Son of If You Can Draw a Straight Line . . .

[riaamaan]

Quote from fortydraws:

While I think it should be obvious, I guess I should state that I took this short because of the failure of buyers not only to maintain a higher high as price was pushed to 26.75 during the premkt, but also to then not be able to maintain price above the prior session's 23.25 high for more than a few seconds. My entry was 22.25, and the time, according to my broker, was 9:37:39 on September 19.


EDIT: And DbPhoenix, I apologize in advance if I upset the apple cart by introducing an ES trade here. I am still daytrading the NQ, so don't think I've forgotten your lessons

Welcome back. It's good to hear about your success. Your well on your way to my dream...hey, wait a minute!

 

[dbphoenix]

Quote from fortydraws:
EDIT: And DbPhoenix, I apologize in advance if I upset the apple cart by introducing an ES trade here. I am still daytrading the NQ, so don't think I've forgotten your lessons

No problem. It's always a pleasure to see somebody applying the approach as written . The instrument is of no consequence.

 

[riaamaan]

I wanted to share something and I hope it's OK here. I've been studying, analyzing and working on my method using Wyckoff principles. This chart demonstrates something I've learned and I hope it helps others.

This is from this afternoon. I like to watch the afternoon action when things pick up before the close. Price came down to the 3220 area and made a db on the 1 minute, followed by an aggressive move up with a controlled pullback. I placed an order to go long, got filled 2 minutes later and immediately failed. I stopped after the 1425 bar closed at the bottom of it's range.

Some will say my long setup wasn't valid since the supply line had not been breached, and this is true. I wasn't sure if a 1 min db at what I deemed to be a support area should override that. I took a shot.

Here's what I've learned. When a setup fails, waste no time lamenting it. Often, there's another trade in the direction of the failure. I went short 1430 and held until price started vacillating.

The dots are where the orders were placed. Charts are Central Time.

 

[dbphoenix]

Quote from riaamaan:

Here's what I've learned. When a setup fails, waste no time lamenting it. Often, there's another trade in the direction of the failure.

Exactly (The Dog That Didn't Bark).

 

[macattack]

Quote from wolfpacker:

Gang,

I seldom post here and some of the questions indicate many of you have either not read this thread on the method DB describes or refuse to think for yourself. Both of these issues will be very hazardous to your health if you want to trade..

I do not even trade this method and can see at least 80T on a single contract if my trading was sloppy.. 20T on first trade, 28T on second trade, and 40T+ on third trade...
I have attached the chart again with arrows where possible trades could be taken..

Thanks for some great info Db..

Wolf

Thanks for the chart. I was racking my brain wondering why & how DB went short at 8:58 & how he made so many ticks. It just made no sense to me.

Obviously I misunderstood his post.............didn't realize he made multiple trades. I should have had more coffee today.

By the way thanks for all of the posts DB. It's nice to read something informative on this website.

 

[dbphoenix]

Those who are interested can start with my first trade and, after having read the first five posts in the thread, determine what I did when I did it and where I did it and why. Perhaps if I show people what can be done in a limited session trading only one contract (though certainly not all that can be done) they will at least make an effort to put the approach into practice. As written.

 

[riaamaan]

Here's my thinking in how you might have played it.

I don't know if you played the the range during the first 29 minutes. Doesn't seem like your style. The first short here is the first retrace after the break of support.

The longs look pretty textbook.

 

[fortydraws]

Quote from Gringo:

Lets get back to the range and how the mid and extremes related to comfort or fear. Around the midpoint the buyers and sellers are reasonably comfortable and continue to trade as they perceive the price to be just right. As the price approaches either of the extremes the danger that it might reverse OR break through causes a bit of trepidation for both the buyers and sellers. If the break through is to the upside with price going beyond the previously established extreme the sellers are left hanging. If the break through is to the downside beyond the previously established extreme the buyers are left hanging. It's this fear that causes a reduction in the number of transactions at the extremes and the reasons for the fear are justified. The extreme is the danger point around which the probability of something violent happening is greatest, whereas, the fear is lowest in the middle of the established high or low.

Those who use price action for trading relish this extreme point. It's the place where as Mamis stated, the information risk is greatest while the price risk is lowest. Information risk is greatest because there isn't much information regarding which course of action the price might take. The price risk is lowest because the moment of the crossing of the 'extreme' or established highs or lows tells the traders something, and risk can be minimized by acting on that something. As Db wrote in the above posts, there are only three courses the price can take here. The price can breakout, it can reverse, or it can retrace after the break out. All these three happen around the 'extreme' of the price range, the area where the greatest uncertainty, hence, greatest fear exists.

It's here where most traders fear to tread, lay the seeds of success. It is here where the risk is minimized. It is here at the extreme where a master trader displays his craft by carving out those magical wins so baffling to the uninitiated. It is here where the weak dread to venture. And it is precisely here where a budding trader needs to focus to hone his skill and rise above the morass.

Gringo

Here lay the seeds of success - where most traders fear to trade - at the extreme edge of the danger level where risk is minimized yet the weak are afraid to act.


That pretty much summarizes what the Straight line threads are all about, doesn't it? Great post, Gringo!

 

[dbphoenix]

Quote from riaamaan:

Here's my thinking in how you might have played it.

I don't know if you played the the range during the first 29 minutes. Doesn't seem like your style. The first short here is the first retrace after the break of support.

The longs look pretty textbook.

That's pretty much it. And if you add up the ticks . . .

If you want to do Monday, the number of positive ticks was 167 and the number of negative ticks was 19.

 

[dbphoenix]

Quote from dbphoenix:

As I look over posts here and there from the past several days or so, it appears that there are a number of people who are applying the notion of "midpoint" incorrectly. This is not only likely to confuse them but also those who happen to be following their "journey".

While the use of the term "midpoint" may have been sloppy here and in the Mother Thread, it is meant to apply to the midpoint of a trading range in order to focus attention on where the most volume has occurred. In this way it is different from a mode in that volume need not have anything to do with price (unless every transaction is for only one share or one contract). It is different from a mean in that the highest level of volume may not exactly match with the level equidistant from the high and low of the trading range. "Mean" is more appropriately applied to "mean reversion", which can apply to both diagonal trading ranges (trend channels) and lateral trading ranges.

A 50% retracement of a rally or reaction, however, has nothing to do with any of this, particularly volume. It is simply a general measure of strength or weakness, i.e., price that retraces more than 50% of a reaction shows strength; price that can't shows weakness; price that retraces more than 50% of a rally shows weakness; price that doesn't shows strength.

Therefore, take care to keep mean reversion, trading range midpoints (or "points of control"), and rally/reaction retracements (MAEs) separate. [/B]