Price and Volume: Strategy

[dbphoenix]

Quote from trader416:

DB,
Why would the resistance on your chart not be a zone as well ?

No reason why it couldn't be. I chose to make it a line because every bar subsequent to the first one can't do more than poke past that high. That means there's something important going on there. Or was. And I want it to be obvious to me when I check the display.

"Support", on the other hand, seems squishier to me. Under those circumstances, I'd want to see an indisputable break (which I got, and which turned out to have no FT, which didn't matter to me personally because I don't trade BOs these days).

But these are my choices, not rules for everybody, much less principles. Others will have different rules. In any case, one has to be definite about what he's looking for. Otherwise, he'll never be able to see it when it presents itself.

 

[dbphoenix]

Things to think about regarding coils:

1. Recognize them as quickly as possible.

2. The lowest-risk, highest-probability trades within a coil are taken at the boundaries.

3. By the time you've recognized the coil, the profit ops become less due to the nature of the coil.

4. Ask yourself, then, whether this is something you really want to screw around with or whether you'd rather wait for the coil to resolve itself.

 

[sulong]

Quote from dbphoenix:

Things to think about regarding coils:

1. Recognize them as quickly as possible.

2. The lowest-risk, highest-probability trades within a coil are taken at the boundaries.

3. By the time you've recognized the coil, the profit ops become less due to the nature of the coil.

I would say that #3 is true for pretty much all possible entry patterns. The more you're sure of your analysts, the closer to the next S/R zone the price is.

If the boundary's of something, are good for entry's, then they are also good for exits.

The further away the price moves from ones entry, the less chance price has, to continue. (assuming that the trade is profitable and entered correctly)

These are just some of my own observations.

 

[dbphoenix]

Quote from sulong:

I would say that #3 is true for pretty much all possible entry patterns. The more you're sure of your analysts, the closer to the next S/R zone the price is.

If the boundary's of something, are good for entry's, then they are also good for exits.

The further away the price moves from ones entry, the less chance price has, to continue. (assuming that the trade is profitable and entered correctly)

Depends on what you mean by "entry pattern". Basic S/R should be determined before the market opens. More minor S/R can generally be determined long before one will need to use it. If you're playing TL breaks, far fewer people are going to be looking at what you're looking at, and since you'll be looking to take the break at S/R, you'll be as far away from the opposite S/R level as possible when you enter.

If you're playing a standard pattern, of course, complete with price targets, then you have all the attendant problems.

As to your second point, you'll generally want to exit one trade before taking a trade in the opposite direction, but using the boundary to exit without taking PV into account simply cuts profits short.

 

[mdl060374]

Quote from dbphoenix:

Things to think about regarding coils:

1. Recognize them as quickly as possible.

2. The lowest-risk, highest-probability trades within a coil are taken at the boundaries.

3. By the time you've recognized the coil, the profit ops become less due to the nature of the coil.

4. Ask yourself, then, whether this is something you really want to screw around with or whether you'd rather wait for the coil to resolve itself.

so you are basically not trading the Break out/down of the coil, but trading "inside" the upport and resistance, playing off the pattern formation (as it is in the process of forming and narrowing?)

 

[dbphoenix]

Quote from mdl060374:

so you are basically not trading the Break out/down of the coil, but trading "inside" the upport and resistance, playing off the pattern formation (as it is in the process of forming and narrowing?)

You can, but you may end up scalping when you had no intention of doing so. OTOH, you can try playing the BO as long as you understand that these patterns have definite targets, and the price is often faded when these targets are reached. But, like today, not always.

Why? For that you have to look at the context.

First, there was some distribution last week which lessens the supply.

Second, this morning's "gap" was up into the PDR but also above all that congestion around 1465 from Friday. This after a day which closed near its low creates a certain tension amongst those who are short.

Third, the volume pattern accompanying the price inside the coil suggested less selling interest than buying interest.

The problem, of course, is that we are so close to R, and having a bias to the shortside is understandable. My point is that trading the pattern is too often a loser's game. Look instead at where it's forming and why and what the PV relationships are within it. After all, a lot of these go nowhere except sideways.

You can also elect to ignore the coil entirely and look at it as a higher low, which in this case occurred before the lower high. Unless you were using a very tight stop, you'd still be in after the following higher low and be in place for the BO.

 

[rognvald]

Another follower, collector and hopefuily eventually a disseminator of your work who is appreciative and trys to work hard at understanding.

Your posts are models of focus and clarity

 

[dbphoenix]

Quote from rognvald:

and trys to work hard at understanding.

It shouldn't be that hard.

Perhaps it's time to narrow the focus of all this to basic principles. I assume most of those who are interested in this thread have read the other one and have read at least the "core" files at the Yahoo site.

So back away from the forest and make a literal list, pencil and paper, of basic principles, basic rules, not of strategy or tactics, but of demand/supply, price/volume, support/resistance (and, if you like, accumulation/distribution) and share it here. If you're not clear on the basics, which are relatively few, it's going to be next to impossible to create a strategy, much less the tactics to go with it.

 

[dbphoenix]

Once you learn to read the market, you find there are limitless opportunities to make money. But, as I'm sure you already know, there can also be a huge gap between what you understand about the markets, and your ability to transform that knowledge into consistent profits or a steadily rising equity curve.

Think about the number of times you've looked at a price chart and said to yourself, "Hmmm, it looks like the market is going up (or down, as the case may be)," and what you thought was going to happen actually happened. But you did nothing except watch the market move while you anguished over all the money you could have made.

There's a big difference between predicting that something will happen in the market (and thinking about all the money you could have made) and the reality of actually getting into and out of trades. I call this difference, and others like it, a "psychological gap" that can make trading one of the most difficult endeavors you could choose to undertake and certainly one of the most mysterious to master.

-- Mark Douglas

[Note: it is remarkable how that "psychological gap" is narrowed to the degree that one has prepared to trade.]

 

[porgie]

Greed, Fear, Ego, Crutches {blame someone or something else}.

here's hoping this trader is at least past the halfway point of working through the worst of that....knowing it will never be eliminated completely...

Starting to look closely at longer time frames as day progresses....using 15 minute chart for trading.....longer term meaning 30 minute chart...intraday trading the Emini S & P....5 point targets but, will ride run if breakeven stop is set ...is reward/risk ratio of 2-1 putting me at risk for success. Or, does that all depend on % wins...

If this is a no-no post, please excuse.... Thank You