Why is this... does it seem too low or too high?
Trading NQ via Price Action
- Thread starter k p
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Why is this... does it seem too low or too high?
Ya.. this is just the tip of the iceberg, but my god, just knowing where a stop will be and being firm with it is such a weight lifted off the shoulders. Accepting the loss is also necessary, and if I'm going to accept the loss, I damn well better make sure to get my 1x profit at least, so this is a big step forward.
I perhaps fought this a bit because I had this idea that I didn't want the market making decisions for me. I felt that a firm stop order meant that I'm giving control of my trading to the market. But I think that if I realize that I'm the one who puts the stop in, and my backtesting has shown that a stop below the low of the retracement is a logical place for it to be, then I am in a sense fully in control, who cares if I didn't click close but rather it was automated.
I'm starting to really understand more what it means to be trading behavior and what it means to not be thinking while trading because all the work has already been done. Some of these ideas I saw as competing/incompatible but I think I'm getting a better handle on it.
No, this trendline approach is obscure and will lead you down the wrong path only to have to start again.
Serious suggestion: purchase the perspective you are lacking.
There are a few futures traders here making > $1mio / year. Why not offer to purchase 1 hour consultation from one of them for e.g. $5k. Post advert on ET. Obviously you need to do some due dilligence e.g. a tax payment from last FY. (no, I am not offering, before someone accuses me of selling something)
If you use this hour to ask the questions you think are relevant, it may be a waste for you if you do not ask the right questions. Nobody is going to share a worthwhile edge for $5k. I would propose the following:
Give a CV/potted history.
#1. Is there any validity in the approach you are following (don't waste time on details)?
#2. Do you have any realistic chance of becoming consistently profitable? (they won't sugar coat it - and there is an outside chance they might even back you if you had something...think on that)
#3. Are you suited for any niche, role, or career within the industry. If so what are your next steps?
This is Win/Win. If you have any features at all which would make you a fit for any part of this industry you will be steered in the right direction, and may have a useful contact who might assist you in the future (so long as you do not impose).
If you don't have a remotely realistic chance, somebody who is successful will (hopefully) be able to get that into your head before you waste any more time and money on this futile quest. Especially as you've paid to hear the advice.
Now why wouldn't you want to take advice from someone who has acomplished your chosen goals? It is only going to cost you what you are likely to gamble away before you quit, but you will get value in return, and it won't take nearly as long or be nearly as painful for you as your current path.
Otherwise, best get on with going live with your new statistics! Be sure to report back when you lose again.
Now why wouldn't you want to take advice from someone who has acomplished your chosen goals? It is only going to cost you what you are likely to gamble away before you quit, but you will get value in return, and it won't take nearly as long or be nearly as painful for you as your current path.
Otherwise, best get on with going live with your new statistics! Be sure to report back when you lose again.
Oh Blotto... how I've missed you. Great that you're still reading though!
I think losing $5000 would be much more fun via trading rather than just giving it away. What's the expert gonna tell me? That I need to develop a thoroughly backtested plan that has a statistical edge? I already got that info for free!
But if there are any very consistently profitable traders reading, please do PM me. I've got no money, but always eager to learn more!
I think anyone who has made it will tell you that it doesn't matter what anyone else can do, all that matters is what I can see and act on. So as inspirational as it would be to talk to an expert, I'm really not sure how much it would help me unless they sat beside me through every trade for a few weeks until I got the hang of "their" system. Now of course the question is would I be able to use their system if they weren't there beside me? The point I'm getting at is that in order to be able to trade it, I probably gotta develop it myself.
Anyway... I'm spending far too much time on this reply already. You still haven't given me anything useful actually. All you keep saying is that it can't be done and that I should do something else. Now you're telling me to pay someone to tell me it can't be done! LOL...
I admire your perseverance to save me, but I'm not putting in the effort to prove you right or wrong. If you're willing to find some expert traders with verified statements to tell me this can't work, then I'd love to read, but so far, I've got more proof that price action can work consistently than I do that it can't, which is only coming from you.
I think we both agree that we can take a scientific approach to this and what we need is proof. I'm searching for proof that I can develop a system that has an edge and trade it. But until I make one, trade it, and get consistent results, then I don't have much, but then again, neither do you to back up your claim. I'm working hard to prove my claim... can you back up your argument?
I fully understand the implications of this statement. It was simply made in jest in response to Blotto saying I should offer an expert trader $5000 to talk to me for an hour. Given that I already know the right way to go about trading, if I was to have to use $5000 for either throwing at the market or giving it to some trader who might very well tell me what I already know, throwing it at the market would be more rewarding!This statement does not bode well for your future trading success
But I certainly don't intend to "throw" it at the market. All your help has not been wasted ND! (BTW, a few traders have PM'd me to say they are enjoying the journal and learning from it. So you aren't just helping me... other's are benefiting as well)
So I was in a chat help session with Multicharts... and they were wonderful! Got my expired contracts for the past year working, and got my bars printing even better. Downloaded software to sync my computer time properly so that I'm not getting a weird countdown timer on my one minute bars that goes above 1 minute. It looks like I will be able to work just fine with a combo of IB for order entry and MC for charting. The "BookTrader" from IB works like a DOM, and this will be used for order entry, and charting is still via MC. Once the order is placed on IB, it shows up nicely in MC and I can even slide the targets in MC. So I really only need IB to place the initial order. This is good new because it means I don't have to spend money on MC at the moment.
Ok.. who cares about that though. (Mind you, the logistics of this was a big help to me back in February. Fortydraws got me onto MC which was a godsend for the very clean look and easy of manipulating the charts, so the logistics of this trading business are important to discuss just like technique and of course mind set.)
Anyway, the whole point of mentioning it all is because I added more stats since I have these expired contracts for the past year now. 24 more charts are added and here is how the numbers shape up.
132 chart in total, with the additional charts coming from NQZ3, so last fall.
91 trades trigger (vs. 75 before... hence 16 more)
59 trades reach 1:1 (64% win rate)
42 trades reach 2:1 (46% win rate)
32 trades reach 3:1 (35% win rate)
For a second trade, only 7 setups trigger from the 24 charts. It's still a bit unclear exactly what sets up the second trade, it can either be a break below the initial line that broke, or a break below the other line. So this 7 added to the previous total of 33 means:
40 2nd trades trigger
29 trades reach 1:1 (72% win rate)
22 trades reach 2:1 (55% win rate)
19 trades reach 3:1 (47% win rate)
What I find incredible is how much these numbers match well with the larger set. Granted, of the 24 extra charts, only 16 more trigger, so when I first had 75 trigger, I now have 91 trigger for the first trade. This extra 16 setups is only 21% more data, so the data isn't going to shift that much, but all these numbers are within 1 or 2%. It would be interesting where the data would be if I had an additional 75 setups trigger. Could I still get the 64% win rate for 1:1 if I had twice as many charts?
I'm not happy though. Some of these wins are incredibly tiny, perhaps even just 5 ticks as this is all based on the height of the entry to the low/high of the RET. What I've got here is a scalping system that doesn't have the best odds for a scalping system to begin with, and it only setups up maybe 1 or 2 trades a day.
I also find that the 2nd trade might not mean all that much since this might not set up till an hour has gone by after the open. Therefore, how much of an influence could the overnight trendlines have on the action now? If anything, what most of this data shows is how good a RET entry can be, regardless of where it is in the whole grand scheme of things and regardless of where the trendlines might fall. The chances of the RET working are I'm sure greater when a 5 min trendline is broke, but that 2nd entry is I think less influenced.
I'm also not happy because some of these trades are stopped out by 1 tick, or the RET is just a bar with a close one tick lower. What ends up forming is a deeper RET, a proper RET with a swing low that is actually a swing. Of course you never know what you will get though. Also, I've been tracking both a RET where the RET bar has at least a high that is one tick lower than the high of the previous bar, but I have been using two bars with the same height as a RET as well. These work not nearly as well. Sometimes they set up a trade and an excuse to get in where its really moving, but more often, they fail. I haven't tracked them all so I'm not exactly sure how often though.
Saying all this, trendlines are a bit arbitrary... they just aren't in the market. Price levels are in the market, so a break out of a range for example is much better because if you have a really good range, the top of the range is an actual price level that couldn't be crossed. So even though I have numbers that work, I'm still scared that the trendlines are a bit subjective, but the ranges are more objective.
So last thing... is a 3:1 profit with a win rate of 35% better than a 1:1 profit with a win rate of 64%? I'm too dense right now to figure it out.
Oh.. this is the last thing actually. Context doesn't make its way into any of this. Far too often as I go through the chart I see a good trending day maybe followed by a crappy choppy day. A crappy choppy overnight session can result in a crappy and choppy opening. A trend up overnight can result in a further up trend right after the open. But sometimes, a huge rise up overnight can result in an instant drop after the open. Lots of combinations, but I do think there is a pattern here.
So although I've got some good numbers, there is still lots of work to do. I sometimes think it would be easier to just develop a statistical model around openings and closings. Today my 1:1 trade would have worked, so would 2:1 and 3:1, but all of this is based on the initial stop of 2.25 points, so not huge profits. Price went up 25 points from the open, then came down 13 points (not going below 50% though), and continued higher to ultimately reach 30+ points. It took hours though, and no way could I watch the whole day. The close was only 25 points above mind you... but jesus, this is still so many points and you could forgotten all the stuff in the middle. (ie. what I'm saying is that trading less, and trading longer term is perhaps more profitable... but requires larger stops, less fear, and a solid system)
I see this far too often, but just have no idea how to profit from it. I always wonder how so many contracts can change hands in the first minute, yet price not move that much in that first bar. It seems like just as many people are betting on going short as going long, hence why price doesn't move much, and then over the next few minutes we see if there is a shift in the balance. If you can get this bet right more often than wrong at the open, making 20 points by just holding throughout the day seems almost smarter, easier, and more profitable in the long run. Of course if you're on the wrong side of the bet, you're losing 20 points, but perhaps you have a method for cutting losses and switching sides.
I still have to do stats on how many days trend right from the open. It's less than 25% I'm sure, but on those good trending day, there are easily 20+ points to be made. So can a system really be developed based on getting it right at the open, monitoring what happens, and if you have to, you quickly switch sides and then continue to hold? It seems like less work than hunting for 1:1 and 2:1 profits. Hmmmm...
Ok.. who cares about that though. (Mind you, the logistics of this was a big help to me back in February. Fortydraws got me onto MC which was a godsend for the very clean look and easy of manipulating the charts, so the logistics of this trading business are important to discuss just like technique and of course mind set.)
Anyway, the whole point of mentioning it all is because I added more stats since I have these expired contracts for the past year now. 24 more charts are added and here is how the numbers shape up.
132 chart in total, with the additional charts coming from NQZ3, so last fall.
91 trades trigger (vs. 75 before... hence 16 more)
59 trades reach 1:1 (64% win rate)
42 trades reach 2:1 (46% win rate)
32 trades reach 3:1 (35% win rate)
For a second trade, only 7 setups trigger from the 24 charts. It's still a bit unclear exactly what sets up the second trade, it can either be a break below the initial line that broke, or a break below the other line. So this 7 added to the previous total of 33 means:
40 2nd trades trigger
29 trades reach 1:1 (72% win rate)
22 trades reach 2:1 (55% win rate)
19 trades reach 3:1 (47% win rate)
What I find incredible is how much these numbers match well with the larger set. Granted, of the 24 extra charts, only 16 more trigger, so when I first had 75 trigger, I now have 91 trigger for the first trade. This extra 16 setups is only 21% more data, so the data isn't going to shift that much, but all these numbers are within 1 or 2%. It would be interesting where the data would be if I had an additional 75 setups trigger. Could I still get the 64% win rate for 1:1 if I had twice as many charts?
I'm not happy though. Some of these wins are incredibly tiny, perhaps even just 5 ticks as this is all based on the height of the entry to the low/high of the RET. What I've got here is a scalping system that doesn't have the best odds for a scalping system to begin with, and it only setups up maybe 1 or 2 trades a day.
I also find that the 2nd trade might not mean all that much since this might not set up till an hour has gone by after the open. Therefore, how much of an influence could the overnight trendlines have on the action now? If anything, what most of this data shows is how good a RET entry can be, regardless of where it is in the whole grand scheme of things and regardless of where the trendlines might fall. The chances of the RET working are I'm sure greater when a 5 min trendline is broke, but that 2nd entry is I think less influenced.
I'm also not happy because some of these trades are stopped out by 1 tick, or the RET is just a bar with a close one tick lower. What ends up forming is a deeper RET, a proper RET with a swing low that is actually a swing. Of course you never know what you will get though. Also, I've been tracking both a RET where the RET bar has at least a high that is one tick lower than the high of the previous bar, but I have been using two bars with the same height as a RET as well. These work not nearly as well. Sometimes they set up a trade and an excuse to get in where its really moving, but more often, they fail. I haven't tracked them all so I'm not exactly sure how often though.
Saying all this, trendlines are a bit arbitrary... they just aren't in the market. Price levels are in the market, so a break out of a range for example is much better because if you have a really good range, the top of the range is an actual price level that couldn't be crossed. So even though I have numbers that work, I'm still scared that the trendlines are a bit subjective, but the ranges are more objective.
So last thing... is a 3:1 profit with a win rate of 35% better than a 1:1 profit with a win rate of 64%? I'm too dense right now to figure it out.
Oh.. this is the last thing actually. Context doesn't make its way into any of this. Far too often as I go through the chart I see a good trending day maybe followed by a crappy choppy day. A crappy choppy overnight session can result in a crappy and choppy opening. A trend up overnight can result in a further up trend right after the open. But sometimes, a huge rise up overnight can result in an instant drop after the open. Lots of combinations, but I do think there is a pattern here.
So although I've got some good numbers, there is still lots of work to do. I sometimes think it would be easier to just develop a statistical model around openings and closings. Today my 1:1 trade would have worked, so would 2:1 and 3:1, but all of this is based on the initial stop of 2.25 points, so not huge profits. Price went up 25 points from the open, then came down 13 points (not going below 50% though), and continued higher to ultimately reach 30+ points. It took hours though, and no way could I watch the whole day. The close was only 25 points above mind you... but jesus, this is still so many points and you could forgotten all the stuff in the middle. (ie. what I'm saying is that trading less, and trading longer term is perhaps more profitable... but requires larger stops, less fear, and a solid system)
I see this far too often, but just have no idea how to profit from it. I always wonder how so many contracts can change hands in the first minute, yet price not move that much in that first bar. It seems like just as many people are betting on going short as going long, hence why price doesn't move much, and then over the next few minutes we see if there is a shift in the balance. If you can get this bet right more often than wrong at the open, making 20 points by just holding throughout the day seems almost smarter, easier, and more profitable in the long run. Of course if you're on the wrong side of the bet, you're losing 20 points, but perhaps you have a method for cutting losses and switching sides.
I still have to do stats on how many days trend right from the open. It's less than 25% I'm sure, but on those good trending day, there are easily 20+ points to be made. So can a system really be developed based on getting it right at the open, monitoring what happens, and if you have to, you quickly switch sides and then continue to hold? It seems like less work than hunting for 1:1 and 2:1 profits. Hmmmm...
I think ultimately, it will be a case of scaling out once I can trade a few contracts. Lock in some profit initially, take profits at set targets for some contracts, hold some through deeper RETs, take more profits at 50% levels, and maybe hold just a few till the end of the day or get out BE. This of course all depends on it being a good trending day, and getting in at a good place. If the initial trade goes against me, well, maybe its a quick scaling out for a small loss.