Trading NQ via Price Action

[dartmus]

k p, you need a setup. Take pics of your chart where you think you see an entry and give them the name of that setup. Think of a name that fits and keep all those pics in a folder with that name. The ones that don't have a name can go in a general journal so you have a record of them until you figure out what to name them. Soon as you think you have a good setup then focus on that one exclusively.

Someday you will want the advantages of a spreadsheet. At that time, that part will be easy. Just record the date, time and entry price. Everything else will fall into place. The next easiest (and most important) piece of data that you store will be the stop loss. I could be wrong but I think that eventually all of this can be done in your head but I wouldn't try skipping it before you have a good setup. You must be familiar with this process first. Doing it on paper will help you know which parts are the most important. Then you will be looking for those things when you're scanning your charts. I'm sorry I have used the word "you" instead of I in this but just know that this has been my personal process up to this point and although I'm still not where I need to be I'm getting very near there.

Again, my sincere thanks to everyone who contributes to this journal.

 

[dartmus]

Redneck, not long ago you said a trader can see things on a chart that others can't. That was exactly what I needed to hear and it inspired me.

NoDoji, your mastery of setting a stoploss has been as you can imagine, quite helpful.

Db, the way you organized the steps required to get to where I want to be has enabled me to narrow my focus which is exactly what I needed.

Everyone, I'm still sim trading but I have more hope than ever that I can do this. I appreciate all of you. I've found something useful within the posts of those that others might have thought offensive. I'm sorry I can't recall everyones names but for me personally, I've only encountered one person I couldn't benefit from and that was on a different thread. So please, all of you, keep this thread going because I need it right now and it's an immense help to me.

 

[k p]

So please, all of you, keep this thread going because I need it right now and it's an immense help to me.

See... I knew my loses would be good for someone! Its part of my giving nature!

 

[lotto]

Yes, this was one excellent trade. The reason why I said it might stop you out is because ND does sometimes put her stop just above the high of the bar that sets up her trade. For this trade, this high is taken out by 3 ticks <snip>

You need to ask yourself where she wold have entered. I seem to remember a post or two or twenty by nodji where she speaks of entering on a stop that, in her words "sweeps her into the trade." If this had been traded the way I understand nodoji to trade, this would have a no heat trade.

<snip>and it also does go above the level of the break of the line <snip>

And where has anyone trading price action ever said that price won't come back to test the breakout? You've heard the terms "breakout pullback" or "retracement"? This is where you show that for all the watching and "work" you've done, you really are still at Day 1.

When RN says that a trader looks at his or her chart and sees what others don't, he is correct. The way to learn to see that which others don't is to do the real work DB and nodoji have suggested. I can guarantee that anyone who has "got it," has done the work, whether speadsheeting, journaling, or some other means of organizing one's observations. GofB, for example, did not learn to trade as he does simply by "winging it." There are several approaches that one could use to succeed at this, but short of doing the work and learning to see that approach and knowing how it works and why it works, or as RN would say, "owning the set up," you'll just keep spinning your wheels.

Are you sure you're not the poster formerly known as "increasenow"?

 

[k p]

A - Looking over the overnight action, this level around 4000 stands out for me. I have a level drawn on my hourly chart at 3998 that I mentioned before, and overnight, I see multiple rejections of 4000, with this one here at "A" being the most recent.

B - We do break through, and then just a bit of consolidation.

C - Now here is the tiniest of tests. I actually have this drawn as a SL, but its so flat that it is practically a horizontal level. In fact I first had this drawn in as a horizontal level that showed R then S, but I could also see how this could in fact be a 5 min SL slopping down ever ever so slightly.

D - After the open, we turn around here after rejecting going higher.

E - And one more trip down, forming all higher lows above this level. This makes me mark in a long above this bar. (too many days I also see that I miss the long off a second higher low after the open... it happens so much that this could almost be my one and only setup! LOL) Price really started to take off, and with this little jump in price, who even know if I would be filled.

F - We seem to now break above the opening range, and we have a solid RET and an op to go long again. Its only good for about 5 points before price comes down.

G - So we come down to here, and even before we get here, I mark in where the mean of the opening range roughly is. I just wait for the bar to close, and then mark in a long 1 point above. It would fill at the top of the very next bar and price would come down right away.. yikes!

H - Above this bar, we do form the tiniest higher low.. so far so good.

I - And it all falls apart here since it broke the previous lows. (Of course as I type some more, price appears to take off again, and then drop, so its messy.)

SUMMARY

Ok.. that's it. I had to go to work yesterday evening so I couldn't review the day in nearly enough detail, and there was so much good stuff to review that it makes sense to do this rather than focus too much on price moving live right now.

Reading over so many comments over the past few days, and focusing on Db's thread about NQ, its absolutely imperative to nail down the context. When I look at my silly trades yesterday, all within the 10 point range, having used up all my mental and emotional resources (some financial as well), there was nothing left to take the long that appears as price left that range.

I know this is elegantly so simple once you nail down what is important to see, and hence, I feel that I am still pointing in the right direction, even if I don't appear to be getting very far.

Less posting, more studying!

(Great to hear though, as per the previous posts, that people are enjoying my journal. It might be frustrating for many of the experts to read about my struggle when I seem reluctant to do what is necessary, but at least there is some value in it as both experts and amateurs seem to follow along. I may appear hopeless at times, but the important thing is that I am still moving forward, I am still trying, there are still people helping and guiding me, and there is still money in the account for when the plan has been worked out. The only failure would be to give up, and that's not on the table.)

 

[NoDoji]

I stumbled a bit when I really sat down to do this last night for the first few days this week. I had more questions about the setup than I did answers, and I couldn't even say if this thing that I'm looking at here is the setup or not. I tried to track all the parameters you outline, and this is where I got stuck. I do of course fully understand tracking if the entry right at the break is better than an entry above or below the RET, but when the time factor was involved, I didn't know what to do. I didn't know if I should collect these stats for a set time period after the break, or at what point I should measure. (ie. At 2 minutes, the trade might be working, at 5 minutes, it might not) Without knowing what R:R I'm looking for, since the idea is to find out what the ideal R:R would be, I just didn't know how to collect this data.

I think moving forward I may jut have to pick something first, such a a fixed stop of 4 or 5 points, or pick a fixed stop based on the breaking of the low or high of the previous bar, and track this, tracking just this one thing. Then I could just say "ok, over the past 20 occurrences, price hit the profit target of 2 times the stop 60% of the time if the stop would be the low of the previous bar". But then of course if I want to see what would happen if I pick a different stop, then I'd have to go through the exercise all over again. The whole spreadsheet data collection I couldn't wrap my head around.

The setup is basic. You connect swing highs/lows on a 5-min chart. Other than a massive news-driven price bar (which can be treated as a swing high/low in and of itself when indicated), you want to have an actual swing, meaning more than one or two pullback bars on that 5-min chart.

So you have the connecting line and when price breaks through it, the setup has signaled a possible trade.

Now collect stats.

In fact, make it easy on yourself and do a "guess and check" analysis, meaning analyze a variety of R:R combos for the last 100 consecutive appearances of the setup/signal.

Do a dual analysis of these combos to determine the best method of entry (limit at the breakout zone, anticipating it will hold, or trailing a stop above/below either the pullback bar that reaches the breakout zone, or whatever other pullback idea you can think of).

So you'll have two analyses, one for limit at breakout zone and the other for trailing a stop.

Within each of these scenarios you check the result of each of these stop/target combos (measured in NQ points):

2/2, 2/4, 2/6, 2/8, 2/10

3/3, 3/5, 3/8, 3/10

4/4, 4/6, 4/8, 4/10

5/5, 5/8, 5/10

And so on. You can even test negative R:R values just for kicks, but with a setup like this I doubt you'll find positive expectancy because failed breakouts usually result in very strong moves the opposite direction.

If you think this is too much work, I personally believe you'd be far better off donating the balance of your account to your favorite charity because you have no idea how your capital will be used by the market participants who will continue to take it from you.

 

[Alpha Trader]

When RN says that a trader looks at his or her chart and sees what others don't, he is correct.

The above quote completely contradicts the quote below:

You need to ask yourself where she wold have entered.

 

[k p]

The above quote completely contradicts the quote below:

Sorry AT... I'm a bit lost. Who is this in reference to? The person who wrote this got lost when you quoted so I'm not sure who this is directed to.

 

[k p]

If you think this is too much work, I personally believe you'd be far better off donating the balance of your account to your favorite charity because you have no idea how your capital will be used by the market participants who will continue to take it from you.

Its only work when I was lost even before I started!

Ok.. first chart, the 5 min with the obvious SL and you can see where it breaks.

2nd chart outlines my difficulties when I was trying to do the spreadsheet method of tracking ticks. By just tracking how far price moved against me or in my favor, the time was the missing variable. I didn't know when I should be making my measurement and I illustrate this on this chart based on two possible places to take that measurement.

3rd chart shows what I think you mean to say going forward now. This means that if I test 2 or 3 combos of hitting a fixed set of NQ profit points or loss points, I might find none of them good enough and then I have to pick a new set of points to test, but at least this way I understand.

So if this is the correct way, I can take 100 screen captures, and just go through them and find something doable for me that I am comfortable with and seems realistic. If I don't get a good result, at least I have my 100 screen captures to go over again. But just for now, keeping in mind with how the NQ moves and what seems like a fair number for a decent potential and a safe stop that won't be hit too easily by the algos, 8 points profit, 4 points loss, and hope that my win rate is at least 50%. This would be a fabulous result and very much like what geez did in his thread. (i remember reading somewhere that you found inspiration in his thread)

I'm sorry if I'm coming off lazy ND... I'm really just lost. So many people are saying so many things at once in these past few weeks and my head is spinning. Combine this with work outside of trading and the girlfriend, then losing money, being told I shouldn't be trading, sleep deprivation, and of course the fear that maybe I'm too stupid for this. etc...., its just lots at once. I'm not losing it though, just overwhelmed. All I mean to say is that I am absolutely fully trying and trying to balance everything. On the one hand I could close down my journal for a week or two, but without something solid to work on, I might just be lost and alone. By posting, I may still be lost but at least continually guided. I put lots of work into these charts to illustrate what I think you're saying so I hope you see that I really am trying.

 

[bh_prop]

That's a start KP but aren't you reading her setup/entry incorrectly? As I understood the setup was a 5 min close above the SL then enter 1st pullback using the 1 min chart. The 1st 5 min close above SL was 3992.75 and there was NO pullback to enter on til after 3999.50 was reached, after which I would argue the trade has already run its course and you need to look for a new setup. One of the drawbacks of entering on pullbacks vs taking every breakout: true, you will reduce your risk but you will also miss out on a few good ones (like the example you chose).