Trading NQ via Price Action

[k p]

There is an incredible amount of insight here.. so thank-you! Db isn't human.. he's like a machine when he trades... he's not scared, he doesn't get mad, he knows all the possible outcomes and accepts each... the exact opposite of a human trader! LOL... So its nice to read you talk about your impatient trading personality as this is me!

I too have been hunting for simplicity, but my personality so far has been incapable of taking those trades on a whim. I literally see the trade, hesitate for 5 seconds, just enough time to get in before it goes in my direction and is gone. So as much as coming up with a trading plan is essential, doing work on myself is just as crucial. As of course one feeds the other (when there is a solid plan the confidence increases), so I think when it comes together, it will all come together.

One more question if I may... is there any for room hinges in your trading plan? Perhaps by using a trend line this captures half of the hinge given that the trend line would contain half the action, but do you see this pattern/behavior and act on it?

 

[NoDoji]

One more question if I may... is there any for room hinges in your trading plan? Perhaps by using a trend line this captures half of the hinge given that the trend line would contain half the action, but do you see this pattern/behavior and act on it?

As I recall from DB's chat room, I use different names for things than he does. Can you clarify "hinge" for me? I think you're referring to triangle formations?

I understand a lot of people here would rather talk about how many cars I trade, but I'm with Ylvis on this: "Never mind the car, let's talk about the hinge!"

 

[VV Cehpei]

Then there are traders like Geez who had a very simple plan that took advantage of a ~50% win rate, with 2:1 reward. All the little details I have to keep in my head are basically irrelevant with his plan, but I didn't have the personality to effectively trade that way. If I were to have a day with 5 losses out of 5 trades I'd be back to the drawing boards trying to "fix" something that wasn't broken!

Hey NoDoji, that's a very good point and one I need to consider! But since this is k p's journal I was wondering if you wouldn't mind answering a question that might help k p as well.

I would imagine that you have a profit target in points or dollars that you set for yourself, and you wait for setups that fit your plan and take pieces out of your daily goal at a time.

My question is if you were trading the NQ, what might be among the smaller pieces that you might take on average? Or do you have any general rules or advice for that?

Thanks!

Edit: And k p, I hope you don't mind me posting a question in your journal!

 

[NoDoji]

My question is if you were trading the NQ, what might be among the smaller pieces that you might take on average? Or do you have any general rules or advice for that?

I look for setups where a 5-pt stop loss can comfortably hold and where an excursion to the next S/R level in line to be tested would provide at least 5 pts. Because I trade in the direction of a defined trend or off the extremes of a defined range, the win rate is pretty high.

That said, because of the way I enter, the 5-pt stop loss is often not triggered when an opposing signal occurs and there's very often a chance to exit break even or for a much smaller loss.

 

[k p]

As I recall from DB's chat room, I use different names for things than he does. Can you clarify "hinge" for me? I think you're referring to triangle formations?

I understand a lot of people here would rather talk about how many cars I trade, but I'm with Ylvis on this: "Never mind the car, let's talk about the hinge!"

ND: Oh.. the hinge is yes, the triangle... so essentially lower highs and higher lows. If the hinge ends up closing, then it usually dribbles out Db would say, but if it breaks one way or the other before the upper line and lower line meet, all this buildup of energy is released in hopefully a strong trend. He has also said that they tend to break out in the opposite direction of the ultimate move, but I don't always see this. And the middle of the hinge, the apex, can often be the area for where price can come back up to test if it broke out the bottom and then bounce off this level. Almost the second mouse entry really if you miss the initial break, although of course price could just take off and never come back.

VV Cehpei: No problem... ask away!

 

[VV Cehpei]

I look for setups where a 5-pt stop loss can comfortably hold and where an excursion to the next S/R level in line to be tested would provide at least 5 pts. Because I trade in the direction of a defined trend or off the extremes of a defined range, the win rate is pretty high.

That said, because of the way I enter, the 5-pt stop loss is often not triggered when an opposing signal occurs and there's very often a chance to exit break even or for a much smaller loss.

Thanks ND, that makes a lot of sense and gives me a few things to think about!

 

[NoDoji]

ND: Oh.. the hinge is yes, the triangle... so essentially lower highs and higher lows. If the hinge ends up closing, then it usually dribbles out Db would say, but if it breaks one way or the other before the upper line and lower line meet, all this buildup of energy is released in hopefully a strong trend. He has also said that they tend to break out in the opposite direction of the ultimate move, but I don't always see this. And the middle of the hinge, the apex, can often be the area for where price can come back up to test if it broke out the bottom and then bounce off this level. Almost the second mouse entry really if you miss the initial break, although of course price could just take off and never come back.

I do use hinges and I have no problem if price takes off without me on the initial break because I will enter on any 1-min pullback that doesn't violate my R:R criteria.

 

[k p]

I do use hinges and I have no problem if price takes off without me on the initial break because I will enter on any 1-min pullback that doesn't violate my R:R criteria.

I love the discipline.

One more question.. and this is a good one so I hope you have time for one more. Do you wait until the bar closes to put on the trade? And if you do, does this mean that you can essentially look at any chart at the end of the day and know exactly where your trades would be because you wouldn't be getting in based on how a bar is forming? I think I read you say somewhere before that you might look at a 15 second for example to see what is going on, so do you violate this rule sometimes or will you always make sure that the pullback is clearly there on the one minute bar before you put in an order to buy above the pullback?

I notice with my charts that the data feed isn't super precise. (I'm getting my data from IB and using MultiCharts as my trading platform) This of course isn't the reason why I'm losing money, but often after I reload the data a few hours later I see the bars move, and a slight 2 tick pullback might appear that wasn't there before. It seems silly sometimes to have to see that one bar close just one tick below the previous bar to consider this a pullback in the one minute chart, but I guess a rule is a rule.

 

[NoDoji]

I love the discipline.

One more question.. and this is a good one so I hope you have time for one more. Do you wait until the bar closes to put on the trade? And if you do, does this mean that you can essentially look at any chart at the end of the day and know exactly where your trades would be because you wouldn't be getting in based on how a bar is forming? I think I read you say somewhere before that you might look at a 15 second for example to see what is going on, so do you violate this rule sometimes or will you always make sure that the pullback is clearly there on the one minute bar before you put in an order to buy above the pullback?

I notice with my charts that the data feed isn't super precise. (I'm getting my data from IB and using MultiCharts as my trading platform) This of course isn't the reason why I'm losing money, but often after I reload the data a few hours later I see the bars move, and a slight 2 tick pullback might appear that wasn't there before. It seems silly sometimes to have to see that one bar close just one tick below the previous bar to consider this a pullback in the one minute chart, but I guess a rule is a rule.

The close of a bar is required for me to evaluate a setup, but I'm aware of all my key levels in advance of the close so I can quickly calculate the risk:reward. If a 5-min bar closes and it fulfills all the requirements for a first entry I place the order immediately and wait until it's filled or the next bar closes, at which point I re-evaluate. If a 5-min bar closes and it's not a first entry setup, but qualifies for a second entry, I wait for a signal first and then place the order. If no signal, no order. If a strong trending move is underway I can use the 1-min chart directly and I only place an order upon the close of a qualifying 1-min bar.

Being human, if I hesitate and don't get my order placed at the right time, I may chase an entry. I agree 100% that a rule is a rule and my scalping method is quite precise, so chasing usually turns a profitable trade into a break even trade or a break even trade into a loss.

I learned very early on that getting in without waiting for a valid signal bar to close is not good at all for my method.

 

[k p]

Excellent. So essentially this is how we were doing it with SLA where an order gets placed either one point above the high of a bar, so if price trends even higher we are swept into the trade, or if we are looking to go short, it is at one point below the low of a bar. (But of course for the long as an example, the bar that we put the entry above has to have a high lower than the previous bar so that there is the retracement clearly visible on the one minute chart)

It might take a few minutes to fill of course if price just keeps going away from our entry (ie. lower if we are looking to go long), but then we could also move the entry once the next bar closes so that we are essentially always one point above or below the bar that just closed.

It sounds like you are doing something similar. It also interesting that you use the 5 minute bar... I have had other members advise me of this as well, and although I look at it on the other monitor, this certainly isn't my main chart.