Trading NQ via Price Action
- Thread starter k p
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That's fair, but since price continues to drop now, why did he get out after only 5 points? Don't get me wrong, I'd love to hear about his method, but if his trading methods caused him to enter a short and get out after only 5 points, I think there are price action traders on here that saw the same short and are more than likely still in their short, not having exited yet.
I don't see what method would tell him to short right here, but only for 5 points. This doesn't seem any better to me than what a price action trader is doing, regardless of the number of contracts.
Well, here. Consider the following:
Trade 1: The position is profitable immediately upon being opened. Price moves five points in a single direction with only 2-3 ticks of adverse excursion from the extreme at any point in time. It's closed right when the opportunity begins to diminish.
Trade 2: The position is opened in the direction of a probable movement of price. The trader sees adverse movements beginning to form and decides to hold through them. They end up being shorter than the favorable movements, and price continued to oscillate upward. The trade is exited as momentum seems to slow, for a larger amount of favorable points gained.
If you ask most beginners, they would probably think the second trade as superior and preferable to the first one. I'd wager that if you asked most experts, they would say the opposite. I would ponder the implications of this, and what it means towards your own personal search for success.
Trade 1: The position is profitable immediately upon being opened. Price moves five points in a single direction with only 2-3 ticks of adverse excursion from the extreme at any point in time. It's closed right when the opportunity begins to diminish.
Trade 2: The position is opened in the direction of a probable movement of price. The trader sees adverse movements beginning to form and decides to hold through them. They end up being shorter than the favorable movements, and price continued to oscillate upward. The trade is exited as momentum seems to slow, for a larger amount of favorable points gained.
If you ask most beginners, they would probably think the second trade as superior and preferable to the first one. I'd wager that if you asked most experts, they would say the opposite. I would ponder the implications of this, and what it means towards your own personal search for success.
You bring up some very good points IIIHeroic.
As a beginner, I actually prefer the first trade. I don't want price to go against me at all, and I want to arrive at my profit target right away.
So here is the thing. If you are saying that Blotto can hunt out trades that are primed to take off with almost zero risk, then I would acknowledge that what he is doing is spectacular. But it would be nice if he shared a little more then.
As a beginner, I actually prefer the first trade. I don't want price to go against me at all, and I want to arrive at my profit target right away.
So here is the thing. If you are saying that Blotto can hunt out trades that are primed to take off with almost zero risk, then I would acknowledge that what he is doing is spectacular. But it would be nice if he shared a little more then.
Lets do some more forward testing....
So first, the high at U certainly looks like an awesome bounce from the trendline in the hourly chart. There is that break of the DL just after U, but shorting in this strong up move will first need some more evidence.
V - As we come down, we do form a lower high, but this isn't obvious until price has gone much lower.
So now if I am using this swing point for my 5 min SL, price breaks at W.
Y - Here would be a good place to put a short. There is a bar that closes above the line, but its not fully above the line, and on the next line we drop down below. The entry would trigger, and price does go against me by just under 2 points, but it ultimately is a good trade.
Here is the thing though. Up at the top, if I used those two highs, I can get a slightly different SL, one that comes down to X, with price just bouncing off. I see the it ultimately doesn't make much of a different, the short is still valid with both lines, but perhaps the line at W might make we question if we could be going up instead. I think though that for price to break a major trend line like a 5 minute would require a solid break complete with a retracement back down and then taking off again.
Either way, this looks like another good trade based on the 5 minute trend lines. Gotta be really patient though to wait for things to happen at these lines.
So first, the high at U certainly looks like an awesome bounce from the trendline in the hourly chart. There is that break of the DL just after U, but shorting in this strong up move will first need some more evidence.
V - As we come down, we do form a lower high, but this isn't obvious until price has gone much lower.
So now if I am using this swing point for my 5 min SL, price breaks at W.
Y - Here would be a good place to put a short. There is a bar that closes above the line, but its not fully above the line, and on the next line we drop down below. The entry would trigger, and price does go against me by just under 2 points, but it ultimately is a good trade.
Here is the thing though. Up at the top, if I used those two highs, I can get a slightly different SL, one that comes down to X, with price just bouncing off. I see the it ultimately doesn't make much of a different, the short is still valid with both lines, but perhaps the line at W might make we question if we could be going up instead. I think though that for price to break a major trend line like a 5 minute would require a solid break complete with a retracement back down and then taking off again.
Either way, this looks like another good trade based on the 5 minute trend lines. Gotta be really patient though to wait for things to happen at these lines.
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As I sit through the agony of not having made any money today, on a day when everything just works like clockwork, all I have to console me is the pleasure I get from more analysis. (truth be told... it seems that I like analysis but not back testing!)
So that short at Y ended up doing quite well. As further confirmation, I could have drawn a DL, which I included on this chart. There is a break, and if one is quick, he might take the RET that forms at the little "y".
Not only is there the bounce from the 5 min SL, but we also have a break of the DL now.
Ok.... so moving along. Price hits the low around 32 at Z and proceeds higher. Comes back down to A to form a higher low. Seeing this, one might be tempted to go long at B, which is further confirmed when price breached the previous high at C. But since this trend down is so strong... no way.
Here is what I will do, I will draw in a DL as Db showed in a slide a while back and wait to see if this breaks.
D - If I was super eager.. would I short here at this first arrow? My entry would have to be a tick below this bar which would fill, but then price would go higher.
I think ND would wait until a bar is fully below. (I should look it up because she is very specific)
E - This second short is much juicier and it does work!
F - Jesus.. no idea why price shot up here, but hey, perhaps this trade was worth a point or two before what would have hopefully been a quick exit or at least BE.
Regardless, the setup is solid and since we never know what will happen, we just gotta take it.
If we waited till "G" to short, we are more than likely looking at a loss.
So that short at Y ended up doing quite well. As further confirmation, I could have drawn a DL, which I included on this chart. There is a break, and if one is quick, he might take the RET that forms at the little "y".
Not only is there the bounce from the 5 min SL, but we also have a break of the DL now.
Ok.... so moving along. Price hits the low around 32 at Z and proceeds higher. Comes back down to A to form a higher low. Seeing this, one might be tempted to go long at B, which is further confirmed when price breached the previous high at C. But since this trend down is so strong... no way.
Here is what I will do, I will draw in a DL as Db showed in a slide a while back and wait to see if this breaks.
D - If I was super eager.. would I short here at this first arrow? My entry would have to be a tick below this bar which would fill, but then price would go higher.
I think ND would wait until a bar is fully below. (I should look it up because she is very specific)
E - This second short is much juicier and it does work!
F - Jesus.. no idea why price shot up here, but hey, perhaps this trade was worth a point or two before what would have hopefully been a quick exit or at least BE.
Regardless, the setup is solid and since we never know what will happen, we just gotta take it.
If we waited till "G" to short, we are more than likely looking at a loss.
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So lets continue some more.
After the huge rise up from F, there really isn't much to go on until we get to H.
H - We seem to be riding the 5 min SL. It was fanned just a little, to cover up spike up at X from the previous analysis.
I show possible shorts below any of these bars. The first two look solid because price is still below the line. But price then shoots above.
The third short ends up taking off for a few points, but gosh, in real time this would be quite a mess.
J - This same thing repeats here. Now perhaps given the fact that there is so much action to the left, we are in a bit of a consolidation area, especially on a higher time frame chart. Also, we have a higher low, so shorting just because we bounce off the SL might not be too smart and we should perhaps wait for more confirmation.
K - Here is the point though that I am seeing of focusing on the 5 min trendlines. Once we try to short so many times, when price does finally penetrate the SL, this bar that fully stays above it, and provides that RET is a solid area to go long. Its at least a 10 point move.
Score another point for the 5 minute trend line. With proper exits and re-entries, I think even the difficult stuff at H and J might have not caused too much pain, and it all have been worth it if going long at K hasn't drained your attention and nerves too much.
After the huge rise up from F, there really isn't much to go on until we get to H.
H - We seem to be riding the 5 min SL. It was fanned just a little, to cover up spike up at X from the previous analysis.
I show possible shorts below any of these bars. The first two look solid because price is still below the line. But price then shoots above.
The third short ends up taking off for a few points, but gosh, in real time this would be quite a mess.
J - This same thing repeats here. Now perhaps given the fact that there is so much action to the left, we are in a bit of a consolidation area, especially on a higher time frame chart. Also, we have a higher low, so shorting just because we bounce off the SL might not be too smart and we should perhaps wait for more confirmation.
K - Here is the point though that I am seeing of focusing on the 5 min trendlines. Once we try to short so many times, when price does finally penetrate the SL, this bar that fully stays above it, and provides that RET is a solid area to go long. Its at least a 10 point move.
Score another point for the 5 minute trend line. With proper exits and re-entries, I think even the difficult stuff at H and J might have not caused too much pain, and it all have been worth it if going long at K hasn't drained your attention and nerves too much.
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You can't be too specific when the setup's sloppy, which it is there.
F - it's a 1-2-3 setup with a slightly lower low (FBO). 1-2-3 trap setups like that tend to result in stronger moves because those "confirmed" shorts have to cover somewhere.
Using a long setup as an example, a 1-2-3 can have a double bottom, a higher low or a very slightly lower low. The very slightly lower low means shorts who entered on the break of the previous low are trapped and if the upside gains even a little traction, there's usually liftoff as the shorts cover, fueling the demand.
