Keeping It Simple II

[dbphoenix]

I wasn't interested in that short partly because there was no target and partly because it took too long. If there hadn't been a 1000 report, I might have babysat it. But the probability that the report would drive price up was greater than that it would drive price down since there was so much anticipation of a falling price. After that, the "N" was awfully sloppy, with great wide overlapping bars.

As for the afternoon, you have to stop thinking about all the reasons not to take the trade. The only reason not to take the trade is that you're trying too hard to make it look better than it is. But this particular failure looked just the way it's supposed to, TL break and everything. And your stop could have been extrememly tight, if you use the end of the bar. Your "vision" of the trade reversing on you can be as damaging as a vision of the trade being spectacularly successful. Look to the setup and don't visualize any consequence. If you've evaluated the setup properly, the odds are in your favor.

--Db

 

[spedblavio]

I think it's interesting to note that today's OR was entirely within yesterday's OR.

This might not seem all that significant considering that yesterday's OR was quite wide (ended up almost being the day's total range). And it's just another way of describing sideways congestion.

Nevertheless, it's something I haven't observed before (within the last 3 weeks or so anyway, since I've been tracking OR's). There have been other periods of sideways congestion, but the OR's have been overlapping or staggered, and/or the previous day's OR did not contain most of price action as it did yesterday.

It will be interesting to watch the next time this happens.

Edit: I should note that by OR I specifically mean the 30 or 33 min "timed" variety.

 

[dbphoenix]

Did you short the lower high at 1020?

--Db

 

[spedblavio]

Quote from dbphoenix:

Did you short the lower high at 1020?

--Db

Not exactly, I got short a little late after it came back into the OR. Ended up being stopped out at BE.

Did you pass on the BO long at 1030.00, and if so why? Because of the expansion bar?

 

[dbphoenix]

Quote from spedblavio:

Did you pass on the BO long at 1030.00, and if so why? Because of the expansion bar?

Definitely, and yes. Entering on a 10pt expansion bar is not the smartest move, esp when the top of it was nudging yesterday's high.

Tomorrow or the next day are going to be much better. I'd rather save my ammunition for that.

--Db

 

[spedblavio]

At what point did you start to sense that today would be a mess? Any cautionary hints going into the open, any specific measures you take under such conditions?

Regarding "ammunition" saved for a better day, do you have any specifically risk management related rules or limititations on "ammunition"?

In the previous plan I was testing, I had a limit of 2 losses per day and would generally quit after one win. There were similarities to what I'm working on now, in that it just doesn't typically generate more than a couple-three legitimate trades per day, and if one is getting more then something's not being done right (within the context of the specific rules I'm testing, which are based on the simple 30/33min ORB idea, with no supplemental trade specific to gaps but does do reversals).

And, similarly to my results before, my current testing supports the idea that a third trade doesn't present often (assuming earlier legitimate trades have been taken), let alone one that helps the day's results. So, I'm considering a 2 loss daily limit.

By the way, what kept you out of any of the "secondary BO's" like the second poke after that first xbar, or the second try at ORB later on in the afternoon?

For me, the former was because it did not demonstrate support above the OR high on pullback (not to mention it was twitchy and the pullback just a doji, but those aren't specified in the rules) and the later would be because of nearness to test of PD high (I felt the earlier ones were far enough away from PD high to get a running start and likely opportunity to tighten stop, so I didn't count them out for that).

 

[dbphoenix]

As to your first question, when the NQ fell only a few pts then segued into an hour-long congestion, during which volume disappeared, I figured we were in for more of the same. I want to get this done quickly. I don't want to sit around all day long trying to squeeze out a few points here and there. I'd rather wait for a wide-range day with decent volume.

Don't know what you mean by your second question.

As for the various and sundry reversals and BO attempts, these tend to get weaker and weaker as the day wears on. The bars overlap more, the reaction points don't hold, and you wind up in creep. I don't trade creep, esp when volume is so low.

I know that looking back on the day it seems like a set it and forget it. But that's hindsight. Even if one had entered on that 1130 reversal, he'd be more or less at BE by now. And then you get into complicated exit strategies that try to catch a greater part of the move.

What it all comes down to is trading intrarange, which is difficult enough with good volume and volatility. This is not a scalping strategy, nor is it any good for trading intrarange. But even the strategy I use for trading intrarange requires volume. The best one can hope for is a good initial thrust and a good reversal. Anything more than that is gravy. But if you want thrusts, you've got to have people trading. Apparently there are only six people trading.

--Db

 

[spedblavio]

Quote from dbphoenix:



I know that looking back on the day it seems like a set it and forget it. But that's hindsight. --Db

Even in hindsight it just looks like crap to me.

 

[spedblavio]

This morning appears to be another good example of when to pass on a 33min ORB entry.

I took the long at 1064.00 (on paper only), but knew as I did it that I would be writing a rule to disallow it.

The rule will be something like "no zag, no entry".
In other words, there was only one swing in one direction for the first 33 minutes, no counterswing, no serious pullback, no TL breach. It zigged, but didn't zag until after entry (fully expected). Just too extended to be a reasonable entry.

Certainly may be an argument for not being rigid about defining the OR, but for now, for testing and development, I want to stick to the mechanical "timed" definition I'm using.

 

[dbphoenix]

These patterns no longer bother me. If you backtest this stuff, you'll find that days when price takes off and never looks back are rare. Trying to accommodate them affects the strategy, which must be applied every day, not just on those days when price behaves in an unusual way.

There are places to jump in during these moves that are compatible with the strategy. If they don't happen to occur on a given day, so what? Look for a good reversal setup.

--Db