Keeping It Simple
- Thread starter dbphoenix
- Start date
hi db,
I recently came across this thread & would like to say it's pretty cool for someone to be sharing the deatails of a successful strategy for guys like me (new to futures). I actually like the fact that you share the tiny details that influence your decisions.
I kinda understand the open trade range brkout part I think and would like to use yesterdays NQ moves to see if I get it right.
1. based on yesterday, since there wasnt a brkout earlier from the open range, before 10, we wait for the eco. news and ... making the 1st trade the one at slightly past 11am, when 968.5 broke and entry would be 966.5 (2pts) w/ stop at 971.5.
A question, though, I read you move the stop using a TL, but what do you do in cases like today when it runs quite good (to below 960) in less than 30 min. (do you take quick gain or let if float back up to make the TL)?
As such I hope you can show how you took profit, coz I'm not sure anymore. (a chart would really explain things good)
2. My second question would be about re-entry... (a) what happens in days when you get stopped out after a profit and then the mkt moves in the same direction again, what would be the reentry signal (or do you wait for another range pattern)? and (b) after the open trade range breakouts, what do you look for as entry signals for the 2nd, 3rd 4th trade of the day, for example? (would the breakdown pattern at around 2:40 be one?)
Thanks.
I recently came across this thread & would like to say it's pretty cool for someone to be sharing the deatails of a successful strategy for guys like me (new to futures). I actually like the fact that you share the tiny details that influence your decisions.
I kinda understand the open trade range brkout part I think and would like to use yesterdays NQ moves to see if I get it right.
1. based on yesterday, since there wasnt a brkout earlier from the open range, before 10, we wait for the eco. news and ... making the 1st trade the one at slightly past 11am, when 968.5 broke and entry would be 966.5 (2pts) w/ stop at 971.5.
A question, though, I read you move the stop using a TL, but what do you do in cases like today when it runs quite good (to below 960) in less than 30 min. (do you take quick gain or let if float back up to make the TL)?
As such I hope you can show how you took profit, coz I'm not sure anymore. (a chart would really explain things good)
2. My second question would be about re-entry... (a) what happens in days when you get stopped out after a profit and then the mkt moves in the same direction again, what would be the reentry signal (or do you wait for another range pattern)? and (b) after the open trade range breakouts, what do you look for as entry signals for the 2nd, 3rd 4th trade of the day, for example? (would the breakdown pattern at around 2:40 be one?)
Thanks.
If you mean Friday, there was no entry as 966.5 was never reached. If you're talking hypothetically, though, the trade would have been entered at 966.5.
As for today, no, I wouldn't (and didn't) take a quick gain. You can make this into a scalping strategy, but that's not its purpose. The goal is to reach the day's target, which we didn't come close to doing, partly because of the size of the opening gap. Once it reaches the day's target, there are a variety of exit strategies you can employ, but if it doesn't reach the day's target, then you just leave the stop at breakeven. If nothing happens by the close, just exit then. Or you can move your stop to the last reaction high, if short. Today, of course, none of that applied since price dropped only five points below the entry.
As for your second question, if you get stopped out, the highest point up to that time becomes the new high, and re-entry is made two points above that. This was one of Mike's rules and I've found it to be a good one. Without some sort of bar, you wind up chasing price.
I'm not sure what you mean by your (b) question. If you're stopped out and you never reached the day's target, you could keep trying as described in the preceding paragraph (assuming that price keeps moving in the same direction), but within three tries you're probably going to be so close to target that being stopped out will be practically guaranteed.
The only other trade is a break of the other end. This never happened today. If the target had been reached, then you could look to enter the other side on a reversal depending on what sort of reversal patterns you like. I only trade Ms, Ws, and 2Bs as they seem to be the most successful. The "breakdown" at 2:40 was not a re-entry since we never reached target; therefore, no reversal was taken. When I got stopped out of the first trade, I was done for the day. But then one of the purposes of this strategy is to keep you out of a trendless market, and this was certainly trendless today.
This is not to say that this can't be modified to create a scalping strategy. But when activity dries up so quickly, I'm even more reluctant to try scalping. The gap didn't fill, so there was no opportunity there. The breakdown below the low didn't pan out, so that was breakeven. There was no reversal to play since we didn't reach target. So I spent the day arguing with inandlong.
Any other questions, feel free.
--Db
Sorry db for the confusion. I meant Tuesday (today).
with regards to the (b), what i meant was after exiting a trade made from the open trading range, what would you look for as a signal that will inform you of your next potential trade later that day?
Sorry for the confusion. Hope I'm clearer this time.
with regards to the (b), what i meant was after exiting a trade made from the open trading range, what would you look for as a signal that will inform you of your next potential trade later that day?
Sorry for the confusion. Hope I'm clearer this time.
Db,
Based on your explanation, I think I kinda didnt understand things properly with regards to what to do after you have gotten in a position.
I believe (using Tuesdays chart) that the short at 966.5 was the only trade (accdg to the system). What I thought was after getting ahead you will use a trendline as a 'trail stop' method.. I think I'm wrong here, since you mentioned having to meet a target first.
How do you get the target?
So what happened then was because the target wasnt reached, the position is held until you get stopped out or it reaches the target, am I correct? In our case, the trade was stopped out at BE.
Assuming the target was reached during mid day before the 'breakdown' at 2:40, would you have made a 2nd trade for a short there, and if so, what would the signal be?
Thanks again.
Based on your explanation, I think I kinda didnt understand things properly with regards to what to do after you have gotten in a position.
I believe (using Tuesdays chart) that the short at 966.5 was the only trade (accdg to the system). What I thought was after getting ahead you will use a trendline as a 'trail stop' method.. I think I'm wrong here, since you mentioned having to meet a target first.
How do you get the target?
So what happened then was because the target wasnt reached, the position is held until you get stopped out or it reaches the target, am I correct? In our case, the trade was stopped out at BE.
Assuming the target was reached during mid day before the 'breakdown' at 2:40, would you have made a 2nd trade for a short there, and if so, what would the signal be?
Thanks again.
Db,
Please give more details to your target calculation. I see an example you gave on 1/30, and tried to determine it for myself but came up with a slightly different number. Do you use the current days high, (including premarket activity)? On the 30th, my calculations were:
Previous 10 day average range, (1/16 - 1/29) = 31.9
Current day high (1/30), (reached at 8:45) = 1027
Target would be 995.1
I assume if your trade was long, you would add the 10-day average to the days low?
Thanks for the details.
If I exited because the target was reached, I'd look for a reversal pattern I like.
If I exited because I was stopped out, I'd calculate the re-entry trigger off the new high/low and wait for either that or a break of the opposite end of the range.
If I've missed something, let me know.
--Db
[1] The short at 966.5 was the only trade for Tuesday. As for using a TL for a trailing stop, you can use a TL break as a signal to move your stop to breakeven if you haven't already, or you can use the most recent reaction high/low. However, if the TL is broken before you've even reached breakeven, then you have to decide whether to use the TL break as a signal to get out, to give price a little room to resume the downtrend, or to leave your stop at its initial loss limit.
Teresa Lo drummed into my head that if the price doesn't move, you don't want to be there. However, price movements have become so lethargic that this is no longer a yes/no matter. With these smaller ranges, price can take an extraordinary amount of time to reach any sort of profit, much less one that enables the trader to tighten stops. There isn't so much a "struggle" in the sense of what we used to have but a complete disinterest. So the best I can do is suggest that you determine your own comfort level in terms of how much you're willing to risk and how long you're willing to stay at risk. Tightening a stop prematurely can increase your risk, so that's not the easy answer it seems to be. On the other hand, sitting there with your initial loss limit in place while the trade is obviously going against you can make you feel like a chump. I wish I could give you some rules for this sort of situation, but I can't, though perhaps Teresa's advice is the best after all: if the price doesn't move, you don't want to be there.
[2] The target is obtained by adding to the opening low or subtracting from the opening high the ten-day average of the daily range. Subtract the low of the day from the high of the day every day for ten days, add them up, and divide by ten. This gives you the average daily range for that period. On the eleventh day, add that range and subtract the range from the first day. You could just use 30 for the NQ, but calculating - or at least noting - these ranges each day gives you some sense of whether ranges are expanding or contracting over time.
[3] Correct.
[4] If the target had been reached and I exited the position normally, I'd look for a reversal. If there was no reversal I liked, that would be it for the day.
--Db
I use the day's low and high for the normal market day.
The average range is added to the day's low or subtracted from the day's high. Today, for example, it would be added to 971.5. Earlier, it was subtracted from 983.5. Now it would be subtracted from 996 (the day's low and high change as the day progresses). But since price is obviously being driven by news, I'm reluctant to fiddle with any of this.
I went over the calculation in the previous post. If you have any other questions, let me know.
--Db
Note:
Regardless of the strategy you're using, unless it's purely mechanical and "systematized", you need to know when not to trade, and that's difficult to reduce to a set of rules.
But if you sit in front of your screen for at least a few hours every day and watch those candles form and take notes as to what's happening (and why, if you know), then you'll soon acquire a sense of when it's "right" and when it's "wrong".
There are, of course, little signals, such as the depth of retracements, but getting into all that is way outside the subject of this thread. There are books and articles and so forth, but there is little better than just sitting there and watching how price behaves and making notes of what you think is going on. You can't know what is abnormal until you know what is normal. And the only way I know to get a sense of what is normal is to observe, particularly since "normal" will change throughout the year and from year to year.
--Db
Regardless of the strategy you're using, unless it's purely mechanical and "systematized", you need to know when not to trade, and that's difficult to reduce to a set of rules.
But if you sit in front of your screen for at least a few hours every day and watch those candles form and take notes as to what's happening (and why, if you know), then you'll soon acquire a sense of when it's "right" and when it's "wrong".
There are, of course, little signals, such as the depth of retracements, but getting into all that is way outside the subject of this thread. There are books and articles and so forth, but there is little better than just sitting there and watching how price behaves and making notes of what you think is going on. You can't know what is abnormal until you know what is normal. And the only way I know to get a sense of what is normal is to observe, particularly since "normal" will change throughout the year and from year to year.
--Db