Swing trade missed opportunities

This is a simple setup I have been using on the daily chart for the past six months or so. I find it works best on the EU and UC as they have a high negative correlation.  Unfortunately I was so preoccupied with my studying of intraday price action I missed them.  A fellow blogger alerted me to them as he uses a similar setup (http://longechoes-updownsideways.blogspot.co.uk/)

I buy when price closes above the 21EMA (short when it closes below it)

ISL:  low of confirmation (high if short)

IPT:  1:2

181113 Staying with Trend Read

Clear uptrend with price making higher lows.  An untradeable M top scalp because signal bar was far too large and nestled in barbwire, meaning the only acceptable trade was waiting for another w trend entry.

151113 Range to Trend Read

Still Practising. Clear overnight range had developed and price was stuck in it. So could only buy the lows and sell the highs to begin with. Then a down TL became clear,  bar 4 was definitely a trade but whether I would have taken it is questionable. However once price made a lower low and lower high before bar 5, I'm certain I would have taken the bar 5 EMA RL short.

141113 Second Entry Trades

Still practising. Pretty clear down trend from the start. A DWTL break occurred but had to expect a test of prior lows. As price didn't make a HH and HL, expected down trend to resume.

131113 Clear Downtrend, Fighting Urge to CTT

Still practising as digesting Brooks book. Trying a slightly different format today, all annotations on the chart.

Summary: Today demonstrated to me just how difficult following the trend is, despite it being the correct thing to do. Between bars 1 and 2 I was looking for every possible excuse to get long.  Trying to make price do a TC overshoot, counting 3 legs down,  thinking there might be a significant TL break. But all of these were nonsense. There were no meaningful TC or TL breaks and a trend can last longer than 3 legs.  The fact was price was making lower higher's and this was the direction to take and all that mattered!

Trading and Boxing

Something I have never mentioned before is my love of boxing.  I started boxing rather late, around 20 years old (most boxers who want to compete start at around 11-15). I was faced with the desire to compete but the realization that I had a huge knowledge and experience gap that I would have to fill if I wished to be a "competitive competitor". The long and short of this is I ended up training hard for around 4 years and had a few fights along the way. As I progressed my desire changed from wanting to compete to wanting to find a method of boxing effectively.  I did all I could think of to acquire knowledge, private coaching, books, changed clubs, dvds etc. I basically found that everyone had some good tips and advice but no one had an actual method.

I am now a boxing coach and continue to pursue this one method ideology not only for myself but for all I teach, i believe there's a reason boxing is called "the sweet science". There is a right and wrong way of doing everything, and if you learn the correct way you are highly likely to be successful in your attacks, while if you execute them with bad form you are likely to lose the exchange. Once you have this science down you can then bring in the "artistic" side and so legends are made,  Ali,  Ray Leonard, Tyson, Mayweather et al. This method approach I believe is entirely transferable to trading. I of course concede that teaching creativity is another matter entirely but I do believe all can learn the science. Over the years as a boxing coach I have developed my own method which I teach to my boxers and now watch them box competently and competitively. This method teaches the science of boxing in steps, I won't bore any would be reader with the details but they can basically be divided into 3 steps 1. physiology (physical correctness in all actions) 2. psychology (what to focus on while competing) 3. probabilities (learning and being aware of the best times to attack). I also guess a "pre-point" could also be made of warming up. The method is really quite simple, but that is what is required for a stressful environment and is probably why this method is on the whole successful (because it's easy to remember and learn).

Most aspiring traders have read "The Market Wizards" and are aware that those covered in the book made consistent profits while only a handful made truly astronomical sums. It is the former that I believe a method can be developed for...

Trading +boxing = Troxing?!

Ws / Ms and general weaknesses

Downward TCOS + "W" bottom =  bias Long
1. was an H1 , but was low probability so hope I would have avoided.
2.  was an H2 at 21EMA =  high prob,  would have traded into R/prior high (1 : 1.5)
3. is a TC OS
4. was an M2S (21EMA PB) =  high prob scalp into prior highs (1 : 1)
between bars 4 and 5 bars really started overlapping making any setup unlikely to work...
5. was a failed L1 / messy "M" top that couldn't even take out the low's of the 1st leg down and more importantly the  UWTL, making...
6.  H3 (failed L1) a high probability long scalp at least into 252EMA (1 : 1)

Summary: I know this stuff but sometimes it's good to hammer this stuff home...
1. overlapping bars are not good to trade around or in.
2. When overlapping bars occur I am better off waiting for a higher probability trade, have a bit of patience!
3. A W 2nd leg up should take out the high of the 1st leg,  if not this shows considerable weakness. The W bottom before my session started is an example of a strong W bottom,as the 2nd leg surpassed the 1st leg's high).
4.  a M top 2nd leg should take out the low of the 1st leg, if not this shows considerable weakness. The M top during my session is an example of a weak M top, as the 2nd leg could not surpass the low of the 1st leg.
5. Ultimately it's all about trendlines and high lows/ lower highs.  In a confirmed uptrend , if price continues to make higher lows, I've got no excuse not to get long at every opportunity (higher low).  The reverse is true for a downtrend.

Chop Suey Practice

Blimey what a morning. Clear overnight UWTC  broke down into a fairly clear DWTL with 3 legs until it hit the h1 21EMA where it "W" bottomed.

1. would have tried to take a swing long off the second bottom, esp seeing that the DWTL had been tested. but that fizzled out pretty quick for a loss (1: -0.2)
2. stopped out of first trade and price made a  "M".
A rather unclear UWTL could be drawn from the "W" first low so...
3.  would have tried taking a w trend long off the UWTL, price then stalled at prior highs for a BE (1: 0)
With so little progress either direction, price appeared to be in range so only option was to sell high or buy low.
4. Would have got short off the 3rd top at the RNG high back into H1 21EMA (1 : 1.5 at the v best)

Also looked at the EJ which was clearer than the EU , however the spread size would have made it hard to trade.

Clear DWTL with 2 legs down to test H1 21EMA, this then BO and PB to 21EMA made for a perfect...
1. MSR (21EMA PB) long swing for a (1: 0.7)
this move finished 3 legs up by bashing into R making it at least a valid scalp back into S so...
2.  2nd entry short into S ( at best 1:1)

Summary:  difficult , but EJ was definitely easier to trade than EU.

Struggled to read Action added a LT MA

A very difficult morning for me to read despite a clear UWTL break and "M" top earlier this morning. I struggled to find a clear TL / TC that defined the downward trend. The nearest I could get was the blue TC shown. I also struggled as the 21EMA was hardly acknowledged by price.   I added in the 252EMA (H1 21EMA) for extra clues.

Obviously after 3 legs up and an M top my bias was on the short side.

The first clear trade in my session came at...
1. TLOS short at least into the prior low (a scalp) would have been reasonable but the correct trade would have been to swing the short as the trend was down and the TLOS shows strength. However it would have been stopped out near BE. (1 : 0)
2. confused the issue as price made a "W" bottom
3. was a 21EMA RL short, but I would have struggled to takes this after the W however the TL had not been broken so the trend had not yet turned, so should have been traded. (1 : 0.7)
4. tested the H1 21EMA and made a 3rd bottom of sorts,  it marked the end of two clear legs down from 1 ,  and three messy legs down from the "M" top, so was a at least a scalp long, if not a swing long. (1: 2)

I also looked at the EJ as it is highly correlated to the EU and often has cleaner setups and was once my preferred pair... it proved a much easier chart to read today... clear TL and respecting the 21EMA

1. 21EMA RL short  (1 :2)
2. TCOS, test of 252EMA and 2 legs down =  long scalp back into TL (1:1)
3. Right shoulder long (1 : 1)

Summary:  It is an interesting day as I feel as though I should feel that I am cheating by switching pairs and adding an additional MA to my chart. I am certain that Brooks would condemn me for adding the additional MA but switching pairs i doubt he would have issue with as making money is paramount and finding the clearest action will help with this. But I must say that I don't feel particularly guilty for adding the 252EMA either. I understand that this is his method and it is not always going to fit with my psychology. TBH I think when in doubt adding a longerterm MA (at least for me) helps as it give me an idea of where price might retrace to.  It seems logical that if price is drifting around, a return to mean will likely give it some clear direction. 

Failed "W" turns into triple bottom

a clear TC and TL could be drawn this AM and the legs of each move were far easier to see too.

1 was a TLOS which is sign of trend strength so my bias was on shorting.
2.  was a L1 and as my bias was short I would have taken it and swung it into the TC (approx 1 : 1.7 IPT)
3.  was an H1 and marked the end of 3 legs down (so was the exit for the prior trade), which in itself is a REV but is an early entry so would have avoided.
4. broke the DWTL which is a trend REV so my bias would now be on swing long,  although expect a test of bar 3 low.
5. was an L4 , but after a TL break could only be scalped into the prior lows, so avoided this to prepare for the rev.
6. confirmed a "W" bottom and was an H2 so is where I would have liked to enter a swing long. (aprrox -0.7)
7. is an L5 and is where I would have been stoped out
8. marks a second small "W" (even a triple bottom) and is an H3 swing long  (approx 1: 2.3)

Summary : despite 8 not being within my trading session. I hope I would have stayed around for it as the short side was looking very weak.

More reading practice JAP closed

So there was a clear DWTL and UWTC that could be drawn this morning. But the legs of the moves were far harder to see.

Just before my session started price had entered a TTR (tight Trading range) which is usually a continuation pattern. So with a clear trend up I looking to get long near the low of the TC.

1. an M2S (21EMA PB) offered the first entry (approx 1:-0.2 TSL)
2. another MS2 (21EMA PB) offered the second entry (approx 1:-0.2 TSL)
3. a final MS2 (21EMA PB) offered the third entry (approx 1: 1.2 TSL)

Summary: a less profitable day, but with JAP closed this might have been a factor especially around the LON open.

011113 More reading practice

Quite easy to spot UWTC and various TLs

after the 3 legs up and TCOS that met prior resistance my bias was on a short Reversal, so was looking to swing.  

1. was a L2 after all the topping signals so a perfect short swing (approx 1:6 TSL)

2.  was a M2R (21EMA RL) and a good short swing( approx 1:-0.5)

3. was another M2R (21EMA RL) and a good short swing( approx 1: 1.2)

311013 when legs are difficult to spot, use trending highs and lows as guide

So more practice this morning  followed by some reading of Al Brooks.  I was questioning whether I should continue to blog this bit of my trading, as my entries have been pretty monotonous recently but I realized that first and foremost this is my trade journal (not a blog) and keeping a record of my progress is most important.

Today 2 clear DWTL and an UWTC could be drawn but once the LON session started it was particularly hard to spot the legs of the UWTC. This made me realise how important it is to keep my eyes on the big picture. Despite the Legs being difficult to see, what was clear is that price was clearly making higher lows so a bull was in place. IDing all the H/L 1,2,3,4 helps with this as not only are you spotting the legs you are focusing on the turns (his/los)

1 + 3. were a "W" bottom. Both bars were out of my session (i wasn't even awake), so although trades took place between them I wouldn't have taken any.

The move coming down to bar 2, although difficult to see was a 2 legged move, 2 bear trend bars separated by a bull doji.

The following bars could all be renamed slightly differently but they are still H/L setups regardless of their number. The most important thing here is that after the "W" and DWTL break,  price is making higher lows  (3,5 and 7) so the market is in a bull trend..
3. was an H1 and marked the 1st leg down
4. was an L2 but after a"W" and DWTL break and 21EMA break so the bias was on getting long.
5. was a rather imperfect H2 as the signal bar was not the low but marked the end of the 2nd leg down
6. was an L1 but again bias is long so not traded.
7. is a much better H2 and should have been traded. (aprrox 1: 1.5 TSL)
8. is an L2 and marks the 3rd leg up (1st 3-4, 2nd 5-6, 3rd 7-8)  but is the first test high of the TC and is a counter trend trade so should be avoided.
9. is and H3 but is rather OE so again should be avoided
10. is an L3 that forms a "M" at prior R, is a second test of the  top of the TC, and meets a LT DWTL making it an ideal short (approx 1: 7 TSL)

301013 more practice and reading

This morning started choppy again.  I found it relatively easy to spot the TL and TC although  because of the chop I found identifying the legs of the moves far harder. Although there was a TC OE and subsequent test of of it that created a "M" top, this was not as definitive a REV as a TL break (a breakdown of the TC low)  that I felt I needed to commence trading in this circumstance.  So my plan was to wait for an actual BD of the TL (TC low) and then short the RL or wait for a continuation,  whichever confirmed  first.

What happened was after the "M" top was there were 3 (very) messy legs down, seeing that it this is a reversal signal and that it coincided with the UWTL and prior S.  getting long on the H2 would be the best entry.

Bar 1  was an entry H2 at UWTL  (approx 1:1)
Bar 2 BO of R and PB
Bar 3 was an L1 and marked the first leg up (expecting at least 2 legs)
Bar 4 was an H3 (PB entry) Long (approx 1:3)
Bar 5 was an L3 and marked 3 legs up so would have shorted a scalp back towards 21EMA ( approx 1:1)