The no BS, obfuscation-free price action thread

[1a2b3cppp]

Quote from Lucrum:

Not trying to be ugly condescending or counter productive. But I think you're chasing your tail with this one.

I'm trying to see if the 5 second chart holds any clues as to why price might reverse or continue through certain price levels.

If it doesn't prove to have any advantage I'll stop looking at it.

 

[Lord.Maushi]

Quote from Lucrum:

Not trying to be ugly condescending or counter productive. But I think you're chasing your tail with this one.

He is being a little hard headed, but eventually he will come around.

 

[1a2b3cppp]

Quote from Lord.Maushi:

I'm not being vague, I'm actually being quite clear. You are doing research and I am telling you how and where to begin and where not to look. The answers you will find on your own, just "trying" to give you a hand as to where and how to look during the beginning of your research.

I told you in a previous post, the lower you go in timeframes, the more noise you will find, and the less areas of high probability you will discover because noise will make the research much harder. I'm not saying fast timeframes cannot be used to trade, but until you know what to look for you will make your work 50x harder by starting where noise is abundant.

Time based charts accentuate these areas with more clarity because the charts are more commonly used, and you need others traders to see them as well.

I mentioned 60min and above because that's when the ratio of noise vs content is balanced favorably for someone researching for these key areas.

Are you suggesting I use the 60 minute chart to make entry and exit decisions, or just as a way of looking at the overall trend? Do you include overnight session data on those charts?

Tradingview.com and freestockcharts.com has free daily continuous data.

Cool, thanks. I knew about freestockcharts.com but I don't think they have futures data.

Tradingview.com has the ES for daily charts going back years which is exactly what I wanted.

 

[oraclewizard77]

Let's take a look at today's ES futures chart using a 9 min chart to see if there were some PA setups.

Now I am using an indicator to automatically label the HH, HL, LL, and LH. I have also draw some support and resistance lines.

As we see from the chart, the indicator is not perfect, in real life although price spikes a little above and a little below the lines, I would call some of these double tops and double bottoms.

So from this chart, we can see that price respected both the top and bottom of the range today.

So a trade long could have been made off of support or a short could have been made off of resistance. In both cases, one could use a reasonable stop and target once you decide to take the trade in case price went against you.

Now once price starts moving away from the support or resistance, it will continue to move enough for one to make a profit. For example, when price made the double bottom, it traveled back up to the previous HH labeled on the chart which was also a DT.

Now we don't want to blindly go long at a support or short at a double top. We want to see what price does at these levels. As we can see after making a double bottom price actually broke above the previous HH on it's 3rd touch. The more times price hits the same support or resistance level, the more likely its eventually going to break. That is why a 1st strike might bounce and a 3rd strike may break. We want to look at what the candles are doing around important levels. We may even take into account the type of market we are in. For example, have most days been bullish or bearish. Are we in a bull market. Will support levels work better in a bull market, yes, a little better. We also want to look at the news for the day. Did some news item come out that was bad or good for the market. Is the market selling off during the day or going up.

After breaking through the HH, we made another double top even though price spiked above the previous HH since that may have been just a little stop hunting before the profit taking. Once we recognize that price is no longer going higher, we can then trade short for standard target.

So now for you the next step would be to setup a chart like I did, and then take a trade based off of this information. The above are just 2 price action setups, and I did not put the other indicators on my chart that I normally use. So once you realize where price may be headed and assuming you are not chasing it, you need to enter in a sim trade and annotate your reasons for the trade. Also, one needs to be patient to wait for the price setup that one wants to use and then wait for your target or stop to be hit.

 

[1a2b3cppp]

Quote from oraclewizard77:

Let's take a look at today's ES futures chart using a 9 min chart to see if there were some PA setups.

What is the reason you picked 9 minutes? Just a value that happens to work for you? Do you always use 9 minute charts?

Now once price starts moving away from the support or resistance, it will continue to move enough for one to make a profit.

Are you saying this as a rule? For example, once price hits S and moves a certain number of ticks away from S, then it will continue in the same direction and so you should enter?

For example, when price made the double bottom, it traveled back up to the previous HH labeled on the chart which was also a DT.

Now we don't want to blindly go long at a support or short at a double top. We want to see what price does at these levels. As we can see after making a double bottom price actually broke above the previous HH on it's 3rd touch. The more times price hits the same support or resistance level, the more likely its eventually going to break. That is why a 1st strike might bounce and a 3rd strike may break. We want to look at what the candles are doing around important levels. We may even take into account the type of market we are in. For example, have most days been bullish or bearish. Are we in a bull market. Will support levels work better in a bull market, yes, a little better. We also want to look at the news for the day. Did some news item come out that was bad or good for the market. Is the market selling off during the day or going up.

How does one look at the news and interpret its significance?

After breaking through the HH, we made another double top even though price spiked above the previous HH since that may have been just a little stop hunting before the profit taking. Once we recognize that price is no longer going higher, we can then trade short for standard target.

How do you "recognize that price is no longer going higher"?

 

[dom993]

Welcome to the fuzziness of discretionary trading ... if you are looking for clear-cut definitions & answers, you should turn towards algorithmic trading.

Of course, no-one will give you any decent profitable trading system, but at least in algo trading backtesting gives you clear-cut answers as to what doesn't work (most anything) & what does work (the needle in the proverbial haystack).

Regardless, trading is a statistical game ... you are totally wasting your time looking at 1 chart for clues ... you need hundreds (thousands, really) of samples to draw valid conclusions in the trading world.

 

[ronblack]

More than 30% of trader flipping a fair coin when trading SPY since inception have ended up with a positive P/L according to this simulation and are possibly attributing that to either their excellent trading skills or fine trading systems.

 

[1a2b3cppp]

Today's chart (there was a lot of volume today so the chart is longer than usual so I don't want to embed it because it would be too wide in the thread):

5-22 ES 5000 volume chart

 

[Blotto]

How was I able to know (from high probability POV) that we would have a move to new lows yesterday, call a good price for shorts to cover, and correctly anticipate the 8 point rally from the low into the close yesterday?

Would this be of interest to anyone learning to read the market, or is it superfluous?

http://www.elitetrader.com/vb/showthread.php?s=&postid=3807173#post3807173
http://www.elitetrader.com/vb/showthread.php?s=&postid=3807187#post3807187
http://www.elitetrader.com/vb/showthread.php?s=&postid=3807215#post3807215

I've done this before, using only price information, on a different instrument
http://www.elitetrader.com/vb/showthread.php?s=&postid=3798308#post3798308

Interestingly, despite all of these long threads about learning to read the market, I get the occasional "good call" comment and no further interest on how I was able to call in advance exactly what the market did with such accuracy. Does this not suggest there are many market analysis possibilities outside of textbook "price action", or is this just not what most aspiring traders want to hear?

Its only worthwhile to post if I get some feedback...we all want to learn, right? Or is this the wrong forum for to have these discussions?

 

[Josef K]

Okay, so how did you predict that eight point rally? Were there objective conditions you saw that made it a high probability occurrence? If so, what were they?