Trading NQ via Price Action

PREP FOR JUNE 16

Ok... this morning is a bit confusing as well because of these contract roll-overs. All the numbers I have in my head just don't match up. I'm a bit surprised that the June 14 contract is still trading, its not called June 20, but oh well. I know we hit a high of 3806 in the June contract, but the Sept contract only has a high just under 3800. I know that at investing.com, they do have the 3806 printed, most probably since the volume was higher that they so they use the number from a higher day, but if I use this, if I use my continuous contract in my charts, I'm not getting the 3806 high, even though I have it set to use the number from the days with the higher volume.

At any rate, what this means is that I'm just not sure where my levels should be. So my longer term levels will have to be put to the side perhaps, and just use where price has been for the past 2 days for this fresh new contract.

So with that in mind, overnight, I am consider the range from 55 to 64 with a mean of 59. Curiously, we just appear to have bounced off 64.25, so close to the top, although I don't really consider it the top of range until it has been tested several times and acts as a top of a range. This really isn't a trading range per say, but price is certainly contained with a narrow price range.

Highs and lows for yesterday are 79 and 53, and visually, 68 is level that jumps out at me. Excuse the cure box drawn in the attached 10 minute chart.... it has a mean of 68. I'm trying to figure out the best way to show this 68 level, whether it comes from the range, or the hinge. Its almost as if I'm curve fitting, making the data conform to the levels I want, but I am just trying to visually see where the important levels were.

There is a fairly prominent swing low at 44, but we are rather 20 points away now, so hopefully I won't be waiting for that till I make a move. Based on the hourly charts, we seem to be heading down now, but since overnight, we are climbing from hitting the ultimate low at 3750. This bounce at 64 could be a resistance level.. will have to see what happens at the open.

Note in my chart that only the past 2 days have volume. On the 11th of June there is hardly any so who knows about how important the levels from this day are, getting back to my original point, and the June contract has price levels that were about 5 or 7 points higher on that say.
 
Going to try and condense my post analysis. I should just talk about what I did, and not wallow so much in all these great trades I saw at the time but did nothing about. Of course I need to discuss what I can do better for the next time, but this is a bit different than spending so much time on a specific trade that is gone.

A - 2 minutes into the open we have a fairly large REJ of 59.

B - 4 minutes into the open, we aren't able to breach the opening high, so I think to go short at the arrow marked on this bar. It clearly doesn't work, but no trade was taken so no exit.

C - By about here we should notice the higher low, the hinge, and the exit from the hinge. Still waiting to breach the line I have marked at 64.75, the top of my range. I have to remember that my levels that I have drawn in could just be in my head, they aren't ultimate tops and bottoms, so might be of no use. More importantly, its the opening high we haven't yet breached... that one will carry for significance as its the heavy volume or traders at the open that really have the power to move the market in a direction, and if they can't bring it above the opening high, this is a problem.

D - Went long here, breaking above the high of yesterday.

E - Tried to hold on but couldn't. Notice the 15 sec insert chart... it just didn't look good at the time to me since we couldn't break 73 and started to turn down. Worst place to sell of course as price barely moved lower. I was for sure in profit protecting mode.... seeing as I hit about $60 already and didn't want to go all the way to $0 or negative. In the back of my head of course I thought that since we broke out of the hinge, we might at least make it to yesterday's high. What I have going for my exit is that for about 2 minutes we were stuck in a little range, and on my exit, we see price dropped below this tiny range.

Perhaps this is a good place to just say that I am fully aware of how important it is to learn the right lesson, but right now, I don't know what that is. Some days your exit teaches you that its good to get out right away, other days you're taught to hang in longer. Will hanging in longer prove to be more damaging in the long run? No idea.... and on top of all this, protecting tiny profits or preventing losses is counter to what you need to do to make money. So if all I'm ever doing is preventing a loss, I don't think I can make any money that way.

F - Price took off quickly after my exit. No worries, its gone, and I exited for a reason that looked good at the time, though it was in fact just a pause. It appears here that we hit some R below yesterday's high.

G - Looking for a short now as I think I have a really good setup. DL would be broken by now, and I have a DT. First one wouldn't trigger.

We then form a higher low.... looking good.... and then another high low. Second short doesn't trigger as well, price can't break 72.50. Usually I am seeing that when price bumps up against a level, either from top or to bottom, and can't cross, but at the same time goes less further away from this level, it usually breaches. Here we do bounce off, going above the lower highs. The fact that I am expecting a short which doesn't trigger should be of some value.

H - We break the PDH, keep coming down, and this short looks good and would trigger. I would more than likely hold to at least 80.75, which would cost me, ouch, just under 4 points. Showing the 15 sec as well to illustrate how good the trade looked to me given the slight poke above the PDH and then the REJ of this level.

I'm not into the groove too well today so I'm not even actively watching at this point.

CONCLUSIONS

First trade was entered too late. There is just so much going at the open, REJs of both sides, the hinge, the levels that I have outlined, so it makes it difficult to know what to see. Most important here now as I see it is the hinge for 7 minutes, and then price leaves. The entry could therefore be lower than mine which was quite far away at 69.50.

Second problem is that I'm getting out way too soon. Price actually moved against me at one point more than what my actual profit was. If I keep trading like this, I will continue to lose money.

As I'm now tracking, there is usually a better place to get out than where I actually do, for the most part. Rarely do I get out just in time before price moves drastically against me. More than likely, a wave comes back close to my entry price, and when it doesn't turn around in the right direction, an exit for a better price can be made. Here, hanging on just a bit longer would bring me to at least 77, so an exit of perhaps 75 or 74.

Summary: up +$26
 
Well... here we are... 2 hours later... and when you look at this chart, it just doesn't look that bad. Yes there is some chop in the top half, but when you're calm and cool and can hang in there for these areas of chop, you could perhaps have made 15 points up and 15 point down. My chart still has my tiny little long in there... don't laugh! hahaha...

Basically, getting in early... once you see which direction its going to go is key. Then you just hang in. If its a mean reverting day, price will come back to your entry so maybe you're out break even, but you should at least take your profits at the 50% level, if not at the break of the DL (if your line is too tight then it will break, hence at least why I mention the 50% level). Or else its a trending day, and you're in the trend so can take your profits much closer to the top when it stalls and the sideways action breaks the DL, like here at 82.

I do see every day that if I am less worried about protecting profits and about every damn tick, profits actually accumulate much faster.
 
Well, here we are at the end of the day almost, and its one of those days again where when you really know what you're doing, making money trading is actually easy, and the mean reversal bites you in the ass or makes you really rich when you monopolize on it.

What really jumps out at me is the 50% retracement of the down move. If we consider the move to be 83-54, the 50% is roughly 68.5 to 69, which is pretty much exactly the level price is gyrating around right now. This is also damn close to the 50% level at 68, marked in the green dashed line, that I outlined in prep since it seemed to carry some significance.

Following the posts by Db over at TL, we are all miserably failing at the simple SLA approach. I do feel a bit conflicted in that it seems to be a bit of a contradiction to follow the lines, yet at the same time drop them and follow the behavior of traders and the rejections more so, but I know deep down its all the same thing, and they don't really contradict each other. Yes there are definite decisions the traders has to make, such as what constitutes an exit, meaning how does price interact with the drawn in SL or DL, so there is some interpretation necessary. But the inability to stay in a trade that might still be working, or the inability to get in at the right place, is what is causing so much of the problems for me.

Aside from fear, which is obviously big, I am not really giving enough time for these moves to work themselves out as I've mentioned. I am expecting price to go in my favor instantly without ever looking back. I also get worried when price goes too far away from a SL or DL, and yet when its all done at the end of the day, its interesting how the first one drawn with perhaps a minor tweak is usually the best.

I actually had an order in initially to go long today at 61, way below where I actually went long at 69, but it didn't get filled cause price blew past me before I confirmed, and I wonder if that would have given me more breathing room to capture more of the move as opposed to exiting when I did. Also, it is imperative to notice when there is a change in trend and follow price with a trade in the opposite direction. So many times in these past few weeks we have had price retrace all the way back to the beginning, if not further, making for a move that is perhaps 20 points one way and then 20 points the other.

As Db says, trading well should be the goal, not the money. The money will follow once the trading is solid. The analysis seems easy at the end of the day, but in the middle, its less clear, and each point against me is something that cannot be overlooked. This is obviously not getting me anything, just one day good day will more than make up for all of my loses since I've started so I really have to make a decision to continue to micro-manage and get messed up, or take a bit of a risk, not worry as much, accept some ebb and flow, and capture more of the move. Clearly what I think and feel isn't working, so I need to change something.
 
So we came to rest at 72, and 72 is the 50% of the bigger move from 3800 to 3744 that occurred on the 12th. My gosh, over a 50 point move from top to bottom, if only one has the discipline to hold on long enough.
 
PREP FOR JUNE 17

Some news must have obviously come out that made drop price 15 points in just minutes, but since then we are retracing back up somewhat.... but the drop can obviously easily resume at the open.

No time for a more thorough analysis since I was caught up in another thread. As always, I have previous days levels plotted in, paying attention to the mean and extremes and areas of congestion where traders found lots of trades.

Getting in early into a move is what I'm looking for, holding on is what I'm striving for, until its obvious that traders are changing which way they want to go.
 
k p said:
PREP FOR JUNE 17

Some news must have obviously come out that made drop price 15 points in just minutes, but since then we are retracing back up somewhat.... but the drop can obviously easily resume at the open.

No time for a more thorough analysis since I was caught up in another thread. As always, I have previous days levels plotted in, paying attention to the mean and extremes and areas of congestion where traders found lots of trades.

Getting in early into a move is what I'm looking for, holding on is what I'm striving for, until its obvious that traders are changing which way they want to go.
More...

"Some news must have obviously come out"...

http://www.forexfactory.com/calendar.php

http://online.barrons.com/mdc/public/page/9_3063-economicCalendar.html
 
Today was much better in many ways. Not because I made a killing, but because I was calm and somewhat patient, trying to see the bigger picture.

A - So we instantly drop at the open, but I restrain myself, trying to wait at least 5 minutes to see how this will shape up. This was a good thing because within almost exactly 5 minutes, we retrace all the way back up to the opening high. I had wanted to put on a few trades in here, might have been chopped up, but no point in going into further analysis since I didn't do anything.

B - So although we have a ledge at A which we cannot penetrate, it might even setup a good REV trade at the high of 71, I notice we have higher lows. As has been my technique as of late, I drew in my lines, not SLs or DLs, but lines to just track where price cannot penetrate, hence the thicker line.

Under this heavy line I also draw in a DL, the faint blue line. The reason why I left this on here even though price eventually moved quite far away from it is that I have seen many times that the first DL ends up being important down the road. The first DL often outlines the general trend that might last hours, even if it doesn't track price too well on a minute by minute basis.

C- Breaking above the R at 71, I enter a long, which moves against me instantly. Now you will notice an exit, but darn it, that was automatic as I still had it set for 2 points. I was in the process of drawing in these lines I just mentioned so I could talk about them later, and before I could react, the little voice from the computer said my order was filled, knowing it was my stop loss.

I knew that we had a succession of higher lows, and I knew that we might test going back below this level of R, so it was not my intention to exit, and its obvious from the chart that price only briefly dropped 2 ticks below my exit, but then it didn't threaten the trade. Oh well...

D - Going long again here. The lows on these bars are tracking up nicely, so no reason not to re-enter. Once again, price does move against me almost 2.5 points it looks like, but what I'm watching is a breach of the trend, and chances are that a better exit than a 2.5 point loss again will present itself if I am so inclined to exit. Not much a reason to think about an exit loss strategy after this luckily.

E - I do finally exit here. I know its all wrong, I know I'm in a trend, but, worst reason, I want to undue the damage from before. Breaking every rule here, especially to let the previous trade affect me, but this is the truth. I was in the postie now, having covered the losses from before, and although price wasn't stalling at all, it hadn't shot up either, so I made a run for the exits with a combined profit now of +$32. (being in protection mode is no way to make money... I know it)

I should also point out here that the yellow line at 79 is somewhat of a significant level. Its essentially where price was before the news release that caused price to drop, but its also a high from a few days ago, so I felt it necessary to bring it froward and we can perhaps see why we stall here for 15 minutes of so.

F - So once again, we have this ledge we cannot cross. Had I not exited before, seeing this when it starts to form might make me exit, simply for the reason that price hadn't gone up higher for 10 minutes. What's interesting to note is that once again, my exit for a profit could have been better than where I actually took my profit.

Also drawn in is that little "DL" to track price up, showing once again that I favor breakout out the top, which it does.

G - We get to the the high of yesterday, and stall here. Once again starting to track the lower highs on each of these bars, and also the level of support at 81.50.

It doesn't work every time of course, and this breaks out in a trading range... I'm mentally ready for that though!

H - Here we are getting a succession of lower highs again, with ever so slight penetration of the previous level of support, this certainly starts showing the LOLR is down and not up. Below this bar, we break out the bottom.

I - Now that we are below the range, I feel its safe to try for a short. In the 15 sec, the RET is nicely there. Now I once again admit to being in protection mode, so the trade isn't actually put on. It goes against me by a good 3 points, but I'm not nervous, even if I was in the trade mind you I don't think because I know that there is a level I have in my head, the level of support we had at 81.50 that is the line in the sand I'm watching to see if we breach and invalidate the short.

Adding to this, we have an initial SL we can draw at the top around H, and although this SL is broken, there is even a more shallow SL we could use, and the break isn't that bad, and price cannot go higher than the bar that does the initial break.

J - In fact, it is this last point, the fact that price cannot go higher than the bar that broke the SL that is significant. What was before support now acts as resistance (as shown by the carried forward dotted line), and even below this I plot in another possible short. What I especially like about this is that its a short at a higher price, a better price. As you can see, this was quite a good trade. (More reason to not be in protection mode)

K - Getting in on this cascade is hard.. but what a shame.. an instant 8 point move or so.

L - Hitting a bottom, which is below 50% of the up move we should note, we have a series of higher lows, and the ledge at 73 we cannot cross. Once again, I favor going up, which we do, but not by much before coming down again. Context should probably tell me that the cascade is serious business, so any minor price action such as this is overshadowed by the larger significant move. Also, a fanned SL from the top would not be broken if we fanned it to include the break at J, so we don't have a break in trend and hence shouldn't be looking for a long.

Ok.. that's enough. I'm not really even trading by this point, just wanting to protect my $32. :(

SUMMARY

Its a shame to be in protection mode as once again we have about 20 points up (with at least 10 very possible to realistically capture), and another realistic 10 points down.

I feel as if I'm definitely making progress. My fear is diminishing, patience is somewhat there, hesitation to instantly exit is a growing which is good. Protection mode is still huge, and letting previous trades affect me will for sure be something I need to work on, but how I'm not sure except to just keep plugging away (unless I'm suffering too many losses mind you).

Holding that second long longer would be good, taking the subsequent shorts that I outlined would be even better. But I did what I did, and my re-entry for the second long was excellent, and just putting a damn trade on is also major progress.

(So much for trying to talk less)
 
shfly said:
"Some news must have obviously come out"...

http://www.forexfactory.com/calendar.php

http://online.barrons.com/mdc/public/page/9_3063-economicCalendar.html
More...

OMG... someone is reading my journal! ;)

Thanks for the info. I do actually have a bookmark as well, from Bloomberg, but it all pretty much looks just like your links.

I am making sure to not look at any news before my trading day. I enjoy reading it after for some de-stressing and information, and perhaps to figure out what the news was, but I don't want it to affect my trading at all. The fact that price is dropping is telling me enough that traders think price is too high given where it is, regardless of the reason.

I suppose a good reason to be aware of it though is to stay away from being in a trade around that time. Sort of like when you're trading stocks and wake up to a bad quarterly report that causes it to drop 10% instantly. Its almost like gambling to be playing news reports or financial statements unless you have some inside info. Its better to play the reaction of the traders to the news as opposed to being caught up in the news release.

Thanks for reading!
 
PREP FOR JUNE 18

Hmmm... so what are the chances of having the same day 3 times in a row where we go up at least 20 points, then back down again all the way, and then up once more???

Overnight, price is bound by 3771 and 3779, with 79 forming almost a triple top. Looking at price action over the past few days, its forming a hinge with the apex right around here, in the 70s. Its interesting that we have so much action here because this is a price level that we previously didn't have many trades in. Price shot up quickly to get to 3800, and then we came back down to 3750, but went back up again to fill the space in between about 55 and 75.

The attached chart is roughly what I am looking at. We can also think of this as a slightly up sloping channel. Since we have higher lows overnight, but tried twice to cross 79 and can't, what I am looking for is to try for 79 again and see if we break through, which I expect more, or see if we bounce off and then break the DL that we can draw in using those higher lows. (this DL would be roughly what my bottom hinge line, the blue one, looks like)
 
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