Trading Pullbacks Intraday

[phoenix01 10]

Hi,

 

I was wondering if anyone had any suggestions/tips for trading pullbacks intraday on the ES or any market really. Are there any types of price action/indicators/nuance which can help you avoid false pullbacks or confirm ones which are likely to continue in the direction.

 

So far i have found nothing, most indicators don't seem to have any edge. You end up missing to many good pullbacks to avoid that single failure. Analysing volume in theory makes since because of the nature of pullbacks but in practice i havnt seen anything that works. Ive only come to find a few nuances that are general rules of thumb because I've been watching them for so long.

 

Trading pullbacks is a popular strategy so it would be good to hear some suggestions.

 

Thanks

[jpennybags 11]

A link to a well presented and simple trading strategy utilizing range bars and entries on pullbacks.

 

http://www.traderslaboratory.com/forums/technical-analysis/10206-trading-storm-methods-struggling-trader.html

[SIUYA 11]

a lot will depend on what you are trying to pull out of the market. As first you need to know why you are trying to trade the pull back.....

largely as one persons pullback is an other persons break out.

 

Trading pullbacks in an established trend is clearly of a higher probability trade that the trend will continue - the nature of a trend, but the problem is that of measuring the pullback. So what is the context of why you are trying to trade a pullback.

 

there is only one thing for certain......if you wait for a pullback you will capture every loss when that pullback fails, and yet you will miss some of the winners as the pullback does not pullback far enough, or never comes. Its a trade off.

[MightyMouse 12]

You have to get "good at" distinguishing whether the market is ranging or trending in the time frame you are trading.

 

You'll get killed if you try to trend trade a range or range trade a trend.

[iris_ta 10]

eminiaddict.com teaches a 50% retarcement startegy. The web site includes webinars, written matreial, trading room, etc. I think he is very good, but keep in mind that like any other trading method, also this one requires putting a lot of effort.

[jtrader500 10]

Everything else aside, a bare bones approach to tilting the odds slightly in your favor on determining is this is a pullback. Look at the cumulative delta off of a one min chart.

 

You will be amazed how much more confident you will be buying pullbacks. Cumu delta measures the differential in "market orders" at each price.

Just study it and you will see which side wants it more...

Good luck

"if you have thought about it, I have tried it"

[4EverMaAT 10]

1) use a basket of trades when you enter. Use the spreadsheet to work out the opportunity costs from initial entry. http://www.traderslaboratory.com/forums/forex-trading-laboratory/11152-dollar-cost-averaging-spreadsheet-alternative-method.html#post132513

 

2) get in late in the mini trend. This maximizes your chance for a pullback. Lookout for a custom indicator soon that can be used to help isolate these movements very soon.

[sr100m 10]

for long trades (shorts are opposite)

if close of most recent bar is in 50-76.4% retrace of most recent swing (use zig zag to define swing)

and close of this bar bar is above open (for long - below open for short)

and the reward to risk ratio is more than a 3:1 (see below)

 

then place stop market order 1 tick above the most recently closed bar (for long - 1 t below for short)

and place stop loss 1 tick below the low of the lowest bar of the retrace

 

when price hits 161.8 extension take profit OR trail on low of bars OR use atr trail or whatever

 

for reward:risk ratio calculation -

distance between initial stop loss and entry is risk

distance between entry and 161.8 ext is reward.

 

it's based on EW (trying to catch wave 3). In theory win ratio is 30-40% which with a 3:1 av W: av L gives a positive expectancy.

 

like much intraday trading it is tricky to trade as a lot of decisions have to made fast and you will get slipped - especially on the trades that are going to work out. i'm trying to automate it.

 

can use 61.8 instead of 76.4 if you want in the retrace - just be consistent.

[silvermachine 10]

I don't trade ES but stocks mainly.

The Reversal Play is one of my core setups.

On average every one off six of my trades is a reversal play from a support or a resistance level.

 

The best way to learn about reversals is to learn about support and resistance levels.

To do that you have to put yourself into the mind of a buyer or a seller.

 

Assuming you want to buy into a reversal after big sell-off.

First, why are traders selling? They think that price cannot go higher anymore.

As they sell, longs will have to cut their losses and will become sellers too and/or reverse their positions and become new shorts.

Then comes the moment when those traders on the sidelines think price will fall even further. They sell the Low.

Shorts who think that price will not fall further will cover their positions.

If they were a lot of shorts, there will be huge buying pressure.

Also the late shorts will have to cut their losses.

 

An ideal scenario will show you a Hammer candle on your chart in that given time period.

In an not so ideal scenario there will be trading range.

 

I recommend reading Bar by Bar by Al Brooks. No easy read.

But he gives you great insight how markets work (well, from his point of view, he admits).

He trades the ES too.

[tulanch 10]

Recently I’ve liked this…given an established trend - check out the plot of an EMA9 and WMA30

 

Google floor trader method (on other site, but hey that’s the net for ya)

 

shape of the pull back interesting to note

number of bars

 

1st pull back seems to have a higher likelihood of success that subsequent pull backs

 

A double pull back (2 legs) to EMA20 on 5 minute is a good setup

 

The pace of the pull back is a good measure

 

One must always keep market context in mind - prior major points of interest such as yesterdays close, yesterdays high, yesterdays low, etc....

 

News... news can really muck up the best of signals.

 

Oh and pull backs when MA’s are flat are not pull backs – they are chop

[phoenix01 10]

Some really good advice, keep it coming.

 

Does anyone know of any indicator that are useful when trading pullbacks?

[silvermachine 10]

Some really good advice, keep it coming.

 

Does anyone know of any indicator that are useful when trading pullbacks?

The Momentum Indicator, RSI, ROC or even MACD are your typical reversal indicators.

 

However if you focus too much on your indicators, you surely miss the price action.

Compared to price, indicators are lagging. They are all lagging, especially the MACD.

Well, it's up to you. You gotta backtest your system anyway before putting real money in it. :missy:

 

My advice is still to learn to read candles and to draw horizontal lines.

1 cent for each... heh...

[silvermachine 10]

Here is one example of price action of today. The stock traded was BIDU.

1 bar is 5 minutes.

 

 

The reversal pattern took place at 11:30.

The 11:25 bar closed below the low of 10:55 and below its EMA, letting traders expect maybe a 50% fibonacci reversal.

But then about 20 cents below the low the price reversed over its opening price and moved towards the prev bear bar's high. Missed it by 1 cent.

The next 4 bars made new highs but failed to close over the 11:25 bear bar's high, letting some traders think that a correction or new bear trend was still about.

The 11:55 bar finally closed over that bear bar's high and over its EMA.

That made the reversal complete, leading to new highs.

 

Given that the overall consensus in BIDU today was bullish, I entered right on that bull bar at 11:30. Since that bar was very tall, the risk:reward was 1:1.

Edited December 1, 2011 by silvermachine

[zdo 20]

In TL, be sure to skim through the thread and discussions at

http://www.traderslaboratory.com/forums/candlestick-corner/4461-20-ema-patterns-18.html

couple extra ideas on posts 140 and 141 … etc, etc.

 

For using volume with pullbacks, check the contributions of dbPheonix herein. Note: For him they were not conceptualized as ‘pullbacks’, but his lessons of volume bhvrs. in these areas can be transferred to ‘reversions’

 

(…also a more ‘spacee’ discussion at

http://www.traderslaboratory.com/forums/technical-analysis/10474-your-mean.html

I can save you some reading that nonsense with these two ‘digests’ –

>Find your own multiple ways of for “trading pullbacks intraday”.

> In upswings, the angle of ascent is one of the best ways of typing / assigning probabilities to the nature of and extent of a 'pullback'. (v v descent for dnSwings)

 

Also, fwiw, I trade ES instrument while using YM charts (with ES volume) a large percentage of the time. YM charts are more 'charty' to me - especially in the sub 30 minute time frames. Directional correlation is sufficiently 'perfect' for me... fwiw

 

hth

[zdo 20]

In TL, be sure to skim through the thread and discussions at

http://www.traderslaboratory.com/forums/candlestick-corner/4461-20-ema-patterns-18.html

couple extra ideas on posts 140 and 141 … etc, etc.

 

For using volume with pullbacks, check the contributions of dbPheonix herein. Note: For him they were not conceptualized as ‘pullbacks’, but his lessons of volume bhvrs. in these areas can be transferred to ‘reversions’

 

(…also a more ‘spacee’ discussion at

http://www.traderslaboratory.com/forums/technical-analysis/10474-your-mean.html

I can save you some reading that nonsense with these two ‘digests’ –

>Find your own multiple ways of for “trading pullbacks intraday”.

> In upswings, the angle of ascent is one of the best ways of typing / assigning probabilities to the nature of and extent of a 'pullback'. (v v descent for dnSwings)

 

Also, fwiw, I trade ES instrument while using YM charts (with ES volume) a large percentage of the time. YM charts are more 'charty' to me - especially in the sub 30 minute time frames. Directional correlation is sufficiently 'perfect' for me... fwiw

 

hth

[Phil-n-Texas 10]

Some really good advice, keep it coming.

 

Does anyone know of any indicator that are useful when trading pullbacks?

 

Fib retracement tool and understanding of HH/HL and LH/LL for market flow analysis to identify trend and swings.

[DionysusToast 10]

Everything else aside, a bare bones approach to tilting the odds slightly in your favor on determining is this is a pullback. Look at the cumulative delta off of a one min chart.

 

You will be amazed how much more confident you will be buying pullbacks. Cumu delta measures the differential in "market orders" at each price.

Just study it and you will see which side wants it more...

Good luck

"if you have thought about it, I have tried it"

 

Indeed - for the ES, this is the way I look at it...

 

Price goes up 20 ticks, delta goes up 10,000

Price goes down 8 ticks, delta goes down 1000

Price goes up 20 ticks, delta goes up 14,000

Price goes down 9 ticks, delta goes down 2000

 

To me, in an uptrend, this is what you want to see to give you the confidence to go in on those pullbacks.

 

Now - maybe you then see:

Price goes up 40 ticks, delta goes up 30,000 - be careful, there might not be anyone left to buy soon.

 

If we are seeing delta go down 3/4000 on the downswings & up 10,000+ on the upswings, I just keep going long. Once I see a down move with a big swing down in delta, then I'll consider shorts.

 

The problem though - it's not always crystal clear. You need to watch it for a while to figure out. It takes a bit of experience to figure out the 'murky' ones.

 

Here's a picture of - well - right now....

 

 

You can see that after the move down to 1246.50, we put in a goof move up which was also a good move up delta wise. Pullbacks are fair game to me once this has happened.

 

The fact that the pullbacks are of equal size does not go unnoticed either. It gives you an expectation of where to look for the next one. It's not a guarantee but in a situation like this you don't want to go long after it pull back 3 ticks. Nor do you want to jump in on a move after it has gone up 6 ticks - it's too late then.

 

As always - actual activity on T&S DOM give you your in - it may just be as simple as getting to a point where marker sellers are no longer interested in the current prices, that's where you jump in.

[johnw 10]

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

 

You will be amazed how much more confident you will be buying pullbacks. Cumu delta measures the differential in "market orders" at each price.

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

 

 

You have a very interesting piece of software jtrader, since somehow you are saying it seems to distinguish 'market orders' from 'limit orders' at each tic.

 

Can you tell us how it does that.

[johnw 10]

Indeed - for the ES, this is the way I look at it...

 

Price goes up 20 ticks, delta goes up 10,000

Price goes down 8 ticks, delta goes down 1000

Price goes up 20 ticks, delta goes up 14,000

Price goes down 9 ticks, delta goes down 2000

 

To me, in an uptrend, this is what you want to see to give you the confidence to go in on those pullbacks.

 

Now - maybe you then see:

Price goes up 40 ticks, delta goes up 30,000 - be careful, there might not be anyone left to buy soon.

 

If we are seeing delta go down 3/4000 on the downswings & up 10,000+ on the upswings, I just keep going long. Once I see a down move with a big swing down in delta, then I'll consider shorts.

 

The problem though - it's not always crystal clear. You need to watch it for a while to figure out. It takes a bit of experience to figure out the 'murky' ones.

 

Here's a picture of - well - right now....

 

 

You can see that after the move down to 1246.50, we put in a goof move up which was also a good move up delta wise. Pullbacks are fair game to me once this has happened.

 

The fact that the pullbacks are of equal size does not go unnoticed either. It gives you an expectation of where to look for the next one. It's not a guarantee but in a situation like this you don't want to go long after it pull back 3 ticks. Nor do you want to jump in on a move after it has gone up 6 ticks - it's too late then.

 

As always - actual activity on T&S DOM give you your in - it may just be as simple as getting to a point where marker sellers are no longer interested in the current prices, that's where you jump in.

 

Would you consider going long on a falling cum delta .... some people would call this 'ease of movement'

[HARDMAN_GAZ 10]

Hi,

 

I was wondering if anyone had any suggestions/tips for trading pullbacks intraday on the ES or any market really. Are there any types of price action/indicators/nuance which can help you avoid false pullbacks or confirm ones which are likely to continue in the direction.

 

So far i have found nothing, most indicators don't seem to have any edge. You end up missing to many good pullbacks to avoid that single failure. Analysing volume in theory makes since because of the nature of pullbacks but in practice i havnt seen anything that works. Ive only come to find a few nuances that are general rules of thumb because I've been watching them for so long.

 

Trading pullbacks is a popular strategy so it would be good to hear some suggestions.

 

Thanks

 

 

 

In session pullbacks, you're gonna need volume data, bid/ask quantities. On top of that, some chart basics SR and PA.

 

You need to have a rough idea of the amount of contracts traded each day on you're chosen market, and the amount of contracts traded it normally takes to turn your market.

 

On top of this you can view level 2, or the ladder.

 

Don't bother with mainstream TA, it doesn't matter how many indicators you use, it only ever equates to 50:50 (coin toss).

[jtrader500 10]

Would you consider going long on a falling cum delta .... some people would call this 'ease of movement'

 

The cumulative delta (it measures the diff b/n bid/ask market orders, which only a market order can trade into a limit order.

How I use cumu delta is to have a feel for which side is holding inventory out of sync with the prices. If the market went up 100 points and back to flat and there were 20,000 extra long contracts being held, I would ONLY factor that into my plan just to be aware of who and why they are holding, And I try to figure it out. NOT Trade off it.

Most people dont know how to use it, (I think you do)

 

Like today, I was shorting the whole day in and out, because of my plan. One main reason was that I felt the market had to fill the open gap, but because all the way down, I was looking at a good size positive delta divergence, I kept my stops tight and really timed my entries.

Toward the end of the day I was still short the down channel waiting for a final blowout breakdown. One reason I held on short was because I felt that the optimism in this huge dow runnup was overblown and those longs were not the smart money and would get squeezed being a fri and a weak trading day.

As a general rule (shhh, dont tell anyone) If you are closer to swing lows, The bullish divergences are more reliable. If Optimism is high after a nice run, (I wouldnt trade heavy

against it like I did) plan on there being more speculating retailers holding and hoping.

How do you think the institutions know where you are and how to crush us. This is one tool.

If you view the cumu delta as a channel like, bollinger bands, you can see the relative flow between people accumulating contracts till its too far and get slapped, then the unwind starts to happen.

You will see people try to trade off of this and get killed. Its only 1 tool, but a good one...

Thanks

[phoenix01 10]

In session pullbacks, you're gonna need volume data, bid/ask quantities. On top of that, some chart basics SR and PA.

 

You need to have a rough idea of the amount of contracts traded each day on you're chosen market, and the amount of contracts traded it normally takes to turn your market.

 

On top of this you can view level 2, or the ladder.

 

Don't bother with mainstream TA, it doesn't matter how many indicators you use, it only ever equates to 50:50 (coin toss).

 

Could you go into any more detail on how to use the bid/ask quantities and how to measure and use the contracts needed to turn the market? Are you suggesting looking at CD too?

[phoenix01 10]

The cumulative delta (it measures the diff b/n bid/ask market orders, which only a market order can trade into a limit order.

How I use cumu delta is to have a feel for which side is holding inventory out of sync with the prices. If the market went up 100 points and back to flat and there were 20,000 extra long contracts being held, I would ONLY factor that into my plan just to be aware of who and why they are holding, And I try to figure it out. NOT Trade off it.

Most people dont know how to use it, (I think you do)

 

Like today, I was shorting the whole day in and out, because of my plan. One main reason was that I felt the market had to fill the open gap, but because all the way down, I was looking at a good size positive delta divergence, I kept my stops tight and really timed my entries.

Toward the end of the day I was still short the down channel waiting for a final blowout breakdown. One reason I held on short was because I felt that the optimism in this huge dow runnup was overblown and those longs were not the smart money and would get squeezed being a fri and a weak trading day.

As a general rule (shhh, dont tell anyone) If you are closer to swing lows, The bullish divergences are more reliable. If Optimism is high after a nice run, (I wouldnt trade heavy

against it like I did) plan on there being more speculating retailers holding and hoping.

How do you think the institutions know where you are and how to crush us. This is one tool.

If you view the cumu delta as a channel like, bollinger bands, you can see the relative flow between people accumulating contracts till its too far and get slapped, then the unwind starts to happen.

You will see people try to trade off of this and get killed. Its only 1 tool, but a good one...

Thanks

 

Could you give more details on how to trade pullbacks using cumulative delta and how it can help you stay out?

[phoenix01 10]

Indeed - for the ES, this is the way I look at it...

 

Price goes up 20 ticks, delta goes up 10,000

Price goes down 8 ticks, delta goes down 1000

Price goes up 20 ticks, delta goes up 14,000

Price goes down 9 ticks, delta goes down 2000

 

To me, in an uptrend, this is what you want to see to give you the confidence to go in on those pullbacks.

 

Now - maybe you then see:

Price goes up 40 ticks, delta goes up 30,000 - be careful, there might not be anyone left to buy soon.

 

If we are seeing delta go down 3/4000 on the downswings & up 10,000+ on the upswings, I just keep going long. Once I see a down move with a big swing down in delta, then I'll consider shorts.

 

The problem though - it's not always crystal clear. You need to watch it for a while to figure out. It takes a bit of experience to figure out the 'murky' ones.

 

Here's a picture of - well - right now....

 

 

You can see that after the move down to 1246.50, we put in a goof move up which was also a good move up delta wise. Pullbacks are fair game to me once this has happened.

 

The fact that the pullbacks are of equal size does not go unnoticed either. It gives you an expectation of where to look for the next one. It's not a guarantee but in a situation like this you don't want to go long after it pull back 3 ticks. Nor do you want to jump in on a move after it has gone up 6 ticks - it's too late then.

 

As always - actual activity on T&S DOM give you your in - it may just be as simple as getting to a point where marker sellers are no longer interested in the current prices, that's where you jump in.

 

Where did you get your commutative delta indicator for ninjatrader? What version of the gom package is it and would you be willing to share it?

 

Thanks

[HARDMAN_GAZ 10]

Could you go into any more detail on how to use the bid/ask quantities and how to measure and use the contracts needed to turn the market? Are you suggesting looking at CD too?

 

 

No x 2. How about YOU put some effort in. Besides, if you didn't understand my previous post then you need time, learning and maybe mentoring.