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I haven't had time to backtest this, but IBs that touch outside a Keltner seem to be more risky. My first on loss on Friday (a 44 tick loss) could have been prevented.
Be careful drawing conclusions from an isolated event. You'll be chasing your tail this way. Backtest it and if the idea doesn't hold up let it go. You can't prevent all the losers in a mechanical system, there are just too many variables and optimizing to try will curve fit the system.
I don't put much faith in any price-based indicators. An inside bar is indecision. It'll break out either way, and the way it breaks out depends on what trader(s) are willing to do at the moment of the breakout. Seeing what price has done in the past x bars could be totally irrelevant, especially in 15 minute bars. All it takes is one trader with a market order and that changes everything.
I just reviewed last week's trades and the performance of IB's outside of a Keltner. Trading all such IBs netted +2 ticks, so I don't know if there's much correlation to Keltner's. I think the problem I have is when the IB is much larger than my target, usually because it follows a large expansion bar. While it's a pause, relative to recent price action, the IB may still be much larger than normal volatility and the market may still be trading violently.
I meant to do a lot more backtesting this weekend but was too busy with other things. As such, I think I'm going to stop trading IBs until I get some more research done. Then again, we just had a winning IB this morning and now I wish I would have taken it, and a 14 tick sized IB on 6E that I would have taken ran up almost +100 ticks
It came up to my target (currently 19 ticks) but didn't hit it (or I didn't get filled). So I sat through a pullback. But then I saw professional buying so I got out with +12.
I'm doing more testing on the optimal target. I suspect maybe Tradestation is too generous with the fills as it reported today's trade filled +19 when real money trading with ninja I didn't get filled. i think I'll move my ticks in a few, maybe 16 like Jeff.
The dots are a work in progress but so far they've been helpful at picking reversal areas which allows me to pull my target in (if I'm quick enough) or look for a retest, or to trail my stop..
I'm no keltner channel expert at all. and I know people trade it different ways. here's one possibility:
if price goes through the lower line and closes outside the lower line it's a bearish sign. if price goes through the lower line but closes inside the channel it's a bullish sign.
All I can say.........every trade you lost on I won on...........to me that would suggest a close examination of your money management strategy......Also, don't trade the afternoon of options expiration day.......make it a rule....
Jeff: Question about the size of the IB. Would you take a breakout if there is no wick in the candle in the direction of the breakout (and it closes there)?
When is a 15 minute IB not a 5 min bear flag?
The 15 min IB bar breakout just hit as I type this note in CLSept10 76.67. It has made it to +7 though not much traded there...
You are trading during lunch time in NYC !!!! This isn't the best time to trade. I see half of al signals FAIL during this time period....So if you want to trade during this time period.....good luck with that.
As far as your other questions........I'm just focused on 15 minute charts so I can not say how the 15 min related to the 5.
Sure.....wickless inside bars......why not......that behavior usually shows some good activity.
Thanks Jeff. Not trading just watching. Post 12:30 the lunch hour is not necessarily bad; especially if ES is ripping.
BTW the signal worked well.
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The 1:15PM bar also worked out well. 2/2 in the past 45 minutes.
Welp.........another fine day for the "Three Set Ups" signals......see attached chart. No losers.....even the lunchtime trade.
I think that pretty much does it as far as these particuliar trades go.......I think me posting charts everyday is sort of redundant since everyone has the same chart.........so if you have questions I'll be happy to answer them......if I can.