switching gears to Price Action via SLA
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I like that - the LITHA tactic. I definitely need to give that a go. I've thought of simming with 2 contracts to keep one in play and "do" what I think I should be doing based on PA with the other.
I think I get where you're going with this. In reality, price (buyers/sellers) do often do some of the same things over and over. Getting used to seeing the waves/reactions will be helpful in making better/more consistent decisions with regard to exits.
If I've gone off the reservation, please nudge me back on track!
I used to suggest this, though not aggressively. But since I wrote the SLA/AMT, I no longer think it's such a great idea.
The only reason to scale out of multiple contracts is the fear of being wrong. The SLA/AMT was written partly for the beginning trader and partly for the damaged trader. The latter needs more than anything else to regain his confidence, and the SLA/AMT, if one follows the rules, assures a healthy P:L ratio. If one can just stick to it, he will develop a sensitivity to what traders are doing and when and where and why and will no longer feel the need to exit earlier than he should.
Therefore, I suggest that you focus on developing your skill at reading the market and trade all in, all out, at least in sim. If you're never comfortable with this, you will eventually find opportunities in real time to add contracts. Today, for example, there were five waves down. Adding a contract on the second or third wave would have been responsible. Though this is of course in hindsight, the market gave you a target, which an ongoing trend generally does not. But as far as taking them off, either you're reading the action properly or you're not. Since the price risk of having misinterpreted the action is minimal, why not take it?
Remind me of this chart when it comes up again. I'll probably forget about it.
The hardest thing about the SLA/AMT approach is believing it. I've used that approach for the past year and have had only 2 losing trades....and those two losses came when I deviated away from the method by jumping the gun.
I forgot to ask about this. You mentioned having another 16 points to go. Was the 'target' around 4110?
4100, because of the low on the 28th. The round number may or may not have had anything to do with price behavior at that level, but the more important factor was the action on the 28th. Consider also, though, that price dropped to it and through it WHAM! There wasn't any waffling around. If there had been, then sure, go ahead and bail and be happy with it and look for possible re-entry. But to exit just because you think you've made "enough", much less "too much", is not sufficient reason. It's in these situations that the SLA comes in real handy, though an understanding of Wyckoff is more helpful when it comes to understanding the behavior at climaxes.
Incidentally, it's fine to test the water, but don't rush back into trading too quickly. It's real easy to backslide.
There are nuances that become clear as one observes, tests, and trades with Wyckoff and the S/A. I included a couple of these -- the hinge and the Dog -- in the pdf because they come up practically every day. But this business of "failures" is difficult for someone who hasn't spent a lot of time observing. If he's been trading instead, he probably will never get it, since the focus is on the trade rather than the price action. And there are other things that come up in real-time trading that won't be seen if one is obsessed with his trades. Therefore, the finer points pretty much have to wait until the trader has more experience with it and has got past his fears. And if he never gets past basic S/A, at least he will have net gains, even though he may not be retiring on them.
But as for mean reversion, or, more accurately, median reversion, this is a biggie, as became clear today. I suspect that someone who had no idea what mean reversion was or how it worked would not have had the least idea what to do today (and judging from the journals I've skimmed, this was the case). So, yes, that is definitely a subject for review and further study.
But as for mean reversion, or, more accurately, median reversion, this is a biggie, as became clear today. I suspect that someone who had no idea what mean reversion was or how it worked would not have had the least idea what to do today (and judging from the journals I've skimmed, this was the case). So, yes, that is definitely a subject for review and further study.