Trading NQ via Price Action

[k p]

The beauty of it is that we do not have to decide which way the market is going to go. All anyone of us can do is merely decide for oneself how he or she is going to interact with it. That is what your trading plan tells you. The trading plan makes your decisions, if not easy, at least easier. The market always makes the first move. The trading plan instructs the trader that "if the market does x, I will do y in response."

I've followed your journal for a long time because you have some very good contributors - DbPhoenix, NoDoji, and Redneck among them. I doubt I can be very much help to you. You have been given very good advice, not only by those three but by a number of others. The best I can do is this: Here is a 5 minute bar interval chart of the NQ from the last few days, and I just have the NY session hours plotted. All I do is look for price levels where an opportunity to trade profitably might occur. If and when price arrives, there are certain things I look for, for example, does price do what one would expect it to do or does the dog not bark? Does price make it all the way to an expected level or does it do buyers/sellers run out of steam before hand. It is all information the market is giving you. But you have to decide what it means to you and your interactions with the market.

I drew some arrows to focus attention on where opportunities to trade were, and to show how one could have identified these levels in advance. Next, you need to determine how you will interact, or not, with the market at these levels. Keep in mind that there are all kinds of trading taking place at all the levels you see in that chart - winners winning and losers losing, day traders, hedgers, funds, etc. IMO, I prefer not to trade all over the place. I let others trade all over the place, and then I pay attention when something changes. Those are then the places I watch for in the future. Sometimes the future never comes, sometimes it is the next day, and sometimes it is only a matter of minutes. My trading plan lets be ready for it whenever it shows up.

Very beautifully put... thank-you.

I have specifically kept this journal going for so long, sharing the continual lows, because of all the great help I have been getting and I wanted it shared for everyone to benefit from. At the same time though, I have been pulled in many different directions. Everyone is seeing something differently, everyone is trading differently, and its been a struggle to figure out what fits me. You have a keen knack for writing and thinking in much the similar way as Db does, so this has really helped keep things consistent.

As you say, letting others trade all over the place as they want is what I'm striving for as well, and then only jumping on board when price gets to the juicy extremes. I've gotten myself far into the weeds because I was trying to make sense of all that stuff in the middle. Had I just focused on the extreme levels from the higher time frame charts, I would more than likely be further along. There is also a huge disconnect between what I see at the end of the day, and what I see in real time, and then of course what I do about it, which is even harder when throwing real money at it. The shitty part is also that some of this stuff happens not in the first 30 minutes or hour, and on the days when I have to go to work after the opening, I'm both missing those extremes sometimes, and also have that extra thing of having to go to work on my mind.

Anyway... your posts in the past few days are most appreciated. Although I've been guided towards the higher time frame charts on many occasions now, I never really knew what I was looking for, but in these past few days, I think may be getting even one step closer.... so hopefully the continued guidance will eventually sink in.

 

[k p]

Oh.. and I should also add that your chart which shows only the NY action is quite interesting. I will have to study it some more after work. Gosh... these past few days looks so easy when looking at your chart!

 

[fortydraws]

Oh.. and I should also add that your chart which shows only the NY action is quite interesting. I will have to study it some more after work. Gosh... these past few days looks so easy when looking at your chart!

Everyday looks easy in hindsight.

 

[k p]

Going into the open, we have a fairly wide overnight range of between 4149 and 4172.

The 4149 has held up as support several times, and on the hourly chart, this constitutes a higher low after yesterday's low at 4145.

The high at 4172 is only one rejection at this price, so this isn't all that pertinent just yet.

Our high yesterday of 4220 to 4145 has a 50% level at 4183, but if I just consider the drop from the NY session then this 50% would be at 4176.... and we have retraced to neither value yet.

Given that this ON range is 20 points wide, it should be wide enough to trade, but right now, 30 mins before the open, we are smack in the middle and its anybodies guess if we test up or down first.

I am also aware that the mean of the channel is still lower down though.

 

[k p]

I also have to chuckle when I see that my piddly little posts have chart views of roughly 10 to 20, but 40D comes along and already 61 people have viewed his chart!

 

[fortydraws]

I have been pulled in many different directions. Everyone is seeing something differently, everyone is trading differently, and its been a struggle to figure out what fits me.

That is why so many have told you to stop trading and start watching.

Here is an updated chart adding yesterday's NY session price activity to the chart posted yesterday.

 

[k p]

That is why so many have told you to stop trading and start watching.

Here is an updated chart adding yesterday's NY session price activity to the chart posted yesterday.

Sweet... thanks!

 

[k p]

So lets do a recap for today like the good old days.

O - Huge spike up at the open that is quickly rejected.

A - Here I enter a long above this bar below given the higher lows to the left, but I quickly exit because I'm not exactly trading at the extremes.

B - Based on what looks like a double top here, I mark a short below this bar but I don't take it. Shame.... It could have been entered 2 bars later for a little lower down, but in both of these cases, the stop would have to be at least 5 points or so.

C - Searching for a reason as to why price stops here, there is this range from the overnight to the left, and this is the midpoint of that range, but this isn't a solid enough reason to act on it.

D - Based on what could very well be a rejection at the OL (and just slightly above the PDL), I enter a long here, and if filled, price will at least be coming up. It does fill...

E - But after just a minute drops down. The auto stop loss at -5 points takes me out right at the PDL, which is quite unfortunate.

F - Seeing the quick rejection of this level, I enter a long at the market, which instantly turns on me. The lows on each of the next few bars look good because they are higher, but I exit once into profit by just a few ticks. (I just cannot shake this problem I have of holding the losing trades and getting out right away when I'm into a tiny profit)

G - I try for a quick short here given slight hesitation at what I think could be a double top (which of course is silly based on nothing else to go on and in the middle of this range and in what is now a very strong up move). The exit is made when we clear the top, but at least both of these orders were done at market and done by me without sitting and hoping.

H - Fully aware of the previous double top and here we come within ticks. You see a short below, far too low. On the one hand, I don't have enough experience with watching my 5 sec chart at these levels, but I've spent countless hours with these 1 minute charts and selling below the lows of this bar is still a great trade if it breaks to the down side, but of course the stops have to be wider. I get into this short far too late... too much hesitation on my part, and so I'm out once again at the first sign of profit.

And that's enough of giving my money away!

SUMMARY

I do think there were enough trade-able things on this chart, but given some lousy decisions, I wasn't available for when the best opportunities arose.

A big problem I have to solve is with order entry and stops. When I enter a stop limit order, I've got my present OCO orders which provides some safety given the auto profit and loss orders at +/- 5 points. Often this leaves me hoping my stop doesn't get hit. Its a wide stop at 5 points, and often hits at the worst place like today at E. A market order gives me more control, I feel as if I'm more in control, but then I'm out too quickly for a profit, and I hang on to the losing trades sometimes.

UPDATE

Took one more short just a few mins ago once we broke below the PDL. I finish my day at +$37. The short of course started 30 points higher at the triple top so this is hardly anything to celebrate.

 

[eminiman414]

Here's an SLA recap. At least how I see it. Just entries. Missed one short entry which I didn't mark at 10:25 or so.

 

[k p]

Hey emini! No doubt about... today was a great SLA day. Once we bounced off 4170 again, each and every single RET worked and the high of the RET never broke the previous lower high except for the one at 4137. In fact, once we hit 4128, I was thinking in the back of my head that Db was calling the channel mean around 4125, and given that we are now a few days later, this would line up perfectly. But alas, the selling didn't stop.

When I miss the most obvious trades, following SLA mechanically when we are in the middle of the two extremes is a bit more difficult. When you consider that I did try my long twice from the PDL but couldn't hold it, or the fact that I tried my short from the triple top at 4170 and couldn't hold it, I've got to think that my problems aren't exactly with technique but in the "what am I gonna do about what I'm seeing" category.

I find it absolutely remarkable that I can hold a losing trade for 30 mins that has gone against me 20 points (from a couple of weeks back), but I cannot hold a winning trade for more than 2 minutes.