(binned per thread starter's request) Market bottom rotation trad

RH tracking closely if it builds micro shelf ill buy pre-takeout, otherwise looking for long on takeout.

RH a bit rough performed lots of chops no direct squeezes, played it well though. 2.7R profit in total.

56,94 SBUX longed, rotation play after clearout and heavy LL HH rotation.

And a minute later....sold for 1R profits.

Finishing the day here 12% gains on equities today, and a decent 4.5% on FX. MRLV for last trade of the day long 23,37.

Posting additional to taken trades today on equities all the non-taken trades and how much R is there left on table pretty much every day. A full time day trader needs consistent patterns and performance in order to put food on the table with strong guarantee every month. Equity markets bring with all the patterns traded and explained in this thread generally 10-30R gains every day as long as trades are executed well and not much is missed.

Continuation to post above, further setups for March 2, 2018.

Over 25R in non taken trades, plus all posted for today is over 38R, which is on 1% risk basis almost 40% a day. This is not unusual performance at all, its almost a day to day price performance, the main drawback is trader missing many setups especially if markets are not watched very closely.
One of main goals for this thread for me is to teach few people to find and execute patterns as well as it is needed and then to form a sharing room where efficiency can be taken from market with a better performance, missing much less setups and also dedicating less time to overall screen with more eyeballs watching it.

Full time trading with robust strategy vs market overfitting strategy

As a trader with focus on making full income from just trading one needs very reliable strategy, capital size aloane will not do the job if trader has gaps in year where no trades are possible to take, such strategy is exposed for trader to make mistakes in oversizing on play time and also taking too much confidence on when plays are in. A robust strategy is backed by process that is happening every day no matter in what stage market is, or rather to say over many different instruments no matter in generall where overall index stands. Robust strategy is something that can be easily backtested and confirmed on performance over short burst of examples / days with consistent performance (for example each day 10 setups, X failures X wins with similar day to day performance). Trader that is under-capitalized needs informational patterns that are frequent there is no way around it. Trading industry allows one to be very flexible having many ideas but some rules just have to be followed depending on the capital size and position size of a play. Small account trader will need many plays every month to gain decent profits unless one wants to risk huge portion of account which should be avoided. On other hand large fish filling 100 mil position in mid liquid market will be forced to use sophisticated approach to fill such approach and cannot just use simplistic indicators to approach market. Some rules can be flexible and some just have to be respected.

Trader should always have a business minded approach to markets, which company is more likely to strike consistency with low risk a McDonallds selling 1000s of units a day on 20% risk per unity (0.2R) or Boeing selling 1 unit or less per day with 50% risk (0.5R production cost)?

What is market overfitting strategy?

When strategy has no real edge in overall market and conditions over many years it fits under pattern/market overfitting strategy. Usually mainly strategies that are market condition specific will fit under such rule for example a buy only strategy traded on bull market only with for example using Stochastic indicator oversold as entry trigger. Such strategy is very simplistic , it will deliver good results if trader really picks a bull market under continuation, but as soon as market turns that strategy will be exposed and deliver consistent bad results. Full time trader needs strategy that is realiable to deliver performance no matter of time, market conditions or any other outside news factors.
Flexible/robust strategy is one which works in any market condition and it delivers similar avarage performance every day if executed to the rules. One sided market strategies are the most dangerous becouse they give trader false sense of market edge, which could lead to large loses once market starts to change trend.
In the end every strategy can be easily proven/ disproven by stress or back test. Any edge or false edge is to be confirmed or removed by doing research.
To put it in short....trader needs to find process in market in order to have flexible and robust strategy, this is rule for any science and performance behaviour.


Trading is flexible business in terms of ideas one can use to trade from tech analysis to fundies to other outside factors, but at the end capital size and position size will dictate flexibility of such ideas.

Supply absorption ahead of takeout

Hi Jan,

Here's another from late yesterday.

More examples of the same thing that I didn't take...

Yep, not the cleanest example but a decent B quallity setup. Bulls have tried hard on this one since 18:30, we got clearout on 18:34, the another clearout (proper one) on 19:16 with liquidation event , and then the rest was all to be decided on 3773. Break of supply on momentum initiation 21:00 and the rest is history.
I didnt took a trade becouse there was a lot of overhead untested supply at 3778, but launching a trade from macro shelf like you did would totally make sense since RR is pretty good even if 3778 delivers a dump.

GBPJPY was probably the flagship pattern of Friday, clean setup with 0 DD performance.

hi J
w which broker u can trade minute chart equities? whats d spread n commission there?

Hi Jan,

Even after the Supply at 3778 was cleared there was another chance to Enter on Test of that Level

Hey, you can trade in any broker (most of them) on M1 charts. I use Tradezero and a private fund, but you can pick any other broker (depending on your capital provided you might be under PDT rule with US brokers). Spreads should be visible from chart you can see blue upper and lower line that are displayed on chart pictures those are bid ask differences. Only 30% US equities is tradable on M1 charts, the rest are either too illiquid or have very large spreads.
On Tradezero i dont pay any commissions, its free trades if you enter with limit order. On private fund i pay 3 cents per share.

Technically not, becouse only initial or first important whole area supplys are traded on takeout. Meaning that whole point is that you want be rigth on the spot when down trend rotates into up trend and the first lowest supply is going to be the only traded one. Once price is in up trend already then takeouts of further higher supplies are not traded simply becouse there is very weak edge in trading those (no precise price rejections in most cases leading to bad RR and many losing trades).
You want to be watching only the supplies that are really still a part of down trend. Any higher supplies will have much larger chance to have old order flow (already TPed and exited positions of shorts and decreased amounts of SLs) thus a trader would also have lower edge trading those.

ahaa thank u, since I was trading 2007 havent notice that. thank u so much.
in 10 years yet couldnt find a retail broker offering low spreads to be able to trade equities minute chart.

tradezero: boker from bahamas w max 1:6 leverage n free limit orders possibly selling ur limit orders to HFT traders instead of trading them

gl

They are getting liquidity rebates trough direct order fillings (due to providing liquidity), however whatever the side mechanism is to who really those orders are handled i dont know, and to be honest its completly irrelevant, if you get filled where you want and the price moves the way you want thats really all it matters.

Equally weighted positions

Tittle of this topic is phrased by word "weighted" and not "sized" becouse those two are different factors that impact traders account. Weight should be reflected trough the % impact of fiat currency gains or loss on deposit that each trade makes, while size is generally the amount of shares or lots that trader buys/sells in each position.
It is very important that positions are as equally weighted as possible, leaving same reflection of impact on trading account with consistency, while the size should be dynamic and generally change trough position to position, this is simply becouse volatility is never the same in markets, it changes all around which means that trader needs stronger positions in low volatile market and smaller positions in strong volatilie markets, trader that does not use dynamic positions will be heavily exposed to reducing edge of strategy towards randomness or potentially be loosing whole account in black swan type of markets.
For example trading 1 lot on 1000 USD acc on M5 setups in usual market conditions will reflect 10-20% of avarage risk per market leg, while using same size of 1 lot in 2008-2009 market would almost certainly lead trader to loose whole account sooner than later as volatility expanded drastically.
Therefore profits or loses on trade should never be reported in pips or cents (equities) becouse those units are only one side of story, R units or USD reports are far more objective and can give outside trader quick overview on how trader was planning to manage SL and risk even if SL is not displayed on chart. R units combine both pip/cent value along with dynamic position size and also reflect same consistent % risk of account, thus joining all the factors together.

In FX there are many indicators or tools to calculate position sizes, it is suggested for trader to get one of such tools to avoid doing on the fly calculations of how much size to use on position (spares time which is useful for M1 trading). In equities its not that big of problem since you can easily scale / sell position in partials if one sizes too much (on brokers that charge per share commissions or no commissions) so no tools are needed there.

In reality trades will never have a true consistency in trading account, due to traders mistakes, poorer than perfect managment or simply changed decisions acording to strategy once trader is in trade, therefore in a solid performant trader there will be on avarage at least 20% overweighting or underweighting across the trades (for example one winning trade closed at 60 USD win, other closed as 50 USD win, then loss closed as 20 USD loss (but was over 1R loss), then next loss closed as 30 USD loss.....).
The key is to try keeping it as consistent as humanly possible. My quick method is figuring out position size, enter a trade, and then quickly drag TP to see if the USD impact is within my preffered targeted area, if its too much ill scale out position, if its too little ill try to get filled on addiitional size. This is process on equities especially, on FX if one uses position sizing tool, position can be always perfectly sized ahead.

If trader does not use dynamic position sizes then that will reduce the process performance impact of traded pattern and increase the randomness in trading performance, for example if trader trades same informational pattern on H1 using static position, losing 100 pips with 1 lot (1000 USD) and then entering M1 setup and gaining 5 pips on 1 lot size (50 USD) then process behind pattern is completly erased since higher TF setup will leave massive in-balance of gain/loss print.
It is simply imposible to expect consistency in trading profits if one does not let trades to leave same impact of % gain/loss on acc, unless one is trading very high performance informational pattern that goes 90% of time in traders direction.

Opportunity cost

Traders sandbox is his/her trading capital, its what allows one to enter plays once they present. This goes for investor or businessman as well. Once opportunity is there one locks portion of capital in that play and this creates a time lock for that play to sort out before one can enter another play, especially in lower leveraged markets. Perhaps up to extent FX markets or especially options might not be that much exposed to this since there is heavy leverage applied, but for equities and other lower leveraged markets that is a important aspect to keep eye on. If all capital is locked in play, that will prevent trader to enter in another play which creates potential oportunity cost meaning that there could be secondary play that could just as well play out in favour of trader but one cannot be engaged becouse capital is locked in initial play.
What creates opportunity costs in most cases? High time frames and low frequency patterns or non-liquid markets. This is one of major reasons why price action trader should prioritize low TFs much higher over high TFs becouse capital can be quickly free in short term plays.

Going to previous example listed...investor with 100 USD into unit of Mcdonallds or Boeing, where is much larger potential opportunity cost, in company that creates high frequency units that sell with high liquidity or one where low frequency units are produced sold at low liquidity?

If there is M1 and H1 play both set up at same time, which one should be taken with priority? Very simple answer is M1 play, becouse that one will be resolved in much quicker time, perhaps even allowing trader to afterwards engage in H1 play.
Often traders will approach low TFs with dozens of conspirancy theories about HTF algos, SL hunts, counter fills of brokers and what not, all of those theories are irrelevant and can be easily empirically disproved compared to low frequency TFs on back to back basis. Therefore there is no black tint of low TFs by default.

In general the whole industry is positioned backwards especially towards beginners and misinformation that is spread around. Trade high TFs only due to X and X factor, and maybe youll make 100% gain in month. That is by mathematical default set against reality, low reps give low profits unless you weight those reps with heavy position size (no go).