The Price Action Journal

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Quote from 4thBorn:

Jash,

Me lines are pretty reliable when u know how to use them, takes a lil bit of time and of course judgement, don't completely disregard them yet...

Also, remember ME lines are simply areas... a % of the day's range, not a specific price point, the NQ can and often does overshoot the lines by a few ticks (sometimes they hold to the tick).

Today's chart:
http://i35.tinypic.com/15yvegz.jpg

Also, this is another chart i made a while back for some the guys in the AHG room showing how effective ME lines can be in reading PA.

http://img108.imageshack.us/img108/5058/07032008194014wg5.png

enjoy :-)

-born4th-
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Born,

Excellent analysis on the charts!

I wouldn't say that I have disregarded the ME lines completely. I just found myself trying to use them in a way that hurt more than help at the moment. For example market is in an uptrend and then hits the 50% line almost to the tick and then starts to pull back some. I try to fade the line and take a short because it is the 'line in the sand' and obviously it has found some resistance. Then the trend continues and hits my stop.

Basically what I am saying is that I don't know how to use them properly. :D They make me see things that are not necessarily there and for me right now they are a distraction.

Can you explain a little more how you use them in your trading?

It looks like they would be most effective for scaling in and out. I imagine a pullback w/ a 3br on a ME line would be a place to confidently enter or add to a trade w/ the trend.

js.
 
Quote from SusanaDT:

He introduced the concept of 3BRs to me, where to enter, how to handle the stop placement and how to also apply them to my exits.
Susana
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How do you apply 3br's to your exits?

Also, regarding your placement of stops. When the trade moves in your favor do you move it to BE and how fast. I think ST mentioned before that he did this after 5 or 6 ticks on the ES. At first I thought that this was incredibly fast and would get hit all the time. However, after some experimenting I am really liking this concept. I do find that I have a lot of BE+1's but I am also finding that I have a lot less full stops being hit. So I might have a couple small losses, several BE+1's and then the big trade comes along to make the day profitable... versus several full stops and then hit a big trade and I find myself only breakeven for the day.

Another thing that I have found is that if my stop gets hit and the inital trend is still intact then I will probably have another opportunity to get back in and it will probably be at a better spot.

I posted the attached chart the other day but it shows what I am talking about. The trend was up and I tried to go long... it went in my favor and I ended up BE+1. Then I tried to enter again right at the trend line and price stopped at support too so I was feeling even better about this trade. Price made a new high but hit my BE+1 again. I was actually really suprised when this happened because it had been nothing but up all day long. I noticed it broke the trendline and resistance and I got stopped out twice. Once it price made the mini double top off the new resistance I was ready to go short. I'm not so sure I would have caught that entry though if I hadn't taken my other trades the way that I did.

Some might say that you need to wait for PA to tell you to move to move the stop to BE. That is what I used to do and I am finding that is not necessarily the best for me. It goes back to protecting your capital at all costs and it is less time that it is at risk. Once that BE+1 is in place I see it is as win/win situation. Either I breakeven or I make money. Maybe it's a psychological thing. Who knows?

Anyone have any comments on this or any other ideas?

js
 

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Quote from jashanno:

How do you apply 3br's to your exits?

Also, regarding your placement of stops. When the trade moves in your favor do you move it to BE and how fast. I think ST mentioned before that he did this after 5 or 6 ticks on the ES. At first I thought that this was incredibly fast and would get hit all the time. However, after some experimenting I am really liking this concept. I do find that I have a lot of BE+1's but I am also finding that I have a lot less full stops being hit. So I might have a couple small losses, several BE+1's and then the big trade comes along to make the day profitable... versus several full stops and then hit a big trade and I find myself only breakeven for the day.

Another thing that I have found is that if my stop gets hit and the inital trend is still intact then I will probably have another opportunity to get back in and it will probably be at a better spot.

I posted the attached chart the other day but it shows what I am talking about. The trend was up and I tried to go long... it went in my favor and I ended up BE+1. Then I tried to enter again right at the trend line and price stopped at support too so I was feeling even better about this trade. Price made a new high but hit my BE+1 again. I was actually really suprised when this happened because it had been nothing but up all day long. I noticed it broke the trendline and resistance and I got stopped out twice. Once it price made the mini double top off the new resistance I was ready to go short. I'm not so sure I would have caught that entry though if I hadn't taken my other trades the way that I did.

Some might say that you need to wait for PA to tell you to move to move the stop to BE. That is what I used to do and I am finding that is not necessarily the best for me. It goes back to protecting your capital at all costs and it is less time that it is at risk. Once that BE+1 is in place I see it is as win/win situation. Either I breakeven or I make money. Maybe it's a psychological thing. Who knows?

Anyone have any comments on this or any other ideas?

js
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Remember that I took what I liked and could use from the three main traders I learned from. The end result is very different.

For example I don't move stops like any of them, I place them above-below swings if at all.

For instance:

ST moves the stop right away kind of like a scalper does.

Anek does some weird management that's just over my head where he scales contracts to make up for a stop without actually moving it but that does not work for pikers with 2 cars.

Sam uses much bigger stops.

In the end, you need to make it your own to fit your very own trader personality.

Susana
 
Susana...
Thanks for for the ST information and suggestions.

Regarding your chart today... I've attached a question for you regarding a short you didn't take... Curious as to why - as R got tested twice there and had a nice bearish 3br. Perhaps too close to S of 81-82?

Your first short was fantastic as it turned out. I had a hard time seeing that as I was looking at 81-82 area as a support area and saw that bullish 3BR coming after the low of 80.25 and thinking long.
I'm curious if you considered that area (flipped on 8/6, 8/7, 8/8) as significant and how you were able to short there.

Fox
 

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Quote from foxthorn:

Susana...
Thanks for for the ST information and suggestions.

Regarding your chart today... I've attached a question for you regarding a short you didn't take... Curious as to why - as R got tested twice there and had a nice bearish 3br. Perhaps too close to S of 81-82?

Your first short was fantastic as it turned out. I had a hard time seeing that as I was looking at 81-82 area as a support area and saw that bullish 3BR coming after the low of 80.25 and thinking long.
I'm curious if you considered that area (flipped on 8/6, 8/7, 8/8) as significant and how you were able to short there.

Fox
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Foxthorn,

Because it would had been like shorting the LOD, very risky, look how close it was to the last LL, gets in the way of the reward, you need a retracement as cushion or you will be stopped unless you get lucky and it produces a bizarre move.

Susana
 
Quote from TXGrillGuy:

Amitman,
Your guy Bill sounds a lot like my eminis mentor (Jim) who taught me this setup just a few years ago while programming me to begin understanding PA and trading S/R. (My hat's off to Anek, Susana, Bill and all others who have shared along the way as well.)
Sometimes these setups take place before a 3rd wave is formed. But they're high probability nonetheless.

For the rest of us, I've attached the usual eye-candy of the ES 10Min chart to continue showing how fluidly price sometimes move between Fib S/R levels. Still horizontal support.

Another trader commented about filling their chart with too many trendlines before.
Quick tip: Identify and monitor S/R in a chart interval only 3 to 5 times your execution chart interval. For example: Trade on the 3Min while watching S/R on a 10Min to 15Min interval chart, and so on. But don't overkill by watching too many higher interval charts. Use only what benefits your trade style and then toss the rest. Really, it makes a difference.
:)

Headed out for my jog now.

Take care,
Tex
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Hi Tex,

I agree with your assessment regarding time frames. I personally have a 1 min with daily and hourly pivots on it, but I limit myself only to 3 lines for the daily and 3 for the hourly, i.e I never look at more than 6 lines and 99% of the time, I only look at the 3 pivots from the hourly.

John
 
Firstly great thread....a rare gem.


Susana, I have a question on the last chart you posted. I have cut to the place in question. Support has flipped to Resistance, price has made a new low and though there has been a bit of a 'head fake' with price poking through the previous high by a tick or two a bearish 3BR has formed.

To me this was the key point on the chart where a short might still be considered. I just wondered what you didn't like about the action that kept you out?

Cheers.
 

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Quote from BlowFish:

Firstly great thread....a rare gem.


Susana, I have a question on the last chart you posted. I have cut to the place in question. Support has flipped to Resistance, price has made a new low and though there has been a bit of a 'head fake' with price poking through the previous high by a tick or two a bearish 3BR has formed.

To me this was the key point on the chart where a short might still be considered. I just wondered what you didn't like about the action that kept you out?

Cheers.
More...

Please mark the exact spot so there is no confusion.

Susana
 
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