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This last week I took a ton, literally hundreds of trades from Renko charts in attempt to scalp the ES and NQ. Although my efforts weren't successful, they were educational. In the end I found that although I was finding good trades and making profit, often times I was taking too much loss in finding them, and ultimately those losses became insurmountable. On the flip side, in taking so many trades, I was able to identify some things that did seem to work in what I consider a reliable fashion. Not oddly enough, these are rather common concepts in trading, support and resistance, swing highs and lows, and good 'ol price action.
Putting it all together
Here is my new chart, and God willing the last one that I will ever put together. Amen. This is ES 5-minute candles. The only indicator of importance is the Swing indicator. The 50 EMA is just there for a quick visual confirmation of what the market is doing for the day. Here it is telling me that overall, sellers are in control for most of the day. I am using swing indicator not only to show me exactly where the ES is putting in new highs and lows, but also to plot my support and resistance.
The top yellow line in this chart was the overnight high, the second, the overnight low. pre-market, at 6:15 the market breaks that overnight support and falls to a point that sets up the next support area, the third yellow line, also indicated by the swing indicator, that becomes the opening range for the day. As the market opens, sellers attempt to push the market higher, but fail to push it past the overnight low, which has now become resistance. This is where I want to trade. Buy support, sell resistance. I get it now. Like in my soul get it, and it is fucking beautiful. At 8:00 the chart prints a doji on the level, signaling a possible reversal, the next 5-minute candle closes below this newfound resistance. This would have put me in the market at 4383.50, at which point I should have held until either a candle closed above the level, or I hit the first profit target at the bottom of the range. Full stop.
I really believe this is the way. From this point forward, I will only be buying support and selling resistance, and it will now be my sole focus as I trade. Although I will be trading an OCO bracket, my exit will be soley determined by how price reacts at the level, meaning I will now always exit my trade is the level is broken. On the other side of that I will now manage my trades in profit, using support and resistance to determine if and when it's time to get out of the pool.
I feel better. I now have a concrete plan. I know exactly when I going to take a trade, and why I would get out. Now all I have to do is simply execute and see where it takes me.
Actually, everything that I need is on the 4-hour chart.
Notes from my journal
- The 4-hour chart opens at 4:00 PM with candles opening/closing at 8:00 PM, Midnight, 4:00 AM, 8:00 AM, Noon and closing at 2:00 PM.
- Set alerts for these 5 minutes before the close of the candle.
- Attempt to establish a bias early in the trading day.
- Enter trades with limit orders with an initial 40/40 OCO bracket at the expected actionable level derived from #TheStrat logic.
- Set alert for triggered trades.
- Adjust stop loss and take profit levels based on the levels currently in play.
- Keep in mind that to pass the funded account evaluation, I must thread the dreaded max daily drawn down needle, which means that my first trades up to $3000.00 have to be successful.
I think the overnight activity was pretty crazy considering that we are headed into a holiday. The ES is red on all time frames right now, sellers are still in control, but for how long? I'm thinking that the ES will defiantly range its way down to 4200, at which point we very well could see sellers come back with a vengeance. I will be looking for good opportunities to short down to 4200, but only if all these charts agree and I get an actionable signal on the 4-hour chart, but what I really see happening is that we are reaching the bottom of expanding formations on all time frames. I think that there is a good chance that sellers are going to come back or attempt to come back into the market at around 4200, so I'm actually feeling pretty bullish for the week. A move that holds price above 4354 would confirm that bias.
Of course, the ES is going to do what it do. These are troubled times so for the time being I'm going to simply trade the price action in the direction indicated when all time frames are in agreement
Not on my part. if price breaks 4350 before 8:00 AM I'm going long in anticipation that the ES will push through last week's big support level at 4354. If this happens, I suspect the move will be rather violent. My profit target is 4400. It's really close to yesterday's high and is a big fat round number. I'm a little fuzzy on risk management on this one. I'm thinking initially I'll shoot for a 10 point stop loss. I bet there is a shit load of stops up there at 4350, which should drive this move quickly. If I don't see that I'll be looking to get out the best I can.
Plan B
If the move goes the other way, I'll start looking for actionable signal to the downside, which will most likely be a 3-1-2 reversal to the downside, providing that there is enough room to make it happen. If this is the case, I will be targeting 4200 and managing the trade down.
7:53 AM filled at 4350.75, so far, so good. Stop loss is ridiculous at 4307. Move didn't quite pop like I had planned, but here comes the 8 AM candle, sellers still seem to be here, and so am I.
Here I have found what I think is a valid expanding range on the 15-minute chart, and it clearly shows that I had originally bought at the top of the range like the rooky I am. I have since then added to in a weak attempt to save this stinker, but I am skeptical.
The fact that I have found this 'tri' (expanding range or broadening formation) is money though. I really believe #TheStrat does an amazing job in describing accurately how price moves, and that once I am able to apply the concepts that it describes I will be able to finally achieve my trading goals.
Currently we are at the bottom of this range, at a swing low, and sellers are looking exhausted, so there is hope, but I don't want to rely on hope as a trader. I want mastery.
This chart is 60 Min bars in the 24 Hr Globex Session. The Black lines mark the durations between the Highs of the past 4 trading sessions. When you were thinking long based on what you were seeing on the 15 Min chart, being aware of this higher time frame dynamic could have made you consider that at 25, 26, 27 hrs from the prior 24 Hr High... time might be running out for the Bulls. The Stochastic was also making an Overbought comment. The white center of the band is the trend of the 24 Hr time frame and is obviously pointing lower. That push up out of the NY Open followed by the reversal is classic ES head fake.
I'm not suggesting that you use the same approach to analysis but you may want to consider that knowing where you were in price movement between the low and high of the day might of helped you see your trade in a context that allowed you to manage it better.
It is possible that the action in the final hours is arguing that tomorrow will see a more successful attempt to push higher... notice the Stochastic turning up from a higher low.
ES was inside on the month, week and day, red on these as well as the 4- and 1-hour charts. The plan then becomes to wait for corrective action, wait for an actionable signal, and trade it. It worked, but there is still plenty to work on.
Hold you bastard!
The goal of my understanding is to eliminate my fear. Today I exited good trades because I was scared to lose profit, but lost profit because I exited too early, even though the trade was working. I was able to profit 10 points today, but I left SO many points on the table, which is frustrating. Even so, if I continue to expand on what I am working, getting into good trades, I can learn to trust my method, so I consider it moving forward. Take this gem for instance, got in on the 2-2 reversal, left the trade at 4-points, left the rest on the table.
I'm exactly where I need to be as a trader. I've cast my net wide searching for something about trading that I could understand and apply. I have found it. Now comes the time to perfect it. Not too concerned with tracking my stats right now, I'm more focused on better understanding Rob Smith's work so that I can get use it to profit every day. I think one day soon I'll open up my trade performance and be shocked to find that I'm in profit, have great numbers, and the fear is gone.
The ES has wiped out all gains made since June of last year, and no close targets, a big fat round number like 4000 makes the most sense.
We already have a MASSIVE range and we're only into the first 4-hour candle of the day. My plan for tonight and tomorrow is to trade every new 2 and new TTO on the way down. The only thing that will convince me that the bleeding has stopped is for the ES to form higher highs and lower lows on the 1-hour chart. Even then, I expect there to be a crazy range at the bottom of this week, if it has a bottom at all.
