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Hi Eric this is really interesting because I trade the two setups on your chart! Until recently, I was trading the first setup with the help of an indicator and volume. There are a few volume patterns that I use to increase the reliability of these trades. I don't know if you're open to the idea of using volume or not. If you are, take a look at my thread on volume, specifically this post shows the volume patterns as a paintbar. I like paintbar because it keeps me focused on price. I'd love to get your comments on using volume to increase the reliability of catching these turns.
For the 2nd setup, I've been trading that for 2 weeks without indicators and it has worked pretty well for me. Basically I look for a swing high and then I trade either a breakout above this high or a breakout below the swing low (after the high). I find both to be good probability trades. This week I'm looking to see if adding the volume patterns can increase the reliability of these trades. I didn't trade the first pattern (the pullback) this week cause I was focused on the 2nd setup but I also want to see if I can wean myself off the indicator I'm using and trade it using price & volume only.
Thanks for starting this thread, I hope to see more trade examples.
I found a chart from CL from Friday. You can see the last 2 texts I added about simming news and testing runners, I was looking to enter on a break of the swing low after price failed to make a HH. I believe this corresponds to your setup, please let me know. I won't post an example of a pullback trade because I use indicators (even if they're non-standard ones) and that's off topic.
Can you help answer these questions from other members on NexusFi?
The breakout/breakdown entry is great if price is trending . That can get you chopped to death in a range so look out for that for sure . Volume hasnt helped me at all in the past except in hindsight , I found it to be too subjective at least for volume divergence . Whats low volume today could be high volume tomorrow .
I would like to be able to apply indicators to price action , maybe to effectively quantify where the strength lies . My idea has been to use channels or bands to spot opportunities . What I would really like to try is Keltner bands on two timeframes and only trade retracements on the lower timeframe when the two directions agree .
I didnt trade Friday because of the rollover taking place . I only trade the ES and I see rollover week as low probability trading especially on friday . I'll save my money for the week after expiry .
I have more price action observations to post during the weekend .
My P&L for last week was 5 trades , 3 win , two lose for - 2 ticks total .
Heres another interesting look at price action I found on YTC . This site has some good insight on learning to trade price action/formation and possibly confirming them with indicators .
You're right about breakouts not working in consolidation and trendless drifting days. But I am learning to spot this by looking at the price. I don't need ADX to tell me if price is trending or not. I don't need ATR to tell me if the market is moving or not. But I can see how others may find those useful. One example is if there are a lot of overlapping bars I stop trading. that has saved me from a lot of losses although sometimes I still fall for it.
For daytrading I look at the volume compared to the previous bars, and to the extremes of the last 20 bars. So yesterday's volume doesn't matter, just like yesterday's trend or anything else.
I don't know if you saw it, but in my volume thread I post examples every day showing how volume can signal reversals. If you're interested please take a look and then we can discuss this further.
Sounds like a good approach but I do not know what keltner bands are. My belief is that price does what it wants and doesn't even know about Keltner bands. Unless a good percentage of traders are using the same indicator and same setting, it's has no predictive power for me. I find they often work but when they don't I get really screwed and then you start second guessing and that leads to failure (for me). But I don't try to convince anyway, I just show that it can be done without indicators and others show it can be done and people choose their own way.
Your analysis, no matter how skilled, is still just your point of view. Your assessment of any directional bias, and ultimately your entry or exit decisions, are based on your mental model of the markets; your beliefs about how the markets work.
We don’t trade the markets. We trade our model of the markets. And a model, no matter how accurate, is still just an approximation of the market.
It’s just your opinion.
And you’re trading against other traders who have examined the same information as you and developed a completely opposite opinion.
It is possible to assess both a bullish and a bearish bias to any market at any time, in particular when allowing analysis over different timeframes or analysis methodologies.
Neither assessment is right. Neither is wrong. They’re just different ways of analysing the same price action. Both may profit depending on holding times, despite their completely opposite entry direction. Likewise, both may lose, once again depending on the trade exit.
It’s very important to understand this. We make our trading decisions based on our analysis; analysis which is based on an imperfect model of the markets, and carried out by an imperfect analyst, subject to numerous human performance limitations in the area of perception and memory, and subject to numerous decision making errors through the heuristics and biases that cloud our judgment.
We trade based on very flimsy evidence.
If you want to make it in this game, get rid of any thoughts that technical analysis is some form of magical predictor of future price direction. And the same goes for any other form of analysis, whether fundamental, quantitative, planetary or whatever else turns you on."
" We trade based on very flimsy evidence " - Thats the part that meant the most to me in this article , It means ( to me ) that its a waste of time to spend a lot of time deciding on the best course of action because price will either go up or dowm - not trying to steal your mantra TRO .
Yes TRO , you're correct - price action trading or as it pertains exclusively to trading .
