Trading NQ via Price Action

[fortydraws]

A - So you've got the level at 4088 marked. When price comes down to here again, it initially penetrates and recovers a bit, then sideways for a couple of minutes and a further drop. Given that you are entering off tick charts... are you not caught up in chop?

C - When we come up to here again, you otline 4119. Initially we go up, then fall through, and up again. Are you not getting chopped up here again?

D - I am analyzing all of this on a 1 minute chart... and when it works, it works beautifully, but of course those stops have to be a good 5 or 6 points wide sometimes. Any time I've gone into the lower time frames I haven't been able to decide what to do and I just get chopped up because price doesn't reject at cleaning and goes up and below the level first before the ultimate direction materializes.

A is answered by the chart "where be chop": I did not and do not see chop there, imo. IMO, the buy point is the break of the first high after the very first higher low.

C is answered by the chart "Sell then Buy": the short ended at scratch, and was a stop and reverse to long. If two trades would have been forced scratches or losses back to back, then there is chop. By the way, I posted this tick chart in close to real time to show exactly what you see here.

D I added D. You are not looking at what needs to be seen. And your continual reference to timeframe indicates, imo, that you have not accepted the continuous nature of price. Chop does exist. I define it as DbPhoenix taught me: a high, followed by a low, followed by a lower high, followed by a higher low. IMO, what you are doing is simply defining chop as any price action that you are not sure about. Like most things in trading, chop is in the mind of the beholder. It is whatever you make it to be. I suggest you define it precisely based on how price actually behaves, and then you will stand a better chance of seeing it and recognizing it when it happens.

Now I have done as you asked: I have shared some charts, and showed what I look at, and even made a few little real time comments. All of which is, imo, is neither right or wrong but simply, my opinion. Now it is your turn. You have to do the work, which starts from observation. Your observations.

Good luck!

 

[k p]

D I added D. You are not looking at what needs to be seen. And your continual reference to timeframe indicates, imo, that you have not accepted the continuous nature of price. Chop does exist. I define it as DbPhoenix taught me: a high, followed by a low, followed by a lower high, followed by a higher low. IMO, what you are doing is simply defining chop as any price action that you are not sure about. Like most things in trading, chop is in the mind of the beholder. It is whatever you make it to be. I suggest you define it precisely based on how price actually behaves, and then you will stand a better chance of seeing it and recognizing it when it happens.

Now I have done as you asked: I have shared some charts, and showed what I look at, and even made a few little real time comments. All of which is, imo, is neither right or wrong but simply, my opinion. Now it is your turn. You have to do the work, which starts from observation. Your observations.

Good luck!

Thank-you once again...

I wonder if I could just explain why I mention the one minute bars. Its simply to do with testing. I no longer have access to tick charts since MC took away the free version that had them (it was the SE version you suggested back in February). Even the 5 sec charts that are the lowest time frame that I can now use are only available for the day. When watching price in real time, then I for sure do watch the right tick, and hence see the ticks, the transactions, but when it comes to review, or testing, none of this is available to me. All I have is these 1 minute bars if I want to go back months for backtesting.

If a level is rejected then this will first be seen by watching the ticks, but then this also materializes on the 1 minute chart, and then of course the 5 minute and even hourly if this rejection is a major rejection, and this is what I have access to for my backtesting. But how this rejects on the tick chart I cannot test, and am forced to buy above or below bars. Not that this is bad of course and this still leads to plenty of profit if I was doing the right things and only had the 1 minute chart to go on. Watching the tick chart it seems just gets you in that much sooner, gets you out for a smaller loss, allows you to reverse much sooner, and increases the profits... so its superior of course, especially in the sense that you really are "breathing" the flow of the market versus just taking snapshots.

This would probably also be a good place to make the distinction between what you and Db do versus ND for example as almost everything I've seen her show requires the bars to "close", and I don't think she even uses anything less than a 1 minute chart anyway. She is the queen of statistical analysis and backtesting though and clearly does exceedingly well, but for her, the continuous nature of price doesn't seem to have much of an impact for her trading.

I do really appreciate this last post though. I like how you showed getting into a short and then switching to a long, and your explanation of what would then have you stand aside. I think you are right that my definition of chop is more about price action that I don't understand, but there is also the element of overlapping one minute bars (even though the ticks might show direction/tight range), and equal buying and selling waves which don't show too much direction.

If I may ask... what made you start posting just now even though you say you've been following along here at ET?

 

[Buster 1956]

KP remember what Db said in the pdf hold the trade till your line is broken. that really helped me and I have almost gotten to where i dont need the lines, but I still use then off and on. Just a thought that might help you stay in the trade.

 

[Buster 1956]

KP not trying to get you to switch brokers but there are plenty of them that offer free charting, trans act futures, atc brokers, think or swim all of which offer tic charts. Just a thought.

 

[k p]

KP remember what Db said in the pdf hold the trade till your line is broken. that really helped me and I have almost gotten to where i dont need the lines, but I still use then off and on. Just a thought that might help you stay in the trade.

Hi Buster. Yes... this makes total sense, and 40D has made the same comment a few days ago about his exit criteria in addition to some other stuff he looks for.

Today, like many other days, is clearly sub par trading based on fear, and quick exits with tiny profits yet long holds of losing trades is an even worse strategy than random trading. I literally have a trading system designed to lose money!

But as I'm going over today its just so obvious that this works, and 40Ds specific examples are a godsend. If I don't have a breakthrough this month I literally don't know what else it would take because its all there... every piece of the puzzle is right in front of me.

I gotta tell you... I don't think I have ever picked myself up nearly as much with anything else I have tried in my life as I have with this trading thing. I think back to all those times in my journal where I said that I thought I was getting close and this couldn't have been further from the truth.

I'm delighted to have read the book that ND suggested about mindset which really filled up my gas tank and helped me to keep going forward. I've read several places where Db has said that for some people its perhaps best to pursue some other endevour. I think about what it would be like if I had to actually face this, but fortunately, the perseverance is just too strong. I love watching those survival shows on tv and often they say the biggest asset a person who is lost has is the will to live/survive. Trading of course isn't a case of live or die, but I'm happy that I keep moving forward.

 

[k p]

KP not trying to get you to switch brokers but there are plenty of them that offer free charting, trans act futures, atc brokers, think or swim all of which offer tic charts. Just a thought.

Perhaps I would explore this later... but my lack of good results is hardly due to not having proper tick data. As much as I love everything that 40D is showing me and I will absolutely incorporate it into my trading, the right tick I can see live, and the one minute chart does essentially have all the info that is needed anyway (its just packaged differently... more compressed... not as precise). Buying above or selling below the 1 minute bars does increase the size of stops, but a rejection at a level is a rejection, and if a tick chart allows for entry 2 points away whereas a 1 minute bar makes me get in 5 or 6 points away, this still won't affect too much the potential 30 or 40 point move that results from this rejection.

If my levels are proper, if my actions with regards to what is happening at these levels is proper, if my fear is in check and if I learn to hold for more than a minute, then I really don't need anything else it terms of tools/software/broker. (Of course Db or 40D holding my hand would never be refused... but that also shouldn't be necessary and Christmas already came and left! LOL)

 

[Buster 1956]

KP if watching the price move up and down on your dom is messing with your head drag it down or out of your line of site and follow your chart then manage your trade once price gets a little traction.

 

[k p]

KP if watching the price move up and down on your dom is messing with your head drag it down or out of your line of site and follow your chart then manage your trade once price gets a little traction.

I think its mostly just messing with my head because I don't really know what I'm looking at... because I don't know what I need to see. Its true that if I was just going to use the bars, then watching how the bar forms perhaps isn't as useful and just leads to emotions. But this is something I want to get past because I absolutely understand the importance of watching price move and the huge benefits that this offers versus just trades based on the bars.

 

[k p]

Ok... so using 40D's charts (which do confuse me a little as they aren't exactly tick charts but line charts of some sort, and all the axis data is left off so its a bit hard to orient myself), I need to match this up with what I'm seeing because I'm the one that needs to see this. So I am overlaying my 5 sec chart. It looks as if his line which ends up being resistance from that swing point earlier is just a bit higher than mine, and the swing points don't exactly match up precisely either, but perhaps the line chart is based on the "closing price" or something like this. Its close enough and more importantly, the swing points are there.

So this chart refers to the area around 4119 where price was approaching the previous swing high that was put in during the down move. Hope I got this right.

 

[k p]

Once again, here is the illustration for his analysis of where we broke below the swing low at 4088 and I saw lots of 1 minute bars doing nothing (which I called chop). This is also where we had a bounce just above that low from over a month ago at 4080. Before I left I remember hoping that he didn't hit this low so that there was still some more left in the down move for tomorrow but alas, the selling was relentless today.

Here, the support line in this case, doesn't match up exactly again like the previous example, but its close enough.

If you're reading 40D, can you tell me what kinds of charts these are that you are using? You used tick charts when you were posting last summer, but these seem to be some sort of line charts based almost on 1 minute bars or some sort of range bar? (emini was explaining these to me at one point because they show the swing points better, or something along the lines of filtering out trades that happened at the same price). They certainly help to show off the swing points and I'm wondering if I can reproduce these myself. Thanks!