TBH not all of this traded in realtime today but God this action made me think.
As suggested I've been looking at the session in bars not candles and prefer the look of it. It makes price flow evenly as the "sessions" are less obvious so price action becomes one not 150 individual little things. However I'm still technically using candle entries so am swapping between views...
It's interesting when reading Al Brooks "Reading price action ...." he says (and I paraphrase because I'm too lazy to find it) "not to worry about data and to just trade the price action that it creates because it is perfectly valid" and that is precisely what happened this PM. US initial jobless came out BTE and the dollar rocketed and price action would have got me in on the move.
I'm using a two higher (lower) closes abv/blw a supply or demand line to confirm it as broken.. and a one close as it is still intact (any readers thoughts on this I want to hear please) So...
TBH I would probably have walked away after the gain from 3. BUT technically I should be able to continue trading this. A few rhetorical Qs that I would actually like answered if anyones got time...
Should I always look for a reversal on a spike?
Should I continue to trade between levels that have been broken to hell?
Should I simply quit after a large move?
2. was a long because if you look carefully 1 marks 2 bullish closes above the supply line.
3. was a perfectly valid short as it hit the supply line from the London session and reversed down from there after only one close above it (despite there being no TLB this was a spike top)... R+5.5
NB as price was moving down I started mapping demand lines from yesterday to help me find the next possible entry (is this correct?)
4&5. spike bottomed after validating a demand line from yesterday putting in reversals so both were long entries.
NB? Once price reversed at the demand level in 4&5 I removed the other demand levels I drew in as a guide (4 dark pinkish lines) as took this as the market confirming what was and wasn't relevant.
6. was a short off the short term supply level between 4&5,
7&8. were longs off PBs to this supply (now demand) level
As suggested I've been looking at the session in bars not candles and prefer the look of it. It makes price flow evenly as the "sessions" are less obvious so price action becomes one not 150 individual little things. However I'm still technically using candle entries so am swapping between views...
It's interesting when reading Al Brooks "Reading price action ...." he says (and I paraphrase because I'm too lazy to find it) "not to worry about data and to just trade the price action that it creates because it is perfectly valid" and that is precisely what happened this PM. US initial jobless came out BTE and the dollar rocketed and price action would have got me in on the move.
I'm using a two higher (lower) closes abv/blw a supply or demand line to confirm it as broken.. and a one close as it is still intact (any readers thoughts on this I want to hear please) So...
TBH I would probably have walked away after the gain from 3. BUT technically I should be able to continue trading this. A few rhetorical Qs that I would actually like answered if anyones got time...
Should I always look for a reversal on a spike?
Should I continue to trade between levels that have been broken to hell?
Should I simply quit after a large move?
2. was a long because if you look carefully 1 marks 2 bullish closes above the supply line.
3. was a perfectly valid short as it hit the supply line from the London session and reversed down from there after only one close above it (despite there being no TLB this was a spike top)... R+5.5
NB as price was moving down I started mapping demand lines from yesterday to help me find the next possible entry (is this correct?)
4&5. spike bottomed after validating a demand line from yesterday putting in reversals so both were long entries.
NB? Once price reversed at the demand level in 4&5 I removed the other demand levels I drew in as a guide (4 dark pinkish lines) as took this as the market confirming what was and wasn't relevant.
6. was a short off the short term supply level between 4&5,
7&8. were longs off PBs to this supply (now demand) level
Nice bars! How does the transition feel to you? I like them for reasons I listed before, but that doesn't necessarily mean they will work for you. I do believe, however, that getting away from the candles helps subconsciously and/or consciously placing less emphasis on the individual bars.
ReplyDeleteItalics questions - using closes is regressive thinking - it defeats what you are trying to accomplish here. There are no closes except for Friday evening. The SL, as you had drawn it, is broken once price pushes through it. However, the SL break is only an indication of a possible change of stride of the market. The extent, duration and distance, of the buying and selling waves is what matters. Now I understand that is all good in theory, but there has to be a practical application of these ideas. If your plan dictates to exit when the SL is breached, you exit when the line is crossed. There are no closes. However, think about what is causing the SL to be breached - did buyers overcome sellers or are sellers merely taking a break?It is important to look at the pace of the movement to the low (prior to the pullback breach the SL) - was this climactic/parabolic? or the big question, is there actually support there?? The second is to look at the speed or determination of buyers during the pullback - are they being forceful? Are their micro pushes being met with equally strong selling? At the start, the SL breach exit is the way of overcoming fear, knowing exactly when you will get out. However, you need to keep an open mind to all of the above questions as you move forward with your study. Often, you will find that when you look left, $ is merely testing some recently broken support or resistance before continuing on its way - but mark the reaction high, that will be important. Lastly, there is nothing wrong with re-entering should price breach the SL but then immediately resume on its way.
And my response to your questions, for what they are worth:
1) No, a spike can be either a climactic move or it can be supply/demand overcoming the opposing force. You'll see spikes at selling/buying climaxes, but you will also see them on a breakout through support/resistance.
2) There are those who draw S/R as if its something that gets used once and then thrown away. These are people drawing S/R merely as swing highs and lows. While those points are important because it indicates a price point where buyers and sellers were no longer able to transact (thus causing prices to move away from that point), a majority of the volume is found in the middle. And this large amount of volume represents traders positions, some losing traders, other winners who will "defend" their position. These ranges are very similar to the concepts of market profile - limited volume on the extremes and high volume in the middle and represent temporary "agreement" of prices between traders. These ranges will at times get blow through, but should typically provide some sort of resistance that traders will have to work through. So I'm not sure if this answers your questions, but just drawing swing lows and highs is not what drawing levels is all about. Its part of it, but not everyone will be important.
3) It depends on "what you want and what you are willing to settle for". I trade for 90 minutes. I don't have a daily loss or profit limit. I let the market provide me with what it will during that time frame. What do you want? What will you settle for?
One more comment - I read a couple of your notes. SLs and DLs do not provide support or resistance. They are there only to alert the trader to change in the stride of the market, perhaps indicating renewed interest by the opposing force (thus causing a longer reactionary wave than previously experience in the move). Nonetheless, if you are profiting from using them as support or resistance, I would be a fool to tell you not to. I just wanted to clarify what they are -
Hey bud! Transition feels good although I ballsed up this morning by reverting back to candles (dickhead!) I was struggling with the big hi wave sessions. TBH I think I would have done better with bars as I wouldn't have read so much into it (the candles make price visually look far more dramatic and probably made me overreact).
ReplyDeleteThanks for taking the time to answer the questions and your comments, awesome, I get everything you say and agree. But...What you said about volume being found in the middle of a range and market profile is something I am struggling with. I read your posts that explain it. I get the concept but in practice it's not gelling. I need to do more work on this.
Also big thanks for the "close/regressive thinking" comment and going into the risk side of it. That is precisely the thing I was having a problem with and predictably you foresaw this. I am going to keep re-reading this comment and keep working through your new blog, which BTW is brilliant. I can't get through it as quick as AT ;-) though because I'm thick and need about 3 pages open chart, description and abbreviations.
BTW what's you're name? it feels weird calling you JMF3 after you've helped me so much ;-)
John -
ReplyDeleteAnd you are doing the work. It took me forever (it seems) to realize that this was a business that required lots of work [duh - like any other business]. I kept thinking I was the chosen one and could do it without the work. Lol... rude awakening!
To be honest, I have my 60/10/1 minute bar charts. But I also watch 30/5/1 minute candle charts, setup as my original mentor had. He mentored me for all of about a week before I decided that I was too smart to put in the work he wanted me to. What an idiot... He said, "all you need is price, volume, and horizontal lines." I'm sure he's surpassed several millions now in his trading profits. I've always wondered what it would have been like if I was just more humble then, instead of taking the road I took to get back to the same spot. Perhaps it wouldn't have been any different - who knows. But I'm here now and closer than ever before to "getting it". Nonetheless, I still have bad habits that sneak in - like when I switch to scalping puke's versus actually reading the price. I guess if it makes me a profit, I can't complain, but its not what I want to be doing.
As for AT and I, I think trading the index futures provides a different experience than trading currencies. We know when the movement will really start, and we know when it will typically die down. And that is our trading period. EUR/USD moves several times during the day, but with less predictability. That's why I don't trade it.
John good to meet you! And thanks for sharing this with me, it certainly cheered me up and is very instructional. I'll keep chipping away buddy ;)
ReplyDeleteIs this why you swapped to the NQ, or am I mistakenly thinking that you used to trade the EU?