Definitely agree, though it seems as though Lance draws multiple support/resistance price levels manually too. It would be interesting to hear his thoughts on the effectiveness of the automated magnet lines and whether they're sufficiently significant to warrant further research.
Al Brook's book, 'Reading Price Charts Bar by Bar', has a chapter dedicated to magnets. Yet he writes the following in the introduction of the chapter, 'This chapter has very little to do with trading and is included for completeness because it illustrates some price action tendencies, but these tendencies are not reliable enough to be the basis for trading. If you want to learn how to make money, do not spend much time here and instead focus on the best trades in Chapter 15.' ( I hope it's ok to post book excerpts on the forum. If not, please let me know & I'll edit it out)
Very interesting indeed.
Just saw your edit. I'll take a look - many thanks.
Last edited by vdersar1; May 22nd, 2015 at 12:25 AM.
Hi there. To answer your question, it's a little bit of both..but a much higher percentage would be due to my own methods.
I use the charts and indicators that I have...because I have used them for at least 4 years in a row..and they really help me process the overall "feel" of the market on any given day. I originally was trading forex and I was very much into momentum scalping. I got involved with the logical forex indicators and system because I felt that it was a great way to scalp 5 to 10 ticks on the euro/usd and euro/yen. But I ended up liking futures more (especially Cl) and I switched to that. I found it made more sense to go for bigger targets on CL, but I liked the way the Logical Forex charts helped me process the market, so I kept using them. However, I found I needed a different methodology for trading this instrument. So I experimented with a few things and got more into Price action setups. I found the rampage indicators were good on heavily trending days to ride out a bigger move.
My favorite feature of the Logical forex charts is that when extreme volatility shows up, the grid lines suddenly get wide and I have found this to be one of the best Real time momentum indicators out there. I also like Tick Strike which is a great audio and visual based Order flow indicator.
I should have become consistent a lot sooner, but I had issues such as having little impulse control, revenge trading, and taking multiple trades in a choppy environment. So, now that I have gotten those issues under control, things have improved immensely. It's one thing to have a good system...but quite another to have the discipline to follow it.
So, counting my forex years up until now, it's been about 7 years. But again, with better discipline and psychological control..it should have never taken this long. In fact, it's kind of embarrassing to admit that I have failed for so many years.
Failure is not an option
The following 2 users say Thank You to lancelottrader for this post:
Thank you, for the nice comments. I like to trade the first opening hour of a market. So for NQ, it would be between 9:30 am est to 10:30 am est. Usually I like to wait for at least 5 minutes to go by from the start of the open..so as not to get caught in a whipsaw. There are times however, when I entered before that. For CL, 9am est to 10am est is often good. Between 10 and 11, it can often get choppy. But on The Crude Oil inventory report day, I wait untill after 10:30 (when it comes out) to trade Cl. It will usually chop around until the report comes out.
My suggestion is to spend some time watching price move during the opening hours of the instruments you want to trade. You will eventually get a feel for when price is moving in a strong directional manner. Then it becomes a matter of timing in an entry and knowing where your most likely target should be.
Hi there. I have noticed that Ninja has an indicator called Swing that draws a lot of these areas..but it doesn't really discriminate much and draws basically every price swing. The logical forex magnets tend to differ in length and color depending on how "strong" the area tends to be. And they differ when put on different time frames. So, the software will have different ones on a 5 minute or 30 minute chart compared to a 2 range.
I have found them to be extremely valuable when determining a target..or in timing in an entry. It will draw an area, that I may not notice without them..and when price hits it..you can see a 10 to 15 tick bounce. So, without these levels quickly mapped out and being drawn in real time, I would get stopped out much easier on many trades.
But, I do tend to analyze the magnets, before the session starts. If I see one was drawn but price only tested an area once..and didn't react much..I may draw a yellow colored line through it. I call this a speed bump..since I feel it probably won't stop price from getting through it. Maybe an area has had price fail at it 3 times. Then I would draw a red line through it so I know this is a more serious level that could possibly serve as a target..or a reversal area.
There are probably free ways to duplicate the magnets...but until someone figures out how to make the grid lines on a chart expand rapidly during times of volume and volatility (like my charts do) I will keep paying for them. The chart below shows what I am referring to.
Failure is not an option
The following user says Thank You to lancelottrader for this post:
First of all, I greatly appreciate all your effort and time in carrying out this very interesting thread. I have read and seen everything in it. The way you do trading looks more or less the way I've been doing my trading. Short Stop Loss and large profit.
I must confess that it has been hard so far way, but since I read your comments, as well as the other participants, I am convinced that it is possible to develop a successful methodology in Crude Oil. I added several of your things on my system, which has so far helped me to see the full potential of the CL (The 10 sec Volume chart and 2 range bar).
My system is supported by Market Profile to see the market context and trend. I have a chart of 30 min (Market Profile) and another of 5 min (current trend). until recently (before reading all your POST jajajaja ) I realized my entries with a chart 8 range that includes a footprint, which has helped me to get better entries on the market. But I had never thought that better than 8 bar Range, is a 2 Range bar. I'm still in the process of assimilating this type of chart.
I would like to propose something about increasing contracts. Something that is more or less what I get to do. you think to place two contracts? and when the price reaches 10 ticks, you move the stop to BE, you get a contract with the 10 Ticks and let run the other contract I think it's something possible, do not you think?
I keep in touch and hope that my performance improves with everything I have learned from you.
Excuse my bad English ....
"The discipline eventually expire Intelligence"
The following 2 users say Thank You to engel532 for this post:
Hi. Thank you for your comments.
I like my 2 range chart..because I can really "feel" the pulse of the market with it. There is a certain way CL moves when the momentum is very strong.. It would be hard to describe..unless you see it at the moments I am talking about. Those moments don't show up all the time, but when they do..I know I have a very, very good chance of being in a winning trade. The tough part for me is staying out..untill I see my perfect moment. I am getting better, but not as good as I will be. However, I have been hitting my weekly goal almost every week for many months.
However, I do not recommend basing your trading decisions off of a 2 range chart or you will end up getting into a lot of bad trades. It is a very jumpy, noisy chart. I use it to time in on certain patterns..but I definitely look at higher timeframes to see the overall context and for candlestick patterns too.
Your idea of 2 contracts and taking 1 off at 10 ticks is good and lots of traders do a similar strategy. I think it's easy for CL to move backwards 10 ticks a lot..so you will probably breakeven often on your second contract. But sometime it doesn't and if you catch a runner, then that will work great. I personally like to go all in and all out at one target. I try to hit a certain goal each week and as I stay consistent, I will slowly add contracts until I get up to 5..then hopefully 10.
Anyhow, I wish you all the best and I am glad you liked the thread.