Price and Volume: Strategy

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As far as developing a strategy. Fine, I'll be the labrat since noone else wants to do in public in this thread.

The strategy I'm developing is fading natural S/R levels. Meaning the ones price action forms. Simple horizontal lines. Incase, of R, when the price approaches and there's two candles closing below it but having shadows above it, basically, i will short. thats it in a nutshell.
 
Going back to your original post, what bar interval are you using for the candle close and how are you defining R? Can you provide a chart example?
 
I agree that closing below R is more important than just penetrating it, but you may also want to consider an extra filter to help avoid being whipped.

Note, for example, that you have a good TL beginning at 1030. Think about using that for your trigger with a stop just above the candle that closed below R. Then look at 20 or 30 charts to see if you might have something.
 
Well in this particular example, it's an ascending triangle that failed to breakout up. anyhow.

I see several problems with this set-up.

1) It takes long time for natural S/R to develop. Sometimes half a day.

2) Many days, especially trend days, the set up never happens, cause the breaks are nice and clean with solid closes below/above S/R.

3) ANyhow, something's amiss. Whether the definition of S/R or the criteria for actual fading.

You know you hear about these "professional who fade S&R with very small stops and achieve very high win %". Hmm... how do they do that?
 
Quote from sunnyskies:



1) It takes long time for natural S/R to develop. Sometimes half a day.

2) Many days, especially trend days, the set up never happens, cause the breaks are nice and clean with solid closes below/above S/R.

3) ANyhow, something's amiss. Whether the definition of S/R or the criteria for actual fading.

You know you hear about these "professional who fade S&R with very small stops and achieve very high win %". Hmm... how do they do that?
More...

1. Depends on how you define S/R and what instrument you're trading. If your instrument works its way or gaps its way into the PDR and just chops around, then, no, you're not going to find a setup unless intraday S/R creates itself. But you don't want to be trading chop anyway with this strategy.

2. That's why you should consider at least one other strategy, e.g., retracements/continuations. That way, if it is a trend day, you're covered. You're not constantly trading counter-trend and getting fucked.

3. Maybe. You'll have to provide examples of S/R and you'll have to test whatever reversal criteria seem to work, both backwards and forwards.

As to what you hear, blah blah. Who cares? All that matters is the reality you find as a result of your own work.
 
"It seems that you have 5 points of S/R within a 7.25 range averaging 1.5pts separating the points. Would that not lead you to justify any entry/exit point within that range? "

DB,
My point is that a trader can include so much "stuff", ie.. S/R levels, pivot points, TL's, and especially indicators, that an entry or exit point can be found at almost any time. As a novice trader (~8 months part-time) I found myself in this dilemma. I realized I was doing no better than at a roulette table or throwing darts to enter/exit a trade.
Since that realization I am very careful on what I include on my charts and my results have improved.
I then realized my results mainly have improved only because of the fewer entries/exit that I am taking and not an understanding of the market itself. My next step in my evolution of a trader is to be able to understand what the market is trying to tell me. The concept of the Price/Volume relationship I feel is key to that understanding. I would like to thank you for the files that you have made available, I have found them to be very helpful. Now I just have to put the pieces together...

martied
 
Quote from martied:



DB,
My point is that a trader can include so much "stuff", ie.. S/R levels, pivot points, TL's, and especially indicators, that an entry or exit point can be found at almost any time.
More...

That's why I don't include pivot points, indicators, or anything else, other than S/R and trendlines. And, of course, the PV interaction.

Today's chart is really no different than any of the other examples I've provided. A hammer at S on strong volume, lighter volume on the test, then a resumption of the trend. Anyone who can't see this is looking at too much, all of which most likely is irrelevant. But unless someone thinks it's important, he isn't going to look for it. And if he doesn't look for it, and hasn't defined it, then he isn't going to see it. And there's not a whole lot I can do about that.

I'm glad you're getting something out of the files, tho. I hope they will continue to be of help.
 
I guess I got this one wrong today in real time although wouldn't of traded it because I don't take new trades between 11:30 and at least 13:30. But.. although the trendline from the 10:05 hi to the 11:05 low was broken it didn't take out the 10:40 swing so I considered it a pullback on a downtrend. Hindsight looks like I was wrong. But with several bozos and the high volume 11:00am bar I wasn't thinking reversal just yet.
 
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