Trading NQ via Price Action

[eminiman414]

"It may very well still, but I certainly didn't see any good way to enter a long after the bounce from 3781"

Why not above the RET you have at K? A more traditional SLA trade. Obv with a 15s chart there is a "better" entry nearer to the PDH where on a 1min you see some hesitation before K.

 

[k p]

Why not above the RET you have at K? A more traditional SLA trade. Obv with a 15s chart there is a "better" entry nearer to the PDH where on a 1min you see some hesitation before K.

Well.. the 15 sec chart, as glamorous as it looks to trade from I think more often then not messes me up.

Certainly at K is a RET.. but its tiny. If anything, if I bought above K, I would be more worried about getting caught up in the consolidation and having to sit through going back down to the low to the right of K. Lately I've been looking for RETs that have a little more of a pullback from the high so that I have some airspace to work with.

If I get in on the RET above K, essentially at 97, that little low beside K is at 90... 7 points away! I don't think there is any way to know that price was about to break out higher right there. At the same time, we haven't even gone up 50% of the down move, and since this 1 minute chart barely showed a RET, the 5 minute chart certainly had nothing. So essentially, that down move still looked too strong for me. But who cares what I "think".. I don't think it set up too well either!

 

[k p]

Now saying this though, I suppose if I mark in a tiny consolidation area here, I can see how the spike down to K tests the breakout of that consolidation top, and hence breaking above the current consolidation area makes sense since we just tried out the bottom and couldn't... but in real time... its just nothing more than a hunch.

 

[eminiman414]

"I don't think there is any way to know that price was about to break out higher right there."

Is there ever really a way to fully know? The rejection of both ends of the overnight consolidation, yesterdays high, and I saw price as trending up from yesterdays low so this lead me to believe we may see the high of that overnight range (at least) or possibly higher. I used to have similar thoughts/speculations as price is moving instead of just acting based on the plan. To me the down move traded thru top to bottom so if we did happen to futz around in the middle of consolidation on the way back up to me that is a change in behavior. I am trading more of the SLA so I probably shouldn't interrupt your analysis. I just enter the trade then deal with the management because who knows what's really going to happen?

 

[k p]

Yup... exactly right... who knows what is going to happen. You see, if you're gonna trade SLA, then since its backtested to work then you're set. But I know for me, I didn't take every SLA trade, so then you're messing with the system when you don't take every trade. I think if you mechanically take every trade, there will be lots. If you have a way to skip some trades, then this has to be backtested. Even how you draw your lines almost needs backtesting. Furthermore, the thing with trade management for me seems like this is also a case of "thinking". What is there to manage if the plan calls for an exit when a line is broken?

I'm just playing devil's advocate here, and I know in real time, I was thinking too much and managing too much. So if I'm gonna do it this way, I figure I should at least fill my head up with the proper way to think being based on what happens most of the time and hence rooted in a statistical probability.

I don't mind you interrupting at all.. I think I've already shown myself to be very pig headed and not wanting to follow advice often... only when I feel like it! LOL... I do love your analysis emini, but in a way, none of this analysis is necessary for trading SLA. But if you can't take every trade, then like I say, you have to test the reasons for not taking every one... so then you're where I am at! (I think trading SLA via 5 minute bars works almost better... and even with hourly bars it works better still!)

 

[Roffe]

Certainly at K is a RET.. but its tiny. If anything, if I bought above K, I would be more worried about getting caught up in the consolidation and having to sit through going back down to the low to the right of K. Lately I've been looking for RETs that have a little more of a pullback from the high so that I have some airspace to work with.

If I get in on the RET above K, essentially at 97, that little low beside K is at 90... 7 points away! I don't think there is any way to know that price was about to break out higher right there.

Sure, you can't know, but notice that we on Wednesday and Thursday bounced on a weekly trendline (spanning back to the Oct 2013 low). Switch to the hourly and you'll see that we on the 14th and 15th had support that then was tested from below as resistance on the 15th and 16th. You'll see that e.g. the hourly SLA signaled a buy during today's Asian or European session, depending on how aggressive you want to be. A couple of hours later the former support, former resistance broke during the European session. I, J and K on your 1 min charts are the US session testing this level from above as support again. Why not go with the flow?

 

[eminiman414]

Sure, you can't know, but notice that we on Wednesday and Thursday bounced on a weekly trendline (spanning back to the Oct 2013 low). Switch to the hourly and you'll see that we on the 14th and 15th had support that then was tested from below as resistance on the 15th and 16th. You'll see that e.g. the hourly SLA signaled a buy during today's Asian or European session, depending on how aggressive you want to be. A couple of hours later the former support, former resistance broke during the European session. I, J and K on your 1 min charts are the US session testing this level from above as support again. Why not go with the flow?

I concur

 

[k p]

Ok.. first chart is this trendline on the weekly... wow.. there it is! Db of course posted this weekly chart in his thread with several of these possible DL's drawn in, but I just wasn't looking at context today. (big mistake)

Onto the next chart. I draw in the the support then resistance via a thick cyan line as outlined. And yes, there it is, staring right at me. I mark in two possible places to take a long (I'm still sleeping, but the huge run up overnight is quite pronounced). I of course don't have entries figured out for an hourly chart though (I don't think it should be 1 point above a RET like on a 1 minute chart), nor do I know where stops should be, but my god, the beauty of this is less stress. Let the traders battle things out on the one minute chart while I just sit back and watch comfortably.

Going with the flow is incredibly hard because the fear tells me that price will turn on me just as I enter. If my method was more solidly developed, I could have a firm level in mind that I know would tell me this trend is over, but I'm a bit too fixated on the 1 minute chart. (I even told emini in a PM just today that using SLA on a 5 minute chart would maybe even lead to more consistent results and less scratches and worry about silly tight lines!) Today, it really took a while to see that long. I needed to a see a "nicer" RET, but given the quick drop down, and major rejection going higher right at the open, I was hesitant to consider any longs.

I love how you put that the "US session is testing this level from above as support". It certainly makes me think of this down move in a whole different way. Of course we never know why, but having this pointed out can I think help me keep my mind on what is happening in the future. I personally need to know stuff... I enjoy it for mental reasons, so this beast needs to be fed I guess in trading, and once its satisfied, I think it will be easier to focus on trading well.

Thanks Roffe for guiding me back to the all important context. Gosh, I've got quite a bit going through my head right now so its difficult to put it all together in a way that it can be taken advantage of in real time without any confirmation of course that it will work. But this is clearly a problem with the trader and not with the method. Excellent analysis... please post to my journal more often!

 

[k p]

Ok.. here is a 5 min chart, with all the garbage from today taken away, but leaving the important stuff that I thought was important going into the open. The red line is that all important S&R level Roffe just outlined which we get from the hourly. This line is of course give or take a few points. (I like absolutes, but this will clearly not work for trading)

What interesting is the trading range before the open happens essentially around this level... the mean of this range is in fact this level.

A - There is a fairly nice symmetrical attempt to go higher, above this range.

B - This is followed followed by the try down to go lower, but the same amount, hence symmetrical.

Why we stop at 80 I'm not sure. The other problem is that if I had been aware of this level around 3793 as being so important, the move down to 80 I would consider a fairly deep penetration. So I'm not sure yet how to make use of this, especially when it comes to entries. Perhaps this is where that tiny RET on the 1 minute chart that I disregard I could in fact have more confidence in given the context.

C - By late afternoon, we come down once again to this level and bounce off twice. It will be interesting to see what implications this has going forward.

 

[dbphoenix]

As you're not trading the SLA, I don't contribute to this journal any longer. However, I do read it occasionally to see how things are going. Lately I've noticed quite a few entries -- largely from trolls -- that are less about your process and more about me. Since none of them understand what I do, these comments are not pertinent. However, since they are about me, I feel compelled to re-enter the fray and clear up some confusions.

Since you believe that you are in the weeds, the first task is to return to the path. So, return to the path and begin again at the beginning:

Developing A Plan​

The Trading Journal

In order to succeed at trading, you must have an edge. Your edge begins with the knowledge you gain through your research and testing that a particular market behavior offers a level of predictability that provides a consistently profitable outcome over time. Without it, one is just "playing" the market in order to have something to talk about on message boards. To get it, you have to know exactly what you're looking for and what to do with it once you've found it. This process is what the journal is all about.

The journal goes through several stages depending on where you are. Once you've decided where you want to concentrate your efforts (at this level, the journal may resemble a diary), then you begin the process of developing a system (or method, strategy, procedure, whatever you want to call it). Here the journal takes on a different character. Once you've developed a tentative/preliminary system, you begin testing/trading it, and the journal adopts a still different character.

The first step is to decide what kind of trader you want to be.

• What do you want to accomplish with your trading? Is it recreational? Supplementary income? A part-time job? Do you want to make a living at it? Even the greenest of the green knows whether or not he wants to make a living at it, trade only part time, trade for recreation, trade for the action, trade to have something to talk about with other traders (for whatever reason), trade only long enough to earn money to do or buy X.
• Do you have any idea what sort of trading is most comfortable? Long or intermediate-term trading? Short-term trading? Day-trading? Trend-trading? Scalping? (Note here that a short-term trader, for example, does not become a long-term trader just because his stop was hit and he didn't sell; a long-term trader doesn't become a short-term trader because he chickened out and sold too soon. Each of these approaches is selected deliberately and for thoroughly-considered reasons.) How patient are you? How adventurous? Are you a leader or a follower (most people think they're leaders)?

.......................................

So after these months, what kind of trader have you decided you want to be?