Making of a method

Quote from niko:

Thanks.
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My relatively short experience with pattern backtesting, and the disappointment with the ensuing forward testing of these patterns, was beneficial in that it reinforced the limitations of a mechanical approach. I am re-posting the following in reference to your earlier inquiry about the hinge pattern. I am sure you are already familiar with this thinking, but repetition helps me for sure.

Quote from dbphoenix:

While I'm not optimistic about your efforts to "come up with Reversal situations containing compelling opportunities that occur with more frequency than the basic re-test scenario", I don't want to discourage you from trying. If you're determined and you don't give up easily, you may just come out the other side. Otherwise, you may become defeated for no particularly good reason other than the choice to wander down the wrong path.

I suggest that using the so-called "123" and "2B" as the bases for your plan is an error since they are little more than features of the landscape and have no particular meaning in and of themselves. Unless reversals take place against reasonably important support and resistance, they are far more likely than not to draw the trader into an almost continual state of trading counter-trend. Wyckoff figured this out more than a century ago. Dunnigan, Ross, Sperandeo and others merely re-affirmed it, though they seem never to have figured out that their problem had to do with ignoring support and resistance.

There are other ways to find reversal opportunities. One is to change your bar interval so that you're looking at different levels of support and resistance. Making it smaller will of course mean that the swings you're trading will be smaller. This may suit you. Making it larger will mean that the swing will also be larger. But the waiting may make you impatient. Another is to learn how to trade ranges since they occur more often than trends do. However, trading ranges means having to give up the safety net of the retest since you have to take the trade as soon as the limit of the range is reached (ranges are rarely accommodating enough to provide retests). If you don't want to do that, then you may have to begin monitoring a variety of instruments and trade those that are on the springboard to providing a trading opportunity during the coming trading session.
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The hinge is almost a specialty. I suppose it's possible to trade it mechanically, but then it's possible to trade a range mechanically too. But there are psychological nuances to the hinge that many people find difficult to process. Therefore, unless one "takes" to it, it's probably best to leave it alone.
 
"....the most robust evidence indicates that this wisdom-of-crowds principle holds when forecasts are made INDEPENDENTLY before being averaged together. In a true betting market (including the stock market), people can and do react to one another's behavior. Under these conditions, where the crowd begins to behave more dynamically, group behavior becomes more complex"

- the signal and the noise

Viewing all this as a bazaar/vegetable/fish market has been opening doors.

One end of the spectrum is betting based on the economics of the business and at the other end is betting based on auction market dynamics.

I remind myself that I have no edge in auction markets unless I am betting based on behavior.
 
Quote from game:

"....the most robust evidence indicates that this wisdom-of-crowds principle holds when forecasts are made INDEPENDENTLY before being averaged together. In a true betting market (including the stock market), people can and do react to one another's behavior. Under these conditions, where the crowd begins to behave more dynamically, group behavior becomes more complex"

- the signal and the noise

Viewing all this as a bazaar/vegetable/fish market has been opening doors.

One end of the spectrum is betting based on the economics of the business and at the other end is betting based on auction market dynamics.

I remind myself that I have no edge in auction markets unless I am betting based on behavior.
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You'll find quite a few traders who talk derisively about "the herd" without understanding that it is the "herd" that moves markets, and that the herd is always right, except at turning points. To try to trade against this herd is not the brightest choice. Many of these quasi-cognescenti do exactly that, of course, which is fine by me. Look at last Friday.
 
FT Day 13 Sept 10

Since this is new territory, use the OH and OL as tentative S/R levels. If the initial trend move is missed use continuation opps to get in.

R: 3189 (PM High)
R: 3188 (PM Congestion top)

S: 3182 (SL from PM)
S: 3179 (SL from ON)
S: 3175 (Former R via Yesterday's high and SH from ON)
S: 3167 (Multiple tested S level. Tested at yesterday's close and then during ON) Also is mp zone of upwave from 46 t 89.

Story 1: The strong trend from yesterday continues onward.The LOLR is up.

Story 2: The overbought condition causes back and forth swings to establish a value level. 75 and the more important level of 67 are tested as S. A Reversal would go all the way back to test 50.

Review:

Trade 1: Short taken as hinge (starting from PM) broke down and then retraced back to DL.

Trade 2: New hinge formed with the action from the open. Broke upside and failed. Then broke down. The ret went back to DL and then turned to hit sell stop. S came in at anticipated level of 79.

http://www.sierrachart.com/image.php?l=1378825529690.png
 
game, everyone seems to start(making of a method) from a small timeframe,try the opposite if you are still simming,look at the larger timeframes and notice what the biggest players are doing, eventually you would like to understand how they operate, the smaller players are their merchandise,think of the fisherie example,then with a small acct,you wouldnt have to trade 3 or 5 or 10 trades a day,you could trade once or twice a month,and build up your capital to increase those trades in either size or frequency,those are the easiest trades,tradingf the intraday moves builds in a fear factor,trading the extremes, longer term s/r,even on sim,you are always (99% of the time)aware of the big players motives, you have the large picture in your head,unlike a scalper who at first is like an ant at a picnic not noticing the large boot descending upon him
 
Quote from ammo:

nq 30 minute
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Based on my understanding of your method, I am assuming that you are anticipating price to move down to the area between 79 and 75 (as seen on the 30 min chart you posted)
 
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