By the way, the green and red lines are the High and Low of the day. The blue lines are the ones I placed on my charts this morning. They were basically identical yesterday. Don't always expect perfection on these bounces, but they will often times bounce to the very tick. Just be prepared that something might happen very close to these lines, although it might be a few ticks to either side of it.
Price Action Journal V1.5
- Thread starter TraderKaizen
- Start date
By the way, the green and red lines are the High and Low of the day. The blue lines are the ones I placed on my charts this morning. They were basically identical yesterday. Don't always expect perfection on these bounces, but they will often times bounce to the very tick. Just be prepared that something might happen very close to these lines, although it might be a few ticks to either side of it.
Quote from mccullek:
One other thought on this. Imagine how all those traders that trade the break outs felt when they took this trade at the exact high? That's why you can't be successful trading break outs. No telling how many amatuers got sucked in at the high here, and to the very tick, then watched in horror as their account equity just evaporated. All the while, the smart traders were smiling all the way down.
This probably isn't the best example of that happening, but I'd be willing to bet that a lot of traders entered there and lost money. I used to be one of them... but not any longer.
I totally agree about the break out thing.
Bad thing is there is so much voodoo trash books out there that you don't know it is garbage until you lose a lot of money.
Pros have a field day fading breakouts. Breakouts work
just enough, however, to keep the suckers coming back
for more. Kind of like a casino. You have to let the gamblers
win some time. Otherwise, they won't come back.
We had a small pull back to test the former resistance line after breaking through. Prices immediately bounced off that line, so it was acting as support now and the move off of it was pretty strong, so you knew momentum was strong. If you would have used a 3 bar entry there, you would have gotten a large part of that big move up.
Normally I don't like trades near the high or low of the day like that, but this move was strong, so it was worth the risk I think. Looking at it after the fact, no doubt about it. It's seeing the momentum, knowing where the S/R was and then watching how PA reacted in real time that makes the difference. That only comes from experience in watching charts.
Normally I don't like trades near the high or low of the day like that, but this move was strong, so it was worth the risk I think. Looking at it after the fact, no doubt about it. It's seeing the momentum, knowing where the S/R was and then watching how PA reacted in real time that makes the difference. That only comes from experience in watching charts.
Just a quick note, so far I have on my list , 5 different entry techniques for getting in on a pullback/retracement to enter a trend. One is the 3br with a 50% entry on the third bar after the break of the third bar, the other the 2br method with an entry on a break fo the 2 br. The other three techniques are based on the 2 min chart . I'll be posting some examples as they show up.
Thanks Mccullek for showing me the first two methods.
After the entry method is defined , gauging the retracement/pullback, to make sure its is not a reversal is a key componenet of reading the price action. I feel that with the the power, speed, enthusiams of the the buyers/sellers sais a lot about the continuation or reversal of the trend on those retra/pullbacks. and the same goes for the continuation move, but i think more so on the pullback/retracement. That has been my eperience.
So basically I am thinking, its best to 1. go with the trend 2.wait for a pullback/retracemtn to get on. 3. Make sure the sppeed, power, enthusiasm of the pullback/retracement is not that of a reversal. 4. Use one of the entry techniques to get on board and use proper money management (different topic).
For reversals, I beleive that its best to wait for a proven change of trend to occurr. ( I'll type my thoughts on this later) for now just want to be thinking about going with the trend. But the DB/DT scenario Mccullek talked of earlier seems to be a good way to get on that reversal.
These are just my thoughts and summary of what i have been reading here and other threads on PA Anek's and Stealths comments.
Also I forgot to mention that the s/r level where those pullbacks/retracements violate or dont violate also gives a clue of the continuation or reversal of the trend.
Max
Thanks Mccullek for showing me the first two methods.
After the entry method is defined , gauging the retracement/pullback, to make sure its is not a reversal is a key componenet of reading the price action. I feel that with the the power, speed, enthusiams of the the buyers/sellers sais a lot about the continuation or reversal of the trend on those retra/pullbacks. and the same goes for the continuation move, but i think more so on the pullback/retracement. That has been my eperience.
So basically I am thinking, its best to 1. go with the trend 2.wait for a pullback/retracemtn to get on. 3. Make sure the sppeed, power, enthusiasm of the pullback/retracement is not that of a reversal. 4. Use one of the entry techniques to get on board and use proper money management (different topic).
For reversals, I beleive that its best to wait for a proven change of trend to occurr. ( I'll type my thoughts on this later) for now just want to be thinking about going with the trend. But the DB/DT scenario Mccullek talked of earlier seems to be a good way to get on that reversal.
These are just my thoughts and summary of what i have been reading here and other threads on PA Anek's and Stealths comments.
Also I forgot to mention that the s/r level where those pullbacks/retracements violate or dont violate also gives a clue of the continuation or reversal of the trend.
Max
Thanks McCullek. When I get home from work I'll definitely check out the entry closer when I get home.
I think I understand S/R and learning to understand real time PA. However, could you elaborate a few words on the momentum?
I see that the last couple of days have been trending within the 1265-1275 range. So a breakout out of the Resistance is very meaningful. Is that what you meant by momentum?
Thanks
JW
That's about how I see it as well Max. Something else I am experimenting with is watching the DOM orders. I trade from the charts, so I've never watched the DOM until the past two weeks. What I'm looking for is the size of the orders and whether or not they are hitting the bid or ask. If there is a pull back in a down trend, and prices start stalling and you suddenly start seeing big orders hit the bid such as 50, 100 and if larger, then even more telling. You know the big guys are jumping in short and/or covering longs, and that's a hint of where price might be going by following those orders. If you have time and sales, then even better. Unfortunately, AMP doesn't offer time and sales, although they say they are coming soon.
I think it's helpful, but I'm not ready to comment yet on how well it's helping. If others can share more, or if you want to experiment with it and report back, it might help us all. On one of my short trades today, I saw a couple of orders hit the bid and one was around 250 cars and another around 350 right afterwards. Those were the biggest orders I have seen/noticed to date. Needless to say, it was a good trade, so at first glance, I'll say that it might have some real merit.
JFW, by momentum, I am basically talking about strength. The fact that prices broke through the resistance area a second time today, along with the fact that the third bar that we use for the 3 bar entry was very long and prices actually closed at the top of the bar (no wick at all). Also notice that the three bars that started the up trend all had HLs and wicks on the bottom.
This brings up another thought for Max who is looking for entry techniques. Another good one to look for is three higher lows, then when prices on the 4th bar break the high of the 3rd bar with the 3rd higher low, enter the trade. You would reverse for taking shorts. You can try placing your order 50% back on bar 3 as with the 3 bar entry, but the rules I learned on it were to just go long or short on the break.
Only use this trading technique on pull backs trading with the trend though. I use it as confirmation of my 3 bar entry a lot. When I see both set ups working together, I feel more confident in the trade. Most trends start off of a break out of 3 higher lows.
Taking the break out of bar 3 would cure some of the missed trades from the 3 bar entry, but you wouldn't get as good an entry I guess. Something more to ponder.
A note about the days end. I see it as a 1-2-3 top and the break of a trend line. The trend line was broken from a lower high on the 10,000 v chart. i remember reading about this in Anek's thread. A break of a trend line after a lower high. This would make me think trend reversal. It is end of day, but I thought it was worth to mention the observation. here is a pic.
max
max