NQ Price Action Journal
- Thread starter niko
- Start date
Remember that "support" and "resistance" have primarily to do with where price WAS and HAS BEEN. It need not have anything to do with where price WILL BE, much less provide entries per se. For that you have to watch what price DOES if and when it reaches a level where you thought/think support or resistance will manifest themselves. And it if under- or overshoots a little, don't get thrown by it.
Ok, I went back to the beginning of the thread in order to get my ideas straight, obviously was seeing lots of things that weren't there in real time. The main reasons are fear and hope.
Fear: Motivation to avoid taking risk, therefore exiting trades too soon.
Hope: Thinking in what I want price to do instead of what price is doing, that led to two things:
1. Entering in bad places.
2. Avoiding responsibility for my trade and letting the stop take my exit decision.
I will start testing some rules, which are MY interpretation of what has been written so far.
At the beginning I will not address S and R or context, just will follow price in real time, if after a number of trades I still find that something is missing, then it will be lack of context and that will be addressed in a later date.
The "rules" are the following:
This is an all in all out approach, so there will be no partial exits.
Entry:
Buy: Break of SL + Higher Low or Double Bottom
Sell: Break of DL + Lower High or Double Top
The exact entry point is subject to testing before being defined. At the beginning will wait for the "close" of the bar, then will move to being able to take the entry with the information provided while the bar is still being formed. (Hence looking at price like a movie not like a slideshow)
Initial stop loss: This stop loss is the contingency one, and it will be placed between 3 and 5 points away from the entry price. This will not be the reason to exit the trade if it is managed according to the next set of rules.
Management rules:
Once in the trade the expected outcome is to see price being able to break above the last swing high (LSH) if we are buying or below the last swing low (LSL) if we are selling.
But what if the trade stalls, and there is no HH or LL, then there will be three possible outcomes:
1. What I thought was a new trend is really just a RET that broke the line and therefore the way to go is to close the trade and get back into the trend.
2. This is just a resting spell before price starts moving in the expected direction
3. Price enters the chop.
For 1 a new entry will be placed in the opposite direction. If 2 happens, the new entry will not be triggered. If the first trade is exited at a loss, and the second one does not move as expected then I will be in the chop, and the trade will be exited. There will be no new trades until I can clearly see I am away from the chop and a new RET appears. (Meaning that I need HH or LL and a S/D Line)
If the LSH or LSL is broken, my S/D line will be valid and from there on I will only close the trade after 2 things happen:
Break of the D/S line.
50% RET of the corresponding D/S line.
After the 50% level has been hit and the SL is broken, three things could be happening.
1. A deeper than expected RET: If this is the case, then price should just bounce back and move in the direction of the trade.
2. The trend is over and price will move in the opposite direction
3. The trend is over and price will chop.
As in real time it is impossible to know which one of these is the one that is happening, I will give the initial trend a chance (perhaps in the future as I am more acquainted with S/R and volume I could differentiate earlier, but not just yet).
I will wait for the low of the bar that broke the 50% to be taken, if it holds the trade stays open if it is broken the trade is exited at market and a new entry in the opposite direction will be taken at the first RET after the break. This will avoid entering in the case price chops before the 50% level is broken.
Fear: Motivation to avoid taking risk, therefore exiting trades too soon.
Hope: Thinking in what I want price to do instead of what price is doing, that led to two things:
1. Entering in bad places.
2. Avoiding responsibility for my trade and letting the stop take my exit decision.
I will start testing some rules, which are MY interpretation of what has been written so far.
At the beginning I will not address S and R or context, just will follow price in real time, if after a number of trades I still find that something is missing, then it will be lack of context and that will be addressed in a later date.
The "rules" are the following:
This is an all in all out approach, so there will be no partial exits.
Entry:
Buy: Break of SL + Higher Low or Double Bottom
Sell: Break of DL + Lower High or Double Top
The exact entry point is subject to testing before being defined. At the beginning will wait for the "close" of the bar, then will move to being able to take the entry with the information provided while the bar is still being formed. (Hence looking at price like a movie not like a slideshow)
Initial stop loss: This stop loss is the contingency one, and it will be placed between 3 and 5 points away from the entry price. This will not be the reason to exit the trade if it is managed according to the next set of rules.
Management rules:
Once in the trade the expected outcome is to see price being able to break above the last swing high (LSH) if we are buying or below the last swing low (LSL) if we are selling.
But what if the trade stalls, and there is no HH or LL, then there will be three possible outcomes:
1. What I thought was a new trend is really just a RET that broke the line and therefore the way to go is to close the trade and get back into the trend.
2. This is just a resting spell before price starts moving in the expected direction
3. Price enters the chop.
For 1 a new entry will be placed in the opposite direction. If 2 happens, the new entry will not be triggered. If the first trade is exited at a loss, and the second one does not move as expected then I will be in the chop, and the trade will be exited. There will be no new trades until I can clearly see I am away from the chop and a new RET appears. (Meaning that I need HH or LL and a S/D Line)
If the LSH or LSL is broken, my S/D line will be valid and from there on I will only close the trade after 2 things happen:
Break of the D/S line.
50% RET of the corresponding D/S line.
After the 50% level has been hit and the SL is broken, three things could be happening.
1. A deeper than expected RET: If this is the case, then price should just bounce back and move in the direction of the trade.
2. The trend is over and price will move in the opposite direction
3. The trend is over and price will chop.
As in real time it is impossible to know which one of these is the one that is happening, I will give the initial trend a chance (perhaps in the future as I am more acquainted with S/R and volume I could differentiate earlier, but not just yet).
I will wait for the low of the bar that broke the 50% to be taken, if it holds the trade stays open if it is broken the trade is exited at market and a new entry in the opposite direction will be taken at the first RET after the break. This will avoid entering in the case price chops before the 50% level is broken.
Given that I still have problem spotting entries, I will focus on that part of my plan first, once entries are fixed I will focus on exits.
The entries are in the chart, they were all taken in real time. There is only one entry per trend (no pyramiding).
After reviewing the day, I only have doubts about entries marked 2 and 6.
2. Had I traced a line from 9:32 to 9:35, this entry would have not happened. In hindsight I think that is the way to go, so I will look for this kind of behavior in other charts.
6. At the time, I did not realize that trades number 4 and 5 had failed, turning the area between 52 and 57 a TR so the trade at 54 would have been taken inside the chop, Therefore the entry would have been instead at the first RET after price exited the chop and that would have happened at 10:49
The entries are in the chart, they were all taken in real time. There is only one entry per trend (no pyramiding).
After reviewing the day, I only have doubts about entries marked 2 and 6.
2. Had I traced a line from 9:32 to 9:35, this entry would have not happened. In hindsight I think that is the way to go, so I will look for this kind of behavior in other charts.
6. At the time, I did not realize that trades number 4 and 5 had failed, turning the area between 52 and 57 a TR so the trade at 54 would have been taken inside the chop, Therefore the entry would have been instead at the first RET after price exited the chop and that would have happened at 10:49
I just want to check that I am looking at the right things (at the time of the chart). Or if I need to adjust my S/D lines to follow price closer.
My analysis is that if long one must remain in, given that we switched from a strong uptrend, to a less than 50% correction and then got inside an uptrending trend channel in which we are still in.
My analysis is that if long one must remain in, given that we switched from a strong uptrend, to a less than 50% correction and then got inside an uptrending trend channel in which we are still in.
