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

[dbphoenix]

At this point, there's no value in continuing since participants know that price has made a higher high and sailed off from there, so any judgements about what to do in the meantime would be contaminated.

So I'll say here that if one had exited his short as suggested above, he could have re-entered two minutes later. Here he would have been able to draw what he might consider to be a better supply line and stay in when price came back to his entry price at 1043. But even if he exited again, he'd have another short op three minutes after that. This would be exited at the break of a fanned supply line, at a profit.

If You Can Draw A Straight Line . . .

 

[niko]

Well, I guess the way to go was not the way of the fearful.

 

[dbphoenix]

Quote from niko:

Ok, asuming he stayed in, the trade would have been exited around 10:56 with about 5 points of profit.

Then after the break of SL and a HL he could have entered again in the long side, there are 2 alternatives after that.

1. He exits at the break of DL that would have happened at 11:10,
2. He waits for the 50% level to be taken out, it is just poked, so the trade would still be open

But lets think he is fearful enough to close at 11:10, the DL is broken and no HH so a short will be the way to go at 11:17, it would have been closed with a small loss.

Then a HL comes after the break of SL so a long at 9.25 at 11:23.

I see no way of getting back in the long side before the break of LSH at 12 after the break of the DL at 11:29.

All correct. The break of the last demand line is followed in minutes by a break of the subsequent supply line which is hardly a line at all but which offers no shorting ops in any case. After that, you have a higher swing high and a retracement at 1133 with a long entry at 1134.

 

[dbphoenix]

Quote from niko:

Well, I guess the way to go was not the way of the fearful.

In hindsight, but though one can learn from hindsight, he can't trade hindsight. In real time, the losses taken are miniscule compared to the profits made in the first upmove. And as long as one stays with it and follows supply and demand, he is in a position to profit from the subsequent continuation.

Distinguishing all this from chop in real time is not difficult. For one thing, whatever losses there might be are tiny. For another, you have considerable variation in swing highs and lows. Contrast this with a loss on the long side followed by a loss on the short side accompanied by a lower high and a higher low.

 

[Huyang]

Quote from niko:

Assuming the risk is a point, the entry would have been at 11.50 so the fearful would be out at the upmove at 11:36

Niko:

long at 11.50? if long, then why get out at 12.5 at 11:36?
if short at 11.50, why short at 11.50? because the rule is to short 1ps lower than some bar low if i understand correctly. 11.5 is not 1ps below any bar low nearby. thanks a lot.

 

[dbphoenix]

Quote from Huyang:

Niko:

long at 11.50? if long, then why get out at 12.5 at 11:36?
if short at 11.50, why short at 11.50? because the rule is to short 1ps lower than some bar low if i understand correctly. 11.5 is not 1ps below any bar low nearby. thanks a lot.

There is no "rule". Go back to the beginning of today's entries and start again.

 

[niko]

Quote from dbphoenix:

All correct. The break of the last demand line is followed in minutes by a break of the subsequent supply line which is hardly a line at all but which offers no shorting ops in any case. After that, you have a higher swing high and a retracement at 1133 with a long entry at 1134.

Thanks, I have three doubts after today´s exercise:

1. At the open I remembered what you always tell me about my propensity to trade into the chop, and was looking at the TR from 7:00 to 8:00.. Why is this not really the same thing that I usually do? Is it because of what happened between 8 and the open?

2. I did not see the move from 10:07 to 10:13 as worthy of a SL (my mistake), my reading was that the DL from the open was broken at 10:12 and then the next upswing was the next leg of what would become the LH. I mean in my head the gray lines where the ones I was paying attention to. while the ones we discussed in the morning where the purple ones. What am I missing here?

3. Using the same logic of the purple lines, would the green line be valid to aim for a long at 6.25 around 10:54?

 

[dbphoenix]

Quote from niko:

Thanks, I have three doubts after today´s exercise:

1. At the open I remembered what you always tell me about my propensity to trade into the chop, and was looking at the TR from 7:00 to 8:00.. Why is this not really the same thing that I usually do? Is it because of what happened between 8 and the open?

Yes. If you begin with the 1pt "trading range", you'll see a consistency to the upper and lower limits. At some point, as they always do, this begins to loosen up as traders look for better trades than they're finding in this relatively useless trading range. This is what auction market theory is all about.

They're able to find trades all the way down to 92, which then dries up. They then move up to a higher swing high and eventually back to that trading range, but they're been there, done that. They then start looking again, making a lower swing low that is also higher than the swing low at 0830.

None of which has any particular significance. What matters is that trading is and has been loosening up, as if it's been constipated. And now that's it's begun loosening up, the conditions are present for a "release" (so to speak).

Quote from niko:

2. I did not see the move from 10:07 to 10:13 as worthy of a SL (my mistake), my reading was that the DL from the open was broken at 10:12 and then the next upswing was the next leg of what would become the LH. I mean in my head the gray lines where the ones I was paying attention to. while the ones we discussed in the morning where the purple ones. What am I missing here?

Looking at it in hindsight rather than real time. Your second "gray line" can't exist in real time, unless you're not tracking supply and demand at all.

Quote from niko:

3. Using the same logic of the purple lines, would the green line be valid to aim for a long at 6.25 around 10:54?

I don't see a green line, but whether there's a long op there or not depends on how tight the trader is with his lines and how quick he is to exit when they are broken (you can't take the other side until you've exited the active trade). A fearful trader will want to be as tight as possible and exit as soon as the line is broken. If and when he ever begins to move past that fear, he can be more flexible since he will be concerned about price action rather than his own fears.

 

[niko]

Quote from dbphoenix:

Yes. If you begin with the 1pt "trading range", you'll see a consistency to the upper and lower limits. At some point, as they always do, this begins to loosen up as traders look for better trades than they're finding in this relatively useless trading range. This is what auction market theory is all about.

They're able to find trades all the way down to 92, which then dries up. They then move up to a higher swing high and eventually back to that trading range, but they're been there, done that. They then start looking again, making a lower swing low that is also higher than the swing low at 0830.

None of which has any particular significance. What matters is that trading is and has been loosening up, as if it's been constipated. And now that's it's begun loosening up, the conditions are present for a "release" (so to speak).

Looking at it in hindsight rather than real time. Your second "gray line" can't exist in real time, unless you're not tracking supply and demand at all.



I don't see a green line, but whether there's a long op there or not depends on how tight the trader is with his lines and how quick he is to exit when they are broken (you can't take the other side until you've exited the active trade). A fearful trader will want to be as tight as possible and exit as soon as the line is broken. If and when he ever begins to move past that fear, he can be more flexible since he will be concerned about price action rather than his own fears.

1. Thanks just laughed with the constipation reference.
2. I was not thinking RET here but REV, the gray supply line would have been traced after LSL is broken, but I think I get the point.
3. Is an ugly green, sorry for the color selection, working on fear, but after today I feel some fearful traders (including me) are making some extra progress.

Have a great weekend.

 

[dbphoenix]

Quote from niko:


2. I was not thinking RET here but REV

There are no reversals. Whatever one might see as a reversal is defined by price action against S/D lines. Entries are found in retracements.