Price Action Journal V1.5
- Thread starter TraderKaizen
- Start date
Quote from TXGrillGuy:
Thanks Mccullek. The difference in my trading now versus long before is that I understand where price is in respect to current swing (S/R and retracement/extension levels) and I pull the trigger in the direction of the greater trend. There are 2 types of Risk:Reward that I pay attention:
- # of ticks I'm will to Risk at S/R in order to gain x # of ticks
- In this example, there's a high probability that a 38% retracement will extend 127% to 162% in this particular swing. This sometimes result as an Equal Move of price run (62% to 127% then 100% to 162%) in the continuation. In your chart, draw a L to H trendline (3min interval for this example at the 732.20 low @ 13:06 (Central) to the 737.50 high @ 13:42. Then copy and paste it at the low of 734.20 @ 14:03. (I see you smiling now!)
Even better, Fib Retrace this level and you'll see that the 127% extension of this leg happens to coincide with where I got out (time stop + profit target about to be satisfied). Each of these confirmed a potential price target. Is this coincidence? This is the way that I trade. I manage trades in this fashion. So letting them run and PA stopping me out has become the ultimate game for me. I once took 6, 17 and 31 tick profits. But hitting a full stop loss without fully realizing a profitable price run really tries our patience.
I think it was in Susana's journal that a trader once mentioned how PA tends to move in 3's (descending highs or acsending lows). He's absolutely correct.
Enjoy those steaks! My preference: the Cowboy Ribeye (that's bone-in ribeye for all non-Texans).
Take care,
Tex
Interesting Tex. I've read some stuff on those equal distance moves and you do find that they happen like that rather consistently. I'm actually glad you brought this up, because an old timer taught me something very similar that seems to work well, but I've been concentrating so closely on the PA and where prices are lately, that his technique completely slipped my mind.
What he will do in up trends is take the low of the last swing and draw a trend line from it to the current low pivot that he just took his trade entry from. He then clones that line and drags it to the top of the highest pvot and it projects where the next high pivot should form. It's uncanny how many times it works to the exact tick. When it comes up short, the market is showing weakness. If it over shoots it, the market is showing strength.
I posted an example since it's hard to explain. I took the first example I saw, so I did not search for one that worked out just right. Interesting that it worked out to the exact tick. My charting package allows me to draw a TL and then just drag it around witout it losing it's length or angle, so it's easy to draw it and then drag it to the next pivot.
You simply reverse this process for down trends. I'm going to start using this once again.
mccullek,
Re: Volume
Hoping here to help and not add to the confusion, on the TS platform I use tick volume up dragged over tick volume down, with the markers changed to +'s for clarity. I have heard that tick volume is a decent proxy for actual volume, but am too inexperienced to make that judgement for myself.
A second way to represent it is to drag buy or sell volume over total volume, so you can see it as a ratio.
You can see the "jumps" of buy or sell volume, and which is greater, or so I surmise.
In Elder's "Entries and Exits" Pascal Willain (chapter 15) gives some interesting thoughts on deriving volume without knowing the actual numbers. Food for thought only, as he gives no concrete formulas.
Re: Volume
Hoping here to help and not add to the confusion, on the TS platform I use tick volume up dragged over tick volume down, with the markers changed to +'s for clarity. I have heard that tick volume is a decent proxy for actual volume, but am too inexperienced to make that judgement for myself.
A second way to represent it is to drag buy or sell volume over total volume, so you can see it as a ratio.
You can see the "jumps" of buy or sell volume, and which is greater, or so I surmise.
In Elder's "Entries and Exits" Pascal Willain (chapter 15) gives some interesting thoughts on deriving volume without knowing the actual numbers. Food for thought only, as he gives no concrete formulas.
jack411,
What I think he's talking about is the market's tendency to make three pushes toward the end of a move. Linda Bradford Raschke calls it "Three Little Indians" (in the chapter 'A Picture's Worth a Thousand Words') and I think it may be related to a triple top, at least when the new highs or lows are close to each other.
In the July 2008 issue of Active Trader the article "E-Mini momentum shifts" by Toni Hansen describes the tendency. It's available online (of course for a fee) if you want.
I hope someone will correct me if I'm wrong, but what you'll see sometimes at the end of a (down) move is three somewhat symetrical "pushes" down, with the lows of the pattern sometimes containable with a TL or a channel. By somewhat symetrical I mean in regards to time (each new low is roughly the same number of bars from each other) and length of swing.
This was the only chart I could find to illustrate (from the web). Hopefully someone else will come up with a better, current example.
What I think he's talking about is the market's tendency to make three pushes toward the end of a move. Linda Bradford Raschke calls it "Three Little Indians" (in the chapter 'A Picture's Worth a Thousand Words') and I think it may be related to a triple top, at least when the new highs or lows are close to each other.
In the July 2008 issue of Active Trader the article "E-Mini momentum shifts" by Toni Hansen describes the tendency. It's available online (of course for a fee) if you want.
I hope someone will correct me if I'm wrong, but what you'll see sometimes at the end of a (down) move is three somewhat symetrical "pushes" down, with the lows of the pattern sometimes containable with a TL or a channel. By somewhat symetrical I mean in regards to time (each new low is roughly the same number of bars from each other) and length of swing.
This was the only chart I could find to illustrate (from the web). Hopefully someone else will come up with a better, current example.
Thanks for chiming in Amit!
Jack, here's Amit's posting from Susana's journal:
http://elitetrader.com/vb/showthread.php?s=&postid=2027974#post2027974
Okay, here's my best explanation of the 3's in a downtrend (get ready to be confused; okay j/k):
For instance when a top can not be broken, there's either price consolidation in that region or the beginning of a pullback. If there's a pullback, start the count of the 3's at the retracement of the leg down, another leg down and a pullback, then another leg down and a pullback. At this 3rd pullback price tends to retrace back to "test" recent lows again whether equal, slightly lower or slightly higher lows. If the region is accepted as Support, then the trend has likely changed and then it's more of the same (but opposite) to the upside.
This is the gist of how this works. But the degree of those pullbacks is what's most important. This is why I quickly Fib areas at first sign of a pullback (3-bar, ross hook, whatever). The degree of each pullback is how I manage my trades. Thus, I trade less and sometimes am in for a longer price run.
So for me it's:
PA
Pivot location (or simple horizontal TL)
Fib for R:R analysis
Easy Bake chocolate cake is ready in 15 minutes.
I hope this helps.
Take care,
Tex
Hi Mccullek,
Measured Moves play a big role in my trading. I have to first acknowledge my trade mentor, Jim Harrison, for his role in deprogramming me and then retraining me on how to trade to continue trading another day.
Okay, much of what I learned was old school stuff such as this that's really quite effective. I'd suggest dusting off your old materials because it's also how I measure H&S, DTs/DBs, etc. to confirm Fib retracement and extension levels. The more confirmation the better. (First think about how many people trade: some trade Fib, some trade Pivots, and many other ways. But when these systems all begin to cluster in a particular price range, do you think it "could" become a major decision point as price moves towards it?) It's self-fulfilling if you really think about it.
One thing to note is that after doing this for a while, you'll be able to eyeball where a "H to H" TL would be broken and then tested as support or the % level of a pullback or extension. But it takes seeing this repeatedly before being able to take off the training wheels, so to speak. The same goes for recognition of major Candlestick reversals that help to confirm these potential price levels as S or R.
Take care,
Tex
You are referring to the concept developed by a gentleman J.R. Stevenson (amicably known as "Baldy" by some here at ET, perhaps) 80 yrs old now, he recently published "Precision Trading With Stevenson Price and Time Targets", available at Traders Press, to list one source. I mignt add, the book evolves from some big-league credentials.
mccullek has described above his PTT concept. I've only become acquainted with this recently, but have already seen many effective occurrences, and also found very interesting the interplay of this idea and a very similar acronym found nearby. They are very close first cousins.
Just a bit of FYI ...
Quote from TXGrillGuy:
Thanks for chiming in Amit!
Jack, here's Amit's posting from Susana's journal:
http://elitetrader.com/vb/showthread.php?s=&postid=2027974#post2027974
Okay, here's my best explanation of the 3's in a downtrend (get ready to be confused; okay j/k):
For instance when a top can not be broken, there's either price consolidation in that region or the beginning of a pullback. If there's a pullback, start the count of the 3's at the retracement of the leg down, another leg down and a pullback, then another leg down and a pullback. At this 3rd pullback price tends to retrace back to "test" recent lows again whether equal, slightly lower or slightly higher lows. If the region is accepted as Support, then the trend has likely changed and then it's more of the same (but opposite) to the upside.
This is the gist of how this works. But the degree of those pullbacks is what's most important. This is why I quickly Fib areas at first sign of a pullback (3-bar, ross hook, whatever). The degree of each pullback is how I manage my trades. Thus, I trade less and sometimes am in for a longer price run.
So for me it's:
PA
Pivot location (or simple horizontal TL)
Fib for R:R analysis
Easy Bake chocolate cake is ready in 15 minutes.
I hope this helps.
Take care,
Tex
Ahh ok,
This was also discussed in the AHG thread. I believe Suri's book has a couple patterns based on this (3 rivers and a mountain maybe?) I forget the name.
Thanks for clarifying.
No problem Jack.
Take care,
Tex