Making of a method

Quote from dbphoenix:

In the case of the first long, theoretically yes. Practically no. Even though you're not "looking back", you are. If and when you forwardtest this stuff, you'll see the problems.

But as for the potential trade at 2, still no. There's no indication that the balance is shifting until the pullback after "3" drops more than 50% of the upwave. This is not to say that the "touching the stove" scenario that you're looking for won't work, but these are not great examples.

What you're looking for is a reach that is foiled. Your first example qualifies. Your others don't.
More...

When people trade off Range S/R, do they normally make the decision simply based on the bet that the range will hold? So as price comes to the bottom, they just either buy then or place a stop for the anticipated Reversal...

It seems that even though a foiled reach results in a breach of Range S/R, it carries much more information about the Range holding than if one were to just simply enter on the basis of it being a Range.


Regarding 2: Based on the pullback levels, it does appear that Demand is in charge. Wondering whether there are cases when the stalling or breach failure that occurs at an anticipated S/R zone carries more information about likely direction and somehow overrides the supply/demand information being conveyed by the character of the swings.

Because if not, it would mean that these Danger zone entries at the extreme should only be taken during a retest scenario - particularly one which is occurring after a Reversal that is deep enough to indicate that the trend is losing steam...
 
Quote from game:

When people trade off Range S/R, do they normally make the decision simply based on the bet that the range will hold? So as price comes to the bottom, they just either buy then or place a stop for the anticipated Reversal...

It seems that even though a foiled reach results in a breach of Range S/R, it carries much more information about the Range holding than if one would just simply enter based on it being a Range.
More...

Trading a range does involve just trading the reversal without waiting for a retracement. There is rarely enough time unless one is working off a tick chart.

As to the range holding, I don't see 28 as the top of a range, so you'd have to find other examples.

Quote from game:

Regarding 2: Based on the pullback levels, it does appear that Demand is in charge. Wondering whether there are cases when the stalling or breach failure that occurs at an anticipated S/R zone carries more information about likely direction and somehow overrides the supply/demand information being conveyed by the character of the swings.

Because if not, it would mean that these Danger zone entries at the extreme should only be taken during a retest scenario - particularly one which is occurring after a Reversal that is deep enough to indicate that the trend is losing steam...
More...

You'd have to test it, but, again, you're looking at a retest of something anticipated, something that may not even exist. If you look at "3", for example, you'll note that the reach is not all that strenuous, but look at that first downbar just to the left of your numeral. That has to strike at least some fear into the hearts of anyone who just bought. That's what you have to look for, not "S/R", in combination of course with the break of the demand line and the deeper pullback after the last effort.
 
Going back to 1.

What are the practical problems of setting a buy stop everytime price is brought back into a value zone after a foiled reach? The depth and speed of the bring back carries information. So why not place a buy stop just above S (in this case 3206)? This would be close to the Danger zone and if price were to breach S again, the trade would be exited.
 
Quote from game:

Going back to 1.

What are the practical problems of setting a buy stop everytime price is brought back into a value zone after a foiled reach? The depth and speed of the bring back carries information. So why not place a buy stop just above S (in this case 3206)? This would be close to the Danger zone and if price were to breach S again, the trade would be exited.
More...

That's not something I can answer for you. You'll just have to test it and see how many times it works and how many times it doesn't and under what conditions.

If price is in a well-defined range, what you're looking for is a shakeout. If that's what you've got, then a buy might work. However, these don't necessarily precede a major move to the upside. These ranges can go on for quite some time. And if you're trading back and forth and back and forth, the one who's making the real money is your broker.
 
Quote from dbphoenix:

That's not something I can answer for you. You'll just have to test it and see how many times it works and how many times it doesn't and under what conditions.

If price is in a well-defined range, what you're looking for is a shakeout. If that's what you've got, then a buy might work. However, these don't necessarily precede a major move to the upside. These ranges can go on for quite some time. And if you're trading back and forth and back and forth, the one who's making the real money is your broker.
More...

Preliminary observation shows that shakeouts that occur during counter trend waves, normally result in a strong Reversal move back in the direction of trend. Thanks for the feedback on all of this. I find these shakeouts/breaches/hot stove situations to be very interesting.
 
Quote from game:

Preliminary observation shows that shakeouts that occur during counter trend waves, normally result in a strong Reversal move back in the direction of trend. Thanks for the feedback on all of this. I find these shakeouts/breaches/hot stove situations to be very interesting.
More...

There are no countertrends in ranges, only "trends" from one side to the other.

At some point, you have to ask yourself if you want to trade or to make money. Trading reversals is a difficult way to make money.
 
Quote from dbphoenix:

There are no countertrends in ranges, only "trends" from one side to the other.

At some point, you have to ask yourself if you want to trade or to make money. Trading reversals is a difficult way to make money.
More...

My replies have not been too linear today. I was shifting the conversation from shakeouts at Range S/R to my observations about hot stove situations that occur during counter trend waves in a trend (not within a Range).
 
Quote from game:

FT Day 32 Oct 7

R: 3230
R: 3225
R: 3218
R: 3212


S: 3199

Context: 16 point sell off from ON is now climbing its way back. Is currently inside a hinge with the apex at the 50% level of the fall at 3211. Now climbing through the air pocket of the ON fall.

http://www.sierrachart.com/image.php?l=1381150298282.png
More...

Actually the midpoint is at 15. If you didn't note the failure at 0845, you should do so and add it to your notes.
 
You must log in or register to reply here.
Back
Top