I love this question, I've been working on this too. What I'm doing is desiging entry exit cards to keep near by. Before I pull the trigger I pick up one card, not randomly, that determines my exit strategy. Is my target 200 points? Then I'll leave my stop at break even, and set my tarfet at 200 and walk away from the computer. Am I scalping in a choppy market and want to make sure to protect profits?, then I set my stop below consolidation areas or half way into extended range candles. Am I trading a channel, then I set my target and walk away, with my stop at break even. There are a lot of exit strategies, but I think the important thing is that you've got it ready before you enter the trade. I prefer to protect profits and re enter the trade. If you've a low commission broker then that's not an issue.
trend following & dealing with retracements
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Jack, you are SOOO myopic. We are ALL at the same place. We all want to buy low and sell high, ideally at the exact price apexes and vertices. The only difference between you and me is that in general I know WHY reverses which do not occur at your channel extremes happen, whereas you do not. I am not waiting for FTTs, FBOs, etc., I see them coming tens of minutes or hours ahead of time. But I am not complaining. I love it that ET laps up your voodoo like warm milk.
Other readers will rightly perceive that between me and Jack it is a non-conversation. We speak orthogonally. To me trading is foremost philosophy, and secondarily mathematics which embody that philosophy. From my perspective, channels are not a proximate cause, as Jack apparently believes, but at best a secondary effect. Like the shadows on the cave wall seen by Plato's allegorical prisoners. Endlessly debated, but ultimately meaningless. In my trading philosophy, if you do not have a target reversal to the tick minutes or more before the event, you do not truly understand the market. Jack makes my case for me with his prodigiously fuzzy "regions".
As an example, how fucking hard was this? All 80-year-old textbook stuff. Maybe the high and low occurred at some obscure channel extremes, but I doubt it.
All feedbacks are appreciated. It's great to see various suggestions although this makes the answer rather subjective. It seems there are multiple factors in managing the trade through retracements:
- identifying the "value" depending on the time frame and the current regime controlling the market
- backtesting to find optimum risk-reward ratios in each market
- including trade size & brokerage commission as decision factors
- monitoring the order flow to manage the trade dynamically
- analyzing the price action, trend lines and levels to assign probabilities based on inspection
I must admit that the development of a sound trade management tool and the skill to follow it is far more challenging than designing a setup which produces great entry signals.
- identifying the "value" depending on the time frame and the current regime controlling the market
- backtesting to find optimum risk-reward ratios in each market
- including trade size & brokerage commission as decision factors
- monitoring the order flow to manage the trade dynamically
- analyzing the price action, trend lines and levels to assign probabilities based on inspection
I must admit that the development of a sound trade management tool and the skill to follow it is far more challenging than designing a setup which produces great entry signals.
I use fibonacci retracements and extensions for entry areas and potential profit targets. Then, I use a hybrid MACD/Bollinger band indicator that helps me gauge momentum and spt/res areas.
When I correlate Fibs, and my indicator with multiple time frames, the picture becomes very clear.
Feel free to check out my blog. I've done some trading videos explaining my thought process through trades.
Chris
When I correlate Fibs, and my indicator with multiple time frames, the picture becomes very clear.
Feel free to check out my blog. I've done some trading videos explaining my thought process through trades.
Chris
As you see the OP posted once again to fill in a little more about where he is located. It is unfortunate for him. THe CW setting is very hard to bypass.
Danto, at Columbia, taught a philosophy of history course and covered, comprehensively, most of the bases. Your role assignment for targets and their prediction (including its value) are similar to the bulletpoint envelope of the OP. The orientation you shape gets the results that CW yields.
I, instead, use logic and binary non probabilitistic maths to make the market's offer continually available to me. Entries and exits disappear as foundation elements in my genre. So does prediction, since it is not needed.
You saw "fuzzy spaces" in my profferred illustration and offered a shadowy cave wall in response where only shadows of reality appear.
What I drew and annotated, instead of what you are able to see was "boundaries" which when aproached are decision making lines that are binary and not probabilistic in nature. All the rule sets annotated dealt with the dynamic transitions from one side of a line to the other.
I look at the OP as a model of the CW -- PA oriented trading as are you. So I offered him an informative alternative to be able to go from betting on survival (the Fight or Flight Response trading orientation (See OODA of fighter pilot John Boyd which deals with that reality and not shadows of reality)) toward a "know that you know" all the time "certainty".
Markets, by their nature of being decreet instead of continuous, dictate that certainty and a non probabilistic information theory must be applied. Conveniently, mathmatically "you always know where you are when using the market variables.
My introduction of that notion fell on deaf ears yet once again.
Th OP gives up most of the market's offer by assuming risk instead. So do you. I am in the market all of the time.
The reason is, is that the market continually makes an offer. I continue to take it all of the time.
Why don't you? Your philosophy and subordinate math do not allow that because that possiblitiy is excluded. In your last illustration you showed a profit taking followed by a beginning of a new segment of profits. I do not think you recognized that when you put up the partial illustration by leaving out one of the market variables.
I suggested to the OP an ATS oriented approach. The ATS continially takes the market's offer and banks it in segment after segment. Entry/exit philosophy and maths cannot be used to continually take the offer in the segments the market offers.
Look at whether or not any of the OP's bulletpoints are required if a person is always taking the offer of the market.
The symmetric philosophy of history is what the pool extraction algorithm uses. History is a significant market concept simply because the P, V relationship, market trading's foundation is expressed as a binary vector. That is something having direction in a context of time.
Fortunately, you go you way and so does the OP. I viewed the nature of the markets and found that those who are what the history of the markets speak to are those who are most capitalized.
I added high money velocity to that. High money velocity is the combination of always being in the market and always being on the right side of the market. A corrollary is to trade at a multiple of the market's capacity by doing partial fills according to the market's harmonic nature at the time of turns. Three bullet points so to speak.
Why are you in the market such a low percentage of the time? Your philosophy and mathematics dictate that.
Why am I in the market all of the time? Simply because as price changes continually I recognize that being on the right side of price change is profitable and the singular way trading takes the market's continual off.
Why does the OP sit through periods of declining profits? His strategy is applied on a fractal that is slower than the trading fractal of the market. Why doesn't he or you trade each segment of profits the market offers? Ignorance from lack of experience? Not having an ability to understand markets? Because making unneccessary bets is what you both do? Fear? Anxiety? Well, there are lots of reasons.
None of them apply to my algorithm and its three applications. Trading comes down to:
1. Having to be in the market to make money.
2. Having to be on the right side of the market at all times.
3. Using partial fills when you have so much capital in the market you are exceeding its capacity.
How are these three things doen?
1. Use a HOLD/REVERSAL strategy.
2. Monitor the MODE of the market (MODE is measured in terms od trend's two characterisitcis: Continue or Change). Fortunately all trends OVERLAP so carving the Change of the TURN is an ATS or mechanical matter.
3. The market book, DOM and T&S shows the capacity; the waveform of the market is shown on five levels of fractals. It is a synthesis of contributions. To make money however the 2 pairs of the OTR charts show the frequency and timing of the partial fills. Small traders simply do reversals at the correct limit of the OTR 2 pairs on the turns.
There are no stops. Money management is a capacity issue onlt for money volcity rate of extraction. There is no prediction and no betting.
In monitoring the market the point of observation is a narrow pane located mostly in the nonstationary window of price volume. The part that is "outside" is in the near tram future where all of the laeding indicators of price operate. This is where the activities of the "smart money" are best observed. Using the Cooner Hayward compresseion expansion is important ans is using the non regression, drift and regression of the premium.
Your comments in this thead are superficial and smug.
Making money requires that a person have there traits. My comments here are intended to be a wake up call for people with open minds. Especially those who may be considering to make a new years resolution to get off their asses and begin to work.
One simple reminder: once a person's mind has become differentiated to any extent in the CW and PA, it is not possible to tranition to another way of critical thinking. Check out the "B" people lists.
Think about cleaning the slate and starting over; You do not have many chances left.
IF you are truly "swing" trading then you must use a time-frame higher than your entry to determine when the trend is over (or a lower high). The very definition of swing trading is sitting through corrections... If the upper timeframe is in your favor, you should not be worried about a minor dip.
I have suffered from this all year.. Once that dip kicks you out and the trend continues, then what?? Get back in and redo the madness again.. A 100 point trip can occur and you actually lose money with this behavior.. THE UPPER TIME FRAME should dictate your exit so a Swing daily trade "should" look to the weekly reversal OR absolute HEAVY resistance to close out.
Takes a lot of discipline to stay true to what type of trade it is... See my ugly journey this year.. Most of it based on responding to these reversals, which really is a lack of patience a.k.a. a lack of discipline.
http://www.elitetrader.com/vb/showthread.php?s=&threadid=115745
Quote from jack hershey:
I'll step my comment up a notch.
The OP didn't get it to do a reversal at the top of the long where a new max price value occurred. (Where he was in his post)
Had he done that he could have collected the profits of the long diagonal I drew. (thin light green line)
Then he would have made profits down to the TL where a significant decision was called for. At that point, either way he would have continued to make another profit segment.
So I took him to the next decision point which was Identical to what got him into his original trade. I completed a cycle of trading a trend in other words. He had already shown that he missed a retrace in the trend and held through it.
Doing the reading you suggest, at best, will put him where you are.
This attachment gets him acquainted with material that is not found on your book shelf if those references are the best you can do.
Nonesense. There is no edge in using this.