I will make a few comments about the micro NQ trades taken Friday. The first chart is the EOD chart showing all trades taken during the session. Five trades were taken. All were long. All were profitable. Two were straight long scalps. Three were averaging down longs. Ended the day $252.00 profit before commissions. The longest trade, timewise, was about 25-30 minutes and was the last trade taken.
I first want to look at why I would take all long trades. It was mainly because of the contexts, both the larger and the smaller. And the TE (traders equation) that gives me an edge in setups within both of the contexts.
Let's start by looking at the first chart which is an end of day (EOD) 5 minute chart showing all the trades taken that day. By the time I got my lazy carcass in gear it was after 10:00 a.m. By 10:20 I had my first trade. By then we can see that the day had opened with a GAP up open bull bar followed by 4 more bull bars. All closing near their highs. This is buying pressure. It is likely the first PB will fail and the trend up will continue. What kind of trend we don't yet know. However, as the first PB is ending by the 11th bar (bull bar) we can clearly see price had not reached the 20 ema on the PB. The three bars are FT (follow-thru bull bars.) See, sellers couldn't make that opening gap AND the opening BO fail. They could not even make price reach the 20 ema. So, there is a gap between the low of bars and the 20 ema. This is buying pressure. Remember a trader's main task is to determine which side is winning. The bulls or the bears. Where the pressure is. That skill is the most important skill a trader can develop as that is what will put him on the winning side with a high win rate and the ability to end the day profitable. Do I have days I cannot get it right? Yes I do and when that happens it is useful to then just stop trading and go SIM. I have days where my brain just simply doesn't work clearly (probably connected to the diabetes).
So, to state again, as traders we need to learn to develop the skill to "see" where the pressures are. Dispense with the notion of the markest being random. It is a myth. There are real pressures being exerted in real markets. By real bulls and bears and 95% of those pressures are from institutions and HFT firms and algos. 5% are from you and I. We are the pip squeaks. They are not worried nor interested in you or I. They are more concerned with taking money from each other. Just set your SL's correctly, don't worry about them running the stops. Price is not going to get there unless an institution wants it to get there. You cannot even buy a single lot unless there is an institution willing to sell you 1 lot. So, your primary task is to detect what the institutions are doing and which side is winning. That is the side you want to be on. Setups are secondary and even entries and exits are secondary.
Where the pressures are being exerted is of prime importance and can be detected by observing first the larger and the more immediate contexts. You do this by just simply looking at the path price is drawing out. Institutions cannot hide what they are doing. I mean they can, but they can't. In the end the chart will tell the story. So, is the larger and immediate context up? Is it down? is it sideways? What about the dynamics as it drew out the chart, fast or slow? Where is price in relation to its opening. What does this look like on a 5 min chart? What does it look like on a 15 min chart? What about on a 30 min chart? So try to detect the general context. There is nothing more important than context! CONTEXT, CONTEXT, CONTEXT! The same setups in two different contexts can, and often will, render two different results. You cannot just say "Oh it is a wedge top price is going south I better short." A wedge top in a strong bullish trend is more likely to fail and price continues up and it failing is actually a good sign of an impending MM (measured move) in the direction of the original trend. In strong bull trends wedge tops can fail over and over in sequence. Likewise, in strong bear trends wedge bottoms can fail multiple times. For ANY price pattern CONTEXT is the most important element or factor for determining if the pattern will fail, or succeed. Your setups are going to be based upon probability (at least I hope they are) and probability needs to also take into account CONTEXT otherwise a trade is PROBALLY going to fail. No matter what individual pattern a trader is looking at, or what setup he is looking at taking context has something to say about it succeeding or failing. The failure of patterns to pan out is why most traders give up on them or call them "ole fashion" or out of date. Or that they don't work today. But consider this the same patterns are on today's charts that were on the charts 60 years ago. And 60 years from now they will still be on charts if we are still using the charts in trading and the so-called global warming has not done us all in.
So, determine the larger and immediate contexts FIRST, then look at patterns and setups. Then run the traders TE. Then execute entries placing initial SL's along with any initial PT's. Hopefully, the latter two were determined by the TE. Next once "in the trade"monitor the dynamics as the trade unfolds making adjustments in both the SL's and PT's or leave then as is (if the dynamics warrant doing so) until the profit or the loss hits you.
So, back to contexts large and immediate, and determining where the pressures are. First, is price going up or down or sideways? If you are confused it is probably going sideways. Even though you may not see that sideways movement on the TF you are looking at. It is probably clearer on another TF. But, try to ascertain it on the TF you are looking at.
Now to helped a trader detail in on where the pressures are at, look at, and consider the following:
1) The type of bars (bear/bull), their closes, their range, their relationship to each other and in particular the previous bar and the bars two or three bars back.
2) gaps (are there gaps between the close of a bar and the close of the previous bar or the close 2 or 3 bars back), gaps between open of one bar and the close of the next bar, gaps between the 20 EMA and the low (if bullish) or high (if bearish) of the 20 EMA patterns being formed. Is there an opening gap? Is price closing that opening gap or is the gap via subsequent bars actually getting larger?
3) How many times has the market attempted to resume it's move after a PB? This is known as bar counting.
4) Always look at volume (a quick peek not a studious one LOL) on any larger than average bar as it could be an exhaustion move and price is about to reverse or have a stronger PB.
5) Monitor PB's (pull backs). In trend, bull or bear, what were the previous PB's like, prior to the present PB that is unfolding? If the trend is fairly steep and strong with minor PB's (say 2 to 5 bars) and the trend continues then the present PB will likely be minor also and not a reversal. (this is important if a trader is looking at averaging down as a tactic)
6) FT (follow thru) Are there successive bull bars interrupted with one or two bear bars (the opposites for successive bear bars)? Or is it bull bar, bear bar, bull bars, bear bars (signs of standoff pressures neither side winning)
7) Over the last 30 or 40 bars are there more bull bars than bear bars? Are those bull bars on average bigger than the bear bars?
8) Are there deep PB's (over 50% of previous bar)?
9) Are overlapping bars (even if all successive overlapping bars are bull or bear bars.) When you look at the PA do you feel confused? If so any apparent trend is probably just a bear or bull leg in a trading range. On the other hand after a range has been established as a range, price can, and often will race to the top or bottom, even on big bars looking, thus looking like strong impending BO out of the top or bottom of the range. That is this is what "appears" to going to be happening next, to then only reverse back into the range leaving the inexperienced trader shaking his head in bewilderment as he thought a BO was certain. The KEY here is to realize it is ALREADY an established range 9as opposed to just a PB), price has inertia, and will probably keep doing what it is doing (i.e. sideways) Any chance of a BO, of a range, being successful needs FT. 80% of attempted BO's of ranges fail within 5 bars and price goes back into the range.
There are more things on detecting pressures but this will suffice for now. Something to chew on. You may want to look at Brooks works for extensive detailed discussions of the matter. He is way more thorough than what I am being.
Will discuss some of the things on subsequent charts of these 5 trades but right now I am wanting to take a few trades for today Monday 6-8-2020. Will try and get back later today with more analysis of these 5 trades above.
