If you are having software issues download ninja. AMP offers a good demo account. Ninja is way too versatile for tracing stuff on the go. F2 for lines, Ctlr+2 For channels F8 for 50%s, F6 for horizontals. I am not familiar with other platforms, but for this drill Ninja performs quite well.
Trading NQ via Price Action
- Thread starter k p
- Start date
If you are having software issues download ninja. AMP offers a good demo account. Ninja is way too versatile for tracing stuff on the go. F2 for lines, Ctlr+2 For channels F8 for 50%s, F6 for horizontals. I am not familiar with other platforms, but for this drill Ninja performs quite well.
Wow.. that sounds easy. I think I will make what I have work somehow. When it comes to trading, I am all set up with IB and I don't want to have to pay to use a platform unless of course I end up doing very well. Maybe someone else will have a suggestion. Luckily these channels don't have to be drawn in all the time. Once they are there, you just use them, and the lines do auto extend so that won't be an issue. Just got to get them right the first time!
You can go to the Ninja Trader website and get a free copy that you can use with your IB data feed. As long as you are only using it for charting, it's totally free.
I actually did that just last night to plan around with it, but I want to be using what I will be using when I'm actually trading, and paying $50 a month seems silly. I'm fairly certain I can make my multicharts work, its just maybe not the easiest. But other than this issue, it works quite well. I love this minimalist approach to trading by the way so any old platform is really good enough.
So going into today the hourly chart used for the past week appears to need a change. As a recap, "trendlines show trend and potential trend change. Trend channels illustrate the extent to which traders depart from the mean of the channel. Price excursions away from that mean are tethered to it until traders decide to find a new range. " (DbPhoenix)
So looking at my posted hourly chart (which just mimics the one that Db prepared), it seems obvious that the mean is changing, and hence we need a new channel. Now of course we didn't know that before today, but even the past couple of days show that price has been leaving this channel. Since it couldn't get back into it today, I feel as if we need a new channel. It is true that this can show overbought and oversold conditions as I've come to understand, but then price should return to the mean. Here, as posted, it appears that there has to be a new channel drawn, but I'm not exactly sure how.
Moving on, we have the 5 minute chart. Since it was the weekend, we have a gap down at the opening during yesterday evening. As was pointed out, the action prior to open was in a range of 72-52. A couple of hours before open, price tries 3 times to go below roughly 54 and can't. I am especially sensitive to this because taking trades at the extreme is the way to go forward I've come to understand. The extreme being either an upper or lower trend channel line, or areas of previous support or resistance. Here the 52/54 level has shown support it appears, and hence an area to watch.
Dialing down into the 30 second chart, two minutes after open we see this area get tested again, and price bounced off. Heads all the way to 77 and forms a range. Now the range from overnight was defined as 72-52, but this 77 level was the opening high, and hence another possible area to look for. Price tried to break above 79, and couldn't, and all the way down it came to test 54, not once, but twice.
I found it interesting that during chat, the talk of trading in a range seemed to not be taken favorably. I could understand if the range is less than 10 points as there is not enough room between the extremes, but this range is much bigger. The support level of 52/54 was tested several times after all. Now I haven't done any backtesting on this, but it seems to me that in the future, if I see an established level such as this tested several times, I will be looking very closely as price approaches this level again, and if it bounces off, then this would be an excellent place to apply the SLA. Perhaps my supply line might not be broken yet from the down move, but following a retracement off this bounce, after a higher low would I think make for an excellent trade. It worked right at open, it worked again 45 mins later, although perhaps only the second time of this instance since it tested twice within a few minutes and that first test of the second instance would have been stopped out maybe. Then just over 2 hours into the open, price finally broke through that level so no long would have been triggered anyway. Clearly I need rules about how to take this trade, but I think it doesn't get better than trading off S/R levels that have been tested by price many times. So trading a range that is wide enough should be profitable.. only testing will tell.
As I'm getting more comfortable with this, the general trading plan seems to be shaping like this. According to Wyckoff, we first determine trend, then where we are in the trend, and then our entries. So using daily and hourly charts to plot channels. These channels don't provide S/R, but are areas to watch for price action. Next, be aware of areas in the past that have provided S and R in the past week or two, and more recently areas such as opening highs and lows, and daily highs and lows made previous day or even current session. Once price reaches these levels, look at price action to show how buyers and sellers are reacting to this price. Use the SLA as a means of entering the trade.
I hope I didn't mess this up!
So looking at my posted hourly chart (which just mimics the one that Db prepared), it seems obvious that the mean is changing, and hence we need a new channel. Now of course we didn't know that before today, but even the past couple of days show that price has been leaving this channel. Since it couldn't get back into it today, I feel as if we need a new channel. It is true that this can show overbought and oversold conditions as I've come to understand, but then price should return to the mean. Here, as posted, it appears that there has to be a new channel drawn, but I'm not exactly sure how.
Moving on, we have the 5 minute chart. Since it was the weekend, we have a gap down at the opening during yesterday evening. As was pointed out, the action prior to open was in a range of 72-52. A couple of hours before open, price tries 3 times to go below roughly 54 and can't. I am especially sensitive to this because taking trades at the extreme is the way to go forward I've come to understand. The extreme being either an upper or lower trend channel line, or areas of previous support or resistance. Here the 52/54 level has shown support it appears, and hence an area to watch.
Dialing down into the 30 second chart, two minutes after open we see this area get tested again, and price bounced off. Heads all the way to 77 and forms a range. Now the range from overnight was defined as 72-52, but this 77 level was the opening high, and hence another possible area to look for. Price tried to break above 79, and couldn't, and all the way down it came to test 54, not once, but twice.
I found it interesting that during chat, the talk of trading in a range seemed to not be taken favorably. I could understand if the range is less than 10 points as there is not enough room between the extremes, but this range is much bigger. The support level of 52/54 was tested several times after all. Now I haven't done any backtesting on this, but it seems to me that in the future, if I see an established level such as this tested several times, I will be looking very closely as price approaches this level again, and if it bounces off, then this would be an excellent place to apply the SLA. Perhaps my supply line might not be broken yet from the down move, but following a retracement off this bounce, after a higher low would I think make for an excellent trade. It worked right at open, it worked again 45 mins later, although perhaps only the second time of this instance since it tested twice within a few minutes and that first test of the second instance would have been stopped out maybe. Then just over 2 hours into the open, price finally broke through that level so no long would have been triggered anyway. Clearly I need rules about how to take this trade, but I think it doesn't get better than trading off S/R levels that have been tested by price many times. So trading a range that is wide enough should be profitable.. only testing will tell.
As I'm getting more comfortable with this, the general trading plan seems to be shaping like this. According to Wyckoff, we first determine trend, then where we are in the trend, and then our entries. So using daily and hourly charts to plot channels. These channels don't provide S/R, but are areas to watch for price action. Next, be aware of areas in the past that have provided S and R in the past week or two, and more recently areas such as opening highs and lows, and daily highs and lows made previous day or even current session. Once price reaches these levels, look at price action to show how buyers and sellers are reacting to this price. Use the SLA as a means of entering the trade.
I hope I didn't mess this up!
Starting today, still not sure what to do about the hourly channel. In the overnight activity, the price did rise, and as pictured in the hourly chart, price spent quite a bit of time around the lower channel line. My problem is that the channel as is wouldn't have helped with looking for levels in the past couple of days, unless we can make the case that the price was being pulled back into that channel today. If anything, we have a succession of lower lows starting from Feb 26th which do not follow the trend of the lows being more of less within the lower channel line.
Moving on, the pre-market was quite slow. In the next picture, there was a willingness for price to not reach lower lows, so buyers kept up the pressure, but they couldn't get anywhere. At the same time, it seemed slower than usual, so perhaps its a mixture of lack of initiative and lack of ammunition. The lines in this first picture are just meant to show the "squeezing of price". The first half hour of the open was pretty much the same, an inability for buyers or sellers to get anywhere.
Db pointed out that he was looking to hit 20. Now this might be spilling hairs, but the only level I could see there was the previous high on Feb 28th, but this was roughly 23. So I'm not sure if this is where the 20 comes up, but perhaps others will be mentioning this so I will look through their journals.
Price slowly did reach 19, and turned, which could have been close enough to that 20 level I was thinking (#1 in third image). But we tried again, managed to get to 20, but it was slow and drawn out. This 20 level offered lots of resistance, but price just wasn't giving up. We have a succession of higher lows, as indicated by the diagonal line, and yet no penetration of 20. Some would call this a rising wedge, which is a bullish sign, but looking at it from the point of a view of behavior, you can't escape the fact that buyers cannot penetrate this level.
As pictured, I did take a short, seemed liked a low risk trade given the failure of repeated attempts to get past 20. Looking back now, my exit should have been just a bit sooner, when price went higher than the lower swing high pictured at 2. I did get out with a 1.25 point profit. Would have been plenty if I was trading 10 contracts!
I stuck around for quite a while, waiting for that short again. We did reach 23, and couldn't get past it, and this level therefore matches up precisely well with that high from Feb 28th. A short could have been take again after price failed to make a HH after #3, a point lower than the top of this crest as the sell stop to get in, but I was more interested in just watching.
Moving on, the pre-market was quite slow. In the next picture, there was a willingness for price to not reach lower lows, so buyers kept up the pressure, but they couldn't get anywhere. At the same time, it seemed slower than usual, so perhaps its a mixture of lack of initiative and lack of ammunition. The lines in this first picture are just meant to show the "squeezing of price". The first half hour of the open was pretty much the same, an inability for buyers or sellers to get anywhere.
Db pointed out that he was looking to hit 20. Now this might be spilling hairs, but the only level I could see there was the previous high on Feb 28th, but this was roughly 23. So I'm not sure if this is where the 20 comes up, but perhaps others will be mentioning this so I will look through their journals.
Price slowly did reach 19, and turned, which could have been close enough to that 20 level I was thinking (#1 in third image). But we tried again, managed to get to 20, but it was slow and drawn out. This 20 level offered lots of resistance, but price just wasn't giving up. We have a succession of higher lows, as indicated by the diagonal line, and yet no penetration of 20. Some would call this a rising wedge, which is a bullish sign, but looking at it from the point of a view of behavior, you can't escape the fact that buyers cannot penetrate this level.
As pictured, I did take a short, seemed liked a low risk trade given the failure of repeated attempts to get past 20. Looking back now, my exit should have been just a bit sooner, when price went higher than the lower swing high pictured at 2. I did get out with a 1.25 point profit. Would have been plenty if I was trading 10 contracts!
I stuck around for quite a while, waiting for that short again. We did reach 23, and couldn't get past it, and this level therefore matches up precisely well with that high from Feb 28th. A short could have been take again after price failed to make a HH after #3, a point lower than the top of this crest as the sell stop to get in, but I was more interested in just watching.
So having just logged in, I would see price was moving up over the past few hours, nice succession of LL and LHs. But I knew from yesterday that he 23 level was tested and rejected, so it was perfect timing to have just gotten up to watch. And would you know, just as I was pointing it out to Niko, price dropped several points. Here is the chart.
Now I see that Db also posted the daily chart, and today, that 24 level looks to be the top of the upper trend line, so yet another reason why looking for shorts is ideal.
So the game plan for today is looking a short!
Now I see that Db also posted the daily chart, and today, that 24 level looks to be the top of the upper trend line, so yet another reason why looking for shorts is ideal.
So the game plan for today is looking a short!
In follow up to my earlier email, I went back to try and identify what tick charts could show me. This level of 23 has been noted, and hence I am watching price at this level. It is a bit complicated because I see instances of the level being as low as 22 all the way to about 24.50, so looking for a reversal is a bit more difficult. But I guess that is what I am looking for, a reversal. The 3 penetrations of this level are shown with the tick charts.
To be honest, I'm not sure yet what I am looking for. Take 1 for example. At 23.25, it looks like this could be the top, but just a few seconds later, the higher top of 24 is made. Who is to say there wont be another one? If we look for a lower high and short below this, like at 22.50, that makes sense, but now we are a bit further away from where I want to be. If we assume that his level could be all the way up to 24.50, which is roughly how high it got to, then by getting in below 22.50, we are looking at maybe a 3 point stop loss, which seems a bit high. Ideally, I would like to short right at the top if I nailed my level, and put the stop just one point above this. These tick charts look great, but once it looks safe to short, the trade has gotten a bit away from you. Perhaps no worry if it going to drop 10 points, but on a day like today, there just wasn't much to work with. Of course the idea is to trade under favorable conditions though. I am just wondering if i could come up with a scalping technique to at least make use of days like this and action that these S/R levels.
The hinge shown in the second picture came up in chat, but it didn't really go anywhere as price didn't shoot out before it turned into a tiny trading range. It did drop in a few minutes, but this isn't exactly the hinge setup, and it didn't go far. Curiously, it blew past the 23 level and reversed, but it didn't seem to have trouble.
There is no denying that the whole day looks a little choppy though. It was difficult to identify any levels further into the day, but I sure spent a great deal of time watching and waiting!
To be honest, I'm not sure yet what I am looking for. Take 1 for example. At 23.25, it looks like this could be the top, but just a few seconds later, the higher top of 24 is made. Who is to say there wont be another one? If we look for a lower high and short below this, like at 22.50, that makes sense, but now we are a bit further away from where I want to be. If we assume that his level could be all the way up to 24.50, which is roughly how high it got to, then by getting in below 22.50, we are looking at maybe a 3 point stop loss, which seems a bit high. Ideally, I would like to short right at the top if I nailed my level, and put the stop just one point above this. These tick charts look great, but once it looks safe to short, the trade has gotten a bit away from you. Perhaps no worry if it going to drop 10 points, but on a day like today, there just wasn't much to work with. Of course the idea is to trade under favorable conditions though. I am just wondering if i could come up with a scalping technique to at least make use of days like this and action that these S/R levels.
The hinge shown in the second picture came up in chat, but it didn't really go anywhere as price didn't shoot out before it turned into a tiny trading range. It did drop in a few minutes, but this isn't exactly the hinge setup, and it didn't go far. Curiously, it blew past the 23 level and reversed, but it didn't seem to have trouble.
There is no denying that the whole day looks a little choppy though. It was difficult to identify any levels further into the day, but I sure spent a great deal of time watching and waiting!
So premarket today we had a tight range between 29 and 35 from overnight. As shown in 1, this move up bounced off the high of the range. I keep wondering when we get to the edge of a range for example if it will go through or reverse. Would love to be able to read the price action properly. Sure this might only be worth a few points since the opposite end of the range isn't far enough away, but a high probability move, even if only a few points, I think makes for an excellent trade.
At 2, we hit the bottom of this range. Overnight, the low of this range was maybe just a point higher or less, so perhaps as we were approaching this low it may have looked at the time that it was breached, so not sure what I would have done at the time, but just thinking out loud, putting a stop to get in either above or below this zone that is a few ticks away should help. Actually, if I recall, perhaps its a better move to just play the Reversal. If it doesn't jump back into the range it might be best to wait to see what it does. This of course I will explore in back testing. What is interesting here is that a few minutes later we get down to this level again, but we have essentially a higher low this time, so this might make for a good long. Since the past few days have had a small range and been quite choppy, I am looking at ideas to test out for just scalping, a quick 3 or 4 points with several contracts would be a nice humble profit. Just prior to this, at the top end of the range, price makes a lower high, analogous to this higher low, and shorting that could have also gotten you a few points.
Moving onto 3. So price broke out of the range at the open and made a series of higher highs, but its very choppy and lots over overlap. The fact that there are similar higher lows though makes me wonder if this is really trending up, or just going sideways. Are buyers really going to take this higher or not? There is so much overlap with these bars that its hard to see where you could place your trades to get in.
As it turns out, we do break to the downside, but this isn't really all that apparent until price breaks the low of 34 sine it could have just been a very shallow mini trend channel on the way up.
Lets jump to 5 first. The low of the down move does stop at roughly the lower level of that overnight trading range, but only on the first occurrence. Second time it breezes right through. Price retraces up to roughly the halfway move down from the top, but also as was pointed out, to the low of the day after open. It couldn't hold, so this made for an excellent short it seems in hindsight.
Price reverses at just below 25, but I need to investigate if there is anything about this level that has been tested before. 4 is circled because price spends quite a bit of time in this area, and this area is roughly the mean of the overnight trading range. At the end of the chart, at 6, price is once again supported by that trading range.
And just as I type this, something very interesting is happening. So let me post this and follow up with another chart.
At 2, we hit the bottom of this range. Overnight, the low of this range was maybe just a point higher or less, so perhaps as we were approaching this low it may have looked at the time that it was breached, so not sure what I would have done at the time, but just thinking out loud, putting a stop to get in either above or below this zone that is a few ticks away should help. Actually, if I recall, perhaps its a better move to just play the Reversal. If it doesn't jump back into the range it might be best to wait to see what it does. This of course I will explore in back testing. What is interesting here is that a few minutes later we get down to this level again, but we have essentially a higher low this time, so this might make for a good long. Since the past few days have had a small range and been quite choppy, I am looking at ideas to test out for just scalping, a quick 3 or 4 points with several contracts would be a nice humble profit. Just prior to this, at the top end of the range, price makes a lower high, analogous to this higher low, and shorting that could have also gotten you a few points.
Moving onto 3. So price broke out of the range at the open and made a series of higher highs, but its very choppy and lots over overlap. The fact that there are similar higher lows though makes me wonder if this is really trending up, or just going sideways. Are buyers really going to take this higher or not? There is so much overlap with these bars that its hard to see where you could place your trades to get in.
As it turns out, we do break to the downside, but this isn't really all that apparent until price breaks the low of 34 sine it could have just been a very shallow mini trend channel on the way up.
Lets jump to 5 first. The low of the down move does stop at roughly the lower level of that overnight trading range, but only on the first occurrence. Second time it breezes right through. Price retraces up to roughly the halfway move down from the top, but also as was pointed out, to the low of the day after open. It couldn't hold, so this made for an excellent short it seems in hindsight.
Price reverses at just below 25, but I need to investigate if there is anything about this level that has been tested before. 4 is circled because price spends quite a bit of time in this area, and this area is roughly the mean of the overnight trading range. At the end of the chart, at 6, price is once again supported by that trading range.
And just as I type this, something very interesting is happening. So let me post this and follow up with another chart.