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Trading Price Action On Renko Charts - Live Trades
Thanks for checking out my journal. Regarding your question, I don't have anything against forex. It's just never suited my personality as well as other markets - CL in particular. I actually don't much like the index futures either, though.
One thing that makes forex difficult for me is location. I would prefer to trade the London session, but I'm on the US East Coast, so I would have to get up at 2am EST. There's usually enough to trade in the US session, but I'm always saying to myself, "man, I wish I had been up to catch that." I have actually grown to like forex more over the last few months, though, so it might become "my market" in the future.
If you have any other questions or feedback, please post away. Have a great weekend, too!
I've spent some time reviewing my plan this weekend, and I noticed a few things (personal opinion on all of these):
1. It's harder to identify strong breakouts on renko charts. Sometimes it's easy, like when price moves 30-40 ticks in 5 minutes, creating 10 bars or so on the chart. But overall, assessing the strength of breakouts might be easier on the time/tick charts.
2. It's easier to identify legs clearly on renko charts. This makes trading pullbacks with limit orders much easier for me.
3. I often find myself saying "oh, yeah, I think that's going higher," but I'm always waiting on the pullback. That doesn't make a lot of sense to me since I'm willing to use a wide stop. But due to 1, I never feel confident enough to buy/sell the breakout. I tend to miss a lot of what I think are high probability trades by waiting.
In light of all that, I'm planning to take a week or two and revisit time/tick charts - with the focus on learning more about trading strong breakouts. I may also try scalping above/below weak signal bars. I've never been willing to use a wide stop or scale in in the past, so I never really took too much time to study these things. For the experiment, I'm planning to look at 5min, 10min, 200 tick, and 500 tick charts - not all at once, of course. EUR/USD market.
My goal here is just to learn more and expand potential opportunities. I have a viable plan already that can be profitable (when I don't mismanage myself), but I think it would be much better if I could add strong breakouts to it. I'll be trading real money for this since I don't feel the same pressure in sim.
There is no match of time based chart if you really want advantage of price action.
What better renko and like bars lack is "time consumed" component which often occur prior to breakouts.
As you are going for experimenting then try time indicator ( i think its available in futures.io (formerly BMT) too but have seen in support forum, google it ) that will plot the time consumed by bars. Exceptionally time taking renko and like bars will be on self notice if they precede the breakouts.
Nothing really spectacular today, but I did one thing well: I sat through pullbacks without getting too uncomfortable. I've always liked the "fast money" aspect of scalping, so this is good progress for me.
Regarding my thoughts yesterday: I'm not sure I should change too much after all. My first instinct when I'm in a slump, or I notice issues with a method, is too add/switch/change, etc. But I'm not sure that's the best course of action since I actually have something that makes sense to me - and a method I am comfortable trading. It probably makes more sense to improve and build on what's working well without tossing out the whole framework.
After thinking about/reviewing things more, I noticed that I really have 3 large issues with the "new method":
1. Losses when I'm on the wrong side: sometimes I misread things, or the low probability event occurs. And sometimes I get confused and am not sure what's going on. The result is usually a large loss because price blows through my limit order and scale-in entry. Then I panic, mismanage, and take a large hit. I've considered not scaling-in and just using the swing stop. The problem there is trading ranges. Because TRs tend to run past S/R and then reverse, I think this will result in too many losers even though my read is correct, if I don't scale in.
2. I often miss the strongest part of the trend due to waiting on the 66% PB level. I've tried to trade the 33% levels with some success but more often than not, I seem to get trapped at the extremes. But if I think the MKT is going up, and it's doing so in a convincing way, then it doesn't really make much sense to wait on a deep PB because it probably won't come if the move is as strong as I think. This is the main reason I considered trading strong BOs.
3. Scaling-in - I'm not sure I'm totally comfortable doing it. I'm also not fast enough sometimes to know that I am wrong and exit (and too stubborn to exit when I should sometimes...)
I think I've come up with a simple solution: Wait for the market to turn up/down at the 50% or 66% level, and enter with a stop above the signal bar. Use the swing stop instead of the tight stop. This will eliminate those times when the market just blows right through everything, catching me in a strong reversal. Using the 50% PB level will also allow me to catch some great moves. I'll still miss some moves, but this should give me enough trades that I really won't care if I miss some. Using the swing stop keeps me in a good trade if the MKT makes another small push against my position. (I mentioned in another post that stop entries were inconsistent for me. But after studying my journal, I think it's more a problem with tight stops than it is the entry itself.)
As far as management and profit targets, I'm not sure what I'm going to do there yet. And I'm not sure how well this will work in TRs either. For an average TRD (bull leg to the top example), I've considered waiting for a signal bar to signal a failed bull BO, selling it on a stop, adding on 20 ticks higher, and using a 40 tick stop. Or base it all on the height of the range:
-Wait for the signal bar and sell
-Add on higher at a distance equal to 1/2 the height of the range
-Stop above a MM target based on the height of the range
I haven't tested that yet, though. One idea at a time for me, so I'll test out the stop entries at PB levels for a while. I've decided that being less discretionary in my entry was a good move for me. By having a 'default' method of entering trades, my mind is clearer, and I can focus more on reading the market instead of trying to figure out how to take a particular trade.
Final side note: I think I am going back to red/green colors for the charts. I don't know if it's related, but I feel like my trading has been worse since I switched to the gray and blue.
So I'm not sure if this will help you or not but I have a couple suggestions based on similar frustrations. You mentioned the 33% and 66% pullback, but I actually decided on a 44% fib entry. Right there in the middle of the popular 38.2 and 50%. I always liked the 50 but was never really sure whether I should place the order 1 pip above, right at it, 2 pips above, etc. now I place it directly at the 44% as kind of the best of both worlds with a pretty high probability of entry fairly shallow or deep.
If this is where I am establishing my initial position I like to scale in all around this area. It's a little nerve racking at first, but I enjoy trying to get a better avg entry price if the pullback goes deeper. And this segways into my next thought...
If I do not get a pullback to at least the 44% and the market reverses with conviction, then I will set an entry order at the breakout for two reasons. The shallow pullback generally indicates strength to me, and I now have an even tighter risk spread due to the short swing. I will generally put on half the position at the high, in case of a weak breakout(like today) and scale in the second half on the next pullback.
Have you considered watching the time chart next to your Renko to gather possible ideas about your breakout trades?
Thanks man; I appreciate the suggestions. I'll definitely have a look at the 44% area.
I got the idea for the 33/66% ones from some of Al's ideas. Bull example: He says that in a bull channel, bulls will look to buy PBs in the bottom 2/3 of the last leg in the channel. They expect the low to hold. The channel may be weak or strong, but either way its better to buy a PB instead of the high since channels are constantly pulling back and have 2 sided trading all the way up.
In a trading range, buy in the bottom 1/3 of the last bull leg. The middle of the range is generally a point of neutrality, so buying in the middle is not as good since both bulls and bears are initiating positions there. And the middle of that bull leg is probably somewhere around the middle of the range.
That's my quick paraphrase of the ideas. They make good sense, but I think I was trying to be too precise with it
It's funny you mentioned that because that idea also occurred to me yesterday. In addition to looking at them for breakouts, I think they may help with trade management, too. Since I'm such a scalper at heart, it's hard to hold through all the smaller reversals that I see on the 4 renko. But looking at the 5 or 10 minute chart, it seems that I won't see some of those smaller moves, so I might be able to hold a bit longer by using them.
I always try to keep it simple and avoid looking at too many different charts since I'm already prone to over-thinking things. But in this case, it makes sense to give it a try since I'm looking for very specific information.
Thanks again for the insights. I hope your trading goes well, too!
I absolutely understand the desire to keep it simple, and the need to experiment enough with each step to make it your own. I believe they are both very important to long run success.
Looking forward to seeing what you decide on and the results going forward.
Small winning day. I could have done much better, but I was fighting myself again. I seem to struggle quite a bit on these large TRDs that have big legs. I'm not sure why that's the case, but I definitely need to come up with a solution. I read the market accurately on these days, but I always take trades that are contrary to what I believe the market is doing. I think I'm trying hard to follow my plan/rules, but days like this require a bit of "cognitive flexibility." So, I get caught up in following rules instead of doing what makes sense for the current market context.
Decent day. I got started a bit late this morning, but I felt calm and relaxed. I tried hard to listen to myself, trust my read, and place trades that made sense with what I thought was going on. I'm still working on management and will be testing some ideas soon - more to come on that.
I decided to call it a day once the MKT started reacting to news about Greece. I don't care much for politicians, and I dislike the news/media even more. So, I could feel myself getting annoyed and decided it was best to stop for the day. (That's why the last trade was SIM) Plus, I just got my copy of TraderMind by Steve Ward in the mail. That will probably be a better use of my time right now.
I have actually grown to like forex more over the last few months, though, so it might become "my market" in the future.
