The Trouble With Scribbles

[i960]

Since I have no idea what price will do, but I have an idea that if it goes beyond this point then it more than likely means that its not going down,

You *should* have an idea what price will likely do and (as you get better) an idea what to do should price fail to do what you expected it to do. Your statement of "more than likely means that its not going down" is completely off. You are not trading CL here, this is NQ. Heck, even crude retraces and dances around multiple times before taking off.

So taking this into account, if I keep a tight stop and it gets triggered, then at least I can think I got in at the best possible place, the earliest place, and not have to worry too much if I should have held in longer or not because it went past the danger area that should mean there is no direction now.

This is completely false. If you look at your entries you're obviously not getting in at the best possible place at all. How is going long at the absolute peak of a move and then getting stopped out by 2 points then only to see the move actually happen some n retracements later an example of "no direction now?" This is what I was talking about. You're trading a 5m timeframe/mindset from a 5s chart and continually forgetting that fact while doing it.

Look, if you see a move spike up or spike down, do NOT enter. Let everyone else take their scalp profits, get shaken out, etc and then enter at support or resistance (if short) after price retreats. If you get shook out by a BS stop run, then shit happens. If price just recovers and it was an obvious shake out, re-ENTER when the setup shows up again (in the above chart it happened 3+ times).

As I said before, you're entering both too early and too late. You see the move and jump right on it when if you just looked at your past data you would see that price never just launches upwards the second some kind of demand shows up.

Had you simply waited for the inevitable retrace and entered at the low then both your tight stop would not have been hit *and* you would have had a winner.

The time you *should* have entered you did not pull the trigger. You hop on things early because that's psychological confirmation to you that it's doing what you want it to do and mentally believe that it somehow protects you from being wrong - because hey, why would you be wrong here, the price obviously went up when you were looking to go long - therefore you get long immediately out of fear of missing the move. The times when it looks "scary," and has the potential to drop, never mind the fact that it's right at a local support, you don't take it. Even when it starts heading up again *and* retraces yet again, you don't take that either. You enter at the least scary *worst* possible areas and won't enter at the most scary *best* possible areas. The market then shakes you out repeatedly because it punishes this behavior.

You know what's scary to me? Entering a long after having just seen price spike up or entering a short after having just seen price drop down. There's no way in hell I jump right on that unless it's some rare situation where one goes market then and there (and that's not common at all). When you see the setup and the signal, be *ready* for price to drop back down to where it permits you enter but also obeys your risk parameters; not the other way around. Take a look at your chart and pretend it was a 15m chart. Would you be entering those areas on a 15m chart after seeing price make those moves? I don't think so.

Your fear is driving your trading 100% from literally every angle. The reason traders are getting upset and frustrated with you is because they keep harping on this stuff but you're not forcing a change of internal behavior. People want to help, they definitely don't want to see people fail, but if they're spending time providing advice and support, you've got to meet that with equal part attempts at changing the dysfunctional behavior. You seriously have to do this or you will not be successful at all. I'm not saying it to be mean, I'm saying it to try and help.

 

[k p]

The reason traders are getting upset and frustrated with you is because they keep harping on this stuff but you're not forcing a change of internal behavior.

Actually, this time around, nobody seemed to be harping yet, and nobody, to the best of my recollection, has actually analyzed my entries nearly as in depth as you have. Most replies have been of the general sense where I need a trading plan, need to test it, need to SIM, etc. So you comments are the first that I remember that are so specific other than what NoDoji has shared in the past.

Had you simply waited for the inevitable retrace and entered at the low then both your tight stop would not have been hit *and* you would have had a winner.

How to know that there will be a nice retrace? When you look at my first long, there is actually a retrace in there, its what made me go long. Sure its tiny given that this is a 5 sec chart, but had I not taken that first one and price never came back, then it would have left without me. For sure that by the time price bounces off 4366 this is looking like firm support, but to be honest, I also have to wonder why price has come back down to this level 3 times.

You know what's scary to me? Entering a long after having just seen price spike up or entering a short after having just seen price drop down.

Since this is a 5 sec chart, a spike up isn't actually so drastic in my opinion. Its not like I'm going long above a 1 minute bar that is 10 points high. This is exactly why I'm using a 5 sec chart, so that I'm not actually getting in too late and the move can be seen sooner.

Your fear is driving your trading 100% from literally every angle.

I accept this, and all I can do is keep moving forward. I wish this wasn't the case, I wish my life experiences prepared me for this trading business better, but here I am, trying to work with what I got.

The time you *should* have entered you did not pull the trigger.

I say this exact same thing, but I do feel a bit as if much of what you say, you're able to say because you have the gift of hindsight of being able to see my chart before you, being able to see my entries, and being able to see at a glance where the better places were to enter. I too can look at this chart and see the perfect places to enter, but not so much in real time.

You enter at the least scary *worst* possible areas and won't enter at the most scary *best* possible areas. The market then shakes you out repeatedly because it punishes this behavior.

This quote is extremely interesting, very much like what Buffet says about being greedy when others are fearful and vice versa.

Look, I'm clearly having to completely change my psychology and to train/force myself to look at things differently. I do very much appreciate your post, but I am taking it rather hard because of course its easy to look at my chart and say where I should have gone long and where I shouldn't have, etc. But since nobody else shows clear entries, I haven't been privy to the fact that others are doing exactly what you say, that they are buying when it looks the scariest, or selling when everyone else is enthusiastic.

Some of the stuff you say absolutely makes sense, but at the same time, I just don't think that the opportunities for the perfect entry always come up as you seem to think they do. How wonderful would it be if price always comes back to the level at which it takes off from to give everyone else a chance to get on board. But as you sit and wait, it might just keep going higher, and if after quite an extended move price does come back down, you really have to start to wonder why it came all the way down again.

I certainly do appreciate your input though. I should start up a journal again so that we can discuss these things in more detail if you have the time because at least now there is finally a good discussion!

 

[i960]

Okay I'll keep it simple: For a setup you would normally take, when you see a spike/mini-breakout do not do the following:

1. Sit and think about missing out.
2. Get impatient.
3. Enter immediately.

Do this:

1. Enter a LIMIT order at 50% of the length of the thing that spiked (in your above example), or at most slightly below or above the S or R it broke through.
2. Set your PT at a reasonable target for the timeframe you're on and a stop that accounts for observered volatility.
3. Don't touch anything.

Just keep doing this over and over until you see it working. Do not question why it retraced or start to get worried about it. It's completely normal. Do not get pissed off at the times it just takes off without you. Entering at those points would violate your risk parameters and there's a million potential trades out there. This isn't a hindsight thing it's a screentime thing of observing how price reacts for the instrument one is trading.

Like I said, it retraced multiple times in your example and you would have never been stopped out. With the entry you took its highly likely you would have in most situations.

 

[dbphoenix]

--04/13/15 RTH Short NQ Jun at 4411.50. Initial stop loss is 4455.00
--04/14/15 RTH Price is 4391.00 Staying short with same stop for now.
--04/17/15. RTH. Price is 4346.75. Staying short for now. Stop lowered to 4439.00

So the OP's "grail" method is stopped out for a loss of 27.5pts, exclusive of expenses.

The SLA/AMT yields over 200pts during the same period.

So far, the "superiority" of the "grail" method remains unproven.

I hope that we are now done with this silly thread.

All 774 posts of it.

For the sake of closure, picking up where the last chart left off:

And a post that bears repeating:

Laissez Faire said: Anyone with half a brain knows that dbphoenix isn't a trader. He wouldn't be spending all this time on multiple forums if he were. It doesn't add up.

Well, I have read this argument many times and as one who knows how much free time day trading can generate, I have to say that those who make have never day traded with the success that would allow them to live a rather free life.

If you were day trading the NQ and you were using S/R, trend lines, channels, etc. and you were looking to trade the main swings, you would soon learn that on most days, the NQ will give 1-3 opportunities in the morning, then it will usually (not always, but usually) lie dormant for 2 to 3 hours where only a masochist or a gambling addict will be actively trying to trade it, and then, sometime after one, usually after 2:30 (the later it starts typically the larger and more certain the move) it will make another good swing. If it starts its move earlier, then the afternoon might give good two way action, as the early move will often not sustain itself - these days are more prone to double tops or double bottoms, in my experience.

Trading in this way means I've already defined prior to the open the price levels at which I will be looking to trade: not long, not short, but either long or short. So when price is away from those levels, there is nothing to do but watch, and perhaps read ET and even post a few times. Certainly as the day gets under way, the current session may very well generate additional levels to watch for subsequent trade, but at the open, there should be at most four levels in play. What happens on most days trading the NQ this means there are a few bits of time - usually 5-15 minutes long, where my attention is focused on looking for a trade. But once in a trade and price has started to move away from my entry, it gets pretty boring.

Also, most days, I get enough opportunity in that morning session before the mid-day doldrums set in that I am ready to do something else. Now I live in the Northeast, and so I have been inside and at my trading station the past few months far more than I'd like to have been, but perma-snow and constant sub-freezing temperatures sort of ruin the outdoor experience for me. But now as the weather breaks, I'll be shutting down after a couple of hours most days. I have an extensive garden, I play a lot of golf, and I have three kids and we all have season passes to a well-known amusement park. You see, day trading, assuming one is making good money at it, can offer one a great deal of free time. Some may spend it on internet message boards trying to find the few others who might also be able to learn how to do it to live such a life, and others might spend it gardening, golfing, or roller coasting. None will spend it trolling message boards looking for fights and trying to tear down others, though one might use it to engage in a defense of one's own against such trolls.

As I think about, I now wonder why those who say DbPhoenix must not trade because he has so much free time to spend on ET don't stop for a moment and think,"gee, he must trade, otherwise how the hell could he have all this time to spend on ET?"

But that would require thoughtful reflection rather than emotional reactions. One factor in whether or not one becomes a troll or not is likely aa propensity to live, trade, bitch, drive emotionally rather than reflectively.

To others following along, I will tell you this: Those who argue against this approach can only do so from a position of ignorance. Three years ago I was breaking my back everyday. Now I too get to spend as much time as I want on internet message boards. Do you really think that is because I don't trade?

 

[Schaefer]

How ironic, that the OP started this thread to bash other traders, specifically DBphoenix, and his followers, accusing them of leading the newbies astray by presenting an incomplete plan. And yet, OP himself presented an incomplete plan, failing to demonstrate where, why and how to take profits.

Schaefer

 

[k p]

Okay I'll keep it simple: For a setup you would normally take, when you see a spike/mini-breakout do not do the following:

1. Sit and think about missing out.
2. Get impatient.
3. Enter immediately.

Do this:

1. Enter a LIMIT order at 50% of the length of the thing that spiked (in your above example), or at most slightly below or above the S or R it broke through.
2. Set your PT at a reasonable target for the timeframe you're on and a stop that accounts for observered volatility.
3. Don't touch anything.

Just keep doing this over and over until you see it working. Do not question why it retraced or start to get worried about it. It's completely normal. Do not get pissed off at the times it just takes off without you. Entering at those points would violate your risk parameters and there's a million potential trades out there. This isn't a hindsight thing it's a screentime thing of observing how price reacts for the instrument one is trading.

Like I said, it retraced multiple times in your example and you would have never been stopped out. With the entry you took its highly likely you would have in most situations.

Thanks i960... let me look into this.

 

[NoDoji]

The times when it looks "scary," and has the potential to drop, never mind the fact that it's right at a local support, you don't take it. Even when it starts heading up again *and* retraces yet again, you don't take that either. You enter at the least scary *worst* possible areas and won't enter at the most scary *best* possible areas. The market then shakes you out repeatedly because it punishes this behavior.

k p, i960 has nailed it. You're so afraid of risk that you're using a 5-second chart to put your mind at ease enough to put on a trade. The irony of it all is that your "best possible price" entry doesn't even require an entry setup pattern on the 5-sec chart.

It feels scary to place anticipatory orders because your mind is certain that S/R can't possibly hold as price drops down or runs up to meet it. In fact, the professionals pull orders to make the drop or run happen quickly so it feels even scarier and lures newbs into taking the wrong side of the trade. Acting like a pro "feels" wrong; it feels like you're a fool for placing an order there and so you're constrained by your own thoughts and feelings and you watch these beautiful price moves transpire without you.

By way of fear and missing out, you are now prone to fear of missing out. The desire to get back what you missed combined with a feeling of invincibility (your ideas were spot on, but you hesitated and missed out) releases the chimp inside you. The chimp says, "Step aside, you fool, and let me handle this!" and then comes the chasing, moving stops to prevent losses, over trading, revenge trading, and so on.

For the style of trading you're describing, you don't need a 5-second chart to limit your risk. All you need is those S/R lines you draw and the ability to place a limit order at the price indicated by the line. There's nothing to watch for or think about on the 5-second chart. Just place the order at the key level with your itty bitty stop and let the winners run.

 

[k p]

k p, i960 has nailed it. You're so afraid of risk that you're using a 5-second chart to put your mind at ease enough to put on a trade. The irony of it all is that your "best possible price" entry doesn't even require an entry setup pattern on the 5-sec chart.

It feels scary to place anticipatory orders because your mind is certain that S/R can't possibly hold as price drops down or runs up to meet it. In fact, the professionals pull orders to make the drop or run happen quickly so it feels even scarier and lures newbs into taking the wrong side of the trade. Acting like a pro "feels" wrong; it feels like you're a fool for placing an order there and so you're constrained by your own thoughts and feelings and you watch these beautiful price moves transpire without you.

By way of fear and missing out, you are now prone to fear of missing out. The desire to get back what you missed combined with a feeling of invincibility (your ideas were spot on, but you hesitated and missed out) releases the chimp inside you. The chimp says, "Step aside, you fool, and let me handle this!" and then comes the chasing, moving stops to prevent losses, over trading, revenge trading, and so on.

For the style of trading you're describing, you don't need a 5-second chart to limit your risk. All you need is those S/R lines you draw and the ability to place a limit order at the price indicated by the line. There's nothing to watch for or think about on the 5-second chart. Just place the order at the key level with your itty bitty stop and let the winners run.

I'm going to reply to this in my new journal NoDoji at the link here: (just need a bit of time... but this is good stuff for sure)

http://www.elitetrader.com/et/index.php?threads/trading-the-nq-take-2.290994/

 

[PABuster]

We were Skyping and calling our trades. He was trading CL and ES and his mindset was impeccable. He cut losers quickly, and if 3 losing trades in a row he stepped away to take a quick break and then came right back to it. I was very familiar with the price action setups he was taking advantage of. I wanted to trade like that and I'd tried in sim but just didn't have the focus or stamina for it at all.

(Hope you're doing well, PA!)

Doing good ND. Hope all is well with you. Lets catch up one of these days in PM.

 

[Buy1Sell2]

Back from a week in Prague. Will post analysis soon.