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Trading the SLA/AMT Intraday


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Trading the SLA/AMT Intraday

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  #101 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012


DbPhoenix View Post
I ought to post this as well, for those who are going to stay up all night to watch price:



I believe this is what the books call a "diamond". But if price bounces around within its confines, it becomes the usual hinge, and if price busts out of it before reaching the apex, there might be an opportunity. OTOH, if it works its way all the way to the apex, as I said somewhere earlier, more likely it'll just drift again. If it were Friday, I'd vote for ranging. But you never really know.

So we broke out of the "diamond" at 0300 but didn't go far as we remain inside the boundaries of the range. However, 33 to 75 is nothing to sneeze at, so there may be a reversal op at 75. If not, another day of doing nothing, unless one focuses on some other instrument.

Nobody promised that the SLA would be thrilling.

 
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  #102 (permalink)
 Gozilla 
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Will be interesting to see how this plays out in real time, after hitting the upper extreme can price find its way back to the lower extreme at 33, could price break out and trend to the wider range at 4510 on the upside or break down to 4390. And if it does so, would this put us into the daily/weekly context for a possible move to the respective extremes of their trending ranges?

Gozilla.

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  #103 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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Gozilla View Post
Will be interesting to see how this plays out in real time, after hitting the upper extreme can price find its way back to the lower extreme at 33, could price break out and trend to the wider range at 4510 on the upside or break down to 4390. And if it does so, would this put us into the daily/weekly context for a possible move to the respective extremes of their trending ranges?

Gozilla.

Interesting conjectures, if one is observing. If one is trading, the question is whether or not one traded the reversal off 75. If not, why not (especially as I pointed this out an hour ago )?

 
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  #104 (permalink)
 Gozilla 
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DbPhoenix View Post
Interesting conjectures, if one is observing. If one is trading, the question is whether or not one traded the reversal off 75. If not, why not (especially as I pointed this out an hour ago )?

I watched the hinge BO, and whilst there was a retrace for a possible long, the only game in town at that moment in time IMO was a reversal off 75 or a breakout above the range. Whilst I would have liked to have taken the reversal, there is still some work for me to do before I can contemplate actively trading it.

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  #105 (permalink)
 DbPhoenix 
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Gozilla View Post
I watched the hinge BO, and whilst there was a retrace for a possible long, the only game in town at that moment in time IMO was a reversal off 75 or a breakout above the range. Whilst I would have liked to have taken the reversal, there is still some work for me to do before I can contemplate actively trading it.

You'll first have to decide for yourself whether or not to trade ranges, and that literally is something you'll have to decide for yourself.

As long as you're looking at this and it's all new, I suggest you look at how price behaved at the point or level at which you'd have taken your long and compare it to how price behaved when it reversed off 75.75 (which was a tick below the top of the range established yesterday). Which trade would you rather be a part of? Which would be "safer"? Which would provide a tighter stop, either mental or hard (transmitted)?

Sure are a lot of people here. What's up, george?

0932: Note that after price tested 75 at the open and reached 76, there was no recoil whatsoever. Now you have a springboard. Ten pts in 1m is not bad. Do you take it or let it ride (this has to be decided in advance)?

0937: You should have turned away from your 5s chart by now or you'll go blind.

0940: Traders jumped the gun a bit at 0929, the scamps. So I'm going to use 72.5 as the beginning of the upmove, which puts the MP at 82.5. As that's where the first swing took place, that seems good (though at the time the MP could not have been established; that had to wait until we reached 92.5). By now the SLA would have taken over as we're trending, but AMT gives us the target: 4544. In the meantime, the long can be ended in the usual SLA way, but we're only 50pts away, so let's not prejudge anything.

0946: Those who've read the SLAB know that they could have fanned their DL by now. And those decisions that have by now been made () regarding what constitutes a break and how much of a break is allowable come into play. In the meantime, relax, breathe, breathe again.

0952: Note that some call that 10m springboard at 0935 HTFs or Bull Flags. Wyckoff just called all that sort of thing springboards. He wasn't a fan of the geometric shape thing. Note also that it's barely detectable on the 5m. The 15m people can't see it at all. They'd call it "noise".

"WhyCough"? Funny. Sounds like a prostate exam.

0956: And, yes, this is another SB. 2nd wave.

0958: DL being tested. If your respiration is increasing, just breathe.

1002: 4pt range here. Either put a stop below 4500 or exit. Your choice. Incidentally, one can expect this sort of thing at a century mark.

1004: Given that we're now ranging, the DL is largely irrelevant; the range limits take over and one manages them just as he would any other range. If we break out to the upside, one can fan the old DL or start a new one.

1006: And we start wave 3 (still wave 1 on the 15m).

1010: I should mention that at this point, these lines become largely irrelevant. Either we reach 4544 or we don't. In the meantime, the last swing lows make good exit triggers, or if one wants to take the money and run, he can just exit whenever he feels like it.

1019: Activity level has sunk dramatically. Pace isn't so hot either. BTW, one trade so far.

1028: And now we're ranging again. This sucker's really tired. Now would be a good time to put a stop under this little range and get away from the screen.

1033: Each to his own but I would NOT attempt a short here. If exiting, I'd just exit and be pleased with the morning and go do something more interesting with the rest of it (are you listening, lajax?).

1046: On our way again, but not much conviction.

1050: Please note that 4544 is a target, not a guarantee. Manage the trade. If we DON'T make it there, that sends a message of its own.

1152: I'm going to assume that nobody bought, but if anyone did, there's nothing wrong with locking in one's profit here and re-entering in the event of a continuation. This could go on for hours.

1203: Incidentally, as this is shaping up to be a potential springboard on the 15m, I expect a different level of trader to notice. Whether they act on it or not is another matter.

 
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  #106 (permalink)
 Gozilla 
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DbPhoenix View Post
You'll first have to decide for yourself whether or not to trade ranges, and that literally is something you'll have to decide for yourself.

As long as you're looking at this and it's all new, I suggest you look at how price behaved at the point or level at which you'd have taken your long and compare it to how price behaved when it reversed off 75.75 (which was a tick below the top of the range established yesterday). Which trade would you rather be a part of? Which would be "safer"? Which would provide a tighter stop, either mental or hard (transmitted)?

Price hung around the long entry after the hinge and chopped around for over an hour, as observed, once price found the extreme at 75/76 the move away was swift, this behaviour is more convincing of a possible imbalance and what I would expect to see at a range extreme.

Range extreme short is the better trade, which in hindsight is easy to see, but, the first ret gives an entry at 72, but, with it being a range extreme trailing price within the context of the upcoming extreme by a point would give an entry around 74 and the stop perhaps a point of two above the range extreme, if the stop is hit a BO is more likely (MAE studies)

Gozilla.

Oh how things change so quick, that was pre-market this is the open.

Just updating to follow the action as per post above.

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  #107 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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Gozilla View Post
Price hung around the long entry after the hinge and chopped around for over an hour, as observed, once price found the extreme at 75/76 the move away was swift, this behaviour is more convincing of a possible imbalance and what I would expect to see at a range extreme.

Range extreme short is the better trade, which in hindsight is easy to see, but, the first ret gives an entry at 72, but, with it being a range extreme trailing price within the context of the upcoming extreme by a point would give an entry around 74 and the stop perhaps a point of two above the range extreme, if the stop is hit a BO is more likely (MAE studies)

Actually it's easy to see in real time as well, but you have to be there.

If one is going to daytrade this, particularly if he wants to trade only the first 90m, he really needs to be there at least by 0800.

 
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  #108 (permalink)
georg7e
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Was that a greeting to me? If it was, I am just seeking a fine education in this method, and you, Db, are doing a great job of providing it. Greatly appreciated.

 
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  #109 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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georg7e View Post
Was that a greeting to me? If it was, I am just seeking a fine education in this method, and you, Db, are doing a great job of providing it. Greatly appreciated.

Yes, it was. But you've been watching for an awfully long time. Years. Maybe the SLAB will give you a boost.

 
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  #110 (permalink)
lajx
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Hi Db, thanks for do this kind of exercise I really appreciate and is very helpful.

I wanted to share how I trade today.



Context



Trade



Management



Management 5 sec


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 Gozilla 
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DbPhoenix View Post
Actually it's easy to see in real time as well, but you have to be there.

If one is going to daytrade this, particularly if he wants to trade only the first 90m, he really needs to be there at least by 0800.

I agree, I watched the hinge trade and at the time I thought the continuation, if it could be called that, was sloppy and hesitant. OTOH the move off the extreme was exactly what I would expect to see from a move off an extreme, and the BO was very straight forward, but, I had no skin in the game, would it have been as straight forward as it was if I had a trade on, I think so but who knows.

Gozilla.

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  #112 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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Gozilla View Post
I agree, I watched the hinge trade and at the time I thought the continuation, if it could be called that, was sloppy and hesitant. OTOH the move off the extreme was exactly what I would expect to see from a move off an extreme, and the BO was very straight forward, but, I had no skin in the game, would it have been as straight forward as it was if I had a trade on, I think so but who knows.

Gozilla.

You'll soon find out

 
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  #113 (permalink)
 Gozilla 
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From an intraday perspective the stride of the rally is slowing up somewhat, but, the trend is still intact and price is making progress towards points of interest (AMT) which are highlighted on the hourly. And just above the nearest hourly limit is the daily DT which could become a triple top depending on what price does when it gets there.




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  #114 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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lajx View Post
Hi Db, thanks for do this kind of exercise I really appreciate and is very helpful.

I wanted to share how I trade today.

This is pretty okay, but you're still hovering too much. Once your entry is clear, your focus should be on management, not on looking for traps set by market demons. It takes a while to trust AMT, but think. We spent all day yesterday ranging. If you understand the purpose of balancing and equilibrium and ranging, there's simply no reason for price to break out then fall back. To do so would mean that yesterday was a complete waste of time. This is not to say that it can't, but don't assume that it will. Your entry is safe. Forget about it. Focus on price. Their hesitancy is understandable. It doesn't spell doom.

How do you like the 5s chart?

 
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  #115 (permalink)
 Gozilla 
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Price action gave it a good try, but was unable to reach the upper limits discussed earlier in the thread, perhaps it will get there overnight or tomorrow or it could signal weakness, only time will tell.

My most recent studies have focused on how much price can break stride yet continue in the prevailing direction, and seeing as we have had a trending day I thought it would be interesting to see how the stats could have come in handy.

Though the sample size is small (58 deviations) 3.80 was the average number, beyond that price was more likely to reverse, I'm not a statistician and my spreadsheet skills are weak (something I am working on, lajax set the bar high on that ) 3.8 wont really go into .25 increments so it would be rounded up to 4.

After the first retrace after the BO I switched to a 5 minute chart as it can be easy to over think things when it looks like a lot is going on but, once a break occurred it was worth zooming in for a more precise picture of the trend break continuation, or reversal.

Four points on a TBC holds up reasonably well, the 5.75 break is a little iffy as I bypass the initial low after the break but, the 5 minute bar closed within the DL, made sense to me but, probably clear as mud.

Swing points were also worth noting, how much can price break a swing point yet continue to trend?



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  #116 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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I posted something to lajax' journal about this, and there's no need to repeat it here. But you two are on the same path and ought to read each other, even though you may not actually work together.

If either of you have questions on this, ask them here. Being able to discuss this stuff without the continuous fighting is a pleasure.

 
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  #117 (permalink)
lajx
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DbPhoenix View Post
How do you like the 5s chart?

Is fast, but one is able to see the continuity of the price in a deeper way, also gives a better clue regarding to the pace and the trading activity, moreover I think that the PA of today was an example of how should be the behavior when a RET is triggered on an interest zone, in any case was a pretty good day.

About the analysis done by godzilla regarding to the Trend lines and its relation with the break of the price his results are very similar to my numbers I hope we can share this kind of information

see you tomorrow : )

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  #118 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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lajx View Post
Is fast, but one is able to see the continuity of the price in a deeper way, also gives a better clue regarding to the pace and the trading activity, moreover I think that the PA of today was an example of how should be the behavior when a RET is triggered on an interest zone, in any case was a pretty good day.

About the analysis done by godzilla regarding to the Trend lines and its relation with the break of the price his results are very similar to my numbers I hope we can share this kind of information

see you tomorrow : )

People tend to be fearful when they don't know what's going on, or when they "know" what's going on but don't understand it. This is a problem with longer bar intervals: one can't see what's going on inside that bar or candle. I suspect that those who trade longer intervals just don't think about it and focus instead on what price does when it exceeds the high or the low of the bar. For others, that's not enough.

In any case, if you keep a 5s open, you at least won't be surprised by what price does when it hits what you've pegged as support or resistance or when it triggers your entry. Using a longer bar interval is not unlike seeing your entry be triggered and then having your monitor wink out. It's not difficult to imagine the reaction when that happens. It won't be calm.

As for sharing information, of course. That's what this is all about, and Gozilla is just as eager to move ahead as you are.

 
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  #119 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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Note that even though price has moved above that 16.5 to 35 range, it hasn't actually cleared it. It's just segued into another range. This may be because that range wasn't all that important to begin with, or it may be because we're so near a new high. As the situation is unclear to me, I'll just wait and see what price does as we get nearer to the "open".

There is also the problem of the ES being nowhere near a new high and that 20 has been an issue since February.

Drama.

0914: If the open isn't "neat", the day may not go as smoothly as one might have wished. Trade what you see, and what your plan tells you to do, not what you think or are hoping for or would like to see.

0924: Price is of course back inside the range, so let's see what the other side has in store.

0931: I should also point out that at this level everybody's a player, from the tick people to the weekly people, and they aren't all going to have the same goals and objectives.

0934: If you hypothesized an entry at some point this morning and it didn't work out, don't forget to look back when you have time and figure out why it didn't work out.

0936: Notice all the sloppy back-and-forth as compared to yesterday?

0945: Your fears will suck you into using wider stops. Don't be tempted. Focus on what price is doing.

1004: Yesterday was the sort of payoff you get if and when you follow your plan, if you have one. Don't give it all back for nothing.

 
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  #120 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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BTW, damnpenguins, you forgot to point out that you owe all your success with wrestling your demons to Appendix F

 
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  #121 (permalink)
 eminiman414 
New York, NY
 
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I don't know if this is ok to post here, but this is my take on "trading by price."

First I'll say I am sick and slept in until about 10:30, so I missed the open. Had I not missed it the trade of the day is obv off of 33 after which I'd most likely call it quits. Since I woke up late I just decided to try to go with what I had just to get some work in. Second I don't use the typical SLA entry. I "time" the entry based on a smaller interval (1range chart). I zoom this all the way out and put up a 1SMA of the median so it forms a line. This has gotten rid of the idea of bars closing and waiting for bars to close. It's opened my mind to a whole different world of viewing price. Of course a 1tick chart is even closer but it's more difficult for me to follow. It seems as if there has been some good discussion here and actual participation without nonsense so I figured I would post this.

So with what I had to work with....

Trade 1: Long off of 12 holding. I didn't really have much time to think here as I just pretty much work up. As we were returning back to 12 we had a bit of a rapid drop from 15 to 12 which quickly got checked and we had an impulse of buying off the level which broke the SL. This then quickly got checked ala TDTDB. We drop rapidly again into 12 which again gets checked. Now it looks as if price is putting in a RET to go short but shorting into 12 seemed risky. I got the impression buyers were holding 12 and with the sideways action that was noticed my anticipation was a trip at least back to 20.25. I waited for another attempt at 12 which was a minor pullback and also what would appear to be a "failed" RET. Long was taken at 14. The exit here was a difficult one as I am only trading one contract. I know this is going to sound bad regarding a trading plan but I do a lot "on the fly" based on what I see with the tools the SLA provides. It's been too difficult to try to be mechanical about this so I am trying to let myself go a bit more. So far it's been going really well. So here the exit was a SAR into a short. My idea was to give price room to RET 50% since I was in at the bottom essentially. The fact that we seemed to be moving sideways here makes me also think range. Once we stall at the top and break the DL I suppose I chickened out?

Trade 2: Continuing on. Given now my mind switched to a Range type trade I went short. This is where I can see SLA/ranges not jiving. SLA if giving price room keeps me in based on the halfway point of that up move and I supposed the mean of the sideways action. Now if really trading it as a Range I suppose I should be short sooner once we fail to BO. So the whole SLA/range thing makes sense. With that said I took a short. The price swings aren't very large so the losses here (if any) wouldn't be large at all. This trade was scratched. Price really wasn't moving and we were holding again above 50%. That and feeling like I should still be long had me scratch the trade.

Trade 3: Again the SLA/range thing. Got in long. Price is moving slow. Again just doesn't seem to want to BO. We do the whole poke out drop back thing. Trade was scratched as I wanted to see us really break out. Of course given the whole pace of all of the action I suppose an aggressive breakout is less likely? Still working on these scratches and expectations given market conditions. Trade 3 realistically doesn't have to be scratched or at the same time doesn't even have to be taken if still long from trade 1. Or even better maybe waiting for the breakout/ret would have made more sense overall if a long "had" to be taken.

Trade 4: Played the range and went short on what was appearing to be a failed RET. (still working on that as well). The play here is if we don't go I'd reverse into the attempted BO. Again price isn't falling so the BO is in play. SAR'd into the BO.

Trade 5: The BO. Play was to sit thru the pb which did take place however failed at 24 which was the bottom of the tighter range btw 33-24. That trade was scratched when the RET failed and we dropped quickly back below 23 the high point from the BO. Again trades 2-4 are all iffy to begin with and at the minimum trade 4 was a bit silly. Of course the only true loser on the day.

Trade 6: Given that we did not want to enter back into the range btw 24-33 I was looking for a short attempt to head back to 12 but keeping an eye on the area of 15-17 which may cause some turbulence. I didn't take what appears to be the initial signal at 11:31 I was waiting to see what happened at the TL that could be drawn and how price would react at 20.25. Initially we had a "decent" bounce off the TL/20 junction which starts to fizzle out at the 21 area. I don't know how relevant the RET high at 9:44 is but that's where we were currently stalling. Short trade was initiated and it did take a little bit of time to go. I knew if we popped up I'd scratch the trade and re-evaluate. The scratch would have been for -1.5pts. Again nothing. Price instead begins its trip lower. Once we break 20.25 of course I'm thinking this is a good thing and now we have a supply line to go off of as well. We do this drop stall, drop stall kind of thing before we rapidly dip right thru were I expect some back and forth action. Go straight thru 15 and then pull back to 15. This area as far as an exit goes starts to get interesting. We pop off 12 which has me a alert but at the same time we are looking like another RET. We poo poo out of the RET and we are at 12. This action is starting to look almost "climactic" with the rapid drop into "S", technically rally/retest. Now mind you this is all very micro but is it? Given the extent and pace of all the action thus far? My stop was trailed to 16.50. We pop out of the retest and I was thinking stop out here and almost considered a long but at the same time if 12 breaks......... 12 does break and for a minute I'm thinking here we go but that quickly gets wiped away by the aggressive bounce up back above 12, then we stall and pop again which caused my exit. This also broke the supply line. Give the character of what was going I was done for the day. Price does end up trading a bit lower but did not continue the down move on the day.

I have attached the 1range, 1 min and the results on the day. Any and all comments are welcome. I considered today more practice than anything else. It's hard for me to have such a tight, statistic based trading plan. It's never worked out for me for whatever reason. Are there mistakes here, yes, but I knew what I wanted to do, when, and how I was going to do it and I just lived with the result. Can you really test a hard "scratch" rule or SAR rule when each moment is pretty unique? I know this all may seem like micro trading but I just want to "stay on top of" price at all times. Again not the best area to trade. I could say more but I don't want to ramble. Thanks for reading.

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  #122 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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DbPhoenix View Post
I posted something to lajax' journal about this, and there's no need to repeat it here. But you two are on the same path and ought to read each other, even though you may not actually work together.

If either of you have questions on this, ask them here. Being able to discuss this stuff without the continuous fighting is a pleasure.

Speaking of which, I was crawling through the attic, stumbled across a cob-webby copy of Livermore's How To Trade In Stocks and discovered what I probably knew at one time (many, many years ago) but had forgotten, or so I thought, that Livermore went through the exact same process that you two are going through, and that I have gone through, in order to determine arithmetically the integrity of a given directional move and at what point the probability of a continuation flips to a reversal.

You'll never guess how many points he came up with. (This creeps me out)

And this was a hundred years ago. (Which creeps me out even further)

 
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  #123 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012


eminiman414 View Post
I have attached the 1range, 1 min and the results on the day. Any and all comments are welcome. I considered today more practice than anything else. It's hard for me to have such a tight, statistic based trading plan. It's never worked out for me for whatever reason. Are there mistakes here, yes, but I knew what I wanted to do, when, and how I was going to do it and I just lived with the result. Can you really test a hard "scratch" rule or SAR rule when each moment is pretty unique? I know this all may seem like micro trading but I just want to "stay on top of" price at all times. Again not the best area to trade. I could say more but I don't want to ramble. Thanks for reading.

Unfortunately, little if any of this has anything to do with the SLA/AMT, and I can't comment on it without knowing your particular trading plan (to do so would involve assuming what your trading plan ought to be, and I can't do even that because I don't know what your objectives and goals are). There is also the problem of not including commissions and fees in your P&L, which you'd have to do in order to determine whether or not in "real trading" any of this would have been worth the trouble. For me, there was only one trade, which was a loss of 2t. But that's my particular plan. Some might have shorted the upper limit of the range, if they could tolerate the width of the stop. Others might have done nothing and quit early (I quit around 1030). But there are no range bars or indicators, as you know.

Your approach appears to be what one might call "soft". And that may work for you. But it's not what's advocated here. If you change your mind about having a "tight, statistics-based trading plan", Gozilla and lajax are doing interesting work. You may want to take a look at it.

 
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 Gozilla 
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DbPhoenix View Post
Speaking of which, I was crawling through the attic, stumbled across a cob-webby copy of Livermore's How To Trade In Stocks and discovered what I probably knew at one time (many, many years ago) but had forgotten, or so I thought, that Livermore went through the exact same process that you two are going through, and that I have gone through, in order to determine arithmetically the integrity of a given directional move and at what point the probability of a continuation flips to a reversal.

You'll never guess how many points he came up with. (This creeps me out)

And this was a hundred years ago. (Which creeps me out even further)

I'm going to go ahead and guess that Livermore come up with a number for a trend break reversal of around 3-4 points, if that is the case then you are right, its a little creepy .

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  #125 (permalink)
 damnpenguins 
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DbPhoenix View Post
BTW, damnpenguins, you forgot to point out that you owe all your success with wrestling your demons to Appendix F



Tell you what - I'll split the credit between your good self and Mark Douglas....

I hadn't read Livermore's other book, obviously had read reminiscences. So I've now got a new book to read over the weekend...

 
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  #126 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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damnpenguins View Post


Tell you what - I'll split the credit between your good self and Mark Douglas....

Mark who?


Quoting 
I hadn't read Livermore's other book, obviously had read reminiscences. So I've now got a new book to read over the weekend...

There's really nothing new in it, but the business about the Market Key at the end is "interesting".

 
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 DbPhoenix 
Phoenix AZ
 
 
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This provides an example of what I've been saying about trading "against" different groups or levels or classes of traders:



So one question you have to consider is whether or not these people are going to help or hinder you, plus of course what you're going to do about it in either case. If you've planned for these contingencies in advance and you're prepared to assume the price risk, then . . .

Therefore, when you're ready or near ready to enter a trade, ask yourself "who sees this? who might be out there to help me?"

 
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  #128 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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Per my usual routine, the weekly trend channel:



I have been asked more than once the reason for including the weekly and daily charts if one is trading intraday, much less a 1m bar. The reason is that the upcoming session doesn't appear out of nowhere. It must be approached, not just jumped in to, if one is going to take full advantage of it. I pointed out Thursday morning, for example, that AMT gave us a target of 4544 on the daily chart. This may not have seemed realistic to those who haven't studied the SLAB as we had only just lifted off 4475, but we topped out yesterday morning at 4540 for a run of 65pts. Would an understanding of AMT have aided one in playing all this? Maybe so, maybe not. For me, yes.

I drew in the "weaknesses" in the daily highs during the last two waves in order to show that just because we've had trouble making a new high, that doesn't mean that the bull market is over and prices are going to plunge and that darkness will cover the earth and that it will rain frogs. However, the median of this channel continues to rise and traders are soon going to have to make up their minds what they want to do (we're beginning a series of earnings reports AGAIN).

 
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  #129 (permalink)
Gring0
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I hate to admit it but more often than not simple straight lines are proving to be smarter than me.

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  #130 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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Gring0 View Post
I hate to admit it but more often than not simple straight lines are proving to be smarter than me.

I don't know that it's that so much as believing or beginning to believe that we're smarter than our own plans. And this step onto the wild side is common. Some of us have done insufficient testing. Or we don't trust our own competence to conduct the testing in the first place. Or we don't trust numbers. Or we read one of those Schwager books and believe at some level -- probably unexamined -- that if we were really good we ought to be able to "sense" the market and "feel" our way through the day, that we ought to be able to get "in synch" with the market just because, that following a plan isn't "manly".

But there is also the problem of those new or relatively new to this of not understanding exactly what the lines are, or are for. There are all sorts of lines one can plot on a chart: Fib lines, Pivot Points, software-generated S&R lines, not to mention regression lines and envelopes and "trend" lines and who knows what all.

The "SLA" line, though, is simply a means of tracking the balance between supply and demand. Nothing more. Nothing cosmic. And when the line is broken, that balance has changed. And the trader is called upon to do something about it (if he doesn't know what, he ought to do nothing). Breaking these other lines generally doesn't mean anything at all. Which is why so many people think that "TA" is a big joke.

If I could get people to see behind the lines, see what creates the lines in the first place, I would consider it a major achievement, but people's brains get so scrambled so fast. It's as if every new trader has a big SUCKER printed across his chest and the typical trading forum is a perpetual timeshare sales pitch.

For example, the ubiquitous weekly trend channel. I read post after post in thread after thread about how it's all over every time price fails to make a higher high. But while everybody looks at this sort of thing, does anybody really see it?



Using the chart I posted above, note that for the past year+ the swing highs and swing lows have corresponded to earnings seasons, the swing highs being three months apart and the swing lows being three months apart. Whether earnings are as expected or not seems to have little to do with it. Anticipation? Rise. Result? Decline. Or, another way of putting it, buy the rumor and sell the fact, but on a market-wide basis. Why has this phenomenon occurred primarily during this period? Because the bull is getting long in the tooth? Because Big Money is eyeing the exits? Would making a new high in the next week or so come as such a big surprise? To a great many people, yes. But to someone who can get behind the lines, not so much. And if we don't make a higher high, that's okay too. It has to happen eventually.

So, yes, the line knows more than you do.

 
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  #131 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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Another dusty, tattered scrap from the attic:

Why do people get excited about volume spikes? Greed or fear. Amateur traders see volume spiking and think Oh God I'm Missing Something, and they try to jump on -- or out of -- a speeding train. Sometimes that volume can propel traders to a new level. Sometimes, at least in an upmove, it's pure distribution, and when new buyers find they have no one to sell to, price can plummet just as fast as it rose.

Part of the problem with regard to discussing price and volume is that not everybody is talking about the same thing. And some people think that definitions don't matter. But they do. And if one is going to think clearly about what's happening in front of him, he needs also to be clear about the language he uses to describe it, even if that language is purely internal.

Some people will say, for example, that they don't use volume, that volume is not important, even that volume is useless. But without volume, that is, trading activity, there would be no transactions and hence no price movement. That in itself makes volume important. What is often meant by statements like these is volume as an indicator, particularly a color-coded indicator, and those who feel that this sort of volume is pretty useless may have a point.

There is also the matter of volume as trading activity (which is how Wyckoff looked at it) and volume as "intent", which is essentially what bid and ask "volume" are about. But the trader who trades according to what people intend to do may not make the same decisions as one who trades according to the transactions that people are actually making. I may intend to sell the strawberries in my refrigerator for $100 a pint, but nobody's going to give a damn unless somebody actually meets my price and we conclude a transaction. That then becomes the price.

But is it the correct value? And mixing price with value is another area where traders tend to trip themselves up. Going back to your first post, a trader may have shares that he thinks are worth $10. But he can't find a buyer who thinks they're worth more than $5. The seller's price is $10 because that's where he's placed their value. The buyer's price is $5 because he's placed their value at that level. But that doesn't make either $5 or $10 the "price". The price is determined through negotiation until there is an agreed-upon amount, maybe $7.50. And if the two parties conclude their negotiation, the transaction takes place and $7.50 becomes the price, even if only for a few seconds.

Therefore, if intent matters to you and you believe that bid and ask "volume" truly reflect intent, then the bid and ask volume may be useful to you. But none of this has anything to do with the volume that is trading activity which in turn is the result of actual transactions which in turn result in prices that are printed on the "tape".

If there is no transaction, there is no volume, and everybody just stands around holding hands. Once a transaction takes place, then you've got something concrete, a benchmark to go by, and some clue as to the action you should take.

 
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  #132 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012








CME:


 
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  #133 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012

Another:

Beginners often want to know how to determine in advance whether or not they are going to be in chop, or at least to be able to detect the chop before it grabs them by the neck and drags them into the barn.

First, show Hope the door and tell it to find someplace else to hang out.

Second, expect nothing. Assume nothing. If you are not yet at the point where you can engage the market without expectations, then assume that the day after a trend day is going to be choppy. They nearly always are. And look instead for signs that it won't be.

Third, if you do not yet have specific criteria for detecting and trading continuations and reversals, then go to the zoo. Or the library. Or the movies. Don't even watch it, much less paper-trade it, because you'll be tempted to do something with it. Or about it. And you're not ready for this yet.

Fourth, if you do have the aforementioned criteria, take great care not to sink too deeply into the micro. If the downside has been rejected by the sellers, and the upside has been rejected by the buyers, a bell should ring, or a light flash. After all, if both the upside and downside have been rejected, that puts you back into the range with a bunch of traders who have lost their way and don't have the power to push price either one way or the other out of that range. If you're going to hitchhike, you don't want to thumb a ride with somebody who's lost. And if you start making lower highs and higher lows, then you're in even bigger trouble.

It's easier than this. Take some time off. Get a good night's sleep. Try again tomorrow.

 
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  #134 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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I hope I don't insult anyone by posting stuff that appears to be so simple that one wonders why it's posted at all. But this is what I see when I first open my platform.




Once upon a time I took a drawing class. One of the instructor's chief goals was to teach us how to see. Not just look, but see. So she placed an apple on a pedestal and told us to draw it while studying it: the shape, the color, the way it reflected light, and so on.

Once that stage was completed, she told us to study the apple for as long as we wished but to do no drawing whatsoever until we had turned away from it. This was, to say the least, an eye-opener (no pun intended). Most thought that they were seeing it, but it wasn't until they turned away from it and found that they had no idea what to draw that they understood that they had only been looking at it. I understand that police cadets often go through this same sort of training in order to hone their witnessing skills.

This isn't the sort of thing that one picks up and drops. When I open my platform, I see instantly the state of price. I don't draw any lines or plot any whatevers. I don't even develop an initial impression. It's just there, and requires no thought at all.

Not a bad exercise for those who continue to have difficulties with forests and trees.

 
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  #135 (permalink)
OmDBnamah
New Delhi India
 
 
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Namo Gurudev. ....

Please can you help on how to determine the range to be used. Also does it depend on the platform and the amount of data visible.

I am using investing mobile app for observation and incidentally I just opened it up and found the range to be b/w 4540 - 4548....15m interval...

Any thoughts please. .

Regards,
K

 
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  #136 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012

Yesterday's high and low are what they are whether one plots a 1t chart or an hourly chart. One can find ranges within ranges within ranges and so forth, but to what purpose?

 
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  #137 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012

Those who have not read the SLAB will not know that it was written with a relatively long timeframe in mind (i.e., longer than a day), using the hourly bar interval to illustrate. But given who we are, many if not most of those who became interested in it insisted on using it in daytrading. I therefore attached an appendix to the latest iteration showing how to apply it to daytrading.

With that in mind, I've pointed out once or twice (!) that the SLA is not suitable for trading ranges, the chief reason being that the SLA, given the way it's constructed, is not appropriate for scalping. "Ranges" in this context refers to the relatively narrow ranges one finds in these shorter timeframes, not to the ranges of a hundred points or more one finds in daily and weekly and monthly timeframes.

I've also pointed out once or twice (!) that the best trades are found at the extremes. This is nothing new. Livermore pointed out the same thing a hundred years ago. But "extremes" refers to those points and levels that everybody sees, or at least the more the better. If no one sees your "extreme" but you, it's not likely that anyone is going to be trading it the same time you are, and if you're all alone, who's going to help push price in the direction you want it to go?

Therefore, in reference not only to the above posts but to all the posts which seek to apply the SLA inappropriately, I'll illustrate again why the SLA isn't particularly good for trading ranges given that today and yesterday will be at least reasonably fresh in everyone's minds and given that yesterday and today provide examples of trading against an extreme and trading against nothing in particular.

This morning I posted an example of what I see when I open my platform. Today I saw a range. This range had limits. Unless and until those limits were reached and exceeded, I had no interest in trading it.

First what I posted this morning:



And the results if one ignored the fact that we were range-bound and insisted on applying the SLA anyway:



As can be seen, it would be extraordinarily difficult to avoid a net loss, even without including commissions, even using a 1m bar interval (anything smaller would be even worse).

Compare the above to what the trading looks like when entering against an extreme, in this case the failure to make a higher daily/weekly high, beginning with the range formed just below it:





While one can quibble about entries and exits, the difference should be clear.

And by the by, anyone who wants to save these charts better do so. Given my experiences on various websites, one can't guarantee that these charts will be here forever.

 
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  #138 (permalink)
 damnpenguins 
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Or you could stand aside?

Both days I've given up soon after the open. I've been able to get a lot of extra backtesting done as a result - beats waiting for the 1 reversal trade of the day.

Didn't Wyckoff say that neutral can be a position too...?

 
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  #139 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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damnpenguins View Post
Or you could stand aside?

Both days I've given up soon after the open. I've been able to get a lot of extra backtesting done as a result - beats waiting for the 1 reversal trade of the day.

Didn't Wyckoff say that neutral can be a position too...?

Yes, indeed, you can very much stand aside. Especially if your bike is calling. And if one is willing to devote only so much time to this, he soon learns either to let things go or drive himself crazy (note that that nice short yesterday took place after 1100). Trend days are not shy.

And, yes, he did. He also said that "eagerness to trade supplants deliberation".

There is also the matter of the ES, which was sitting there like a wart. I'm not encouraging anyone to rely too much on the ES, if at all. But if it's not moving, odds are that the NQ won't be hopping any freights and heading out of town.

 
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OmDBnamah
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Namo Gurudev. ...

Thanks for your reply. You also answered my next question (regarding which range to consider) in the above post..

If no one sees your "extreme" but you, it's not likely that anyone is going to be trading it the same time you are, and if you're all alone, who's going to help push price in the direction you want it to go?

And I used this in a way today when I waited for around 4 hours for breakdown of yesterday's range to trade....

And I can tell it is not easy to keep your calm intact as you tend to see trades when none exist..

Regards,
K

 
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  #141 (permalink)
 Gozilla 
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Interesting to see what happens here with price at the top (slight breach) of the multiday range and close to ATH.

Gozilla.


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  #142 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012


OmDBnamah View Post
Namo Gurudev. ...

Thanks for your reply. You also answered my next question (regarding which range to consider) in the above post..

If no one sees your "extreme" but you, it's not likely that anyone is going to be trading it the same time you are, and if you're all alone, who's going to help push price in the direction you want it to go?

And I used this in a way today when I waited for around 4 hours for breakdown of yesterday's range to trade....

And I can tell it is not easy to keep your calm intact as you tend to see trades when none exist..

Regards,
K

Which is why I continue to encourage people to trade longer bar intervals. If patience is an issue, daytrading is not the place to be unless one wants to scalp, and this isn't a scalping approach.

 
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  #143 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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Gozilla View Post
Interesting to see what happens here with price at the top (slight breach) of the multiday range and close to ATH.

Gozilla.

It's the damned ES. When they decide they want to move, it'll be much easier.

 
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  #144 (permalink)
 Gozilla 
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DbPhoenix View Post
It's the damned ES. When they decide they want to move, it'll be much easier.

I guess the ES moved just enough to drag the NQ with it, price has tagged the lower extreme of the range, now its a case of whether or not price can get back to the upper extreme or break to the downside.

We are still between a rock and a hard place.

Gozilla.


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  #145 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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What was the last thing you traded? Look at its 1 year, 6 month, 1 month, and 3-5 day charts. Can you see all the opportunities where you could have made a profit? Should have gone long there, shorted here . . .. You're assessing "opportunity" based on price activity subsequent to the point at which you believe the opportunity existed, which means that you're working backward to identify that point of opportunity. This type of thinking will cause a trader to make trades when no real opportunity exists.

Looking at the charts again, try to identify forward-looking opportunities, where you consider only each price point and the price patterns before it. You'll find that it's now far more difficult to spot the winners, but those are the opportunities that you need to identify and then appropriately act on in order to be a successful trader.

-- Innerworth


In other words, everyone's a genius in hindsight. Beating yourself up for missing an opportunity that you didn't plan for is not productive, though if it prompts you to look for similar opportunities and commonalities among them that might result in a new setup, then the opportunity you didn't take advantage of turns out to be an opportunity that you're taking advantage of after all.

 
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  #146 (permalink)
 TheTradeSlinger 
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Pre-market hinge with 4535 as midpoint.

Watching for breakout/pullback SLA entries and midpoint tests.

(Would post image of chart, but unable to yet due to 5 post minimum).

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 Gozilla 
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TheTradeSlinger View Post
Pre-market hinge with 4535 as midpoint.

Watching for breakout/pullback SLA entries and midpoint tests.

(Would post image of chart, but unable to yet due to 5 post minimum).


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  #148 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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4750 has come up repeatedly since Monday, and today it's the upper limit of the hinge. I suggest we pay close attention to it.

0941: 2 failures at 22.5.

0944: make that three. Appears to be the ES again.

0952: Lots of cross currents here with the ES: financials are fine, energy not so much. Then there's the Greece thing which, given the activity in the early hours, appears to be important to Europe. And the ES appears to be taking the lead, leaving the NQ messy.

 
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  #149 (permalink)
 supermht 
Naperville IL
 
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DbPhoenix View Post
4750 has come up repeatedly since Monday, and today it's the upper limit of the hinge. I suggest we pay close attention to it.

4750?

 
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  #150 (permalink)
 Gozilla 
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Seems like price is revolving around the mean of the previous days high-low at 35, not much to think about until price gets to or surpasses the range extreme 15-55. Price broke to the downside of the hinge but has so far failed to follow through.

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  #151 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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Gozilla View Post
Seems like price is revolving around the mean of the previous days high-low at 35, not much to think about until price gets to or surpasses the range extreme 15-55. Price broke to the downside of the hinge but has so far failed to follow through.

I'd focus more on the extremes of the range as that's where the balancing is taking place. But given the weakness in the ES, I wouldn't expect much. Or hang around for long if you have something more interesting to do. The longer you watch this, the easier it will be to see opportunities that aren't there. Which is why I've been taking breaks to weed the garden.

 
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  #152 (permalink)
lajx
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  #153 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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lajx View Post



If you made only two trades and then quit, that's a big improvement.

Given the way you're collecting data, both graphically and numerically, you can go back over what you have and note or analyze how price behaves in a range and how it behaves as and after it leaves one. That may not prevent you from trading within ranges, but it will have implications for how and where you exit and how much room you give price to get where you expect it to go. If you use price targets, there will be implications for that as well.

 
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  #154 (permalink)
lajx
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Yes Db, so far I have been working in the study of the charts and trying to translate this data in numbers in order to have objective information, in any case I will try to upload this as soon as possible

 
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  #155 (permalink)
 Gozilla 
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Price appears to have given up on trying to push higher and is now making a move lower to the daily range mean/DL beyond this level lies the last swing low at 4390 +/-.

The hourly chart compliments the daily, the rally into a level that price has been unable to make its way beyond followed by the ranging and subsequent rejections on a spike higher could, or should have been taken as a warning.

Lower time frame chart to show the possible location of an entry today.

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  #156 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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Observing and analyzing and playing with hypotheses and possible new tactics and reconfigurations of old ones is always to the good. Helps one from getting stale. However, avoid making changes solely due to boredom, particularly when the bases for those changes is hindsight.

As I've spent a great deal of time studying how price behaves within a range and how it behaves without, I look at what goes on as it reaches the limits of those ranges, such as 4490 and 4517 today. Yes, price broke below 4490 just before 1100, but it reversed there. And didn't try again for an hour and a half. If one knows that there is going to be a reward for sitting there and doing nothing for an hour and a half, then he might decide to do just that the next time. But the next time nothing happens. So the trader trades anyway because after all he's been sitting there for so long. And those bad habits come rushing back.

If the trader were snowbound, there might be some excuse for hanging around, if he is physiologically and psychologically capable of doing so. But there's really no reason for that this time of year. The trades that look great in hindsight very often have no logical reason for being. If we look for those reasons to rationalize and justify trades that were or might have been taken off-plan, more likely we're just looking for bunnies in clouds.

 
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  #157 (permalink)
 damnpenguins 
West Sussex, UK
 
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DbPhoenix View Post
Observing and analyzing and playing with hypotheses and possible new tactics and reconfigurations of old ones is always to the good. Helps one from getting stale. However, avoid making changes solely due to boredom, particularly when the bases for those changes is hindsight.

Good advice..

I wasn't thinking about making changes to my entries etc, just the conditions under which I would take entries. Maybe looking outside of the first 90 minutes etc.

Probably more a reflection of my lack of experience in dull markets....

Was there something I said specifically that piqued your interest?

 
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  #158 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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damnpenguins View Post
Good advice..

I wasn't thinking about making changes to my entries etc, just the conditions under which I would take entries. Maybe looking outside of the first 90 minutes etc.

Probably more a reflection of my lack of experience in dull markets....

Was there something I said specifically that piqued your interest?

Experience in dull markets, or any kind of market, is always a plus. The danger in dull markets lies in those hindsight I Could Have taken that, which becomes I Should Have taken that, which become I Would Have taken that if only, and there you are. Now there's nothing wrong with pursuing the couldawouldashoulda into further testing if one isn't sick of it. But then there's always the very real possibility that whatever one finds will apply only to dull markets and that as soon as things pick up again all that work goes right out the window (though one can also save it for the next dull market).

And there was nothing you said specifically. But there is a lot of antsy-ness going around, and I'd hate to see you guys start backsliding. As for looking beyond 90m, sure, why not? Only you know whether you can stare at a screen that long or not. The danger lies in waiting and waiting and waiting for an opportunity, then taking it if it presents itself, and then the trade doesn't work out. So you've sat there for two hours or more for nothing. This isn't good for the psyche.

That's why I always quit by 1100 unless we're in the middle of a trend day. I know that if the market hasn't moved by then, it probably won't, or if it does, it may take hours to do so, and I don't love this that much.

Chacun a son gout, though.

 
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  #159 (permalink)
 damnpenguins 
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Cheers.

That sounds about right... Sod's Law as applied to trading; If you hang around until 1100, the trade will come at 1130...

Each to their own indeed

The thing that got me was staying on the sidelines when I'd done the work to get to this point. To me, it is a fine line between hesitance and discipline. One being an excuse and the other quite reasonable.

I'm thinking I fell on the side of prudence this week, but I would have liked last weeks market for my first week trading live again.

 
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  #160 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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Another scrap from the attic:

So you ignore the fact that price made more than thirty points in no time at all and that the only people who are going to be suckered into this "pullback" are those who were too cowardly or too ignorant or too sleepy or too unprepared to have taken the trade they were supposed to take, which of course are the same people who are going to be the first to panic when things go wrong, which is what happens two bars later. But you've already bought it and made yet another tuition payment. And it isn't even lunch yet . . .

So you take that hour to sit back and ruminate on the meaning of life, or at least the meaning of your life, and you try to decide whether or not you ought just to say the hell with it and get a real job. And eventually you decide to stick with it for at least a little while longer. However, you also decide to punish yourself in future, not by jumping into trades that you have absolutely no business jumping in to, but by sitting on your hands when you've failed to act appropriately and "in a timely fashion". You decide to call it The Preclusion Rule: you don't take any trade that you wouldn't be taking if you had taken the trade you should have taken in the first place (you may add something like "you stupid idiot", if you like.)

 
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  #161 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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I should say that a chart helps those who can read it or rather who can assimilate what they read. The average chart reader, however, is apt to become obsessed with the notion that the dips and peaks and primary and secondary movements are all there is to stock speculation. If he pushes his confidence to its logical limit he is bound to go broke.

There is an extremely able man, a former partner of a well-known Stock Exchange house, who is really a trained mathematician. He is a graduate of a famous technical school. He devised charts based upon a very careful and minute study of the behaviour of prices in many markets -- stocks, bonds, grain, cotton, money, and so on. He went back years and years and traced the correlations and seasonal movements -- oh, everything. He used his charts in his stock trading for years.

What he really did was to take advantage of some highly intelligent averaging. They tell me he won regularly -- until the World War knocked all precedents into a cocked hat. I heard that he and his large following lost millions before they desisted. But not even a world war can keep the stock market from being a bull market when conditions are bullish, or a bear market when conditions are bearish.

And all a man needs to know to make money is to appraise conditions.

--Jesse Livermore

 
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  #162 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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Until the lens of experience focuses information, it does almost no good. No matter how much the marketing machines of the Information Age would have us think otherwise, information by itself isn't power: knowledge is. And turning information into knowledge requires more time, experience, and effort than an afternoon spent staring at a screen full of facts.

Information is passive. To make it knowledge, you need to assimilate it. Put it in context. Understand it. Knowledge streamlines and focuses our relationship with information. Knowledge helps us avoid information we don't want or need and leaves us with the stuff we can use.

In an age in which endless amounts of bits and bytes are always available, it's a daunting task to spot the worthwhile stuff. It's easy for the Net to overwhelm us or lull us into the misconception that simply having access to something is as good as knowing it.

--Michael Penwarden

 
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  #163 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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from Larry Phillips' book, Zen and the Art of Poker:

Patience
(edited)

RULE #1: Learn to use inaction as a weapon.

RULE #2: Don't get irritated or angered by long session of folding.

RULE #3: If you've been folding a lot, for a long time in the game, and you're starting to think that maybe it's time you got in and played a few hands again – that's not a good enough reason. Keep folding.

RULE #4: Don't feel like a martyr when folding.

RULE#5: Sometimes others get to play and you don't. Make peace with this idea. Cross your arms and sit back.

RULE#6: To win at poker you must embrace the idea of breaking even. A distaste for breaking even can lead us into the valley of pressing and overplaying and other wrongful activity.

RULE #7: Regard patience as a central pillar of your game and strategy. Don't assign it a secondary or lesser role.

RULE #8: Keep plugging away. Expect nothing. There will be times when you play tight, keep playing tight, and keep on playing tight, and it still does no good; the bad cards just keep coming. You may have to just keep doing it until the end, with no reward at all.

RULE #9: Don't fall into the "Now Trap." Players want to win now, today. Results must happen now, in this hand, the one right in front of us. We assign a little more importance to where we are. We make it bigger, more important. But we do this timewise, too; we assign things more importance because they are happening in the present moment. Yet giving greater importance to the present in the game of poker allows us to imagine marginal hands into good hands and good hands into great hands.

RULE #10: The long run is longer than you think. Playing only the best hands can be frustrating. Anger and irritability can arise. The emotions can be severely tested. This is where Zen comes in.

RULE #11: Don't defend patience too strongly. You can't make yourself go to sleep through sheer strength of will. It is not about the strength of commitment; it is more of a gentler thing, a letting go.

RULE#12: Don't be impatient about patience. Your brain is telling you to play patiently while your emotions are saying, "What's taking so long?" These two must be in alignment.

RULE #13: Occupy yourself while you are not playing. The fact is, if you are playing correctly, you are going to be doing a lot of folding, so you need to think of ways to fill this time. If you hate this period of time when you're not playing, and some do, it will have the effect of throwing your game out of kilter.

RULE #14: Begin by playing tight, but don't forget to stay tight. The important thing is not who possesses the control and discipline at the start of the game, but who possesses it at the middle, the end, and all points throughout.

RULE #15: Discipline your game. It is more like patience, pacing yourself (especially emotionally) for the length of the game. It is different than mere patience, however. It comes from a larger and longer-term view of things, one that steps back and sees things as a whole.

 
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  #164 (permalink)
 TheTradeSlinger 
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PreMarket Range Question

What would you guys consider the premarket range of NQ for today?

I can see an up trending range, but also a range from the lows to the highs.

Best to wait and see how the market reacts to both to determine the one to use?

(unable to post image of my chart yet, 5 posts rule)

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  #165 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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TheTradeSlinger View Post
PreMarket Range Question

What would you guys consider the premarket range of NQ for today?

I can see an up trending range, but also a range from the lows to the highs.

Best to wait and see how the market reacts to both to determine the one to use?

(unable to post image of my chart yet, 5 posts rule)

Try to ask this sort of question at least 15m before the open.

The premkt range had no well-defined limits. One could have bought a break of the premkt high at 38.75, but to get anything out of it, you'd've had to use a wide stop. In any case, it didn't get far, and probably won't until something is decided this week about Greece.

After the break and break failure at 38.75, price rallied again and formed a hinge from 094320 to 094445. This offered a springboard for a clean break up to 50+, which isn't bad, but you'd have to take the profit without hesitating as it all evaporated shortly thereafter.

And that's that.

 
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  #166 (permalink)
lajx
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DbPhoenix View Post

After the break and break failure at 38.75, price rallied again and formed a hinge from 094320 to 094445. This offered a springboard for a clean break up to 50+

Hi db.

Regarding to this, Do you refer to the 5 sec chart? (Hinge in the blue circle?)


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  #167 (permalink)
 Tap In 
Bend, OR
 
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DbPhoenix View Post
from Larry Phillips' book, Zen and the Art of Poker:

Patience
(edited)

RULE #1: Learn to use inaction as a weapon.

RULE #2: Don't get irritated or angered by long session of folding.

RULE #3: If you've been folding a lot, for a long time in the game, and you're starting to think that maybe it's time you got in and played a few hands again – that's not a good enough reason. Keep folding.

RULE #4: Don't feel like a martyr when folding.

RULE#5: Sometimes others get to play and you don't. Make peace with this idea. Cross your arms and sit back.

RULE#6: To win at poker you must embrace the idea of breaking even. A distaste for breaking even can lead us into the valley of pressing and overplaying and other wrongful activity.

RULE #7: Regard patience as a central pillar of your game and strategy. Don't assign it a secondary or lesser role.

RULE #8: Keep plugging away. Expect nothing. There will be times when you play tight, keep playing tight, and keep on playing tight, and it still does no good; the bad cards just keep coming. You may have to just keep doing it until the end, with no reward at all.

RULE #9: Don't fall into the "Now Trap." Players want to win now, today. Results must happen now, in this hand, the one right in front of us. We assign a little more importance to where we are. We make it bigger, more important. But we do this timewise, too; we assign things more importance because they are happening in the present moment. Yet giving greater importance to the present in the game of poker allows us to imagine marginal hands into good hands and good hands into great hands.

RULE #10: The long run is longer than you think. Playing only the best hands can be frustrating. Anger and irritability can arise. The emotions can be severely tested. This is where Zen comes in.

RULE #11: Don't defend patience too strongly. You can't make yourself go to sleep through sheer strength of will. It is not about the strength of commitment; it is more of a gentler thing, a letting go.

RULE#12: Don't be impatient about patience. Your brain is telling you to play patiently while your emotions are saying, "What's taking so long?" These two must be in alignment.

RULE #13: Occupy yourself while you are not playing. The fact is, if you are playing correctly, you are going to be doing a lot of folding, so you need to think of ways to fill this time. If you hate this period of time when you're not playing, and some do, it will have the effect of throwing your game out of kilter.

RULE #14: Begin by playing tight, but don't forget to stay tight. The important thing is not who possesses the control and discipline at the start of the game, but who possesses it at the middle, the end, and all points throughout.

RULE #15: Discipline your game. It is more like patience, pacing yourself (especially emotionally) for the length of the game. It is different than mere patience, however. It comes from a larger and longer-term view of things, one that steps back and sees things as a whole.

Exactly what I needed at this time. Thanks

 
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  #168 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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lajx View Post
Hi db.

Regarding to this, Do you refer to the 5 sec chart? (Hinge in the blue circle?)


Correct. It also provides a good example of what I've quoted so often: if it doesn't move, you don't want to be there. Note that when price "broke" 38.75, nothing much happened. It just waffled for two minutes then fell back to 34. Compare this to how price moved off that springboard. That's what you want to see. If you don't see it, "you don't want to be there". IOW, other buyers aren't willing to pay the ask; why should you be?

 
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  #169 (permalink)
lajx
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  #170 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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So where was the trade today (just one)?

This isn't couldawouldashoulda. This isn't about entries. This is about reviewing the trading session.

If one doesn't know what to look for, he'll never find it.

 
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  #171 (permalink)
lajx
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DbPhoenix View Post
So where was the trade today (just one)?

Here (?)


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  #172 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012

Yep.

Look at the 5s and think about how you'd play this, given that you'd already located that level well in advance.

 
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  #173 (permalink)
 Gozilla 
Aberdeen, Scotland
 
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As a review of what has happened during the day I'll go over what I thought about the day.

The general picture from the preparation was that the line of least resistance was down, price had broken the daily DL and had moved strongly away from it suggesting a move to the lower extreme of the trending range. Along with that, prior to open price was just below the MP of the previous days high-low which would suggest further weakness.

At this point though, price had made its way back above the swing lows from the start of the month at around 4390 and these could have had a part to play as the day unfolded.

Charts explain the opening sequence, the action that happened just after price broke below the MP threw me. For 10 minutes price got batted back and forth between 4400 and 3394, after seeing all this activity in that area along with prep suggesting weakness a long would have been off the table at the range low (possible mistake).





The subsequent PA seemed wild and the best option at the time was to wait for price to get to either the ONL or the PDL, Price does get to the ONL and breaks it by enough of a margin to trigger a BO trade, but, with the PDL so close by I would have passed on this as it was 8 points from entry to target if price could get there.

Price rallied and choked on the mean of the premarket range which did not come as a surprise, by this point it is clear that it is a ranging day, and choppy given all the overlap I am seeing. Price makes it back to the ONL and pushes lower, but this is rejected again (DOG).

I swap between 1 and 5 minute time frame as I find it easier to manage on the 5 as the 1 minute can at times tie one in knots. Price cannot sustain a move beyond the ONL, it rallies back above the ONL breaking the SL and retracing, and whilst it does poke that level again it is rejected a third time, tracking the rally there is not much to think about, and once price reaches the previous day hi-lo MP (context) and chokes an exit could be taken on the failure.


Gozilla.

On a side note, todays range straddled the previous daily swing low, or to be more precise, yesterdays low to todays high had a MP on the previous daily swing low, and that's roughly where price ended the day.

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  #174 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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Gozilla View Post
The subsequent PA seemed wild and the best option at the time was to wait for price to get to either the ONL or the PDL, Price does get to the ONL and breaks it by enough of a margin to trigger a BO trade, but, with the PDL so close by I would have passed on this as it was 8 points from entry to target if price could get there.

If you're already short, why would you be concerned with a BO trade? Commentary apart from entry/exit considerations is fine, and useful. Part of the observation process. But if you're engaging in CWS, it's important to note that if you were short, none of the rest of the CWS would apply until 1100. After the short, the rest would be management. Therefore, I suggest you focus on that. If you didn't take the short, then all other entries present additional risks, and these risks won't carry much punch in hindsight (one of the worst habits to get in to is the "I wouldn't have taken that").

Doing PA reviews without fretting over entries and exits is foreign to most non-professional traders, but it is an important skill to learn, particularly as to do otherwise dredges up all the emotions that one is trying to do without.

 
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  #175 (permalink)
 Gozilla 
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DbPhoenix View Post
If you're already short, why would you be concerned with a BO trade?

By that point I was flat, Pre market I was working with a range of 4407 - 4390, just prior to the open price poked the upper part of the range, and as I have been stat collecting the 3 ticks it pushed by was not enough to constitute a break, live, sim, replay, backtest I would have mashed that sell button into the desk .

Price got to the lower extreme and pushed by a point, again, not enough to suggest a break is on the cards, price subsequently re-entered the range and tagged the mean. I gave it a chance, but the weak break and re-entry to the range would have been enough to exit.

Maybe it was an oversight to plan a trade on what may have been a narrower range, but it seemed like the most immediate range at the time given the overnight resistance becoming support.

CWS? I will probably when you tell me but I'm not familiar with the meaning.


Price met my expectations up to that point, had I been working with the ONL - ONH that along with management would also have met expectations. Maybe I am just a little short sighted at times.

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  #176 (permalink)
 DbPhoenix 
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CWS=CouldaWouldaShoulda

In order to see what's happening at 4407.50, you'll need a 5s chart.

 
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  #177 (permalink)
 Gozilla 
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DbPhoenix View Post
CWS=CouldaWouldaShoulda

In order to see what's happening at 4407.50, you'll need a 5s chart.




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  #178 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012

It's not so much the LH. You're talking about 25 secs here, so there's not much time to think about it. You have your key level and you presumably want to go long at a break above that level. Depending on where your trigger is, if price doesn't trigger it, then you are faced with the option of bracketing the trade and entering whichever side price takes you. If price DOES trigger it, then you have to be calm enough to exit the failure and go short. But unless this is all considered ahead of time, most likely you'll be immobilized.

This comes up often. It's worth finding examples of this and replaying them in order to desensitize oneself to what can be the emotional baggage that this sort of entry carries with it.

Paradoxically, if one doesn't take the correct entry because of what is perceived to be the extra risk, any other entry carries greater risk. In confusion lies opportunity if you can remain calm when everybody else is being caught by surprise.

. . . the price you paid for a stock is absolutely irrelevant to where and when it should be sold. The level you bought it at has to do with a past act only, and brooding about the price (or gloating) cannot be allowed to impinge on analyzing its current behavior. No one else -- neither broker, specialist on the Exchange floor, accountant, nor the person who's about to buy the shares from you -- cares what price you happened to pay.

And, of course, if the price you paid for a stock has no practical significance, then neither does the price you sold out at, except for your taxes. Grasping this point is the key to dealing with your own emotional involvement, for price is the peg that emotional hats get hung on. That being the case, we must learn to view the market as cold numbers rather than as emotional dollars, just the way the Dow averages are read as abstract points.

--Justin Mamis

 
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  #179 (permalink)
 damnpenguins 
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It's amazing the calibre of conversation one can have when threads arent hijacked by trolls. Thanks @Gozilla and @DbPhoenix.

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  #180 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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As we're on the subject, I'll quote myself from the SLAB:

Trading plans invariably become egocentric. A few traders get past that and move on to a different level, but most of those who begin the process of developing a trading plan do not (most traders, of course, don't begin at all). Because the process is egocentric, the chief concerns are where do I enter, where do I exit, what should my target be, what should my stop be, how much risk can I tolerate, and so on. The character of the market itself is a secondary issue at best. What is paramount is how the market can serve the ego rather than the other way around.

The market couldn't care less about the trader's entries and exits and stops. The market couldn't care less about what the trader wants. The market couldn't care less about the trader's personality. The market functions in a certain way. It has a certain structure. If a trader is to be truly successful, i.e., more than just "getting by", he must understand these functions and this structure, neither of which have anything whatsoever to do with him.

One begins, of course, again, by observing the market, characterizing it, then formulating hypotheses that tentatively explain its movements. One then tests those hypotheses in order to determine whether or not they are true, i.e., predictable and reliable. Only after all this do the matters of how to take advantage of what one has determined come into the picture, i.e., entrances, exits, stops, etc. It is at this point that the process becomes almost entirely egocentric, e.g., how much risk can I tolerate, and the market itself becomes largely ignored except insofar as it serves the trader's needs and wants. But the market couldn't care less about the trader's needs and wants. And this results in a perpetual frustration among those who focus on themselves rather than on the behavior of price (which is the aggregate of the behaviors of everyone who is participating in the market). If, for example, the trader is focused not only on breakeven but on getting to breakeven as quickly as possible, he is focusing not on the market but on himself. One of the more obvious consequences of this, particularly if the trader is "stopped out", is that the trader dwells or even obsesses over his "failed trade" and completely ignores what the market has told him by having come back to or exceeded his entry point, thus preventing him from evaluating the situation and preparing for the next trade, especially if it happens to be in the opposite direction.

I suggest, therefore, that those who are serious about developing trading plans focus on the market and on price behavior rather than on themselves, unless they want to spend years trying to reconcile two forces which are in many ways mutually incompatible. If one enters correctly, for example, issues of stops and breakeven and size and "targets" become irrelevant. If one doesn't enter correctly, then of course he has to exit. But his doing so has nothing to do with his hopes and needs and wants and desires. Rather it has to do with the fact that he read the market incorrectly. One should, in fact, once he has entered a trade, forget about the fact that he entered the trade at all and instead focus on the market. Only in this way will he become "available" to profit from what the market has to offer.

Nearly all traders except for beginners are in a quandary: they are eager to trade yet are afraid to trade (beginners have not yet learned fear). Thus they seek to exploit the market while simultaneously insulating themselves from any negative consequences of attempting to do so. That's what the bulk of the books and blogs and articles and trading rooms and newsletters et al infinitum are all about. Only an infinitesimally small number of them are focused on why price moves as it does. Which is why there are so many books and blogs and so forth.

 
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  #181 (permalink)
 TheTradeSlinger 
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I'm working with a range of 4423.50 to 4441.75 with a midpoint of roughly 4432.50.

Waiting for extremes.

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  #182 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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TheTradeSlinger View Post
I'm working with a range of 4423.50 to 4441.75 with a midpoint of roughly 4432.50.

Waiting for extremes.

Thank you, and you're correct to wait for the extremes. However, 23.5 was busted at the open. The question one must settle for himself is how much he's willing to pay to find out if he was correct or not. That can be a tick or 5pts or no stop at all.

 
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  #183 (permalink)
 TheTradeSlinger 
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No retracement (1 minute chart) entry on that break just now of the lower range.

I am now looking for what happens at midpoint of the range or for another break below the low of the range.

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  #184 (permalink)
lajx
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  #185 (permalink)
 supermht 
Naperville IL
 
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i look for extreme of 4442-4407

4442 is where selling came from

4407 is JOC area

 
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  #186 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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I should point out in case it's not obvious that traders all over the world are doing exactly what the SLAyers are doing: poking and prodding and testing and looking to see if there are buyers at level X or sellers at level Y. If there aren't, the experienced traders get out and go back to watching. Mostly watching each other. They don't know about you or care about you. All they care about is making a profitable trade.

Absent that, they're thinking about where they're going to go for lunch. Or that hottie they saw on the elevator this morning.

 
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  #187 (permalink)
 TheTradeSlinger 
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DbPhoenix,

Do you have any more resources for combining SLA/AMT in a similar fashion to the "When Worlds Collide" page of the SLAB2015?

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  #188 (permalink)
gears
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DbPhoenix View Post
Thank you, and you're correct to wait for the extremes. However, 23.5 was busted at the open. The question one must settle for himself is how much he's willing to pay to find out if he was correct or not.

Could you further elaborate on this? Yes 23.50 was busted at the open. Traders didn't like that area. Price couldn't get to 41 and headed back to 23.50 - not quite as low the next time. Followed by a HH but then no more progress. Is that what you mean by busted? Broken through but nothing further?

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 DbPhoenix 
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gears View Post
Could you further elaborate on this? Yes 23.50 was busted at the open. Traders didn't like that area. Price couldn't get to 41 and headed back to 23.50 - not quite as low the next time. Followed by a HH but then no more progress. Is that what you mean by busted? Broken through but nothing further?

Traders "broke" 23.5 then retreated to 38.5. That tells me that 23.5 is not an important extreme, at least for entering a short. As traders don't want to go lower nor do they want to go higher, I do nothing but watch. At least till 1100.

 
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 DbPhoenix 
Phoenix AZ
 
 
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DbPhoenix,

Do you have any more resources for combining SLA/AMT in a similar fashion to the "When Worlds Collide" page of the SLAB2015?

Resources? No. But we've been in such a situation since the end of April. See posts 130 and 132.

 
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  #191 (permalink)
 Gozilla 
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With price dropping past the mean of the daily trending range and struggling at this point to get back, would the most probable outcome be a visit to the lower extreme of the channel? Price still has to sustain a move beyond June's low, if it cant it still gives us a 170 point range to work with.

Maybe getting ahead of myself with the 60 minute, but, time will tell.

Gozilla.


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  #192 (permalink)
lajx
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For today I prefer stop trading because the Price presents a slow activity (until now 0906 the Price has moved only 12 pts)

0909:



Final update (No trades for today)


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  #193 (permalink)
 Gozilla 
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With price failing to make a concerted effort beyond the range extreme would one consider this overbought? Or should the range be amended to take in the new information? Or we could go sideways for a bit.

Gozilla.


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  #194 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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You guys are getting back into the (bad) habit of over-lining. Probably because you're bored.

The limits of the range were determined by lajax' 5m hinge, 40 to 25. Yes, one could have entered all sorts of places, including a break below 25. Depends on how wide a stop one is willing to risk. 10pts seems about right.

This won't go on forever.

Of course, if one had entered where Gozilla pointed out the failure to make a new high . . .

 
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 DbPhoenix 
Phoenix AZ
 
 
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Stages of a Trader



Stage One: The Mystification Stage

This is where the neophyte trader begins. He has little or no understanding of market structure. He has no concept of the interrelationship among markets, much less between markets and the economy. Price charts are a meaningless mish-mash of colored lines and squiggles that look more like a painting from the MOMA than anything that contains information. Anyone who can make even a guess about price direction based on this tangle must be using black magic, or voodoo.

But those ads on TV are so persuasive. Earn $100,000 A Week In Your Spare Time. At Your Kitchen Table. In Your Bathrobe. All one has to do is buy Hidden Secrets of Market Wizards Revealed! (plus shipping and handling). Or that software with the red and green arrows (how hard can it be?).

So you open an account, subscribe to Level II, install your charting software, and are absolutely mesmerized by all the flashing lights and colors. DOM? You bet! And all you have to do to participate is . . . click.

 
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  #196 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
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Stages of a Trader

Stage Two: The Hot Pot Stage

Before you’ve lost all your money, the thought that you haven’t the least idea what you’re doing may prevent you from blowing your account entirely. You realize now that this is not easy, it’s hard, it’s work, but rather than chuck it, you elect instead to take the subject “seriously”. You locate your library card and/or shop Amazon. You check out -- or take much of what you have left and buy -- all the “recommended reading”. You take the courses. You attend the seminars (box lunch included). You subscribe to the chatrooms and websites and newsletters. How-To book or notes in hand, you scan the markets every day. After a while (sometimes a good long while), you notice a particular phenomenon which pops up regularly and seems to "work" pretty well. You focus on this pattern. You begin to find more and more instances of it and all of them work! It’s all true! It Works! Your confidence in the pattern grows and you decide to take it the very next time it appears. You take it, and almost immediately your stop is hit, and you're underwater for the total amount of your stoploss.

So you back off and study this pattern further. You go back to the books, back to your notes. And the very next time it appears, it works. And again. And yet again. So you decide to try again. And you take the full hit on your stoploss.

Practically everyone goes through this, but few understand that this is all part of the win-lose cycle. They do not yet understand that loss is an inevitable part of any system/strategy/method/whathaveyou, that is, there is no such thing as a 100% win approach. When they gauge the success of a particular pattern or setup, they get caught up in the win cycle. They don't wait for the "lose" cycle to see how long it lasts or what the win/lose pattern is. Instead, they keep touching the pot and getting burned, never understanding that it's not the pot (pattern/setup) that's the problem, but a failure on their part to understand that it's the heat from the stove (the market) that they're paying no attention to whatsoever. So instead of trying to understand the nature of thermal transfer (the market), they avoid the pot (the pattern), moving on to another pattern/setup without bothering to find out whether or not the stove is on.

 
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  #197 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012

Stages of a Trader


Stage Three: The Cynical Skepticism Stage

You've studied so hard and put so much effort into your trading, and this universal failure in the patterns only when you take them causes you to feel betrayed by the market and the books and materials and gurus you tried to learn from. Everybody claims their ideas lead to profitability, but every time you take a trade, it's a loser, even though the setups all worked perfectly before you played them. And since one of the most painful experiences is to fail when success looks easy, this embarrassment is transformed into anger: anger at the gurus, anger at the vendors, anger at the writers, the seminars, the courses, the brokers, the market makers, the specialists, the "manipulators". What's the point in trying to analyze and improve your own trading when there are so many dark forces out to get you?

This excuse-driven blame game is a dead-end viewpoint, and explains a lot of what you find on message boards. Those who can't pull themselves out of it will quit.

 
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  #198 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012

Stages of a Trader


Stage Four: The Squiggle Trader Stage

If you don't quit, you'll move into the "squiggle trader" phase. Since you failed with patterns and so on, you figure there's some "secret weapon", a "holy grail" that's known to the select few, something that will help you filter out all those bad trades. Once you find this magical key, your profits will explode and you'll achieve every dream you ever had.

You begin an obsessive study of every method and every indicator that is new to you. You buy a whole new series of books, attend new and different courses, sign up for new and different newsletters and advisory services, register for new and different trading websites and chat rooms (you hear this guy really knows his stuff). You buy more elaborate software (100s Of Indicators And Studies!). You buy off-the-shelf systems (Guaranteed Results!). You spend whatever it takes to buy success.

Unfortunately, you stack so much onto your charts that you become paralyzed. With so many inputs, you can't make a decision, particularly as they rarely agree. So you focus on those which agree with the direction of the trade you've taken (or, if you're the fearful sort, you look only for those which will prove to you how much of a loser you think you are).

This is all characteristic of scared money. Without a genuine acceptance of the fact of loss and of the risks involved in trading, you flit around like a butterfly in search of anything or anybody who will tell you that you know what you're doing. This serves two purposes: (1) it transfers to others the responsibility for the trade and (2) it shakes you out of trades as your indicators begin to conflict. The MACD says buy, the sto says sell. The ADX says the market is trending, the OBV says it's overbought. By the end of the day, your brain is jelly.

This process can be useful if the trader learns from it what is popular, i.e., what other traders are doing, and, if he lasts, how to trade traps and panic/euphoria. And even though he may decide that much of it is crap, he will, if he doesn't slip back into the Cynical Skepticism Stage, have a more profound appreciation – achieved through personal experience – of what is sensible and logical and what is nonsense. He might also learn something more about the kind of trader he is, what "style" suits him best, learn to distinguish between what is desirable and what is practical.

But the vast majority of traders never leave this stage. They spend their "careers" searching for the answer, that perfect setting, that ultimate tweak to their backtest, and even though they may eventually achieve piddling profits (if they don't, they will of course eventually no longer be trading), they never become truly successful, and this perpetual not-quite-failure not-quite-success can have debilitating consequences for the psyche.

 
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  #199 (permalink)
 DbPhoenix 
Phoenix AZ
 
 
Posts: 470 since Dec 2012

Stages of a Trader


Stage Five: The Inwardly-Bound Stage

The trader who is able to pry himself out of Stage Four uses his experiences there productively. The trader learns, as stated earlier, what styles, techniques, tactics are popular. But instead of focusing entirely on what's "out there", he begins to ask himself some questions:

What exactly does he want? What is he trying to accomplish?

What sort of trading makes the most sense to him? Long or intermediate-term trading? Short-term trading? Day-trading? Trend-trading? Scalping? Which is most comfortable?

What instrument -- futures, stocks, ETFs, bonds, options -- provides the range and volatility he requires but is not outside his risk tolerance? Did he learn anything at all about indicators in Stage Four that he might be able to use?

And so he "auditions" all of this in order to determine what suits him, taking all that he has learned so far and experimenting with it.

He begins to incorporate the "scientific method" into his efforts in order to develop a trading plan, including risk management and trade management. He learns the value of curiosity, of detached interest, of persistence and perseverance, of taking bits and pieces from here and there in order to fashion a trading plan and strategy that are uniquely his, one in which he has complete confidence because he has tested it thoroughly and knows from his own simulated trading and real-money experiences that it is consistently profitable. This eventually becomes his “edge”*.

He accepts fully the responsibility for his trades, including the losses, which is to say that he understands that losses are inevitable and unavoidable. Rather than be thrown by them, he accepts them for what they are, a part of the natural course of business. He examines them, of course, in order to determine whether or not some error was made, particularly one that can be corrected, though true trading errors are rare. But, if not, he simply shrugs off the loss and goes on about his business. He understands, after all, that he is in control of his risk in the market.

He doesn't rant about his broker or the specialist or the market maker or that vast conspiracy of everyone who's trying to cheat him out of his money. He doesn't attempt revenge against the market. He doesn't fret. He doesn't fume. He doesn't succumb to hope, fear, greed. Impulsive, emotional trades are gone. Instead, he just trades.

*the knowledge gained through research and testing that a particular market behavior offers an acceptable level of predictability to provide a consistently profitable outcome over time.

 
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  #200 (permalink)
lajx
Bogotá
 
 
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Context 06/07

Although the PA shows an uptrend in the 5m chart, I was unable to sync with the market


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