jonbig04

I think I'm on to something with this stop-run study. Im sick of charts right now, will likely continue the study tomorrow between trades. It's helpful because its looking like the stop run strategy works decently on months when my s/r picking is great (and is my net), but does very well when my s/r picking my be a little off, making up the slack. Anyways I don't want to get ahead of myself, but I think its a sound concept. I know I can get killer trades with a 1 point stop using the 5 sec and stop run hunting may be one way to do it. As far as trading tomorrow goes...my TL has never been in danger and was bounced off of on 5/7 at 15:34 at 898. I have a major area at 940. May try to get a long in in the AM if I can, other wise I must wait. Does appear to be some R up here in the 925s, but my guess it that it will break to the upside, we'll see.

Trying to do a stop run study. Too often do vol spikes occur just before a large move. As atto pointed out, there's no way to tell if that's a stop run or a break out. Or is there? I'm trying to see if I can distinguish them with any profitability. As with any system, its difficult to define specifically what you are looking for because if you wait for all criterion to be met, your fill is shit. With a 1 point stop, i can't afford crappy fill. Worked on this all last night with moderate success. I'm going to play around with it for the rest of the day. Im trying to focus on what price is doing, what a stop run IS and what it means in terms of supply and demand-how can I use that info to find them and get the killer entries that result? hmm.

oopsssssssssssssssssss

Took a stop today for -1.25. Saw the small move of 2 or so points, obviously I wanted more. Just goes to show that the level was correct, but price had other ideas. which is ok because if it was going to take of higher, it would ave done so at my level...or a good chance at least.

NO trades today, was looking to buy a pullback, but it took off. Also wanted to short 919, but we never got there.

lmao! Glad I didn't hold it swing. Gotta love following the rules.

Thanks BF and diablo, I'll check into those. Today's chart.

haha, I'm being somewhat facetious, but it would be cool to be able to drop the bomb.

It just not the same

Lately I've been hanging out in chat, and I am deeply concerned with an issue that I have noticed there. I cannot type '****'. With my all encompassing word taken away from me, I find myself crippled with nothing to say. When I am stopped out, I can't say anything. When something strange happens in the market, I can't say anything. This word goes with trading like salt goes with popcorn. Trading needs the F bomb. I can't trade without it. I hope others will join my cause: to bring **** to our chat room. We need it.

Thanks BF. Can you recommend anything similar in tick size and daily range to ES?

To me, the larger the time fare, the more significant the level. You can always trade more than one instrument if you get bored. I'm flat all the time too.

Notes on the pic (as it will be from now on)

Man have I been journal slack or what? So despite of all my talk of not changing anything, I made some changes lol. I can't help it,-I get new ideas and have to test them out. If they are more profitable, how can I not adjust? Anyways I think I'm done adjusting. I'm going to describe what I do, just in case anyone...well...wants to know. Fundamentally I haven't changed at all. And to place credit where it's due, this is all AHG born. As of right now I'm not trading NQ. I may start, but as of now it's too much of a PITA to focus on 2 instruments. I'm using 2 charts only to trade the ES 30,000vol and the ES 5 sec. That's it. Nothing in between. This is where the biggest change has taken place. I used to use quite a few more. What I found was that I was simply in over my head. I'm not an adept enough PA technician to analyze all those charts, while keeping my priorities (as far as time frames and targets go) in check. The intraday (for ES I was using 10,000 vol) was always shaking me out. On top of that, my targets are usually 8-12ES, and I find that to hit that trend with an intraday chart, you have to be exact. Usually, you have to be in right at the beginning to have a nice 10 point gain (this is all ES points, from here on out). However is you use a larger chart, it chops FAR less, and you can hit multiple 10+ point trades in the same trend. this way, you don't have to me exact. This is kind of like trading the intraday chart using 3 point targets. The 30k chart, to me, is big enough, but not too big. I am marking significant areas on the 30k chart and entering at those areas only. I don't know how some of you make it work entering seemingly anywhere, to me that requires a damn big stop because its not protected by any major S or R. My targets will also be based off of the 30k. The 5 sec is just to get a more surgical entry, if I can. For example, if I see vol exhaustion just before my entry or right after I get stopped. Usually I will just place a limit one tick above the level. For some reason price has to break the level for me to get fill. I guess it's just the luck of the draw, but some bastard is getting fill there, why not me? Stops are static at 1.25. I will be fading the level (initial rejection test) and also playing the flip of the level IF it happens. To me this is the essence of s/r and maybe even trading. It's how the market really speaks to us. A level that is major R will see price stop, sometimes dead in its tracks, right then. When price does breach the level many times it will re-test it. If it was R it will flip S and vice versa. Happens all the time. It happens just as much as the rejections. I'm not really sure why, but it does. I suppose it's something to do with people thinking "oh, I'll wait until it goes back down to that level that I used to hate it at"...lol or something along those lines. I'm still all in-all out at this point. Eventually I'm sure I will scale for pysch reasons, but as of now its just grab-your-balls-and-wait. Unless you can scale with great efficiency (I can't) then this is the best, but maybe hardest, approach. Notice the 'unless'. I don't really know how this is going to work out. It's tested out well, but I know tests mean precisely dog shit. The results, and idea real time are 20-25% accuracy with 1:9 risk/reward. It didn't test well in april though. I'm not sure why. I started to trade on friday and got owned. I was still testing and only half way paying attention. Can't really do that trading. I fudged the hell out of both entries. The second one I entered the wrong level entirely, I meant to click 75.5, but accidentally entered at 74.5 (had the wrong line on my 5-sec). Would have been stopped anyway though. Despite the shitty entries and stops, its always great to see price react at your pre-determined levels. If you are wondering why I didn't enter at 10:01, I tried but missed fill. But at +6 or so, I wouldn't have exited anyway

What I meant about NQ is that it seems to bend s/r much more than ES. in part because of the small tick size. If I pulled up morning reversals at globex, NQ would likely reverse sometimes at ghigh (or glow), but usually it will be 2-6 points above it, where as ES will stop dead in its tracks more often. If I see level I want on ES, I can place a limit there and still have a decent chance, its tough to do that on NQ. Your last point is really what its all about. I'm just advocating looking at larger trends, as they tend to chop MUCH less than trying to make sense out of the intraday charts (1 min etc) and basing your targets accordingly. Enter at important levels on the larger chart so that your stop is protected (ideally) AND you can target the next level on the chart which will be a good number of points away (you dont have to worry about buyers or sellers stepping, because you are trading something bigger). IMO you can do this with the same size stops that i see people using everyday in chat when they are trading intraday charts. So why not increase your reward? The only hard part is actually holding through the sometimes scary intraday action, and no I don't mean necessarily swing trading (I close all my trades at EOD).

Great post. I personally don't take multiple shots at entries. I try to nail it on the 5 sec and if I don't, I pay the price. But I see your point. I think it comes down to what you said near the end and what I mentioned in the above posts. Its about time frames. Instead of watching the shaky intraday I try to locate the larger trend and catch a small part of that. About the lines in the sand, I somewhat disagree. To me NQ seems to bend and move s/r much more than ES. I don't know why, but there are hardly any lines in the sand on NQ. ES though has lines in the sand to some degree. I'm actually doing a study on it right now and will post my results, but many times ES respects a level to the point, eg 836. To me 836 on ES is better than sex. yea, I said it lol. The other day you took a long from 836. I missed the boat on the 5 sec, but was glad to see you caught it. With 836 such an important level to me there is a decent chance that it will win the fight with intraday R, where you scaled out. So why not push it? With worst case a BE and best case a +15ES and the knowledge that it happens fairly often, I grab my balls and hold it. A typical bounce off of that important of a level ( i dont know it off the top of my head), is quite a bit more than 4ES or 5ES. So why not just exit when the larger time frame makes a new HH or LL, or you reach what you think to be an equally important level. If the market moves quickly from S to R then the small psychological damage you receive from watching a +3ES turn into a b/e will be nothing compared to the couple times you book the +10 or +15ES. Thats just my opinion though. You guys know way more about this stuff than me of course. From reading the chat though I notice that some people aren't yet profitable in SIM, so I'm just offering my $0.02 to them as well as anyone else.

You may have gone over my head here lol. I don't understand how, when PA is doing what you expect, your advantage decreases. Lets say you are playing a standard head and shoulders pattern. You enter at what you anticipate to by the forming of the next shoulder, your trade is now in the green by say 5NQ. Then the neckline breaks. Wouldn't your edge increase? If you are looking for X (in price action) and you begin to see it, aren't you in an improving position? IMO all R and S weren't created equal. I get my levels from a large time frame chart. lets say I enter a long based of a support level from that chart, it it runs into intraday R. I am betting that since my S is from a larger time frame, it is more significant and hopefully stronger than anything the intraday can throw at me. Now if by established R you mean R that was ALSO found on a large time frame chart, than absolutely scale or exit. But for me those levels are roughly 20-30NQ apart-so holding until then is the idea. I try not to let intraday p/a scare me. I think this depends on which chart you're looking at. For me personally, I dont trade between S/R (large time frame). Why? Because I'm not good enough. There are too many shakeouts and fakes. I trade the extremes and whatever happens in the middle is complete bs that I TRY not to pay attention to.

Good points. I'm not even advocating swing trading, I'm just advocating larger time frames and..well...fearless holding. You are absolutely right, the best trades are the ones that last all day long testing and trying us through every minute. People scale to avoid this, I think. Another thing I am curious about is something I read here on TL. Its that we scale because the odds have changed, out of our favor. How does that work? If I enter on say a potential double-bottom, and price starts taking off, isn't that putting the odds more and more in my favor? When we reach a profit, should our reaction be more along the lines of holding because it looks like the odds are more on our side as opposed to being scared that something might change and bailing out? Another thing. I read in chat that some people exit when buyers ( if they are short) or sellers (if they are long) might step in. Makes sense, but let me submit this. If you enter a trade on NQ and you scale out at +5 because you think the other side "might step in", you should never have taken the trade in the first place. (Keep in mind that I'm referring to the way the majority of us trade. I'm sure there are scalpers who make bank by netting +5s all day, but it doesn't help anyone if we constantly advocate every kind of style). If there is a place where the other side might step in, i sure as hell am not going to enter 5NQ below it (or above it). Thats shitty R/R. We need to enter in places where our trades have room to move. If there isn't room, than maybe we shouldn't take the trade.

true, accuracy is of course necessary-my point is simply that its only HALF of the equation. Right, this is what I think the vast majority of us do to some extent. (identify trend, zoom in for entry). True, no doubt sometimes the unexpected does happen. the other day I saw my +8ES turn into a -1. If you start letting your winners really run, this WILL happen (most move their stop to BE, I dont). So that does happen, but usually, if you are that far ahead, the move won't reverse in the middle of nowhere. So what we have is all these people who are so scared of being subject to the psychological anguish of watching a +10ES ( or more, etc) turn into a BE that they scale out or exit entirely, when the majority of the time the win was there-we are just to afraid of what it will feel like if we see a big gain disappear so we cut our winners short. When that happened to me the other day someone remarked "I would never let a gain like that turn into a loss or BE". Thats probably true, but from what have seen most people would have never held long enough to see the +8 to begin with. What I am getting at here is this: I think that a lot of people are leaving a lot of money on the table by cutting their winners short. To make up for this people have to increase accuracy, and they are struggling to find a way to do that. When the only thing holding them back from really holding their winners (thus increasing their expectancy) is fear. Fear of watching that gain disappear, because once they have a winner they are so scared of losing it, that emotion takes control.

"Trend following" is tough to define. After all, which trend do you mean? For me personally I consider myself a trend follower-of the last few days or weeks. During the day I'm sometimes counter-trend, and on entry I ALWAYS am counter trend. So am I a trend follower or not? For someone just trading reversals, lets say on a week long chart, I think holding your winners is even more important. Because (IMO) those are tough and when you do nail one, there is lots of profit potential.

lol, well naturally. What I'm saying is that we focus much more on the accuracy side of the expectancy equation than we do the reward size side.

Since I'm always droning on about this I figured I would just make a thread dedicated to my droning. Cut your losses and let your winners run. Cliche? No doubt, but that doesn't make it any less important.We all know that there are about a billion ways to trade profitably. So really, we can't say that one method is better than the other. Unfortunately, that doesn't help newbies (like myself) very much. This site is full of information. How to trade, what to trade, who to use to trade etc. But it sees like the vast majority of it is dedicated to accuracy. Making the right call, the solid play, the perfect trade. Who cares? Accuracy can only be discussed in the context of risk:reward. If your risk is 1 point and your reward is 125 a person with 1% accuracy can make all kinds of money. Conversely a person with a risk of 90 and a reward of 1 can, with 99% accuracy, make all kinds of money. With that in mind why are so many more concerned about their accuracy than their reward. There are equal parts of the profitable traders equation. So how do we let our winners run? Well thats what I hope for this thread to be about. Many people, when in a winning trade, are more concerned about protecting their profit than letting the thing actually run. Why? Because they are scared it will come back down to bite them. I maintain that most scaling out is due to FEAR, not expectancy. Of all the profitable traders I know, this is the biggest difference I see between their trading and the trading of us noobs. We can't be afraid to let our winners run. One thing I am doing is looking at a larger time frame chart. I no longer watch the 1 min or 1k vol (nq) chart. I use a bigger chart. If the market is fractal, why wouldn't I? I don't want to hold overnight for personal reasons, so I have the biggest chart that will still show me intraday trades. Why catch smaller moves intraday if I can catch bigger ones? If I'm going to let my winner really run I need to see a bigger picture. One thing I will say is, though I increased my time frames, I did NOT increase the size of my stop. it's still intraday. If I was swing trading then the stop would have to be increased, but for the size of stops I see everyday in chat, we can be looking at much bigger time frames without increasing our risk. Anyways, I hope some other people will chime in on the problem of letting our winners run. True, scaling out at pivotal areas can be a good idea, if something changes...yea I get it. But thats not my concern, because I know damn well that the majority of scales intraday are because we are scared something MIGHT happen, not because of something we are seeing right then in PA.

To me, predict implies you are trying to profit by figuring out what the market will do next in that moment. the fact is that no one knows. all we can do is react to set ups that are in front of us. All we know is that there is X chance of something happening. You know your profit potential is Y and loss potential is Z. You know that, over time, these variables add up profitably. During trading, you react to what is happening now. go into chat and there will be many people making predictions about what's going to happen. Trying to predict also implies that you need to be "right" to make money, when in truth you can be wrong 90% of the time and make bank. On a side note it seems like most people spend all their time trying to increase their accuracy, when they should be focusing equally on their r/r.

haha #2 should be "trying to predict the stock market".

How do you all define 3 bar? Say, for example, in a down trend.