Making of a method

Review:

Error of judgment:

The weakness displayed by the DT from PM called for holding on to the 2nd or 3rd short and giving it room. There was no significant adverse movement and the open never displayed any significant strength.

Strategy and Tactic Error:

The long at 0903 was a continuation attempt on the missed Rev off S. During prep I had judged 3212 to be the middle of the value zone. So my long was far away from the extreme and right in the middle of value.

The tactical error here has to do with a lack of clarity in my plan regarding when intra bar ret entries are justified.

Going forward:

Ret entry can be taken intrabar when the proximity of price to a major boundary zone lowers price risk. However, even in these cases, entries will normally be taken after the first thrust (whether Rev or BO)retraces back.

Continuations will not be taken intrabar, unless there is a low price risk situation.

http://www.sierrachart.com/image.php?l=1380130978402.png
 
Review:

Today's action served as a good example for the need to use context during trade management. The first sell off from 24.75 should have been viewed within the context of price having broken out of a lot of compression created over the last few days. The odds lay with trend continuation. While the selling wave to the 50% mark was fast, awareness of the context would have kept me in the trade instead of mechanically exiting at the half way point.

In general, I tend to manage trades from the viewpoint of my entry price, instead of managing it based on an assessment of buying and selling pressure within the overview of context. Going forward, I have to develop the habit of constantly observing PA to determine where the pressure lies and what is the context surrounding PA.

Danger zone entries: Need to update plan with guidelines on how to position for entires at this zone. The 1 min leads to larger price risk entries and while I have been using the 5s in this zone, I need to set some guidelines to reduce hesitation.

http://www.sierrachart.com/image.php?l=1380212308798.png
 
Quote from game:


In general, I tend to manage trades from the viewpoint of my entry price, instead of managing it based on an assessment of buying and selling pressure within the overview of context. Going forward, I have to develop the habit of constantly observing PA to determine where the pressure lies and what is the context surrounding PA.

http://www.sierrachart.com/image.php?l=1380212308798.png
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Your ability to assess context would be greatly improved if you start considering the high, low, and close of RTH as key levels to be tested before 1000CT. Today for example NQ opened within yesterday's range and with a gap. As I said before the RTH gap demands to be tested unless NQ moves away from it immediately with conviction. In this case it did and so the first test was the high of the day. Then that was rejected and the gap was retested but held. Also after the London Equity Close at 1030 CT there is usually a test of the VWAP before the US Equity Close. That is the move in process at the end your chart.
 
Quote from horton:

Your ability to assess context would be greatly improved if you start considering the high, low, and close of RTH as key levels to be tested before 1000CT. Today for example NQ opened within yesterday's range and with a gap. As I said before the RTH gap demands to be tested unless NQ moves away from it immediately with conviction. In this case it did and so the first test was the high of the day. Then that was rejected and the gap was retested but held. Also after the London Equity Close at 1030 CT there is usually a test of the VWAP before the US Equity Close. That is the move in process at the end your chart.
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Apart from being probable based on your studies, why does price test these levels?
 
price tests many areas,you need to know what tests are the biggest players,longer timeframes, and surmise what happens in between,the context,reading of the big players ,will form your major bias,and then like most of us,learn to tread the smaller levels in between as we are the ones being gamed
 
Quote from game:

Apart from being probable based on your studies, why does price test these levels?
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The market is always searching for liquidity and those are the most logical areas to visit in search of that liquidity. Furthermore everyone can see them so when they are touched everyone that cares about the intraday interval will factor the results of that event into their own behavior to some degree.
 
FT Day 26 Sept 27

Focus for today:
Monitor the balance between buying and selling pressure. Make decisions (entry and exit) based on this information, not on entry price.

R: 3233
R: 3219

S: 3213
S: 3208
S: 3199
S: 3196


Context: Price is back down to equilibrium zone of the hinge with an apex at 3213. The mp of the loose range is around 3215. The fall back to 3213 has been steep. Remains to be seen if this level provides S at the Open as selling dries.

http://www.sierrachart.com/image.php?l=1380284340483.png
 
Review:

The main errors made today were at 1 and 3.

1: This was a tactical error. While the LOLR was down at this point, I entered on a straight Rev instead of waiting for a ret, either on the 5s or 1min. Plan needs to be updated so that there is clarity as to when a Rev without ret can be used. Straight Rev can be used at Range boundaries (not in the plan) or if there is a clear failure of a thrust to make HH or LL (Danger zone). All other Rev opps require a ret.

2: A violation of the plan. Although price sold off Ant R, entry was too early. Plan called for waiting for a retest. Regardless, not a good trade considering that I was shorting right back into S (former Range R)

Something to reflect on:

3: As the open settled into a Range, my plan was to wait for a trending move before participating. Once price broke R, there were no low price risk entries to join the move. As I look back, the question is whether the action at the bottom of the range at (2) held any information regarding the likelihood of a trend move?

A straight Rev entry off Range bottom would have got me in the move. But my plan does not include buying Reversals just because price is at Range bottom.

The only clue was the pressure building via a small Hinge at Support. Once price broke out of this mini hinge, it retraced back to the apex. Here was an opp to go long. But technically I would be entering in the middle of the Range, which is against my plan. So is there anyway to reconcile this?

Also, the swing from the hinge break to R, looks very different from the up and down direction less movement that preceded it. Once again, the quality of movement within a Range is saying something about pressure. In this case the ret at 0914 would have presented another opp to enter although it would technically still be inside the range.

So the question is:

Does the quality of action within a Range hold information as to probable direction?

http://www.sierrachart.com/image.php?l=1380300473490.png
 
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