Price Action Journal V1.5
- Thread starter TraderKaizen
- Start date
Mccullek,
Can you please post a pic of a two bar entry? I understand what I'm seeing with a 3 bar entry because the third bar is lower or higher than the second bar and sometimes also the first bar which gives a hint of the direction where price can continue to travel. I don't understand how using only two bars for an entry offers a hint into where price will go. I hope my comments are clear. Thanks for your help.
Floyd Roberts
Can you please post a pic of a two bar entry? I understand what I'm seeing with a 3 bar entry because the third bar is lower or higher than the second bar and sometimes also the first bar which gives a hint of the direction where price can continue to travel. I don't understand how using only two bars for an entry offers a hint into where price will go. I hope my comments are clear. Thanks for your help.
Floyd Roberts
Good trading today traderTX!
As a note, your afternoon long took place as price was pulling back for a 50% (healthy) retracement. See the chart I've attached.
(As a note, I drew a H to L and L to H trendline just to show exactly where you entered within the bigger picture.)
Take care,
Tex
Floyd, on a 2 bar entry, I look for a wick on bar two, the longer the better, then when bar three breaks the low of bar 2, I enter the trade. The high of bar three should be lower than the high of bar 2, as well. Reverse for long entries.
I don't recommend the 2 bar entry and you are correct in that a simple break of bar 2 is not necessarily telling you nearly as much as a 3 bar entry. You need other clues hinting of a turn as well with the entry. There are very few times I would use that entry.
That was also a DT in my book. It wasn't to the exact tick, but there was no close above the last high. Only a couple of ticks inidcated by the wicks there. For all practical purposes, that was a double top. A perfect place to go short. Any time you see a DT or DB at a critical sup/res area or major fib area, and you can trade it with the trend, give it more weight. It's easy to see this stuff after the fact. When you learn to see it in real time, that's when you can make some money.
Quote from mccullek:
That was also a DT in my book. It wasn't to the exact tick, but there was no close above the last high. Only a couple of ticks inidcated by the wicks there. For all practical purposes, that was a double top. A perfect place to go short. Any time you see a DT or DB at a critical sup/res area or major fib area, and you can trade it with the trend, give it more weight. It's easy to see this stuff after the fact. When you learn to see it in real time, that's when you can make some money.
Well said Mccullek.
Take care,
Tex
Quote from TXGrillGuy:
Well said Mccullek.
Take care,
Tex
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.
GrillGuy,
Thanks for the input! I hadn't drawn a fib, but as I pointed out, I should've known better anyway, I went long a mere 8 ticks in front of resistance....the fib level would've supported that resistance level...sometimes I forget to watch all those things...so thanks again for pointing that out.
Also, I agree...trading breakouts, especially in the index futures, is dangerous...too many false breakouts occur...good trading all!
-traderTX
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.
ROFL!!!
My absolute favorite trade is the breakout (or expansion trade). But I too have paid the market dearly for my lessons early on. One or two failed BOs has this way of humbling us if we're willing to see the lesson in it.
The key to successful BO trading is to simply let the market prove itself first (say old resistance becoming new "tested" support) and then trade them. This is somewhat watered down in definition but I know you catch my drift.
I actually recall my absolute worst trade ever. It was a chase of a failed BO on the ER2. I called it early timing and had to have that trade. I totally ignored my trade plan of letting that one slip by (as it was untested). 2 contracts with 19 ticks each on the stop loss to allow room for it to run. I found all the right reasons to not focus on reasoning by letting it pass. I immediately began to "listen" to what my mentor had been teaching me and why. Staying in the game is so important. Live to trade another day!
Take care,
Tex