Trading NQ via Price Action

Aw shit man... studying Db's chart some more, I see the double bottom indicated, which I totally missed, it hadn't even occurred to me as I was thinking of too many other things. Missing out on this huge trend up is bugging me just a little.

Maybe I just need to forget everything I know and put on each and every single SLA trade and just think of something else to do for intellectual stimulation while I fill my account up with easy money.
 
So it seems like for yesterday, the overnight traders allowed price to drop 50 points, and then during the regular hours, those traders brought price all the way back up 50 points.

PREP FOR JULY 11

Overnight, price has climbed from 3872 to 3889. That level where the airspace was before several days ago has completely filled in. In fact, we have spent quite a bit of time in that zone the past few days.

We are still above the mean of this long term channel, but it does appear as if we have lower highs going forward from a few days ago after we hit the high of 3917 on July 7th which was also where we bounced off the upper line.

Looking back to June 9th, we also hit the top of the upper channel, then went to the mean and from about June 27th made a nice rally to get to the top of the channel againn, meaning we only visited the mean before going back up again and not down to the lower channel line. This means that there is no reason why we can't go back up again, and hence a perfect illustration I think of why its better to be trading at the extremes as AMT would suggest, since here, it can go either way, as opposed to when we were at the upper line and it was more likely to go down.

30 minutes before the open now, we are at 79, essentially the midpoint for this overnight range, so at the moment, price is coming down, following a SL, and lets see what happens at the open.
 
Studying the charts while I have time, I see that if a draw a rectangle around the action on the left of this chart, just above the airspace level, we see this area of congestion has a mean of 89, and if we bring forward this mean via the thick blue line, we can see how price bounces off several times, most recently just during the overnight action. (it really is quite beautiful visually how this all works)

I had 83 as a level outlined earlier since this was the bottom of that range, but now when I look at the mean of the range, at 89 once again, the significance of this really jumps out. That green line is only there, as drawn today, because it was the overnight high from last night, but that blue line, the mean of the congestion, could have been drawn days ago and provided something to look for which in the past few days has proven quite valuable.

So how can I use this going forward? Price has tried a few time to penetrate 89, and hasn't been able to, but at the same time, since we keep trying, perhaps if we try again today and break through, it might set up a really good long. Either way, there are a few good reasons now why watching 89 could provide a really good trade.
 
A - So I started with a SL which was drawn in from higher up, but its amazing how price actually turned back down right here at the SL again.

B - Noticing this bounce here, I quickly drew in this line for what could be a double bottom. After missing that killer long from yesterday because of the double bottom that didn't jump out at me, I wasn't going to let this get in my way again. Plus, price is turning around just below the mean of the overnight range which could show strength.

C - Tiny SL break, but here is a RET for a long. Just before the open so I better not get in just yet, lets see what traders have in mind. The opening volatility might stop me out even if the eventual move up would be up.

O - So we open, try down, bounce off the mean, and I put in a long on this opening bar as you can see. It has elements of SLA, but only for the 15 sec chart. I had lots of rationale backing up my long though so felt confident about it.

D - Feeling really good by this point as I'm easily $100 in the money, but bam, sudden drop, and I'm out on the next bar. This all happened so quick, no time to think, but of course a few minutes later its obvious. Price turned around right at not only the overnight range, but also that 89 level I just spent so much time talking about. Now I'm not sure if everyone else saw this and took it as an opportunity to get out and hence why price dropped so quickly, but if only I could have thought a bit faster I would have gotten out sooner. I think that getting into the move so early today I was a little phased, and of course I was already counting my money and got distracted.

Now I did put in a possible long for re-entry as I knew my exit was a bit panicky, and if price comes back up that would be a good sign, but as you can see, price never comes up so it didn't trigger.

E - I think by about here, I saw the significance of the REV at 89, so I was thinking to go short, and used these lows just below 85 as a trigger. Put in a sell stop at 83 which fills on the next bar.

F - Things are looking really good as we drop below the opening without trouble.

G - This RET up to G is about 4 points before it turns back down, no problem, it allows me to draw in a SL.

H - So here I'm thinking to add another contract. Going up has already been rejected at 89 and this could be a very good move down, just need it to continue since we are already quite a bit away from where price turned around.

My actual entry is just a bit below where it should be, I just wanted to clear the previous lows. I'm doing pretty good, up over $150 by now, but it quickly goes downhill in a bad way. That SL breaks, and you can see how I'm out on the two contracts on the next bar, pretty much right on top of each other.

I had never added to contracts before, so I was a bit distracted with so many lines on the screen. Even looking at it now, without the letters, its already looking cluttered. Glancing at the 15 sec chart which I also have up made it easier because I could actually see price. In the moment, I was a bit distracted.

I - What's really unfortunate is that price rallies to "I" but then drops down again. Had I not added that second contract, I would still be holding, using the level at G as my line in the sand. But I was 100% watching the P&L, and that second short took away all my profits from the first short, so I was out both contracts together just to keep some profits. As it is, there was at least another 5 points to go down from where I exited, so on 2 contracts, this would be 10 points or $200. Oh well... learning and moving on.

J - So since this down move is continuing, and I keep fanning the SL, I get in one more time here. As you can see, my exit is less than 2 minutes later. Seeing this bounce from the bottom of the overnight range, and seeing that I kept having to fan my SL, and seeing that I've already done so much work and its barely 20 minutes in, I really needed a mental break. As it turns out, the exit was good, but not exactly for solid reasons.

K - The fanned SL breaks again a bit later and I can draw in this DL now.

L - The break is really solid, and I put in this stop to go long as marked here. It doesn't trigger, in fact, the DL breaks.

M - So we shoot back up, and below the DL break is essentially a higher low, but because I pulled the trade off at this level, I'm not mentally ready yet to put it on again at the exact same level. My DL did after all break, and although price came back up, so this could be a case of DTDB, I'm just not ready. I did have a long a little higher up, but also took that off because we are now essentially at the mean of all this, both the overnight range, and also the range now from the open, which is really the same range.

N & P - Yup, my price reading is good, and we meander around the mean for a while. It certainly does look like our lows keep getting higher, but we cannot yet penetrate this 84 level.

Q - Great long op here, but you know, I think what I was thinking was that we are just too close to that 89 again. Entry would have been at 85.50... what the heck is so bad about getting 4 points if I think we will try for 89??? Aye... no trade.. but works beautifully.

R - We do breach 89, but can't hold, and this illustrated a good reason for waiting for that clear RET. On the next bar you can see how price quickly drops, nobody left to buy higher.

After this, I draw in a SL, and it tracks price down nicely, but now we are back into this range. It is wide enough to trade, but honestly, I want to protect the little money I made today. :(

SUMMARY

So I'm up $54. It was looking so much better, and I reckon without that second contract, I would be up probably about $200. Maybe I would have even been more composed to take advantage of the long after the bounce from 73.

Gosh, quite a few good opportunities today. I consider today not that bad in the whole grand scheme of things. I took more of my entries, and really understood quite well what was going on, and more importantly, I didn't quite give up so soon. I eventually did of course after that last short and missed the whole move up, but I was busier today than I ever was.

If I keep getting in early like I did today, on the trending days I should make decent money. And as long as I stay out of trouble on the mean reversion days like today, then I think I can expect a certain about of consistency.

It is kind of sad to think though that just a couple of tweaks today could have made for a stellar day. The levels I outlined proved so accurate. This is why I'm making sure to push forward live with real money. No matter how well I see everything, what I in fact end up doing is what really counts, and the only way to know this is moving forward with money!

S - As it happens, price bounces off the mean. Jesus, this is almost predictable.

Ok.. before I finish, I gotta say, I'm bothered by the lack of a better result today. I have such a busy day after, so I guess I was pushing to wrap this up sooner. But so much happened in just the first hour that I could have made plenty during this time period if I didn't let my upcoming busy day influence me.

I guess I'm scared that the next day won't be as easy, that I won't have anything to go on like I did today. That airspace a few days ago was a very highly probable short all the way to the bottom, and I only captured 1/3 of it. Today, that bounce from 89 meant that I should have been out of my long sooner, and then went short right away. And then, the bounce from the overnight low was also so clear that I should have gone long. I'm scared that the next day will be messier and it will just chop me up, so I'm left wishing that I was more able to take advantage on days like today. :(
 
So overnight, we have quite the rally, bouncing off 3918, a previous top on July 3rd. By this point, price was already in a range, so not exactly the best criteria to set up a short.

Although the overnight low is at about 3900, what seems more appropriate this morning is using this tight range we have been in for the past few hours of 3914.75 and 3918.25 with a mean of 3916.50.

Using our daily channel, the upper line is now at 3952, so a breakout above 3918 could be a 30 point move up, and there is nothing in the way since above 3918 would be breaking new highs. The mean of this channel is roughly at 3867, but we would have to see weakness first, and there are of course multiple levels on the way down. 3899, yesterday's high, would be the first, then that 3889 which I'd say is fairly prominent. I will have a more thorough look if we go down as we are heading down if it so turns out this way.

I have attached the daily chart, but I am also attaching the hourly as well. If I draw in a DL on this hourly chart, using the lows of 3830 and 3872 to form my line, look at how the low at 3902 overnight is just touched before price takes off. I'm not sure how most other traders trade, and I doubt they are sitting there looking at hourly charts and drawing lines and all decide to buy since the DL is getting touched, but I can't argue with what I see in the chart. Using this info, we have a few hours of sideway action before the line is touched again, or a drop down to about 3912 would cause price to be at the line again, so breaking below would break the hourly DL, and more reason to perhaps set up a short.
 
A - So even though we are in this tight range before the open, I draw in this DL to start with something. It breaks just before the open.

O - We start down, but rally up again. In fact, for the next 3 minutes, we keep trying higher but can't, although each dip doesn't go far either as its bought up too.

B - Using this high, I can draw in some SL's. The first is drawn using the high of the entry drawn in at C. This SL breaks, so it can be fanned once my entry is hit.

C - Here is the classic SLA short. We have a SL, not that steep mind you, and the short triggers 3 minutes later. Its of course nice when it triggers right away... I wonder if I could compile some stats about how successful a trade is depending on how long it takes price to hit the entry point. (ie. the sooner the entry is hit, the better the trade works)

D - Of course right after the entry there is a bit of a rally up, but I'm not worried, and my mental stop is above the opening level, so lots of room. Using this swing high to draw in my new SL.

E - The trade works really well for a while, I think I'm almost up $60 and price even comes up to touch the SL drawn in from the previous swing highs and turns back down which is nice.

F - But bam, it rallies after bouncing off 09.50. Now this rally is just under 5 points, so I'm hanging in there, but I'm not liking to see being in the red now after I was in the green by $60 just a minute ago. I'm being patient, but the SL has been broken now for a few minutes and you can see my exit. I slid up my profit target so it got hit with a tiny profit. I figured we would have sideways action for a while, so if I exited anywhere around here, I wanted to make sure I was on the positive side of the exit. I have seen enough instances where my exits for a loss could usually be exits for a tiny profit. The few times this doesn't work and a bigger loss has to be taken I think is more than covered by waiting for the most past. (ie. Given enough trades, its more profitable to wait than to exit too soon)

So I'm up $11.

G - As it turns out, the exit bar is in fact a higher low, so a long here above this bar is the RET after the SL break. This long would trigger, but instantly price would come down 2 points. There is of course another entry 2 minutes later, but I have to fan my DL. I drew them both in to show how this progresses and how unclear it is in the moment.

I missed the first long entry, which I seem to often do after getting out of my short, not believing that we can instantly go up, but this was a valid trade, and a profitable one at that. I even have a second chance, just one tick higher 2 minutes later as price rallies up. I remember my excuse was that I didn't want to trade right back into the overnight range. The thing though is that if price is really going to shoot up, then it of course has to go through the overnight range first.

Oh.. this would also be a good place to point out the line I drawn across the volume to show what the actual volume is. The number of 2092 is just a bit below about 2200, which seems to be the volume of the opening minute. Not that great, and it drops off significantly. I'm not basing my decisions on this at the moment, and I sure hope it isn't impacting my subconscious negatively, but forward testing this once again, I see that usually we need more volume at the open to really give a move some strength.

I know that in the afternoon, price can easily climb or drop nicely on much lower volume, albeit more slowly, so volume is tricky as a tool, but at the open at least, the big moves happen with greater volume. Now I'm not saying that volume causes the move, its more like if the move is strong then volume picks up perhaps, so this is a case of correlation vs. causation. (Hopefully I'm getting this right... only typing so much now because price is going nowhere right now)

Anyway... moving on.

H - So having cleared the overnight high and more importantly the previous top, we do have a RET to go long here. It is moving quite sluggishly, and although I have a trade set, it doesn't trigger and once price turns back down I take off the trade.

I - Time for a SL now, but no RET. Not sure if I would take it anyway, cause you know, I like to come up with excuses! :(

J - Here would be that offical RET (the bottoms of the two bars above). It of course doesn't trigger, and price shoots back up.

K - So here is the first RET for a long. I'm happy that it would be above the previous highs, and just as I'm putting the trade in, its cancelled because price already blew past the entry. It comes back down though and breaks the DL.

L - So this looks like another RET for a long. We have to wait 2 minutes for price to come up here, and we can fan the DL once it does, but I don't put it on since it just doesn't look right. In this case my instinct was good, but lets be honest, my instinct is probably worse than 50/50 at this point.

After this, its just 45 minutes of a 4 point range. Well at first it looks like a 2.5 point range, and then its slightly wider, so not that easy to trade as I'm seeing when I'm actually looking to put on a trade to trade a range. I see that I actually don't have the balls yet to go short at the top when it looks like price is going up since trading a range essentially is taking the opposite side of which way price is currently moving.

The mean of this range is curiously 3918, the prominent top from days earlier.

The end of my chart shows a break about 3920... lets see where it goes.
 
So we are climbing up ever so slightly. Not much has changed since yesterday. On the channel front, we are pretty much in the middle of the mean and the upper channel. 3957 would be the upper channel line high and 3872 would be the value for the mean today.

Overnight, we hit a low just below 3916 and a high of 3929.75. This high is exactly one point below the ultimate high of 3930.75. So it won't take much at the open to make a new high, and then the sky is the limit. On the way down, quite a bit to catch the fall.

The DL on the hourly chart has been broken, but any SL we would have started drawing has broken as well, so this break is essentially just sideways action which is the weakest type of break I would say. Going higher by just a few points would allow us to fan the DL.

And just a bit of reflection, yesterday after we broke above 3920 it was a fairly easy 10 points higher. I was still around but just talked myself out of a trade. This is unfortunate because these breaks above or below areas of consolidation/ranges tend to work quite well. Once this one broke through, there really was no looking back, and there were plenty of RETs on the way up, so even 5 points was I would say almost easy if a trade was entered.

Also, after reloading the data, I notice that the volume for the first minute yesterday was actually 2700 contracts, way above the 2200 value I was first seeing. So I may just have to give up on my volume analysis for now. Lets face it, not taking a legitimate entry is probably more important of an issue to work on before I add some fancy analysis into the mix.
 
An absolutely horrible day. It started out so slow and I thought there wouldn't even be a trade, but after my first trade, the train had left the station and it was just downhill all the way. Shame I wasn't trading downhill! LOL

The best way to describe today would be that the thing you fear the most is what you end up being pulled towards. I fear some SLA entries, and what I did was take the worst ones, skipped all the ones that worked beautifully.

Anyway... here we go.

O - The open is so slow, price barely moves, but we manage to stay above the opening price for the most part.

A - A see this hinge forming so draw it in complete with the apex.

B - Huge level of resistance here are yesterday's high. We could call each of these bars a RET I guess since they all have the same height and we have a DL below them, so along one point above is legit. The breakout isn't spectacular but its there, another with another long op a few minutes later.

C - We have a DL break, nobody left to buy above yesterday's high and down we come.

D - Here is technically a RET and short op. I had no interest given how slow it was and thought it wouldn't go anywhere.

E - So we drop another 5 points and here is another one. I take this one, gets filled on the next bar. Goes instantly against me.

F - I use the previous swing high as an exit, and once we go above it, which also breaks the SL, I'm out for a quick $100 loss.

G - Here would techincally now be an op for a long, but only once the DL is fanned, as the first one gets broken that sets up the long. Each time I have to fan a line I am a bit more cautious.

H - Anyway, moving to H, we drop below the level at which I went short. Of course the market has no idea where I went short, so this should have no bearing on anything, but psychologically I can't help but think that I tried to go short here and it didn't work so I better not short here again. Stupid, I know, but its such a stong feeling sadly.

The worst thing of course is that I have two DL breaks just above this. And as much as I try to look at what's happening, I should also be aware of what isn't happening. Its easy now of course. It looks like a long was setting up, but it didn't take, and dropping below the previous swing low is significant, so what isn't happening is that we aren't going up.

I should also point out that I wasn't quite ready for this volatility. It came out of nowhere. I don't think I've even seen such a slow and lazy day pick up speed so quickly at what I would say is a random time. Its almost like most traders slept in today and punched in late.

I - So here is where it starts to fall apart I think. I'm missing out on this down move. Not taking the first SLA short at D made me enter the second SLA short at E that failed and caused a very quick loss. Although there isn't an SLA short at H, I have no trouble taking trades from the 15 sec chart, and a short at H was a quick profit.

So now, breaking the level at 18 that I have outlined, and more importantly, breaking the overnight low, I enter a short here, but quickly get out. I think I made $20. I have this idea in my head that if the first trade is a loss, my job for the rest of the day is to slowly scalp my way out of it. Clearly I'm focusing on the money and not on trading well.

J - So the exit was good, nothing to learn from it since its a random scalp, and here is an official long. It works for a few minutes, and then price drops, so I'm out. I'm probably down about $140 at this point.

K - Here is an SLA short, pretty much where my exit was, but I don't take it. Good thing here. And see, this is my problem. I've got a random selection of SLA trades that work in my head, and a random amount that don't work. It seems that if I take a random amount of SLA trades, sadly most are 2nd and 3rd entries which don't work as well, then I'm almost looking for a worse result. I also know that first SLA entries can get stopped out more often when in a range, and if you wait a little while to see you're in a range, you might not get caught in it, whereas a 2nd entry sometimes shows you the trend is strong so you can get in, with the caveat that your entry price is now worse, and you can get stopped out from a 4 point loss for example even though the trend isn't invalidated. So what I'm saying is sometimes the first SLA short is best, and sometimes its best to wait. Sometimes the 2nd entry is worse, and sometimes is safer because the trend it now getting more established. As you can see... I got issues I need to work out!

L - So after a few more minutes, I draw in this rather crude looking hinge, but it works since it contains price quite well.

M - I see this exit, and think to short right here, once again if only for a quick scalp to lessen the damage done today.

N - In real time, is this a double bottom forming with the previous low 20 bars back?

O - Thinking of shoring here again, but I don't. Worried about the bounce up at N, but at the same time, looking at the bigger picture, we have a succession of lower highs all the way down. This was an easy 10 points in only minutes.

I wonder what would happen if I just did what my first instinct is to do versus thinking about it too long, then wishing and hoping for a few more minutes, and then getting in once everyone else sees what's going on and when its often too late.

P - So here is another RET for a short and I take it. Drats, goes against me right away, and I'm out on the next bar, at the worst possible place. Up until now, for each trade I put on, an exit could always have been made at a better price only minutes later, but the dollar loss is what's making me hit that close button, and fear that this is the one time where price never does come back to me.

So now I'm sitting at I think -$(236). How on earth does this happen when I look at the chart now and see a nice general down trend?

After this, its a series of scalps that get me down to -$(179).

Q - So now we have an op to go long. Could be worth a scalp, but honestly, this down move was quite strong now, I'm not sure if I want to go long in a down move, and there is techincally no higher swing low yet.

R - Here we actually do have a higher swing low from where the entry would get triggered, but this trade goes nowhere, and a quick exit here would be best as price doesn't come back up again for a while.

S - Here is a much nicer higher low. No way to really know this until the SL breaks mind you, and there isn't an official RET until you get to T.

T - Here is that long op that goes nowhere, but at least an exit can be made for BE.

U - We have a range forming now, and the upper limit is quite clear.

V - The lower limit is a bit trickier. By the time price is leaving the range, its itching to go out the bottom.

W - And here, it looks like a solid exit, so I think of going short, but of course don't as I don't want to make the damage any worse. Should have been good for maybe a few points.

SUMMARY

Ok.. and that's my day. I don't feel as bad now, but this result is a bit of a setback. I was almost not going to take a trade today, and when my first one failed horribly, the game plan was to make the money back, and I ended up doing more damage.

Looking at the chart now, it doesn't seem too difficult, but the entry for a short would have to come right at the beginning because the waves are just too wide.

Today I unfortunately have lots of places where I think I should have done what I was initially thinking, but then also places where trades that I was thinking of putting on would have led to a few losses, so I'm not exactly sure what to walk away with.

Anyway, it looks like the total for today is -$(179). I'm gonna need a lot of days like yesterday where I made $11 to make up for today! LOL (this is of course sarcasm to say that if all I focus on making is a point or two a day, then I'm essentially still going backwards)
 
So I'm certainly not happy with yesterday, but it isn't catastrophic. Never mind the money loss, that's nothing. Missing that first short that I didn't feel like taking is a bit of a problem because the reason for it isn't solid. Unless I have a well defined rule, my feelings at this point aren't all that well informed yet.

The second short was a proper trade, it just didn't go anywhere. Sadly it was this loss that made the day fall apart a little bit, but even if I traded exactly by the book, 2 or 3 losses in a row are completely within the realm of possibility and something I have to be prepared for.

It ended up being a move of 50 points down, and although I was shorting every time, it wasn't straight down and the money loss made me exit the many times I tried. So I have to decide to either only take the first entry and then forget about all the others for fear of what happened yesterday, which was selling just before a solid RET back up for a little bit, or I have to be prepared to hold on longer, looking at the bigger picture.

My other option is really tight stops actually. I would have way more trades I think, but as long as emotionally I could keep taking them, there would be lots of shorts and even some longs in a day like yesterday. As it stands though, the way I'm going forward is taking only some entries, cherry picking so to speak, and it just so happens that I picked the ones after the good moves already happened so a RET back up should be expected.

After spending so much time looking at the chart from yesterday, here is what I should have seen. I should have taken the first short and exited for a few points, this would prevent that first loss. There is also a hinge that I outlined half way down, and if a hinge exit is taken right away, these tend to work quite well, even if only initially. Price did come up right away again, but not even to the apex, just to the entry point where it broke out the bottom of the hinge. Getting back in early on after my first loss was also quite telling because once price didn't go higher, it had no trouble dropping below the level at which I first shorted at where I was too scared to short again, and this was in fact an instant 10 point move.

Also, drawing in a SL from the top, connecting the the two swing lows, worked actually quite well to follow most of the action down that wasn't so clear always. I see this often where that first line drawn in tends to work quite well, even though at first it seems price is so far away from the line, things clear up as it unfolds.

PREP FOR JULY 16

Ok... I don't know how we can drop 50 points, only to come back up again overnight and breach previous highs, but this is how the money is made!

Channel wise, we are still between the mean and the upper line, so that's not super helpful today.

We've got a low of 3913, and recently just bounced of 3940, a new high. If I draw a very tight DL for the past hour or so, it does break, and we have a RET to go short after bouncing off 3940, complete with a lower high, but we also seem to be settling into a tight trading range now, so the next 20 minutes just before the open should clear it up. Just now in fact, the SL we can start with after the DL break has also broken, so sideways it is.
 
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