Ditch, I haven't found anything better than what you taught me, which is just ambush the darn thing. Especially when it stalls at previous failures.
Pete's Place
- Thread starter PetaDollar
- Start date
Sure, check out yesterday's NQ action around 13:43 EST.
A trader looking to short would be waiting in ambush to short around 71.5 (the pivot). The morning rally stalled just above there. Then there was another attempt that failed around noon.
So at this point he's watching the order flow, ready to short around 71.5. As soon as trades take place around there, and back off, like around 13:43 EST, that's a short entry.
Another example from this morning. I got long at 66.5 around 9:37 EST. (I was a little too agressive with a reverse later, and am sitting on a small loss for the day now, but that's besides the point.) The pre-market traded around 65 a long time, so after that first little move up to 68 I was waiting to ambush a stall around 65. Sure enough it pulled back and there was a pause in the order flow. So there I went long.
When it works you're in well ahead of good moves. When it doesn't work, boy, it sucks and you find out right away. It takes a lot of practice. When I first started working with this I lost a lot of money shorting big moves up at each stall, and going long on big moves down at each stall. You have to remember that there are natural pauses and pullbacks in these big moves. In these cases it is usually better to go in the direction of the move, rather than try to catch the bottom.
Catching tops and bottoms is awesome but a lot harder. There should be at least two failures, and other supporting evidence helps too.
A trader looking to short would be waiting in ambush to short around 71.5 (the pivot). The morning rally stalled just above there. Then there was another attempt that failed around noon.
So at this point he's watching the order flow, ready to short around 71.5. As soon as trades take place around there, and back off, like around 13:43 EST, that's a short entry.
Another example from this morning. I got long at 66.5 around 9:37 EST. (I was a little too agressive with a reverse later, and am sitting on a small loss for the day now, but that's besides the point.) The pre-market traded around 65 a long time, so after that first little move up to 68 I was waiting to ambush a stall around 65. Sure enough it pulled back and there was a pause in the order flow. So there I went long.
When it works you're in well ahead of good moves. When it doesn't work, boy, it sucks and you find out right away. It takes a lot of practice. When I first started working with this I lost a lot of money shorting big moves up at each stall, and going long on big moves down at each stall. You have to remember that there are natural pauses and pullbacks in these big moves. In these cases it is usually better to go in the direction of the move, rather than try to catch the bottom.
Catching tops and bottoms is awesome but a lot harder. There should be at least two failures, and other supporting evidence helps too.
Hi Pete thanks for the explanation.
It appears that you mainly look at the futures chart and trade off there. Do you watch the individual components of the indices to get a feel for the tape.
I mainly look at the major stocks and the advance/declines to get a feel for the tape. It has worked really well for me.
For eg: take a look at msft, it started cracking and gave an early warning that the early strength could reverse. And once a major stock cracks, the other ones generally follow and bring down the index.
It appears that you mainly look at the futures chart and trade off there. Do you watch the individual components of the indices to get a feel for the tape.
I mainly look at the major stocks and the advance/declines to get a feel for the tape. It has worked really well for me.
For eg: take a look at msft, it started cracking and gave an early warning that the early strength could reverse. And once a major stock cracks, the other ones generally follow and bring down the index.
Good stuff Tex, I have the adv/dec and ticks underneath and aligned with my 2 min chart, so I can see divergences.
"Hesitation must be overcome by self training. To observe a positive indication and not act upon it is fatal-- more so in closing than in opening a trade. The appearance of a definite indication should be immediately followed by an order. Seconds are often more valuable than minutes. The tape reader is not the captain-- he is but the engineer who controls the machinery. The tape is the pilot and the engineer must obey orders with promptness and precision."
Pete,
Did you happen to read the interview with LBR in recent issue of Active Trader? In it she describes how if she is watching for a trade to set up and for some reason (distraction, etc.) misses her entry, she will still enter the trade even if she has to chase it at the market just to maintain the discipline of taking every setup she sees.
Pete,
Did you happen to read the interview with LBR in recent issue of Active Trader? In it she describes how if she is watching for a trade to set up and for some reason (distraction, etc.) misses her entry, she will still enter the trade even if she has to chase it at the market just to maintain the discipline of taking every setup she sees.
LBR has the money to take sub-par entries as negative reinforcement. I have the opposite problem sometimes, which is settling for a crappy trade setup, being too aggressive.
Well, I have two rules pertaining to missing the boat:
(1) Better never than late-- since in the past I got into a lot of trouble chasing. For me, either i'm on the ball or I don't get in. I always use market orders.
(2) Correct mistakes instantly-- applies to exits not entries. Suppose I am up 5 points, then all of the sudden i'm only up two, or even down two. I look and I see I missed my exit signal. Then I just get out immediately. Usually waiting around would make things worse. Also applies to order entry mistakes-- just get out instantly.
Well, I have two rules pertaining to missing the boat:
(1) Better never than late-- since in the past I got into a lot of trouble chasing. For me, either i'm on the ball or I don't get in. I always use market orders.
(2) Correct mistakes instantly-- applies to exits not entries. Suppose I am up 5 points, then all of the sudden i'm only up two, or even down two. I look and I see I missed my exit signal. Then I just get out immediately. Usually waiting around would make things worse. Also applies to order entry mistakes-- just get out instantly.
...golden...
There's also an issue with stops and defined risk. If one chases, for whatever reason, the defined risk has to be re-defined on the run. Seems to me that the lesson to be learned is not that one ought to chase an entry that was missed because one failed to pay attention but to pay attention the next time (and, in the meantime, to let it go).