Firewalker's Journey: A path of discovery in search for enlightenment

This is a discussion on Firewalker's Journey: A path of discovery in search for enlightenment within the Trading Journals forums, part of the Reception category; Originally Posted by Tubbs I really don't think price moves for a reason on 5 min charts - it just ...

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Old Aug 3, 2006, 6:43pm   #78
 
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Quote:
Originally Posted by Tubbs
I really don't think price moves for a reason on 5 min charts - it just does. You'll never track down that reason. Just look for signals to it's moving. Quantify them all. Do not trade in generalities - there is no such thing as a general trade.
Have you looked at my charts where I'm trying to indicate signals?
I guess I have some psychic ability to read all the wrong signals but still, have some points to argue in favour of them. If anybody were to sat next to me, and do exactly the opposite of the trades I'd took he would be a millionnaire by now.
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Old Aug 3, 2006, 7:25pm   #79
 
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Originally Posted by firewalker99
Ok, I'll share some essentials of my trading plan for taking an entry.
They are however based on S/R lines or trendlines; that's where I fail to make it. Often in hindsight I see other points that indicate a better support zone, and if I'd taken my entry conform strategywise that would have been a possible profitable trade. This part doesn't say anything about position sizing, risk reward, profit/loss, fixed or variable target, stoploss, etc. If you'd want me to add let me know but perhaps it's better to take it one step at a time.

1) If a break through a previous resistance level should occur on a wide range body (closing above middle, this does not necessarily imply one bar try to "blend" bars), check if volume is equal or higher than the previous upswing. If it is (but not extremely high because that would indicate too much supply), than wait for a retracement (lower volume, small spread) to touch the resistance line. If it waffles around or slightly above the line for a minimum of three bars on lower volume (possibly dry-up), than take an entry. Also check for support to the left of the weekly/monthly chart if the marubozu upbar didn't create an air pocket without support.
In case of a support line -> similar situation but turn everything around

2) After a potential selling climax (of course easy to say in hindsight, although I have described some elements where too look for), look for a high volume wide spread hammer that closes above the low of the previous wide spread down bar (sometimes you'll have to "blend" two bars to see it). If price slowly starts to move up than wait for it to go back very near or to the lowest point of the SC. On that point if you see three bars that have an end above the middle, place your long entry.

3) Once you see a triangle (coil, hinge,...) developing check what happened before. This should be a low volume move converging into a point in the future. If after a selling climax, enter long on one of the lowest points, then if a false outbreak would occur you'd still be breakeven. If price has been ranging before, then if price > opening price => go long on lower boundary, otherwise short on upper side.

For now, I'll reframe from posting anything further. Although this is my journal, I'd have no problem with anybody else explaining his/her plan in this thread...
While I admire the work you've done here, I can now understand why you're having so much trouble. If I were to try to trade this, I'd be spending more time banging my head against the wall than trading. This is not to say that what you're doing here is unusual. More people go through it than will likely admit it (or admit having done so at some point in a past best forgotten). I went through something similar before deciding that it was all nuts, throwing it into the trash, and starting all over again. You're trying to combine S/R theory, trend theory, candle theory, pattern theory, your own take on point-and-figure, and trader psychology into something that prompts you to enter or not enter a position at a given price. This may help explain your frustration.

Quote:
If I'm still at a loss after checking the theory, going back to it, having a break for two weeks & taking some time to do something completely else, coming back and checking it out all over again to have one the same conclusion. I'm unable to read the charts in real time. Indeed people get frustrated after that, I haven't given up but I see no point in getting back to the books when they apparently haven't taught me anything useful or I am unable to put it into practice somehow.
I suggest beginning tomorrow with what I've suggested. I'll repeat it here for convenience:

1. Pre-market, post charts of the previous day, the previous week, the previous month. Plot whatever S/R lines you need for the current day.

2. State where you plan to go long or short after the open and why (no theory).

3. State what your stop is going to be and why (no theory).

4. State what your target(s) is(are) and why (no theory).

5. State how and where you're going to exit and why (no theory).

That's it. Nothing more.

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Old Aug 3, 2006, 8:14pm   #80
 
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Originally Posted by dbphoenix
While I admire the work you've done here, I can now understand why you're having so much trouble. If I were to try to trade this, I'd be spending more time banging my head against the wall than trading. This is not to say that what you're doing here is unusual.

I suggest beginning tomorrow with what I've suggested.
Db
Do you mean it's all crap I wrote?
I'm not sure in what direction a trading plan should look like then... I've seen examples, people saying "if I see two shadows above a resistance line, I'd short", if I see a shooting star after high volume down bar I'd short, stuff like that... I was just trying to sort out something for myself and I've assembled some screenshots where my entries do actually work. But it's not a guarantee for success, but then again, no strategy works for every trade right?

Could you perhaps give me a hint about what a plan should look like then?
As for your suggestion, I'll start doing that tomorrow and leave volume out of the equation as you also suggested. To be honest, I'm not sure how I'm going to place an entry with leaving all this in the trashcan, only using S/R and not using any theorie. Seems like throwing darts at a cheesecake...
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Old Aug 3, 2006, 9:33pm   #81
 
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Quote:
Originally Posted by firewalker99
Do you mean it's all crap I wrote?
I'm not sure in what direction a trading plan should look like then... I've seen examples, people saying "if I see two shadows above a resistance line, I'd short", if I see a shooting star after high volume down bar I'd short, stuff like that... I was just trying to sort out something for myself and I've assembled some screenshots where my entries do actually work. But it's not a guarantee for success, but then again, no strategy works for every trade right?
No, it's not crap. It's all part of the process. And everything you've read and everything you've heard and everything you've tried will be used in some way at some point. Nothing is wasted.

However, now it's time to put it all together into something that works for you. Looking at the examples of others is fine as far as that goes, but what works for somebody else is not likely to work for you because it won't be yours. And, no, not every trade will yield a profit. However, that doesn't mean the strategy is at fault. But the strategy has to yield a consistent profit over time or it's not worth using.

Quote:
Could you perhaps give me a hint about what a plan should look like then?
As for your suggestion, I'll start doing that tomorrow and leave volume out of the equation as you also suggested. To be honest, I'm not sure how I'm going to place an entry with leaving all this in the trashcan, only using S/R and not using any theorie. Seems like throwing darts at a cheesecake...
Don't put it in the trashcan, then. Just set it aside and focus on one thing. Try whatever seems most logical of everything you've tried so far.

As for the plan, you've made a good beginning, but it's very complex. Have you tested all of that? Take your "1", for example. Does that tell you exactly what to look for? If so, you'll at least be plotting potential S/R levels. You'll also be posting the previous day's, week's, month's chart. Then, according to what you've written, you'll be waiting for a WRB. Translate all of that into specific actions. Then, when the trading day begins, all you have to do is wait for the conditions you've specified. You don't have to guess. But you have to specify first (see my last post). That's part of the plan.

If you want comments, post this at night in order to give people plenty of time to look at it and ask their questions or offer their suggestions.



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Old Aug 4, 2006, 7:41am   #82
 
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Originally Posted by dbphoenix
If you want comments, post this at night in order to give people plenty of time to look at it and ask their questions or offer their suggestions.

Db
Well, as I'm in quite a different time zone as you are, I'm not able to post it at the evening because that would mean the middle of the night here in Belgium


I invite everybody to give me their comments, whether it's on a chart from a couple of days ago doesn't matter, I don't expect to have immediate responses although I appreciate any "live" feedback.
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Old Aug 4, 2006, 8:59am   #83
 
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August 4 - taking it from the beginning

firewalker99 started this thread As Dbphoenix suggested, I'll begin today by stating charts, entries, stop, targets, exits.
It's all very basic, because I want to avoid having endless discussions back and forth. Let's focus about essentials, if I'm unable to get that right, no use in letting myself slip away in the details.

1. Pre-market: I attached a chart of previous month (1day bar), week (30min bar) and day (5minbar) with S/R lines.

2. After the open:
- when near 5710 short
- if price drops below previous S 5690 wait for it to retrace up to the line, then short again
- if price drops below Support 5670 wait for it to retrace, then short if selling volume was still high enough (not after probable selling climax)

* In case price breaks up through 5710 on high volume bozo, wait for next bars and try to enter long around 5710 if you see the signals as described in "1". Than wait and see what happens if it reaches previous resistance around 5737.50. Anyway, that's where points 4 & 5 come into play.

3. Stop: my stop will be placed at ATR. So depending on the volatility at the time of entry, stop can be small or large. Why? I don't want to get stopped out to early.

4. Target: if I trade two contracts the first target is 2x ATR, second is 3x ATR.
Why? I think is risk:reward of 1:2 or 1:3 is not aiming too high. If I'm unable to take small profits, I don't think I'll ever be able to take big profits.

5. Exit: After my first target is reached, I'll place my stop to breakeven. So either I'll exit on BE or on 3x ATR with second contract. If first target isn't reached, than both contracts will be out on the stoploss.
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daxmonthly.jpg   daxweekly.jpg   daxprevious.jpg  

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Old Aug 4, 2006, 12:26pm   #84
 
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firewalker99 started this thread So, let me start be getting into detail with the first three trades of the day.
I added S/R lines that formed throughout the day in blue.

"Near 5710 short": didn't happen unless you take in account first bar.

"Price drop below 5690":
- short at 1 following steps in my plan, after breakthrough S on WRB bars.
- stop = ATR = 4 points
- first target = 5682 and second target = 5678 were both hit so I'm out of the trade

After what I believe to be SC, application of same principles:

"Long near 5690":
- Exactly what I've described in my plan "break through a previous resistance level 5690 should occur on a wide range body" then go long on retracement. So at 1100 I went long @ 5690 marked by point 2 (placed a limit order before).
- stop = ATR = 3.5 points
- first target = 5697 and second target = 5701 were both hit so I'm out of the trade

"Long near 5695":
- Same situation actually, although I "blend" the three upbars from just after 1100 together in one WRB that moves through 5695 without hesistation. So after that I placed a limit order @ 5695 that was triggered at 1200
- stop = ATR = 3 points
- first target = 5701 and second target = 5704 were both hit so I'm out of the trade
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