Simulated Combine - NQ I

[NoDoji]

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An uptrend is NOT confirmed during that black arrow move. That's simply a 2-leg pullback to a previous support level in a well-defined downtrend (lower lows and lower highs). If you believe in any way, shape, or form that the price action surrounding that black arrow is a trend reversal signal, you will consistently leave the more profitable opportunities behind and may end up break even or net unprofitable in the long run. Only superb scalpers can make a consistent living off that sort of trading.

Al Brooks makes it very clear that the visual counter-trend signals on the 1-min chart are setups for excellent with-trend entries. Even trend reversal signals on a 5-min chart in a very strong trend are perfect with-trend continuation entries as counter-trend traders get trapped over and over again and by the time they finally get positioned for a deeper pullback or a real reversal, they're so damaged they can't even hold beyond the "Thank God I'm back to even again" price.

 

[dbphoenix]

This is an excellent example of too much focus on the trees and not enough on the forest. As Donna says, there's nothing here to suggest an uptrend, much less confirm one. If there's any lingering doubt, note that price can't get past the 0845 swing low. This swing high therefore provides the first opportunity for drawing a SL, if you really need one.

Remember that the lines are there only to help you stay on track. They are not the focus. They aren't even necessary unless you're so paralyzed with fear that you can't act without them.

 

[lajax]

So at what level can the trader postulate that traders are finished ranging and are ready to begin trending?

IMO I would think that the traders are ready to begin trending where the black dot is located. Because before the ret is done the price shows ease of movement to the downside.

But regarding to the HL (black arrow) at an interest zone such as the PDL, would it not be a good entry for a long?

BTW: thanks for your opinion regarding to this day (NoDoji and db)

 

[dbphoenix]

See my previous post and think about the purpose of ranging. Then take note of the 1005 (0905) bar. Would traders spend over a day focused on 29 then be satisfied with only a 5pt drop? If you had taken the 1005 bar, would it be worth exiting that short to go long where you want to, particularly since the PDL had already been broken before the open and is broken again where you have your arrows? Look at the same timeframe using a 5m bar. Do you still see a long op?

 

[dbphoenix]

If this is in response to my question, there is no beginning other than what's in your own mind. To start at the beginning of the trading session is like watching a play beginning with Act 3.

The trading session must be approached. And one of the first questions to ask is whether price is trending or ranging. If you want to draw an analogy to hunting, one must first spend at least a moment observing the animal's behavior before blasting away, and if and when one does fire, the results obtained by using the sight are generally better than firing from the hip.

The entire day Thursday was spent in a hinge. This hinge had an apex of 29.

The midpoint of the swing from the ON at 45 to the low at 14 was 29.

The midpoint of the swing from 14 to the pre-open high at 43 was 29.

Price then swings from 43 to 25, with a midpoint of 34.

All of this takes place well before the open.

During the first 15m of the session, price forms another hinge with an apex of 34.

Price falls out of this then rallies to the apex at 34.

Price then makes a lower high, creating another hinge. But whether one focuses on this new hinge or the trendline beginning at 0946, price drops out of all this at 29.

So at what level can the trader postulate that traders are finished ranging and are ready to begin trending?

(and none of this requires lines)

As the post quoted above appears to be unclear and as trading will begin again in a few hours, I'm going to illustrate at least some of the above so that you might better understand what I was looking at.

The following is a broader view. As you can see, Thursday's high never reaches the last daily high. This suggests weakness. Nor does the ON range reach Thursday's high. This also suggests weakness. Price then drops below Thursday's low. Weakness.

Thursday spends most of its day forming a hinge with an apex of 29:

The opening high on Friday does not reach the ON high which in turn does not reach Thursday's high which in turn does not reach the last daily high. Weakness. In the meantime, traders explore the area 15pts above this mean to 44. They then explore the area 15pts below this mean, to 14. After which they settle into another hinge. Mean reversion.

The apex of Friday's hinge is a little higher, but once it's formed, price drops below the low of the hinge, i.e., the OL. Weakness. It then appears to show strength, returning to the hinge. But price keeps failing at its apex and dropping back to or toward 29. Weakness. Price then drops rapidly through 30/29 and stops at the last swing low -- which is already below the OL -- for three minutes before dropping below it. Weakness. When price tries to rally, it can't even reach the level of the last swing low, much less retrace half the downmove, which could by then be measured.

A long never even crossed my mind. At least not until we reached the halfway level of the move from Tuesday's low to Wednesday's high: 4502 (price reversed at 4498).

The upcoming session on any given day must be approached. That's what the dailies and the hourlies are all about. If one skips past them, he has no compass, no tether.

Is all of this hindsight? By the time the session begins, of course it is. That's what preparation is, studying what has happened up to the point where the trading session begins, just as an actor prepares the backstory of his character before he walks onstage (or at least the best ones do). Without it, the trader has no context within which to make choices, which means that the odds of his making the wrong ones are pretty much 50/50.

Behavior. Always behavior.

What are they doing?

Why are they doing it?

Why are they doing it where they're doing it?

What do they want to accomplish? Where are their efforts failing?

Where are they going? Why? How fast? How far might they go?

I take the making of these charcoal layouts very seriously. Too many novices wait until they are on the canvas before trying to solve many of their problems.
--Norman Rockwell

Chance favors the informed mind.
-- Louis Pasteur

I've been at this for a week or so and I haven't made a cent.
-- Message Board Post

 

[NoDoji]

But regarding to the HL (black arrow) at an interest zone such as the PDL, would it not be a good entry for a long?

The PDL did not hold. If you bought the PDL directly, you'd be out break even when the 2-leg pullback stopped at support and turned back down through the PDL, giving the second mice shorts a clean entry on the break and the anticipatory longs a chance to scratch and reverse.

 

[lajax]

Db thank you so much for your analysis really appreciate it, I will try to follow your thought process (“Approach”), also try to keep updating post to the forum; so far I am doing a new simulated combine in forward testing and other one in Sim trading, the results will be posted soon.

Once again thank you so much to Db and for all the people who have participated in this thread

 

[dbphoenix]

so far I am doing a new simulated combine in forward testing and other one in Sim trading

What is it exactly that you will be forwardtesting?

 

[lajax]

I will be testing the combine of 10k in order to trade with only one contract, and gather more assertive information, but parallel I´ve been working in the questions that you posted previously also studying the Gamera´s post in BM.

 

[dbphoenix]

I will be testing the combine of 10k in order to trade with only one contract, and gather more assertive information, but parallel I´ve been working in the questions that you posted previously also studying the Gamera´s post in BM.

"Testing the combine" is a mistake.

There is/was a substantial difference between the forwardtesting you did before you started the "combine" and the results of your simtrading. Continuing to simtrade without first determining what caused this difference will be pointless. You may as well not have done any backtesting or forwardtesting at all.

You already have far more data than you need, but you haven't done any analysis of it, particularly with regard to the questions I asked here. These at least should be addressed before moving on, and I say "at least" because there are more.

I haven't posted much to your journals because I wanted to give you plenty of room to make your own discoveries and use those to modify your preliminary trading plan. However, if you insist on moving forward without doing the necessary analysis, you should at least examine or re-examine what you're doing with regard to determining and using context. You spend time and effort reviewing the daily and hourly and 5m, then appear to ignore all of it once the trading session begins, particularly with regard to trading inside ranges. This results in a great deal of overtrading, a lot of stopouts, many small losses, many small gains. I assume that none of this is part of your goals and objectives. Therefore, I suggest that you examine at least this before moving on.