Making of a method
- Thread starter game
- Start date
That's just the sweep of both sides of the market after the payroll data. You are above yesterday's high but below the high from the 26th so you could go either way. At the open you are in a balanced formation for the first few minutes with both sides tested until the Putin news printed.
My point is you could sit and agonize over why the short side won in the formation when a quick glance at the news tape would allow you to move on and avoid wasting time imagining that what happened was some sort of natural law of price action.
My point is you could sit and agonize over why the short side won in the formation when a quick glance at the news tape would allow you to move on and avoid wasting time imagining that what happened was some sort of natural law of price action.
Thanks for the post. It made me reflect on what a story is.
A story is a construct that frames PA. It is a representation - a map. It's purpose is more to serve my limitations as a trader than to explain the why behind the rational motivations of traders.
Today, for example, price dropping below 35 and then weakly retracing back to 35, provided me with an excellent chance to place a sell stop at a critical point. However, my limitation was the inability to be open and available to what the PA was indicating. The rejection at 42 decreased the strength of the initial long hypothesis but I was unable to see this. This limitation led to indecisiveness once the competing hypothesis began to unfold at the break through 35. So two failures of thinking here - and not of prediction.
The problem arose due the decreased ability for fast and clear thinking in the face of emotion inducing price movement. My solution for this limitation is to have the outline of a competing hypothesis already in place so that I can quickly filter the PA against a pre-established construct, thereby improving my ability to act or not act.
I think it's less about agonizing over why the short side won, than it is about identifying the reasons why I was not present at the critical point. For that is the entire basis behind this approach - to be available at the turns and not to explain them.
I think the only natural law of PA has more to do with our intrinsic natural cognitive limitations and biases. But since the market is a complex system, one cannot simply extrapolate principles of behavioral finance at every tick. The irrationality of multiple traders can lead to a very rational and balancing system - wisdom of crowds. Thus, the value of using trader behavior lies at the critical points, once the balancing state is in danger of turning into a cascade.
I normally do not look at news, but today I did, since the action was something I have not encountered before. I can certainly see how incorporating elements of news can help with perspective. Today, once price fell to 3100, the pure PA trader would have noted the flattening of pace just above this zone at 3112. He would have also noted the high VAP levels at 3100 and it's past significance as a critical level. Perhaps knowing that the market's sharp down move was a result of incorrect interpretation of significant news would have helped the trader increase his estimation of the probability of Reversal once price bounced off 97. But my task at hand is to become skilled in being open and available to the PA first. Once I can do that, then perhaps there is room to introduce other characters in the story.
But there's no agony or imagining. As I said, the weakness was clear by 0900. Then price fell to support and 3100 and made a V reversal. What caused it is irrelevant, at least to a price action trader. If you're interested, all this was tracked before and during in the Straight Line thread.
A 1 minute Reversal in a 10m Balance before the Open is not an indication of weakness beyond the 1m Interval, particularly given the location in terms of the 60m and Daily. You don't know how the RTH will open on the news until you get to the RTH. Sure you could trade the event before the Open if you are trading at that time and then decide what to do at the Open, but that is not his focus. And the notion that what happened at the Open was already set by that pre-market event is magical thinking.
The weakness was at resistance as shown on the daily and the hourly. How RTH will open is irrelevant to the trade entry itself. But even if one were to wait for the open, there was a retracement opportunity several minutes afterward.
But I'm sure Game has read all this in the Straight Line thread, and I don't want to intrude further.
The NDX opened and balanced around 40 just above 60m Resistance and below Daily Resistance. See the chart. He is trading from the Open so obviously how the RTH opens is relevant to the trade entry. Nothing that happens at the Open is predetermined by a minor test 30 minutes before the Open. So he is headed down the wrong path if he wastes energy imagining otherwise when the news tape will tell him what really happened. Again that was my original point.
neat tread but I think it is lacking a serious look into adapted dom when it comes to positioning strictly, too much talk of everything else