Trading the NQ: Take 2

[k p]

Bad example. 4/8 was FOMC meetings day with a bunch of crazy action around 1300ET.

Ok.. I see what you mean, I guess traders on this day are waiting for the news before they make any bold moves, but it technically wasn't till 2pm.

But fair enough, although I still think that even with higher lows pushing into resistance, it doesn't make a BO above so much more likely. I see these fail far too often. Now if I was to buy at a higher low, a few points below resistance, and then already be in a long in case it breaks out, or get out for BE in case it drops, then this is a golden position, but assuming I'm not in a trade yet, I wouldn't know which way to call it.

 

[i960]

If you look at the bigger picture from London forward the entire day is one big ascending wedge. Note: This is a 2048 vol chart (I'm not into time charts) where you can see the higher lows edging up and up where a very obvious compression is building to blow through the PDH. Just simply buy any of those retraces at the very bottom with a limit order. It's not 100% guaranteed to be successfully but it's pretty likely what's going to happen next.

When I see price penetrate a level, but come back inside, I'm not sure that I would favor another try to be honest.

The market does this all the time all over the place. Demand couldn't push it higher. That doesn't mean demand goes "welp boys, guess it's not going higher, let's just go home."

There's a million different reasons it might only slightly move again resistance and then head back.

Its true that it didn't get smacked back down, but the fact that it didn't go higher on the breakout is worrisome.

Because it wasn't time yet, you need to have a bit more patience in it.

 

[eminiman414]

2 charts, 2 patterns, somewhat similar, one works for a breakout, one doesn't. That's how it goes. Can you differentiate these two more specifically? If not then you're 50/50. What's risked and what's gained in each? Nothing will be 100%. If you analyze everything in the ways you are you'll never be able to make a trade.

If you're playing with 2 point stops the first wins more than two points and the second loses two points you're up.

 

[k p]

If you look at the bigger picture from London forward the entire day is one big ascending wedge. Note: This is a 2048 vol chart (I'm not into time charts) where you can see the higher lows edging up and up where a very obvious compression is building to blow through the PDH. Just simply buy any of those retraces at the very bottom with a limit order.

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Quite interesting the way you show it. I like what you say about compression breaking through the PDH. But then I looked at my hourly chart to back up a bit as well, and I saw this, from just yesterday (well some of it was from overnight as well). Same thing with the ascending wedge, even breaks through resistance, but bam, drops below R, and drop below the line that was tracking price up. For sure the higher lows today are more pronounced, but blowing through R just because there are higher lows doesn't seem to work well enough for me, based on my observations at least. But I could of course be very wrong.

 

[k p]

2 charts, 2 patterns, somewhat similar, one works for a breakout, one doesn't. That's how it goes. Can you differentiate these two more specifically? If not then you're 50/50. What's risked and what's gained in each? Nothing will be 100%. If you analyze everything in the ways you are you'll never be able to make a trade.

If you're playing with 2 point stops the first wins more than two points and the second loses two points you're up.

Totally agree.... take em both... who cares what happens. There more than likely are ways to differentiate a bit, but as you say, if I analyze so much that I can't take the trade, which I do suffer from, then this is the worst case scenario rather than not trying and taking that small loss, because this means I won't try again in the future and get the gain.

 

[MarketAddict]

Wow.. 30 points down and 50 points up is not a trend day? I do see what you mean though about how price couldn't make a lower low on the hourly chart, but wow, that is quite the long term view. I'm hoping to get 5 or 10 points, this isn't asking much! I didn't need a lower low on the hourly chart, I just needed to get into a short again at roughly the same area I did the first time

No it's not Kp.. And I'm not looking at the 60 min it was the 5 min.. I would show you how a real trend day look like but I'm to lazy to look for some charts.. The day started off a nice bear day and reversed all the way back up .. I like to label my days and today wasn't even close to a trend day..

Would you also say though that it could break out below.. as in break down? Here is a similar chart from Apr 8. I mark via the blue arrow here price is also consolidating at the highs, complete with higher lows (so roughly a similar setup), and yet, it doesn't break out, but rather breaks down, although not dramatically of course.

The consolidation broke the structure.. I would look for shorts..

Lastly though, you mention on my chart that you annotate (thanks by the way), to wait for the long to set up. So what does a long setup look like for you? I'm tying to make sense of the bars you point to with your green arrows, but I can't see any similar features in all 4 that make me see how these set up a long in each case.

The million dollar question lol. You are really trying to get me to give you the secret sauce (even tho it's really no secrets out here). You might hate me for this but I'm not going to get into detail on how my longs and shorts look like.. But I will give you a multiple choice (and yes my setup is in the multiple choice).

A) 123
B) H1
C) H2
D) Trend line touch
F) Engulf
G) Box break

Now it's up to you to back test and see what works for you.. Quick question.. Why don't you have an ema on your chart?

P.S. Any trade setup will work in the multiple choice, but you just have to know how to manage the trade..

 

[k p]

The consolidation broke the structure.. I would look for shorts..




The million dollar question lol. You are really trying to get me to give you the secret sauce (even tho it's really no secrets out here). You might hate me for this but I'm not going to get into detail on how my longs and shorts look like.. But I will give you a multiple choice (and yes my setup is in the multiple choice).

A) 123
B) H1
C) H2
D) Trend line touch
F) Engulf
G) Box break

Now it's up to you to back test and see what works for you.. Quick question.. Why don't you have an ema on your chart?

I think this is a trick question. The obvious answer is E which you left out... hahaha. I'm familiar with a 123, trendline touch, box break (from the Forex scalping book NoDoji suggested), but not the others.

As for why no EMA, well, I've read stuff on it, and do feel it rather lagging. But I would say that if its something many traders use, and then I know what they are about to do because I know what they are looking for, and it happens, so I know they woulds start buying, then it makes sense to have this on my chart. But given also that there are various values one could use, it makes it rather arbitrary. Plus, I don't think my downfall at the moment is lack of info. I'm clearly not doing what I should be doing based on what I already see, so I'm not sure if adding more to look at would actually help.

Plus, I'm really just trying to trade S&R for now. I figure that if you get your levels right, they will either hold or break through, so this is what I'm trying to focus on, to get the direction right.

 

[k p]

Well today didn't go well at all, but you know, I don't feel all that bad. Had a short bias going into today.

Just before the open, I saw hesitation at 4440.50, and wanted to short right there, but was worried about opening volatility incase it spiked up higher for a moment, so I waited, and within a few seconds saw the crash down.

1st short was right after the quick rejection from trying to go higher at the open, but I caught a bottom unfortunately.

2nd short well executed, seems like a bounce from 4440.50 again.

3rd short is very late after we drop back down below the 4441.50 level.

4th short, well, the micro price action you could say broke the first ascending wedge, and that dashed pink R line was rejected again, so if this was a 1 min chart, it looked like a good place to try short yet again. The trouble here is I moved the stop to account for that swing high that spiked up. I got taken out quick, and of course worried about a turn at the ONH since I was no longer in, but oh well.

5th trade is a long, just buying the BO, a late BO mind you, and got taken out.

I mark an area where I would have gone long, but ultimately this trade would have been closed at BE.

So there you have it. Now if people want to comment, they may, but may I start with saying that if you want to tell me that I should have seen the uptrend, no, not until later because there were plenty of levels here for price to have turned down. So if you knew and saw that it was going up, I'd love to see your charts where you took your longs.

What I do see now is where my first short is, the area that happens to be the opening low does in fact form a double bottom of sorts, so the inability to make a lower low sounds great now, but not at the time, in real time, when its time to place trades.

 

[k p]

Well this sucks. I did take one more trade. Had my PDH on the chart, and also that 61.50 level I see as prominent resistance. Took a short.... drops after a bit of hesitation, move stop to BE, ended up being BE +2, and got taken out just before the drop. Would have held this one to 10 points, perhaps locked in +5 after we dropped below that. Well, that's life. So I made $6 on this one.

Crazy thought... can people see I have an order right there to buy? Did price spike up just because of me??? Honest question actually. I don't think the market is out to get me personally, but moves are certainly designed to run stops and test for stops and test for buying, etc.

EDIT: Yup... just hit +10 points, but being honest to myself, I'm pretty sure after we moved through +5 I would have locked that in and taken than. This really sucks to see such nice and clean action at these levels up here, but not at the levels at the open.

 

[toucan]

one thing you might do before the open is "look" at a longer term chart 5min or 10 or 15... what ever you are comfortable with... when i looked, it looked like a lot of chop into the open which made me hesitate on any trades...and you had only 1 chance to short as price rose to the overnight high about an hour before the open. other shorts come from your 5sec chart. even if you did see the uptrend, looking at my charts, long trades on the way up would have needed a stop of between 4 and 6 points to stay in for the full run from before the open to the top of the run.

excellent job keeping losses small, but you probably took too many trades.

cheers