What TF you using in your chart is it RTH chart or a 24 hour chart? and is it mes or ES? Often it can be both A channel and a range. Furthermore price is ALWAYS in a channel. Will explain later.
Techniques for Day Trading the ES, NQ, YM, MES, MNQ, and MYM
- Thread starter volpri
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It is 5M 24 hour ES chart. (but I usually trade MES, especially during volatile times. I always have both charts open and use ES to chart since I see it as the 'main' chart over MES)
Thank you for explaining it in such details, much obliged.
Understood, the doji next to the previous bearish bar is just another range trade (in smaller TF), which will break to the downside if it breaks, then it broke, to the downside. Thank you Volpri.
Someday when you feel you make enough money and don't want to trade substantially and take a semi retirement from trading, and if you find a good kid who is sincere to learn from you, you may treat him like an apprentice and hand these posts to him and ask him to go through them while practicing on SIM for whatever period, 3 month to 6 months, after a year or so he will understand more and more about what you have described in these posts, then he would be in a good position to organize these posts into different chapters, and after you review them and you may add a thing or two, and a book is born. You can even add some fun stories in between as it happened. You have established a system of your own and trade the market in a particular fashion and have been quite profitable consistently, and you have been spending lot of time, energy and effort to detail those trades day in day out. It would be of remarkable value to share it with the trading world.
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That is correct on a smaller TF it is a PB that that then continued back down closing low. Basically a kind of up then down move on a 1 min chart. Here it on 5 min in red circle and the same action in red circle on the second chart which is 1 min.
That is true. It is a broad bear channel on a 24 hr chart. It is a range on a RTH's chart my post #678. Look again at my chart in post#678 and your bear channel chart right after my post. I am not sure what trade of mine you are talking about trade 5 or trade 6 but either way both trades are in the top 1/3 or close to it on your chart and on mine. A channel is a range too. Just a tilted range. I trade them the same way in this case short in the top 1/3. So either chart would work as basically the trade is gonna be the same.
I define a range for practical purposes as sideway move for 20 bars or more.
Thanks for answering Volpri, clear as always.
I was not talking about the trades as such, was just surprised you defined a range there. But I do understand now. Basically your definition of a range is what others might call "chop". No clear boundaries needed, just no clear trend. Right?
For trade #5 it actually didn't matter indeed, on my chart it was a short as well. #6 is not so clear though. It could be a risky short on my chart, but that particular trade I would not take.
Reason: depending on how you draw the channel it could have been a breakout from the bear channel. I tend to avoid these entries.
I was not talking about the trades as such, was just surprised you defined a range there. But I do understand now. Basically your definition of a range is what others might call "chop". No clear boundaries needed, just no clear trend. Right?
For trade #5 it actually didn't matter indeed, on my chart it was a short as well. #6 is not so clear though. It could be a risky short on my chart, but that particular trade I would not take.
Reason: depending on how you draw the channel it could have been a breakout from the bear channel. I tend to avoid these entries.
A day trader has to drill himself on the mechanics (strategies and tactics)until they become second nature or the amount of energy expended in the heat of trading will drain you and colosal mistakes will result. That is why I tell people SIM..SIM..SIM. Trading is a very high performance activity. And as a human you cannot perform well if you have not trained and practiced. You cannot be at the top of your form sitting on the couch eating potato chips. In day trading hundreds of decisions have to be made and made quickly. A day trader cannot afford to have the mechanics of trading become rusty and unused. If I am having a bad day and losing money and just can’t seem to get on the right side of the market I just stop trading with money and go to SIM trading and keep pushing. If that fails I may just need a break. Grab a fishing pole and go fishing....
There are a lot of factors that can affect performance in trading. Environment (market conditions), psychological conditioning at the moment, other stresses one faces unrelated to trading, lack of focus, too many things on your plate, size of your account....etc
Don’t keep throwing good money after bad. Find ways to circumvent that. In trading going to SIM for a bit can help. It is practice. Practice builds routine. Routine lowers stress levels and increases focus and clarity.
It is easy to fall into the error sunk cost fallacy. A trader can fall victim to sunk-cost fallacy. It is a cognitive tendency or bias referring to the act of making future decisions based on past investments. For example, when you have trouble throwing away those old tools you are thinking to yourself, “what a waste to throw away these garden tools away“ (even though they are old and used up). “I’ve spent all this money on these tools.” Even though you never garden anymore and clearing them out of the shop would open up space for tools you actually need. We are the only animals that act in this irrational way. Even rabbits are smarter than us and keep looking for rewards in the future rather than dwelling on the past.
In trading the next trade has nothing to do with the previous trade. It is a total independent activity. We have to learn to psychologically “let it go” or we will find ourselves caught in a downhill spiral the rest of the trading session building one loss upon another.
As traders we should remember that the implementation of mechanisms can get rusty and often practice is needed to rejuvenate the implementation of doing what you already know to do.
“DISCIPLINE is paying attention to detail and doing WHAT you need to do, HOW you need to do it, and WHEN you need to do it even when you don’t FEEL like doing it.”
Practice perfects discipline as it ingrains habits and good habits render good results over time, and habits lower the amount of energy needed to implement something because much of the decision making has already been made. You see, when the market gives me profits I take them. I can always go back in and grab some more. I know...I know...“but commissions will eat you alive...hang on for more profit make less trades and lower commission cost” BS for a scalper. If you are gonna scalp you are gonna pay out commissions. It is a cost of doing business. Worry more about devising a “modus operandi” that puts you winning over and over and commissions cost will fade in the background of potato chip money....cracker jack change. Besides don’t you care about your broker? He has a family to feed and he has to make a living too. Let him get a slice of the pie. LOL
We even fall into this trap of sunken cost with our trading strategies and tactics. “But I have invested so much in learning this....I just got to keep trying...I can’t just set it aside...” We won’t let go what cost us a lot to get even if it isn’t producing for us. “It has to work my guru is making piles of money”
The tendency to become a victim of sunken cost is connected to a theory called “Prospect Theory”. Prospect theory explains how we make decisions when risk is involved. There is a phenomenon called loss aversion within prospect theory. Loss aversion means we are willing to give up a lot of potential reward to avoid a chance of loss. We fear the pain of losing more than we value the reward of winning. We despise and fear the consequences of losing way more than we embrace or value the feeling of winning.
Traders often use such concepts to construct a “modus operandi“ for long term investing. They will sing the ole tried and supposedly true song of ivory tower construction... “Let your profits run” To some degree, for investing, there is a ring of truth to this. The loss aversion they fear is the FOMO on bigger profits. The problem is in a very bad year they will hold and their advisors tell them “hold it will come back”. In the end it WILL probably come back but can you hold and hold without your account getting decimated and can you add to your position and how long will you have to wait for it to come back? This “modus operandi” does not work for a day trader who is scalping 1 to 8 points in say the ES or MES or NAZ.
I have always despised losing. Since I was a child. So it, on the surface, may seem like I have fallen prey to loss aversion since I sing a different tune namely “cut your profits short” and “average into your losers”. Surely I have fallen into the trap of loss aversion. Actually, it is just the opposite. I value the reward of winning and embrace the feeling of winning more than I despise losing. Hence I develop mechanisms (strategies and tactics) that keep me winning. I lock in those profits! There is no metric more important in trading than winning. I know the arguments. “Yes but you can have a low win rate and make more money than with a high win rate.” NOT IN SCALPING. And in my opinion it is a piss poor way of looking at even investing. Why would a trader or investor just “wanna” have a low win rate? If he can make money with a low win rate he can make even more money with a high win rate.
Look we can sit down with calculators and in theory prove just about anything. But in the real world of push and shove theories can get blasted to the moon and crash there. The markets can never be completely nailed down. NEVER! We can never know all the variables, the whys, of price moving the way it has. However, we can capitalize on the inertia and momentum of market moves. They a generally brief. Especially in scalping. So, do those things that puts you winning. Dispense with “hang on to your winners” as a standard operating procedure. The only time you should do that in scalping is when the dynamics of price movement, AFTER your entry, is clearly in favor of hanging on and letting your profits run. SL’s have to be placed correctly or successive losses will nickel and dime your account to death on too tight of SL’s. Not understanding and identifying contexts can decimate your account. Not seeing and understanding price patterns, the when, and how, they will probably work, or not work, can do damage to your account. Not taking profits at the appropriate time will diminish your account, especially when scalping.
ALL OF THE ABOVE ARE MY OPINIONS ONLY. I would not advise you to follow them even though I try to myself.
There are a lot of factors that can affect performance in trading. Environment (market conditions), psychological conditioning at the moment, other stresses one faces unrelated to trading, lack of focus, too many things on your plate, size of your account....etc
Don’t keep throwing good money after bad. Find ways to circumvent that. In trading going to SIM for a bit can help. It is practice. Practice builds routine. Routine lowers stress levels and increases focus and clarity.
It is easy to fall into the error sunk cost fallacy. A trader can fall victim to sunk-cost fallacy. It is a cognitive tendency or bias referring to the act of making future decisions based on past investments. For example, when you have trouble throwing away those old tools you are thinking to yourself, “what a waste to throw away these garden tools away“ (even though they are old and used up). “I’ve spent all this money on these tools.” Even though you never garden anymore and clearing them out of the shop would open up space for tools you actually need. We are the only animals that act in this irrational way. Even rabbits are smarter than us and keep looking for rewards in the future rather than dwelling on the past.
In trading the next trade has nothing to do with the previous trade. It is a total independent activity. We have to learn to psychologically “let it go” or we will find ourselves caught in a downhill spiral the rest of the trading session building one loss upon another.
As traders we should remember that the implementation of mechanisms can get rusty and often practice is needed to rejuvenate the implementation of doing what you already know to do.
“DISCIPLINE is paying attention to detail and doing WHAT you need to do, HOW you need to do it, and WHEN you need to do it even when you don’t FEEL like doing it.”
Practice perfects discipline as it ingrains habits and good habits render good results over time, and habits lower the amount of energy needed to implement something because much of the decision making has already been made. You see, when the market gives me profits I take them. I can always go back in and grab some more. I know...I know...“but commissions will eat you alive...hang on for more profit make less trades and lower commission cost” BS for a scalper. If you are gonna scalp you are gonna pay out commissions. It is a cost of doing business. Worry more about devising a “modus operandi” that puts you winning over and over and commissions cost will fade in the background of potato chip money....cracker jack change. Besides don’t you care about your broker? He has a family to feed and he has to make a living too. Let him get a slice of the pie. LOL
We even fall into this trap of sunken cost with our trading strategies and tactics. “But I have invested so much in learning this....I just got to keep trying...I can’t just set it aside...” We won’t let go what cost us a lot to get even if it isn’t producing for us. “It has to work my guru is making piles of money”
The tendency to become a victim of sunken cost is connected to a theory called “Prospect Theory”. Prospect theory explains how we make decisions when risk is involved. There is a phenomenon called loss aversion within prospect theory. Loss aversion means we are willing to give up a lot of potential reward to avoid a chance of loss. We fear the pain of losing more than we value the reward of winning. We despise and fear the consequences of losing way more than we embrace or value the feeling of winning.
Traders often use such concepts to construct a “modus operandi“ for long term investing. They will sing the ole tried and supposedly true song of ivory tower construction... “Let your profits run” To some degree, for investing, there is a ring of truth to this. The loss aversion they fear is the FOMO on bigger profits. The problem is in a very bad year they will hold and their advisors tell them “hold it will come back”. In the end it WILL probably come back but can you hold and hold without your account getting decimated and can you add to your position and how long will you have to wait for it to come back? This “modus operandi” does not work for a day trader who is scalping 1 to 8 points in say the ES or MES or NAZ.
I have always despised losing. Since I was a child. So it, on the surface, may seem like I have fallen prey to loss aversion since I sing a different tune namely “cut your profits short” and “average into your losers”. Surely I have fallen into the trap of loss aversion. Actually, it is just the opposite. I value the reward of winning and embrace the feeling of winning more than I despise losing. Hence I develop mechanisms (strategies and tactics) that keep me winning. I lock in those profits! There is no metric more important in trading than winning. I know the arguments. “Yes but you can have a low win rate and make more money than with a high win rate.” NOT IN SCALPING. And in my opinion it is a piss poor way of looking at even investing. Why would a trader or investor just “wanna” have a low win rate? If he can make money with a low win rate he can make even more money with a high win rate.
Look we can sit down with calculators and in theory prove just about anything. But in the real world of push and shove theories can get blasted to the moon and crash there. The markets can never be completely nailed down. NEVER! We can never know all the variables, the whys, of price moving the way it has. However, we can capitalize on the inertia and momentum of market moves. They a generally brief. Especially in scalping. So, do those things that puts you winning. Dispense with “hang on to your winners” as a standard operating procedure. The only time you should do that in scalping is when the dynamics of price movement, AFTER your entry, is clearly in favor of hanging on and letting your profits run. SL’s have to be placed correctly or successive losses will nickel and dime your account to death on too tight of SL’s. Not understanding and identifying contexts can decimate your account. Not seeing and understanding price patterns, the when, and how, they will probably work, or not work, can do damage to your account. Not taking profits at the appropriate time will diminish your account, especially when scalping.
ALL OF THE ABOVE ARE MY OPINIONS ONLY. I would not advise you to follow them even though I try to myself.
There are different ways to creating the top and bottom lines of channels and ranges.
One way is to draw them where they best embody most of the price action. Generally, you will have overshoots on the top or bottom or both.
Another way is, say on the top side you get two points. Draw a line. Make a copy and drag that parallel line to the lowest price point on the bottom. If the two points are on the bottom the drag a parallel line to the highest point on top even though you don’t have two points on top.
However, for myself the important defining characteristic of a range is 20 bars or more of sideways action otherwise it could just be a PB. Twenty bars is usually enough to see that the bears and bulls are about equal and then I employ range trading tactics. Sometimes I will fudge a little on that and start doing it on less than 20 bars, maybe 16, if the dynamics (how the bars are being formed) indicates we will probably have an established range by the 20th bar.
As concerns the 6th trade. On your chart it appears to have been taken place right at or just above the top channel line. On my RTH’s chart it was in the top 1/3. I will sometimes look at both type of charts if I have any major concern.
But here is the deal. On a higher time frame a bear channel is a bull flag. The successful BO of the bear channel on your chart when it happens will probably be north. However, until it does become a successful BO and not just a BO attempt I will trade it as a BO attempt and fade the BO at the top of your bear channel on my trade #6. Why?
1) BO’s out of the top of a bear channel will fail 75% of the time and the pressure is already down (otherwise the bear channel would not even exist) so together I get pretty good odds this BO will fail enough for a quick scalp.
2) On a RTH’s chart PA is in the top 1/3 thus ripe for a short in this trading range.
Taking both charts together the 24 hr and the RTH I would have no qualms shorting at the top of your bear channel on my trade #6 because 75% chance it will trade back into the channel within 5 bars at least enough for a scalp and on the RTH’s chart it is in top 1/3 and 80% chance any BO will fail.
However, all this said I still need to have a tactic in my mind as to what I will do if the BO attempt becomes a successful BO. By that I mean a BO with good FT. In that case I would exit, take my loss then double up and go long with the BO direction. But, until then, I will play it on either chart as a higher possibility of it failing and going back into the bear channel or TR on the RTH’s chart. I had rather short it. The one thing I would not do is go long UNTIL the BO shows itself as being a successful BO. Then I would look for a MM up.