Can you elaborate? Where do you get your red stop lines and target yellow lines?
Ups and downs trading
- Thread starter Alfing
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Can you elaborate? Where do you get your red stop lines and target yellow lines?
As I continue to explore different aspects of TA and PA, today's topic is Pullback Reversals.
Here are my notes from Volman's book,
· Is the market in bearish or bullish mode?
· A pullback is a correction to 50-60% of the dominant swing (if strong trend – even 40%)
· It has to reach, even perforate a bit, 25ema
· Even better, if the correction test with previous S&R (“like a pattern line extension, a ceiling test, a previous high or low in the dominant swing, or even a round number level”)
· The trendline is broken (not a guarantee in itself)
· “… standard entry on the pullback reversal is taken on the break of a signal bar … This bar may represent the high or low of the pullback itself (one-bar turnaround), but probably more common is for the anticipated turn to show at least a few bars of pushing and pulling before the pullback appears to be ready to "roll over".”
· There is a harmony, when a “favorable degree of retracement” is achieved. Another element is the way the pullback gets printed. Not necessarily bars of one color, but “their average span should not exceed that of the bars in the dominant swing.”
· “On balance, the best reversal candidate is a pullback that appears to travel almost "reluctantly" against the dominant pressure.”
What would you change or add?
Here are my notes from Volman's book,
· Is the market in bearish or bullish mode?
· A pullback is a correction to 50-60% of the dominant swing (if strong trend – even 40%)
· It has to reach, even perforate a bit, 25ema
· Even better, if the correction test with previous S&R (“like a pattern line extension, a ceiling test, a previous high or low in the dominant swing, or even a round number level”)
· The trendline is broken (not a guarantee in itself)
· “… standard entry on the pullback reversal is taken on the break of a signal bar … This bar may represent the high or low of the pullback itself (one-bar turnaround), but probably more common is for the anticipated turn to show at least a few bars of pushing and pulling before the pullback appears to be ready to "roll over".”
· There is a harmony, when a “favorable degree of retracement” is achieved. Another element is the way the pullback gets printed. Not necessarily bars of one color, but “their average span should not exceed that of the bars in the dominant swing.”
· “On balance, the best reversal candidate is a pullback that appears to travel almost "reluctantly" against the dominant pressure.”
What would you change or add?
my goodness !!! It sounds very complex to me even though I started trading before computers were available for home use.
I am not saying this method is bad/ wrong. perhaps different people trade differently.
Anyway do develop your own trade plan.
First day impression of US 500 /emini
just lovely...planning to trade /scalp 5 min.
it moves about 5 times as fast as any forex pair-i thought i was watching M1 [instead of M5] by mistake.
No wonder Brooks loves it
just lovely...planning to trade /scalp 5 min.
it moves about 5 times as fast as any forex pair-i thought i was watching M1 [instead of M5] by mistake.
No wonder Brooks loves it
any thing in writing seems complex
Explaning how to drive a vehicle will seem hugely complicated but millions of drivers
would go through a checklist in their minds almost automatically:like Most experienced traders
I would subtract ALL of the above as inconsequential.
Volman has missed to mention the MOST IMPORTANT feature of most pullbacks: the PB normally takes much much more time to complete than the time the swing,which it is pulling back, took, and in the end, it may travel only half the price distance of the main swing .
This is the primary reason why patience is the most CRITICAL requirement of all traders except scalpers.
On the chart this will show up as a large no of small bars.
Support and resistances and moving averages are just decorations and have nothing to do with the market internals:the only important thing that matters is that, before the pullback can reverse,it has to slow down:what does this mean? watch momentum.do not use an indicator, use your eyes.
An indicator has a FIXED look back period:meaning it compares the latest bar with a bar a fixed time ago.This property of indicator is what makes indicators useless most [not all] of the time.
Your eyes on the other hand can compare the latest bar with any of the previous bars and this is most necessary.
This is why Brooks insists repeatedly,until there is trend line break, in the pullback, do not even think of a trade.
A necessary factor before a trend line break can happen is a loss of momentum and trend line break is but a symptom of a loss of momentum.
stops are usually above one of the highs,and are always accompanied by a prayer to GOD to protect the stop.
Target is the expected target and it is one of the support or resistance but that target may be changed if the momentum requires such a change that is why i say i do not think along those line
My feeling that the critical internal of how far the market will go how it will behave is momentum
Thanks for defining momentum. No one else talks about it. What are the important characteristics of momentum? Do you simply compare bars? What do you look for when identifying momentum?
you have a flat moving average and all you are doing is buying high.
when you have a flat moving average the only trades above the EMA are sells and below the EMA are buys