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Keep in mind sma's ema's and price action are area levels, they are not definitive. So price may sometimes push through a few points, ticks, or whatever, and then reverse and continue in the direction of the trend. In my opinion I wouldn't place all your eggs in one basket with an indicator unless your system calls for it. More or less a pro or con for the trade.
lol of course you should never place your decision on one indicator. What I am talking about is where is the best place to enter the trade on a trend up/down day.
Have you ever traded a trend up down day before?
But if there are dark clouds, and in four other cities nearby its raining and the weather maps says there is a storm system moving to ontario from new york, then guess what? I will put my money on it going to rain in Toronto........why? obviously b/c all the indicators show its high probability chance it will rain in Toronto.
Oh okay, well, yes I have and yes I know what you're talking about. Depending on what you're trading I'd wait for a pull back into a price level and if an sma is near by that's an extra pro or con against the trade. I also use fib levels. PA patterns are my primary. A lot of new traders clutter their charts with indicators and don't know how to use them.
The most important thing is to identify a potential trend day fairly early in the day. Once you are aware that you are in a trending market, trading it is fairly easy. Of course, identifying it can be fairly tricky, seeing as the type of trend days you are specifying are fairly rare. You'll take a lot of losers hunting the parabolic trend day whale.
I do have some tricks for identifying and entering trend days, but I think I'm going to make a thread about it, and it will take a bit to write it all up.
Thanks for reply. I definitely am looking forward to your "tricks" for identifying trend days.
The tradeoff is getting in early vs having enough confirmation. If you get in on opening drive, you might get trapped out if the market turns around. I tend to like to get in between 9h45 and 11am.
How many trend days have you traded?
p.s. you also want to write up your thread in this one, since Mike is especially finicky about starting new threads it seems.
Before we talk tricks, let's talk about your beliefs and how they differ from mine. You believe that you have to catch the trend early to make money, and you only get one shot at it. My opinion is that there are many places you can enter and catch some of a trend. Instead of focusing on catching the whole thing, your focus should first be to catch some of it, consistently. Even that is harder than it looks, but you are looking for a perfect trend trade, and those are rare. That play cannot be your bread and butter, especially as a small player.
Value, I am only learning to trade trend days, it seems I have traded substantially a lot less trend days than you have.
I have changed my beliefs since my last post, and now understand that it is less riskier to enter on a trend day on the main legs (perhaps you use ADX to help decide this?), as opposed to holding a position till the close ( a lot of trend days seem to hit their lows/highs before 15h00).
But again, being able to read the signs of a parabolic trend day is what this thread is for.
Thanks for your contribution, still eagerly anticipating your "tricks".
Platform: TradeStation execution, some Thinkorswim charting
Trading: CL
Posts: 55 since Apr 2014
Thanks Given: 137
Thanks Received: 97
Since no one can predict the markets, I certainly can't pretend to give you the golden ticket you're requesting. I notice that some of the more wise advice has been thrown to the side, so rather than dissuade you and incur a similar response :-), I encourage you to learn in the markets if your proposed strategy will work.
I've yet to find a reliable indicator, once having searched for years for something similar. However - and this is perhaps common sense to you - on an intuitive level, should you find 2 or more days in a row that have traded within a narrow opening range for most of the day, it's likely one of the following days will experience a nice explosion one way or the other.
Platform: TradeStation execution, some Thinkorswim charting
Trading: CL
Posts: 55 since Apr 2014
Thanks Given: 137
Thanks Received: 97
I still don't believe I can accurately predict this, BUT, I found an interesting method that may work in volatile months to capture much of the trend. I would only use it in that situation, in slower times you'd likely just lose a ton on little stops, but I haven't researched that assumption to back it up.
The idea is a 2:20 r:r (you read that right), or even 2:25, inspired by my losing days as a "trader" (read: gambling). Try to make 2 points, market goes against you, lose a ton, etc. For anyone who's ever traded like this, they know that it might work for awhile, but eventually it catches up to you. So why not try it in reverse where you find volatility.
Essentially, trade breakouts from the opening range which you find roughly 9:30-10am, with 2 point stops. At a point where you think it might break down or up out of that range after 10am, go for it. Sometimes you'd make several attempts in one day, getting stopped out several times. Over the last month (3/13/14 - 4/10/14), where volatility has been relatively high, backtested for 2:20 I would have had 7 winning trades and 20 losing (140-40 = 100 pts. before commish), or even for 2:25, 5 winners and 19 losers (125-38 = 87 points). Notice losers are different in number - it's a subjective method, no indicator would feed it to you, so when going by intuition, the second time I took different trades. You would have to hold overnight to make this work, I should mention, but usually the trades were over in a day or so.
If you can deal with a staggeringly high lose rate, I was astounded to see how well that might work in future volatile months, look forward to trying it myself.
