Trading NQ via Price Action

[k p]

I had my trend lines in place from the majority of the day and removed the tighter adjusted line when the lower channel level held as support.


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Brilliant! Price on my chart unfortunately doesn't get quite high enough to break the UTL as yours does when I draw it the same like you do by connecting the first two swing highs (it needs just a touch of down angle). But close enough.. and I certainly understand the lesson! Not sure if I would be taking a trade so late in the day expecting such a big move down that only had minutes to work itself out, but it sure did!

I am loving this new way of using trend lines and by using these 5 minute charts, the trend (signal), is certainly separated from the noise (the algos on the 1 minute charts).

 

[k p]

Don't have much time today so have to make this quick. I will use a couple of charts because things get stretched out too much after the big drop.

A - This is our SL we get from a 5 minute chart.

B - I see this lovely hinge forming.

C - Just before the open, we have a break of the 5 minute SL, and one bar even closes completely above it. I indicate via green arrow where I strongly considered going long, but I didn't put the trade on because if it spikes up at the open I didn't want to be sucked into the trade if it quickly reversed.

The other thing is that there was this strong down trend over night, so I have to be very careful with thinking the trend is over. At the open is I think just a good a time as any to have a trend reversal, but this still really needs to show so I am watching the 5 minute chart for this.

D - We end up dropping down, but too much overlap with these bars so I do nothing.

E - Here we break above the opening level, and back above that SL. I am thinking a long looks good but I don't enter till even a few points higher at 78.

Was this properly setup? Not exactly, but the rejection of going down after having 6 minutes seemed decent, and we are well above the SL now.

F - We only make it this high, and I start to worry because I notice that this level is the bottom of the previous congestion area. So in a sense, we could be testing that breakout level. I was prepared to hold through a deep retracement though.

G - So I clearly didn't hold that long! LOL... The rejection was looking strong, and although my exit happens at the worst place, meaning the bottom of the down wave, ultimately getting out was good. If I entered the long much sooner, my exit could have cost me much less .

So I start my day at around -$70.

H - Having dropped below even the previous lows at D, it was time to seriously look for a short. I saw a nice retracement on the 5 minute chart, but this would put an entry around 70 for a short, and I was much too late now.

I - Well, no need to beat around the bush, lets just try now and use a wider stop to make up for the late entry. I do perhaps still have the strong overnight down trend blowing at my back since we clearly didn't get far with the rally up so I'm getting into my short at 68.

J - Things look really good, and on my way down to here, I more than make up for my loss, but price starts to quickly come back up. We have an area of congestion yesterday between 67 and 74... so this could get messy here.

K - And my exit is here. Its actually only 4 points above the low that we hit, but I guess watching the P&L, it seemed like price was really going against me and I just wanted to collect something here, mostly to make up for my loss.

So after this trade, I was still at about -$14 for the day I think.

L - Well, thankfully here is a re-entry. It should be a little higher given the low of the bar above, but hey, at least I re-entered.

(moving onto next chart)

Wow... it drops right away. I can't even watch the 5 minute chart now, its just a line straight down, so not much to go on. And although I love these quick moves since I want to be in the clear right away, I also know that quick moves can just as quickly retrace back up.

M - And so I'm out here. No reason other than to collect my money. I am seeing that we are now entering the area yesterday where we had action, but I just figured lets ends on a good note today.

So I end at +$148.

N - This looked like it was going to provide lots of support, but eventually we fell out the bottom, and as it is now, we are even at 4020. Jesus... how low can this go? It does suck to not getting a bigger piece of this huge drop and all I had to do was to stay in a bit longer, but the last thing I want to do is to start shorting randomly since I have a knack for catching bottoms, but never when I'm going long!

I think if I didn't start my day with a loss I would be better able to hold, but such is life. I've picked up too many fears along the way now so I have to just focus on baby steps in the right direction.

 

[k p]

A - So going into today, I have this 5 min DL.

B - Here it appears we have a bounce, and I consider a long.

C - We have a break of the DL, and I'm looking for an entry which I don't get till here.

The exit is on the next bar as price just came up too quickly after I was almost 3 points ahead so I just bailed. I'm fully aware price can be going up to test the breakout level, but I got in too far below so I'm not taking the risk.

D - When we bounce off here, I connect this with the two time this level acted as support about 20 minutes earlier.

E - Because this level seemed to be so well tested and rejected, and because the 5 minute trend is now over, I think shorting below here again seems like a decent trade. I don't put it on, which is good since it didn't work out, but technically I think its still a legitimate trade.

Ok.. well I just did a few bad trades so let me just get to there.. no point in spending too much time on what I didn't do.

E - After this bounce here I draw in these green lines to see if we have a channel, and altough I mark in some possible trades, I don't take any, and some didn't fill.

F - I do take this trade here seeing as we rejected that price level outlined by the pink line a few times and I think a ride down to the bottom seems quite likely. I get spooked so I'm out for a just a few ticks. It did shoot up and quickly back down again.

G - This one pisses me off. I was looking for the RET after going above the OH and also breaking out of that channel. SO I had a trade entered and I was realizing that the previous swing low, right at the OH is just too far away. Well my entry gets hit and I knew it didn't look good right away because it just dropped. In fact, I didn't like this whole day. Price just violently moved up and down, seems not natural if that makes any sense.

Anyway, so I had a stop just below the OH which eventually got hit for a good 5 point loss.

H - Thinking this down move was strong, I shorted just a little later, and of course this isn't set up well at all so I have exited right away as well, at pretty much the top. Had I just kep the short things would have been much muhc better.

I - And here I do it again. I just think I'm going to scalp a few points when the market looks like its dropping, you know, to stupidly make up the loss, but there is always a retracement back up right after a huge drop when suckers get in from hurting after missing a good move already. So this has to be exited at a loss as well.

I was doing quite good today and being patient, waiting for something good, but it fell apart and within 10 minutes, the damage was done.

So I end my day at -$170.

J - Now as I draw in a new 5 minute DL, I can see that price essentially bounced off here and hence what a stupid place to short this last time, for so many reasons. Seriously, if I did exactly the opposite of everything I try and do I would be so much further ahead.

(sorry, I don't even feel like proofreading this today before I post it)

 

[toucan]

KP.... did you ever write down your trading rules/trading plan?

cheers
toucan

A - So going into today, I have this 5 min DL.

B - Here it appears we have a bounce, and I consider a long.

C - We have a break of the DL, and I'm looking for an entry which I don't get till here.

The exit is on the next bar as price just came up too quickly after I was almost 3 points ahead so I just bailed. I'm fully aware price can be going up to test the breakout level, but I got in too far below so I'm not taking the risk.

D - When we bounce off here, I connect this with the two time this level acted as support about 20 minutes earlier.

E - Because this level seemed to be so well tested and rejected, and because the 5 minute trend is now over, I think shorting below here again seems like a decent trade. I don't put it on, which is good since it didn't work out, but technically I think its still a legitimate trade.

Ok.. well I just did a few bad trades so let me just get to there.. no point in spending too much time on what I didn't do.

E - After this bounce here I draw in these green lines to see if we have a channel, and altough I mark in some possible trades, I don't take any, and some didn't fill.

F - I do take this trade here seeing as we rejected that price level outlined by the pink line a few times and I think a ride down to the bottom seems quite likely. I get spooked so I'm out for a just a few ticks. It did shoot up and quickly back down again.

G - This one pisses me off. I was looking for the RET after going above the OH and also breaking out of that channel. SO I had a trade entered and I was realizing that the previous swing low, right at the OH is just too far away. Well my entry gets hit and I knew it didn't look good right away because it just dropped. In fact, I didn't like this whole day. Price just violently moved up and down, seems not natural if that makes any sense.

Anyway, so I had a stop just below the OH which eventually got hit for a good 5 point loss.

H - Thinking this down move was strong, I shorted just a little later, and of course this isn't set up well at all so I have exited right away as well, at pretty much the top. Had I just kep the short things would have been much muhc better.

I - And here I do it again. I just think I'm going to scalp a few points when the market looks like its dropping, you know, to stupidly make up the loss, but there is always a retracement back up right after a huge drop when suckers get in from hurting after missing a good move already. So this has to be exited at a loss as well.

I was doing quite good today and being patient, waiting for something good, but it fell apart and within 10 minutes, the damage was done.

So I end my day at -$170.

J - Now as I draw in a new 5 minute DL, I can see that price essentially bounced off here and hence what a stupid place to short this last time, for so many reasons. Seriously, if I did exactly the opposite of everything I try and do I would be so much further ahead.

(sorry, I don't even feel like proofreading this today before I post it)

 

[k p]

toucan, I am embarrassed to say that I have not yet. I think its coming together somewhat well in that I will only be using the 5 minute chart to show general trend and then the one minute chart to get my entries. I see today how bounces from the 5 min DL would have worked beautifully, and these large channel provided excellent moves. I had clear ideas of where I would go long or short based on the one minute chart, and I even put one of those on that fit the plan, but I just couldn't hold.

When I entered that long trade, I thought I was getting in on what is an decent retracement having gone above the OH, but it didn't go anywhere very quickly, and I could have taken a couple of points loss and just been at BE essentially given that I had already a few points from earlier. But I held on too long, and then the next 2 shorts were just stupid which did more damage.

But of course the over riding problem is that I have no solid plan yet. The excuse is that I haven't had enough time to study the 5 minute charts and cross reference the 1 minute. So of course the next question would be why am I trading and not using this time to come up with the plan. The excuse is because I lack discipline and think that I can put something together as I go, and hopefully at the same time get into a good move and collect some points. This is of course wrong, as evidenced by my results, but its the most honest answer I can give.

 

[eminiman414]

Did you anticipate a choppy open?

 

[k p]

Did you anticipate a choppy open?

I think anticipation is kind of tricky because it gives you a bias. On the one hand I could see why there might be a rally to at least make it up halfway to the huge move down yesterday. I could also see that the selling might continue. But of course a pause/congestion is also quite likely given the huge drop.

So I didn't anticipate really, but I could see that it was quite choppy. I did a good job of staying out for the most part, since playing these channels is a bit new (although I think I clearly have the trades outlined in my head). But this all fell apart after the breakout.

You know, it really is only about 2 mistakes. First was that the long was perhaps too tricky given how far away that swing low was, or rather how deep the retracement was. Combine this also with the fact that I held on too long I think.

The second problem of course was the chasing down with improper entries. Shorting of course worked, but I should have waited for the RET.

Had I also redrawn my 5 minute DL to see the touch at "J", I could have gone long above that bar and done really well today. You really have to be working at 98% to be successful. If you do things only 80% right it just isn't good enough.

 

[eminiman414]

I think anticipation and having a bias are two different things. With anticipation or having some sort of expectation (for me anyway) it sort of gives me a framework and whether what I anticipate happens or not so be it. I am prepared for both either way. For me today before we open I saw a HL and a LH within the overnight price range from there if trading mechanically we have a long and a short both of which don't go anywhere so that confirms the anticipation of potential chop. I myself also wouldn't be interested in trading a "tight" range especially with the speed in which we were getting to the top and bottom.

 

[k p]

I think anticipation and having a bias are two different things. With anticipation or having some sort of expectation (for me anyway) it sort of gives me a framework and whether what I anticipate happens or not so be it. I am prepared for both either way. For me today before we open I saw a HL and a LH within the overnight price range from there if trading mechanically we have a long and a short both of which don't go anywhere so that confirms the anticipation of potential chop. I myself also wouldn't be interested in trading a "tight" range especially with the speed in which we were getting to the top and bottom.

Excellent observation. It sounds like you are really getting quite good at this, mostly of course because I am sure you have studied diligently. Along with the plan, (which is a must but at least what I'm thinking it will be in my head seems to be working somewhat well with what I see happening in forward testing), its these silly habits that I have to get rid of. Everything tends to fall apart in just minutes, and just as bad as putting on some stupid trades and losing points, being unable to put on the rights trades shortly there after is also a killer. I am seeing it unfold right now as I track my 5 minute SL down and and seeing lots of opportunities to enter on the 1 minute chart.

 

[eminiman414]

as an aside I am reviewing mid July thru present day and so far mechanical SLA collects a net of 173 points from mid July to mid August. One thing I did to try to be consistent was the exit was +/- 1 point from a 10 sma as opposed to drawing individual lines and finding the price at which the line would break myself, if that makes sense. SMA was colored white so I couldnt see it just the price of the average.

I followed the rules as laid out aside from that exit which comes pretty close to a sl or dl break anyways. No regards to context. 49% win rate. avg win 5.25 pts avg loss 2.25 pts based on the SMA exit. Avoided chop with the chop rule. There have only been 3 losing days w the max losing day being less than 6 points. There was one day where the drawdown was 12 points but in the end staying mechanical the day ended up plus 2.75 points.

looked from 930-1130 unless in a trade then held until the exit was hit

This was all mechanical so I am not saying I'd sit thru 12 points of losses just sharing the results thus far.