It sounds like those who poo poo another’s profitable trading methodology simply don’t understand it. Thank you for your post.
It's not MY "methodology"... it's fundamentally Technical Analysis. It's GOLD.. but not MY gold... I'm just reiterating "Chapter 1 of Technical Analysis 101". It's fundamental... like gravity.
As a novice PA trader, sharing my 2 cents below: (disclaimer: I'm a beginner trader) Bottom Line Up Front--I see Friday as a bull BO (breakout) bar breaking the downward trend line, as the bears' 2nd attempt to BO down from a large bear flag failed (it's also a consecutive failed BO of Sep low as well as a failed BO of the multi-day trading range). Near term--since the down channel (one may argue it's a wedge, prolly doesn't matter) is tight enough, first breach may not succeed (Israel and whatnot, for instance, can provide a convenient excuse for a pullback); I'll be interested to see what kind of follow-through we get on Mon-Tue, and I'll look for a PB (pullback) to buy (for at least a second attempt to reverse up). If, however, the PB is deep and strong enough, I'll trade the other side as well ^SPY 5min chart with comments--I focus on the US cash session (esp with the 5min timeframe, features are cleaner to me without globex; hence using SPY chart). fBO=failed breakout. LL=lower low. DB=double bottom. MTR=major trend reversal (yes, all Al Brooks terminology) ^HTF context. HTF=higher time frame. I didn't mention in BLUF (Bottom Line Up Front) that I saw the market was very interested in that May/June midway (or was it a breakaway) gap, and I would consider the earlier D1 close below a false break and a 2nd failed attempt (first being the large reversal bar prior), which adds to the bull "reversal" case here. the indicator on the bottom is borrowed from LBR--her famous 310 oscillator and 2period ROC overlay. I use it for context (too much to go into details, but fair to say context supports we getting a pause from selloff here) ^entertaining what may follow... (IMHO, this sequence of BO PB price action seems to be common--ie, often enough it's likely >50% odds--following contexts similar to what we have up to last Friday 10-06; but I'm just a newbie, and even I know the market can do anything it wants to...) ^^I make a slide deck after cash close every day, summarizing the session, lessons learned, and whatnot. I took some slides from last Friday's deck... All constructive criticism is appreciated. I'm a newbie and eager to learn where my mistakes are/ how I can improve Hope everyone has a good trading week!
I think what most of us just want to see is either trades posted in real time, or a chart with your trades marked on it by the platform. Then we can see how you're taking your trades and if you are following the KISS rules. Here is the chart from Friday. We had a big drop at 8:30 after the jobs report, and then open at the big red O. So we try up for a few minutes, then down, and then we come back up again towards A. We don't hit A though, but is this close enough to try a short based on what you would call a matched high? At B we make a nice double bottom, but it doesn't go back up to the top. If you tried a long, how long do you hold for? Would this even be a profitable trade or do you exit at break even when it drops back down again? When we make a lower low down to C, at this point are you going to try and chase the breakdown? It sure looks like it wants to drop with the series of lower highs and right at C, it looks like its rolling over and getting ready to drop. At D, we certainly look like we are rejecting that high for a couple of minutes, so is this a short entry? We do break out though at E, but then go sideways for quite a few minutes, and even dropping lower down to F. If you chased the breakout at E, do you get out for lack of follow through? When we hit G, it was the price that we dropped from after the news, so we filled in that gap. Once again, do we try a short here since its just sideways? It would be really difficult to figure out the direction for the day. So what we would want to see is that you're following your rules by trying to take both longs and shorts, looking for those double bottoms and double tops, and then also see if you are chasing any breakouts, and what you do about breakouts that don't just take off and fizzle. There are easily a dozen trades you can take in just this first 2 hours based on the simple logic I outline, which I do think is well within the KISS principles. So showing us how you're using these principles to put on trades would in my opinion be a million times better than an audited statement, unless that statement of course had timestamps that we could use to plot your trades on a chart.
Nice analysis, well spotted second FBO in SPY in the first chart, that was a nice long opportunity, not only because it failed to break out lower, also because it rejected the previous day low. Maybe it's also interesting for you to add other indexes like QQQ and DIA. You will see that at the same time SPY had the second FBO the DIA also failed a BO lower and strongly rejected the previous week low and the previous day low, confirming a possible change in direction. Market internals can also be used to confirm the direction of the market or to spot a possible change of direction.
You don't want much, do you? Sheesh. This is exactly why I don't get involved in posting trades. (If I were offering a paid service of some kind, that would be different, of course.) I've said over and over, "Buy Support, Sell Resistance, Chase Breakouts, Trade with stops", just like it says in TA books... and I've shown several support and resistance examples. It was never my intention to teach "Price TA" on ET. My recent posts of S/R examples were illustrations of how the market responds to tests of S/R. It's up to you to take it from there if you care to.
I let my mind work on this a bit before responding. I consider the notion of "a dozen trades within 2 hours as unreasonable." Price TA works on all time frames and in all markets... but you know you can't trade every tic nor every little wiggle. You need to figure out which trades offer a big enough R/R for you to risk your money upon. Personally, I see 1-3 decent trades per day... sometimes up to 6 if the market trades back-and-forth a well defined range. (If you were OK with being manic, I suppose you might define the params for 12 trades/day... but that's not me. 12 good trades within 2 hours? Not likely in my view.) The plays I highlighted on earlier posts were of the "more substantial" variety. That is, the obvious ones you really should get. Learn to get them first before you try to conquer the minutiae. (And please, get over your obsession with false break-outs... not just you, but everybody. They're not as common as most traders seem to fear... nor do they do much damage unless you screw up.)
I do absolutely agree that I am pushing it with my suggestion for the trades, but at the same time, they are following the same concepts of just buying swing lows and selling swing highs. Of course its better if its on an hourly chart, since that low or high is more prominent than a swing low put in a few minutes after the open. I think this is where you are wrong, and even Volpri would disagree with this if you follow his work. His suggestion is that when in a range, 70% of attempts out of that range fail, and I tend to agree. On my chart I showed, I think I even showed exactly a false breakout which happened at C. It might have only dropped 4 points, but it certainly looked like down was the direction given the lowers highs, but if failed, and price quickly rallied. Now if you don't consider dropping 4 points to be significant, then one has to wonder when you get into a trade that you consider worthy of chasing. Do you wait until price has gone down 10 points? This many would say is chasing the entry, and those often fuck you over. But since you say chasing is what a trader should do, this really requires some nuance. For the record, I don't doubt your ability to trade Scat. But what I do doubt is that your trades are simple. You have a filter from lots of experience that perhaps keeps you out of trades, but if a trader was going to follow KISS principles, they would have to take each trade, and hence lose a lot. I'm also sure you enter at not the best places, and hence many entries once again don't follow the simple logic. If you actually showed a bunch of trades on various days, I'm sure what we would see is that half of what you do is nothing like following the KISS method, and this is where the magic sauce is.
Perhaps its a definition issue, but here is what I would call another false breakout. At the red arrow, ES dropped below the opening low, and then climbed back up. It first looks like its breaking out to the downside, but then goes back into the range. Is this not a false breakout?
No. Market had already broken to the downside and was in a downtrend. The opening low offered support, and was accepted. Many of you could solve an analysis problem if you just add a 0.1% fudge factor to your Hz lines. In this case it looks like ±4 handles worked fine. Particularly if you use the bar close.