SLAAMT Exercise

[BonScott]

Maybe don't enter a trade where the LSL or LSH, or whatever stop you think is reasonable, is too far away from the entry point.

Just as an aside, when I traded stocks, I would have the same amount risked on each trade. So if a reasonable stop was further away, I would have to buy less stock to get the same risk.
In this case if your sensible stop limit was 1 pt away you could trade 4 contracts, but if 2pts away then only trade 2 contracts.
It might not be the way to do futures, but might make people more comfortable with the risks.

 

[niko]

I realize I'm not in chat and involved with this but once I'm in a trade with a profit I use the latest swing high or low as my point to get out, my problem is when that point comes before I have a profit! Sorry to butt in niko

Go ahead and participate, that is an Idea most of us have applied, and as you say the problem comes when it is hit .

 

[green.green]

Here is the move down this morning. Assuming we entered at 3490 then I have circled potential areas to get out. In the first circle we have a spike bar that breaks our SL but leaves the previous swing intact. The second bar goes a little higher before removing most of the first bar's gain and closing weak. (REJ)

Personally I think exiting is warranted here. It is early in the move and although things look bearish with the DL break, inability to rally much above the morning's range and LL/LH it is entirely possible that it goes up and tests or even exceeds the high. However - the next bar says get back in. We should be in somewhere around 86 and assuming we don't exit on a twitch the next scary bar is in the next circle.

Here we have a big down bar followed but a big up bar. Initially this looks like a rejection of a level although there really isn't anything to the left (as I recall). The next three bars continue to overlap and should incline us to stay in. Looking to the left we see we are testing the underside of the level at 71 formed by the breakout of the range. Nothing but monsters under the bed and down we go.

The next scary bar is in the next circle. Still no follow through on the next bar and the bar after that seems to reject 62-63 and down we go. We have another "scary" bar that threatens the (tightened) SL. The following bar breaks the SL. If we exit here it isn't because of price action but the combo of the SL break and a scary bar with some follow-through. This seems reasonable as long as one realizes that the trend is still down and we should be looking to either wait for more confirmation of a change in behavior or wait to get back on. A few bars later there is an opportunity to get short which would have been filled and stopped. We then get a spike up that barely exceeds the last swing low, followed by a small no continuation bar.

Here we are still well beneath the 50% line, well under our non-tightened SL and have potentially a structural stop to lean on. If we are paying attention we can get back in around 58. If we aren't that aggressive we get in after a LL and LH form. Depending on our stop we might get stopped out on this entry but the bar that stops us also closes weak and the next bar closes lower after failing to make any upward progress. If we take this entry we are in a round 50 and don't have to think about much until we hit 30.

 

[k p]

Here is the move down this morning. Assuming we entered at 3490 then I have circled potential areas to get out. In the first circle we have a spike bar that breaks our SL but leaves the previous swing intact. The second bar goes a little higher before removing most of the first bar's gain and closing weak. (REJ)

Personally I think exiting is warranted here. It is early in the move and although things look bearish with the DL break, inability to rally much above the morning's range and LL/LH it is entirely possible that it goes up and tests or even exceeds the high. However - the next bar says get back in. We should be in somewhere around 86 and assuming we don't exit on a twitch the next scary bar is in the next circle.

Yes, I completely agree. The first entry would get stopped out, the upmove that breaks the SL is too much. So the entry off A is scratched.

I'm not sure if I can re-enter at 86 again. It just looks like it will amount to a double bottom with the area just before B. In real time, it doesn't look good, and I think many of us were expecting a long anyway, weren't we? I'm not say we should expect, but just to get to the mean of the channel was possible, and the action from overnight was positive. So in my chart, at B I would find it difficult to short. A REJ here is just as likely as the move up. When we call areas where price is rejected, I think we only can confirm this a couple of minutes later. So if price came to 86 and bounced out, we would be calling this a double of triple bottom.

Then we do go lower, to C, and we do get stopped in, but price will move against us over 2 points before dropping lower. So you gotta have a plan that calls for price moving against you over 2 points. These RETs are easier to deal with if you are already in the trade and many points ahead, but as an initial entry, 2 points against you seems hard to hold, but that's just me.

 

[niko]

Is the SLA about lines or it is about supply and demand?

The scratch is all about acting when the trade isn't going as expected. It is intended to defuse hope. At what point does the trader determine that the trade isn't going as expected?

Given that the SLA aims to ride the trend the first expectation must be the ability to make a HH or LL and confirm the trend, if that is not achieved then there is no reason to stay in the trade. Now, one has to characterize the market in order to see how it moves and don't freak out when it goes against you 5 ticks when it is supposed to do that.

 

[green.green]

Yes, I completely agree. The first entry would get stopped out, the upmove that breaks the SL is too much. So the entry off A is scratched.

I'm not sure if I can re-enter at 86 again. It just looks like it will amount to a double bottom with the area just before B. In real time, it doesn't look good, and I think many of us were expecting a long anyway, weren't we? I'm not say we should expect, but just to get to the mean of the channel was possible, and the action from overnight was positive. So in my chart, at B I would find it difficult to short. A REJ here is just as likely as the move up. When we call areas where price is rejected, I think we only can confirm this a couple of minutes later. So if price came to 86 and bounced out, we would be calling this a double of triple bottom.

Then we do go lower, to C, and we do get stopped in, but price will move against us over 2 points before dropping lower. So you gotta have a plan that calls for price moving against you over 2 points. These RETs are easier to deal with if you are already in the trade and many points ahead, but as an initial entry, 2 points against you seems hard to hold, but that's just me.

What I saw this morning was a range -> fakeout breakout -> small leg up with tons of back-filling and a rejection of Friday's high. We then have our DL break, a LH and a LL. We also had a big overnight move up behind us. All of this indicates weakness to me.

The move stalls a little at 85 and moves sideways before getting the stop out bar. We break a SL but what is that SL worth at this point? Its just a random line. I would not be looking for a long here. We could have continued up but I wouldn't have expected much follow through to the upside if any.

The rejection is significant because there were a lot of buyers who were probably looking for pullback longs right here. They just got hurt and are cluing in. No swing was taken out. If we are trying to get in a little later then you have to recognize the soup you are heading into and allow price enough room. The 10:05 bar never gets challenged so an entry under there would have worked. If you missed that one an entry under 10:08 would have worked as well. If you put your entries too far from the low of the highest bar then your stop needs to be structural (above a swing).

I think the red boxes show every entry bar?

 

[k p]

I think you missed one entry bar, between the first and third, but yes, stops to go short under all of those do work well, especially below that 10:08 bar, that was the lowest risk one, not that we would know it at the time though.

I understand your rationale as well, I'm just not able to think about all this at the time. I'm horrible at talking myself out of trades though specifically with thinking too much. We clearly need to give price some room. I'm just biased today because I tried twice and lost out on both tries to go short, but this was the trade of the day obviously. Just need a bit more practice, but there is nothing wrong with this assessment at all.

 

[green.green]

I think you missed one entry bar, between the first and third, but yes, stops to go short under all of those do work well, especially below that 10:08 bar, that was the lowest risk one, not that we would know it at the time though.

I understand your rationale as well, I'm just not able to think about all this at the time. I'm horrible at talking myself out of trades though specifically with thinking too much. We clearly need to give price some room. I'm just biased today because I tried twice and lost out on both tries to go short, but this was the trade of the day obviously. Just need a bit more practice, but there is nothing wrong with this assessment at all.

Next time you say "I'm waiting for price to clear X level" I'm going to hold you to it

Also - we never made a swing high so we can't look for longs so even following mechanical SLA it just means fan the SL line and take the next entry. That should get you in at 10:06 and quickly have you forgetting your two scratches in less than 10 minutes. In an hour you are thinking about where to take the wife (or whomever) for dinner to celebrate.

 

[k p]

Next time you say "I'm waiting for price to clear X level" I'm going to hold you to it

Also - we never made a swing high so we can't look for longs so even following mechanical SLA it just means fan the SL line and take the next entry. That should get you in at 10:06 and quickly have you forgetting your two scratches in less than 10 minutes. In an hour you are thinking about where to take the wife (or whomever) for dinner to celebrate.

I do have to learn to just take the trade.. waiting gets me a worse price and more problems! As to the second comment... doesn't that sound lovely!

 

[eminiman414]

I should also mention that it is very likely that the easy part is over. Not a guarantee, just a caution. GOOGL and AMZN have had dramatic corrections. The NQ hasn't done too badly itself. Will it continue to fall to the LL of the next-older TC? Probably. Will it be as rapid? Unlikely, since it is no longer overbought. But opportunities will arise. You just have to know where to look for them and what to do with them when you find them.

Those large moves down we have seen essentially were because there was a lot to sell due to the fact we were "overbought." I didn't make any trades until the test of the mean then I started to enter. Took the first short but did not re-enter as I've been working on that. Since I missed the entry there I waited for the other end of the range to break and took the first retracement from there. While I missed a chunk of the move I haven't been comfortable/figured out re-entry criteria so I waited. I took that short since the mean was tested and moved down past the other end of the range. Took the first retracement with the expectation of moving to the lower TC line. The posts in the ghost thread were fantastic as well. I think waiting for certain prices could also be an addition to the criteria instead of just SLAing away. Had I had some sort of re-entry criteria it would have been great (CWS). All the trades prior to the mean being tested I passed on.