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DbPhoenix
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Everything posted by DbPhoenix
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If you're still working through your fears, then you're doing just what you ought to be doing. However, while a defensive game will prevent you from taking heavy losses, it won't get you very far into the profit column unless you luck into an easy trend day. The SLA is fine if you have nothing to guide you. But focusing on lines rather than context when context is available is self-defeating. Here, you had a rejection of 14. This rejection took you all the way through the pre-mkt congestion and a break of the SL to a ret above all of this, and this you took. However, the next "extreme" was not due until 32, then 34, and finally 40. Therefore, if you can shift toward how price behaves when it reaches each of these extremes, e.g., how far it retraces, whether it threatens the last swing low, whether it's a short, sharp ret or a sideways congestion, rather than whether or not price breaks a line, you may then find no reason to exit until price reaches the last extreme, which in this case is 42. Even then you may elect to stay in since price shows no inclination toward failure. I should also point out that it is necessary to habituate determining (1) what could or should have been done to improve the day's trading and (2) what can and should be done to improve one's trading during the next session.
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In order to complete the preliminary work for a testable hypothesis, you'd have to define just about every term you used in your previous post: MR environment profitable high information risk reversals extremes confirmation ret parabolic action momentary breathing room swing trend. short spikes very long climactic spikes steady (1) medium (2) swings extra confirmation Defining "broad areas" isn't going to do much good at crunch time.
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You have an awful lot of defining ahead of you.
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What hypotheses are you testing?
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While I encourage hypothesizing and testing, I should point out that the SLA is continuously adaptable and self-correcting, if employed correctly. As Douglas points out, every moment is unique and the outcome of any given trade is unknowable. If one is able to place better trades by assessing probabilities, all to the good. But, as the funds say, past performance is no guarantee of future results. Therefore, being able to evaluate the dynamics of a given situation in the moment is critical. If one can't do that nor learn how to operate in an environment of uncertainty, then this approach will be of little or no benefit.
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8-9pt range. Tons of overlap.
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Looking forward: .......................
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Unfortunately, by using bundled tick charts you miss out entirely on, in this case, the lengthy congestion, which is fine if you don't find that informative.
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Tons of scratches, trades that don't go anywhere, lots of overlap, multiple hinges and even hinges within hinges. The pattern of making a quick opening high and low and settling into the midpoint for an hour or so was characteristic of the top of the internet bubble. This is not to say that we're topping. On the contrary, we have been moving upward fairly consistently for a while. But we are clearly grinding. You're going to have to back up a little in your preps. If, for example, you left out the aftermarket consolidation on the 21st, you would have no reason to think that 34 had any importance on the morning of the 22nd. You might therefore see that plunge as a cascade rather than a climactic low and wait for a continuation rather than take the VREV. If you recognized it too late but recognized it nonetheless, then you'd be prepared to wait for the test, which you got at 1025. Otherwise you might see it as another leg down and short it. Same thing yesterday when price bounced off the midpoint of the previous day's range. Not that bouncing off the midpoint of the previous day's range is a lock, but the trader should at least be aware of the fact that it is there so that the reversal does not appear to be coming out of nowhere. Trading reversals is more nerve-wracking than trading the extremes of TCs and TRs with retracements. And there's always the option of waiting until the market begins to form these again before re-entering the market. But learning how to trade them is worth the doing if only in sim.
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The SLA is not a perfect system, but one thing it does do if the trader lets it do its job is to force the trader to wait for the right setup rather than endure the enter SO enter SO enter SO enter SO whack-a-mole trap. One can run the numbers and figure out the average and worst-case recoil after entry and how far one can expect price to move in one's favor before his entry is "safe" and so forth, but all of that flies out the window once one is in the trade, particularly with real money. Even worse, he can then review all of this in hindsight and begin the "if only I'd stayed in" business, after which it all begins to come apart. Waiting for a retracement in a fast-moving market can be frustrating, but the savings in being forced to do so outweighs the alternative which is too often being pecked by ducks. And if one takes the first/best entry and gets stopped out, that in itself can be a clue as to how things are going to go. That we formed a hinge at 1018 or so provided the confirmation that we had been and were going to remain range-bound and that there was no longer any reason to trade, at least until all of that resolved itself. It's understandable that one might feel as though the market owes him something for his having done all that prep. But an unacknowledged benefit to having done all that prep is that it strengthens his resolve to do nothing, whereas he might otherwise get sucked in to a cycle of small losses.and the resulting frustration, which is not conducive to clarity and focus.
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Context is important. The market isn't after all going to sit at its opening price all day. However, when it comes to the opening itself, the macro context isn't as important as what traders are doing just before. Here, the macro (left) matters in more ways than one. However, if one is looking for clues as to how to trade at the open, an extremely tight range that lasts for 90m (right) is a big one. The trades are suggestions.
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I'm the moderator and I think it's just fine where it is. There is much that I don't say because it will have little effect. For one thing, this business of backtesting MAEs and stops. The trader has to find these things out for himself, like learning not to touch a hot stove. While one may detect what appears to be a pattern in the extent of MAEs, it is more likely going to be bunnies. And even if it isn't, so what? Each situation is unique, and if one doesn't follow the drill, he will end up making trade after trade after trade, each one being stopped out just at or past that level that he has determined via backtesting to be the MAE. The backtesting has to be done, but not to determine the MAE. The backtesting has to be done in order to convince the trader that the backtesting is a waste of time and effort (although one could argue, as I do, that learning that it's a waste of time and effort makes the time and effort worth taking and doing). Each AE has to be evaluated in real time according to the context and to what traders are doing in the moment. Otherwise, all these efforts to determine the MAE are essentially little more than striving to insulate oneself against fear, or at least to avoid having to make RT decisions.
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I'm copying this here partly because it has as much to do with the subject of fear as it does with trading the SLA, and I want to avoid taking the SLA thread too far off-topic. Beyond all this, however, I suggest that concentration and focus are as important as developing a robust trading plan. There is nothing casual about daytrading. It requires attention. But the attention must be of the right kind. The trader must be honest enough with himself to determine whether he's thinking about what traders are doing or about the status of his trade. If the latter, he needs to stop and pull himself together as no purpose will be served by his driving through the rest of the session. By focusing on the latter rather than the former, his results will only get worse. It is not possible to know exactly what the market will do once the opening bell rings much less what it will do once one has entered a trade. But there is a world of difference between the trader who tenses up and holds his breath while the trade unfolds -- hopefully away from his entry point -- and the trader who understands that anything can happen and anticipates the market's moves, is fully confident that he knows how to deal with those moves, and that he will act appropriately when required to act. If the focus is on these elements, there is no space for fear. It becomes an indulgence.
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If there is a disconnect between RT trading and hindsight review, little progress will be made. For example, if you are to enter at the first retracement after the DL is broken, why not enter at the arrowed bar? If you do, what is your response when price immediately moves against you? If you exit, how likely is it that you will see the rejection of 70 and re-enter? If you don't re-enter for whatever reason, what will be your emotional response if the trade moves on without you? If you don't enter before the bell, will you notice the rejection at 70 and enter below that? If not, why not? What will be your response if you short there and the trade moves against you? How far will you allow it to move if it does so? As for the SL, it might be more acute than you have drawn in hindsight (the dotted line). Either way, are you going to notice the hinge? Are you going to exit? Are you going to wait? For what? Are you going to notice the rejection of 57? What will you make of it? Will you view that as a Dog and enter a new short (if you exited)? What will you make of the subsequent rejection of 51? Will you be prepared to exit your short, if taken, and enter a long at 53? Are you going to wait that long before drawing a DL? If you take the long, are you going to allow price to fall all the way from 61 to 53? Is there something not plotted, such as the 50% level? When you see price reject 53, do you have a rationale for re-entering a long? If you take it, do you see any particular reason why price might not be able to get past 67? If so, are you going to exit there or wait for a break of the DL or look for something else? What are your criteria for action? Looking at it from a DL/SL perspective, would you not draw a DL beginning with 51 as shown? If not, why not? Would you exit at a break? What constitutes a "break"? There is no subsequent retracement for a short, but then there's no subsequent retracement for a long after the SL is broken. Is the rejection of 53 enough to take the long, particularly since price bounces off the DL you've by then drawn? If not, are you satisfied to allow price to rise until it runs out of steam? What will you look for to determine whether or not and where that is occurring (see previous paragraph)? And so on . . . If one has developed a robust structure, it doesn't matter what the market does; the trader is confident that he will be able to deal with it. The focus is meeting the challenge. There's no time or space for fear. On the other hand, if the trader has not developed a robust structure, he will be kicked around like a soccer ball and play an interminable game of catch-up. The market will tell you what it's going to do by what it's doing. There is no "just kidding". You may not be able to understand what message the market is sending, but, in that case, you simply stand aside until the message becomes clear. This has nothing to do with fear. It is rather a matter of waiting for clarity. If that clarity never comes, then doing nothing but observing for the rest of the session may be in order.
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A good start, but only a start. Those of you who are doing reviews -- and not everyone is -- should remember that the review has at least three elements. Some of you may be covering these privately, which is fine, but judging from your results, I doubt that this is the case. At the very least, the review should cover the trades that were done. Some of you are leaving it at this. The next step is to detail what should have been done. And some of you are going this far. But the review is relatively pointless if there is no thought given to exactly what one can and will do during the next session to avoid taking the trades that should not be taken and to take those trades that should be taken. And as far as I can tell, no one is doing this. Fear cannot be dissolved unless and until one achieves competence. If one feels competent to solve the problem, fear becomes much less a factor, and the more competent one feels, the less influence fear has, if any. But while all of you are farther along the road to competence than you were at the beginning, none of you are nearly as far as you should be. If you do not complete "proactive" reviews, you will not be much farther along in a year than you are now. If you're still hesitant about where to draw lines or how to define a "break", for example, then you are not yet at the level of competence necessary to put fear in its place. What Niko has done is a good beginning, but the review must go beyond that into a prescription for future trading behavior. "Just follow the rules" is not enough if one has not internalized the rules and cannot apply them without hesitation and without thought. Trading with "discipline" if one is trading a plan he doesn't trust is not productive. You cannot apply the principles of Zen until you know the game perfectly inside and out. Having the proper attitude of Zen calm and confidence does no good if you do not know the game. Zen will not make up for, or offset, incorrect play. As a result, there is a certain amount of ordinary, old-fashioned work involved in mastering the game, a certain amount of sweating the white beads before the days of tranquility come along. Good [trading] is not a "mood", it is a series of individual decisions. It does not occur by "Buddhistically" meditating ourselves into some dreamlike mental state, but rather by knowing the game well and being in synch with it -- by inserting ourselves correctly into the flow of what is going on in front of us. No Zen attitude will make up for this lack. You may be quite Zen-like and have all the attributes of Zen calm, but if you play incorrectly, the result is that you will get destroyed. Practice, and long hours at the table, are indispensable.
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It seems to me that you guys may have abandoned the lines too soon. This becomes more evident on a day like today, where using the lines would have avoided a number of losing trades. I suggest that each of you go back, whether in replay or hindsight, and draw in the lines. Then compare that to what you actually did.
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Today's SLA trades with suggested scale-in points:
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But you've been at it for so long because you've needed to rush things up. You'd likely be much farther ahead if you'd taken your time. Tortoise and the Hare. One difficulty which you share with everybody else is a lack of appreciation for what a retracement is. If it provides you with an opportunity to enter, it's your best friend. But the next retracement is a danger signal, turning into your enemy, and prompts you to get out. The reasoning behind this needs to be examined if you are to make substantial progress.
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Which I've said any number of times. But few people can be deliberate. They must rush ahead and try to do too much too soon thinking that they can save time that way. But they invariably end up having to go back and retrace their steps, even to the extent of starting over. But this is something that one must discover for himself.
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This morning's SLA trades:
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A DT/DB is a retracement.
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SLA trades for this morning:
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It's not so much lack of testing as lack of practice along with the fact that you're trying to do too much all at once. But you had to figure that out for yourself.
