Trade Discussion and Analysis

[firewalker 10]

  wasp said:

Mornin' chaps,

 

My niece and sister here today so no time to post but quickly............

 

they are daily areas which price could not surpass due to supply and demand basically. All very simple and some go back weeks. If they are penetrated more than a couple of times with no reaction I kill them off, other wise they stay.

 

I agree with wasp, one penetration of S/R does not mean it can't provide S/R in the near future again. Actually, I've found that by looking to the left or your chart, some zones will come into play even much later, when you wouldn't expect them to...

[firewalker 10]

This one's for wasp... or anybody else who is interested!

 

I posted my live trade with entry, scale out and exit in the appropriate thread, but this isn't about my trades of today. Here is the 1-minute chart of the NQ, June 11:

 

 

Given: the short (red dot) entry, and support at 1947.50-1950 (from May 23 and before), further support at 1937. Would the green dot signal a long entry?

 

At the green dot we have (a) break of the supplyline and (b) break of the trendline and © failure to make a lower low and (d) a break of the last swing.

 

The green dot would be a clear signal to lighten my position again. You could hope on a trend continuation after that (or re-enter short at a later time)... I just wanted to illustrate that an exit signal isn't always a reversal signal.

 

Suppose you stayed in further and drew a new line, beginning at 1955 and along the swings down to 1937. Line breached, no lower low, support confirmed and up we go. Long again at the blue entry. These aren't trades I've taken. But they might have been, had I not decided to call it a day after the first one.

 

Main point here is, imo, that unless you trade multiple contracts and leave one on till the end of the day - preferably with your stop at breakeven - you're never going to catch the complete range...

[Phil Mibbutz 10]

:hmmmm: FWIW FW, I'd say it depends on what you mean by 'the complete range'. Placing more trades theoretically gives you the chance of making far more than than the range.... If you get it right. Or losing far more if you get it wrong, of course.

So far as yesterday's or any other chart goes, commenting after the event doesn't usually help much. My ideas would probably be completely different if I could only see the part to the left of the green dot and were unaware of what happened next!

[firewalker 10]

  Phil Mibbutz said:

:hmmmm: FWIW FW, I'd say it depends on what you mean by 'the complete range'. Placing more trades theoretically gives you the chance of making far more than than the range.... If you get it right. Or losing far more if you get it wrong, of course.

 

If you trade every little swing correct, I think you can - theoretically - make much more than the daily range. However, theory and practice are two totally different matters in that aspect! If you can manage 1x the daily range of any instrument, you're already doing a fantastic job imo.

[JT1 10]

  firewalker said:

If you trade every little swing correct, I think you can - theoretically - make much more than the daily range. However, theory and practice are two totally different matters in that aspect!

This would be the dream - tracking the movement pip by pip (or as close as possible.

 

 

If you can manage 1x the daily range of any instrument, you're already doing a fantastic job imo.

For sure, this would be superb also.

 

........................

[Phil Mibbutz 10]

It doesn't really matter how much of the range is captured, if you make a gain every day, without fail. Even if it's only a few points, all you need to do then is scale up.

[wasp 10]

  firewalker said:

this One's For Wasp... Or Anybody Else Who Is Interested!

 

I Posted My Live Trade With Entry, Scale Out And Exit In The Appropriate Thread, But This Isn't About My Trades Of Today. Here Is The 1-minute Chart Of The Nq, June 11:

 

Given: The Short (red Dot) Entry, And Support At 1947.50-1950 (from May 23 And Before), Further Support At 1937. Would The Green Dot Signal A Long Entry?

 

At The Green Dot We Have (a) Break Of The Supplyline And (b) Break Of The Trendline And © Failure To Make A Lower Low And (d) A Break Of The Last Swing.

 

The Green Dot Would Be A Clear Signal To Lighten My Position Again. You Could Hope On A Trend Continuation After That (or Re-enter Short At A Later Time)... I Just Wanted To Illustrate That An Exit Signal Isn't Always A Reversal Signal.

 

Suppose You Stayed In Further And Drew A New Line, Beginning At 1955 And Along The Swings Down To 1937. Line Breached, No Lower Low, Support Confirmed And Up We Go. Long Again At The Blue Entry. These Aren't Trades I've Taken. But They Might Have Been, Had I Not Decided To Call It A Day After The First One.

 

Main Point Here Is, Imo, That Unless You Trade Multiple Contracts And Leave One On Till The End Of The Day - Preferably With Your Stop At Breakeven - You're Never Going To Catch The Complete Range...

 

Chart annotated.

 

Obviously, this is hindsight but anyhow... The way I would trade on a smaller TF like this is annotated via the orange circles. An exit is an entry! My method is documented enough I think but simply it is to a trendline with a HrL or LrH to confirm then a break of that with S or R depending on direction. There would be numerous trades and a couple of losses.

 

Whether I was trading multiple contracts or not, I would have taken all those trades. If I wanted to catch it all in just one move, I would be looking at a larger TF. I don't think you can catch a days movement in just one on such a small TF personally.

 

 

  phil Mibbutz said:

:hmmmm:fwiw Fw, I'd Say It Depends On What You Mean By 'the Complete Range'. Placing More Trades Theoretically Gives You The Chance Of Making Far More Than Than The Range.... If You Get It Right. Or Losing Far More If You Get It Wrong, Of Course.

 

Indeed, as this is a one minute chart though, I wouldn't like to place anymore trades in there than I could help. TF aside, I have only made 2 trades this week and caught most of the range on my instrument, but a shorter TF player would have made more trades... Who would have made more though......?

 

  phil Mibbutz said:

So Far As Yesterday's Or Any Other Chart Goes, Commenting After The Event Doesn't Usually Help Much. My Ideas Would Probably Be Completely Different If I Could Only See The Part To The Left Of the Green Dot And Were Unaware Of What Happened Next!

 

Hindsight is 20/20 but without some sort of analysis how can you improve your view, even if after the event............

 

  jt1 said:

if You Trade Every Little Swing Correct, I Think You Can - Theoretically - Make Much More Than The Daily Range. However, Theory And Practice Are Two Totally Different Matters In That Aspect!

this Would Be The Dream - Tracking The Movement Pip By Pip (or As Close As Possible.

 

As mentioned above, the more trades and attempts to catch every swing, especially on such a short TF, is more than likely going to encounter more losses IMO.

  jt1 said:

If You Can Manage 1x The Daily Range Of Any Instrument, You're Already Doing A Fantastic Job Imo.

for Sure, This Would Be Superb Also.

 

Double the daily range would be fantastic!

[wasp 10]

  Phil Mibbutz said:

It doesn't really matter how much of the range is captured, if you make a gain every day, without fail. Even if it's only a few points, all you need to do then is scale up.

 

Agree. Catch it all or just a bit, points are points and being greedy is not good... Be happy with a consistent return, scale it up over the weeks and months and happy days!

[DbPhoenix 42]

  wasp said:

 

Whether I was trading multiple contracts or not, I would have taken all those trades. If I wanted to catch it all in just one move, I would be looking at a larger TF. I don't think you can catch a days movement in just one on such a small TF personally.

 

Not if you're trying to capture multiple twists and turns since, by definition, the smaller the TF, the more twists and turns there'll be. But whether the TF is small or large need not have anything to do with the number of trades taken. One could simply take the first trade, then wait for price to reach the other side of the range.

 

  Quote

Indeed, as this is a one minute chart though, I wouldn't like to place anymore trades in there than I could help. TF aside, I have only made 2 trades this week and caught most of the range on my instrument, but a shorter TF player would have made more trades... Who would have made more though......?

 

Again, the advantage of a smaller TF is seeing what price is doing in the moment rather than waiting for a summary. What one does with regard to what he sees is another matter. You're making generalizations which are actually a matter of personal choice.

 

  Quote

As mentioned above, the more trades and attempts to catch every swing, especially on such a short TF, is more than likely going to encounter more losses IMO.

 

Now that I agree with, but it has nothing inherently to do with the TF. It has more to do with whether or not the trader is trading the TF competently.

[wasp 10]

  DbPhoenix said:

Not if you're trying to capture multiple twists and turns since, by definition, the smaller the TF, the more twists and turns there'll be. But whether the TF is small or large need not have anything to do with the number of trades taken. One could simply take the first trade, then wait for price to reach the other side of the range.

 

Yes, if one is confident it is going to stay in the down trend till the end of the day of course. Which is why, imo, you need to look at a larger TF too. If the crossing of trendlines and S/R is a valid change in direction and price reversed and ended the day above the open, things would not have been as good.

 

  DbPhoenix said:

Again, the advantage of a smaller TF is seeing what price is doing in the moment rather than waiting for a summary. What one does with regard to what he sees is another matter. You're making generalizations which are actually a matter of personal choice.

 

Yes they are of course as I can only account for myself and as far TF, again, it is a matter of choice as I swing these days rather than day trade.

 

  DbPhoenix said:

Now that I agree with, but it has nothing inherently to do with the TF. It has more to do with whether or not the trader is trading the TF competently.

 

agreed!

[Dinos 10]

  Phil Mibbutz said:

It doesn't really matter how much of the range is captured, if you make a gain every day, without fail. Even if it's only a few points, all you need to do then is scale up.

 

 

Couldn't agree more, I have no interest in running the range, I have a set target per trade (small, as leverage is high), in on signal, out on target, in and out on a regular basis pays the rewards imo:), less exposure to the markets and money in the bank so to speak:thumbs up:

[DbPhoenix 42]

  wasp said:

Yes, if one is confident it is going to stay in the down trend till the end of the day of course. Which is why, imo, you need to look at a larger TF too. If the crossing of trendlines and S/R is a valid change in direction and price reversed and ended the day above the open, things would not have been as good.

 

And it happens. However, an exit in and of itself is not sufficient reason to SAR. The fact that price has stopped moving in the desired direction does not necessarily mean that it's going to reverse. It may simply be done. Which is more often the case.

 

Being "confident" that price is going to do something is another matter and largely irrelevant. What matters more is being able to interpret what's happening at the time.

 

There is a further question, of course, of being mechanical vs being discretionary. The mechanical trader is going to have to stick to his rules, even though they may lead to far more trades than necessary.

[wasp 10]

  DbPhoenix said:

And it happens. However, an exit in and of itself is not sufficient reason to SAR. The fact that price has stopped moving in the desired direction does not necessarily mean that it's going to reverse. It may simply be done. Which is more often the case.

 

Being "confident" that price is going to do something is another matter and largely irrelevant. What matters more is being able to interpret what's happening at the time.

 

There is a further question, of course, of being mechanical vs being discretionary. The mechanical trader is going to have to stick to his rules, even though they may lead to far more trades than necessary.

 

 

An exit can very often be a very good reason to SAR if that is how you view your exits and it works very well for me. Not necessarily though for anyone else.

 

Being confident and correctly interpretating what is happening go hand in hand, as one needs both to execute their trading successfully imo.

 

Well yes, mechanical vs discretionary is another kettle of fish but I don't think anyone here is?

[DbPhoenix 42]

  wasp said:

 

Well yes, mechanical vs discretionary is another kettle of fish but I don't think anyone here is?

 

Your and FW's approaches appear to me to be pretty mechanical, though I may not fully understand what you're doing. But being mechanical is something that just about everybody goes through at some point. In any case, I haven't read the thread, so I don't know whom "anyone" encompasses.

[wasp 10]

  DbPhoenix said:

Your and FW's approaches appear to me to be pretty mechanical, though I may not fully understand what you're doing. But being mechanical is something that just about everybody goes through at some point. In any case, I haven't read the thread, so I don't know whom "anyone" encompasses.

 

 

I'm not sure who ''anyone'' encompasses in particular either :shocked: just members who post in here really.......

 

I wouldn't say I trade mechanical, my setups just happen to appear that way but all my trades are discretionary to a degree each time.

 

Anyhow, we are drifting from the point here...

 

I don't think, looking at FW's chart in question, one could have captured the whole range in one trade looking at the one minute chart alone with those levels and trendlines. IMO.

[DbPhoenix 42]

  wasp said:

 

I don't think, looking at FW's chart in question, one could have captured the whole range in one trade looking at the one minute chart alone with those levels and trendlines. IMO.

 

That would depend on (a) how it's managed and (b) whether or not one saw a reversal. Technically, or mechanically if you will, there was a reversal. But a reversal made no sense, so I didn't take it. I just continued scaling out according to more or less the same process as I posted in the Trend thread.

[firewalker 10]

All I did was post a chart, one interesting discussion going on

 

  DbPhoenix said:

Your and FW's approaches appear to me to be pretty mechanical, though I may not fully understand what you're doing. But being mechanical is something that just about everybody goes through at some point. In any case, I haven't read the thread, so I don't know whom "anyone" encompasses.

 

I'm not totally clear on how you define discretionary...

 

Although I can't speak for wasp, I'll admit that most of the time I'll act on the plan, and I would only "outsmart" myself if I had some very good reasons to do so. Trusting on 'gut feeling' helped me in some occasions... but following that kind of instinct is probably more a result of something you might have experienced in the past but don't recall very consciously at that moment, but it's still in your head someplace.

 

  DbPhoenix said:

That would depend on (a) how it's managed and (b) whether or not one saw a reversal. Technically, or mechanically if you will, there was a reversal. But a reversal made no sense, so I didn't take it. I just continued scaling out according to more or less the same process as I posted in the Trend thread.

 

It seems to me like you are "overriding" some signals, because you probably have a good idea of what the market is going to do, something which might come with the years and experience? As for the principles laid out there, I applied them on the NQ chart, but I didn't actually exit according to those rules yesterday (doesn't matter a whole lot).

 

I do remember us having a discussion about a YM trade, where I stayed in the short, although you said at the time I had stopped listening to the market because there was -technically or mechanically- a trend reversal...

 

Edit: just to make sure I'm clear on this, IF the higher low on lower volume (after potential SC) happened on support, would that have been enough reason to exit and reverse?

Edited June 12, 2008 by firewalker
added question

[DbPhoenix 42]

  firewalker said:

 

Edit: just to make sure I'm clear on this, IF the higher low on lower volume (after potential SC) happened on support, would that have been enough reason to exit and reverse?

 

That would depend on conditions, including how important the support was. If there was nothing to indicate a move one way or the other, I'd probably maintain the short and go long the Q.

 

There's a difference between trading for a living and trading for some other reason. Since I trade for a living, I trade far less often than most of the people who frequent message boards. I also hold the trades I take far longer, partly because I trade for a living and partly because I'm no longer afraid.

 

Therefore, you are the only person who can answer the question you asked. If you understand the YM and you know its tells, then you'll know whether to exit and reverse or to stand firm. What somebody else does or doesn't do is completely irrelevant.

[firewalker 10]

been a while since we had these formations:

 

[wasp 10]

  DbPhoenix said:

There's a difference between trading for a living and trading for some other reason. Since I trade for a living, I trade far less often than most of the people who frequent message boards. I also hold the trades I take far longer, partly because I trade for a living and partly because I'm no longer afraid.

 

You're making generalizations which are actually a matter of personal choice.

 

  DbPhoenix said:

Therefore, you are the only person who can answer the question you asked. If you understand the YM and you know its tells, then you'll know whether to exit and reverse or to stand firm. What somebody else does or doesn't do is completely irrelevant.

 

Yet without raising these questions and queries negates forums and discussion and also every book ever written on the subject.

[DbPhoenix 42]

  firewalker said:

been a while since we had these formations:

 

 

Is this the new contract?

[Phil Mibbutz 10]

Can anyone really 'understand' the YM, and how long does it take to reach this stage of enlightenment?

[wasp 10]

  Phil Mibbutz said:

Can anyone really 'understand' the YM, and how long does it take to reach this stage of enlightenment?

 

 

Its like anything in life, the longer you do it, the easier it becomes and the better you know it.....

 

In a past life I was a professional bartender in Hong Kong. When I started, a 'screwdriver' was in your toolbox. Nowadays, I could make you 100 different cocktails from memory.........

 

Just how long it takes is the unanswerable question...

[Phil Mibbutz 10]

Start trading when you're about 20 and you might just have it sussed by the time you retire, if you don't die of a heart attack.

[DbPhoenix 42]

  Phil Mibbutz said:

Can anyone really 'understand' the YM, and how long does it take to reach this stage of enlightenment?

 

I trade behavior, so it's important to me to understand what it is that I'm trading. If I didn't, I'd have to trade mechanically, and that would be boring.

 

As to how long it takes, I can't say, though with the availability of replay, it should take a lot less time than it used to. One possible advantage of the YM, though, is that the underlying is comprised of only 30 stocks. This beats the hell out of trying to understand the S&P. How long it takes also may depend on where one begins. I began with stocks and all the various indexes. But this was long before affordable software, much less RT streaming prices. So my understanding of the minis may be more grounded than it would be otherwise. (On the other hand, I haven't the slightest understanding of currencies, so I don't find forex the least bit tempting.) I imagine that this also accounts to a large extent for what I understand of support and resistance. Without it, I suspect that support and resistance would be a giant mystery.