anyone buying above was caught
Trading the NQ: Take 2
- Thread starter k p
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Are you playing the extremes? Realistically that's where the tightest stops can be placed. Over time your initial long has more of a chance of being stopped out then playing the extreme.Catch the long??? I'm not sure I understand since I think you mean to suggest a short.
The fact that I was in a long is what prevented me from taking a short trade. Knowing I use a really tight stop, I want/need to get in early, and after the long was exited, I was looking for at least a tiny RET, but price just plunged, and then it was too late to take any trade based on the reversal at 40/41.
Ah yes... now I see, and absolutely right. If I wasn't in that long, there is a perfect place to short as I mark on my chart, but to SAR takes twice as much experience. First you have to be experienced enough to exit properly, then you have to be experienced enough to enter properly. In a way, an SAR is almost twice as hard!
I'm playing the extremes, the opening range, and also another extreme that might set up as the day wears on. When price stopped this morning at 4424 the first time, it didn't mean much, when it did so again at 1005 and 1009, this is now an extreme to me. Sure enough, it set up great trades at 1042 and 1044... which I skipped and instead went back to bed since I couldn't stand to see my imaginary profit climb! LOL
So first, I'm encouraged by all the people who liked your post in the Scribbles thread.
The irony of the best possible price as you mention really is always a kick in the face. I want the best price, but I wait, it moves, now I can't get the best price, so I wait... it moves some more. Talk about me being a sucker for punishment. I want to be careful to avoid that 2 point stop by not taking a random order, because it seems random without any confirmation, or at least hesitation, but then all those late entries very easily take out my 2 point stop anyway. I would hate to be putting on random trades cause I'm focusing on doing things right, but perhaps a trade at S or R isn't really so random after all if I've always noticed a rejection, even if just initially. Sometime the exact level isn't hit, so a stop limit order would never fill, but I can of course worry about that later, if price turns a few ticks shy of the level I'm looking out for.
When you say that the professionals pull orders to make that run happen quickly and hence make it even scarier, I see this constantly... I just needed someone else to tell me because what the heck do I know! I present 3 charts from today with the exact same level I was already watching as support where I would say this same behavior happened.
Your last paragraph about nothing to think about with a 5 sec chart and just have a standing order I've thought of myself... I've seen you write it to me a few times, and yet here we are again having the same conversation. LOL... (thanks for saying it yet again!) Its true that as long as I keep my risk small... 2 points, this isn't really much to lose. Heck, I lose 2 points easily by actually trying to put on a good trade with confirmation, with waiting for a RET, etc. So risking two points for what could easily be a 10 point move isn't bad odds.
I'll tell you what stopped me from doing this, because I was working on it. I looked over dozens of charts, easily at least 50, and I couldn't quite come up with a number that worked. Sometimes I saw price penetrate 2 points or less, sometimes it was as high as 4 before turning around. Sometimes price didn't actually quite make it to the level, so in order to catch the move, I would need to get in 1 point before the level, and then to give it some room, I'd need 2 points above the level, which is now at least 3 points for a stop, and this still didn't capture most of the instances. You see, I was still looking for the perfect trade, looking for a set of parameters that would fit 90% of the occurrences, as if I could actually come up with a trade that had a 90% win rate.
But I do see that even if I had a 70% win rate, heck, even 50%, but a risk of 2 points and a reward of at least 10, I'd be golden. This would of course require just putting the trade on and letting it hit either profit or stop without any intervention, and I don't think I was quite able to do this before because I would think that I could do better by moving stops to BE or getting out for a tiny profit when it doesn't look like it can go further, etc. But I am slowly starting to see that I need more of a hands off approach.
In your vast experience, how successful of a plan do you think can be developed around this idea of just placing stop-limit entries at key levels with tight stop?
(I'm still amazed by your simple explanation about orders being pulled. This is exactly what I was getting at when I started that thread about spikes a month or two ago but I don't think any reply in that thread was quite as good as what you said here, especially in the context of fear and what a newbie would do with that spike. Or perhaps I wasn't ready for the answer yet or didn't fully understand whatever info was given.)
A good start in creating a solid plan - define..., and know beyond any shadow of doubt - what the S or R you will be trading looks like
And never deviate / waffle / compromise from your definition of either
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Your way is out there - just need to find it
This would be a really good first step
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This is an absolute must
Though I personally subscribe to setting reasonable profit targets..., no matter..., the losses must all be kept small
And set where the trade breaks down - not arbitrarily small
Such as just the other side (breach) of your defined S or R
RN
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S/R is tricky as there are a few ways to draw these levels. If in testing the level doesn't hold lets say, is it because you got your level wrong? Or is it just because in this instance, the buyers or sellers showed up thereby breaking through this level? So much of this I think relies on countless hours of experience... hence why the need to keep stops small so you can survive the long haul!
I think a very successful plan can be developed around this concept. It involves a lot of documentation. Define "key levels" in terms of the price action environment. Then build your spreadsheet of a few hundred occurrences of price trading at the key level and the MAE/MFE surrounding each occurrence. I would start with a bid or offer 1 tick inside the key level and assume that price has to trade at least at the level to ensure a fill would've occurred in real time. Basically the same exercise as I've mentioned in previous threads of yours.
I don't trade this way, but I see how well it works when it works and in certain environments these levels hold well enough to scalp at least 4 NQ points 80% of the time, so a 3x or better R:R should set up a fine trading strategy.
S/R is tricky as there are a few ways to draw these levels. If in testing the level doesn't hold lets say, is it because you got your level wrong? Or is it just because in this instance, the buyers or sellers showed up thereby breaking through this level? So much of this I think relies on countless hours of experience... hence why the need to keep stops small so you can survive the long haul!
So extrapolate
When could we reasonably expect S to hold - in an up move
Conversely...
When could we reasonably expect R to hold - in a down move
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There are no tricky ways to define S or R
Each is where price was rejected from proceeding further
How vehemently rejected is for you to pick
eta - we know price is worked on the horizontal..., and diagonal -> so to is S or R created / defended
RN
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If I had the answer to this question... I'd be rich!