firewalker

Guess it's all down the personalities! For me, trading less, and staying longer in a trade means (a) less tress and (b) more time to do other things I know myself... by exiting for little profits, I'd be looking for another trade far too quickly, so it's also a protective measure. Especially after I scaled out and moved my stop to breakeven the 'trade management' is much more relaxing than the work to pinpoint the entry without getting stopped out.

To be honest, I hadn't look at what time the setup presented itself. I agree that volume signals during lunch can be somewhat difficult to interpret. But from what I can see on the chart there's no reason not to take the entry. It would be interesting to see what happened next, but since the chart has no date on it, I'm not sure anyone can look it up...

How do you define a reversal? The trend is still intact and the last swing low is not breached, so the way I see it there's no talk about a reversal. Looking at 1502, it looks like resistance (10:10), but selling pressure subsides around 11:15 where we see tiny price bars and lesser volume. After that a breakout follows 11:30 and price pulls back to identify resistance now turned into support. This seems to be confirmed by the volume at 12:10 on the test. All imho

In Belgium, playing poker for anything higher than a very low stake (I think 0.60cent) is illegal and can be prosecuted unless you are playing in a casino. You'd think they don't actively go looking for poker players, but since the popularity of Hold 'em has peaked, I had to read in the papers a while ago that the police broke up a poker game... between students! Yes they were playing for money, but they were doing it in their own dorm... What happened to fighting real criminality? Anyway, that's another discussion... just wanted to vent that too

He'll tell you something else, but mainly because Wasp thinks Asians are more kinky

Interesting article... for me personally not because of the EMA 20 (because I don't use indicators but no offense to anyone who does), but because an experienced trader like Bo Yoder talks about people seeing their edge being eroded throughout the course of this year ! I'm curious how many traders from TL have had similar issues as those described in the article. The author mentions one thing which has been imo important to keep in mind during this year of sharp drops and bear rallies: being very flexible in taking a position from a bullish or bearish point of view. However, why would the 'classic' principles of supply & demand be any different this year from other years? Personally, I had a pretty rough time during the summer 'doldrums' but that might have been more down to what has been reportedly a period with unusual liquidity and the lowest volume in over 5 years. Next to that, I don't see anything out of the ordinary, except the obvious rise in volatility but that's a cyclical phenomenon...

Well... Last couple of months trending days have been more common than usual. I'd say in out of 3 is potentially a trending day which gives you about 6-7 days per month. On these days the daily range usually extends and on the ES it can be 40-50 points. Even if I only catch 1 out of 3 of these trendings days, let's say 2 per month, I'll make 100 points per month. That's an average of 5 per day, which is far far from bad. And that's with a very conservative point of view... You said you disagreed 100% with what I said, does that mean that you would advocate NOT scaling out too? I'm not sure if you disagreed with that too... Anyhow, if you scale out efficiently (with the right portion of your position), you can protect your position as well as leave yourself open the possibility that you'll catch "the big swing" on those "one-way" days. For example: Trade 3 ES contracts (stop 1 point): Exit #1 at +3 Exit #2 at +7 Exit #3 at breakeven Average profit => 3 points per contract with a risk of 1 point per contract Now let's assume one of these one way days: Exit #1 at +3 Exit #2 at +7 Exit #3 at +40 Average profit => 16.66 points per contract with a risk of 1 point per contract I strive to have a couple of these days per month. That way I can afford to not take a trade on choppy or ranging days where trading becomes more difficult. No one says you need to trade each and every day... in fact the less I trade the better I seem to do and I think that would be the case for a lot of people.

As requested, some more charts to spice things up This is the DOW as per yesterday, October 3rd. Comments on the charts.

That's a good observation... I guess we do perceive potential reward differently once we have 'money in the bank'. But a lot depends on context imo. If we, from previous experience or from reading price action as it unfolds minute per minute, can determine the odds are still in our favour that price will continue in the favourable direction, than why exit?

Comments: see chart... I think we can both find examples where scaling out is the better way, but we can also find examples where staying in is the safest thing to do.

Yes I think that sums it up correctly. The problem with riding price from R to S or the other way around is that it requires patience and sitting through chop sometimes. It also means you can get stopped out BE and have to re-enter while giving back several points. Since I prefer to take only a handful of trades per day, I don't really care about all the little directional moves in between S and R, because for me they are more difficult to trade and require a wider stop. Since wasp is nearly always in the market, it is indeed a different approach... his exit is usually an entry! I posted my chart with my trades (or how I would approach it) in post #11. It's up to wasp now to show me his entries/exits there

Just noticed the update too... looks nice, but... If I click on Blogs > Blogs main I am directed to this URL where I am asked to install a toolbar? http://traderslaboratorytoolbar.ourtoolbar.com/

Well it started with a chart I posted in Jay's Journal. Might as well copy it over here I had a short signal around 1527 on the NQ (first red dot). I moved my stop to BE rather soon but equally soon I got stopped out. But I shorted again several minutes later (second red dot). Support was at or around 1500. I figured with price already having fallen so much it would be unlikely to drop like a stone straight away. I've drawn some lines to show momentum and possible exits (at the breach of the line). When the second line broke, price rallied shortly but fast enough to come very close to my entry point. As you can see on my chart, it took my about 3 hours to get where I wanted. There's the obvious trade-off between bigger profits and staying in a trade risking getting stopped out BE. Price swung wildly between 1527 and 1500 several times. If I were to put a trade on in between those levels, I'd risk getting whipsawed easily. You could say I got lucky this time that price traveled all the way to the opposite of the range. But it doesn't happen that frequently. In fact, during the summer months I'd get stopped out BE far too many times to my liking! The only way to cope for that imo, is to scale out for little profits first: perhaps only a handful of points, but at least that covers commission... If I understand wasp correctly, he's saying I should only have exited at 1500 and scaling out only diminished my profits. My argument is that if I were to do that each time, I'd end up with a lot of breakeven trades and zero profits.

Well, there are two things you are saying. First, leaving the exit over the chance is not what scaling out is about. In fact, scaling out is anything but chance because you have determined beforehand at what point you will exit a part of your position. This may be for several reasons, a break of trendline, a predetermined fixed target or something else. Second, when you enter you have your stop to protect you in case you are wrong. When you exit, and price goes further in the right direction, there is only hindsight to say that you exited too early. Imo there is no way in knowing with 100% certainty what is going to happen after you exit, the same way there is no way in knowing for sure what price is going to do. But you can be 90% sure perhaps. Which doesn't change the fact that pinpointing the optimum exit isn't an easy feat. Because how do you define optimum? Is it the farthest price has traveled during that way? What about overnight? More important imo is the potential reward versus the risk of getting out with nothing and giving back all your profits. Over the long run that will determine the net profitability of your strategy...

Why don't say so straight away that you were advocating an "all in-all out" strategy :o As for not scaling in, that's true. A lot of people would advocate that pyramiding is a better strategy in the long run though. Your idea would be nice, in theory. But in reality, you enter a trade and you see if or not price starts going in the favourable direction. In reality, where would you have exited that short (see chart I posted)? Once you're in a profitable position, you're no longer viewing the exit as an entry. Suppose you have 10 points, do you want to risk giving up 10 if there's a 50% chance to gain another 10? What if there's a 33% to gain another 40? You might argue that you have no way of knowing these chances, but that's another case. Over the long run, it's what you feel comfortable trading with that matters. Some people have no problem seeing 5 profitable trades return to breakeven, but I do. I'd rather take my 10, leave a small position on, but run for the exit in case the market fails to continue (this leaves the possibility for re-entry). But this isn't about me, this is jason's thread

No, I agree, if you get the entry right you should try to squeeze out as much points as possible. But if just don't think there's a simple way to accommodate for the market dynamics. You can never know for sure if price is actually going to travel from one end of the range to the opposite. But you can manage your profits, with your eye on the big prize, not afraid to settle for 2nd prize when the odds of winning fall below your threshold...

Nice chart sdoma thanks. I really like the way you write "it's hard to stay in unless you have perspective". I was actually short on the NQ in a very similar situation with my perspective on support around 1500. Price took a hell of a long time to get there, but it did. Great to see MP input complete the picture.

I said "You can just leave one car on till EOD and say to hell with it, move your stop breakeven and see what happens." Obviously that's not the best way to trade because you're not applying an exit strategy, but I was surprised myself to see how many times that would've actually been a more profitable way to approach the exit then just exit on the first sign of trouble. I agree that exits are important, but that doesn't mean you can always determine when "it won't continue". Take a look at the chart I just posted. There were several times where I thought "hmm this isn't going to continue lower this is chop", yet near the end of the day price did fall back all the way to support. But it took considerable time... that's why I said "to hell with it" referring to anything that happens in between your entry and your exit, if you have things planned out AND if you know what you are looking for (which can be S/R, fibs, a fixed target, a trendline break, a time signal, a price target based on the ATR, etc, etc). Imo, if you focus on one single exit, you'll never catch the big swings. I know you manage to catch each swing almost by surgical precision, but you can get yourself seriously burnt when you end up reversing and reversing in choppy circumstances...

I think you raise some good points Jason... and it's definitely not easy. I spent a fair amount of time determining 'the optimum exit' point, only to realize there is no such thing as thé single exit. I've spent countless hours with statistics determining what the variation of each exit was, how much this was affected by the average true range, etc, etc. But in the end all these numbers meant little as the market is dynamic and calculations and statistics don't accommodate for what happens in real time. Scaling out is imo the only way to catch big rides. I'm not sure if that's your aim though. You might feel more comfortable holding on 5 minutes than 5 hours. I know what you mean about price suddenly going against you. There are two things you can do: ignore what is going on, focus on the target and let yourself get stopped out if the market shows you are wrong. The other thing is exiting before you get stopped out, but leaving the possibility of a re-entry. I'm trying to be flexible in this too but it's not easy in real time. You need a lot of patience. Let me illustrate with an example from yesterday. I had a short signal around 1527 on the NQ (first red dot). I moved my stop to BE rather soon but equally soon I got stopped out. But I shorted again several minutes later (second red dot). Support was at or around 1500. I figured with price already having fallen so much it would be unlikely to drop like a stone straight away. I've drawn some supply lines to show possible exits (at the breach of the line). When the second line broke, price rallied shortly but fast enough to come very close to my entry point. As you can see on my chart, it took my about 3 hours to get where I wanted. There's the obvious trade-off between bigger profits and staying in a trade risking getting stopped out BE. Price swung wildly between 1527 and 1500 several times. If I were to put a trade on in between those levels, I'd risk getting whipsawed easily. You could say I got lucky this time that price traveled all the way to the opposite of the range. But it doesn't happen that frequently. In fact, during the summer months I'd get stopped out BE far too many times to my liking! The only way to cope for that, is to scale out for little profits first: perhaps only a handful of points, but at least that covers commission... Just some thoughts... comments welcome

That's true... which is why scaling out is imo the only way to make sure you never exit "too early". You can just leave one car on till EOD and say to hell with it, move your stop breakeven and see what happens. Most days you'll get stopped out BE, but on a handful of days you might catch that big trending day. And in the end, even if you do that only once or twice your account will get a big boost on these days.

Hi ST, that's Jay's chart though I just annotated it...

I know this isn't much... but if you're exiting too early, is it because you have a specific points target in mind where you are normally pleased with? Or is it because you fear the market may suddenly reverse 'out of nowhere' (yesterday's spike on the news about Buffett for example caught me by surprise)? I've attached a chart, with just a very simple drawing of some lines. These aren't exactly trendlines, but they do help in staying in a directional move for some time. Depending on context, I use demand- and supplylines to scale out. The lines on the attached are not how I would trade (they probably resemble wasp's strategy better), but they do prevent you from taking +2 points or +3 when +7 or +8 or available. They won't make you bag homeruns though, but I'm not sure whether that is your intention. Good luck!

Thanks, interesting to see what happens on the other side of the globe However, I'm not sure about the importance of overnight moves on the US indices. In the past I saw price falling through support or breaking resistance premarket, and my hopes were high for a continuation. However, in many cases a pullback to previous S or R didn't provide a new rejection, but price just crawled it's way back up above previous S and R, seemingly ignoring what happened before. As it happens, Steenbarger wrote something in his blog this week that gave me some thoughts: "...the fact remains that many short-term traders find their opinions colored by what happened overnight. In reality, these function as independent markets: what happens overnight is not predictive of what happens during the trading day." Coming from someone who's pretty fond of analyzing historic market data, I was actually rather surprised to read such comment. See also http://traderfeed.blogspot.com/2008/09/day-and-night-sessions-this-bear-isnt.html Perhaps anybody else got an opinion on this?

Extreme was indeed the word for yesterday I won't disrupt your journal much, but I was wondering as you pay attention to VIX, I was wondering if you have any charts from the VIX peaks during the previous bear market. All I could find where charts starting somewhere in 2003. But yesterday's 'off the scale' peak hasn't been seen in the last 5 years... Edit: sorry, just found a chart going as far back as 1995 on Yahoo... looks like yesterday's peak was about the highest ever?

Very sweet that vwap line... I had my ('static' if you wish) resistance drawn exactly where your vwap line was. Made up for a perfect short. I wonder where to from here... we closed near the low yesterday, and we broke the previous lows from September easily. The Nasdaq lost close to 10%. :shocked: So it doesn't look like a bottom is in yet. I'll add another chart, from the small caps. It shows the market ranging in the last couple of months, yet failing to make new longs. This compared to the DOW & ES signaled strength imo. However, it looks increasingly likely that the lows will be taken out soon as price is on it's way down for the fourth time...