Trading NQ via Price Action

What an embarrassing day. I know the market isn't designed to screw me per se, it doesn't know when I enter or exit, but one can't help but wonder if the guys who know what they are doing are baiting the amateurs like me to get in just as it looks good before price takes off in the opposite direction!

A - Leading into the open, we have this level of resistance that we cannot get past.

B - Down here we have this level of support, but its sloping up, so not exactly a range, but certainly we have an area where traders are agreeing on price within these two bounds.

O - Here is the open, and I refreshed it a few times and it didn't seem to move at all today. I mark in a possible long above here, not one that I considered taking, but it technically would be a RET above breaking out of the range. Price does make it high enough to trigger the entry but it would come back down.

C - This yellow line brings forward a previous swing low. I don't want to just use the lows at B, I want to break a previous swing low before looking for a short.

D - I get the opportunity here. It looks good on the minute chart and the 15 sec chart. It is 3 ticks below the previous lows, not exactly sure why its not a whole 4 to be a point, but as you can see, it triggered, and went against me right away.

Don't even ask, it is what it is. My exit is so far away that I might as well say I was in the bathroom even though I wasn't. Looking it at now, I really should now better. If I'm gonna take this type of trade, which I watch like a hawk, I gotta get out if it doesn't take off right away, if it comes back up above the level that it broke below.

E - On the attached 15 sec chart, I was watching this level at E, knowing that we can either bounce off and come back down, or break through. Even with the break above, I'm not sure why the exit is so far away, but I took a hit of over 4 points on this trade.

But you know, it didn't bother me at all, I know I just have to stick with it, and my chances of making 4 points are very good.

F - So not a bad move up. A bit of hesitation here at the opening level, but we go further, going above the PDH and also the high of the overnight range.

G - Here is an official RET for a long. Now I guess if you draw your DL super tight, you might even say its already broken. But what I did was just use the low of my entry bar to draw my DL since price came up to trigger my entry. Once again, I'm buying at the worst possible place, but at least the exit is a bit better for just over 2 points. If I held on a few more seconds, my exit could have cost me less, but perhaps I would be just thinking that I should hold my trade some more since price came up again on the next bar if I did hesitate on my exit and see what was happening on the next bar while still holding my long.

I entered this trade full well knowing that we could just form a range here since we have already gone up over 10 points, but I figured an entry is an entry. I was looking to get in sooner, but there wasn't even a RET on the 15 sec chart, so other than getting in on a market order, no way to get in.

So I think I'm at -$138 now. No worries, its only 7 points.

H - So here I mark what could be the bottom of this range. I notice that we have gone above the opening by roughly 6 points, the same amount we went below the opening, 6 points. So this might mean we come down again. There is no RET to get in when we drop below H, and just too many overlapping bars.

I - So here I have the top of the range marked in as price approaches this level.

J - And here would be my entry. Often I see that once price clears a range, if we wait for the RET and price comes up again, it does take off. Here, for the third time today, I am getting in at a top. My exit is once again horrible.

If I look at the exits for my 3 trades today, only the first was good that it happened when it did because price kept going against me. But these last two could have cost less if I waited. Now if I had stats to determine if waiting is prudent versus getting out when you see the trust in the opposite direction then this would be great, but I don't have those stats. I'm inclined to say that for me, giving price a bit of room just isn't going to work. If I'm trading RETs on a breakout from a range or the continuation of a trend, I need that trend to continue. If its stalling after my entry, its stalling, so no point in waiting to see which way it goes.

Anyway, so now I sit at -$192.

K - I see this lovely range here, but I've already stopped as I'm already typing. I will watch to see if a break of this range produces anything good.

SUMMARY

So apart from my first bad exit, 3 bad trades in a row, combined with multiple bad days in a row, I think really shows I have no edge. I've been trying to learn from my previous mistakes, but some of these things just don't work on certain days. Statistics should certainly be applied on at least 20 or 30 trades, so even this might not be saying much.

I could also say that when you have one good trending day, the next might be the opposite, but just when you think that, you have 3 trending days in a row, so I'm not even sure if I should put any thought into this.

My account is down about $900 at this point. Its not a terrible loss, who cares about the money, but what's more worrisome is the string of terrible days.

Not sure what I will do about it yet. It seems to me that just a few tweaks is all I need... but I guess that's the thing. You gotta be better than 95% of the traders, and hence those tweaks is exactly the difference between a positive day or a negative day.

L - So here we have a break below the range, some poor suckers maybe got caught in a short and then price went back into the range. At least I wasn't the sucker this time! Waiting for that RET is a good rule.

M - Ha... more suckers that probably got caught in a long! It did stop above the midpoint of the range though, maybe the exit out the top will be solid on the second try.

Oh.. and before I end, this hesitation at 75 certainly appears to come from that hinge I posted a few days ago. The trading day on July 24th ended up being one big hinge, so I drew in an apex and this roughly sits at 75. But as I mentioned in my prep, if I can't even get into a move that is going down, but not get out soon enough when its going up, and then don't go up along for the ride, then all these levels aren't of much help to me at the moment. I need to first see up and down!!!

CONTINUATION

Ok... just as I'm finishing, big drop!

N - I note this area here, the resistance line that breaks out the top, but comes back down. Once again, suckers buying just above. (once again, thank god I'm not the sucker this time!)

There really is something to a move once it starts. This is why I like this pattern so much... (gasp... I mean behavior!) If there are no buyers to buy above the resistance, price drops below, and can drop strongly below. Here the down move continues.

P - I drew in this yellow line which brings forward the previous low, that darn one that caught me in a short at the very bottom of the move. But here price doesn't get caught at all, just melts right through.

Q - Clearly I am missing out big time, but since we dropped below that swing low, based on what I see on the 15 sec chart, I decide to enter. It's just a gamble, but with such a strong move down, I will know in seconds if I'm making money or not. It was actually a stop limit order, with price moving this wildly, I want to make sure the entry is neat, but it got hit and triggered at my price.

You can see my exit, not bad indeed. What would have been better would be a long with my exit. With moves this severe, there has to be a fairly significant RET as was pointed out to me a message just the other day from a fellow trader. Anyway, it was an easy 6 points or so, therefore, I end the day at -$81.

Getting in just a bit sooner would have essentially brought me into the positive more than likely for today, but oh well, hesitation seems to be a major issue of mine that I need to solve.

FURTHER UPDATE

Well.. price dropped again... once again... too much hesitation. Once again, just an entry hoping for a continuation, and once again, a stop limit order to at least make it somewhat legit with a that triggered and hence price was moving towards me.

Just attaching a little chart, the 15 sec. Would you believe I got out right at the bottom? For once I got out at the best possible place.

I now sit at -$55 for the day. I wonder what caused this huge drop... hmmmm.
 
Oh ya, I should mention that the last trade had an exit that was actually based on realizing that price was now at the overnight low of 50.25. I don't have that level marked on a 15 sec chart which I showed the trade on, but its on the one minute, so when I put the trade on and realized what I did, my only concern was to get out for a profit and re-evaluate. It just so happens that it was the perfect place to get out and it seems like the overnight low really was the turning point.
 
Hi KP...

I thought about you when the market opened today and it seemed like it was going to drop again today... so I too shorted nq but was in earlier and ended up breakeven on that trade. Price had a good move up before the market opened, then got close to the high of yesterday and reversed down. I entered after price pulled back up to the high of yesterday a couple of times and then resumed down. I figured (wrong) that price would continue down to the low of the premarket move up. but was out breakeven.

Price then quickly moved above the high of yesterday and was sort of in a trading range until it had a quick move down below the high of yesterday and pulled back up (stalled) to the high of yesterday. I shorted when price resumed its move down expecting the trade to either stop at the swing low you mentioned or continue down to the low of the premarket move up. as you said, that was a good move.

You talked about the move up to point G.... that move up, including the premarket move up was about 10 points and I would have been looking for short trades due to this long move up. If i were to go long after point G, i would have waited for the pullback below the high of yesterday and entered around 3972.

Early in my trading, i tried trading reversals and ranges..... I was terrible at trading those setups. Others seem to do well, but I could never figure out what was a move and what was a fake out.

I'm not sure exactly how you are using trendlines. They can be used to help determine price move direction similar to moving averages (and before you learn to judge price direction based on price action)... but if used for entry signals, they are usually lagging... ie if your entry today would have been a bit higher, you might have broken even on the trade... depending on how you move your stops. What is your initial stoploss for nq and do you move the stoploss up when profits accumulate? My initial stoploss is 3 points and I move the stop up every half point of profit... keeping the stop at 3 points, but just higher and saving profits.

cheers

toucan
 
toucan said:
If i were to go long after point G, i would have waited for the pullback below the high of yesterday and entered around 3972.

I'm not sure exactly how you are using trendlines. They can be used to help determine price move direction similar to moving averages (and before you learn to judge price direction based on price action)... but if used for entry signals, they are usually lagging... ie if your entry today would have been a bit higher, you might have broken even on the trade... depending on how you move your stops. What is your initial stoploss for nq and do you move the stoploss up when profits accumulate? My initial stoploss is 3 points and I move the stop up every half point of profit... keeping the stop at 3 points, but just higher and saving profits.
More...

Thanks for thinking of me!

In reference to G, if price pulled back to below the high of yesterday, I would be a little worried. I would think a break above the high should be solid, so a minor little RET is what I'd look for for an entry, but if it dropped back into the range, perhaps this has me thinking nobody is left to buy up higher.

The trendlines are tricky. Ideally you want to use the swing points, but often you don't know what the swing point is yet. Its easy on the chart at the end of the day, but in real time, not so much, and this is where I struggle. Once the swing point is obvious, then the trade based on this is already gone.

I mean assume that price hits a low that you think might be a double bottom since it hits a low at lets say yesterday's low. On the one minute chart, if this bar is 4 points tall, then you can buy at one point above this low, but you are buying already 5 points above where the double bottom happened. Using 15 second charts and ticks charts should get you into the move sooner, but this is the problem. Now of course if price comes down again to test that double bottom, you might be stopped out by 2 or 3 points, but this could in fact form a higher low and you're still good for a long, but too scared to take it after getting stopped out once already.

My initial stop is just 4 points, set by the platform, but really, the stop to get out because a trade isn't working should be less. The problem is that unless you got in at just the right time, the trade can easily go negative by 2 points and still not be in jeopardy because of a previous swing high or low that hasn't been breached. Giving price room and know when to get out is really an art form it seems. But clearly on my charts, I see after its all said and done that the exit should have been made much sooner. Live and learn!

When it comes to profits, for sure if I'm already 5 points ahead i don't want to lose them all, but once again, price can sometimes test a certain area before dropping back down and I have held before, for example on the way up to test the apex of a hinge. The best would be to get out and keep a few points perhaps, but know to get back in right away again once the test level is rejected, but I'm just nowhere close to being as nimble yet.
 
KP quote:

"The trendlines are tricky. Ideally you want to use the swing points, but often you don't know what the swing point is yet. Its easy on the chart at the end of the day, but in real time, not so much, and this is where I struggle. Once the swing point is obvious, then the trade based on this is already gone. "

You described the problem exactly and in many of your trades, if you had entered a wee bit earlier, the trade would have a smaller loss or a profit.

I tried many times to use a trendline or moving average for the "entry trigger" and was in too late and led to many stops/losses. I finally started using them to determine price direction only and after a while, i found that I could see "near term" price direction without them. I used them for a long time before dumping though.

Then I had to find a method for determining "setups" and after trying reversals, ranges, breakouts, pullbacks etc... ended up just using pullbacks. Once I settled on pullbacks, I found there were too many pullbacks and needed a way to determine which pullback to trade. What works for me is to use high/low of yesterday and daily floor pivots. about 80%+ of my trades are off of the high/low of yesterday and the daily pivot. The remaining trades are off of the other floor pivots R2, R3 and S2 and S3. I don't take trades even if there is a pullback, unless the pullback is close to h/l yesterday or floor pivots.

Finally, I had to find a method to determine when to place the trade (entry trigger). I settled on "when price pulls back and then turns back toward the original price direction, I place the trade". For me that is 2 or more bars back in the original price direction that are next to each other.

when you say your initial stop is 4 points, do you mean 4 nq ticks of 1 point or 4 nq points.

I don't do this often, so it might not work, but attached is todays chart for NQ

cheers

toucan
 
toucan said:
KP quote:

You described the problem exactly and in many of your trades, if you had entered a wee bit earlier, the trade would have a smaller loss or a profit.

when you say your initial stop is 4 points, do you mean 4 nq ticks of 1 point or 4 nq points.

I don't do this often, so it might not work, but attached is todays chart for NQ

cheers

toucan
More...

Yes, this is why I am trying to use a 15 sec chart as well. You see, the rule for trading via SLA is after a line break, you wait for a little retracement. The thing is that if price just keeps going up, you might not get it to show up in the one minute bar. This is essentially what happened between point D and F, all the way up to G. Of course there were tiny little retracements along the way, you can see a few of them at point E in the 15 second insert, but having taken a short, I first wanted to believe my short and hold on, and then when I finally got out I'm still not prepared to go long.

Clearly I need to work through this a bit faster, and when I look at the chart now, even though I can defend the entry, I cannot defend the exit, and I can easily see how the long sets up as well, but alas, too late now.

Initial stop loss is 4 points, or 16 NQ ticks. This is enough to give price room, but of course take me out if need be automatically. The idea of course is to get out myself when I see the trade isn't working. Just like with the trade in question, once price broke above the line at E, we can clearly see a series of higher highs and higher lows, so that exit should have been made by 64.50, and yet for some reason it goes all the way above 66.

To be honest, with each trade, I have that little voice in my head that says "this isn't working out", and this happens much sooner, but I hang on because there is another little voice that says "if you exit right here, price will turn right back around". Often you see my exits are just before a better place to exit comes up. Going forward, perhaps the best approach, just for me and my psychology, is if it doesn't work right away, take a little loss. If the trade sets up again, I will be in a better position to re-enter after a 2 points loss or less versus 4 points.

In terms of your chart, I see what you are saying, but my gosh... that is one busy chart!
 
:) i can see where you would think my chart is busy... a little explanation...

1. The vertical lines are time...For the first 3 hours after the futures open, there are lines every 15 minutes and lines every 30 min after that. i tend to trade news and open/closes... for example, the second short was right after the London close. Often moves take place when london and frankfurt markets close. Then there is the never ending news at 6:45pst, 7am, 730, etc.

2. The horizontal lines/dots represent support/resistance areas for me... similar to what you put on your charts. The are high/low premarket, high/low of the day, high/low of yesterday and the white line is the daily pivot.

3. The straight lines that look like trendlines and follow price movement denotes price direction like you are doing with your trend lines. The numbers above/below the turn points represent how far price has moved in relation to my stoploss. I use a 3 point stoploss so the number 4 means 4 stoploss points and equals 12 nq points. They help me understand price direction and how far price has moved.

4. The 2 green numbers just to the left of the right axis about price 3969 and price 3939 indicate the average daily move for nq on top and todays move on the bottom. These numbers are also relative to the nq stoploss.

5. And the indicator at the bottom just measures the speed of "trades" not volume.

cheers

toucan
 
Well I'm impressed! If you can keep up with all that in real time then you are for sure going with the flow. I am still trying to figure out why it takes me so long to see certain things while its so obvious at the end of the day. I can hardly see the price bars on your chart! :)
 
So I got up a bit early today since there was going to be an important news release. Considered getting in, and there was a good enough RET right around 68 to buyin just above this could have been good for almost 10 points, but of course I'm not experienced enough with this so I stayed out. Price stalled just above the high of yesteday, but lets see what traders do with it from here on.

I also considered this short marked on this chart as price was breaking below the outlined range which might have been good for 2 points at least. Upon the news release, price of course shot up.

That blue line shows the overnight high prior to the news release, so with the inability to go above it, it made the short look good once again. I will now have to redo my levels before the open to take into account this new thrust up.

Just as I'm about to post this, I also see this hinge forming, but its about to close... so not sure if it will break powerfully, or just whimper out sideways.

EDIT: There is also that lovely double top at 78.75, and the tick chart showed places to get in... but I'm being cautious.
 
So here is where I'm at before the open. The hinge didn't go anywhere, but we have a solid level of 76.50 we cannot cross, so we bounced off and went lower. But we turned back up just above 72... so this isn't exactly all that nice and neat.

We have yesterday's high at 77 marked in, and the overnight high at 78.75, so its a little busy right around here. I guess now the question at the open will be if we shoot above 78, or drop below that swing low at 72.
 
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