appreciate your technical post and your comments are joy to read. Thank you

Question for your please.

How do you make the decision to exit for 1, 2, 3, 4, 5, 6, 7, or 8 point? In my trading I tend to always keep my exit points the same.

Is it based on the A. current price behavior or price dynamics or price momentum or/and B. trade performance or previous trade was a loss and need to make more money to recover loss.

Thank you for the response.

 

[volpri]

Thanks for the detail answer. I like how you use the "noise" action of the index on your side. Do you always enter your original trade small so you can average down when the market goes couple level against you?

Yes. Probably 8 times out of 10 I start small. Occasionally, I am all in at one wack. Starting small allows me to be able to capitalize on averaging down opportunities while controlling my risk.

 

[volpri]

Good Evening volpri,

How are you doing sir? First of all, I always appreciate your technical post and your comments are joy to read. Thank you

Question for your please.

How do you make the decision to exit for 1, 2, 3, 4, 5, 6, 7, or 8 point? In my trading I tend to always keep my exit points the same.

Is it based on the A. current price behavior or price dynamics or price momentum or/and B. trade performance or previous trade was a loss and need to make more money to recover loss.

Thank you for the response.

My decision to exit is based on how I read the momentum of price the moment at the level that price is at, at the moment. That includes resistance and support levels and how price acts when gets there.
I have no set amount, dollar or point amount. The minimum scalp is one point. If I don’t think I can get one point then I figure it is not worth taking the trade.

In short I let PA determine when I exit. I am interested in “how” price was made as I am interested in the distance or size of the move. And that doesn’t mean all big bars. Some of the strongest trends crawl up or down but they are relentless.

Most of my trades get me 2 to 4 points. Some get me 8 or 10 points. I firmly believe in taking what the market hands because it can “poof” disappear in a puff of smoke faster than I can sneeze. I am a strong advocate of locking in profits quickly. I can always enter again with a new trade should a move continue that I have already exited with a profit. This modus operandi renders me a high win rate.