Thoughts on Day/Swing Trading

[Smart_trade]

gif upload

hi ST
your way of trading intrigues me... I have pasted 30 min chart of euro/inr . I have drawn two lines on it. (though technically this is a wrong example becos the second low does not breach the first low, saved by 3 ticks...but hypothetically speaking, if it did, I would have been out on the next high) I understand that a filter can save me in such circumstances..but would like to know from you if there is another way to guage that this is a sideways movement in a downtrend..

regards

ps I am not very good at charts, hence wd request u to be a little patient with me -

Yes Anurag , you dont have to keep holding the loosing short position till the high of the sideways range gets takenout. Supposing the second low had cracked the first low and your short trade gets triggered, the moment the prices instead of going in the direction of breakdown reverse and comes back in the range...tells you that the line of least resistance is not downwards ( atleast till then ) So the bar closing back in the range it broke tells us to liquidate the short position on rejection of that breakdown. And as you are back in the range, you are back to sideways range for some more time so dont trade till you get a clear breakout/breakdown again.

Once you close below the range then go short again and this time it has worked.

The rejection helps us in getting out with a scratch / min loss trade and once breakdown works we make our money.

Regards,

Smart_trade

 

[TraderPatro]

Dear SmartTrade

thanks to you for the wonderful thread, iam also a price action trader

i also trade in the direction of bigger time frames but many times i take counter trend trades which have low success rate

i generally look for trend exhaustion on 60/30min or extended rallies and
hammer and shooting star candle in 60/30min

could you suggest how to trade high probable counter trend trades selectively?

 

[Smart_trade]

Dear SmartTrade

thanks to you for the wonderful thread, iam also a price action trader

i also trade in the direction of bigger time frames but many times i take counter trend trades which have low success rate

i generally look for trend exhaustion on 60/30min or extended rallies and
hammer and shooting star candle in 60/30min

could you suggest how to trade high probable counter trend trades selectively?

Few things come to mind when to take counter trend trades.They are as under :

1) When you have a prolonged and steep move in one directon, look for possible trend reversal in a V shape reversal formation. The fall/rise has to be steep...

2) When you have a reversal formation on larger timeframe, think of taking anti trend trades on smaller timeframes.

3) Take antitrend trades when the psychology of market participants is likely to be in extremes....such as a large gap,take antitrend trades...

4) Take antitrend trades when market is doing totally opposite of what is the general perception.So if the trend is down, you open with a large gap down....the whole trading /investing world is expecting the market to crash further....but market starts climbing up.....take antitrend trades because large number of participants will be trapped in the reverse position and they will will look for cutting their losses at various stages depending on their risk tolerence.....and that is your prey.... or good economic numbers....and market fails to go up.....take antitrend trades as lots of longs will be trapped....

Best wishes,

Smart_trade

 

[AW10]

Thanks ST for sharing excellent pointer for counter-trend trading.
My 2 cents will be
- Keep your ego on check and don't find the reason that your anti-trend trade is correct.
- Be ruthless in cutting the trade at small loss, if it doesn't move in your direction. You can always take next counter trend trade as market will give you next opportunity very soon.

Market can remain irrational for much longer time (recall parabolic move in silver/ oil recently), hence proactive risk management is of highest importance to counter trend trader.

Obviously when counter trend trades work, they bring very great pleasure to trader cause they got into the move before everybody else. You need a belief that market timing is possible. At the same time, you got to respect the market move and accept being wrong. Can't afford to push your view on it.

Hope this helps.
Happy Trading

 

[Smart_trade]

Thanks ST for sharing excellent pointer for counter-trend trading.
My 2 cents will be
- Keep your ego on check and don't find the reason that your anti-trend trade is correct.
- Be ruthless in cutting the trade at small loss, if it doesn't move in your direction. You can always take next counter trend trade as market will give you next opportunity very soon.

Market can remain irrational for much longer time (recall parabolic move in silver/ oil recently), hence proactive risk management is of highest importance to counter trend trader.

Obviously when counter trend trades work, they bring very great pleasure to trader cause they got into the move before everybody else. You need a belief that market timing is possible. At the same time, you got to respect the market move and accept being wrong. Can't afford to push your view on it.

Hope this helps.
Happy Trading

Thanks AW10...totally agree on the above...particularly on keeping the ego under check and cutting the loosers fast as you are trading against the trend.....it could be very rewarding but it could be risky and may turn out to be very painful if loosing trades are not closed fast....one has to be very nimble footed with this kind of trading....it is not a easychair type of trading...

Thanks for bringing out the safeguards ...

Smart_trade

 

[TraderPatro]

Dear SmartTrade

can you explain little more details about trading intraday swings without any bias

thanks a million

Intraday trading can be done in following ways :

1) Take all trades in the direction of the longer timeframe. So if we are trading on 5 min chart, see what is the trend on 30 min chart...if it is down, take all short trades on 5 min chart.....but your trade entry,stops and profit taking all has to be on 5 min chart.. This is relatively easy as we are trading in one direction generally unless the trend on larger timeframe reverses during the day..

2) Trade the intraday swings without any bias....trade as the price flow moves...trade from short and long both sides....this mode is bit difficult as we need to be fast in reversing our positions and we need to understand the market action well....and very rigid on stops....

Let us take the tougher part .....intraday swings. I am posting Telco 5 min chart for last 2 days with trades , adds,profit taking points marked on the chart....

Smart_trade

 

[Smart_trade]

Dear SmartTrade

can you explain little more details about trading intraday swings without any bias

thanks a million

Just study the chart posted and see how we take trades in both direction. In my experience only 15 -20 % days we will have unidirectional moves. In rest 80-85 % days we will have 2-3 price swings in any trading day.

We can catch these price swings if we have a good knowledge of trends .I will not be able to explain the trends concepts here in this thread as that is a matter of a separate thread. But just see the clearly visible pivots and see how the market changes the swing direction once these pivots are broken on upside or downside. So here we trade without having any bias...we adjust our steps as the market moves and changes its direction.

Smart_trade

 

[krish4166]

ST,
The chart timeframe needs to be decided on the kind of trading we intent to do. A 30 min timeframe is very good for swing trading and 5 min for day trading and daily timeframe for position trading.

One can also combine two timeframes and take trades on multiple timeframes signals.So one can use daily as a larger timeframe and trade 30 min in the direction of trends in daily for swing trades or use 30 min as a larger timeframe and trade 5 min bars in direction of 30 min trends for daytrades.

Will post some examples on the above soon...

Smart_trade
Reply With Quote

When the day trend is down and any buy signal on 30 min TF, can we take long trades on 5min TF. Plz explain.

 

[sibumajumdar]

ST,
The chart timeframe needs to be decided on the kind of trading we intent to do. A 30 min timeframe is very good for swing trading and 5 min for day trading and daily timeframe for position trading.

One can also combine two timeframes and take trades on multiple timeframes signals.So one can use daily as a larger timeframe and trade 30 min in the direction of trends in daily for swing trades or use 30 min as a larger timeframe and trade 5 min bars in direction of 30 min trends for daytrades.

Will post some examples on the above soon...

Smart_trade
Reply With Quote

When the day trend is down and any buy signal on 30 min TF, can we take long trades on 5min TF. Plz explain.

Brother,
Our STda clearly mentioned that if 30min shows dn trend then NO-LONG but only shorts when pull up....hope iam correct...thanks...SLMuncle

 

[krish4166]

ST,

At your free time plz explain my query, so I can improve my trading.