Trading NQ via Price Action
- Thread starter k p
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A - We were forming quite the long and drawn out hinge before open, so looking for an exit.
B - We have one here, or you can call it a break of the SL with RET so we can go long here. No trades taken today, so no exists even, just showing possible stuff I had going on in my head. I especially like this one. Still going with my theory of getting in before the open. Either it takes off in my direction, and I'm already in, or I get out right away.
The other issue is that I'm more nervous to get in later, not knowing if the move will continue or not... but will work on that, maybe getting in too soon won't end up being too smart after all.
C - This would be a second entry. Notice here, price will move against me a good point after it is filled before it takes off. Hard to see with this compressed chart. The trade at B moves less than a point away from my entry.
D - We quickly go up, but quickly go down. No way would I have held the position all the way down. On the second try up, we fail. But since we are forming a big of a hinge, its tough what to do.
E - We eventually BO the bottom. Here at E, my stop to get in is placed within the bar because I followed a RET by watching just the right tick. I get into the move sooner, but it ultimately doesn't work.
F - In contrast, waiting for the 1 minute RET my entry would be placed here which never triggers. Now I don't have my SL drawn in, so not sure what I was thinking in real time, but by getting in at E, the price is better, although it might be stopped out for even a loss, whereas entry at F is never triggered.
By using entries sooner, I'm sure I put on many more trades and have to scratch way more often, but will this lead to smaller losses and potentially bigger gains? If price continued down I have more than a point extra profit. And if I was just triggered at F, I surely have a bigger loss there than getting in at E. At the moment, who knows, but something to think about.
So from here on in, it gets ugly. Breaking the high of D is tough, and although we break the low of F it doesn't go far at first. I do have lines drawn in, but most of this was done way into the move, and since it looked like a big trading range, I was waiting for it to get out first.
G - Here at G I get back into the groove, but notice how getting stopped into the short would very quickly work against me on this next bar.
So the question seems to be this. Either wait for a break out of the range to a totally different level, or keep playing within the range, scratching without hesitation and eventually you will be in a move that exists.
On the one hand, I don't want to be over trading, on the other hand, I want the better price. If I stick to the SLA method, it does say to wait for a different area after two scratches. Need to think about this a bit.
In terms of the prep work this morning, we broke above the channel, came back down into it, and nothing too spectacular happened, yet.
B - We have one here, or you can call it a break of the SL with RET so we can go long here. No trades taken today, so no exists even, just showing possible stuff I had going on in my head. I especially like this one. Still going with my theory of getting in before the open. Either it takes off in my direction, and I'm already in, or I get out right away.
The other issue is that I'm more nervous to get in later, not knowing if the move will continue or not... but will work on that, maybe getting in too soon won't end up being too smart after all.
C - This would be a second entry. Notice here, price will move against me a good point after it is filled before it takes off. Hard to see with this compressed chart. The trade at B moves less than a point away from my entry.
D - We quickly go up, but quickly go down. No way would I have held the position all the way down. On the second try up, we fail. But since we are forming a big of a hinge, its tough what to do.
E - We eventually BO the bottom. Here at E, my stop to get in is placed within the bar because I followed a RET by watching just the right tick. I get into the move sooner, but it ultimately doesn't work.
F - In contrast, waiting for the 1 minute RET my entry would be placed here which never triggers. Now I don't have my SL drawn in, so not sure what I was thinking in real time, but by getting in at E, the price is better, although it might be stopped out for even a loss, whereas entry at F is never triggered.
By using entries sooner, I'm sure I put on many more trades and have to scratch way more often, but will this lead to smaller losses and potentially bigger gains? If price continued down I have more than a point extra profit. And if I was just triggered at F, I surely have a bigger loss there than getting in at E. At the moment, who knows, but something to think about.
So from here on in, it gets ugly. Breaking the high of D is tough, and although we break the low of F it doesn't go far at first. I do have lines drawn in, but most of this was done way into the move, and since it looked like a big trading range, I was waiting for it to get out first.
G - Here at G I get back into the groove, but notice how getting stopped into the short would very quickly work against me on this next bar.
So the question seems to be this. Either wait for a break out of the range to a totally different level, or keep playing within the range, scratching without hesitation and eventually you will be in a move that exists.
On the one hand, I don't want to be over trading, on the other hand, I want the better price. If I stick to the SLA method, it does say to wait for a different area after two scratches. Need to think about this a bit.
In terms of the prep work this morning, we broke above the channel, came back down into it, and nothing too spectacular happened, yet.
So not much has changed overnight. We hit a high of 3665 and have back off about 10 points since then, which puts us pretty much to where we ended yesterday.
Curiously, on the hourly chart, the top of that green channel before seems to be acting as support now, but I'm not really going anywhere with this, just an observation. Because we are riding the trend channel lines, we can stay in or out, but two areas might be 3710, which would put us at the the mean in the daily chart, or just a hair below 3600 which is the mean on this hourly chart from March.
We have had a strong move up since the 27th based on the hourly, but have leveled off a bit now for the past couple of days, so maybe traders will make a move one way or the other, or we just continue sideways.
Curiously, on the hourly chart, the top of that green channel before seems to be acting as support now, but I'm not really going anywhere with this, just an observation. Because we are riding the trend channel lines, we can stay in or out, but two areas might be 3710, which would put us at the the mean in the daily chart, or just a hair below 3600 which is the mean on this hourly chart from March.
We have had a strong move up since the 27th based on the hourly, but have leveled off a bit now for the past couple of days, so maybe traders will make a move one way or the other, or we just continue sideways.
My eyes having opened up a bit more now, I see price was coming down since it hit the high overnight, and reversed off 3654 twice as shown in the line in this chart here. Lets see if this acts as support again. It certainly appears that price slowed down and doesn't want to go lower so is just going sideways waiting for buyers.
A - Prior to open we have a SL drawn in. The blue horizontal line represents the price level 54.25 that was touched 3 times and acted as support.
B - Here we just had a break of the SL, and we have a RET. Eventually we can draw in our DL, but already at C I am thinking we have a good setup for a long. The 3 tests of 54 i very much like, and now I will just follow the RET. I did actually place a stop to go long here at about 57.
D - We get here, and can trail our stop to get in. Naturally I'm anxious. I see good reason for a trade, but scared to get filled! LOL I got a little distracted with chat, and since price moved down, I didn't actually trail my stop to get in but took the trade off.
Within a minute of course it would get hit and not look back, and my confirmation would be the higher low. Such a shame, oh well, CSW.
E - We follow the DL up, and right around open its broken so get out. Would have been around 4 or 5 points. I am liking this premarket action lately, once again to get into a trade before open, prepared to scratch right away if needed, but its easier to get in when its moving slower.
The black arrow represents the exit, but the red arrow down was now a short entry. Its based on looking at the right tick, and because the behavior seemed to really show selling, I would take it.
F - Here at F we have the classic SLA entry of the first official RET.
G - We do make it past the low of 54 that I was watching closely, but not by much. On the way back up the SL is broken, so out at G. In this case, the entry at E would have been profitable, the entry at F just about break even.
H - Bounce off the opening high... lets marks this in now with a line.
I - Here we have a nice 50% of the of the up move.
J - Price breaks the level of 65 with force, looks to be a solid BO. Although I didn't think to take the long at J, Db mentioned how the RET on the right tick could give you enough of a reason to enter, just like how I did at E.
These are tricky though. Its hard to test for them by using a hindsight chart, only reply would do as was pointed out in chat, and sometimes they work to get you in at a better price and more profit, other times they put you in a trade you gotta scratch for BE or a small loss that would have never happened had you waited for the official RET of the actual 1 minute bars.
There is one important nuance here that Db made, and this was about where this happens, and since we have what appears to be a BO from the range, its justifiable.
K - This was pointed out as 50% of the move from bottom to top. It is also a higher low from I.
L - This area was interesting. We broke out of the 64 level again, no problem, but could barely get above the highs of J, and each bar that went higher by a tick also dropped back down strongly. The bars are quite long, and watching it in real time, major indecision.
M - What looks like a nice move down really isn't. Right at about the level of where M is placed we have that 50% level to get past, and we clearly hesitated for almost 10 mins. Then we have another hesitation at the low of 54ish around N. So although its a drop of 20 points between the extremes, really difficult to trade, and since we were in a range, it was a reason to stay out.
O - This was interesting here. A DL can be drawn as I have shown, we have a RET, so a long could be placed above the RET, which just gets filled before it goes down and breaks the DL.
The problem here as Db pointed out is we have gone sideways for 20 mins. So taking that into account, it would be best to wait to leave this range.
B - Here we just had a break of the SL, and we have a RET. Eventually we can draw in our DL, but already at C I am thinking we have a good setup for a long. The 3 tests of 54 i very much like, and now I will just follow the RET. I did actually place a stop to go long here at about 57.
D - We get here, and can trail our stop to get in. Naturally I'm anxious. I see good reason for a trade, but scared to get filled! LOL I got a little distracted with chat, and since price moved down, I didn't actually trail my stop to get in but took the trade off.
Within a minute of course it would get hit and not look back, and my confirmation would be the higher low. Such a shame, oh well, CSW.
E - We follow the DL up, and right around open its broken so get out. Would have been around 4 or 5 points. I am liking this premarket action lately, once again to get into a trade before open, prepared to scratch right away if needed, but its easier to get in when its moving slower.
The black arrow represents the exit, but the red arrow down was now a short entry. Its based on looking at the right tick, and because the behavior seemed to really show selling, I would take it.
F - Here at F we have the classic SLA entry of the first official RET.
G - We do make it past the low of 54 that I was watching closely, but not by much. On the way back up the SL is broken, so out at G. In this case, the entry at E would have been profitable, the entry at F just about break even.
H - Bounce off the opening high... lets marks this in now with a line.
I - Here we have a nice 50% of the of the up move.
J - Price breaks the level of 65 with force, looks to be a solid BO. Although I didn't think to take the long at J, Db mentioned how the RET on the right tick could give you enough of a reason to enter, just like how I did at E.
These are tricky though. Its hard to test for them by using a hindsight chart, only reply would do as was pointed out in chat, and sometimes they work to get you in at a better price and more profit, other times they put you in a trade you gotta scratch for BE or a small loss that would have never happened had you waited for the official RET of the actual 1 minute bars.
There is one important nuance here that Db made, and this was about where this happens, and since we have what appears to be a BO from the range, its justifiable.
K - This was pointed out as 50% of the move from bottom to top. It is also a higher low from I.
L - This area was interesting. We broke out of the 64 level again, no problem, but could barely get above the highs of J, and each bar that went higher by a tick also dropped back down strongly. The bars are quite long, and watching it in real time, major indecision.
M - What looks like a nice move down really isn't. Right at about the level of where M is placed we have that 50% level to get past, and we clearly hesitated for almost 10 mins. Then we have another hesitation at the low of 54ish around N. So although its a drop of 20 points between the extremes, really difficult to trade, and since we were in a range, it was a reason to stay out.
O - This was interesting here. A DL can be drawn as I have shown, we have a RET, so a long could be placed above the RET, which just gets filled before it goes down and breaks the DL.
The problem here as Db pointed out is we have gone sideways for 20 mins. So taking that into account, it would be best to wait to leave this range.
Yesterday ended up being quite the day. As Db addressed in the backtesting thread, there really wasn't much of a way to know. Actually, now that I think about it, I said similar things in my journal for why taking a short at the top when we got just outside of the range and holding it all the way down was problematic, and even taking that short to begin with wasn't the obvious trade as it was happening.
What's interesting is after we hit the bottom, we retraced that move to roughly the 50% level. I kept the green channel on my chart still, and it looks like price is riding the mean again. In terms of the longer term blue channel, we are closer to the top than to the mean, but at the same time, we have been poking out of the top of the channel a couple of times now anyway.
I see in Db's chart that he has gone ahead and drawn in a DL across the bottoms, which is roughly the bottom line of the green trend channel, but he has also drawn in S/R resistance line as possible areas for price to do something.
That's what I see for now!
What's interesting is after we hit the bottom, we retraced that move to roughly the 50% level. I kept the green channel on my chart still, and it looks like price is riding the mean again. In terms of the longer term blue channel, we are closer to the top than to the mean, but at the same time, we have been poking out of the top of the channel a couple of times now anyway.
I see in Db's chart that he has gone ahead and drawn in a DL across the bottoms, which is roughly the bottom line of the green trend channel, but he has also drawn in S/R resistance line as possible areas for price to do something.
That's what I see for now!
Well everyone knows we had a big drop in the NQ today, and entries based on the SLA could have been made practically anywhere today for profitable trades.
Looking at the bigger picture is what really jumps out today. The posted chart is the hourly. By following the longer term trend channel, the blue one, we can see that we made an attempt to get out of it, but quickly turned down, hit the mean, and went almost to the bottom.
Now I'm not looking for this to be an exact science, but I wonder if the channel needs a bit of a tweak. The past several days have seen breaks above, but perhaps that was just signaling an overbought price, which is what these channels are supposed to tell you. The mean of the channel is what is most important, and the mean seems to hold up well with price reacting to it on many occasions.
Its funny how when you take a bit of a longer term view, such as even a 5 minute chart, the smaller swings tend to fade a bit, and the bigger moves or price can be seen without the distraction of price moving against you by a point or two.
As a new trader who will be starting out with just one contract, a 5 point move is $100 so this isn't something to be taken lightly, and hence the 1 minute chart is still in my view the best way to trade. But when I look at the hourly charts, that expression of missing the forest for the trees comes to mind. Its as if you forgot about the money, and only used this hourly chart to place trades based on the upper channel and lower channel, along with the mean, you could do just as well with less work, but perhaps more stress since your money risks are just so much higher.
I would love to know why prices stay within these channels, why price returns to the mean, until traders look for a different mean that is. The why of course doesn't matter as much since money can be made off of just knowing that this works. But its funny how the collection of traders, the market, picks a mean, deviates from it, comes back to it, and eventually picks a different mean to follow. Since the mean is separate from the chart, how does a mean get formed?
Great day today though!
Looking at the bigger picture is what really jumps out today. The posted chart is the hourly. By following the longer term trend channel, the blue one, we can see that we made an attempt to get out of it, but quickly turned down, hit the mean, and went almost to the bottom.
Now I'm not looking for this to be an exact science, but I wonder if the channel needs a bit of a tweak. The past several days have seen breaks above, but perhaps that was just signaling an overbought price, which is what these channels are supposed to tell you. The mean of the channel is what is most important, and the mean seems to hold up well with price reacting to it on many occasions.
Its funny how when you take a bit of a longer term view, such as even a 5 minute chart, the smaller swings tend to fade a bit, and the bigger moves or price can be seen without the distraction of price moving against you by a point or two.
As a new trader who will be starting out with just one contract, a 5 point move is $100 so this isn't something to be taken lightly, and hence the 1 minute chart is still in my view the best way to trade. But when I look at the hourly charts, that expression of missing the forest for the trees comes to mind. Its as if you forgot about the money, and only used this hourly chart to place trades based on the upper channel and lower channel, along with the mean, you could do just as well with less work, but perhaps more stress since your money risks are just so much higher.
I would love to know why prices stay within these channels, why price returns to the mean, until traders look for a different mean that is. The why of course doesn't matter as much since money can be made off of just knowing that this works. But its funny how the collection of traders, the market, picks a mean, deviates from it, comes back to it, and eventually picks a different mean to follow. Since the mean is separate from the chart, how does a mean get formed?
Great day today though!
Precise enough for you yet? 
Precise enough for you yet?
LOL.. price listened to me!