The thing with chop days it that it can only bite you twice, one to the upside and one to the downside. After that is just you wanting to be bitten.
Now that's a way to put it. You might end up turning into a poet one day.
NQ Price Action Journal
- Thread starter niko
- Start date
Now that's a way to put it. You might end up turning into a poet one day.
I am in poetry 101, have to master my skills to be able to get close to the master G.
As I said in the ghost thread my interest this week is to understand scratching, and be able to pull the trigger without hesitation when the trade doesn't go my way.
At the beginning of my day my context was a TR and a TC the latter was within the former. As we approached the SL of the TC around 9:00 and the stride of the uptrend that started around the midline of the TC was broken it was time for a short. At first the short did follow through but buyers were found at the midline of the TC again. Here I jjust opted for closing the short at BE, perhaps the fact that sellers were unable to make a LL was reason enough to close and given the time even SAR, but that was not my plan. So I held the trade until BE was hit.
As no long was initiated and prices were hovering the SL of the TC from the hourly my thinking was short if buyers couldn't make a HH, as soon as I got an entry it was taken, in this occasion price did retrace a little bit after my entry but it held below the 50% level of the previous swing so I decided to stay in the trade. But as sellers failed to hold prices below the OL for even more than a minute the trade was scratched.
By then I had 2 failed shorts at a level that was providing R, then as buyers attempted to take prices higher by holding prices above the top of the hourly TC i took the entry on the long side. Now, that long was in trouble as soon as it got to R at the TR area in the hourly (top at 22), At first I looked for reasons to keep the trade open, but then the LH being so close to my entry and below the TR top was the clue to SAR. Prices moved rapidly below my entry level but then bounced rapidly at 50% of the move from 9:45 which was a sign of strength. So the trade was scratched and given that this looke more as a test of the top of the TC than as an attempt of sellers to go back into it and given that I had a RET I decided to take another long.
This time the long moved just fine, without looking back. After the strong move to the upside I was expecting buyers to try to get to the value area above 32, so decided to give the trade room. This room was only gonna be provided with the 3rd contract that was kept open until the trade was closed at BE. The other 2 contracts were closed according to rules. 1st at the HL, and 2nd at the break of LSL.
I will write some of my observations regarding the issue of scratching later in the day.
At the beginning of my day my context was a TR and a TC the latter was within the former. As we approached the SL of the TC around 9:00 and the stride of the uptrend that started around the midline of the TC was broken it was time for a short. At first the short did follow through but buyers were found at the midline of the TC again. Here I jjust opted for closing the short at BE, perhaps the fact that sellers were unable to make a LL was reason enough to close and given the time even SAR, but that was not my plan. So I held the trade until BE was hit.
As no long was initiated and prices were hovering the SL of the TC from the hourly my thinking was short if buyers couldn't make a HH, as soon as I got an entry it was taken, in this occasion price did retrace a little bit after my entry but it held below the 50% level of the previous swing so I decided to stay in the trade. But as sellers failed to hold prices below the OL for even more than a minute the trade was scratched.
By then I had 2 failed shorts at a level that was providing R, then as buyers attempted to take prices higher by holding prices above the top of the hourly TC i took the entry on the long side. Now, that long was in trouble as soon as it got to R at the TR area in the hourly (top at 22), At first I looked for reasons to keep the trade open, but then the LH being so close to my entry and below the TR top was the clue to SAR. Prices moved rapidly below my entry level but then bounced rapidly at 50% of the move from 9:45 which was a sign of strength. So the trade was scratched and given that this looke more as a test of the top of the TC than as an attempt of sellers to go back into it and given that I had a RET I decided to take another long.
This time the long moved just fine, without looking back. After the strong move to the upside I was expecting buyers to try to get to the value area above 32, so decided to give the trade room. This room was only gonna be provided with the 3rd contract that was kept open until the trade was closed at BE. The other 2 contracts were closed according to rules. 1st at the HL, and 2nd at the break of LSL.
I will write some of my observations regarding the issue of scratching later in the day.
Thanks for that. You gave the last contract of the long 2 hours to attempt to reach the 30's before closing it at break even. Do you think you would have given it that long on a real trade? I feel that I would start doubting the validity of my long before that. Well done if you can keep to your rules.
Bon, the system calls for leaving at least 1 contract on the table until 50% is hit (50% was below so BE was the way to go here.) or price hits R and gives an entry in the opposite direction. And it was after 11:00 so I was not looking for initiating any new position, so leave the one I had open looked fine. Perhaps you are right, I might not have held the trade, but then again that would be not following the plan as it is written. 
I said I was gonna work on scratching for the week, so after some days of observation I came up with an idea that involves zooming in after the entry. In the past zooming in meant overtrading, but now I think I know better .
The theory behind my scratching method is that once you enter a trade you want to see a trend to move in the direction of your trade. Based on the W tests for buying and selling I am going to be looking for my 3 test for scratching or not.
So here is the deal, once I am in a long trade I am gonna be looking for signs of weakness in order to define if a scratch is needed or not. 1 sign of weakness was too little as it usually was the break of LSL in the tick chart and that just meant exiting too soon, so I am going to look for 2 more signs of weakness. Those will be LH or DT or a Failure to make a HH, and a downwave that goes below the 50% of the previous upwave.
The opposite for short.
My take is that by doing this I wont be relying on some mechanical parameter to define my scratch, but it will depend exclusively on PA, I have been thinking that perhaps 2 test could be enough, but for now I will work with 3 and see where it takes me.
Any comments are as always appreciated.
.The theory behind my scratching method is that once you enter a trade you want to see a trend to move in the direction of your trade. Based on the W tests for buying and selling I am going to be looking for my 3 test for scratching or not.
So here is the deal, once I am in a long trade I am gonna be looking for signs of weakness in order to define if a scratch is needed or not. 1 sign of weakness was too little as it usually was the break of LSL in the tick chart and that just meant exiting too soon, so I am going to look for 2 more signs of weakness. Those will be LH or DT or a Failure to make a HH, and a downwave that goes below the 50% of the previous upwave.
The opposite for short.
My take is that by doing this I wont be relying on some mechanical parameter to define my scratch, but it will depend exclusively on PA, I have been thinking that perhaps 2 test could be enough, but for now I will work with 3 and see where it takes me.
Any comments are as always appreciated.
14-01-13
Still in backtesting, and already defined a scratching method I feel comfortable with. I might change it in the future or not.
The good thing about the method is that I have managed to take fear away from the equation, the thing with fear for me is ignorance, not knowing what is happening leads to all kind of wrong decisions. When defining a scratching method I think I have the last piece I needed, I might still need to improve exiting according to AMT, I think today was one of those days when acting upon AMT would have allowed me much better results, but that is for another day.
The charts are attached.
The tick charts show what I was looking at the time after the entry was triggered.
Still in backtesting, and already defined a scratching method I feel comfortable with. I might change it in the future or not.
The good thing about the method is that I have managed to take fear away from the equation, the thing with fear for me is ignorance, not knowing what is happening leads to all kind of wrong decisions. When defining a scratching method I think I have the last piece I needed, I might still need to improve exiting according to AMT, I think today was one of those days when acting upon AMT would have allowed me much better results, but that is for another day.
The charts are attached.
The tick charts show what I was looking at the time after the entry was triggered.
Something I found very valuable, it is from the Zen thread:
"So why does one press it? Because one wants perfection, and perfection loses. One has to let go of his agenda and listen to the market. You should know by now that I believe a "natural" trader is the best trader and in order to be a "natural" trader, one CANNOT be the "perfect" trader"
There is a great relief when one decides to let go of your emotional expectations for a trade and just trade your plan. The other day someone asked me if I was willing to let price go all the way to 50% in order to close. I think that is part of the trick, now if you realize after the fact that something is wrong with your planning there is no reason not to adjust.
"So why does one press it? Because one wants perfection, and perfection loses. One has to let go of his agenda and listen to the market. You should know by now that I believe a "natural" trader is the best trader and in order to be a "natural" trader, one CANNOT be the "perfect" trader"
There is a great relief when one decides to let go of your emotional expectations for a trade and just trade your plan. The other day someone asked me if I was willing to let price go all the way to 50% in order to close. I think that is part of the trick, now if you realize after the fact that something is wrong with your planning there is no reason not to adjust.
Another valuable quote from the Zen thread:
"The idea is eventually to learn to become an objective observer of your own thoughts, words, and deeds. Your first line of defense against committing a trading error is to catch yourself thinking about it. Of course, the last line of defense is to catch yourself in the act. If you dont commit yourself to becoming an observer to these processes, your realizations will always come after the experience, usually when you are in a state of deep regret and frustration. (Mark Douglas)"
I can go back in history and find out that most of my losses came from being unable to do this.
"The idea is eventually to learn to become an objective observer of your own thoughts, words, and deeds. Your first line of defense against committing a trading error is to catch yourself thinking about it. Of course, the last line of defense is to catch yourself in the act. If you dont commit yourself to becoming an observer to these processes, your realizations will always come after the experience, usually when you are in a state of deep regret and frustration. (Mark Douglas)"
I can go back in history and find out that most of my losses came from being unable to do this.