Trading NQ via Price Action

So first lets talk channels. Db posted that lovely chart yesterday in another thread where price came right to the bottom on his channel. On my chart, the channel bottom looks to be below his enough that you see the daily bar for yesterday get close, but for sure not touch.. it looks like there were at least 10 or 12 points to go. I'm not sure how this happened as we are using the same swing lows for the lower channel line, but oh well.

In my attached chart you, you also see how I have my hourly beside my daily, and on the hourly, hitting the low overnight and bouncing off matches very well with the low hit on the 17th or 18th at 3854, but I can't really see this on the daily, perhaps something to do with how the platform separates days. At any rate, what should be noted is that price has really dropped out the bottom of the channel. It better get back up there quick or else we have trouble in the form of having to use a more long term channel which would have a low considerably further down.

I am quite surprised that overnight we dropped so low, almost 50 points if we consider the high at 3900.50 and the low at 3853.50. Yesterday of course we just kept going down after an already strong down move over night, so who knows. This would mean serious trouble for our channel though, so I think the LOLR should be up, but we have to wait for price to show us that. I think there should be a news release in a few minutes, lets see what happens.
 
So we had quite the jump.. the news must have been good. Considered getting in, but lesson from yesterday wasn't good as price turned around quick. Today I think it would have turned out better since it just kept going, but who knows where my market order to get in would have been filled.

A - So after that was over, I started with this DL at A. NoDoji has really got me on this idea where I won't be changing the initial lines I draw. I will keep them to track if the trend is still intact, even if price gets too far away from it as it might come in handy further down the road which really illustrated this well on her charts..

B - I saw this nice resistance level forming here, and although there are pokes, not strong enough yet to do anything. I also like how NoD is waiting for a bar to be completely outside the line, then waiting for that pullback to the line, and then seeing if after that last test if price does take off again. This is the way I understood that example she showed me yesterday and it makes solid sense, which is probably somewhat similar to the second mouse entry as well.

C - Couple of breaches of the DL here, but no worry.

D - You see a trade here. This uptrend looks solid. The bar lows are each higher and I got in on a RET on a tick chart. Once it was filled, shit, I just wasn't happy. I wasn't happy because the lows of these bars are over 2 points lower, and I'm not exactly getting in above the resistance level. So I would either want to get in right at the DL, although this would be an entry off a tick chart as well with the rationale that price will maybe a go for the resistance level again and bust through, with a nice and easy stop at the previous swing low which isn't that far away if getting in at the DL. Or wait for a solid RET above the resistance level complete with a continuation. So I'm out for a profit of $11 sine I wasn't happy.

That solid RET above the level never comes, and although we make a higher high two bars after D, we do go down, and as it appears now, setting up a range.

Oh, that 83 level outlined (dashed red line) also sat on my chart from weeks ago, and would you know it, its roughly where price ultimately landed yesterday. I know that with enough levels on your chart something is bound to get hit and provide a stopping point, but hey, yesterday I had two levels, and both appeared to provide support for enough traders that they caused buying! The green line is yesterday's low, and the dashed blue line, midpoint of overnight, but I see this should actually be at 77.. so I fixed it.

Ok.. 30 mins to go before the open and we are seriously coming down now so lets see where we are just before the open. I think I still have a long bias for the open, but not so sure, which is great as I will be forced to really watch with an open mind.
 
So continuing...

E & F - Drawing in these "hinge" lines. Not exactly a hinge because price doesn't test each level multiple times, but these lines certainly do contain price.

G - We have a drop out the bottom here, and the first possible long is marked. Now if this isn't a hinge, if we have more of a range, then the previous swing low at F could be horizontal support so its a bit tricky. We do see that the bar that would have filled the for the entry comes back up.

H - If I wanted to play this as a drop below what could have been horizontal support, here could be a short for that. It doesn't trigger, so this could be a sign. It does seem like a trade triggering is a sign for price moving in your direction, but with the trade not triggering, is it just we need a bit more time, or perhaps a trade in the opposite direction is setting up???

O - The open is marked, but once again, price really started to move 30 seconds earlier.

These bars overlap soooo much, but for 5 minutes, price barely drops below the opening level, and on the bar where it does, this bar actually closes on its high!

I - So here could be a long entry, one point above this bar, and it does at least clear the previous highs. Its not taken because the overlapping bars really make me think price will get sucked back in. Once price does take off, I draw in that DL below. Although the quick rise means price is quite far away from it, lets just see where things end up as the DL and price are bound to meet again!

J - This bar here has a fairly significant drop, but it doesn't go below that DL. We could place a long here, but there certainly is a pause in the trend now and although the trade would fill, price drops, breaking the DL, so this entry is much too late into the trend that is over now.

K - Carrying forward the swing high, and crossing it, we can see a place to go long two bars later. Its still a couple of points below the overnight high, so there is room to get out if needed.

L - Really hard to tell what is going on here. We penetrate every so slightly, but cannot cross. Where would be the entry for a reversal be? Some swing lows are getting broken, so a short looks quite plausible, but price comes up each time and pokes through 3 times.

M - Around here we do start forming lower lows and lower highs, but I guess I'm just not that eager today.

N - So I'm finally waking up around here. We have practically a 20 point rise, and now a 20 point drop, and not a single trade!

P - We breach the previous day low, but this isn't all that important now as it has been breached before. This is pretty much also where the opening level is, so its still significant, just not because of the green line which is the previous day low. Seeing the lack of sellers below, lets see if a long above this bar would work.

It doesn't, and although we make a lower low, getting to 3878, we turn around back up.

SUMMARY

So sleepy today, and although it was 20 points up and 20 points down, getting in at "I" would only net about 7 points as price came quickly back down, so I'm sure I would be out and happy with my profit. Then perhaps shorting around M could net 10 points if the exit was around N. So not 40 points, but hey... anything over 10 points would be excellent.

So I guess I finish my day at +$11, but really, its a big fail for not taking any trades after the open. Damn, these overnight levels have provided so much opportunity these past few days if not weeks, and so has getting in so close to the open and just holding would be more profitable then everything I'm doing. I still think its funny that yesterday, where I had my disconnect, had it taken so much longer to reconnect, I would be much more into the money and captured more of that down move. Looking at the big picture is for sure where the big bucks is made. Things to think about over the weekend.

Such a busy day today so I don't have time to sit in agony now and watch price move without me some more... thank god! :D
 
Well.. big drop... shame....

But finally now with a data reload, look at what I have. On this chart I have two O's, the first one, the higher one is the original one, and the second one, the lower one, is the reloaded data one. Notice how now the picture looks different? I don't see that huge overlap anymore. I see price going up, coming down, stopping at the opening level by more buying, going up again, and on the way down forming a higher low. This means the green entry arrow could be even lower for a better price. The DL is exactly as it was drawn before, but the way these bars are different certainly makes the long look that much better. I guess from now on I will be marking my opening 30 seconds early!
 
So nothing too fancy for the overnight. We have a fairly narrow range of 3874 and 3888. Just eyeballing the move up from the low, it certainly appears as if that trend is broken and we are very much in a consolidation right now of about 82 to 88, so it would be nice to see price go somewhere else first at the open.

Based on my daily channel, price is now ever so slightly back into the channel after dipping well before on Friday. So lets say the LOLR should be up. Mind you, the low for yesterday was 47 and with price being in the 80's now, that is a fairly good move up already, since you have to expect something like this after a major drop, and hence more buyers willing to pay more just might not be there at the open anymore.
 
Well, I think I've managed to prove that the way I'm doing things is the wrong way to do them, so lets just do a quick recap.

O - I think I have the right opening level here... caught about 30 seconds before my platform hits 08:30.00.

A - Wanted to get in on a short here, but not quick enough as price blew by.

B - Got in here, clearly not the best place to short! :( (refer to 15 sec chart)

C - You see the exit here. I will tell you what I'm learning though. I think I can see the need to exit well before I exit, and then I hope for a few more seconds, but I can see how the buying is just not making my short look good. Along with this strong buying, I should really be looking for a long I think. Often when I'm wrong about a trade, the exit for a loss is the best place to get in on the opposite trade. Here that would have been worth over 10 points.

So I'm down -$60.

D - This is where I take a long, 10 points above where it started! At least my exit is for about 1.5 points profit... so maybe I'm at about -$34 right now. I took it based on breaching the overnight high and seeing a tiny RET, but since it didn't take off right away, I got out.

E - Seeing as we didn't make it quite far past the overnight high, I try another short here, using that yellow line, indicating the previous swing low as a reference. Once again, I'm shorting right at the bottom and I'm out on the same bar.

F - Of course price does come back down again and I try another short here. I know I'm shorting right around the opening level, and right around 50% of the move up, but honestly, I just wanted to be in the short in case it drops right back down to at least the low of 77. I only wanted a few points anyway to get back to BE, and all of these are terrible reasons.

G - Here is an exit, and it looks like I took a full 4 points loss on this one. You will also notice another long here, no idea why. When I exited my trade, I tried to do it manually by hitting the close button, but right around the same time, I think the automatic stop loss was triggering, so before I knew it, I was also long (a result of exiting the short twice somehow). So you can see the exit on the next bar for yes, another loss.

I was well aware much sooner that none of these are SLA trades. In fact, no SLA trades trigger up to this point if I was to draw in my lines and take the RETs with the one point trigger entry.

H - I do draw in this DL now as price seems to follow it up nicely.

I - Now I'm gonna wait to clear the previous high, indicated by this resistance line below, and you can see a long 1 point above this. The exit is made for a tick profit just to cover the commissions. Of course I wanted it to take off, which it didn't, and when I exit, I'm worried that its only coming back down to test this breakthrough and take off again, but it ultimately doesn't work anyway.

SUMMARY

So I guess I'm at -$194. Honestly, I'm sick today and I'm tired, and I just thought if I keep trying I might get into a move early on that just takes off. Sure I was looking for a few things to justify a trade, but none of the stuff I'm looking at is all that tested, and although it might actually work in the long run, today isn't exactly the best day anyway as we clearly aren't trending. I think if I dig deep into my head, I do feel as if after a couple of strong trending days, nobody knows what they want and we get a day like today, so I shouldn't be too surprised and with enough testing I should be prepared for it. Basically, what I am saying is I know better, but I'm not doing anything about it. Some members have also been e-mailing me and replying to my journal trying to help as you can see, and I feel horrible that I'm not actually applying any rules or making them, thereby almost making their advice a waste of time, which it wasn't, but I'm being stupidly stubborn.

Its unfortunate that on Thursday and Friday I was reluctant to take a trade to get into the move, which would have gotten some profits because I thought I was being good to wait for something solid, and today I recklessly get in on moves when its not going anywhere.

I know a good trading plan would keep me out of trouble, so its about time I really hammer out at least one solid trade. My forward testing with random entries and varied justifications isn't really working too well as I'm sure everyone else can see! :)

J - Seeing this good drop, bringing forward the previous swing low... seeing the general down move from what looks like a double top at 94 now... do I think of taking this? Nope.. looks like the slight penetration below that swing low was bought up. I think I am shaping up to be the classic retail trader who consistently loses, getting in just when I'm missing out on the move and donating my money along the way! At least I'm not drinking my money away. :)

Its time to go back to bed. Please no one reply today... today isn't worth wasting time on as most trades were just stupid! :D
 
So it seems like yesterday ended up having some good moves in the end and there was a range of over 40 points.

For the overnight, we have gone from a high of 3900 just a few hours ago to a low of 3779 that we hit only an hour ago. We are riding the lower line of the daily channel, and if we look at the hourly and connect the low, we have dropped below that, so perhaps on the hourly chart it looks like a short is called for. The PDL is at 67, so lots of room to make some money if we do go down and see this as a level that price can test. Likewise, going to the overnight high of PDH also would gives us lots of points. Lets see what happens!
 
Nope.. looks like the slight penetration below that swing low was bought up. I think I am shaping up to be the classic retail trader who consistently loses, getting in just when I'm missing out on the move and donating my money along the way! At least I'm not drinking my money away
thats just one of many steps along the way , think of a baby falling several times before being able to stand and balance themselves holding the couch or a parent, then learning to take steps, don't beat yourself up
 
ammo said:
Nope.. looks like the slight penetration below that swing low was bought up. I think I am shaping up to be the classic retail trader who consistently loses, getting in just when I'm missing out on the move and donating my money along the way! At least I'm not drinking my money away
thats just one of many steps along the way , think of a baby falling several times before being able to stand and balance themselves holding the couch or a parent, then learning to take steps, don't beat yourself up
More...

Thanks.. and you're right! This is something that I just have to work through and these past couple of bad weeks will hopefully just be minor in the whole grand scheme of things. I will certainly have to re-evaluate better come the weekend to see where I'm going wrong, but for now I'm just going to be moving forward.
 
O - Putting the opening roughly where I think I saw it start.

A - This is technically a RET for a long, but not wanting to take it just below the previous high at the open.

B - This is the long I'm trying to take, but the platform keeps cancelling it for an unknown reason.

C - Price is moving up, great confirmation for the trade and I'm eager to get in. Finally I get in here with a market order and sure enough, I went long at the very top!

D - Since it doesn't work at all, I don't hesitate too long on my exit. A reverse here would have been great.

E - Here a short comes up which I take.

F - But I'm out here. If you draw the SL tight like my first one, its broken, but if I just used the first 3 bars at the top, I get this less steep one that ends up working well when price does drop. Gosh, it really is a shame to see this drop without me. Its easily 10 points if I just held on a bit longer.

G - I finally get in here again, and I'm happy to exit for a tiny profit because based on those higher lows on the bars after my entry, the short didn't look good at all.

H - If I draw in a steeper SL, its broken, and here is a RET for a long. Since it would fill 2 minutes later this area around here really looked like it was forming a higher low, but ultimately price did drop again.

I - The bar below here is just a bit above the previous day low... is this close enough to consider it a bounce? Could a long at one point above this bar be a legit trade? The action now is sideways, so the downward trend has broken, and since we got very close to a prominent level, perhaps this is good enough to take a long. The entry would be around 73 and hence a good 4 points above the low of the bar, so price rising 4 points to trigger the entry should be somewhat good confirmation that price is now on the rise without seeing a clear RET. As it turns out this was a good trade.

SUMMARY

I think my biggest problem right now, besides the random entries because I'm missing out of course, is trading via my P&L. That short at E only went against me 1.25 points at the worst, but I was far too eager to get out, not wanting to suffer another $60 loss. This in fact prevented me from getting at the very least 10 points.

With trading, it seems like you really have to do everything right 95% of the time. Just a small little mistake will often prevent you from seeing something, or prevent you from getting into a trade, and things can very quickly go bad. So many of these $200 loss days I've had in the past couple of weeks could have been turned around with one minor little tweak, but since I'm not working at anywhere close to peak perfection, being consistently profitable eludes me.

J - Tried one more trade here... really looked like price was breaking above these highs, and clearing the range, but alas, I took a small loss.

K - Oh look.. the trade does actually work, would just have to sit tight for a couple of extra minutes as price went down... not sure if that would have been possible.

I've got too much stuff in my head. On the one hand, I can see how using a larger bar interval makes things more clear, but stops have to be wider. On the other hand, I'm thinking of just using a 15 sec chart to almost scalp, in and out, taking SLA trades as they set-up, exiting at a line break, but also a quick re-entry if it sets up.

I really do have to pick something and stick with it. This forward testing with random entries is slowly draining my account.

Oh.. so I end my day at -$86.
 
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