Why I won't trade patterns

Quote from ProfitTakgFool:

By "fade" doesn't he mean buy? If the market is going to new lows on light volume you'd be buying - i.e. fading falling price.
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Sure, but he says that we should be looking for volume drying up as markets make new lows.

On that chart you posted you pointed out how volume was increasing as markets were making new lows, indicating that sellers were being 'washed out', right? You then pointed out that as prices turn, where are the sellers? They have all sold; therefore there is less selling pressure and prices are free to go up. If I have that wrong, please correct me immediately. You said

"If you see a volume surge as price is falling, you know you're near the bottom".

He's saying "If you don't see a volume surge as prices are making new lows, you know you're near a bottom"

Not trying to say you're wrong in any way. Also, you did not say 'As price is making new lows', you just said 'as price is falling'. So maybe you look at new daily lows differently than you look at each swing low.

It's just something that caught my eye because I had just finished reading your posts.

Make sense?
 
Yeah, makes sense. This is also one of the reasons I take that initial partial. We could easily go to a new low and at that time I'd be looking for that low to occur on lighter volume. This is one of the ways I solve the dilemma between, does the market bottom in a V-shape or a double bottom, lower low shape? Obviously you don't know the answer to that ahead of time so I take the V-bottom and if it works I'm good. If it doesn't then I have that partial to protect me while I add at the lower low.

Quote from traderNik:

Sure, but he says that we should be looking for volume drying up as markets make new lows.

On that chart you posted you pointed out how volume was increasing as markets were making new lows, indicating that sellers were being 'washed out', right? You then pointed out that as prices turn, where are the sellers? They have all sold; therefore there is less selling pressure and prices are free to go up. If I have that wrong, please correct me immediately. You said

"If you see a volume surge as price is falling, you know you're near the bottom".

He's saying "If you don't see a volume surge as prices are making new lows, you know you're near a bottom"

Not trying to say you're wrong in any way. Also, you did not say 'As price is making new lows', you just said 'as price is falling'. So maybe you look at new daily lows differently than you look at each swing low.

It's just something that caught my eye because I had just finished reading your posts.

Make sense?
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Quote from traderNik:

Sure, but he says that we should be looking for volume drying up as markets make new lows.

On that chart you posted you pointed out how volume was increasing as markets were making new lows, indicating that sellers were being 'washed out', right? You then pointed out that as prices turn, where are the sellers? They have all sold; therefore there is less selling pressure and prices are free to go up. If I have that wrong, please correct me immediately. You said

"If you see a volume surge as price is falling, you know you're near the bottom".

He's saying "If you don't see a volume surge as prices are making new lows, you know you're near a bottom"

Not trying to say you're wrong in any way. Also, you did not say 'As price is making new lows', you just said 'as price is falling'. So maybe you look at new daily lows differently than you look at each swing low.

It's just something that caught my eye because I had just finished reading your posts.

Make sense?
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My conclusion is that the three of you are incorrect.
 
PTF
Thanks very much for sharing your approach and for all your time.

One question I have is your timing. I know you say that timing is least important and diffacult to get just right, but it looks like you take positions before the move you are attempting to acquire has shown itself in terms of a price reversal. In other words it looks like you are trying to catch that falling dagger just as hits the floor. Is this true? Are you in fact aiming at the extreme in the move to enter your fade?

Or do you wait for something like higher low (on a long entry) on the 1 mintue before wading in? Or some other method that signals that move you are fading has exhuasted itself and begun to reverse?

Thanks Again
 
This is my way of solving the dilemma created by randomness. Will the market reverse in a v-bottom or a double bottom, or even a triple bottom for that matter? You don't know so will take the trade when I believe the v-bottom is beginning. On that bottom I was a little early but I have a plan to handle that situation. On the top, I was actually late on the limit sell I had parked to I took it with a market order instead. Yes, I do try to catch the falling knife but I'm aware of the difficulty and risks of trying to do that. I've been trading the fut's for a long while so I have a degree of confidence that can only come with time and successful trading. Occasionally, that knife will cut me but I will manage that risk, relative to the size of my account. It's just a risk I'm willing to take to avoid missing a perfectly good trade.

Buying down and selling up has just been what has worked for me. You'd certainly be justified to wait for at least some sort of turn.

Quote from Trayo:

PTF
Thanks very much for sharing your approach and for all your time.

One question I have is your timing. I know you say that timing is least important and diffacult to get just right, but it looks like you take positions before the move you are attempting to acquire has shown itself in terms of a price reversal. In other words it looks like you are trying to catch that falling dagger just as hits the floor. Is this true? Are you in fact aiming at the extreme in the move to enter your fade?

Or do you wait for something like higher low (on a long entry) on the 1 mintue before wading in? Or some other method that signals that move you are fading has exhuasted itself and begun to reverse?

Thanks Again
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Quote from ProfitTakgFool:

Buying down and selling up has just been what has worked for me. You'd certainly be justified to wait for at least some sort of turn.
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I have only skimmed this thread and that quote may be out of context, BUT I would think that your stops get hit a lot with that strategy. I also missed which Index Future you are talking about, is it YM, ES or NQ?
 
I'm trading the ES and there are occasions where I've had to stop out of successive trades before something like the 3rd or 4th trade will be the winner. I've gotten pretty good a nailing the tops and bottoms of the markets so this doesn't happen as often as it used to.

How does Buffett put it? Know what your competencies are and invest (trade) within them? Or something like that......in other words, just know what you're capable of doing and keep doing it over and over.

Quote from forex-forex:

I have only skimmed this thread and that quote may be out of context, BUT I would think that your stops get hit a lot with that strategy. I also missed which Index Future you are talking about, is it YM, ES or NQ?
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Quote from forex-forex:

I just started trading the YM mini dow intraday and am experimenting with this:

Since you can never - or rarely - pick the top or bottom then the "trend is your friend". If the trend is up BUY with a tight trailing stop, if the trend is down SELL with a tight trailing stop. I would think this is very common and most traders have tried this method, but setting the trailing stop would be the tricky part. So far I have manually closed all positions and am thinking of maybe a 15 or 20 point trailing stop.
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YM MINI DOW UPDATE:
  • I entered short at 13,368 (12:01 EST) as the days trend was down. Trailing Stop set at 20.
  • Got stopped out 13 minutes later at 13,380. Minus 12 ticks / $60.00 plus commission.
  • Market then finishes around 13,322 without me. :(
  • This is the first time I implemented the Trailing Stop feature and I will have to reevaluate it, looks like a 25 trailing stop would not have been hit.
 
Quote from forex-forex:

YM MINI DOW UPDATE:
  • I entered short at 13,368 (12:01 EST) as the days trend was down. Trailing Stop set at 20.
  • Got stopped out 13 minutes later at 13,380. Minus 12 ticks / $60.00 plus commission.
  • Market then finishes around 13,322 without me. :(
  • This is the first time I implemented the Trailing Stop feature and I will have to reevaluate it, looks like a 25 trailing stop would not have been hit.
More...

25 point today, 27 the next day. The worse thing you can do is to trade the next day using what worked the day before. You'll always be chasing, just be careful!
 
Quote from ProfitTakgFool:

Buying down and selling up has just been what has worked for me. You'd certainly be justified to wait for at least some sort of turn.

Thanks PTF,
Of course the appearance of a little turn in the direction I am looking for doen'st really mean much. Perhaps it's just mentally comforting to see that at least somebody is looking to go my way...

Naturally wouldn't jump in right in front of a speeding freight train. Looking for that V, as you said.

Since the ES was chopping around today around midday, I tryed your approach on short-term positions I had taken that came under pressure because I entered early. Instead of taking a stop, I doubled up, then take partial when able and let the rest ride. Worked very well today, one of my best days in a while.

Trying to catch (or rather, stay with) a long around 12:45 would have been bloody. I was wondering: on that final stop when your postion(s) have been hammered with no oppertuties for partials, do you ever reverse at the final stop-out point? Seems like it might be a way to recover a bit from what was clearly a trend beginning in the other direction.

Thanks
Trayo
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