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Blind Entries
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Blind Entries

  #11 (permalink)
Trading Apprentice
Daytona Beach, FL
 
Futures Experience: Advanced
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Headstrung's Avatar
 
Posts: 8 since May 2012
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Nicolas,

I absolutely agree! High volume is also a sign of a reversal, in most cases key reversals. In reference to what I meant, low volume at a S/R point is more of a short term setup, these occur more frequently when dealing with hourly pivots. I apologize for not being clearer in my previous post. Regarding traders putting complete faith in S/R points, without knowing the volume impact around the time price reaches those points, is probably not a great idea. Thank you for the correction!


Last edited by Headstrung; August 25th, 2012 at 10:46 PM.
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  #12 (permalink)
 Vendor: diversifyportfolio.com 
PTA, Gauteng
 
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Im hoping to revive this thread on the topic of entering blind based on pre-determined levels vs waiting for some sort of confirmation at the level before entering.

I constantly go back and forth between which approach is better. I actually have two methods in which I enter reversal trades depending on the state of the market at the time. One enters blind using limit orders placed ahead of time, the other waits for specific order flow patterns on the footprint. Surprise, surprise, my expectancy on both methods is almost identical. I have zero additional edge by waiting for confirmation.

One thing that is important however is that context is key for me when trading levels blind. I dont just identify a SR level and then place a limit order at it. It's all about where did the market open in relation to yesterday, which direction is it moving, where are the likely targets, where is the market showing acceptance. Once all that is determined, I simply place a limit order at my level and sit back doing nothing.

The main pros/cons I think of each method are:
Enter blind:
  • Better risk / reward
  • More focus on the big picture rather than intraday noise
  • More chance of being run over

Wait for confirmation:
  • Less risk of being run over
  • A higher win percentage in theory (however personally my results show zero difference)
  • Potentially worse risk:reward

I am currently in the process of manually going through charts from January onwards, documenting every trade with a blind vs confirmation based entry. It's going to take quite some time, but a worthwhile exercise I think.

I think it's worth keeping in mind that a lot of this debate is probably more relevant to position traders, not scalpers. It is relevant for those who prefer trading the major move of the day and are ok with larger stops that need to be placed according to market structure. I think in the case of scalping it is important to get as close to the best price as possible and not take much heat. However when position trading, it is fine to enter in a zone and then just wait for the market to play out, taking cues from context rather than every tick.

I know full well the adage that you need to see how the market reacts at a level before trading it. But when saying that, have you really done a statistical analysis on both methods (blind vs confirmation)? Also, did you take the current context of the market into account or did you just place an order at a level because it held price in the past (this is not context).

Does anyone else have any opinions on this? It would be especially interesting to hear from traders who enter blind.

Diversification is the only free lunch

Last edited by DarkPoolTrading; September 11th, 2014 at 04:57 AM.
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  #13 (permalink)
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My best guess is that the heuristics you are using to place a limit order or a market order are in fact the same, the only difference is whether you got the information yesterday or today, and that's not as important as you maybe want to give it credit for.

The important part is that 'you' have already got a good idea of a useful level and what to do there, many will never get that.

Often we think we are doing something with what we see and our brains are actually using a much simpler, but deeper, process to tell our body what to do. This has been proven in just about every profession on the planet, I doubt we're any different as traders.

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  #14 (permalink)
 Vendor: diversifyportfolio.com 
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ratfink View Post
My best guess is that the heuristics you are using to place a limit order or a market order are in fact the same, the only difference is whether you got the information yesterday or today, and that's not as important as you maybe want to give it credit for.

The important part is that 'you' have already got a good idea of a useful level and what to do there, many will never get that.

Often we think we are doing something with what we see and our brains are actually using a much simpler, but deeper, process to tell our body what to do. This has been proven in just about every profession on the planet, I doubt we're any different as traders.

You make a good point that a trader can either get their levels from prior days or from the currently developing session. However I think the blind vs confirmation debate applies regardless. In one scenario a trader identifies their areas of interest pre-market and then has the option to trade them blind or with confirmation. In another scenario a trader determines a swing low intra-session that they feel is significant. They can either trade that level blind should price return,...or they can wait to see how price behaves there.

If a trader is operating under the assumption that they will be wrong roughly half the time, ie: +-50% win rate. Then is there really much edge to be gained by waiting for confirmation which results in a worse R:R. This is obviously assuming that the methodology used to identify levels is solid. This illustrates again that this discussion is probably not applicable to scalpers who care about high win percentages.

Is waiting for confirmation a psychology crutch that we don't really want to admit, or is it statistically sound? Over a large sample of trades does the reduced R:R of waiting for confirmation make up for occasionally getting run over by trading blind?

Im still sitting firmly on the fence, as evident by the fact that I use both methods depending on how the market approaches the level. But one thing seems to be clear from my stats thus far, my expectancy for both blind vs confirmation is almost identical. But more testing needs to be done.

hmmm...

Diversification is the only free lunch

Last edited by DarkPoolTrading; September 11th, 2014 at 10:00 AM.
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  #15 (permalink)
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Every day I scan the market for stocks.

I usually hold for several weeks so what happens in one day is unimportant in the grand scheme, usually. Instead I just want to put the position on after I've got the setup I want on the daily.

That said, there is still a 'signal' just on a bigger chart. I am not sure it's fair to say I entered blind. I do just enter at the market when I find a setup I want to join.

Mike

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