Trading NQ via Price Action

[Redneck]

PA is PA

It all works the same

Working with Slugar and Jas (they trade NQ / CL) - the exact same rules / concepts / approaches - apply


The biggest difference imo would be in behavior - but then behavioral differences exist from one stock to another


btw..., imo stocks are not any easier..., or harder - to trade..., just different


RN

 

[k p]

I simply don't understand all the micro-analysis you're doing. Shortly after the open this morning price breaks through the descending pre-market trend line with conviction (by about 4 points) and then pulls back to the breakout level 4295.25 on the 1min chart. So you trail a buy stop 1 tick above the 1-min bars and you're long at 4297.75 or so.

You place a 5 point stop and target and you get your profit.

Or you trail your stop below the 5-min bars and end up scratching the trade on the break of the 9:50ET bar low.

Or you hold the position as long as no previous swing low on the 5-min chart breaks down (you're still holding and you're up over 10 points).

Just pick a couple ideas and test the heck out of them. Apply rules until something works consistently. Breakouts and "hook" turns off pullbacks to breakout levels provide positive expectancy if you take the time to develop a simple plan around them. You won't get perfection; you won't get no losing trades; you will get a positive expectancy trading plan.

The fact that you can't do this and use sim trading until you master it leads me to believe you have a gambling addiction. Looking back at static charts is great for IDEAS, and it's great for gathering stats on a set of rules, but it's not valid until you can apply the rules and make money in sim.

Thanks for stopping by ND!

Well the first thing is that I was looking to taking the first RET after the break. This would cause me trouble on the entry, but for sure I can see how price coming down to the breakout level and going long there would have worked. But how do you come up with your 5 point profit or loss target? I always thought the stop loss should be based on the the swing low, and then your profit target some multiple of this initial stop loss. I know that in my backtesting I could have also picked a fixed set of profit and stop loss targets based on points, but I figured initially that it would be best based on the swing points in the market.

Here is a chart of what you illustrate which I do understand based on what you say, but the fact that you wouldn't take the first RET and using a fixed stop/target seems a bit different than some of the other ways you have shown this. Perhaps you always wait for price to retrace back to the breakout level and you don't just take the first retracement? And perhaps you have found that 5 points is a good value for stop and profit... or is there some other reason why you pick 5 points? I don't see this as a value coming from the market today, but perhaps its based on your statistical testing.

Oh.. one last question if I may, each time you use the phrase "hook", you're just referring to the retracement correct? So today, price broke up, came down to test the breakout level, and the hook is complete when price now goes above the high of the bar with the lowest high to trigger the trade.. correct? (I always just call this the trade triggering above the RET bar, which is the bar with the lowest high)

 

[Fortissimus]

Keeping in mind that Lescor had an average winning day of $3000, and yet an average losing day of $2000, if we cut this by a factor of 10, is it possible for me to average $300 on good days and lose $200 on bad days? I know I can certainly lose $200 on a bad day, this is only 10 points.. LOL... but if I'm not discouraged and keep taking trades, then making 15 points on those good days is more than possible. (The number of bad days of course can't out number the good days)

Okay, been kind of lurking here for a little while because I enjoy NQ journals, trade it sometimes, and you seem to be very interested in succeeding, so I am going to finally chime in a bit if I may.

One of the major issues that I had that took me years to overcome is not being too fixated on the results of my daily profits/risk/reward/whatever blah blah. In trading, as you know, you must have a plan that will make you money over time, preferably with very little draw-down, but what you do each day will vary throughout the days/weeks/months/years. Consuming your thoughts with if I avg this and that is a waste of time in my opinion.

I am sure you already know this, when it comes to profits, you either win often/take little chunks or win less often/take big chunks. Over analyzing numbers in markets that fluctuate in volatility began to seem pointless to me. So I realized that I am with the win less often/take big chunks crowd and I don't really pay too much attention to that anymore. The way NQ has been trading the last couple days, I would just be looking to take whatever I could get. I wouldn't want to create a state of panic subconsciously because I am so fixated on $300 that it hinders my decisions. On the flip side, you also don't want that number to hinder your profit potential when things are going great and you could potentially brutally beat the market down that day.

You must have your max daily loss number that forces you to stop trading for the day to protect your account. That is critical.

Instead I want to think about, how I am going to operate and react today like a champion would. If that means losing today after following my rules and being patient for my setups, fine. If that means taking $100 profit and playing great defense because the market is being a piece of shit, so be it. If that means the market is in full beast mode and I destroy it, so be it. Screw the numbers... Ask yourself, am I trading pro-like? That is what I try to be fixated on now. It took me years to understand this and once I came to this realization, my trading improved dramatically.

Also, try not worry too much about what Lescor or anyone else is doing. It's just more pressure you don't need and it is pointless to consume your thoughts with that sort of thing. He is a different trader, with completely different psychology, and background. I think it is okay to be inspired by a trader, but trying to mimic their risk/reward/profits whatever seems to be both a damaging and limiting to me.

You may not find this information helpful, I don't know. Take it for what it is worth. I just thought I would give you my perspective on a couple things. Keep at it!

 

[k p]

Okay, been kind of lurking here for a little while because I enjoy NQ journals, trade it sometimes, and you seem to be very interested in succeeding, so I am going to finally chime in a bit if I may.

One of the major issues that I had that took me years to overcome is not being too fixated on the results of my daily profits/risk/reward/whatever blah blah.

Also, try not worry too much about what Lescor or anyone else is doing.

That's for posting Fortissimus. Its a shame you don't have more of a posting history.... especially since you say you've been lurking and yet this account you're using was only activated this week. I ran across a post by a member, "garachen" I think it was, who says he knows a guy who makes 1 million a day.. perhaps you're him? LOL (all kidding aside, its just a shame that I'm not too familiar with your posting history)

Yes, you're absolutely right with most of what you say. The swings in daily profits can be extreme, even from week to week, but an edge should certainly keep you on the correct side if you keep trading trades as you should. Because I haven't exactly figured out what the plan is and calculated that edge, I'm still tinkering with things.

Mentioning Lescor isn't to emulate him... he doesn't even actually trade off charts!!! He just uses spreadsheets and formulas I guess that tell him when to enter. The only reason I bring him up is to illustrate exactly what you're saying as well. The fact that a guy who's pulling in hundreds of thousands every year can have losing days is just helping me focus on what my expectations should be. If I start testing something and I see it fail a few times in a row, I think I need to tinker with the trade setup. But this could very well be the worst thing to do as it might still be profitable over a series of trades, and making some trades work better on some days with this tinkering may actually lower the profit overall.

So there is this sweet spot where a trading plan is good enough in that it gives you enough signals to trade, limits the max drawdown, won't have too many consecutive losses to suck your emotional energy, and still produce a profit that hopefully far surpasses BE after taking into account commissions and slippage. Most of all, it has a to be trading plan that fits the trader's psychology. I'm still learning what that is for me! I would like something of the order of a 75% win rate, hopefully a 1:2 or better profit factor, with at least 2 or 3 trades a day, and of course a profit of at least 3 or 4 points to make it worthwhile. I realize that even this will give 3 losses in a row and hence a down day, but I know that if I did the stats myself and trust this number, then the week should turn out fine, even if a day or two don't.

 

[Fortissimus]

That's for posting Fortissimus. Its a shame you don't have more of a posting history.... especially since you say you've been lurking and yet this account you're using was only activated this week. I ran across a post by a member, "garachen" I think it was, who says he knows a guy who makes 1 million a day.. perhaps you're him? LOL (all kidding aside, its just a shame that I'm not too familiar with your posting history)

Yes, you're absolutely right with most of what you say. The swings in daily profits can be extreme, even from week to week, but an edge should certainly keep you on the correct side if you keep trading trades as you should. Because I haven't exactly figured out what the plan is and calculated that edge, I'm still tinkering with things.

Mentioning Lescor isn't to emulate him... he doesn't even actually trade off charts!!! He just uses spreadsheets and formulas I guess that tell him when to enter. The only reason I bring him up is to illustrate exactly what you're saying as well. The fact that a guy who's pulling in hundreds of thousands every year can have losing days is just helping me focus on what my expectations should be. If I start testing something and I see it fail a few times in a row, I think I need to tinker with the trade setup. But this could very well be the worst thing to do as it might still be profitable over a series of trades, and making some trades work better on some days with this tinkering may actually lower the profit overall.

So there is this sweet spot where a trading plan is good enough in that it gives you enough signals to trade, limits the max drawdown, won't have too many consecutive losses to suck your emotional energy, and still produce a profit that hopefully far surpasses BE after taking into account commissions and slippage. Most of all, it has a to be trading plan that fits the trader's psychology. I'm still learning what that is for me! I would like something of the order of a 75% win rate, hopefully a 1:2 or better profit factor, with at least 2 or 3 trades a day, and of course a profit of at least 3 or 4 points to make it worthwhile. I realize that even this will give 3 losses in a row and hence a down day, but I know that if I did the stats myself and trust this number, then the week should turn out fine, even if a day or two don't.

I wish I made a million per day. You did your research on me, you are right, I am new to ET. Or maybe I am not and I am Anekdoten? Kidding... Maybe I need more ET street cred before I post too many of my opinions . LOL

Anyway, just thought I would throw out a couple ideas. You seem like you are on the right track, just keep doing what your are doing and you will get there. Good luck!

 

[jsmacksem]

I wish I made a million per day. You did your research on me, you are right, I am new to ET. Or maybe I am not and I am Anekdoten? Kidding... Maybe I need more ET street cred before I post too many of my opinions . LOL

Anyway, just thought I would throw out a couple ideas. You seem like you are on the right track, just keep doing what your are doing and you will get there. Good luck!

Anekdoten. LOL!

 

[k p]

I wish I made a million per day. You did your research on me, you are right, I am new to ET. Or maybe I am not and I am Anekdoten? Kidding... Maybe I need more ET street cred before I post too many of my opinions . LOL

Anyway, just thought I would throw out a couple ideas. You seem like you are on the right track, just keep doing what your are doing and you will get there. Good luck!

Its not so much street cred I don't think. At this point I am somewhat good about filtering what makes sense and what doesn't, and of those things that might be a stretch or not within my grasp, there is always facts based evidence to support one's claim. So its just more about if the way you trade lines up with what I am looking at. (I am at the moment still being pulled in slightly different directions so I need to solve this)

Just taking the simple idea that the NQ is a mean reverting market would entail that certain principles might not carry forward if taken from a different market. (Are currencies mean reverting? I would almost guess not... so although price action might work intraday, if there isn't a mean to revert to, then many trading strategies might not work)

If you're willing to share your story though, I'd love to read!

 

[Fortissimus]

Its not so much street cred I don't think. At this point I am somewhat good about filtering what makes sense and what doesn't, and of those things that might be a stretch or not within my grasp, there is always facts based evidence to support one's claim. So its just more about if the way you trade lines up with what I am looking at. (I am at the moment still being pulled in slightly different directions so I need to solve this)

Just taking the simple idea that the NQ is a mean reverting market would entail that certain principles might not carry forward if taken from a different market. (Are currencies mean reverting? I would almost guess not... so although price action might work intraday, if there isn't a mean to revert to, then many trading strategies might not work)

If you're willing to share your story though, I'd love to read!

I don't have much of a story. I like to keep my losses small, my winners much larger, and my trading as simple as possible. I am planning on hanging around ET for a little bit, so it will be interesting to see how the rest of my story unfolds.

You seem to be a sharp dude and on your way to cracking the code. Great journal, keep up the good work, and good luck!

 

[NoDoji]

Thanks for stopping by ND!

Well the first thing is that I was looking to taking the first RET after the break. This would cause me trouble on the entry, but for sure I can see how price coming down to the breakout level and going long there would have worked. But how do you come up with your 5 point profit or loss target? I always thought the stop loss should be based on the the swing low, and then your profit target some multiple of this initial stop loss. I know that in my backtesting I could have also picked a fixed set of profit and stop loss targets based on points, but I figured initially that it would be best based on the swing points in the market.

Here is a chart of what you illustrate which I do understand based on what you say, but the fact that you wouldn't take the first RET and using a fixed stop/target seems a bit different than some of the other ways you have shown this. Perhaps you always wait for price to retrace back to the breakout level and you don't just take the first retracement? And perhaps you have found that 5 points is a good value for stop and profit... or is there some other reason why you pick 5 points? I don't see this as a value coming from the market today, but perhaps its based on your statistical testing.

Oh.. one last question if I may, each time you use the phrase "hook", you're just referring to the retracement correct? So today, price broke up, came down to test the breakout level, and the hook is complete when price now goes above the high of the bar with the lowest high to trigger the trade.. correct? (I always just call this the trade triggering above the RET bar, which is the bar with the lowest high)

5 pt stop/target is just an idea, something to test. That's all.

A hook is what it looks like when price pulls back and turns back in the direction of the breakout. On the 1-min chart you get a pullback and if price breaks the high/low of a pullback bar, that is how a hook begins. Think 1-2-3 or cup and handle pattern. Just because price breaks a previous bar's high or low back in the direction of the breakout following the pullback doesn't mean it will result in a true hook with a significantly higher high or lower low. That's where risk management comes in, to control the size of losses. But every hook begins with the break of a previous bar's high/low back in the direction of the breakout (or trend-in-progress) following the pullback. And because every hook begins that way and because when it works, it tends to really gain traction and work well, that's how I enter the trade.

IMHO, this concept is a Holy Grail.

 

[k p]

IMHO, this concept is a Holy Grail.

And I couldn't agree more.

The trick for me right now is to get the numbers right. I see that using the most recent swing low works well, but not well enough as price does often print even a lower low for example just before turning back up. So the trick is to get the sweet spot, where you save enough trades that go to profit, but don't give it so much room that your losers end up costing too much. I think you wrote this very same thing just the other day, so I know I'm in the right frame of mind when I see something for myself that you advocate!

Today to be specific, that first RET would be stopped out, my trade at G, but the second one, where we have the bounce from the breakout level, so the trade above bar "I" in my chart is the one that works (for at least the 1:1).

The trouble I'm having is that if I wait for price to come all the way down to the breakout level, this will make me miss many trades where price doesn't come back. So this makes me want to take the first RET, and I think what I've seen is that the first retracement is often the best one. If this is stopped out, then I have to figure out if the re-entry is called for. This means going long again, after it failing the first time, so trying the same thing twice seems a bit risky in one sense, but on the other hand, if you're filled on the trade, it means that at least some people want to go higher. So I know I just have to figure out the stats on this.