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 firewalker99 I think I got lucky because of those spikes that just touched my S/R line, in ...

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Old Aug 4, 2006, 9:28pm   #89
 
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Quote:
Originally Posted by firewalker99
I think I got lucky because of those spikes that just touched my S/R line, in many cases they just hover above without me entering and missing on a profitable trade. On other occasions all S/R are all mixed up.
And in all other such occasions, did you follow exactly the same protocol?

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Old Aug 4, 2006, 9:47pm   #90
 
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Quote:
Originally Posted by dbphoenix
And in all other such occasions, did you follow exactly the same protocol?

Db
It's the first time I've used charts from the day/week/month before to draw S/R lines, in all those other occasions S/R lines where drawn throughout the day itself.
What is your impression now that you've seen my "plan"? You may be honest, I'd rather know where I'd stand than beat around the bush.
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Old Aug 4, 2006, 10:25pm   #91
 
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Quote:
Originally Posted by firewalker99
It's the first time I've used charts from the day/week/month before to draw S/R lines, in all those other occasions S/R lines where drawn throughout the day itself.

What is your impression now that you've seen my "plan"? You may be honest, I'd rather know where I'd stand than beat around the bush.
If this is the first time you employed this particular approach, then, yes, you were lucky, even though plotting longer-term S/R may have given you a slight edge, which would make it prepared lucky, which is a higher-class variety. However, if you continue to suspend your trading and apply this approach to, say, 20 days' charts (one trading month), you'll have some indication of the probability of your success, which will give you something more solid to rely on than luck, even prepared luck.

As to your plan itself, I can't say much about it since it incorporated volume and you didn't plot volume on any of your charts or mention it in the account of your trades, so I really don't know if you did what you planned to do or not. Can you clarify this?

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Old Aug 4, 2006, 10:46pm   #92
 
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As to your "context" charts, I did make some minor adjustments, but you seem to have a handle on S/R, so for now I don't see this as an issue.
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Old Aug 4, 2006, 10:50pm   #93
 
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Quote:
Originally Posted by dbphoenix
If this is the first time you employed this particular approach, then, yes, you were lucky, even though plotting longer-term S/R may have given you a slight edge, which would make it prepared lucky, which is a higher-class variety. However, if you continue to suspend your trading and apply this approach to, say, 20 days' charts (one trading month), you'll have some indication of the probability of your success, which will give you something more solid to rely on than luck, even prepared luck.

As to your plan itself, I can't say much about it since it incorporated volume and you didn't plot volume on any of your charts or mention it in the account of your trades, so I really don't know if you did what you planned to do or not. Can you clarify this?

Db
I'm sorry perhaps I didn't clarify that enough. I left volume completely out of the equation because you asked me to. I didn't only left it out of the chart but I also neglected to even take a look at it. So I removed the references to volume from my plan:

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) then wait for a retracement to touch the resistance line. If it waffles around or slightly above the line for a minimum of three bars, 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

I didn't follow the 'three bars' rule as I placed limit orders and didn't keep my eye on the charts continuously so perhaps I'd have to adjust that one too...
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Old Aug 5, 2006, 12:07am   #94
 
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Quote:
Originally Posted by firewalker99
I'm sorry perhaps I didn't clarify that enough. I left volume completely out of the equation because you asked me to. I didn't only left it out of the chart but I also neglected to even take a look at it. So I removed the references to volume from my plan:

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) then wait for a retracement to touch the resistance line. If it waffles around or slightly above the line for a minimum of three bars, 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

I didn't follow the 'three bars' rule as I placed limit orders and didn't keep my eye on the charts continuously so perhaps I'd have to adjust that one too...
With regard to volume, I was referring to the following:

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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Old Aug 5, 2006, 9:41am   #95
 
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Quote:
Originally Posted by dbphoenix
With regard to volume, I was referring to the following:


[/I]
Sorry, I thought I had edited that post. Should sound like this:

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 unless you see wider spread up bars or a lot of up bars closing near the high

* In case price breaks up through 5710 on wide spread 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.

So regarding to volume, I implied wide spread bars.
As for ATR, I did plot it on my screen, but left it out of the charts.

Last edited by firewalker99; Aug 5, 2006 at 11:09am.
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Old Aug 5, 2006, 11:08am   #96
 
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Quote:
Originally Posted by dbphoenix
As to your "context" charts, I did make some minor adjustments, but you seem to have a handle on S/R, so for now I don't see this as an issue.
Although you call them "minor" adjustments, drawing the line 5 points higher or lower could mean the difference between a profitable trade and a stoploss trigger because my stoploss is normally less than 5 (ATR).

Do you look at the outer edges to draw a line? In many cases I've read it's safer to draw a line within a "congestion zone" instead of the point where it spikes. Do you take in account the wicks, bodies, or say for instance it's more probably to have a zone around 5650 than around 5645 because it's a "round number"... Take a look at post #87, not so long ago, I'd probably drawn S/R on those points.

Take for instance the lower line at 5625, could have drawn it at 5620 or at 5630, I intuitively choose 5625 but if I were to defend my position I could also argue in favour of 5620-5630. I know you say the lines are often more "zones" but trading a zone of a mere 10 points is a too big for me.
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