Trading NQ via Price Action

[NoDoji]

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.

I'm really curious about the benefits of watching price move on the DOM instead of just trading based on a bar or line chart. I've never read about, or heard anyone discuss in detail, this method of trading.

 

[k p]

I'm really curious about the benefits of watching price move on the DOM instead of just trading based on a bar or line chart. I've never read about, or heard anyone discuss in detail, this method of trading.

Db talks a lot about the thrusts and hesitations and things like this. But specifically for watching at the important levels, its all about seeing the higher lows or highs on a tick chart at resistance or support. The fact that no more sellers or buyers can be found at this critical level which causes the swing low or high gets you in at a very good price.

I guess its just like what you are doing with the 5/1 min BOPB. But in this case, you're looking for that RET on the tick chart as opposed to the one minute bar, and buying or selling when price clears the previous swing low or high, but this swing points is made from the actual ticks and not 1 minute bars.

Here is a chart from a file that emini sent me that he put together from the stuff Db wrote at TL. It is a classic tick chart, and he goes on to explain how buying at the various places outlined (1-5) has good and bad points.

 

[gears]

can you tell me what kinds of charts these are that you are using? …these seem to be some sort of line charts based almost on 1 minute bars or some sort of range bar?

Not 40D, but in my charting software, it's just called "close line." We tend to most often see the candlesticks or OLHC, but I recall Db mentioning it as a really good way to see the continuous nature of price.

 

[bh_prop]

KP: I do not understand your incessant fascination with the micro time frames. The 1 minute wasn't 'fast' enough, neither is the 5 sec, now tick charts and DOM? Sheesh, no wonder your head is always spinning.

FYI: any line chart I have ever seen on a retail charting platform is close to close only

 

[k p]

Not 40D, but in my charting software, it's just called "close line." We tend to most often see the candlesticks or OLHC, but I recall Db mentioning it as a really good way to see the continuous nature of price.

Ah... that's it... thanks gears! Sadly, my MultiCharts only allows for 1 minute bars, nothing of a lower time frame, and when converted to the "line on close", I clearly am not getting enough "resolution" to work with. When I go to IB which has my 5 second charts, I don't have the option for "line on close". Drats...

 

[k p]

KP: I do not understand your incessant fascination with the micro time frames. The 1 minute wasn't 'fast' enough, neither is the 5 sec, now tick charts and DOM? Sheesh, no wonder your head is always spinning.

FYI: any line chart I have ever seen on a retail charting platform is close to close only

Well... I will say that it has clearly messed me up in the past, but this is because I was looking at it at the most inappropriate times. Today, when we made our way up to 4170 again an hour after the open and this area was very much of interest, we stopped just two ticks shy of the previous high put in at the open which in fact was a double top. So if you dial down into a lower time frame and see the rejection, see the lower high, then why not short for a better price and have a much smaller stop?

I realize this is more of an advanced move, and I should have shorted there based on just the one minute bars (I did actually, just a few ticks too late and I didn't hold), but this doesn't mean that it can't be done sooner.

Let me show this chart here, the 5 second chart. All of this is micro managing, but done at an important level I think makes sense. Based on this, I could see being in the short at roughly 4167, which is almost 2 points below where I should get in based on the 1 minute bar with that entry being at 4165.50.

Now don't get me wrong, I haven't shown ability to properly trade a 1 minute chart so what the heck am I doing messing around with this micro precision. But in some respects, having tighter stops will actually help the fear because I know the loss will be smaller, and this also makes me more in control of my trading in some respects, which will be good to know exactly where to get out because of this intense focus as opposed to being in a losing trade and just hoping and wishing.

I'm not saying I am capable of this type of execution, but in hindsight I can see it and I understand it.

 

[eminiman414]

Just a word of advice. If you do plan on entering off of the 5sec chart sim it before you trade it live. Statically it all looks great entering here or there or placing a entry stop here or there but that chart is fast and doesn't afford the "luxury" of using the 1min 1pt stop entry. I don't know if you planned on entering off the 5s or entering similarly to the SLA rules using a 5s "bar" instead of the 1 min. Just throwing it out there. I currently enter at the market if I am confident in what I'm seeing. It's the easiest way for me to do it.

 

[k p]

Just a word of advice. If you do plan on entering off of the 5sec chart sim it before you trade it live. Statically it all looks great entering here or there or placing a entry stop here or there but that chart is fast and doesn't afford the "luxury" of using the 1min 1pt stop entry. I don't know if you planned on entering off the 5s or entering similarly to the SLA rules using a 5s "bar" instead of the 1 min. Just throwing it out there. I currently enter at the market if I am confident in what I'm seeing. It's the easiest way for me to do it.

I couldn't agree more. I have been looking for that entry right below a RET on the 5 sec chart, but I have also done it with market orders. There just usually isn't time to get the order in if its a stop limit order. I think that as long as its done in the right place, then the results won't be that bad. What I like about the market orders is that for mine, I don't have attached OCO orders to this order. So I know that if I need to get out, I have to do it myself. This leaves no wishing and hoping. These reversal either work or they don't without too much messing around, and as I said to bh_prop above, getting in closer to the level should actually help with fear because I don't have to sit through a bigger loss waiting for the high of a bar to be broken. 2 to 3 points is much easier to swallow than 5 to 6.

But for now, I really am just working on the levels. When this is nailed down properly, when I can practice patience to wait for the best places to trade, then the entry almost doesn't matter as much.

 

[dartmus]

Well... I will say that it has clearly messed me up in the past, but this is because I was looking at it at the most inappropriate times. Today, when we made our way up to 4170 again an hour after the open and this area was very much of interest, we stopped just two ticks shy of the previous high put in at the open which in fact was a double top. So if you dial down into a lower time frame and see the rejection, see the lower high, then why not short for a better price and have a much smaller stop?

I realize this is more of an advanced move, and I should have shorted there based on just the one minute bars (I did actually, just a few ticks too late and I didn't hold), but this doesn't mean that it can't be done sooner.

Let me show this chart here, the 5 second chart. All of this is micro managing, but done at an important level I think makes sense. Based on this, I could see being in the short at roughly 4167, which is almost 2 points below where I should get in based on the 1 minute bar with that entry being at 4165.50.

Now don't get me wrong, I haven't shown ability to properly trade a 1 minute chart so what the heck am I doing messing around with this micro precision. But in some respects, having tighter stops will actually help the fear because I know the loss will be smaller, and this also makes me more in control of my trading in some respects, which will be good to know exactly where to get out because of this intense focus as opposed to being in a losing trade and just hoping and wishing.

I'm not saying I am capable of this type of execution, but in hindsight I can see it and I understand it.

What happens if you apply these 5 second rules you're using at 930am to the test of that same resistance that occurs at 923am at a slightly lower level? When you say lower high, it's apparent you mean relative to some previous H. If you go back and review the 5s chart you overlayed on top of fortydraws chart there's at least 2 distinctions present that are in conflict with your 930am setup. I have no ego in this. I'm holding back on being more specific because I hope to learn from this discussion without revealing more than necessary to get others to be similarly discrete and simply point me in the right direction to look. If you don't have time to look further into these setups that's fine, just carry on with whatever new setups are presented today because they will likely not vary much in the ways we've been analyzing them in the past.

 

[k p]

So today is going to be tricky. We are well off our low yesterday at 4082 which provided a really nice opportunity to go long given the previous low a month ago. We have that great resistance level at 4144, although we have turned sharply down 30 mins ago at 4138 without quite making it there.

From the ON action I do see a support level at 4108 or 4110, and possibly at 4122, so lets see how all of this plays out.