switching gears to Price Action via SLA

[gears]

Back at the replay action, but this time I did it in real time (as in not sped up). I wanted to really see the pauses and not assume anything. Second time at 12/9/13 and it's interesting that I'm seeing things a little better than I did the first time and allowing myself to give price some room to breathe rather than being such a stickler for the tiniest cross of a DL or SL. Granted, you can get burned by allowing too much room, but being rigid isn't going to work either.

In hindsight, the overnight high was the star of the show on this morning. The AMT bit is showing itself at every turn these days for me. It's pretty damned cool actually.

1. From the early morning hours, a DL had been drawn. Just prior to the open, the DL was compromised but price didn't go below the LSL.
2. Just as quickly as price went down, it went back up.
3. And then it went crashing back down - through the LSL level and all the way down to the overnight high level. Would this area be tested? Price didn't shoot back up even though it was a parabolic move. Lots of pauses.
4. New LL and a fairly significant retrace back up. More force on the retrace than the initial down move.
5. Trade would have been triggered, but price got there almost begrudgingly.
6. Price definitely moved up with more force than it had just gone down and it completely took me by surprise (though it shouldn't have considering that it didn't really go down with lots of pressure). Went outside the SL and same high as previous bar, but began falling again. Lots of movement on that bar.
7. Price keeps bumping up against the 14.50 mark - broke through and fell again.
8. Price just hung out in a 2-point range not making HHs or LLs.
9. Price catapulted up and above the LSH and almost to the area just after the open. In hindsight, I see that price had made a series of HLs.
10. Price ends up in the 14.50 range again (low of that bar).
11. Price popped out of that range and made a HH for the morning.
12. Then buyers and sellers took a smoke break. A series of LHs and HLs.
13. Couldn't seem to pop above the 20.75 mark, but then finally did. New DL drawn.
14. As quickly as the DL was drawn, it was broken, but not with tremendous force.
15. Price keeps inching upward, but the pops of up movement are followed by more sideways movement - buyers seem to just barely be hanging on. Seems like the up pressure is slowing down.
16. DL is crossed, but LSH not compromise.
17. Neither side seems to be in charge. Has value been found in this price range?
18. Guess I spoke too soon. Price convincingly went through the LSL. Time to draw SL and look for RET. Will it get back down to the overnight high level?
19. Quite a violent upswing. Making me wonder which way things are going.
20. Though no LL yet, price is remaining inside the SL I've drawn.
21. Spoke too soon yet again - SL break - look for RET up.
22. Price headed up without much pause. RET wasn't triggered and headed back down again.
23. Even though price went down, a short wasn't triggered either. Price popped back above the SL but didn't really go anywhere. Aha --- a hinge.
24. Price pops up and then heads down. Pretty typical behavior of a hinge - first way is not the eventual way.
25. Price moves below the 50% mark from the up movement of just after the open.
26. Pace really seemed to slow down.
27. Almost uncanny that as soon as something seems to be one way, it's the opposite. Price moves back up to the 50% area of the morning's up move.
28. Will sellers push price back to the overnight high this time? Or will it bounce off that level and head back up to the 22-23 range?
29. Crossed the newly revised SL, but didn't move with extreme force. Lots of hesitation.
30. Back up to the 50% morning area.
31. Pretty forceful move up.
32. Slight RET and another HH.
33. Couldn't make it past 20 even with multiple attempts.
34. Buyers couldn't keep price above 20, but sellers didn't seem to have a hard time getting it below 18.50 once it got there.

I kept track of additional RETs using a light blue dot. If a subsequent RET would have been triggered, that provides additional confidence that things are moving your way.

--I still don't know when something is a DT or just a pause of hitting the same area twice before thrashing through that area.
--Still not comfortable with identifying a REV area, but I think I've read more recently about price risk vs information risk.
--With this day specifically, the overnight high area was like a magnet - price kept meeting it and going away. The range was only about 10 points, but if you're aware of it, you can trade it.
--I keep learning and that's what my goal is.

 

[gears]

I had some high points and some low points today. I keep learning that as db has said, the market will show you how to lose the most amount of money, but thankfully it's just sim money.

Overnight the market didn't do much. It just hung out in a very tight range. The high of 05 occurred right around 5AM and from there, it stayed in a tight range of just around 7 points. Until it broke out on either side of that range, I wasn't going to do anything. Add to that, that it's FOMC day and usually things are quiet in the morning. I know that thinking about FOMC is a bias, but it was on my mind.

1. So just prior to the open, the market starts to show it's hand that down may be the initial direction of choice. I want a clear piece of information though and even after it does so, I don't take the first RET and miss out on the only real entry down.
2. That doesn't stop me from taking an entry though - at pretty much the worst spot.
3. Price finds itself back up in the overnight low range. - sort of like a magnet.
4. Because I'm trying to give price some room and see how the 50% bit works, I give price lots of room, but eventually exit. Not doing so hot right off the bat. I do see that price had a few HLs, but it also seemed to hug the 91.25 area so I didn't want to be too hasty.
   
   The larger SL is broken and an up move ensues. Using the 1min chart, I didn't see a clear RET until the 1001 bar and after having seen so much movement up and how price didn't have a lot of resistance on the way up, I wasn't thinking of getting in long.
   
   
5. Price did have a few LHs and made a HH, but it rejected that price like someone had smacked it's mama.
   
   At this point I just decided to lay low. If price was going to ride a wave of a 12-15 range, I know that I'm not skilled enough to read the signals and figure out when reversals might happen.
   
   
6. Price eventually goes through the overnight low area again and has some resistance along the way. I figured - it might be a REAL short this time. Yet again, I got in at the worst time. I was quicker to exit this time though as pace let me know this was for real.
7. I decided to go for the long and price immediately moved in my direction which felt good after the first 2 trades.
8. Sellers fought a little but couldn't make much headway to move price back down.
9. Price made a HH, but then a LH and broke my DL. After having given price a bit of room on the 2 prior trades, I didn't want to get beat up again so I exited - just before price rebounded again.

Lessons learned:
If you say you're going to stay out until the market plays its cards, stay out.
If you have rules about crossing SLs or DLs after a parabolic move, stick with them.
If you have rules about allowing price to cross a SL or DL and see if the LSH or LSL is compromised, follow them.
Don't let prior trades cloud your judgement on the next trade. The market doesn't care what you have or haven't done previously.

Am I making mistakes? Yes. Am I learning from them? Yes. The flow of price is more obvious to me now. Looking back at my entries, there were signs that I was being hasty. That's a tough balancing act though - to think rationally and act accordingly.

 

[dbphoenix]

Why didn't you take these trades?

 

[gears]

Why didn't you take these trades?

I was waiting for more confirmation. It's the whole price risk vs information risk balance and right now I'm hesitating. Due to hesitation, I get in late and then make decisions about where I am in comparison to the current price rather than really listening to the market signals.

If we (as traders) truly believed in our setup, edge, whatever you want to call it, then there would be no hesitation, fear or the need for more confirmation when our setup, edge, etc.. presented itself..

In reading this in game's thread, it really rang true for me. I've been burned and therefore am fearful. Until i can just GO without hesitation, I'll probably keep sucking at this.

Back to replay.

 

[dbphoenix]

I was waiting for more confirmation.

Confirmation of what?

Did you not notice that price was falling out of the range it had been in for so long?

Did you think that the market was trying to trick you?

When you see something rolling toward the edge of a shelf and teetering there, do you wait for it to hit the floor before you've "confirmed" that it's falling?

This is replay. You can't lose. You can't go wrong. This is a lab. You're testing something. There is no failure. There is only experimentation.

When you're changing a washer and you pick up the wrong wrench, do you despair? Or do you look for the right wrench?

Out of metaphors for now.

 

[gears]

You're right. I need to just DO and not THINK so much. Smack down taken.

 

[gears]

So back to replay (12/10/14, v2) and I tried to just be automatic about things - semi strict SLA while also giving price some room to breathe (not compromising LSH or LSL. I got batted about a bit.

Activity overnight had been quite heavy so the only real point of interest on my chart was the Prior Day Low. It seemed like a hot stove as it couldn't be breached.

Just before 0900 sellers weren't able to get below 3508. Three tries and it just didn't happen. The LSH wasn't compromised, but then a LH occurred.

1. At around 0915, the LSH was compromised and a DL could be in place --- but that was inside the larger SL. However, the SL was a 'country mile' away from price, so I'm not sure how valid that SL was any longer.
2. Neither buyers nor sellers seemed to be in control until the open. The SL was immediately crossed, but price went back inside. Price generally was outside the SL, but not convincingly.
3. Finally at 0937, buyers took the reins, price definitively crossed the SL and off to the races. Because of the hovering around the SL, I considered both a Long and a Short. The long was triggered. DL was broken and due to the parabolic nature of the up move, I exited.
4. SL drawn and it was immediately broken. DL drawn and it was immediately broken and the high of the parabolic move was not met or exceeded.
5. SL was touched but held. SL was broken and though price hadn't gotten past the LSH, I exited. Price did go on to make a LL, but again the area around 3507/08 seemed to be a rejection area.
6. Fanned SL was broken, RET occurred and a Long was triggered. Price moved a bit sideways for a while and took off again.
7. LH occurred at 1011 and the DL was broken. Price seemed to want to make a HH, but it wasn't happening - exit.
8. Looked for a RET for a short. It occurred and with it the SL was fanned. Price hit the SL but didn't go outside or above the LSH.
9. Price couldn't get below 3513 after the 3rd attempt. I should have taken that as a signal, but I wanted to wait for the SL to be compromised.
10. SL was definitively compromised and I exited. DL drawn. Looking for a RET in either direction as the DL was immediately crossed.
11. Short not triggered so it made sense to keep the long in play.
12. Since the DL was crossed and the subsequent SL was crossed, I used a fanned DL from earlier as a bigger picture perspective of where price was.
13. Price made a HH, the DL was broken, but it didn't go below the LSL. Another HH occurred and the DL was fanned. This time when the DL was broken, it went right to the LSL and I exited.
14. Look for a RET going short. Found one and price pretty quickly crossed the SL. In this instance I wanted to give price a little room to breathe so I waited to see the if LSH would be compromised. It wasn't so I waited.
15. LL and fanned SL drawn.
16. SL crossed but LSH not compromised. New SL drawn after LL.
17. SL crossed and LSH compromised - exit.
    
    I'm having an issue with determining if a cross of the SL/DL is enough or if I should wait for the LSH/LSL to be compromised. Right now I'm not being consistent and I've got to figure out which way to go with that. Once price has taken off and is a distance from the beginning of it's movement (not my entry - the actual movement), I'm ok with giving it some room. The issue is when you give it too much room and get burned or don't let it breathe and you keep exiting. Keep testing via replay.

 

[gears]

Today two things happened in concert:
I followed the rules.
The market moved a bit and I could test out holding, LSLs/LSHs.

Overnight the range wasn't very large. Neither the high nor low of yesterday were compromised. A little more movement around 0300 getting almost to the top of the range around 0430 and dropping down to the bottom part and then through it a little after 0630.

1. Just before 0915, price was moving up. I saw a RET and decided to get going. It was triggered and price took off. It did so in sort of a parabolic move and got close to the overnight high area. I tightened my DL so it would better represent what was happening with regard to price.
   
2. The DL was broken, but that's not a huge shock due to how price rose without any resistance on the way up. But rather than just exit immediately, I wanted to give price some room. A LH occurred a few bars later and that should have been a signal, but I gave price the 50% room to breathe - and exited at that point.
3. My short looks funny as price got to that area while I was seeing it as a RET. Sometimes I'm a little hasty with indicating an entry. Price immediately went above the SL I'd drawn, but came right back inside.
4. Slight RET but price didn't go too far and the SL was fanned. Price steadily went all the way down to the overnight low.
5. Three tries to go further but it wasn't meant to be. There were some pauses along the way, but no real pullbacks. Price definitively broke the SL and without much resistance on the way down, it wasn't a huge surprise.
6. I drew a DL but a RET didn't occur for a while. I'm sure if I were comfortable with REV I might have taken the long earlier, but I didn't. The long was triggered, but it shot up and then went down with more force that the up move. I had a stop in place to not let it go below the swing low prior to my entry and it took me out.
7. Drew a SL but it wasn't triggered.
8. Tried for a long on the next RET as the market moved up. It took. Price pulled back a little, but not too much and kept on going.
9. Fanned my DL and price kept going up. DL was broken, and it seemed as if sellers were having a hard time getting price to go up. But at the same time, it wasn't going down. It was literally moving sideways, so I held tight.
10. Price did go higher and I fanned my DL again. This time the pullback was more downward and a few HLs occurred. Wanting to give price a little room to breathe, I did, but eventually got out at 84.25. A short wasn't triggered though so I looked for another long.
11. Long wasn't triggered followed by a short that wasn't triggered. Should have realized it was chop, but I tried for another long.
12. A long was triggered and then fell beneath the DL. I exited and realized that my concentration was waning so it was time to sit on the sidelines.

It was a really good morning for me. My goal was to be automatic and look for a RET in the opposite direction when a DL or SL was compromised.
I honestly didn't care which way price went. My hope (though know that's not supposed to play out in the market) was that if I followed the rules, the trades would be there. I was just going to be automatic and see where things went. It was kind of liberating.

 

[niko]

Today two things happened in concert:
I followed the rules.
The market moved a bit and I could test out holding, LSLs/LSHs.

Overnight the range wasn't very large. Neither the high nor low of yesterday were compromised. A little more movement around 0300 getting almost to the top of the range around 0430 and dropping down to the bottom part and then through it a little after 0630.

1. Just before 0915, price was moving up. I saw a RET and decided to get going. It was triggered and price took off. It did so in sort of a parabolic move and got close to the overnight high area. I tightened my DL so it would better represent what was happening with regard to price.
   
2. The DL was broken, but that's not a huge shock due to how price rose without any resistance on the way up. But rather than just exit immediately, I wanted to give price some room. A LH occurred a few bars later and that should have been a signal, but I gave price the 50% room to breathe - and exited at that point.
3. My short looks funny as price got to that area while I was seeing it as a RET. Sometimes I'm a little hasty with indicating an entry. Price immediately went above the SL I'd drawn, but came right back inside.
4. Slight RET but price didn't go too far and the SL was fanned. Price steadily went all the way down to the overnight low.
5. Three tries to go further but it wasn't meant to be. There were some pauses along the way, but no real pullbacks. Price definitively broke the SL and without much resistance on the way down, it wasn't a huge surprise.
6. I drew a DL but a RET didn't occur for a while. I'm sure if I were comfortable with REV I might have taken the long earlier, but I didn't. The long was triggered, but it shot up and then went down with more force that the up move. I had a stop in place to not let it go below the swing low prior to my entry and it took me out.
7. Drew a SL but it wasn't triggered.
8. Tried for a long on the next RET as the market moved up. It took. Price pulled back a little, but not too much and kept on going.
9. Fanned my DL and price kept going up. DL was broken, and it seemed as if sellers were having a hard time getting price to go up. But at the same time, it wasn't going down. It was literally moving sideways, so I held tight.
10. Price did go higher and I fanned my DL again. This time the pullback was more downward and a few HLs occurred. Wanting to give price a little room to breathe, I did, but eventually got out at 84.25. A short wasn't triggered though so I looked for another long.
11. Long wasn't triggered followed by a short that wasn't triggered. Should have realized it was chop, but I tried for another long.
12. A long was triggered and then fell beneath the DL. I exited and realized that my concentration was waning so it was time to sit on the sidelines.

It was a really good morning for me. My goal was to be automatic and look for a RET in the opposite direction when a DL or SL was compromised.
I honestly didn't care which way price went. My hope (though know that's not supposed to play out in the market) was that if I followed the rules, the trades would be there. I was just going to be automatic and see where things went. It was kind of liberating.

Nice

 

[gears]

I definitely say that the more I do this, the more comfortable it all becomes. This replay session (12/11/13) I felt more like I was on autopilot. Draw DL or SL, wait for RET and enter. If DL or SL is broken, unless after a parabolic move or one where there was very little resistance, allow price to move to the LSH or LSL. Overall, this strategy is working pretty well --- but that isn't a secret. There are more than 1000 posts discussing this in the 4 SLA threads - I'm just actually implementing it more consistently now.

As I was getting ready to save the pic of what I did, I extended the original SL and was quite surprised by where it ended up. I like to keep the lines fairly close to where price is because I'm not as well versed at "seeing" the right tick and having a feel for where things are going. Price did get to the 50% mark of the down thing but just barely. I'd like to think that as I become more skilled and more confident that with multiple contracts, I'd scale out and see where things went. But that's just wishful thinking for now.

Some trades were better than others. But as db has said, this isn't about EVERY trade being a winner, but it's about cutting losses. I'm cool with that.