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Trading PA Practice - trading the right edge
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Trading PA Practice - trading the right edge

  #1 (permalink)
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Trading PA Practice - trading the right edge

hey guys

i am starting this thread for education purpose
this will help all us to understand how other traders think

when you answer explain why will you take Long / Short and where will be your stop loss and profit target


so here is the first puzzle

the chart with the trend line is the 5Min chart and the second chart is the 15Min chart

so what will happen next ????

thanks for your participation (and no cheating )

ben

Keep on sowing your seed, for you never know which will grow -- perhaps it all will.

-- Albert Einstein
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  #3 (permalink)
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15min shows buyers are dwindling. Last candle a sellers wick. TL about to break on 5min. I think a short is on the cards if we get a break of the TL.
But then, what do I know. lol

 
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Ok, I will put my ego on the line...

The last two green bars (marked with the red arrows) shows rejection to me. The first one have the longish upper wick and high volume.
The second one made a half hearted attempt on low volume to rally again, but couldn't make a new high.
However, the chart shows a fairly strong rally up to that point and without being able to see if there is some kind of longer term resistance at that point to provide context, I want to see more confirmation. This came in the form of a 1-2-3 pattern that I am anticipating at the 2nd last bar on the chart, the doji before the last red bar. I would have anticipated a 1-2-3 pattern at that point and had my sell stop one tick below the doji bar.


Since what I would have done on the bar before is not in the spirit of right edge trading, what I would do now is the following:
  • Place a sell limit order one tick below the low of the doji; the blue line.
  • My stop would be three ticks above the high of the doji; the red line.
  • My target would be 2 ticks above the previous high that sticks out to me as I would expect that to act as support now; the green line.
I would enter the limit order because if I go short at the current price, I don't like my risk:reward. If it fills, great, if it doesn't, I will wait for the next opportunity.

I don't use trendlines in my trading, so I am not factoring them in at all.

That's my story and I am sticking to it. Win or lose.

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I believe the safest course of action is to wait for one more 5m candle, to see what price did at the TL.

But I like to say "we're bullish until we're bearish", and the chart is bullish. So go long again on the TL tap. Most TL breaks fail the first time.

Stop = swing low minus a tick, target = top of TL.

Mike

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Looks like an uptrend to me.

I would be using volume bars in addition to this to get a 'feel' for the action at this level.

But without those, I would place a buy order near the bottom of the next 5 min candle. Stop below the low of that candle or the previous candle (current red candle). Even if I am wrong, it is a low risk entry and the loss would be minimal.

Target would be the upper trendline initially.



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Puzzle Results

guys,

first i will like to thank you for participating in this thread i think it will be very educational for all (i am playing this game almost on a daily basis )


so here is the answer traders that short 1Tick below got stop out

the market did show sign of weakness on higher time frame but if you want to short the high time frame remember that you need higher stop loss

people who join the trend made money and the risk was so small
you can put your stop loss few ticks below the trend line and never get stopped out

also if you look at the volume on the 5 min chart you will see that volume is declining

so you dont really need a volume chart for that

hope you enjoy this practice

i will post more chart on Monday


ben

Keep on sowing your seed, for you never know which will grow -- perhaps it all will.

-- Albert Einstein
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its tricky, it was almost at the end of trend

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Corry ,

Great way to look at this!!!!

Ben

Keep on sowing your seed, for you never know which will grow -- perhaps it all will.

-- Albert Einstein
 
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Another thing to consider is where is price in terms of some key level. Is it near a floor pivot, a prior area of resistance on a higher time frame, or in no mans land?

This is a good exercise, Ben. Thanks.

Also, if trading this type of price action one thing to look for is supply entering the market. If the uptrend is going to reverse, there needs to be supply and that will show as increased volume on a down bar. As Ben pointed out, the pullback was on declining volume.

David

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