I liked how you managed your last trade. I also took the same set up but held on for a -22 loss. I'm interested on why you closed it or why you moved your moved B/E there.
Ratios & Harmonics: a Different Way to Trade
- #19,466
- Edited 4:18pm May 13, 2016 3:51pm | Edited 4:18pm
- | Joined Jan 2016 | Status: Trader | 1,719 Posts
- #19,470
- May 14, 2016 9:50am May 14, 2016 9:50am
- | Joined Mar 2016 | Status: Trader | 1,068 Posts
{quote} I would not have a problem to enter such a trade (especially on news time), if you mean the area highlighted in the circle. However, I am not sure that in live trading this would have ended positive since there are 2 pairs of candle rotations; with one no prob.). This can be very fast a trap for the SL. I would try to set the SL very fast to BE+1. In general, from MM aspect maybe not the best trade to take.
{quote} i would have expected continuation to the downside given that price had just tested what appears to be a strong level of resistance (your cyan zone) and the rotation upthere right within the zone of resistance appears heavy and should act as a barrier to the bulls. In short, risk reward appears to be skewed to the downside. However, you can expect a retest of this heavy area of balance and think about going down from there.
{quote} Tough call. I dont really like trading into structure. Price is a little expensive, initial R:R is mahhhh,. I would like to say that I would of taken it but I honestly don't think I would of. If I did, I would managed it aggressively tho. Like evocpr19 said," look to go to B/E very fast", probably at test of structure and, personally I would be looking for a break out for targets. Historiclly, I'm not very good at break outs so I tend to lean on the side of caution and wait for the breakout then the PB. I know, pretty retail way of thinking...
I agree crixus, I expected further downside to the green zone in the screenshot. The way that price rejected the top of the supply zone then formed large range bars on the way down made me think that selling was definitely not over.
However now looking back and deconstructing the setup I think it was evo who had mentioned toward a prior similar example that he would not expect a deep retracement regardless of the fact that price had created a weak NSH because price was increasing in momentum substantially on the way to creating the NSH. This latest example is a good case in point. Also the major momentum drop off on that second green leg down coupled with that ugly complex correction add strength to the fact that the bears were weakening.
I also think maybe you have to take into account the amount of times that the supply zone had been tested by price. On the left of the chart price had passed back and forth through it several times. Followed later by another 2 tests and then again once more before that last dump by the bears. So perhaps that was their last ditch effort to beat price down and despite the fact that it looks like a violent rejection, it clearly didn't have enough force behind it to keep the bulls from shutting it down.
I know I posted an example recently asking which swing you guys use after price sustains a change of order flow so this is something that I'm still not clear on. It's hard for me to go against expectation but I think in this scenario and perhaps similar scenarios, using the smaller pattern might not be a bad idea provided that you manage aggressively like you guys have said. If it doesn't work out then I suppose you can monitor price action and revisit if you get your deep retracement as expected.
When I was watching this real time I was not thinking about the bullish momentum on the way up, or the fact that the bearish rejection could just be a last ditch effort. Price moves fast and unfortunately I find myself not thinking of everything that I should be thinking of, this is something that I'll have to try harder to get better at lol.
You could also look at this as either a cup n handle or inverse head n shoulders pattern but I'm not sure Damian would like people looking for those patterns specifically as they are pretty retail haha.
Mack - I think breakouts are super retail and believe the fail rate to be very high, I know when I've tried them I've gotten steamrolled lol. I think waiting for the pullback is definitely the way to go and don't think of this as being retail.
I am toying with the idea of moving back to the 233tick vs the 144. Had the 233 up last week and was sporadically comparing to the 144 and it seems that the rotations hold more value on the 233 and there are less false moves. Of course this comes at the price of a larger stop. Will play around with it next week.
- #19,471
- May 14, 2016 12:25pm May 14, 2016 12:25pm
{quote} Good afternoon I liked how you managed your last trade. I also took the same set up but held on for a -22 loss. I'm interested on why you closed it or why you moved your moved B/E there.
Since it did not move fast on my favor, I did not give it a second chance.
The expectation on 5m ( The 17687 peak was not broken )
and this is how it looked on 1m
- #19,473
- Edited 5:06am May 15, 2016 4:19am | Edited 5:06am
- | Joined Jan 2016 | Status: Trader | 1,719 Posts
- #19,474
- May 15, 2016 9:34am May 15, 2016 9:34am
- | Joined Mar 2016 | Status: Trader | 1,068 Posts
{quote} Hi Jmezz, I hope it is ok for you that I use your posted chart to further explain my thoughts. I see a level of support (yellow rectangle) and at this level we have the 68 to 78 Fib level of the last swing (yellow line), which I see as a deep retracement of the last swing. Price (yellow arrow) showed at a first glance a good rotation ( but turned again down to form a LL and turned again). I would have probably tried to enter after the first rotation candle, which would be pain (since price pushed down) and would most probably my tight SL....
Thank you for the explanation, I get what you're saying now. I thought that maybe you were talking about the 2 bear rotation bars then 2 bull rotation bars right before price took off from the 618.
Studying this example further I think if given the opportunity for a similar setup in the future that it probably is not a bad idea to attempt a trade. There was structure (as you pointed out), order flow breakdown by the bears and strength shown by bulls leading up to it, and confluence of 2 different fibonacci swings.
Really what was going on in the 618 zone was that small consolidation / changing of hands. The confirmation of which was that rotation bar out of the consolidation range. As this is an aggressive play, you could place the stop at the bottom of the rotation candle itself, not the swing low. It'd be a right or right-out sort of trade with minimal risk. I'll include a screenshot.
It's definitely easy afterwards to see what is right or wrong. Whenever I review trades or setups there always seems to be at least a few details that I missed at the time. Then next time I'll think of those details but then not pick up on another few. Always something I'm leaving out lol.
- #19,475
- May 15, 2016 12:04pm May 15, 2016 12:04pm
- | Joined Dec 2013 | Status: Trader | 1,118 Posts
{quote} It's always ok to use one of my charts
I never used stops at the bottom of the rotation bar... uhmmmm I'm kind of interested in it. maybe I'll start some backtesting on it
- #19,476
- Edited May 16, 2016 7:28am May 15, 2016 7:58pm | Edited May 16, 2016 7:28am
- | Joined Mar 2016 | Status: Trader | 1,068 Posts
