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ant

Entering Trades Ahead of Time

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In general, I use market internals to monitor a market for strength/weakness as price approaches a key support/resistance level before I enter a trade. That is, I use market internals to confirm most of my trades. I would like to explore some trade setups that would allow me to enter a trade ahead of time without requiring further confirmation. So...

 

Under what conditions do you feel comfortable placing a buy/sell order ahead of time and letting the trade trigger when your stop is hit without further trade confirmation? For example, do you identify major support/resistance levels that you feel you can simply enter a trade there if the level is hit? I would be interested in hearing from traders who do this as part of their daytrading or position trading portion of their trade plan. I'm currently working on my swing/position trading program of my trade plan and would like to better understand when it is feasible to do this (e.g., trading breakout, S/R, retracements, etc). Thanks.

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Hello Ant

 

Tomorrow I'll be doing a seminar in the chatroom sometime after lunch. Part of it has to deal with placing orders ahead of time. If you can't make it I can send you a transcript. Maybe that will throw some ligth on what you're looking to acomplish

 

Regards

 

Raul

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I usually identify breakout or failure from S/R areas and wait for the first pullback or rally to buy or short. To place the trade ahead of time, I place a buy stop (for longs) a few ticks higher than the last bar's high. As it moves down, I adjust the buy stop accordingly until the stop is hit. The opposite is true with shorts.

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Sometimes you need to press hard and sometime lightly. The markets are full of opportunities but not always do you see a sure bet. I find that one can enter a trade ahead of time using simple S&R levels. Once you identify a significant S&R level the odds are stacked in your favor.

 

This is why I believe cluster points to be a key price level. People use many different methods to identify clusters. Moving averages, pivots, fibonacci, trendlines, etc...

 

For example the YM just bounced off a significant price level at 12000 on Friday. This was a key psychological level as well a support on a major trendline. On Monday it then went on to rally over 100 points. I think these areas do not come around often but when they do one needs to trade aggressively. Just my 2cents. :)

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My entry ahead of time is dynamic in a sense that I place the buy stop to wait for the momentum to go my way, letting the market take me in. This way, I hitching a ride in the bus that's going my way... uptown, downtown. I wouldn't want to get in the bus going an opposite direction and hold the driver at gunpoint and order him to turn around, trouble will be brewing sooner or later. But lots of traders do just that.

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Thanks guys for your suggestions.

 

feb2865, your Forex seminar was a great example of what I was referring to. I trade Euro and Yen (currency futures) and will be paying close attention to your trade setup. I have to reread the transcript to better understand the stops and whether reentries are allowed (i.e., market crossing the H/L several times).

 

Soultrader, sounds like you're comfortable entering a trade when there is a cluster of support/resistance levels, such as MP levels and pivots. How often do you enter like this without reading the tape? I think for position trading, identifying clusters in a longer-term timeframe may give me the confidence to enter trades without monitoring the market in real-time.

 

Torero, I like your comment about letting the momentum take me into a trade. Retracements is a type of trade where I'll enter my order ahead of time too. However, I usually buy pullbacks when price is heading down, I rarely wait for the market to turn back up (vice versa for shorting rallies).

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Ant

 

I didn't read your last post entirely. As for re-entries, they're not allowed. Once you miss the bus you have to wait for the next one for the following day. That's why I set up brackets ahead of time just in case London session has a strong move while I'm sleeping. Once the bracket is activated, we need to let it go and do it's thing. Like all markets, you're going to get pullbacks at these levels. If it happens that you're actively watching the market during that time , ignore it and go do something else.

 

Three things are going to happen

 

1) your stop-loss is going to get hit

2) you won't have a trade or

3) you will make money

 

I normally see # 2 or # 3 very often and if you're shooting for 5 pips, I bet you'll see # 3 quite a lot. The whole idea is to win consistenly.

 

Raul

 

PD: One thing you consider for the bracket is to make sure your broker has a crystal clear execution, preferably a DAT. If your broker charts or DOM's get frozen during a fastmarket, consider a change or don't trade

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Soultrader, sounds like you're comfortable entering a trade when there is a cluster of support/resistance levels, such as MP levels and pivots. How often do you enter like this without reading the tape? I think for position trading, identifying clusters in a longer-term timeframe may give me the confidence to enter trades without monitoring the market in real-time.

 

As you may know I rely on the tape heavily. Entering at a key level without any confirmation is definitely a rare case. But I tend to place great important in certain key levels and I would try to enter once price reaches it.

 

Not usually a limit order before price gets there since in most occassions the markets give you time to enter. But I would enter as price tests it and then a few ticks below the test. I dont do this for pivots for MP levels but major support and resistance points on the daily charts. I feel confident at these levels because I expect the longer-time frame participants to be looking at the same level and will step in. Usually more right than wrong.

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