What's really preventing you from stopping everything until you have a plan? The market will be there when you get back. If the previous bar is what you want to use for your stop then go back and test that. How far below or above the bar? Going through the testing everything has to be well defined. Really well defined lol. I've run into issues when previously testing because certain parameters were too wishy washy. Silly example is "if price moves far enough." What's "far enough" etc. You can always do a quick scan of what you're interested in to see if it's even worth going through a more thorough test. Trust me you're going to love life once you have something more concrete.
Trading NQ via Price Action
- Thread starter k p
- Start date
This is something I look forward to as well and know is in fact waiting for me when the testing is complete.
I found out just how wishy washy my plan was when I attempted to describe it in a way that could be automated.
Here's a fun exercise - describe these terms in such a way that a programmer could write code that would identify them on a chart the way you imagine them:
Higher low/lower high
Strong trend
Big price bar
Pullback
Swing high/swing low
HOD/LOD
Strong breakout
Failed breakout
Well, I'm mad today. What a stupid day to practise restraint. I always knew that on the day I decide to just mark trades on a chart but not take them that things would go very well.
Lets back up a bit first though.
A - An hour before the open, we have this 5 min DL that gets broken. Price does re-enter but exit again. If a short was taken here, it should be a scratch once price re-enters again for a minor loss.
B - With price only coming this far, this allows for a great 5 min SL to be drawn. After hitting what is the overnight high at 4063, price tried again 30 mins later and stopped 2 ticks lower. This is giving me lots of confidence in this SL.
C - With price dropping out the bottom again, I see this short here would also work. (But I have nothing worked out in terms of re-breaking once the line is broken and price re-enters.
D - We only make it down this far (this is the top of a range of congestion during the overnight, but these things are tricky and just a bit subjective)
E - Lets track any of these shorts that can be made here.
O - So we open up, and sure enough, price shoots up.
F - We are approaching the 5 min SL, I am already fully aware of what I'm looking for. On a 15 sec chart, there is a lovely double top and a pause long enough just to get a short in at roughly 53.
The close of this bar isn't till 52, and the SL is roughly at 56, so if an entry is 1 point away at 51, that is a 5 point stop loss. I think I would have been in the short even sooner, strickly based on the behavior and a lower time frame chart, but on this one minute, lets mark the entry below this bar.
G - After this, every single RET that you see can have shorts added.
H - I would have more than likely exited here, just to keep all my money, but I fully know that we really need a HL and a HH in order to even consider this strong trend down over.
I - Looking to see what happens at the OL. We do have penetration by a good 5 points, but its bought up.
J - If I use that spike up on the way down to draw a SL, it breaks here, but this is still no good reason to exit the trade, and look at how quickly it drops down again just a few minutes later.
SUMMARY
Well, I could have posted a really good profit for a change, but all I have is confirmation that these 5 minute trend lines really do provide amazing opportunity. It really does hurt because adding contracts on the way down, which I am prepared for once I see a strong trend, and exiting even at H is several hundred dollars at least.
Lets back up a bit first though.
A - An hour before the open, we have this 5 min DL that gets broken. Price does re-enter but exit again. If a short was taken here, it should be a scratch once price re-enters again for a minor loss.
B - With price only coming this far, this allows for a great 5 min SL to be drawn. After hitting what is the overnight high at 4063, price tried again 30 mins later and stopped 2 ticks lower. This is giving me lots of confidence in this SL.
C - With price dropping out the bottom again, I see this short here would also work. (But I have nothing worked out in terms of re-breaking once the line is broken and price re-enters.
D - We only make it down this far (this is the top of a range of congestion during the overnight, but these things are tricky and just a bit subjective)
E - Lets track any of these shorts that can be made here.
O - So we open up, and sure enough, price shoots up.
F - We are approaching the 5 min SL, I am already fully aware of what I'm looking for. On a 15 sec chart, there is a lovely double top and a pause long enough just to get a short in at roughly 53.
The close of this bar isn't till 52, and the SL is roughly at 56, so if an entry is 1 point away at 51, that is a 5 point stop loss. I think I would have been in the short even sooner, strickly based on the behavior and a lower time frame chart, but on this one minute, lets mark the entry below this bar.
G - After this, every single RET that you see can have shorts added.
H - I would have more than likely exited here, just to keep all my money, but I fully know that we really need a HL and a HH in order to even consider this strong trend down over.
I - Looking to see what happens at the OL. We do have penetration by a good 5 points, but its bought up.
J - If I use that spike up on the way down to draw a SL, it breaks here, but this is still no good reason to exit the trade, and look at how quickly it drops down again just a few minutes later.
SUMMARY
Well, I could have posted a really good profit for a change, but all I have is confirmation that these 5 minute trend lines really do provide amazing opportunity. It really does hurt because adding contracts on the way down, which I am prepared for once I see a strong trend, and exiting even at H is several hundred dollars at least.
Attachments
How to get into a long today?
So after the price dropped down to K, the SL can be fanned using the swing point at L.
M - Coming down to here, the lows of the previous lows are really just ticks lower, so price is very much starting to stall, but after coming down 30 points, going long has to be well established.
N - When this new SL breaks at N, we do have I guess a high high, but not really quite a lower low yet, but the break is there.
Now this bar right above N has a low that almost is at the low of where the break of the SL happened. There so far has not been a RET in which to enter a long.
Does this even qualify as a higher low? It seems pretty minor.
P - This is where the RET happens, and the bar before did have a slight peak above even a previous high at J or L.
Q - Now suppose I'm not even in a long yet and I see price drop after P but it doesn't go below 36. I could treat this as an area of congestion.
I do notice that on the 5 min chart, there is a nice RET in here, but does it also set up on this 1 minute?
R - Here would be a RET after the slight poke above and you know, the next bar where the fill would happen is certainly a strong move up. We are now 20 points above the low mind you. In a way, this means we have retraced more than 50% of the down move as well.
S - We penetrate the SL from earlier, and if I wanted to go short below this bar that penetrates just in case price comes down again, I wouldn't get a fill since price goes higher.
Going long above the next bar works, but now we are 30 points above the bottom, and close to the OH. But hey, a solid 5 points I will take any day if breaking through this 5 min SL ends up being a very statistically profitable.
T - Right here could make a person want to short. If we had a tight DL drawn in (which I don't), it would have broken. Above T we have lower high, and on the spike down to the right of T, we even have a slightly lower low since its spikes down.
But alas, it fails right away, and shorting in this strong up trend would be foolish without much more confirmation.
Its a slow and steady move, but price does keep going higher.
U - We even break above the overnight high. Wow, its practically 40 points up!
So ND, if you are reading... what do you see as a place to go long? At what point would you say the down move is over... and at what point do you have confidence in taking a long?
So after the price dropped down to K, the SL can be fanned using the swing point at L.
M - Coming down to here, the lows of the previous lows are really just ticks lower, so price is very much starting to stall, but after coming down 30 points, going long has to be well established.
N - When this new SL breaks at N, we do have I guess a high high, but not really quite a lower low yet, but the break is there.
Now this bar right above N has a low that almost is at the low of where the break of the SL happened. There so far has not been a RET in which to enter a long.
Does this even qualify as a higher low? It seems pretty minor.
P - This is where the RET happens, and the bar before did have a slight peak above even a previous high at J or L.
Q - Now suppose I'm not even in a long yet and I see price drop after P but it doesn't go below 36. I could treat this as an area of congestion.
I do notice that on the 5 min chart, there is a nice RET in here, but does it also set up on this 1 minute?
R - Here would be a RET after the slight poke above and you know, the next bar where the fill would happen is certainly a strong move up. We are now 20 points above the low mind you. In a way, this means we have retraced more than 50% of the down move as well.
S - We penetrate the SL from earlier, and if I wanted to go short below this bar that penetrates just in case price comes down again, I wouldn't get a fill since price goes higher.
Going long above the next bar works, but now we are 30 points above the bottom, and close to the OH. But hey, a solid 5 points I will take any day if breaking through this 5 min SL ends up being a very statistically profitable.
T - Right here could make a person want to short. If we had a tight DL drawn in (which I don't), it would have broken. Above T we have lower high, and on the spike down to the right of T, we even have a slightly lower low since its spikes down.
But alas, it fails right away, and shorting in this strong up trend would be foolish without much more confirmation.
Its a slow and steady move, but price does keep going higher.
U - We even break above the overnight high. Wow, its practically 40 points up!
So ND, if you are reading... what do you see as a place to go long? At what point would you say the down move is over... and at what point do you have confidence in taking a long?
Attachments
Don't worry... I always buy at the top and sell at the bottom... you're not alone!
Hmmmmm meaning Db is about to make a short
To be honest, I saw you posted the hourly in your journal and so it made me look for myself!
Oh shoot.. I thought you were saying that you bought on the high and had to get out for a loss.
You see, what I believe is that it doesn't matter why price went down there. All that matters is that it did, and that I have a way to profit from this via a statistically positive approach.
I would love to hear how you trade if not with trendlines or even price. If you have the holy grail though, 5 points seems like a small amount of profit!
You see, what I believe is that it doesn't matter why price went down there. All that matters is that it did, and that I have a way to profit from this via a statistically positive approach.
I would love to hear how you trade if not with trendlines or even price. If you have the holy grail though, 5 points seems like a small amount of profit!