Making of a method

[Gringo]

Quote from game:


Given that price had recently fallen from early R at 3228, do you think it was reasonable to not exit this trade once it lost momentum, and to give it room till the 50% level?

Was there anything in the context that would have called for a different approach?

I would have exited simply because the price turned before reaching the previous swing high around 3228. Now, there is no restriction on re-entering. That's the whole point of exiting faster so that one can evaluate the situation and re-enter if the danger that prompted the exit didn't pan out. Here we had a higher low, if one preferred to enter after that, or later a break above the swing high around 3228. There are no perfect entries and exits because of the difference in the internal makeups of our mind. What's required is on the whole, to be on the right side of the direction, and not get crushed when on the wrong side.

Gringo

Edit: I missed recognizing the hinge :eek:. Yes that would have given a better entry instead of break above the 3228.

 

[game]

Quote from Gringo:

There are no perfect entries and exits because of the difference in the internal makeups of our mind. What's required is on the whole, to be on the right side of the direction, and not get crushed when on the wrong side.
.

I think that is why I am considering the 50% guideline as a first filter of sorts. Despite the context of the moment, it will, at least for the most part, allow me to use trend continuation odds to my advantage.

 

[game]

Quote from dbphoenix:

If you want an idea of how it works, I suggest you look at Game's journal. Though he hasn't taken all my suggestions and he doesn't trade the way I do, the process he's gone through and continues to go through is pretty much what any successful trader has to go through.

Unsure whether I am implementing the suggestions incorrectly or not considering them at all. Which of your suggestions are not reflected in my trading?

 

[dbphoenix]

Quote from game:

Unsure whether I am implementing the suggestions incorrectly or not considering them at all. Which of your suggestions are not reflected in my trading?

After almost 900 posts, it's difficult to be specific. But I suppose the chief differences are the lack of daily and hourly charts to show where you get your S/R levels from, the aspect ratio of your charts, the "precipitate" entries, the too-quick scratches, and the tendency to trade chop.

However, the process is such that all of this falls by the wayside eventually, if the trader keeps at it long enough, and the trader winds up trading in synch with the market, unless he is unusually stupid or extraordinarily arrogant, and you are neither. In other words, all price action traders end up trading pretty much the same way because the market demands it (and by "price action" I mean true price action, not the Al Brooks sort of nonsense).

Hope this doesn't put you off. You're doing just fine, particularly for someone who had baggage.

 

[game]

Quote from dbphoenix:

After almost 900 posts, it's difficult to be specific. But I suppose the chief differences are the lack of daily and hourly charts to show where you get your S/R levels from, the aspect ratio of your charts, the "precipitate" entries, the too-quick scratches, and the tendency to trade chop.

Regarding the too quick scratches:

Earlier this morning you talked about managing the trade based on what price does at the entry level rather then where it is in reference to the entry price. Doing this would reduce early scratches.

OTOH there is this philosophy of getting out quick if the trade does not move. I might be taking this too literally, leading to the premature scratches.

While there is no definitive answer, are there some guidelines to help attain more balance in this area?

 

[dbphoenix]

Quote from game:

Regarding the too quick scratches:

Earlier this morning you talked about managing the trade based on what price does at the entry level rather then where it is in reference to the entry price. Doing this would reduce early scratches.

OTOH there is this philosophy of getting out quick if the trade does not move. I might be taking this too literally, leading to the premature scratches.

While there is no definitive answer, are there some guidelines to help attain more balance in this area?

The "guidelines" will change as you gain more experience, either in replay or in real time. As your confidence in your ability to read price deepens, you will be more likely not only to know how much room to give price but also to actually do it.

After mentioning this business of entering and exiting too quickly several times, I dropped it because I knew that if you stuck with it long enough you'd reach this conclusion by yourself in a much more effective way than my just telling you. And you have. So it's all good.

You and niko have much the same problem, or I suppose I should say "challenge". You may want to look at what I recommended to him regarding the voice recorder and the line chart.

 

[game]

FT Day 29 Oct 2

R: 3251
R: 3237

S: 3224
S: 3213
S: 3205

Context: While there has been a sell down since the high made at yesterday's close, the trend remains up. A LH formed during PM has reduced the stride of this trend, enabling the creation of a channel with a less acute angle. The recent PM action itself has been neutral with a complete sell down of the last buying wave.

http://www.sierrachart.com/image.php?l=1380718707155.png

 

[game]

Review:

Trade Management:

Long at 0843: The first thrust off the open found R a bit below Ant R of 37. This meant that R was strong. Thus, once the second try to go past R faltered, I opted to get out.

Short at 0901: Trade immediately moved adversely. The entry level to be tested was 35.50, being the LH. However, it was 2.5 points away and I was just not comfortable with that much risk. Which leads to the question - If I am not comfortable with the entry level risk, then why take it? Worst is to get out in the middle, halfway between entry and entry level test.

Overtrading:

None

Hesitation:

Once the short was exited, PA began to once again confirm weakness. There was an opp for a continuation entry at 0905. I am attributing my hesitation here to the large number of trades to the left. Despite topping action, I expected a lot more chop here rather than a clean run all the way to OL. OTOH the confirmation of R at 37 meant that all those who had been buying the dips in anticipation of a breakout would now be exiting. Another factor adding to the hesitation was the range displayed during this ret. There was no close entry level as a reference to minimize risk.

The better continuation entry was at 0907 because price retraced back to the previous SL at 30.75 and found R there. This confirmation of R should have encouraged taking this short.

After this, once price bounced off S, we were in the middle of a 14 point Range and I did not want to participate in it's middle.

Observations:

The thrust above R at 0854 and the down thrust below OL at 0910 provided excellent opps to position for traveling the Range.

But the manner in which price got to the up thrust above R was very different than the way it got to the down thrust below S. The upthrust had a lot of trades behind it, as there was a slow gradual move to the boundary, with buying on the dips. The down thrust below S in comparison, had a lot of fast action behind it. So upon failure to cross the Range boundary, which thrust held more information as to the likelihood of price traveling in the opposite direction?

I was tempted to buy at 0910 as price came back inside the Range after a climactic sell off from R. But it is not in the plan. Something I need to take a deeper look at. The combination of Climactic action against a Range boundary seems like a good bet.

http://www.sierrachart.com/image.php?l=1380728196383.png

 

[dbphoenix]

Perhaps you're making too much of predetermined S&R which may be only in your head (except for daily and weekly highs and lows). Because of that, you're hesitating in advance of price facing what may be only imaginary trouble at S&R that may not even exist. This is the core of trading price: going where price leads you rather where you think it's going to go and what you think it's going to do. While the long at 0943 was fine, for example, there was no reason not to take the long at 0934. When your demand line was broken at 1000, there was no reason not to take the short at 1005, or even 1001. Similarly, when price made a double bottom at 1010 with a fast and hard rejection, there was no reason not to take the long at 1017. Notice also that none of these pullbacks retraced more than 50% except for the one at 0951, which signaled that the upmove was weakening, which it was, and after one last higher high, it folded.

Less preconception. More in-the-moment.

 

[game]

Quote from dbphoenix:

Perhaps you're making too much of predetermined S&R which may be only in your head (except for daily and weekly highs and lows). Because of that, you're hesitating in advance of price facing what may be only imaginary trouble at S&R that may not even exist. This is the core of trading price: going where price leads you rather where you think it's going to go and what you think it's going to do. While the long at 0943 was fine, for example, there was no reason not to take the long at 0934. When your demand line was broken at 1000, there was no reason not to take the short at 1005, or even 1001. Similarly, when price made a double bottom at 1010 with a fast and hard rejection, there was no reason not to take the long at 1017. Notice also that none of these pullbacks retraced more than 50% except for the one at 0951, which signaled that the upmove was weakening, which it was, and after one last higher high, it folded.

Less preconception. More in-the-moment.

For tomorrow, I am going to make a concerted effort to just go with the immediate LOLR once the entry conditions are met. Perhaps if I surf more, I might be able to find that balance between outright surfing and outright overthinking.