It does - thank you.
Trading the SLA/AMT Intraday
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It does - thank you.
At the risk of poorly expressing myself, I'll venture a comment here regarding my take on some of "k p"'s recent statements (I lost track of where - and I'm aware that I haven't seen his earlier posts), about the value of watching over a seasoned pro's shoulders.
I've been advised that it's probably no longer worthwhile to find a prop trading floor for this purpose. In my personal case anyway, that opportunity (in person or from remote) would not be for duplicating the day's trades, or even to take notes. I'm developing my own system, not attempting to duplicate anyone else's. It would be more about getting a feel for some of the less tangible aspects of the activity of trading I think. The atmosphere, the attitude, the rhythm of it all. That friend who spent a week at 40d's benefited from that, in my opinion, for that bit which cannot be conveyed in books or discovered in backtesting or paper trading.
Maybe it really only teaches confidence by example, I don't know, but for some reason I can see some value in watching over a successful trader's shoulders for a day or two. Most other crafts are learned through apprenticeship, after all, including at big trading firms, from the stories I've been hearing...
Thanks!
I think that what it teaches might very well be the most important skill necessary... proper trader's mindset. You see, when you watch an expert trader put on a trade, you will witness what made him put the trade on (and it won't be that feeling of "oh shit... look at it go.. i gotta get in on this). He will say it was his rules. You will see how he acts if it goes into profit right away, or lingers too long. You will see if he starts to get jittery. In fact, what you will see is his reactions to whatever happens. When the trade is closed out, you will see what he does with that, be it at profit or at loss. And most importantly, you will see what he does next.
I can only speak of myself since I've never seen anyone else trade. But when it goes against me right away, I start to question myself. When it lingers too long, I start to get scared. When it goes against me, I hang on, clinging to hope. When I'm into profit, I take it. And when the trade is done, I think about re-entering but, but the reason for re-entry is completely dependent on if that previous trade was closed at a profit or loss. Every single action/reaction/instinct/thought is wrong and not what is necessary for proper trading.
So to watch someone do it right for a week, at the beginning of one's journey, is I think an express elevator ride to the top floor as opposed to having to take the stairs.
(Hopefully I'm not diverging too off-topic here...)
While we agree on the benefits of watching the pro, we part ways regarding the purpose.
It really sounds like you'd benefit from (re?)reading Mark Douglas' Trading In The Zone (just skip the 20% of it which is metaphysical weirdery). His simple exercise at the end could help set you free.
You also sound like I did way back in 2003... For me personally, detaching emotion from trading was rather easy, though years later: develop a trading strategy which involves pre-set bracket orders, and only use a broker which implements those directly (I.B., most Forex joints, etc.) Set aside strategies which require more money management finesse for later when you've built plenty of confidence. The more mechanical while in play, the easier on the nerves.
For illustration purposes, one idea I'm experimenting with is trend continuations which are a shoe-in for bracket orders. Buying a pull-back to a demand line, for example, allows for a limit entry at X ahead of time, a tight stop Y-ticks away hidden behind structure, and a decent up-sloping target Z if you draw an upper parallel. Target and stoploss are one-cancels-other and only become active when the entry limit fills. You know your risk/reward, stop size, technical justifications for entering and for the target. The beauty in that execution strategy is that there's no second-guessing once you're in a position: if you get filled, great, if it goes nowhere after that, just wait it out. The stoploss can only be ratcheted in your favor, of course, and only when there's a structural reason to do so, so you know how much you'll spend if the trade goes against you before you even get in. No rush to go break-even too early: in my mind, my full stop size is lost the moment I enter a trade, and if I recover it great, if not it was already written off, so no emotion. Using brackets also means that placing an order is a tad tedious, which helps filter out any urge to make a quick irrational entry.
I know Wyckoff usually uses market orders and also enters breakouts, but that's for the "emotionally advanced" trader in my opinion, because it involves constant re-evaluation and more risk. It makes for earlier entries and potentially much later exits (i.e. catching much bigger portions of swings), but what's wrong with starting small if the system itself is already statistically profitable? I have no problem walking before I can run. Optimizing profits is a nice first-world problem to have.
While we agree on the benefits of watching the pro, we part ways regarding the purpose.
It really sounds like you'd benefit from (re?)reading Mark Douglas' Trading In The Zone (just skip the 20% of it which is metaphysical weirdery). His simple exercise at the end could help set you free.You also sound like I did way back in 2003... For me personally, detaching emotion from trading was rather easy, though years later: develop a trading strategy which involves pre-set bracket orders, and only use a broker which implements those directly (I.B., most Forex joints, etc.) Set aside strategies which require more money management finesse for later when you've built plenty of confidence. The more mechanical while in play, the easier on the nerves.
For illustration purposes, one idea I'm experimenting with is trend continuations which are a shoe-in for bracket orders. Buying a pull-back to a demand line, for example, allows for a limit entry at X ahead of time, a tight stop Y-ticks away hidden behind structure, and a decent up-sloping target Z if you draw an upper parallel. Target and stoploss are one-cancels-other and only become active when the entry limit fills. You know your risk/reward, stop size, technical justifications for entering and for the target. The beauty in that execution strategy is that there's no second-guessing once you're in a position: if you get filled, great, if it goes nowhere after that, just wait it out. The stoploss can only be ratcheted in your favor, of course, and only when there's a structural reason to do so, so you know how much you'll spend if the trade goes against you before you even get in. No rush to go break-even too early: in my mind, my full stop size is lost the moment I enter a trade, and if I recover it great, if not it was already written off, so no emotion. Using brackets also means that placing an order is a tad tedious, which helps filter out any urge to make a quick irrational entry.
I know Wyckoff usually uses market orders and also enters breakouts, but that's for the "emotionally advanced" trader in my opinion, because it involves constant re-evaluation and more risk. It makes for earlier entries and potentially much later exits (i.e. catching much bigger portions of swings), but what's wrong with starting small if the system itself is already statistically profitable? I have no problem walking before I can run. Optimizing profits is a nice first-world problem to have.
Hello all. Dbp or anyone else that can assist please. I have read the SLA-AMT pdf, and gone through a couple of dbp threads including the one that deals with just SLA (house of if you can draw a straight line). However, there are still a few of things I am not clear about.
1) With reference to the attached chart, counting from the bar annotated with yellow arrow (that broke the DL), at which bar a retrace as per the SLA has taken place? This is something that has not been shown clearly by dbp. He talks about short entry a few ticks below a crest (upside down V), and long entry a few ticks above a through (V). This seems to imply the retrace has to form a V or U shape, implying a one bar retrace doesn't count?
2) Dbp also mentions entry after the first retrace. So does this mean even if you have a long continuous DL or SL line with several retraces (but hasn't been broken), and you missed the first retrace for whatever reason, you should not enter any trade until that DL/SL is broken?
3) Does the trend channel (just like the box and hinge) apply only to AMT? If one is concentrating solely on the SLA method, then should one disregard these. I believe dbp mentions AMT applies to 'mean reverting' instruments, so in effect, it would appear the TC, box and hinge do not apply to 'non-mean reverting ' instruments like FX or equities. Is that correct assumption?
1) With reference to the attached chart, counting from the bar annotated with yellow arrow (that broke the DL), at which bar a retrace as per the SLA has taken place? This is something that has not been shown clearly by dbp. He talks about short entry a few ticks below a crest (upside down V), and long entry a few ticks above a through (V). This seems to imply the retrace has to form a V or U shape, implying a one bar retrace doesn't count?
2) Dbp also mentions entry after the first retrace. So does this mean even if you have a long continuous DL or SL line with several retraces (but hasn't been broken), and you missed the first retrace for whatever reason, you should not enter any trade until that DL/SL is broken?
3) Does the trend channel (just like the box and hinge) apply only to AMT? If one is concentrating solely on the SLA method, then should one disregard these. I believe dbp mentions AMT applies to 'mean reverting' instruments, so in effect, it would appear the TC, box and hinge do not apply to 'non-mean reverting ' instruments like FX or equities. Is that correct assumption?
1. If you're reading the chart from left to right or trading it in real time (in which case you have no other choice), the retracement begins with the first bar after your yellow arrow. You can't know in real time how deep the ret will be or how long it will take. To say that it's not complete until the fourth bar is a hindsight conclusion. Granted the ret is not confirmed until the fourth bar, but you don't know that in real time.
It will also be helpful to develop the habit of following the right tick. This is what illustrates the movement. All you can see in a static chart is the "close", but in real time that tick is moving up and down for a minute, and it tells you a great deal about what traders have in mind if you pay attention. This is one of the chief purposes behind observing without concerning oneself with finding trades.
As for the "few ticks", that's up to the trader. He may want to place his entry stop below the swing low in this case, i.e., where you have your arrow. In this way, he knows when his stop is triggered that the ret has at the same time been confirmed. The problem is that he will also be late. In any event, it is important that the market stop the trader into the trade by moving in his direction. Otherwise he's just jumping in and hoping that he's right. Entries might also and probably will change depending on the time of year and the volatility of the market. A fast-moving market is not going to take the time to wait for you to make up your mind. You have to be ready to act and do it. Other markets are more leisurely, and you have plenty of time to decide (of course they can be so leisurely that your trade wanders aimlessly for what seems like an interminable amount of time). Therefore, rather than obsess over the number of ticks, focus on whether or not you want to be in the trade. If you do, take it. If not, leave it alone. If your judgement was poor, you can exit the trade and evaluate your performance later, at your leisure.
2. You seem to have picked up the habit of reading from right to left, and you're going to have to get over this if you're going to develop the facility to read a chart competently and quickly. You can't know in real time whether the line is long and continuous or not, much less how many rets there are or where they will be. That's why you take the first. That doesn't mean you can't take a subsequent ret, but, first, you don't know whether or not there will be one, second, it may take so long that the move is well on its way and perhaps near its end before you ever get on board, and, third, you may be entering at a level where those who bought the first ret are already exiting their positions, which gives you that much more to overcome.
3. Trends and ranges are in the market. They are independent of you and whatever method you pursue to make profitable trades. Whether the trends form channels or not will depend on whether or not the instrument is mean-reverting (or, technically, median-reverting) as it is the mean that determines whether or not a channel will form (due to traders departing from it on a consistent basis). AMT applies to any instrument that is governed by the Law of Supply and Demand. Whatever "patterns" are formed are an unpredictable and perhaps even irrelevant consequence, i.e., traders don't do what they do in order to form a pattern; they do what they do in order to find and make a trade. If they're trading via charts, they don't even know what their behavior looks like, which is why it's more important to focus on the behavior rather than whatever "pattern" it appears to be forming.
As for how the SLA and AMT work together, I've gone into this in the series of charts I posted to TL. Read those posts first.
As to boxes and channels, these are the result of price moving in one or the other of the two states available to it: trending and ranging. Sometimes these ranges form a regular, tradeable "box". Sometimes they don't. Sometimes the ranges look like a sonogram. A scalper may not care. But this isn't a scalping approach. Ditto trending. Sometimes the trends are so chaotic that only a scalper can benefit from them. But that doesn't mean they don't exist. A large part of developing a plan is to find an instrument that moves in ways that provide you with the trading opportunities that you're looking for. If whatever you're looking at doesn't do that, why mess with it? It's not like there's a shortage of trading instruments out there. This is part of the characterization process.
You will, by the way, find all this in the journals, but that's a lot of reading.
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i think the biggest issue one has , is if one starts to draw in the charts...
and one perceptions/conclusion u might come up with thereafter...
however if u are able to draw in simple sup./res. lines and channels .. u have your levels of interrest ie. where u want to do buisness in (extremes).. ie. look for entries ..
the DL and SL lines.. just help u to judge the change in supply and demand.. what happens after that change is entirely up to the market , but u can judge the action based on what price is capable to do and what not--
like 50% , retr. HL/LH , LL/HH, failures , etc.. will help u in managing/exiting(enter?) or reverse... a position
its simple if u understand , but hard to master if u dont..
and one perceptions/conclusion u might come up with thereafter...
however if u are able to draw in simple sup./res. lines and channels .. u have your levels of interrest ie. where u want to do buisness in (extremes).. ie. look for entries ..
the DL and SL lines.. just help u to judge the change in supply and demand.. what happens after that change is entirely up to the market , but u can judge the action based on what price is capable to do and what not--
like 50% , retr. HL/LH , LL/HH, failures , etc.. will help u in managing/exiting(enter?) or reverse... a position
its simple if u understand , but hard to master if u dont..
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