Potential NQ Targets

[NoDoji]

This morning, for example, supply had the upper hand, but soon after the open, demand took over and rose 35pts. Several people saw this trade but didn't take it out of fear. But that's a problem that's outside this particular approach. One can't profit from a trade he doesn't take.

Less experienced traders perceive every little pause and pullback as a failed breakout or a reversal. They feel far more comfortable picking what they believe is a price turn (tops and bottoms of moves) hoping to get the "best deal".

The uncomfortable thing to do is to trade in the direction of an existing trend or a breakout into a possible new trend using pullbacks and trailing stop orders that sweep you back in the direction of the established trend or possible new trend (breakout that doesn't fall significantly back inside the break).

My friend Rob send me an article long ago describing how the market rewards that which is difficult. In fact, the level of fear a student trader feels when considering the trade on these setups is very likely indicative of the strength of the move that follows. It would be interesting to do a study of this!

I thought of k p yesterday morning when these setups appeared and hoped he was trading them.

Granted you're not picking tops and bottoms, but it's an elegant setup and easy to develop a very mechanical trading plan around it.

 

[dbphoenix]

While "the level of fear a student trader feels when considering the trade on these setups is very likely indicative of the strength of the move that follows", it may also reflect the lack of a trading plan. I'm puzzled by those who insist on trading without one since doing so is in effect gambling. However, testing the setup and determining the probabilities of its success go a long way toward ameliorating whatever fear one might otherwise feel.

 

[Redneck]

......

There are talkers... then there are traders

OP is long one..., short the other

IMO of course

RN

 

[k p]

I thought of k p yesterday morning when these setups appeared and hoped he was trading them.

And I of course was thinking of you when I marked the trades on my chart because this is after all ND's BOPB 5/1 setup! (the 5/1 is of course the 5 min/1min chart combo).

The short I had a little trouble seeing as I had a much longer 5 min DL marked, two actually at F and G, so I was waiting for these to break. (I also marked in a possible long in case there was a bounce off the line at F, but this of course would never trigger) I thought of this entire hour prior to the open as a hinge, and so the exit from a hinge could also be another good reason to short.

I also see that my data doesn't show the short as clearly as yours, but I have no idea how this could be since we are both with IB and using their data. I will really have to look into this as I know around the open, price starts to move 20 seconds before the opening bar starts to form, so this is really messing things up when looking for the retracements. Your chart has it, and mine doesn't.

The long of course that I have marked at J is picture perfect, and the place to take a long as you also show, and the only reason to not take it I guess is that I'm trying to practice a bit more first. I might have been a bit spooked by the OH, since I do have a possible shorts marked on my chart at both K and L, but I am slowly moving away from anticipating trying to anticipate.

I find it amazing how similar your setup is to SLA, the only difference being is that with your method, the entry after the retracement is taken once a more profound trend line is broken, with an additional filter of waiting for a close above/below the line, as opposed to using trend lines from the 1 minute chart. I was drawing them too tight of course, so this 5/1 addition is a great filter for keeping me out of trouble. Its no surprise that two expert traders, Db and ND, would find very similar entries!

 

[k p]

While "the level of fear a student trader feels when considering the trade on these setups is very likely indicative of the strength of the move that follows", it may also reflect the lack of a trading plan. I'm puzzled by those who insist on trading without one since doing so is in effect gambling. However, testing the setup and determining the probabilities of its success go a long way toward ameliorating whatever fear one might otherwise feel.

As always.. you're bang on again.

1. Lack of a trading plan - When I go through a few months of my own trades, most loses result from wild trades, not anywhere close to where they should be placed. And of the small wins that are there, they are exited for no good reason other than fear, hence those profits couldn't be realized. I have successfully proven to myself that trading without a plan doesn't work!

2. Given my level of fear now, I know that the only way to dig myself out of this hole is to let the elegant beauty of math do its thing. If I have the perseverance to take each trade as it comes, a trade of course that is based on a statistically positive edge, then a series of 10 or 20 trades will absolutely put me in the green. Now its just time to prove this!

 

[NoDoji]

I also see that my data doesn't show the short as clearly as yours, but I have no idea how this could be since we are both with IB and using their data. I will really have to look into this as I know around the open, price starts to move 20 seconds before the opening bar starts to form, so this is really messing things up when looking for the retracements. Your chart has it, and mine doesn't.

And the chart I use to illustrate is probably a little different from, say, the chart generated in IB. But the overall gist of the PA should be good enough to figure out the risk:reward of a trade.

 

[k p]

And the chart I use to illustrate is probably a little different from, say, the chart generated in IB. But the overall gist of the PA should be good enough to figure out the risk:reward of a trade.

Oh good to know, I was assuming this was your live trading data. When I refresh a few hours later my bars look pretty much exactly as the charts you post, but you probably are using updated data as well by the time you get to making your charts for educational purposes.

Love the "bunnies in the clouds!"

 

[NoDoji]

Oh good to know, I was assuming this was your live trading data. When I refresh a few hours later my bars look pretty much exactly as the charts you post, but you probably are using updated data as well by the time you get to making your charts for educational purposes.

Love the "bunnies in the clouds!"

What are you using for real time charts? I use IB charts for my trading.

 

[k p]

What are you using for real time charts? I use IB charts for my trading.

Using the IB data, but I use Multicharts for my platform. Its just such a nice clean look and I love how quickly I can scroll through the charts, compress them, have two open on different monitors. I'm sure many platforms are good enough for us PA traders who just need to see the price bars!

I will investigate on Monday if the charts in IB look the same as in Multicharts as my first step. It seems to me that the reason its off is because of a timing issue. The action starts to move 20 seconds before 06:30.00 rolls around, so then the bars don't "close" when they should. When the data is reloaded a few hours later, then it all matches up much better. I have the time set to use the time of the exchange (Globex), so I see no reason why I could be 20 seconds behind!!!) I am getting real time data I'm sure, its just that the drawing of the bars doesn't start on each minute, exact to the second, as it should. So I just have to figure out if this is an IB issue or a Multicharts issue.

 

[Ghost_of_Blotto]

I thought of k p yesterday morning when these setups appeared and hoped he was trading them.

Granted you're not picking tops and bottoms, but it's an elegant setup and easy to develop a very mechanical trading plan around it.

That is an interesting approach to teaching trading. Tell the student to call "break outs" in the middle of a range using "trend lines". And of course it is "impossible to know" which way the market is likely to break, so you should "just trade what price is doing now".

Now when the student draws his trend lines like attached, and goes long instead of short, your reply will be selected from:
1) he didn't draw his trendline properly
2) his psychology is wrong
3) the loss is OK as some trades don't work but the profit when the trend carries outside the triangle will make up for it

If you invoke answer #3, for extra credit can any of the "apprentices" explain why using a coin flip or other random entry method with a target 2x the stop distance isn't profitable?

Can we get YTD clearing firm statements of an account running this strategy in order to see such useful metrics as net profit per contract traded and ratio of max drawdown to total return? Or are the apprentices expected to invest their time and later their money without any evidence whatsoever that the "method" you are teaching can have positive expectancy?

It is unfortunate to see so many "price action" threads in the journals section which lead the beginner off down the road to nowhere. ET "educators" whether asking for financial compensation or not should be providing evidence of their profitability. Evidence which prospective students can verify with accountants or attorneys. An important question is always how much risk is being taken to achieve the purported returns.

There is far too much fraud in this business. Aspirants who do not get their start with a legitimate trading company are likely to get conned. Those who value their time so poorly as to invest it without engaging in the most basic due diligence are likely not suited for this endeavour.