One Trade at a Time

Had another thought – it is separate from channels, but tied to your last chart.. and a question you posed

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Those long bars are volatility, volatility is risk

Traders hate volatility

Btw, volatility covers up poor trading (makes an idiot trader think they can be profitable if only they sit and stare at a loser long enough)


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Those long bars are also a form of momentum, and traders like momentum, but ya gotta know how to trade momentum

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I don’t expect you to understand the above statements, just know at some point you’ll need to

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There is also a very low risk trade there – the set up is a failed retest…. See if you can indentify it

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There are times to sell weakness… but then there other times to buy it

There are times to buy strength… but then there are other times to sell it


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You wanted to know what’s next – just gave you a couple of years worth of pursuits


RN
 
RN,

Seems as if there are two low-risk possibilities.

The first is a short after the first large red down bar, when price moves back up to the top two horizontal lines but cannot close beyond.

The second would be a long right after the first, when price can't close beyond the bottom two horizontal lines.
 
RN,

Beginning to have ideas about setups based on what I've learned thus far.

The main setup I've tested uses channels. Back-testing shows positive results.


According to the setup, a golden opportunity arrived this morning just a minute ago. Attached chart shows what I mean.
 

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Another opportunity. I missed it because I drew the channel right after it happened and didn't want to chase price.

Again, price flew away and had I caught the setup, if I had held on I could have netted around 10 points.
 

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Took 2 setups. Again, they're only using channels.

The first was stopped out, as price was in a downtrend. I drew a channel up, but it turned out to be a simple pull-back instead of a reversal.

The second trade was a winner. I tried to let the trade ride. Price obeyed the channel and rode up until it failed to break through the horizontal price level, at which point I took profits. Not sure if I should have held longer, at this point it seems price could go either direction.
 

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Redneck,

I've been re-reading this:

quote from redneck:Granted sometimes price will bust down and out of the bottom channel line – yeah okay – we’re not there yet (meaning we have not discussed how to identify the intraday move we should be trading)
More...

Here's the latest progress: I've been drawing channels throughout the day, but it seems there are times when I have, for example, a down channel still holding, but then a HL appears so I draw an up channel and it seems as if price could go either way.

As far as I can tell, this means that it's 1 of 2 issues. Either I'm having trouble differentiating the difference between pivots and pull-backs in real-time as they're forming, or as you mentioned in the quote above, I'm not sure how to identify the intraday move I should be trading.

I'm trying to look for context using both horizontal levels and diagonal channels but sometimes I'm still unsure as to which direction I should pursue.

I've attached a chart to further explain myself. If you wouldn't mind, would you be so kind as to elaborate on the quote above?

Thanks,

Chris.
 

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Time to update:

I now have a solid framework which provides a consistent context to the market.

I'm still Sim-Trading NQ, and I'm now incorporating multiple charts.

I use the 5-minute chart for setups, and I enter on the 1-minute chart for tighter entries.

I've attached an image showing today's trades. I'm going to try to upload my daily results and then write down any lessons learned and what needs improvement. I tried this close to 9 months ago, but didn't have a solid plan.

The blue horizontal lines on the chart are my way of seeing pivots easier, and they help me keep a better idea of where local S/R might be to quickly evaluate potential R:R before entering a trade.


Lessons Learned:

I need to hold profits longer. As seen on the chart, my second trade could have yielded greater profit. Nevertheless I surpassed my minimum mental target.

Rules Broken:

Although the last trade was a valid entry, I entered a bit later than I should have, and the risk:reward ratio was insufficient, considering the blue line was right above the entry price.
 

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Only took 3 trades today. I think my daily number of trades has gone way down since I've started adhering to a solid set of rules.

My first trade was improper. I entered because the setup looked close enough, but was not complete. By the time I entered the trade, the most recent 5-minute bar had closed back inside the trading range, invalidating the setup. I was stopped out.

Second trade was done right, according to plan. Entered and took profits when the time came. I feel good about this trade because I believe I held profits long enough.

My third and final trade was a valid setup when I took it, but was quickly invalidated, resulting in a stop-out. I could have reduced my loss further by exiting right after the pivot had formed, rather than at my initial stop-loss point. I'm starting to see how traders accept their losses and even embrace them.

Lessons Learned:

1. Move stop loss closer as soon as trade is invalidated. I knew this previously, but now I'm going to incorporate it into my plan, as I've now seen first-hand why it's so important.

2. ALWAYS wait for a complete and valid setup. Otherwise my "numbers game" is invalid, and the odds are no longer in my favor.

Rules Broken:

1. Did not enter on valid setup during my first trade.
 

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Today was progress, as I hope everyday is.

Just like yesterday, I only had three trade attempts, of which one was successful.

The first was a decent long setup out of a trading range but the setup failed and I exited at break-even + 1.

I then tried a second attempt at a long trade, which my trading plan allows for. I botched up the rules though, because the second attempt was after the price bar closes back inside the range. Same mistake that I made yesterday.

After watching price move down and out of the range, I saw another valid setup, this time for a short trade. It was a missed opportunity though.

I then capitalized on the next LL/LH and was able to book a profitable trade. Think I did a fair job at not leaving too much profit on the table either.

Shortly after there was a fifth setup opportunity, but I was away from my desk and didn't see it until after, and did not want to chase the trade. As it turns out, it most likely would have been a scratch trade.

Lessons Learned:

Pay attention at all times. Distractions and being away from the computer led to two missed trades, which is detrimental to the odds being in my favor.

Rules Broken:

The same one as yesterday - I entered with a similar but still invalid setup.
 

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