Trading NQ via Price Action

[k p]

It is unlikely that you will get off this wheel until you figure out why you can't stop trading and do the necessary preliminary work.

Up until my last bad to days in a row, I feel as if I had done enough work to see that there is a huge edge with this system as long as one keeps taking the trades as one should. When I go back through my charts and see what happened, its obvious that I would be far ahead. Perhaps some moves would be entered late, and then of course many of the best trades would be a couple of hours into the session when I am no longer at my screen, so I wouldn't have had every day be a home run. But I do see that the past two weeks would have been quite profitable.

But its obvious that I walked off into the weeds. The idea that I'm going forward with is that this result is from the lack of discipline and not from not doing enough work. There are some days that look a bit choppy in the first 60 to 90 minutes after the open, so there might have been some losing days, but overall, these two weeks should have been quite profitable as a whole given just the simple set of rules.

I of course can't now even evaluate if I would be able to trade the rules in real time since I wasn't following the rules anyway. (ie. perhaps even if I stick with the rules my evaluation in real time wouldn't be fast enough so perhaps I would still get a crappy result, but at least by following the rules there would be one less variable to have to think about)

Put in more simple terms, I feel as if the thing to do is just follow the rules and not necessarily stop trading. If I can say that I did what I should do and still have a bad week then I should look for other solutions, but at this point, not following the rules seems to be the problem.

 

[k p]

k p, I'm sure it will work for you, because you can already see the correct trades.
Are you collecting the data for all the trades in excel or elsewhere?
Hopefully you will stay with, us and we will both be trading well in the new year.

Thanks Bon. I absolutely intend to carry on. You're for sure one step ahead of me with all the data collection so this is perhaps something I should be more diligent with. But its great that we both see the same trade. Waiting for that best trade is the hard part. You never know if you will get something better, and you don't want it to get away from you if you're to patient, but just following the rules is a great position to be able to fall back onto.

 

[dbphoenix]

Put in more simple terms, I feel as if the thing to do is just follow the rules and not necessarily stop trading. If I can say that I did what I should do and still have a bad week then I should look for other solutions, but at this point, not following the rules seems to be the problem.

You are nowhere near the point of developing rules. Therefore, this mantra of following the rules isn't going to improve your situation.

You are currently trading multiple strategies and multiple tactics using multiple bar intervals, all simultaneously, having done virtually no testing of any of this. If you ever do manage to turn any sort of profit, it will most likely be accidental and nothing you can replicate. Your posts are filled with "here's a trade that I should have taken and didn't" and "here's a trade I took I shouldn't have". Since you not only have no plan but nothing on which to base a plan, you trade by feel, and since you often get it wrong, you reinforce your fear, which makes any sort of progress that much more unlikely.

You are not going to learn this by "doing". You must stop and study and research and test. If you continue to avoid the work, you will continue to fail.

 

[k p]

I see you're familiar with my patent-pending trading system. Instead of trading by price, I call it "Trading by Feel"!

An accidental profit would be nice right about now and its curiously interesting that I haven't stumbled into this. Given that I hold onto the losing trades and cut the winning trades short, this of course is no surprise.

Roffe up above mentioned something interesting which is what I was trying to focus on. As you say, I'm looking at far too much, and hence none of it is all that well tested. But by just focusing on a solid exit from a tight range or obvious hinge with a perfect RET is something that I do have lots of confidence in. This has to happen in an area where there isn't congestion to the left, and hence the context of this is rare, which is what gets me into trouble since I look to do other things instead of waiting for just the very best thing.

But you are of course right that none of this nearly as well tested. As you say somewhere else, the idea is to trade size, and if one cannot trade size, then to me this shows that there is no confidence in the system, hence even accidental profits up till now would be no proof of anything.

Deep down I honestly thought that if I just follow a few simple rules I would be happy with making a few points here and there as I gained confidence to just enter and exit, and if all I ever did was end up BE for the day, I would be happy with this too as I saw it as gaining "real world" experience. I wanted to trade what I think I knew somewhat well, and continue to test other things, but this isn't even in fact what I did.

Anyway, thank-you for your posts. This break over the holidays will be a good time to do more testing and see what I can come up with for the new year.

 

[jas_in_hbca]

You are nowhere near the point of developing rules. Therefore, this mantra of following the rules isn't going to improve your situation.

You are currently trading multiple strategies and multiple tactics using multiple bar intervals, all simultaneously, having done virtually no testing of any of this. If you ever do manage to turn any sort of profit, it will most likely be accidental and nothing you can replicate. Your posts are filled with "here's a trade that I should have taken and didn't" and "here's a trade I took I shouldn't have". Since you not only have no plan but nothing on which to base a plan, you trade by feel, and since you often get it wrong, you reinforce your fear, which makes any sort of progress that much more unlikely.

You are not going to learn this by "doing". You must stop and study and research and test. If you continue to avoid the work, you will continue to fail.

I absolutely agree with this. Before you decide not to take his advice I would really sit down and have a talk with yourself as to why you do not want to do it. What beliefs are being challenged by accepting this may be the best path.

Take a look at the start date of my journal and how long it's taken me. Your decisions remind me of me. I thought my set ups were too discretionary to back test. I thought I had to read the market 'live' to get the feel and know when to take trades using my set ups. I was wrong. I did not start having real progress until I had clear written rules for set up, context, trigger and management.

Missing trades I found is not simply a discipline issue and need to try harder. It quite likely is your conscious and unconscious brain does not know what they should be looking for. There is conflict and indecision. Once you understand triggers for entry and exit (and they need not be complicated but they may have variations) you can start training your brain to act on these through review of static charts, back testing bar by bar, market replay and going live.

I started my journal to benefit me and to document the process of learning to trade. If you want to see the frustrations ahead of you you can read my journal. Or as I said, check how long I've been at it. I'm not yet the trader I expect to be but I finally feel as if I'm making real progress, know what I'm doing and what I should be doing to achieve my goals.

Good luck.

Jas

 

[dbphoenix]

. . . just focusing on a solid exit from a tight range or obvious hinge with a perfect RET is something that I do have lots of confidence in. This has to happen in an area where there isn't congestion to the left, and hence the context of this is rare, which is what gets me into trouble since I look to do other things instead of waiting for just the very best thing.

1. How is all of this defined? (What is "solid"? "tight"? "obvious"? "perfect"? "congestion"?)

2. What are your metrics for this?

 

[k p]

1. Tight range I would say anything less than 10 points. An obvious and solid RET is one that happens above or below the limits of this range, and where price doesn't re-enter the range. Also, the entry should trigger within in a minute or two because after about 5 or 6 minutes, I think of this as almost a new range now. Price should also not retrace more than 50% of the initial move. (ie. If the trust up is 10 points, but the RET has the low of the bar that is the RET dropping more than 5 points below the high at 10 points, then this down wave is quite strong and a trade should be skipped). What I want to see is price be in a 10 point range or less, an exit is made out the top. Lets say it goes up 10 points for 3 or 4 minutes, then a bar finally closes below the previous top by a point of two but this bar is only a couple of points high, and now the entry trigger is one point above the high of this RET.

Given such a precise RET, these are rare, but some really visually do look better than others. (I wish I was at home right now to actually show some examples, but just looking at the chart for Dec 19 with the RET I mark at D is a very nice RET. It happens well above the hinge, the move down in the RET is about 4 points but the entire move up was 12 points so the low is well above the 50% level)

2. I'm not sure I understand exactly what you mean by metrics. But given what I think you're asking, the answer to this would be more visual than anything. A range is nice if its tight, less than 10 points, but so much of this is related to context. Some days have a range of 100 points, but these look no different than days which have a range of 20 points and you'd never know if you take away the price scale.

So visually when price looks like it has moved far, its just in relation to where it was before and of course percentages. That 50% keeps working over and over again. Sometimes the 50% level is only 5 points if the move up is 10 points, but of course if the moves up is 40 points, then the 50% level is 20 points. So when you ask me about metrics, I'm inclined to answer this in terms of percentages that I assess visually, and especially in relation to where price has already been.

When I look back to Dec 18, if I wasn't caught in a stupid short, I can so clearly see on a higher time frame chart by zooming out that we had tested 4209 twice before during the overnight. I even have this marked on my chart as a horizontal support line. And when we bounced off yet again, hence a third time, it was a no brainer to go long. I didn't because I was stuck in my short, and the trade problem of doubling up a position by accident instead of closing it left me totally confused for a few minutes, but the idea of what is happening I understand quite well.

Anyway, I hope I answered your question in terms of metrics somewhat well.

EDIT: I should say that I understand it quite well in post.. in real time its of course a bit more difficult, and since I'm trying to trade, my judgement is further clouded.

 

[Redneck]

I absolutely agree with this. Before you decide not to take his advice I would really sit down and have a talk with yourself as to why you do not want to do it. What beliefs are being challenged by accepting this may be the best path.

Take a look at the start date of my journal and how long it's taken me. Your decisions remind me of me. I thought my set ups were too discretionary to back test. I thought I had to read the market 'live' to get the feel and know when to take trades using my set ups. I was wrong. I did not start having real progress until I had clear written rules for set up, context, trigger and management.

Missing trades I found is not simply a discipline issue and need to try harder. It quite likely is your conscious and unconscious brain does not know what they should be looking for. There is conflict and indecision. Once you understand triggers for entry and exit (and they need not be complicated but they may have variations) you can start training your brain to act on these through review of static charts, back testing bar by bar, market replay and going live.

I started my journal to benefit me and to document the process of learning to trade. If you want to see the frustrations ahead of you you can read my journal. Or as I said, check how long I've been at it. I'm not yet the trader I expect to be but I finally feel as if I'm making real progress, know what I'm doing and what I should be doing to achieve my goals.

Good luck.

Jas

quoting Mr Turtle

"Wisdom is profitable to direct"

RN

 

[dbphoenix]

1. Tight range I would say anything less than 10 points. An obvious and solid RET is one that happens above or below the limits of this range, and where price doesn't re-enter the range. Also, the entry should trigger within in a minute or two because after about 5 or 6 minutes, I think of this as almost a new range now. Price should also not retrace more than 50% of the initial move. (ie. If the trust up is 10 points, but the RET has the low of the bar that is the RET dropping more than 5 points below the high at 10 points, then this down wave is quite strong and a trade should be skipped). What I want to see is price be in a 10 point range or less, an exit is made out the top. Lets say it goes up 10 points for 3 or 4 minutes, then a bar finally closes below the previous top by a point of two but this bar is only a couple of points high, and now the entry trigger is one point above the high of this RET.

Given such a precise RET, these are rare, but some really visually do look better than others. (I wish I was at home right now to actually show some examples, but just looking at the chart for Dec 19 with the RET I mark at D is a very nice RET. It happens well above the hinge, the move down in the RET is about 4 points but the entire move up was 12 points so the low is well above the 50% level)

2. I'm not sure I understand exactly what you mean by metrics. But given what I think you're asking, the answer to this would be more visual than anything. A range is nice if its tight, less than 10 points, but so much of this is related to context. Some days have a range of 100 points, but these look no different than days which have a range of 20 points and you'd never know if you take away the price scale.

So visually when price looks like it has moved far, its just in relation to where it was before and of course percentages. That 50% keeps working over and over again. Sometimes the 50% level is only 5 points if the move up is 10 points, but of course if the moves up is 40 points, then the 50% level is 20 points. So when you ask me about metrics, I'm inclined to answer this in terms of percentages that I assess visually, and especially in relation to where price has already been.

When I look back to Dec 18, if I wasn't caught in a stupid short, I can so clearly see on a higher time frame chart by zooming out that we had tested 4209 twice before during the overnight. I even have this marked on my chart as a horizontal support line. And when we bounced off yet again, hence a third time, it was a no brainer to go long. I didn't because I was stuck in my short, and the trade problem of doubling up a position by accident instead of closing it left me totally confused for a few minutes, but the idea of what is happening I understand quite well.

Anyway, I hope I answered your question in terms of metrics somewhat well.

EDIT: I should say that I understand it quite well in post.. in real time its of course a bit more difficult, and since I'm trying to trade, my judgement is further clouded.

Metrics are data, statistics, anything arithmetic. Metrics are not feelings. Metrics are not judgement. That a range is "nice" if it's "tight" though it's all related to "context" is of little to no value if it does not lead to a decision that can be made in real time or in replay. This is why your efforts to trade in real time are "difficult" and that your "judgement is further clouded". No judgement is required. None. It's either there or it isn't.

You continue to introduce elements -- such as 50% -- into your definitions that complicate those definitions and make recognition difficult if not impossible. Therefore, you must -- as has been suggested many times by many others -- select one strategy, one, and deliberately and precisely define its characteristics, its components. If you want to trade retracements, then you must determine where you will look for those retracements. If you're going to trade retracements that occur after a range breakout, then you must of course define what you mean by "range".

Therefore, pick an interval. It doesn't matter if it's a bar or candle or any other collection of prints. But pick one. One. Then review static charts and find 100 examples (tip of the hat to Donna) of what appear to you to be "ranges". Determine the characteristics of these "ranges". Define them so specifically that you will have no trouble detecting them in new charts. Then replay a random day and look for these characteristics (if you accidentally view the day in toto and know how it's going to unfold, then scroll forward to a subsequent day). If your characteristics are spot on and you have no trouble detecting these ranges in dynamic charts (i.e., replay), then you can move on to the next step. If your characteristics need work, then write down what caused you to stumble and fix it. Then start again.

If you can't find 100 examples of ranges, then you need to bone up on exactly what a range is. If for some reason you won't do it, then you have to determine just why you won't do it. But regardless of the reasons why you can't, don't, or won't do it, you must stop trading in real time, whether in demo mode or with real money. If you can't or won't stop, then the problem lies beyond the lack of a trading plan.

 

[k p]

Define them so specifically that you will have no trouble detecting them in new charts.

At what point is close, close enough? I would hate falling into the trap of patterns, and often a range is hardly bound by 3 rejections for example that are to the tick. Price may very well penetrate 2 points and be very quickly rejected, hence show the inability of buyers of sellers to push further out of the range.

I often see that when I zoom out my chart and hence it gets compressed both vertically and horizontally, its so much easier to see the important things as this little pokes are not as significant.

So what I'm fighting right now are rules that are so specific as to be essentially too constraining. Don't get me wrong, I don't want to say that rules are unnecessary, but as you say in the PDF, you need to give price a little bit of room, you need to be a little generous with what constitutes a line break. I have seen far too often that a tick break of the previous swing low that might knock one out of a trade happens too often. Emini has also mentioned to me that I think you said somewhere that hard stops are problematic. So when you say to define something so specifically, I wonder at what point you would draw the line.

Now at my level I realize I can hardly go with the flow, but if I want to say a range has to be one where price rejects the same level at least 3 times with the difference between the highs being less than 3 ticks, this just seems too artificially constraining to me. If one of those spikes happens to go 5 ticks above the previous high but price comes right back into the range, with this not be close enough?

I'm sorry if I sound like I'm not heeding your advice. I'm only trying to put everything together and sometimes certain things do sound contradictory, although I fully realize that its up to me to figure out what this means for me. (ie. the idea that I have to give price room, but also that I need to be so specific with what I'm looking for, which almost makes it sound like a setup).

Perhaps a better question as a follow up would be, if you would entertain this question since its personal about your trading, do you count ticks? (ie. If you're watching a level for rejection or penetration, would you say it isn't rejected if price penetrates a certain number of ticks? Or rather, which is what I think your answer would be, you would say that you look at the behavior around this level and even though price may go 2 points above, you look at how strong the buying is, not just how many ticks above we have gone. This also assumes that a level is precise to the tick, which it rarely is, and hence a level could be more of a mini range that is a couple of points wide.)