Trading NQ via Price Action

[k p]

You could always trade the retracement on the 1 Min around 4180 if you felt like it.
It is back in the middle of the channel though

Since I love pictures so much... I wanted to post exactly what you are suggesting. And you're right... but it is very much in the middle. If this level is important, then it warrants looking for an entry, but it is quite messy in here by this point.

It does make me sick to my stomach that the past week has been an incredible SLA week with hundreds of points possible, but the fear of when it doesn't work is too much on my mind, so looking for filters of when to SLA it and when not to is justified. This of course means you're essentially backtesting the whole thing and starting from the ground up!

 

[k p]

kp. There are so many things I could say about this soap opera, but in my humble opinion you're too focused on how other people are doing it down to every little detail. You want to trade discretionally; then you will have to accept that there will be some more fuzziness compared to if you'd trade mechanically.

I want to remind you that there are a couple of stylized facts for asset price processes in the academic literature (do the google research if you're interested). In essence you've got properties like long tails, volatility clustering (i.e. expansion vs contraction; i.e. it is a mean reverting process), and long term memory.

It is more or less those properties that you are trying to exploit here. You can do that in several ways, and there are many threads and books about it, but just the other day we had Db repeat it again (http://www.elitetrader.com/et/index...w-a-straight-line.287955/page-34#post-4080349):



Keep it simple. Don't focus on the minutiae. Don't hunt perfection. If you want to trade discretionally and get this "feeling" you're talking about (but at the same time you're hinting above how this approach might be too "spiritual" for you...), then pick a bar interval that gives you the time to reflect over the situation. You will never be able to internalize anything if you're just stressing out all the time; you have to be open and receptive.

Keep it simple. You're familiar with the market's properties. Now just wait for the right behaviour (and you've heard also this from ND, Db, and countless others before): if it doesn't move [as expected], get out.

Hi Roffe.. I'm delighted to see you still reading!

Yes, I am focused on everyone else, and I absolutely see that its not getting me far. Its allowed me to focus on the areas to look for trades, but then its gets very personal at that point... nobody is talking!

Those things you list at the top went over my head, but I certainly take note of mean reverting, and long term memory, since we are getting some of these levels from days/weeks ago.

The perfection I'm hunting is in reference to what to do. The trading plan has to be solid. I need to know exactly what to see to tell me when to get it and when to get out, and not wish I stayed in longer or gotten out sooner. So many of my trades start with "aww shit..." right after they are entered, so although I think I have the right idea often when I'm reading price action or looking at a chart, what I do with it pure madness.

Keeping it simple and also making it consistent is the key.

 

[BonScott]

Since I love pictures so much... I wanted to post exactly what you are suggesting. And you're right... but it is very much in the middle. If this level is important, then it warrants looking for an entry, but it is quite messy in here by this point.

It's hard to trade when you are back in the middle, I didn't take it myself.
Better to trade at the extremes, and this is the way that I would like to be able to trade.
I did take the trade at the break of the bottom line, but I also took other trades at the wrong place as well. I see these everyday, and if I could just wait until the right time I would do well.

 

[k p]

It's hard to trade when you are back in the middle, I didn't take it myself.
Better to trade at the extremes, and this is the way that I would like to be able to trade.
I did take the trade at the break of the bottom line, but I also took other trades at the wrong place as well. I see these everyday, and if I could just wait until the right time I would do well.

Wait a minute.... you're not trading before having a consistently profitable and tested trading plan are you?

Yes.. trading at the extremes is the holy grain. But imagine if you did get caught into a long at the top at 4212? There is technically a RET in there that looks like it would fill two bars after the one you point out that doesn't trigger, but I take it that you're not taking those if price falls below the line which it did. Wouldn't you consider that just a nice higher low?

 

[BonScott]

Wait a minute.... you're not trading before having a consistently profitable and tested trading plan are you?

Yes.. trading at the extremes is the holy grain. But imagine if you did get caught into a long at the top at 4212? There is technically a RET in there that looks like it would fill two bars after the one you point out that doesn't trigger, but I take it that you're not taking those if price falls below the line which it did. Wouldn't you consider that just a nice higher low?

I do have a plan with lots of figures calculated, but following it everytime, everyday requires me to be disciplined. I can pick some good entries in real time, but my Zen needs to improve.
If I had entered at the top, I would have exited for my stop loss. One thing I learnt last year was to always take my stop loss, and less if I can.

 

[k p]

Hi Db.

If you are reading and have the time, I wonder if you can make any comments about this chart. I'm very much interested in getting what should be on my chart going into the open right, and based on some of the journals I read where you comment, you do often say that you would draw your ranges/extremes a bit differently, so I want to make sure to get this right.

Here I have my pre-market range, along with the overnight high, swing high from Jan 28, and the PDH.

I also made some comments about the action after the open, specifically the rejections of the pre-market range right after the open, a small range up above at roughly 4234 to 4237 that although looks tiny, for some reason it stood out to me so I drew it in in real time, and the rejection of the 50% level.

Thanks!

 

[NoDoji]

"fear of when it doesn't work"

"I need to know exactly what to see to tell me when to get it and when to get out, and not wish I stayed in longer or gotten out sooner."

I see you're still searching for the Holy Grail of perfection.

When things are happening subconsciously, k p, you're not aware of them.

Have you considered that subconsciously you love the thrill of the quest (the after-the-fact chart analyses where everything that works pops out at you and you're blind to all the similar setups that failed) and fear the boredom of consistently profitable trading (there's no adrenaline or emotional drama to attract commenters in ET)?

Just sayin'.

 

[k p]

I see you're still searching for the Holy Grail of perfection.

When things are happening subconsciously, k p, you're not aware of them.

Have you considered that subconsciously you love the thrill of the quest (the after-the-fact chart analyses where everything that works pops out at you and you're blind to all the similar setups that failed) and fear the boredom of consistently profitable trading (there's no adrenaline or emotional drama to attract commenters in ET)?

Just sayin'.

Funny you should say it just like this, because my dating analogies that I love so much apply here as well. I used to always think that I would meet the perfect woman and live happily ever after. (Can't blame myself too much I don't think as this is very much what is taught to us from a very early age, and women certainly gravitate towards this ideology even more). But then what I realized was that it was the journey I enjoyed the most... the constant looking! When you learn to get over not getting the one you initially wanted (who was more than likely only perfect in your dreams), its interesting to see that getting one (ie. marriage) would actually prevent getting to experience further the thrill of the quest.

Ok.. back to trading. The second sentence that you quote "I need to know exactly what to see..." I think is still completely valid. It simply points to having firm rules that would tell me to enter a trade or not. I know I don't have them yet. When I see what I think is a rejection, I don't act because I'm not sure yet. Of course there is never any way to know. Once it has moved in my direction, then the opportunity to get in where I should have is of course gone, and any subsequent entry might now carry more price risk.

So I wonder if this could perhaps be a better to explain that I am not looking for perfection, but at least something that is good enough. (ie. statistically more profitable than not). I remember Alpha Trader commenting in my journal that he averages an 83% win rate if I recall correctly. That is quite the incredible number, and mine is somewhere around the inverse of this number! (my biggest problem of course is that I have always stopped my winners but held my losers, so if I made sure to always try for at least 1:1, who knows what the win rate would actually be)

You bring up an interesting point about the fear of boredom. Subconsciously, I have no idea what is going on, but consciously, I'd like to think that I am wanting to succeed.

The after the fact hindsight analysis where it all works out is a killer. This is partly why I posted not too long ago that I would have loved if 40D as an example could have posted some losing trades as well in addition to the winners (ie. perhaps a week of all trades taken).

This is also why I keep going back to the drawing board because when I have something that I think works, I see too often that I would be sucked into a trade and it not work. I don't have the stats to back it up because I don't have that firm set of rules that tell me exactly where, when and how to take the trade, but of the trades I do take, its amazing how many are so close to the highest or lowest tick without seeing any profits, so clearly my entry criteria needs work. I don't need perfection, but I for sure need a better set of entry criteria.

 

[BonScott]

meet the perfect woman and live happily ever after.

You can have one or the other, not both ...

If you like trading rejections, why not test a few days for bars that go above a level, but close back inside. Enter on the next bar with a stop loss above the high of the rejection bar.
See how many make a 1:1 profit.

For myself, I was looking at straight breakouts with my morning coffee, no figures, just visualising what I should test.

 

[k p]

You can have one or the other, not both ...

If you like trading rejections, why not test a few days for bars that go above a level, but close back inside. Enter on the next bar with a stop loss above the high of the rejection bar.
See how many make a 1:1 profit.

For myself, I was looking at straight breakouts with my morning coffee, no figures, just visualising what I should test.

Oh ohh... you're not talking trading the bars are you?? hahaha...

Yes.. that is an excellent filter. One of the things I've noticed actually is that when we penetrate the 50% level but come back up, this usually leads to a move in the original direction, as if the 50% level was rejected, just like today where I marked that 50% level on my chart. These things do tend to be somewhat subjective of course depending on what points you're using to establish the high and low and hence get your 50%. Often I would see the 50% level break, and think ok, the trend up is broken because we dropped below 50%, but if we recovered, and there an an entry above the bars that dropped below, it would often test the first high.

One of the things I struggle with is when levels are penetrated, which might get me into the move thinking its a breakout, and then it fizzles out and drops below. Trading the range extremes though is certainly where the money trades are... just gotta figure out how to get in, where to get out, and if a stop and reverse is called for.