I've come up with a stripped down set of rules for trading S/R levels during fast market conditions.

I've watched about 10 sessions over the last few months where volatility has come into the market in a big way and price shoots off so quick the YTC PAT trading strategy I'm using just says "don't trade". I see the market still interacts with S/R in a big way though. So I stripped down the YTC PAT rules for trading break-outs at S/R levels.

Break-out continuation setup: when price penetrates the S/R level, wait for the pull-back to take price back over the S/R line. To be definite about this and to allow time to react, penetration of the S/R level means at least 1.5 pips gone - and the pull-back must retrace 1.5 pips back over the line too. Then place the entry stop order right on the line.

If filled, put the stop 1 ATR away from the line. I use an 8 bar 3min ATR.

Put the target 1.5 pips in front of the next S/R level.

Keep them there until one or the other is filled - the market should be moving so fast that there is hardly time to consider anything else anyway.

Break-out Failure:

after price touches or penetrates S/R, if it doesn't continue by the rule defined above, then enter a reversal when the next bar forms a reversal pattern - a reversal bar, a doji break etc.

Put the stop at least 1 ATR away or at the S/R level if further.

Put the target 1.5 pips in front of the next S/R level.

Don't take the trade if the R:R is less than 1:1.

Also only take one entry at any S/R level interaction - if it fails, it fails - wait for the next opportunity at the next level. Trying to do more will lead to errors (for me for sure) and probably wouldn't help and just cause whipsaws.

The 1.5 pip rule is actually feasible since price actually hovers around the S/R levels sometimes, even if it sounds pointless in a fast moving market.

I tried that out using market replay on Thurs 9th Feb last week and it works well. When I've got time I'm going to run market replay over other recent big days where I can download the Ninjatrader market replay data.

Of course if a big day happens while I'm sim trading, I'll trade it too and see how the results turn out. If it turns out that this was all just co-incidence that this method brings a decent profit, then that's fine - it will still be good practice making quick decisions which can only benefit my normal strategy.

Late posting these charts from Wednesday after I had a visit to the dentist on Wednesday afternoon.

A pretty good day for trading YTC PAT if you can - there was plenty of opportunity there and I came away with a small handful. Guess I would have been seriously disappointed if I'd still managed to lose money.

Last trade was a real downer, getting myself stopped out again to the pip by drawing my stop in too close too quick after a good entry and then watching a good move go unexploited.

That is a definite sign that my focus and concentration is finished - so I finished the session at that point, I'd already done 3 hours.

Totally messed up my schedule today so I ended up trading the US opening from 13:00 to 15:00, just in time for the start of the bull run up today.

Another day full of great setups, so lots of pips available and I managed to turn a profit out of it - two profitable days in a row, that's a first. If tomorrow goes sideways all day, that will be the real test, to see if I can come out of it with a profitable week.

Same old problems today as ever getting stopped out to the pip. Instead of trailing my stop right on the extreme pip of the big bars, I need to leave just 2 pips gap from where I think it should go and that'll save my position. It's worse on short trades because the chart charts the bid, and I get filled at the ask which is always a pip or so above. So, short trades, add 3 pips on to the price where I reckon the stop should go, and long trades it can be just 2 pips.

I'm checking out the Interactive Brokers' volume feed which is apparently a big fiction - but I'm going to see if I can get anything useful from it anyway - heard enough about volume in recent days to think the info would be useful if it was reliable.

Hi Adamus. Just saying while your entries or stops may not have been precise as you wanted , your trades look like fine entries based on PA to me with a decent amount of ticks gained. And without a plethora of indicators and good use of s/r. Nice.

Yay, a profitable week. Just. Up on pips but commission makes it look a lot more like just break-even.

Have to do a lot more learning to get some more of what's on offer.

Paid way too much attention to doji breaks than I should have done - I guess I'd begun to think they were silver bullets. Made 3 trades where doji breaks swayed my decision - in fact at least 2 trades based solely on doji breaks, disregarding whether it was my setup or not - stupid. Won't be doing that again.

Missed 3 trades completely - only saw them after the session was over. That's pretty bad - need to put something in my checklist to remind me to think of a reversal entry when I'm visualising what might go wrong.

Started out pretty tired this morning and it really showed. I should not have made trades 3 & 4 when I'd been trading for 2 hours already (or more) and I had just pushed through the fatigue. Just thinking I'm focused doesn't mean I am focused - slight difference. Wish I could figure out a physical test for it.

Adamus 

I've come up with a stripped down set of rules for trading S/R levels during fast market conditions. I've watched about 10 sessions over the last few months where volatility has come into the market in a big way and price shoots off so quick the YTC PAT trading strategy I'm using just says "don't trade". I see the market still interacts with S/R in a big way though. So I stripped down the YTC PAT rules for trading break-outs at S/R levels. Break-out continuation setup: when price penetrates the S/R level, wait for the pull-back to take price back over the S/R line. To be definite about this and to allow time to react, penetration of the S/R level means at least 1.5 pips gone - and the pull-back must retrace 1.5 pips back over the line too. Then place the entry stop order right on the line. If filled, put the stop 1 ATR away from the line. I use an 8 bar 3min ATR. Put the target 1.5 pips in front of the next S/R level. Keep them there until one or the other is filled - the market should be moving so fast that there is hardly time to consider anything else anyway. Break-out Failure: after price touches or penetrates S/R, if it doesn't continue by the rule defined above, then enter a reversal when the next bar forms a reversal pattern - a reversal bar, a doji break etc. Put the stop at least 1 ATR away or at the S/R level if further. Put the target 1.5 pips in front of the next S/R level. Don't take the trade if the R:R is less than 1:1. Also only take one entry at any S/R level interaction - if it fails, it fails - wait for the next opportunity at the next level. Trying to do more will lead to errors (for me for sure) and probably wouldn't help and just cause whipsaws. The 1.5 pip rule is actually feasible since price actually hovers around the S/R levels sometimes, even if it sounds pointless in a fast moving market. I tried that out using market replay on Thurs 9th Feb last week and it works well. When I've got time I'm going to run market replay over other recent big days where I can download the Ninjatrader market replay data. Of course if a big day happens while I'm sim trading, I'll trade it too and see how the results turn out. If it turns out that this was all just co-incidence that this method brings a decent profit, then that's fine - it will still be good practice making quick decisions which can only benefit my normal strategy.

Tried this out again today on another day of fast market - Tues 2012-02-09 - and I couldn't get to grips with the market replay data from NinjaTrader, compared to the Interactive Brokers data I was using before. NinjaTrader's Euro / USD forex market replay data is full-pip, i.e. no half-pips, which is a bit weird, and its bid-ask spread is 2 pips compared to 0.5 to 1 pip with IB.

On top of that, I couldn't work out what S/R levels were good or not for 9th of Feb - there were just a ton of swing highs and swing lows from the consolidation period in the prior 2 weeks, it made things too complicated. I ended up with too many S/R levels and trying to trade it felt like playing pinball at high speed.

I gave up on the plan as a sidetrack and went back to coding some shortcut buttons for the chart trader.

Took the day off because of Labor Day in the US.

I don't think I like that advice not to trade holidays.

Spent the day trying to work out how to trade high volatility (and couldn't) and programming a few buttons to make a few common NinjaTrader things that I do into one click operations.

Been sick with flu since Wednesday, completely incapable of rational thought until today.

Catching up on stuff, saw that Lance Beggs has posted an excellent article on his website about moving stops to b/e which is what I'm trying to do every trade:

Sometimes a Free-Trade is Not the Best Option | Articles-Risk-Management

Hopefully Monday next week everything will be back on track, although I'm sure my progress will have taken a hit with a whole week out of the markets, knowing the law of progression and regression.

Get well!

Better to abstain from trading in the condition you were in, than trying to trade because you felt you needed to.

First day back after 10 days without trading and it shows. Although I religiously looked over my notes prior to trading to try to refresh all the critical trading knowledge I possess - didn't look at any charts though, forgetting to go over them was not clever. Took me all day to get back into trading as a result, because effectively it was mainly Complex Pull-Backs on offer. It was a bit like choosing the wrong subjects to revise for an exam.

Anyway, with the market in quiet trending mode and the break-outs not really offering good entries, the Complex Pull-Backs in the trend were the best solution, since they look like reversals and trap counter-trend traders so that there's some momentum to ride out of the setup area on when the trapped traders bail out. The danger is of course is that the trend does reverse, and annoyingly today of all the CPBs I chose to trade, the only one I took was the damn point where the trend reversed.